-----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, LcfGPBE+hj2ss68i8zzkfXUhZk5RcE8CFa8/38PBNB1kg7Y7Tkvv7MKD4GVXpJVe jB8R/xZqh2R3t0ctslffkQ== 0000912057-97-026122.txt : 19970807 0000912057-97-026122.hdr.sgml : 19970807 ACCESSION NUMBER: 0000912057-97-026122 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19970629 FILED AS OF DATE: 19970806 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: KAYNAR TECHNOLOGIES INC CENTRAL INDEX KEY: 0000917193 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT ENGINES & ENGINE PARTS [3724] IRS NUMBER: 330591091 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22519 FILM NUMBER: 97651926 BUSINESS ADDRESS: STREET 1: 500 N STATE COLLEGE BLVD STREET 2: STE 1000 CITY: ORANGE STATE: CA ZIP: 92868-1638 FORMER COMPANY: FORMER CONFORMED NAME: KAYNAR HOLDINGS INC DATE OF NAME CHANGE: 19970205 10-Q 1 FORM 10Q - ------------------------------------------------------------------------------- UNITED STATES 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 June 29, 1997. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________ Commission file number 000-22519 KAYNAR TECHNOLOGIES INC. (Exact name of registrant as specified in its charter) DELAWARE 33-0591091 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 500 N. STATE COLLEGE BOULEVARD, ORANGE, CALIFORNIA 92868 (Address of principal executive offices) (Zip Code) (714) 712-4900 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No X ------- --------- APPLICABLE ONLY TO CORPORATE ISSUERS: As of August 5, 1997, the Registrant had 5,206,000 shares of Series C Convertible Preferred Stock, $.01 par value, outstanding and 3,694,000 shares of Common Stock, $.01 par value, outstanding. - ------------------------------------------------------------------------------- KAYNAR TECHNOLOGIES INC. AND SUBSIDIARIES Form 10-Q - Kaynar Technologies Inc. INDEX
Page ---- PART I - Financial Information ITEM 1. Financial Statements Condensed Consolidated Statements of Income for the three months and six months ended June 29, 1997 (Unaudited) and the three months and six months ended June 30, 1996 (Unaudited) 1 Condensed Consolidated Balance Sheets at June 29, 1997 (Unaudited) and December 31, 1996 2 Condensed Consolidated Statements of Cash Flows for the six months ended June 29, 1997 (Unaudited) and June 30, 1996 (Unaudited) 4 Notes to Condensed Consolidated Financial Statements 5 ITEM 2. Managements' Discussion and Analysis of Financial Condition and Results of Operations 7 PART II - Other Information ITEM 6. Exhibits and Reports on Form 8-K 10
Page 1 Form 10-Q-Kaynar Technologies Inc. Kaynar Technologies Inc. and Subsidiaries Condensed Consolidated Statements of Income (in thousands except earnings per share data) Quarter Ended Six Months Ended June 29, 1997 June 30, 1996 June 29, 1997 June 30, 1996 ------------- ------------- ------------- ------------- Unaudited Unaudited Unaudited Unaudited Net sales, including $3,487 and $3,050 for the quarters ended June 29, 1997 and June 30, 1996 respectively, and $7,158 and $6,003 for the six month periods ended June 29, 1997 and June 30, 1996, respectively, to a related party $37,250 $23,228 $69,452 $43,890 Cost of sales 26,214 17,178 49,183 32,370 ------- ------- ------- ------- Gross profit 11,036 6,050 20,269 11,520 ------- ------- ------- ------- Selling, general and administrative expenses 5,082 2,994 9,422 5,779 ------- ------- ------- ------- Operating income 5,954 3,056 10,847 5,741 Interest expense, net 1,063 846 2,328 1,669 ------- ------- ------- ------- Income before provision for income taxes 4,891 2,210 8,519 4,072 Provision for income taxes 1,958 884 3,417 1,629 ------- ------- ------- ------- Net income $2,933 $1,326 $5,102 $2,443 ------- ------- ------- ------- ------- ------- ------- ------- Earnings per share of common stock and common stock equivalents outstanding $0.36 $0.19 $0.68 $0.36 ------- ------- ------- ------- ------- ------- ------- ------- Weighted average number of shares of common stock and common stock equivalents outstanding 8,147 6,800 7,481 6,800 ------- ------- ------- ------- ------- ------- ------- ------- The accompanying notes are an integral part of these condensed consolidated financial statements.
Page 2 Form 10-Q - Kaynar Technologies Inc. Kaynar Technologies Inc. and Subsidiaries Condensed Consolidated Balance Sheets - Assets (in thousands of dollars) June 29, December 31, 1997 1996 --------- -------- Unaudited Current assets: Cash $1,914 $909 Marketable Securities 1,033 0 Accounts receivable, including $2,587 and $1,987 in 1997 and 1996, respectively, from a related party, net of allowance for doubtful accounts of $293 and $235 in 1997 and 1996, respectively 21,840 15,392 Inventories 30,904 29,901 Prepaid expenses and other current assets 465 709 --------- -------- Total current assets 56,156 46,911 --------- -------- Property, plant and equipment, at cost 32,187 24,160 Less - accumulated depreciation and amortization (6,981) (5,451) --------- -------- 25,206 18,709 --------- -------- Intangible assets, net of accumulated amortization of $348 and $167 in 1997 and 1996, respectively 7,233 7,815 Other assets 162 254 --------- -------- $88,757 $73,689 --------- -------- --------- -------- The accompanying notes are an integral part of these condensed consolidated financial statements. Page 3 Form 10-Q - Kaynar Technologies Inc. Kaynar Technologies Inc. and Subsidiaries Condensed Consolidated Balance Sheets - Liabilities and Stockholders' Equity (in thousands of dollars) June 29, December 31, 1997 1996 --------- --------- Unaudited Current liabilities: Revolving line-of-credit, to a related party $470 $746 Current portion of long-term debt 963 1,457 Current portion of capital lease obligations 258 133 Accounts payable 6,272 6,105 Accrued payroll and related expenses 5,296 5,330 Other accrued expenses 4,410 2,664 Deferred income taxes 288 288 --------- -------- Total current liabilities 17,957 16,723 --------- -------- Long-term debt, primarily to a related party 26,610 45,176 Capital lease obligations 616 332 Deferred income taxes 861 832 --------- -------- Total long-term liabilities 28,087 46,340 --------- -------- Commitments and contingencies Stockholders' equity: Series C Convertible Preferred stock, $0.01 par value; Authorized--10,000,000 shares; issued and outstanding--5,206,000 shares 52 52 Common stock, $0.01 par value; Authorized-- 20,000,000 shares; issued and outstanding-- 3,694,000 shares and 1,594,000 shares at June 29, 1997 and December 31, 1996, respectively 37 16 Additional paid-in capital 29,020 1,432 Retained earnings 13,906 8,838 Currency translation adjustment (302) 288 --------- -------- Total stockholders' equity 42,713 10,626 --------- -------- $88,757 $73,689 --------- -------- --------- -------- The accompanying notes are an integral part of these condensed consolidated financial statements. Page 4 Form 10-Q - Kaynar Technologies Inc. Kaynar Technologies Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in thousands of dollars) Six Months Ended June 29, June 30, 1997 1996 --------- --------- Unaudited Unaudited Cash flows from operating activities: Net income $5,102 $2,443 Adjustments to reconcile net income to net cash provided by operating activities - - Depreciation and Amortization 1,774 1,079 Loss on sale of property, plant and equipment 127 58 Changes in operating assets and liabilities-- Increase in accounts receivable (6,510) (2,973) Increase in inventories (1,008) (3,840) Decrease in prepaid expenses 225 10 Decrease (Increase) in other assets 281 (98) Increase in accounts payable 130 1,502 Increase in accrued expenses 1,701 1,386 --------- --------- Net cash provided by (used in) operating activities 1,822 (433) --------- --------- Cash flows from investing activities: Purchases of property, plant and equipment (7,881) (2,915) Proceeds from sales of property, plant and equipment 83 26 Purchases of marketable securities (1,033) 0 Decrease (Increase) in intangible assets 90 (268) --------- --------- Net cash used in investing activities (8,741) (3,157) --------- --------- Cash flows from financing activities: Net (payments) borrowings on line-of-credit, from a related party (276) 3,259 Borrowings on long-term debt, primarily from a related party 276 755 Payments on long-term debt, primarily to a related party (19,565) (400) Principal payments on capital lease obligations (100) 10 Net proceeds from issuance of common stock 27,610 0 --------- --------- Net cash provided by financing activities 7,945 3,624 --------- --------- Effect of exchange rate changes on cash (21) (1) --------- --------- Net increase in cash 1,005 33 Cash, beginning of period 909 52 --------- --------- Cash, end of period $1,914 $85 --------- --------- --------- --------- Supplemental disclosures of cash flow information: Cash paid during the period for Interest $2,549 $1,532 --------- --------- --------- --------- Income taxes $3,799 $1,686 --------- --------- --------- --------- Noncash financing activities: Capital lease obligations assumed for the purchase of equipment $507 $355 --------- --------- --------- --------- Borrowings on long-term debt for preferred stock dividends $58 $48 --------- --------- --------- --------- The accompanying notes are an integral part of these condensed consolidated financial statements. Page 5 Form 10-Q - Kaynar Technologies Inc. Kaynar Technologies Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements June 29, 1997 (Amounts in thousands, except for earnings per share) (1) BASIS OF PRESENTATION The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The accompanying consolidated condensed financial statements have been prepared on the same basis as the consolidated financial statements for the year ended December 31, 1996. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Registration Statement on Form S-1 dated May 6, 1997 for the year ended December 31, 1996. The condensed consolidated financial statements include the accounts of the Company and all of its subsidiaries after eliminating all significant intercompany transactions and reflect all normal recurring adjustments which are, in the opinion of management, necessary to present a fair statement of the results for the interim periods reported. The results of operations for the three months ended June 29, 1997 are not necessarily indicative of the results to be expected for the full year. The Company's fiscal quarters are on a 13 week basis. The second quarter of 1997 ended on June 29, 1997 (the Sunday nearest to June 30, 1997). Last year's second quarter ended on June 30, 1996. (2) MARKETABLE SECURITIES The Company invests excess cash in a money market fund that invests in short term (maturities of 397 days or less) direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. (3) INVENTORIES Inventories are stated at the lower of cost (FIFO) or market and include the cost of material, labor and factory overhead. Inventories consist of the following at June 29, 1997 and December 31, 1996: 1997 1996 ------- ------- Finished goods $8,537 $8,781 Components 4,804 4,628 Work in progress 9,994 9,151 Raw materials 2,616 2,790 Supplies and small tools 4,953 4,551 ------- ------- $30,904 $29,901 ------- ------- ------- ------- (4) EARNINGS PER SHARE Earnings per common share and common share equivalent are computed on the basis of the weighted average number of common shares outstanding. The outstanding Series C Convertible Preferred Stock are common share equivalents. Page 6 Form 10-Q - Kaynar Technologies Inc. (5) ACQUISITION The Company acquired an Australian corporation (Recoil) in mid August 1996. The acquisition has been accounted for in accordance with the purchase method of accounting. The Company's condensed consolidated financial statements include Recoil's results of operations from the effective acquisition date. The following unaudited pro forma consolidated statement of income information presents the results of the Company's operations for the quarter and six months ended June 30, 1996, as though the acquisition of Recoil had occurred as of the beginning of that period: Qtr Ended Six Months Ended June 30, June 30, 1996 1996 --------- --------- Net Sales $25,700 $48,750 --------- --------- --------- --------- Net Income $1,491 $2,840 --------- --------- --------- --------- Earnings per Share $0.22 $0.42 --------- --------- --------- --------- The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the acquisition taken place at the beginning of the fiscal period or the results that may occur in the future. Furthermore, the pro forma results do not give effect to cost savings or incremental costs which may occur as a result of the integration and consolidation of Recoil. The pro forma results include additional interest on borrowed funds and additional amortization of goodwill resulting from the acquisition. (6) INCOME TAXES Income taxes are provided using the estimated effective tax rates for the years ended December 31, 1996 and December 31, 1997. (7) INITIAL PUBLIC OFFERING OF COMMON STOCK In May 1997, the Company completed a public sale of 2.1 million shares of common stock at an offering price of $14.50 per share. The net proceeds approximated $27.6 million. Page 7 Form 10-Q - Kaynar Technologies Inc. Kaynar Technologies Inc. and Subsidiaries Managements' Discussion and Analysis Of Financial Condition and Results of Operations Forward-Looking Statements Certain statements contained in Management's Discussion and Analysis of Financial Condition and Results of Operation, particularly in the three paragraphs entitled "Liquidity and Capital Resources," and elsewhere in this quarterly report on Form 10-Q are forward-looking statements. Statements in this quarterly report on Form 10-Q which address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as expansion and growth of the Company's business and operations and other such matters are forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those identified as "Risk Factors" in the Company's Pre-Effective Amendment No. 6 to the Registration Statement on Form S-1 filed May 6, 1997. The foregoing should not be construed as an exhaustive list of all factors which could cause actual results to differ materially from those expressed in forward-looking statements made by the Company. Actual results may materially differ from the anticipated results described in these statements. Summary The following table sets forth certain items from the Company's Condensed Consolidated Statements of Income for the periods indicated and presents the results of operations as a percentage of net sales:
Quarter Ended Six Months Ended June 29, June 30, June 29, June 30, 1997 1996 1997 1996 -------- -------- -------- -------- Net sales 100.0% 100.0% 100.0% 100.0% Cost of sales 70.4% 74.0% 70.8% 73.8% -------- -------- -------- -------- Gross profit 29.6% 26.0% 29.2% 26.2% Selling, general and administrative expenses 13.6% 12.9% 13.6% 13.2% -------- -------- -------- -------- Operating income 16.0% 13.1% 15.6% 13.0% Interest expense, net 2.9% 3.6% 3.4% 3.8% Provision for income taxes 5.3% 3.8% 4.9% 3.7% -------- -------- -------- -------- Net income 7.8% 5.7% 7.3% 5.5% -------- -------- -------- -------- -------- -------- -------- --------
Quarter Ended June 29, 1997 Compared to Quarter Ended June 30, 1996 Net Sales. Net sales increased 61 percent or $14.1 million, to $37.3 million in the second quarter of 1997 from $23.2 million in the second quarter of 1996. This growth was primarily the result of increased customer demand, which occurred as commercial aircraft build rates increased. In addition, net sales growth was enhanced by the expansion of existing product lines, the development of variations of existing products and the introduction of new products. The Company's acquisition of Recoil accounted for approximately $3.3 million of the increase in net sales over the comparable quarter. Gross Profit. Gross profit improved from $6.1 million for the second quarter in 1996 to $11.0 million during the same period in 1997. As a percentage of sales, gross profit improved from 26.0 percent to 29.6 percent. This improvement in gross profit margin was primarily due to the increase in sales volume (which resulted in a greater absorption of fixed costs) and improved productivity. Page 8 Form 10-Q - Kaynar Technologies Inc. Selling, General and Administrative Expenses. Selling, general and administrative expenses of $5.1 million, were 70 percent higher than last year's similar period, and were up 0.7 percent as a percentage of sales. The $2.1 million increase in these expenses was attributable primarily to (i) additional employee costs needed to to support the increased sales volume and (ii) the selling, general and administrative expenses of Recoil, which due to the nature of its business, tends to have higher selling, general and administrative expenses as a percentage of net sales than the Company's other business units. Interest Expense. Interest expense increased 30 percent to $1.1 million, up from $846,000 for the same quarter in the preceding year, but decreased as a percentage of sales from 3.6 percent for the second quarter in 1996 compared to 2.9 percent for the second quarter in 1997. Interest expense was up in 1997 as a result of working capital requirements, capital expenditures and the Recoil acquisition. However, the interest expense was limited by the Company's prepayment of approximately $24.6 million of debt in the second quarter of 1997 with proceeds received from the Company's initial public offering. Net Income. Net income for the second quarter of 1997 increased to $2.9 million or 36 cents per share compared to $1.3 million or 19 cents per share for the same period in 1996. Six Months Ended June 29, 1997 Compared to the Six Months Ended June 30, 1996 Net Sales. Net sales increased 58.2 percent or $25.6 million, to $69.5 million in the first six months of 1997 from $43.9 million in same period of 1996. This growth was primarily the result of increased customer demand, which occurred as commercial aircraft build rates increased. In addition, net sales growth was enhanced by the expansion of existing product lines, the development of variations of existing products and the introduction of new products. The company's acquisition of Recoil and its purchase of the KELOX product line accounted for approximately $6.9 million of the increase in net sales over the six month period. Gross Profit. Gross profit improved from $11.5 million for the first six months in 1996 to $20.3 million during the same period in 1997. As a percentage of sales, gross profit improved from 26.2 percent to 29.2 percent. This improvement in gross profit margin was primarily due to the increase in sales volume (which resulted in a greater absorption of fixed costs) and improved productivity. Selling, General and Administrative Expenses. Selling, general and administrative expenses of $9.4 million, were 63 percent higher than last year's similar period, and were up 0.4 percent as a percentage of sales. The $3.6 million increase in these expenses was attributable primarily to (i) additional employee costs needed to to support the increased sales volume and (ii) the selling, general and administrative expenses of Recoil, which due to the nature of its business, tends to have higher selling, general and administrative expenses as a percentage of net sales than the Company's other business units. Interest Expense. Interest expense increased 35 percent to $2.3 million, up from $1.7 million for the same six months in the preceding year, but decreased as a percentage of sales from 3.8 percent for the first six months in 1996 compared to 3.4 percent for the first six months in 1997. Interest expense was up in 1997 as a result of working capital requirements, capital expenditures and the Recoil acquisition. However, the interest expense was limited by the Company's prepayment of approximately $24.6 million of debt in the second quarter of 1997 with proceeds received from the Company's initial public offering. Net Income. Net income for the first six months of 1997 increased to $5.1 million or 68 cents per share compared to $2.4 million or 36 cents per share for the same period in 1996. Page 9 Form 10-Q - Kaynar Technologies Inc. Liquidity and Capital Resources The Company generally relies upon internally generated cash flows and amounts that may be available under its Revolving Line of Credit to satisfy working capital needs and to fund capital expenditures. Cash provided by operations in the first six months was $1.8 million compared to cash used of $400,000 in the prior year. A higher net income and a decrease in the rate of investment in inventories, offset by a greater increase in accounts receivable and a decrease in the rate of increase in accounts payable were the primary reasons for the increase in cash provided by operations relative to the same period for the prior year. To support increased sales volume, improve productivity, and provide installation tooling for lease to customers, capital expenditures increased to $7.9 million in the first six months of 1997 as compared to $2.9 million in the same period of the preceding year. In May 1997, the Company received net proceeds of approximately $27.6 million from the sale of 2.1 million shares of common stock, from its initial public offering. The Company believes that the net proceeds from the initial public offering (of which $24.6 million was used to pay down debt), internally generated cash flow and amounts that may be available under the revolving line of credit, which was increased from a potential maximum of $15 million to $21 million, will provide adequate funds to meet its working capital needs, planned capital expenditures and debt service obligations. However, the Company's ability to fund its operations, make planned capital expenditures and make scheduled payments on, and refinance its indebtedness, depends on its future operating performance and cash flow. Future operating performance and cash flow are, in turn, subject to prevailing economic conditions and to financial, business and other factors affecting the Company, some of which are beyond the Company's control. Page 10 PART II--OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits Number Description ------ ------------ 2.2 Recapitalization Agreement with General Electric Capital Corporation ("GECC"), dated May 5, 1997. 10.2(c) Amendment and Limited Waiver with GECC, dated April 30, 1997. 10.2(d) Third Amendment and Limited Waiver with GECC, dated June 25, 1997. 10.6(b) Amendment to Lease with West L.A. Properties dated August 21, 1996. 27 Financial Data Schedule. 99.6 Indemnification and Contribution Agreement with GECC, dated May 5, 1997. (b) Reports of Form 8-K. No reports on Form 8-K were filed during the quarter covered by this report. SIGNATURES 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. KAYNAR TECHNOLOGIES INC. /s/ D.A. Werner Date: August 5, 1997 ---------------------------- By: David A. Werner Title: Executive Vice President /s/ Robert M. Nelson Date: August 5, 1997 ---------------------------- By: Robert M. Nelson Title: Controller (Chief Accounting Officer) S-1 EXHIBIT INDEX Number Description ------ ------------ 2.2 Recapitalization Agreement with General Electric Capital Corporation ("GECC"), dated May 5, 1997. 10.2(c) Amendment and Limited Waiver with GECC, dated April 30, 1997. 10.2(d) Third Amendment and Limited Waiver with GECC, dated June 25, 1997. 10.6(b) Amendment to Lease with West L.A. Properties dated August 21, 1996. 27 Financial Data Schedule. 99.6 Indemnification and Contribution Agreement with GECC, dated May 5, 1997. EX-2.2 2 EXHIBIT 2.2 RECAPITALIZATION AGREEMENT THIS RECAPITALIZATION AGREEMENT (this "Agreement") dated as of May 5, 1997 among Kaynar Holdings Inc. ("Parent"), Kaynar Technologies Inc. ("Opco") and General Electric Capital Corporation (the "Preferred Stockholder") relates to (i) the Certificate of Designation of Series A Convertible Preferred Stock of Parent, (ii) the Certificate of Designation of Series B Convertible Preferred Stock of Parent and (iii) the PIK Dividend Note Agreement dated as of January 3, 1994 (the "PIK Dividend Note Agreement") among Parent, the Preferred Stockholder and the other Holders (as defined therein). Unless otherwise defined herein, capitalized terms are used herein with the meanings ascribed to them in the PIK Dividend Note Agreement. RECITALS WHEREAS, Parent and Opco have proposed a recapitalization pursuant to which (A) the Certificate of Incorporation and Bylaws of Parent shall be amended and restated in the forms attached hereto as Exhibits 1 and 2, respectively, (B) each outstanding share of Common Stock shall be split into 68 shares of Common Stock, (C) each outstanding share of Series A Preferred Stock shall be exchanged for 9.953 shares of Common Stock and 58.057 shares of Series C Convertible Preferred Stock, par value $0.01 per share, having the terms set forth in the Restated Certificate of Incorporation referred to herein (the "Series C Preferred Stock") and (D) each outstanding share of Series B Preferred Stock shall be exchanged for 68 shares of Series C Convertible Preferred Stock (the actions described in clauses (A) through (D) are referred to herein as the "Recapitalization"); WHEREAS, Parent and Opco have further proposed a merger pursuant to which (A) Opco shall merge with and into Parent on the terms set forth in the Agreement and Plan of Merger attached hereto as Exhibit 4, (B) Parent, as the surviving entity, shall assume all liabilities of Opco and (C) Parent shall change its name to "Kaynar Technologies Inc." (the actions described in clauses (A) through (C) are referred to herein as the "Merger"; the merged entities are referred to herein as "KTI"); and WHEREAS, Parent and Opco have further proposed that KTI sell in a public offering up to 2,100,000 shares of Common Stock (the "Offering"), as described in the Prospectus dated April 11, 1997 filed with the Securities and Exchange Commission as part of Registration Statement No. 333-22345 (the "Registration Statement"); NOW, THEREFORE, in consideration of the foregoing premises (all of which are incorporated herein as a part of this Agreement) and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Preferred Stockholder agrees as follows: 1. CONSENT TO RECAPITALIZATION, MERGER AND OFFERING. Subject to the terms and conditions set forth herein, the Preferred Stockholder hereby, as of the Effective Date, consents to the Recapitalization, the Merger and the Offering. 2. WAIVER OF CERTAIN COVENANTS AND NOTICE REQUIREMENTS. Subject to the terms and conditions set forth herein, the Preferred Stockholder agrees to waive: (a) The provisions of Section 8.11 of the PIK Dividend Note Agreement in respect (and solely in respect) of the Offering; (b) The provisions of Sections 7.01 and 8.09 of the PIK Dividend Note Agreement and Section 4 of each of the Certificates of Designation in respect (and solely in respect) of the Merger; and (c) The provisions of Section 8.12 of the PIK Dividend Note Agreement in respect (and solely in respect) of the Recapitalization. 3. EFFECTIVE DATE. This Agreement shall become effective upon the date (the "Effective Date"), which shall be no later than May 30, 1997, by which all of the following conditions shall have been simultaneously satisfied: (a) the Board of Directors of Parent shall have approved and authorized the Recapitalization, the Merger and the Offering and adopted (i) the Amended and Restated Certificate of Incorporation of Parent in the form of Exhibit 1 hereto (the "Restated Certificate of Incorporation"), (ii) the Amended and Restated Bylaws of Parent in the form of Exhibit 2 hereto, (iii) the Certificate of Merger in the form of Exhibit 3 hereto (the "Merger Certificate"), (iv) the Agreement and Plan of Merger in the form of Exhibit 4 hereto (the "Merger Agreement"), (v) the Stockholders Agreement in the form of Exhibit 5 hereto (the "Stockholders Agreement"), (vi) the 1997 Stock Incentive Plan in the form of Exhibit 6 hereto, (vii) the forms of employment agreements attached as Exhibit 7 hereto, (viii) the Underwriting Agreement in the form of Exhibit 8 hereto (the "Underwriting Agreement") and (ix) the Indemnification and Contribution Agreement in the form of Exhibit 9 hereto (the "Indemnification Agreement"); (b) the Management Investors shall have approved and authorized the Recapitalization, the Merger and the Offering and each of the documents referred to in clauses (i), (iv) and (vi) of Section 3(a) hereof; (c) the Board of Directors of Opco shall have approved and authorized the Merger and adopted the Merger Agreement; (d) the Management Investors shall have executed and delivered to the Preferred Stockholder the Stockholders Agreement; (e) the two nominees of the Preferred Stockholder shall have been elected to the Board of Directors of Parent and shall have been appointed to each of the Audit and Compensation Committees thereof; (f) Parent and Lehman Brothers Inc. (as representative of the underwriters) shall have executed and delivered to the Preferred Stockholder counterparts of the Underwriting Agreement; (g) Parent shall have executed and delivered the Indemnification Agreement to the Preferred Stockholder; and (h) Parent shall have delivered to the Preferred Stockholder a certificate of an executive officer of KTI stating that the conditions described in this Section 3 have been satisfied. 4. CONDITIONS SUBSEQUENT. The consents set forth in Section 1 hereof and the waivers set forth in Section 2 hereof shall cease to be effective unless the First Delivery Date (as defined in the Underwriting Agreement) shall have occurred on or before May 30, 1997 and the following shall have occurred on or before the First Delivery Date: (a) the Preferred Stockholder shall have received payment in full in cash of all Obligations then due and payable under the PIK Dividend Note Agreement and the Notes; (b) the Restated Certificate of Incorporation and the Merger Agreement shall have been executed by each of the parties thereto and filed with the Secretary of State of the State of Delaware, and the Merger shall be effective; (c) Parent shall have entered into employment agreements in the form of Exhibit 7 hereto with each of the Management Investors (other than Joseph F. Blomberg) who is an employee of Parent; (d) O'Melveny & Myers LLP, counsel to Parent, Opco and KTI, shall have delivered to the Preferred Stockholder an opinion in form and substance satisfactory to the Preferred Stockholder and its counsel stating that (i) the Preferred Stockholder is entitled to rely on the opinion delivered pursuant to Section 9(e) of the Underwriting Agreement as though the opinion were addressed to the Preferred Stockholder, (ii) the Stockholders Agreement has been duly authorized by KTI and is legal, valid, binding and enforceable against KTI in accordance with its terms and (iii) the shares of Series C Preferred Stock delivered to the Preferred Stockholder have been duly authorized and validly issued and are fully paid and non-assessable; (e) Arthur Andersen LLP shall have delivered to the Preferred Stockholder a letter in form and substance satisfactory to the Preferred Stockholder and its counsel regarding procedures performed by Arthur Andersen LLP in connection with the preparation of the Registration Statement; and (f) all of the documents and agreements referred to in Section 3(a) shall be in full force and effect, and there shall not have been any amendments, modifications or supplements thereto which have not been approved in writing by the Preferred Stockholder. 5. COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. 6. GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, Opco, Parent and the Preferred Stockholder have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written. KAYNAR HOLDINGS INC. By: /s/ David A. Werner ---------------------------- Name: David A. Werner Title: Vice President KAYNAR TECHNOLOGIES INC. By: /s/ David A. Werner ---------------------------- Name: David A. Werner Title: Vice President GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Peter C. Keenoy ---------------------------- Name: Peter C. Keenoy Title: Authorized Signatory EXHIBITS Exhibit 1 - Amended and Restated Certificate of Incorporation of Parent Exhibit 2 - Amended and Restated Bylaws of Parent Exhibit 3 - Certificate of Merger Exhibit 4 - Agreement and Plan of Merger between Opco and Parent Exhibit 5 - Stockholders Agreement among KTI, the Preferred Stockholder and the Management Investors Exhibit 6 - 1997 Stock Incentive Plan of Parent Exhibit 7 - Forms of Employment Agreements Exhibit 8 - Underwriting Agreement among KTI, the Preferred Stockholder and the underwriters named therein Exhibit 9 - Indemnification and Contribution Agreement between KTI and the Preferred Stockholder EX-10.2(C) 3 EXHIBIT 10.2(C) AMENDMENT AND LIMITED WAIVER THIS AMENDMENT AND LIMITED WAIVER (this "Waiver"), dated as of April 30, 1997 among Kaynar Holdings Inc. ("Parent"), Kaynar Technologies Inc. ("Opco") and General Electric Capital Corporation (the "Lender") relates to: (i) the Term Loan Agreement dated as of January 3, 1994 between Parent and the Lender, as amended and restated as of August 12, 1996 (as so amended and restated, the "Parent Loan Agreement"); (ii) the Credit Agreement dated as of January 3, 1994 between Opco and the Lender, as amended and restated as of August 12, 1996 and as further amended as of December 17, 1996 (as so amended and restated, the "Opco Credit Agreement"); (iii) the Pledge Agreement dated as of January 3, 1994 executed by Parent in favor of the Lender with respect to the capital stock of Kaynar Technologies Inc. ("Opco"), as supplemented as of August 12, 1996 (as so supplemented, the "Parent Pledge Agreement"); and (iv) the Security Agreement dated as of January 3, 1994 executed by Opco in favor of the Lender, pursuant to which Opco grants Lender a first priority security interest in substantially all of Opco's personal property, as amended and supplemented as of August 12, 1996 (as so amended and supplemented, the "Security Agreement"). Unless otherwise defined herein, capitalized terms are used herein with the meanings ascribed to them in the Parent Loan Agreement. RECITALS WHEREAS, Parent and Opco have requested the Lender's consent to the following transactions: (A) the amendment and restatement of the Certificate of Incorporation and By-Laws of Parent to provide, among other things, for (1) a stock split pursuant to which each share of Common Stock of Parent will be split into 68 shares of Common Stock, (2) the merger exchange of each share of Series A Preferred Stock into 9.953 shares of Common Stock and 58.047 shares of Series C Convertible Preferred Stock, par value $0.01 per share, of Parent (the "Series C Preferred Stock") and (3) the merger exchange of each share of Series B Preferred Stock for 68 shares of Series C Preferred Stock (collectively, the "Recapitalization"); (B) the merger of Opco with and into Parent, with Parent, as the surviving entity, assuming all liabilities of Opco and being renamed "Kaynar Technologies Inc." (the "Merger"; the merged entities are referred to herein as "KTI"); and (C) the sale by KTI in a public offering of up to 2,100,000 shares of Common Stock (the "Offering"), with the proceeds thereof to be applied, among other things, to repay indebtedness under the Parent Loan Agreement and the Opco Credit Agreement, as described herein and in the Prospectus dated April 11, 1997 (the "Prospectus"). NOW, THEREFORE, in consideration of the foregoing premises (all of which are incorporated herein as a part of this Waiver) and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Lender agrees as follows: 1. LIMITED WAIVER UNDER PARENT LOAN AGREEMENT, OPCO CREDIT AGREEMENT AND SECURITY AGREEMENT. Subject to the terms and conditions set forth herein, the Lender agrees to waive: (a) The provisions of Sections 3.01(b)(i)(C) and 8.16 of the Parent Loan Agreement and Section 3.01(b)(iii) of the Opco Credit Agreement in respect (and solely in respect) of the application of proceeds of the Offering as set forth herein and in the Prospectus; (b) The provisions of Sections 7.01 and 8.09 of each of the Parent Loan Agreement and the Opco Credit Agreement and Section 4(d) of the Security Agreement in respect (and solely in respect) of the Merger; and (c) The provisions of Section 8.13 of each of the Parent Loan Agreement and the Opco Credit Agreement in respect (and solely in respect) of the Recapitalization. 2. AMENDMENTS TO PARENT LOAN AGREEMENT AND OPCO CREDIT AGREEMENT. Subject to the terms and conditions set forth herein, the Parent Loan Agreement and the Opco Credit Agreement 2 are hereby amended as of the Waiver Effective Date (as defined in Section 4(a) hereof) as follows: (a) The definitions of "Preferred Stock" and "Shareholder Agreement" in Section 1.01 of the Parent Loan Agreement shall be amended and restated in their entirety to read as follows: "PREFERRED STOCK" means the Series C Preferred Stock. "SHAREHOLDER AGREEMENT" means that certain Stockholders Agreement among the Borrower, the Lender and the Management Investors in substantially the form delivered to the Lender pursuant to Section 4(a) of the Waiver, as the same may be amended, supplemented or modified from time to time. (b) The following new definition of "Series C Preferred Stock" shall be added to Section 1.01 of the Parent Loan Agreement in proper alphabetical order: "SERIES C PREFERRED STOCK" means the Series C Preferred Stock, par value $0.01 per share, of the Borrower. (c) The following new definitions of "Stock Incentive Plan" and "Waiver" shall be added to Sections 1.01 of both the Parent Loan Agreement and the Opco Credit Agreement in proper alphabetical order: "STOCK INCENTIVE PLAN" means the 1997 Stock Incentive Plan of the Borrower in the form delivered to the Lender pursuant to Section 4(a) of the Waiver. "WAIVER" means the Amendment and Limited Waiver dated as of April 30, 1997 among the Borrower, Opco and the Lender. (d) Each reference in the Parent Loan Agreement and the other Loan Documents to "Kaynar Holdings Inc.", "Kaynar Technologies Inc.", "Borrower" and "Opco" shall be deemed to be a reference to KTI. (e) Each reference in the Opco Credit Agreement and the other Opco Loan Documents to "Kaynar Holdings Inc.", "Kaynar Technologies Inc.", "Borrower" and "Parent" shall be deemed to be a reference to KTI. (f) Schedule 5.01-D of each of the Parent Loan Agreement and the Opco Credit Agreement shall be replaced by 3 the new Schedule 5.01-D, as delivered to the Lender pursuant to Section 5(d) hereof. (g) Clauses (viii), (ix) and (xi) of Section 8.01 of the Parent Loan Agreement shall be replaced by the words "[Intentionally omitted}". (h) A new clause (v) shall be added to Section 8.05 of each of the Parent Loan Agreement and the Opco Credit Agreement, to read as follows: (v) Accommodation Obligations of the Borrower to the Underwriters and the Selling Stockholder under (and, in each case, as defined in) the Underwriting Agreement in the form delivered to the Lender pursuant to Section 4(a) of the Waiver. (i) Clauses (ii), (iii) and (iv) of Section 8.06 of the Parent Loan Agreement and clause (ii) of Section 8.06 of the Opco Credit Agreement shall be deleted and replaced with a new clause (ii), to read as follows: (ii) the grant of Awards to Eligible Persons under (and, in each case, as defined in) the Stock Incentive Plan. (j) A new clause (vi) shall be added to the last sentence of Section 8.08 of each of the Parent Loan Agreement and the Opco Credit Agreement to read as follows: or (vi) the grant of Awards to Eligible Persons under (and, in each case, as defined in) the Stock Incentive Plan, PROVIDED that no Event of Default or Potential Event of Default results therefrom. (k) Section 8.12 of each of the Parent Loan Agreement and the Opco Credit Agreement shall be amended and restated in its entirety to read as follows: 8.12 ISSUANCE OF CAPITAL STOCK. Neither the Borrower nor any of its Subsidiaries shall issue any Capital Stock to any Person except for (i) the Capital Stock issued by such Persons as of the Amendment and Restatement Effective Date, (ii) Common Stock issued by the Borrower upon conversion of shares of Preferred Stock in accordance with the certificate of designation for the Series C Preferred Stock, (iii) Common Stock issued by the Borrower pursuant to the Offering (as defined in the Waiver) and (iv) Common Stock issued by the Borrower upon the exercise of Awards granted to 4 Eligible Persons under (and, in each case, as defined in) the Stock Incentive Plan. 3. TERMINATION OF PARENT PLEDGE AGREEMENT; RELEASE OF PLEDGED COLLATERAL. On the date on which the Merger Agreement is filed with the Secretary of State of the State of Delaware and the Merger becomes effective, the Parent Pledge Agreement shall be terminated, and the Lender shall deliver to KTI the Pledged Collateral (as defined in the Parent Pledge Agreement). 4. WAIVER EFFECTIVE DATE. This Waiver shall become effective upon the date (the "Waiver Effective Date") on or before May 30, 1997 on which the following conditions shall have been simultaneously satisfied: (a) the Lender shall have received the following, each dated as of the Waiver Effective Date and each in form and substance satisfactory to the Lender: (i) counterparts of this Waiver signed by Opco and Parent; (ii) a certificate of the chief financial officer of Opco and Parent certifying that all conditions precedent to the effectiveness of this Waiver have been satisfied and that, after giving effect to this Waiver and the transactions permitted herein, no Event of Default or Potential Event of Default has occurred or is continuing; (iii) copies, certified as to accuracy and completeness by the Secretary of Parent, of (A) the Amended and Restated Certificate of Incorporation of KTI (the "Restated Certificate of Incorporation"), (B) the Amended and Restated By-Laws of KTI, (C) the Shareholders Agreement, (D) the Stock Incentive Plan, (E) the Underwriting Agreement with respect to the Offering, (F) the Agreement and Plan of Merger with respect to the Merger and (F) the Certificate of Merger with respect to the Merger (the "Merger Certificate"); and (iv) a certificate of the Secretary of Opco and Parent certifying the resolutions of the board of directors of Opco and Parent approving and authorizing the Recapitalization, the Merger and the Offering and the execution, delivery and performance of this Waiver; (b) after giving effect to this Waiver, no Event of Default or Potential Event of Default under either the Parent Loan Agreement or the Opco Credit Agreement shall 5 have occurred and be continuing, and the representations and warranties in the Loan Documents and the Opco Loan Documents shall be true and correct in all material respects on and as of the Waiver Effective Date, as if then made (other than representations and warranties which expressly speak as of a different date, which shall be true and correct in all material respects as of that date). 5. CONDITIONS SUBSEQUENT. The waivers set forth in Section 1 hereof and the amendments set forth in Section 2 hereof shall cease to be effective unless the Offering shall have been consummated on or before May 30, 1997 and the following shall have occurred on or before the date on which the Offering is consummated: (a) the Lender shall have received payment in full in cash of (i) all Obligations then due and payable under the Parent Loan Agreement, (ii) Indebtedness in the principal amount of $2,000,000 under the RCL Loan Agreement and (iii) at least $2,000,000 in principal amount of the Revolving Loan (as defined in the Opco Credit Agreement); (b) the Preferred Stockholder shall have received payment in full in cash of all Obligations then due and payable under the PIK Dividend Note Agreement and the Notes (as defined in the PIK Dividend Note Agreement); (c) the Restated Certificate of Incorporation and the Merger Agreement shall have been filed with the Secretary of State of the State of Delaware, and the Merger shall be effective; and (d) the Lender shall have received the following documents, each in form and substance satisfactory to the Lender and its counsel: (i) an opinion of O'Melveny & Myers LLP, counsel to Parent, Opco and KTI, with respect to the Merger, the Recapitalization, the Offering and this Waiver. (ii) a reaffirmation and assumption of the Loan Documents and the Opco Loan Documents (as amended hereby) executed by KTI; (iii) a revised Schedule 5.01-D to each of the Parent Loan Agreement and the Opco Credit Agreement; and (iv) a certificate of the Secretary of KTI certifying the names and true signatures of the 6 incumbent officers of KTI authorized to sign the Loan Documents and the Opco Loan Documents. 6. REPRESENTATIONS AND WARRANTIES. (a) Parent hereby represents and warrants to the Lender that, as of the Waiver Effective Date and after giving effect to this Waiver: (i) all of the representations and warranties of Parent contained in the Parent Loan Agreement and the other Loan Documents are true and correct in all material respects on and as of the Waiver Effective Date, as if then made (other than representations and warranties which expressly speak as of a different date, which shall be true and correct in all material respects as of that date); and (ii) no Potential Event of Default or Event of Default has occurred or is continuing or will result after giving effect to this Waiver. (b) Opco hereby represents and warrants to the Lender that, as of the Waiver Effective Date and after giving effect to this Waiver: (i) all of the representations and warranties of Opco contained in the Opco Credit Agreement and the other Opco Loan Documents are true and correct in all material respects on and as of the Waiver Effective Date, as if then made (other than representations and warranties which expressly speak as of a different date, which shall be true and correct in all material respects as of that date); and (ii) no Potential Event of Default or Event of Default (in each case, as defined in the Opco Credit Agreement) has occurred or is continuing or will result after giving effect to this Waiver. 7. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a) Upon the Waiver Effective Date, each reference in the Parent Loan Agreement and the Opco Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import, and each reference in the other Loan Documents to the Credit Agreement, shall mean and be a reference to the Parent Loan Agreement and the Opco Credit Agreement, respectively, as amended hereby. (b) This Waiver shall be limited solely to the matters expressly set forth herein and shall not (i) constitute an amendment of any other term or condition of the Parent Loan 7 Agreement, the Opco Credit Agreement or any other Loan Document or Opco Loan Document, (ii) prejudice any right or rights which the Lender or Lender Parties may now have or may have in the future under or in connection with the Parent Loan Agreement, the Opco Credit Agreement or any other Loan Document or Opco Loan Document, (iii) require the Lender to agree to a similar transaction on a future occasion or (iv) create any rights herein to another Person or other beneficiary or otherwise, except to the extent specifically provided herein. (c) Except to the extent specifically consented to herein, the respective provisions of the Parent Loan Agreement, the Opco Credit Agreement and the other Loan Documents and Opco Loan Documents shall not be amended, modified, impaired or otherwise affected hereby, and such documents and the Obligations under each of them are hereby confirmed in full force and effect. 8. MISCELLANEOUS. This Waiver is a Loan Document and an Opco Loan Document. The headings herein are for convenience of reference only and shall not alter or otherwise affect the meaning hereof. 9. COUNTERPARTS. This Waiver may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. 10. GOVERNING LAW. THIS WAIVER SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. 8 IN WITNESS WHEREOF, Opco, Parent and the Lender have caused this Waiver to be executed by their respective officers thereunto duly authorized as of the date first above written. KAYNAR HOLDINGS INC. By: /s/ David A. Werner ------------------------------ Name: David A. Werner Title: Vice President KAYNAR TECHNOLOGIES INC. By: /s/ David A. Werner ------------------------------ Name: David A. Werner Title: Vice President GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Peter C. Keenoy ------------------------------ Name: Peter C. Keenoy Title: Authorized Signatory 9 EX-10.2(D) 4 EXHIBIT 10.2(D) [EXECUTION COPY] THIRD AMENDMENT AND LIMITED WAIVER TO AMENDED AND RESTATED CREDIT AGREEMENT THIS THIRD AMENDMENT AND LIMITED WAIVER TO AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 25, 1997 (this "THIRD AMENDMENT") is entered into between Kaynar Technologies Inc., a Delaware corporation (the "BORROWER") and General Electric Capital Corporation, a New York corporation (the "LENDER") and relates to that certain Amended and Restated Credit Agreement dated as of August 12, 1996, between the Borrower and the Lender (as previously amended as of December 17, 1996 and April 30, 1997 and as further supplemented or otherwise modified from time to time through the date hereof, the "CREDIT AGREEMENT"). W I T N E S S E T H: WHEREAS, the Borrower and the Lender have entered into the Credit Agreement; WHEREAS, the Borrower has requested that the Lender amend the Credit Agreement (i) to revise the amortization schedule for the repayment of the Term Loan (after giving effect to a $6,000,000 prepayment thereof made in connection herewith), (ii) to increase the Revolving Credit Commitment from $15,000,000 to $21,000,000, (iii) to include 50% of the value of "Eligible Inventory" (as defined below) in the calculation of the Borrowing Base, (iv) to increase the maximum amount of permitted Capital Expenditures for Fiscal Year 1997 to $13,000,000 and (v) to effect other amendments, all as more fully described herein; and WHEREAS, the Borrower has also requested that the Lender waive certain provisions of the Credit Agreement and the Defaults and Events of Default resulting therefrom, as more fully described herein; NOW, THEREFORE, in consideration of the above premises, the Borrower and the Lender agree as follows: 1. DEFINITIONS. Capitalized terms used and not otherwise defined herein have the meanings assigned to them in the Credit Agreement. 2. AMENDMENTS TO THE CREDIT AGREEMENT. Upon the "Effective Date" (as defined in SECTION 5 below), the Credit Agreement is hereby amended as follows: 2.1 AMENDMENTS TO SECTION 1.01. Section 1.01 of the Credit Agreement is amended as follows: (a) The definition of "Borrowing Base" is hereby amended to amend and restate clause (b) thereof to read as follows: (b) an amount equal to 85% of Eligible Accounts, PLUS 50% of the book value of Borrower's Eligible Inventory valued on a first-in, first-out basis (at the lower of cost or market), MINUS reserves as the Lender may deem necessary or appropriate in its reasonable credit judgment. (b) The definition of "Cash Equivalents" is hereby amended and restated in its entirety to read as follows: "CASH EQUIVALENTS" means (i) marketable direct obligations issued or unconditionally guaranteed by the United States government and backed by the full faith and credit of the United States government; (ii) shares of an open-end investment company registered pursuant to the Investment Company Act of 1940, as amended, and operated as a money-market fund in accordance with Rule 2a-7 issued thereunder; and (iii) domestic and eurodollar certificates of deposit and time deposits, bankers' acceptances and floating rate certificates of deposit issued by any commercial bank organized under the laws of the United States, any state thereof, the District of Columbia, any foreign bank, or its branches or agencies (fully protected against currency fluctuations), which, at the time of acquisition, are rated A-1 (or better) by Standard & Poor's Corporation or Prime-1 (or better) by Moody's Investors Services, Inc.; PROVIDED, that the maturities of such Cash Equivalents shall not exceed one year. (c) The following definition of "Eligible Inventory" is added in proper alphabetical order: "ELIGIBLE INVENTORY" means that Inventory of the Borrower that strictly complies with all of the Borrower's representations and warranties to the Lender with respect to Inventory, and that are and at all times shall continue to be acceptable to the Lender in all respects, PROVIDED, HOWEVER, that standards of eligibility may be fixed and revised from time to time by the Lender in its reasonable credit judgment. Without limiting the foregoing, the Lender does not 2 CURRENTLY intend to treat the following as Eligible Inventory: (a) Inventory that is not owned by Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure Borrower's performance with respect to that Inventory), except the Liens in favor of Lender; (b) Inventory that is (i) not located on premises owned or leased by Borrower in the District of Columbia or any state of the United States of America or (ii) is stored with a bailee, warehouseman or similar Person, unless Lender has given its prior consent thereto and unless (x) a satisfactory bailee letter or landlord waiver has been delivered to Lender, or (y) reserves satisfactory to Lender have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (c) Inventory that is placed on consignment, is in transit or is otherwise not located on premises owned or leased by Borrower; (d) Inventory that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to Lender; (e) Inventory that in Lender's reasonable determination is excess, obsolete, unsalable, shopworn, seconds, damaged or unfit for sale; (f) Inventory that consists of items other than (i) finished goods or (ii) raw materials consisting of sheet metal, wire coil and bar stock; (g) Inventory that consists of goods which have been returned by the buyer for reason of defectiveness or are of a type which cannot be resold at the same price; (h) Inventory that is not of a type held for sale in the ordinary course of Borrower's business; 3 (i) Inventory as to which Lender's Lien is not a first priority perfected Lien; (j) Inventory which consists of Contaminants or goods that can be transported or sold only with licenses that are not readily available; (k) Inventory that is not covered by casualty insurance acceptable to Lender; (l) Inventory with respect to which all or a portion of the value thereof is attributable to "freight-in" charges, to the extent of such attributable value; or (m) Inventory that is otherwise unacceptable to Lender in its reasonable credit judgment. (d) The following definition of "New Third Amendment" is added in proper alphabetical order: "NEW THIRD AMENDMENT" means the Third Amendment and Limited Waiver to Amended and Restated Credit Agreement dated as of June 25, 1997, between the Borrower and the Lender. (e) The following definition of "New Third Amendment Effective Date" is added in proper alphabetical order: "NEW THIRD AMENDMENT EFFECTIVE DATE" means the "Effective Date" under (and as defined in) the New Third Amendment. (f) The definition of "Revolving Credit Commitment" is hereby amended and restated in its entirety to read as follows: "REVOLVING CREDIT COMMITMENT" means the obligation of the Lender to make Revolving Loans and to issue, or cause to be issued, Letters of Credit pursuant to the terms and conditions of this Agreement (and, for the applicable period, the Existing Credit Agreement), in an aggregate amount (including all Letter of Credit Obligations and the principal amount of all Revolving Loans) which shall not exceed (i) from the Initial Closing Date through and including December 31, 1994, $6,500,000, (ii) from January 1, 1995 until the Third Amendment Effective Date, $5,000,000, (iii) from the Third Amendment Effective Date until the New 4 First Amendment Effective Date, $9,500,000, (iv) from the New First Amendment Effective Date until the New Third Amendment Effective Date, $15,000,000, and (v) from the New Third Amendment Effective Date until the Revolving Credit Termination Date, $21,000,0000, as permanently reduced from time to time pursuant to SECTION 3.01. 2.2 AMENDMENTS TO SECTION 2.01(d)(i). Section 2.01(d)(i) of the Credit Agreement is hereby amended to amend and restate the amortization table set forth therein as follows: PAYMENT DATE PRINCIPAL INSTALLMENT July 1, 1997 $ 100,000 October 1, 1997 $ 100,000 January 1, 1998 $ 100,000 April 1, 1998 $ 100,000 July 1, 1998 $ 100,000 October 1, 1998 $ 100,000 2.3 AMENDMENT TO SECTION 2.02(e)(i). Section 2.02(e)(i) is hereby amended by deleting the second and third sentences thereof in their entirety and substituting the following sentences in lieu thereof: On the Third Amendment Effective Date, the Borrower executed and delivered to the Lender a substitute promissory note in the form of EXHIBIT J attached hereto and made a part hereof, evidencing the then existing Revolving Credit Commitment. On the New First Amendment Effective Date, the Borrower executed and delivered to the Lender a second substitute promissory note in the form of EXHIBIT J-A attached hereto and made a part hereof, evidencing the then existing Revolving Credit Commitment. On the New Third Amendment Effective Date, the Borrower shall execute and deliver to the Lender a third substitute promissory note, in substantially the form of EXHIBIT J-B attached hereto and made a part hereof, evidencing the Revolving Loans and the Revolving Credit Commitment (the "Revolving Credit Note"). 2.4 AMENDMENT TO SECTION 5.01. Section 5.01 of the Credit Agreement is hereby amended by adding the following representation and warranty as subsection (bb) thereof: (bb) ELIGIBLE INVENTORY. From and after the New Third Amendment Effective Date, all Eligible Inventory is, as of the date as of which any Revolving 5 Loan is made or requested or any Letter of Credit is issued hereunder or a Borrowing Base Certificate is delivered, is of good and merchantable quality, free from material defects. 2.5 AMENDMENTS TO SECTION 8.01. Section 8.01 of the Credit Agreement is hereby amended as follows: (a) to delete the word "and" at the end of clause (x) thereof in its entirety; (b) to delete the period (".") at the end of clause (xi) thereof in its entirety and to substitute in lieu thereof "; and"; and (c) to add the following new clause (xii): (xii) Indebtedness arising from the intercompany loan from the Borrower to RCL of $2,000,000 as evidenced by the promissory note dated as of May 9, 1997, PROVIDED that such promissory note has been delivered to the Lender pursuant to the Security Agreement, together with an endorsement in blank relating thereto. 2.6 AMENDMENTS TO SECTION 8.04. Section 8.04 of the Credit Agreement is hereby amended: (a) to delete the reference to "SECTION 8.01(vii)" in clause (vi) thereof in its entirety and to substitute in lieu thereof "SECTIONS 8.01(vii) AND (xii)". (b) to delete the reference to "$600,000" in clause (viii) thereof in its entirety and to substitute in lieu thereof "$1,500,000". 2.7 AMENDMENT TO SECTION 9.05. Section 9.05 of the Credit Agreement is hereby amended by deleting in its entirety the reference to "$7,500,000" as the Maximum Amount for Fiscal Year 1997 and inserting in lieu thereof "$13,000,000". 2.8 AMENDMENT TO SECTION 11.06(b). Section 11.06(b) of the Credit Agreement is hereby amended by deleting the address of the Borrower and substituting the following in lieu thereof: Kaynar Technologies Inc. 500 North State College Boulevard Orange, California 92868 Attention: David A. Werner 6 Telecopier No. (714) 712-4909 2.9 AMENDMENTS TO EXHIBITS. A new Exhibit J-B is hereby added to the Credit Agreement in the form of ANNEX A attached hereto and made a part hereof. 3. LIMITED WAIVER. As of the Effective Date, the Lender hereby waives (a) the provisions of Section 3.01(b)(ii) of the Credit Agreement in respect of (and solely in respect of) the requirement that the Borrower make a mandatory prepayment under such Section based on the amount of Excess Cash Flow for Fiscal year 1996 and any Default or Event of Default under Section 10.01(a) of the Credit Agreement resulting from the Borrower's failure to make such prepayment within the time period specified in Section 3.01(b)(ii) of the Credit Agreement, (b) the provisions of Section 8.01 of the Credit Agreement in respect of (and solely in respect of) the Borrower's having made a loan to RCL in a principal amount of $2,000,000 evidenced by the promissory note dated as of May 9, 1997 and any Default or Event of Default under Section 10.01(b) of the Credit Agreement resulting therefrom,(c) the provisions of Section 8.04 of the Credit Agreement in respect of (and solely in respect of) the Borrower's having Investments, funded by proceeds from its initial public offering, in a money market mutual fund, and any Default or Event of Default under Section 10.01(b) of the Credit Agreement resulting therefrom and (d) the Defaults and Events of Default under Section 10.01(e) of the Credit Agreement resulting from "Defaults" and "Events of Default" under (and as defined in) the RCL Loan Agreement, as set forth in the waiver letter of even date herewith from the Lender to RCL. 4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and warrants to the Lender that, as of the Effective Date and after giving effect to this Third Amendment: (a) All of the representations and warranties of the Borrower contained in this Third Amendment, the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the Effective Date, as if then made (other than representations and warranties which expressly speak as of a different date, which shall be true and correct in all material respects as of that date); (b) No Potential Event of Default or Event of Default has occurred or is continuing or will result after giving effect to this Third Amendment; and (c) The Borrower has not voluntarily, by operation of law or otherwise, assigned, conveyed, transferred or encumbered, either directly or indirectly, in whole or in 7 part, any right to or interest in any of the "Released Claims" (as defined in SECTION 6 below) purported to be released by this Third Amendment. 5. EFFECTIVE DATE. This Third Amendment shall become effective as of the date first written above (the "EFFECTIVE DATE") upon the satisfaction of each of the following conditions: (a) the Lender shall have received each of the following documents, in each case in form and substance satisfactory to the Lender: (i) counterparts hereof executed by the Borrower and the Lender; (ii) a Revolving Credit Note substantially in the form of EXHIBIT J-B to the Credit Agreement (as added by this Third Amendment), duly executed by the Borrower; (iii) a certificate of the chief financial officer of the Borrower certifying that all conditions precedent to the effectiveness of this Third Amendment have been satisfied; (iv) a certificate of the Secretary or Assistant Secretary of the Borrower dated the Effective Date certifying (A) the names and true signatures of the incumbent officers of the Borrower authorized to sign this Third Amendment and the other Transaction Documents executed in connection with this Third Amendment to which it is a party, (B) that the By-laws of the Borrower have not been amended or otherwise modified since the date of the most recent certification thereof by the Secretary or Assistant Secretary of the Borrower delivered to the Lender and remain in full force and effect as of the Effective Date, (C) that the Articles of Incorporation of the Borrower have not been amended or otherwise modified since the date of the most recent certification thereof by the Secretary of State of Delaware delivered to the Lender and remain in full force and effect as of the Effective Date and (D) the resolutions of the Borrower's board of directors approving and authorizing the execution, delivery and performance of this Third Amendment and the other Transaction Documents executed in connection with this Third Amendment to which the Borrower is a party; and 8 (v) such additional documentation as the Lender may reasonably request; (b) the Borrower shall have made a prepayment on the Term Loan in a principal amount of not less than $6,000,000.00; (c) no law, regulation, order, judgment or decree of any Governmental Authority shall, and the Lender shall not have received any notice that litigation is pending or threatened which is likely to, enjoin, prohibit or restrain the consummation of the transactions contemplated by this Third Amendment, except for such laws, regulations, orders or decrees, or pending or threatened litigation that in the aggregate could not reasonably be expected to result in a Material Adverse Effect; (d) all of the representations and warranties of the Borrower contained in this Third Amendment, the Credit Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the Effective Date, as if then made (other than representations and warranties which expressly speak as of a different date, which shall be true and correct in all material respects as of that date); (e) all corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Third Amendment shall be satisfactory in all respects in form and substance to the Lender; and (f) no Event of Default or Potential Event of Default shall have occurred and be continuing on the Effective Date or will result after giving effect to this Third Amendment. 6. OUTSTANDING INDEBTEDNESS. The Borrower hereby acknowledges and agrees that as of May 23, 1997 the aggregate outstanding principal amount of the Revolving Loans under the Credit Agreement was $127,952.54 and that the aggregate outstanding principal amount of the Term Loan under the Credit Agreement was $27,725,000 and that such principal amounts are payable pursuant to the Credit Agreement, as amended hereby, without offset, withholding, counterclaim or deduction of any kind. The Borrower, for itself and on behalf of its officers and directors, and its respective predecessors, successors and assigns (collectively, the "RELEASORS"), hereby waives, releases and forever discharges the Lender, and its parent corporation, Subsidiaries and Affiliates, officers, directors, shareholders employees, attorneys, agents and servants, and its respective 9 predecessors, successors, heirs and assigns (collectively, the "LENDER PARTIES"), from any and all claims of every type, kind, nature, description or character, known and unknown, whensoever arising out of any actions or omissions of the Lender Parties, except all such claims of Affiliates of Lender arising out of sales of inventory in the ordinary course of business, occurring any time up to and including the date hereof, which in any way arise out of, are connected with or relate to the Credit Agreement or any other Loan Documents (the "RELEASED CLAIMS") and agrees not to bring any action in any judicial, administrative or other proceeding against the Lender Parties, alleging any such Released Claim or otherwise in connection with any such Released Claim. 7. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a) Upon the Effective Date, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import, and each reference in the other Loan Documents to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended hereby. (b) This Third Amendment shall be limited solely to the matters expressly set forth herein and shall not (i) constitute an amendment of any other term or condition of the Credit Agreement or any other Loan Document, (ii) prejudice any right or rights which the Lender or Lender Parties may now have or may have in the future under or in connection with the Credit Agreement or any other Loan Document, (iii) require the Lender to agree to a similar transaction on a future occasion, (iv) be deemed or construed as an admission of liability with respect to the Released Claims or otherwise by the Lender Parties or (v) create any rights herein to another Person or other beneficiary or otherwise, except to the extent specifically provided herein. (c) Except to the extent specifically consented to herein, the respective provisions of the Credit Agreement and the other Loan Documents shall not be amended, modified, impaired or otherwise affected hereby, and such documents and the Obligations under each of them are hereby confirmed in full force and effect. 8. MISCELLANEOUS. This Third Amendment is a Loan Document. The headings herein are for convenience of reference only and shall not alter or otherwise affect the meaning hereof. 9. COUNTERPARTS. This Third Amendment may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. 10 10. GOVERNING LAW. THIS THIRD AMENDMENT SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the Borrower and the Lender have caused this Third Amendment to be executed by their respective officers thereunto duly authorized as of the date first above written. KAYNAR TECHNOLOGIES INC. By: /s/ David A. Werner ------------------------------- Name: David A. Werner Title: Executive Vice President GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Charles D. Chiodo ------------------------------- Name: Charles D. Chiodo Title: Authorized Signatory 11 ANNEX A TO THIRD AMENDMENT AND LIMITED WAIVER FORM OF AMENDED AND RESTATED REVOLVING CREDIT NOTE Attached. 12 EX-10.6(B) 5 EXHIBIT 10.6(B) AMENDMENT TO LEASE West L.A. Properties, a California limited partnership (Lessor) and Kaynar Technologies Inc. (Lessee) hereby amend the Lease between them dated January 3, 1994, (the Lease) covering a portion of the premises commonly known as 190 West Crowther, Placentia, California as follows: 1. TERM The term of the Lease, now scheduled to end on December 31, 1998, is extended to September 30, 2001. Paragraph 50 of the Lease, which granted Lessee an option to extend the term of the Lease, is hereby deleted; Lessee has no further option to extend. 2. RENT Effective on October 1, 1996, the Base Rent shall be $14,000 per month. The security deposit shall 1 be reduced to $14,000 Lessor will apply the $1,200 excess it now holds to the rent due on September 1, 1996. Rent shall continue to be payable on the first day of each month. Effective on April 1, 1999, the Base Rent shall be increased in accordance with the Cost of Living Adjustments provided for in paragraph 49, of the Lease, except that the Base Month (the denominator in the fraction) shall be August 1996 and the Comparison Month (the numerator in the fraction) shall be February 1999. 3. TENANT IMPROVEMENTS Lessee proposes to make certain Tenant Improvements in accordance with plans and specifications that Lessee will promptly prepare and submit to Lessor for its approval, which approval will not be unreasonably withheld or delayed. Lessee will make those improvements in a good and workmanlike 2 manner and in accordance with the requirements of paragraph 7.3 of the Lease. Lessor will not require a lien and completion bond provided; (a) Lessor approves the general contractor and its financial statement, and (b) Lessor is given an opportunity to file and post an effective notice of non-responsibility. Those improvements shall be subject to the provisions of paragraph 7.4 of the Lease. Upon completion of those improvements in accordance with the Lease requirements, Lessor will lend to Lessee an amount (not to exceed $205,000) which Lessee demonstrates by books, records and canceled checks to represent Lessee's out-of-pocket cost in connection with those improvements. The loan shall be funded in increments of not less than $50,000 prior to completion of improvements provided Lessee gives Lessor evidence of (a) lien free completion of work of a value of not less than the required draw; and (b) certification by the contractor that the work 3 remaining to be done can be completed at a cost which will not exceed the undrawn balance of the $205,000. Total incremental advances shall not exceed $150,000. Any remaining loan shall be funded only after expiration of the period during which mechanic's liens can be filed. Lessor's loan to Lessee shall be represented by Lessee's promissory note (the Note) in the form attached as Exhibit A. The Note shall be payable in equal installments of principal and interest over the number of full months remaining between the date of the Note and September 30, 2001. It is a condition precedent to lessor's loan that Lessee not be in breach of any of its obligations under the Lease. For this purpose, a breach is a default which shall have extended beyond any notice and cure periods. A default in any payment under the Note shall constitute 4 a Breach under the provisions of paragraph 13 of the Lease. Dated: August 21, 1996 LESSOR: WEST L.A. PROPERTIES, A CALIFORNIA LIMITED PARTNERSHIP By The Weil Family Trust dated October 3, 1984, General Partner By /s/ Martin H. Weil ------------------------------ Martin H. Weil, Trustee LESSEE: KAYNAR TECHNOLOGIES INC. By /s/ D.A. Werner ------------------------------ David A. Werner, Vice President 5 EXHIBIT A Santa Monica, California $__________ __________________, 1996 In installments as hereafter stated, for value received, the undersigned promises to pay to West L.A. Properties, or order, at Santa Monica, California, the principal sum of $___________, with interest from date of advance(s) on unpaid principal at the rate of 10% per annum. This note is executed pursuant to the provisions of a Lease (the Lease) between Maker as Lessee and Payee as lessor. The Lease consists of the original lease dated January 3, 1994, as amended on __________, 1996. Principal and interest shall be payable in the sum of $_________ or more on the first day of each month commencing on _________, 1996. The note will become immediately due and payable on the first to occur of the following: (a) any Default or Breach by the undersigned of any of its obligations under the Lease as those obligations are defined in the Lease; or (b) September 30, 2001. The maker(s) acknowledge(s) that late payment to payee will cause payee to incur costs not contemplated by this loan. Such costs include, without limitation, processing and accounting charges. Therefore, if any installment is not received by payee when due, maker(s) will pay to payee an additional sum of 6% of the overdue amount as a late charge. The parties agree that this late charge represents a reasonable sum considering all the circumstances existing on the date of this agreement and represents a fair and reasonable estimate of the costs that payee will incur by reason of late payment. The parties further agree that proof of actual damages would be costly or inconvenient. Acceptance of any late charge will constitute a waiver of the default with respect to the overdue amount and will not prevent payee from exercising any of the other rights and remedies available to payee. Should default be made in the payment of any installment of principal or interest when due, then the whole sum of principal and interest shall become immediately due and payable at the option of the holders of this note. The undersigned further promise to pay all costs of collection, including attorney's fees incurred in the collection of this note. Principal and interest payable in lawful money of the United States. Kaynar Technologies Inc. By ------------------------------ EX-99.6 6 EXHIBIT 99.6 INDEMNIFICATION AND CONTRIBUTION AGREEMENT THIS INDEMNIFICATION AND CONTRIBUTION AGREEMENT (this "Agreement") is entered into as of the 5th day of May 1997 by and between General Electric Capital Corporation, a New York corporation (the "Selling Stockholder"), and Kaynar Holdings Inc., a Delaware corporation ("Holdings"). WHEREAS, Holdings proposes to merge its wholly-owned subsidiary, Kaynar Technologies Inc., a Delaware corporation ("Kaynar"), into itself, with Holdings as the surviving corporation, and immediately thereafter Holdings proposes to change its name to Kaynar Technologies Inc. (the "Reorganization"); and WHEREAS, immediately following the Reorganization, Holdings proposes to sell up to 2,100,000 shares of its Common Stock, par value $0.01 per share (the "Shares"), to several underwriters pursuant to the Underwriting Agreement dated the date hereof (the "Underwriting Agreement") among Holdings, the Selling Stockholder and Lehman Brothers Inc. and PaineWebber Incorporated, as representatives of the underwriters named therein (the "Underwriters"); NOW, THEREFORE, in consideration of the foregoing premises and of the covenants set forth herein, the Selling Stockholder and Holdings hereby agree as follows: AGREEMENT 1. Holdings shall indemnify and hold harmless the Selling Stockholder, its officers and employees and each person, if any, who controls the Selling Stockholder within the meaning of the Securities Act of 1933, as amended (as so amended, the "Securities Act") or the Securities Exchange Act of 1934, as amended (as so amended, the "Exchange Act"), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of the Shares), to which the Selling Stockholder, or any officer, employee or controlling person of the Selling Stockholder, may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in the Preliminary Prospectus dated April 11, 1997 (the "Preliminary Prospectus"), the Registration Statement on Form S-1 (Registration No. 333-22345) (the "Registration Statement") or in any amendment or supplement thereto (other than any statement of a material fact contained in the description of the financing arrangements included in the circled material on the six pages of the Preliminary Prospectus attached hereto as Exhibit A and any information furnished by the Underwriters and described in Section 10(f) of the Underwriting Agreement) or (B) in any blue sky application or other document prepared or executed by Holdings (or based upon any written information furnished by Holdings) specifically for the purpose of qualifying any or all of the Shares under the securities laws of any state or other jurisdiction (any such application, document or information being hereinafter called a "Blue Sky Application"), (ii) the omission or alleged omission to state in the Preliminary Prospectus, the Registration Statement or in any amendment or supplement thereto (other than any material fact omitted from the description of the financing arrangements included in the circled material on the six pages of the Preliminary Prospectus attached hereto as Exhibit A and any information furnished by the Underwriters and described in Section 10(f) of the Underwriting Agreement), or in any Blue Sky Application, of a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any act or failure to act or any alleged act or failure to act by the Selling Stockholder in connection with, or relating in any manner to, the Shares or the offering contemplated by the Preliminary Prospectus, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon matters covered by clause (i) or (ii) above (PROVIDED that Holdings shall not be liable under this clause (iii) to the extent that it is determined in a final judgment by a court of competent jurisdiction that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by the Selling Stockholder through its gross negligence or willful misconduct), and shall reimburse the Selling Stockholder and each officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by the Selling Stockholder, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER, that Holdings shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in the Preliminary Prospectus, the Registration Statement or in any amendment or supplement thereto, or in any Blue Sky Application, in reliance upon and in conformity with written information concerning the Selling Stockholder furnished to Holdings by or on behalf of the Selling Stockholder specifically for inclusion therein. The foregoing indemnity agreement is in addition to any liability which Holdings may otherwise have to the Selling Stockholder or to any officer, employee or controlling person of the Selling Stockholder. 2. The Selling Stockholder agrees, subject to the limitations set forth in Paragraph 6 hereof, to indemnify and hold harmless Holdings, its officers and employees and each person, if any, who controls Holdings within the meaning of the 2 Securities Act or the Exchange Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of the Shares), to which Holdings, or any officer, employee or controlling person of Holdings, may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage or liability or action arise out of, or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Prospectus, the Registration Statement or in any amendment or supplement thereto or (ii) the omission or alleged omission to state in the Preliminary Prospectus, the Registration Statement or in any amendment or supplement thereto a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Preliminary Prospectus or any amendment or supplement thereto, in conformity with information provided in writing by the Selling Stockholder to Holdings specifically for use therein and will reimburse Holdings and each such controlling person for any legal or other expenses reasonably incurred by Holdings in connection with investigating or defending any such loss, claim, damage, liability, or action; PROVIDED, that the Selling Stockholder will not be liable in any such case to the extent that (i) any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Preliminary Prospectus or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished by Holdings specifically for use therein or (ii) if such statement or omission was contained or made in the Preliminary Prospectus and corrected in an amendment or supplement thereto. 3. Promptly after receipt by an indemnified party under this Agreement of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Agreement, notify the indemnifying party in writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Agreement except to the extent it has been materially prejudiced by such failure and, PROVIDED FURTHER, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Agreement. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense 3 thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Agreement for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. 4. If the indemnification provided for in this Agreement shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Paragraphs 1 or 2 hereof in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by Holdings and the Selling Stockholder, respectively, from the offering of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative faults of Holdings and the Selling Stockholder, respectively, with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by Holdings and the Selling Stockholder with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Shares purchased under this Agreement (before deducting expenses) received by each of Holdings and the Selling Stockholder, bear to the total gross proceeds from the offering of the Shares, in each case as set forth in the table on the cover page of the final prospectus. The relative fault shall be determined by reference to whether 4 the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by Holdings or the Selling Stockholder, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. Holdings and the Selling Stockholder agree that it would not be just and equitable if contributions pursuant to this Paragraph 4 were to be determined by PRO RATA allocation or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Paragraph 4 shall be deemed to include, for purposes of this Paragraph 4, any legal or other expense reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 5. The Selling Shareholder confirms and Holdings acknowledges that the circled material on the nine pages attached hereto as Exhibit B is a full, complete and correct record of all the written information which the Selling Stockholder has furnished to Holdings expressly for use in the Registration Statement, the Preliminary Prospectus and any further amendments or supplements thereto, filed with respect to the registration of the Shares (including 300,000 Shares reserved for the underwriters' over-allotment option). 6. Notwithstanding any of the provisions of this Agreement and the Underwriting Agreement, the Selling Stockholder's liability to Holdings and its officers, employees and controlling persons, together with the Selling Stockholder's liability to the Underwriters and their respective officers, employees and controlling persons under the Underwriting Agreement, shall not exceed the net proceeds received by the Selling Stockholder from the sale of the Shares being sold by the Selling Stockholder to the Underwriters, and in no event shall Holdings have any right of contribution from the Selling Stockholder for liability which Holdings may have to the Underwriters, their officers, employees and controlling persons pursuant to the Underwriting Agreement, except under the circumstances which give rise to liability by the Selling Stockholder under Paragraph 2 hereof. 5 IN WITNESS WHEREOF, the Selling Stockholder and Holdings have caused this Indemnification and Contribution Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written. KAYNAR HOLDINGS INC. By: /s/ David A. Werner ------------------------------- Name: David A. Werner Title: Vice President GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Michael A. Gaudino ------------------------------- Name: Title: Authorized Signatory S-1 EX-27 7 EXHIBIT 27
5 1,000 6-MOS DEC-31-1997 MAR-31-1997 JUN-29-1997 1,914 1,033 22,133 293 30,904 56,156 32,187 6,981 88,757 17,957 0 0 52 37 42,624 88,757 69,452 69,452 49,183 49,183 9,422 0 2,328 8,519 3,417 5,102 0 0 0 5,102 .68 .68
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