Exhibit 18
Argonaut Technologies, Inc.
0000 Xxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
January 12, 2005
Jewelcor Management, Inc.
Xx. Xxxxxxx Xxxxxxxx
000 Xxxxx Xxxxxx Xxxxx Xxxx.
Xxxxxx Xxxxx, Xxxxxxxxxxxx 00000
Re: Letter of Agreement
Gentlemen:
As you know, Jewelcor Management, Inc. ("Jewelcor"), a Delaware corporation
that is controlled by Xx. Xxxxxxx Xxxxxxxx ("Xxxxxxxx"), has requested that
the board of directors (the "Board") of Argonaut Technologies, Inc., a
Delaware corporation (the "Company"), call a special meeting of its
stockholders (the "Special Meeting") to consider and vote on proposals
(collectively, the "Proposals") to: (i) amend the Company's bylaws to
provide that any vacancy in the Board occurring by reason of removal of
any director or directors by the stockholders shall be filled, for the
unexpired term of the director or directors so removed, only by the
affirmative vote of a majority of the voting power of the outstanding
shares; (ii) remove some or all the current members of the Company's
board of directors, except Xxxxx Xxxxx, including removal of one or more
directors for cause; and (iii) elect individuals to the Company's board
of directors to fill the vacancies created by such removal of directors, to
serve until their successors are duly elected and qualified. The Board has
heretofore refused to call the Special Meeting. The Company, Jewelcor and
Xxxxxxxx have determined that it is in the best interest of the Company and
its stockholders to resolve their dispute with respect to calling the
Special Meeting and certain related matters, upon the terms and subject
to the conditions set forth herein.
On the basis of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and accepted, the
parties hereto hereby agree as follows:
1. Special Meeting. Upon the
execution and delivery of this letter agreement:
(a) Jewelcor shall withdraw its request
that the Company call and hold the Special Meeting;
(b) Jewelcor and Xxxxxxxx shall discontinue
any further solicitation of requests to call the Special Meeting, including,
without limitation, any further efforts to finalize the preliminary proxy
statement filed by Jewelcor with the Securities and Exchange Commission
(the "SEC") on November 18, 2004 (the "Proxy Statement"), whether by
responding to comments of the Staff of the SEC pertaining to the Proxy
Statement, filing any amendments to the Proxy Statement with the SEC,
mailing the Proxy Statement to any stockholder of the Company or otherwise,
and Jewelcor shall notify the SEC of its desire to withdraw the Proxy
Statement; and
(c) Jewelcor and Xxxxxxxx shall discontinue
(without prejudice) any further efforts to challenge the provisions of the
Company's certificate of incorporation or bylaws that relate (or may relate) to
the conditions upon which one or more stockholders of the Company may call (or
request that the Company or the Board call) a special meeting of the Company's
stockholders.
Notwithstanding the foregoing, upon expiration of the Standstill Period (as
defined in paragraph 3 hereof), Jewelcor and Xxxxxxxx shall each have the right
in its or his sole discretion to pursue any of the foregoing matters.
2. Board of Directors; Committees.
(a) The Board shall immediately take all
action necessary to (i) increase the size of the Board so that it is
comprised of seven (7) directors and (ii) appoint Xxxxxxxx as a member of
the Board, to serve as a Class II director until the expiration of the
term of such Class at the Company's 2005 annual meeting of stockholders.
(b) Upon Xxxxxxxx'x request, the Board
shall take all action necessary to appoint Xxxxxxxx to any committee of
the Board of which he may seek to be a member (provided that, if Xxxxxxxx
is a member the Nominating and Corporate Governance Committee or any
committee of the Board having substantially similar functions, Xxxxxxxx
shall recuse himself from any determination of nominees for election at
the Company's 2005 annual meeting of stockholders); provided that he is
then qualified to serve on any such committee under applicable legal
requirements and listing standards.
3. Standstill Restrictions. Commencing
upon the execution and delivery of this letter agreement and continuing
until 11:59 p.m. (California time) on the date that is seventy-five (75)
calendar days from the date hereof (the "Standstill Period"), neither
Jewelcor nor Xxxxxxxx (nor any of their directors, officers, employees,
controlling persons and other affiliates, nor their agents or other
representatives under their control or direction) shall (i) acquire or
agree to acquire any shares of voting stock of the Company unless and
to the extent approved in advance by the Board; provided,
however, that the foregoing restriction shall not restrict or otherwise
limit the right of Xx. Xxxxxxxx to acquire shares of Company common
stock (or options to acquire shares of Company common stock) pursuant
to the compensation arrangements provided to directors of the Company
in their capacity as directors of the Company, (ii) join a group of
persons who are unaffiliated with Jewelcor in any manner that would
be required to be disclosed under Section 13(d) of the Securities
Exchange Act of 1934, as amended, with respect to the Company, (iii)
submit any stockholder proposals for inclusion in the Company's proxy
materials relating to any special or annual meeting of stockholders
of the Company, call a meeting of stockholders of the Company or
otherwise solicit proxies in favor of proposals, or encourage any
other party to do so, in any such case other than as approved in
advance by the Board, (iv) engage in, offer, solicit or otherwise
facilitate any proposal to acquire the Company, whether by merger,
consolidation or other business combination transaction,
recapitalization, purchase of securities or assets, or otherwise,
or encourage any other party to do so, in any case other than as
approved in advance by the Board, (v) assist or act in concert with
any third party with respect to the actions set forth in the
foregoing clauses (i) through (iv) other than as approved in advance
by the Board, or (vi) request or seek a waiver of any provision of
this paragraph 3 in any manner
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that would require public disclosure; provided, however, that none of the
foregoing restrictions shall be deemed to (A) require Jewelcor or Xxxxxxxx
to vote, or refrain from voting, on any matter as they may deem appropriate,
or (B) restrict Jewelcor or Xxxxxxxx from soliciting proxies from the
stockholders of the Company (or tender any of its or his shares of the
Company's common stock to a third party) in opposition to a merger,
consolidation or other business combination transaction or any purchase
of the Company's securities or assets, or any other similar transaction,
that is proposed by the Board during the Standstill Period.
4. Confidentiality. Subject to his
fiduciary duties and other obligations under applicable law, Xxxxxxxx shall
not disclose, and shall keep confidential, any Confidential Information
(as defined below) that becomes available to him in his capacity as a member
of the Board, and shall not use such Confidential Information to contest any
action or determination of the Board. For the purpose of this paragraph 4,
"Confidential Information" means all material, non-public information about
the Company or any of its affiliates (whether written or oral or in
electronic or other form and whether prepared by the Company, its advisers
or otherwise) that is or has been furnished to Xxxxxxxx in his capacity as
a member of the Board by or on behalf of the Company; provided, that the
term "Confidential Information" does not include any information that
(i) is or becomes generally available to the public through no action or
omission by Xxxxxxxx, (ii) was or becomes generally available to the public
other than as a result of a disclosure by Xxxxxxxx or (iii) is or becomes
available to Xxxxxxxx on a non-confidential basis from a source, other than
the Company (including its officers, directors or employees) that, to the
best of Xxxxxxxx'x knowledge, is not prohibited from disclosing such
information to him by a contractual, legal or fiduciary obligation.
5. Public Disclosure. The Company,
Jewelcor and Xxxxxxxx shall use their respective best efforts to agree upon
a joint press release announcing the terms of this letter agreement. In
addition, except as may be required by applicable law, during the Standstill
Period, neither the Company, Jewelcor nor Xxxxxxxx shall issue any press
release or make any other public statement or announcement to any third
party or file any document with any governmental authority regarding
(i) this letter agreement, (ii) the Special Meeting or the Proposals, the
solicitation of proxies in connection therewith or the solicitation of
requests to call the Special Meeting or (iii) the Company, the Board or
management of the Company, in each case without the prior written
approval of the other party or parties hereto, which approval shall not
be unreasonably withheld or delayed.
6. Bylaws. During the Standstill
Period, the Company shall not amend its certificate of incorporation or
bylaws in any manner to impose any additional standards or conditions
regarding the ability of directors of the Company to call, or otherwise
make it more difficult to call, meetings of the Board.
7. Waiver of Advance Notice Provisions.
Upon the request of Xxxxxxxx or Jewelcor the Company shall amend or waive, and
shall not seek to invoke or enforce, any provision or limitation set forth in
the Company's certificate of incorporation, bylaws or any other instrument to
which the Company is a party or by which it or its stockholders may be bound
concerning any requirement that a stockholder of the Company (i) provide
advance notice to the Company, the Company's board of directors or any
committee thereof of such stockholder's intention to nominate any person or
persons to serve on the Company's board
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of directors or (ii) provide the Company, the Company's board of directors
or any committee thereof with information concerning any nominee of such
stockholder or other material, so that any such notice, information or other
material, to the extent it might be otherwise required, shall be timely and
valid if provided prior to the later of (x) 10 days after the Company
publicly announces the date of its 2005 annual meeting or (y) 60 days prior
to the date of such meeting. Further, the Company shall not publicly
announce the date of its 2005 annual meeting or finalize or mail any proxy
or consent materials during the Standstill Period, nor shall the Company
schedule any meeting of or seek any action by the Company's stockholders
(except as to a matter as to which Jewelcor or Xxxxxxxx is free to solicit
proxies without restriction pursuant to paragraph 3(B) above) during or
within 61 days after the end of the Standstill Period (except that the
Company may, during the Standstill Period, publicly announce the date of
its 2005 annual meeting, which meeting shall be held more than 61 days
after the end of the Standstill Period).
8. Miscellaneous.
(a) Governing Law. This Agreement is to
be construed in accordance with and governed by the laws of the State of
Delaware without giving effect to the principles of conflicts of laws.
(b) Jurisdiction and Venue. Any legal
action or other legal proceeding relating to this letter agreement or the
enforcement of any provision of this letter agreement may only be brought
or otherwise commenced in any state or federal court located in the State
of Delaware. Each party hereto (i) expressly and irrevocably consents and
submits to the jurisdiction of each state and federal court located in the
State of Delaware (and each appellate court located in the State of Delaware
in connection with any such legal proceeding, including to enforce any
settlement, order or award), (ii) agrees that each state and federal court
located in the State of Delaware shall be deemed to be a convenient forum
and (iii) waives and agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any state or
federal court located in the State of Delaware, any claim that such party
is not subject personally to the jurisdiction of such court, that such
legal proceeding has been brought in an inconvenient forum, that the
venue of such proceeding is improper or that this letter agreement or
the subject matter hereof or thereof may not be enforced in or by such
court.
(c) WAIVER OF JURY TRIAL. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT,
OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR
THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT HEREOF.
(d) Specific Performance. The parties
hereto agree that irreparable damage would occur in the event that any
of the provisions of this letter agreement were not performed in
accordance with their specific intent or were otherwise breached. It
is accordingly agreed that the parties hereto shall be entitled to an
injunction or injunctions, without bond, to prevent or cure breaches of
the provisions of this letter agreement and to enforce specifically the
terms and provisions hereof, in addition to any other remedy to which
such parties may be entitled by law or equity, and any party hereto sued
for breach of this letter agreement expressly waives any defense
that a remedy in damages would be adequate.
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(e) Severability. In the event that
any term or provision of this letter agreement shall become, or is
declared by a court of competent jurisdiction to be, illegal,
unenforceable or void, this letter agreement shall continue in full
force and effect without said term or provision as close as possible
to the intent of the parties hereto.
(f) Attorneys' Fees. In any action
at law or suit in equity in relation to this letter agreement, the
prevailing party in such action or suit shall be entitled to receive
from the non-prevailing party its reasonable attorneys' fees and all
other reasonable costs and expenses incurred in connection with such
action or suit.
(g) Full Knowledge; Independent Advice.
This letter agreement is entered into with full knowledge of any and
all legal rights that the Company, Jewelcor and Xxxxxxxx may have under
applicable law. Each party hereto acknowledges that it has been
represented by competent counsel in connection with the negotiation and
preparation of this letter agreement, and that it participated in the
drafting of this letter agreement, and therefore hereby agrees that any
applicable rule of construction to the effect that ambiguities are to
be resolved against the drafting party shall not be applied in connection
with the construction or interpretation of this letter agreement.
(h) No Duress. The Company, Jewelcor and
Xxxxxxxx hereby acknowledge and agree that they have entered into this
letter agreement without duress, in good faith and for sufficient
consideration, and that it is fair, just and reasonable to all signatories
hereto and their respective affiliates.
(i) Delays or Omissions. No delay or
omission to exercise any right, power or remedy accruing to a party
hereto under this letter agreement shall impair any such right, power
or remedy nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring, nor shall any waiver of any single breach
or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring.
(j) Entire Agreement. This letter agreement
constitutes the full and entire understanding and agreement between the
parties hereto with respect to the subject hereof.
(k) Assignment. This letter agreement
shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assignees. This letter
agreement may not be assigned by any of parties hereto without the prior
written consent of the other parties hereto.
(l) Amendment. Neither this letter
agreement nor any term or provision hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the
party hereto against whom enforcement of any such amendment, waiver,
discharge or termination is sought.
(m) Termination. This letter agreement
shall terminate and be of no further force or effect, without any action
on the part of any of the parties hereto, in the event of a change of
control of the Company, which shall be deemed to include, among other
things, (i) any
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transaction or series of related transactions pursuant to which the
stockholders of the Company prior to such transaction or series of
transactions hold less than a majority of the voting power of the
Company or any successor in interest thereto or less than a majority
in interest of all or substantially all of the assets of the Company
after such transaction or series of transactions and (ii) any
transaction or series of related transactions pursuant to which the
directors of the Company prior to such transaction or series of
transactions constitute less than a majority of the members of the
Board or the board of directors of any successor in interest thereto
after such transaction or series of transactions.
(n) Notices. All notices and other
communications pursuant to this letter agreement shall be in writing
and shall be delivered personally, sent by facsimile, sent by
nationally-recognized overnight courier or mailed by registered or
certified mail (return receipt requested), postage prepaid, to the
respective parties hereto at their respective addresses set forth
above. Each such notice or other communication shall for all purposes
of this letter agreement be treated as effective or having been
given as follows: (i) if delivered personally, when delivered,
(ii) if sent by facsimile, upon confirmation of facsimile transfer,
(iii) if sent by nationally-recognized overnight courier, when
received or (iv) if sent by registered or certified mail, at the
earlier of its receipt or 72 hours after the same has been deposited
in a regularly-maintained receptacle for the deposit of the United
States mail, addressed and mailed as aforesaid.
(o) Further Assurances. The parties
hereto shall do and perform or cause to be done and performed all
such further acts and things and shall execute and deliver all such
other agreements, certificates, instruments or documents as any other
party may reasonably request from time to time in order to carry out
the intent and purposes of this letter agreement and the consummation
of the transactions contemplated hereby. Neither the Company nor
Jewelcor shall voluntarily undertake any course of action inconsistent
with satisfaction of the requirements applicable to them set forth
in this letter agreement and each shall promptly do all such acts and
take all such measures as may be appropriate to enable them to perform
as early as practicable the obligations herein required to be performed
by them.
(p) Facsimile; Counterparts. This letter
may be executed and delivered (including by facsimile transmission) in
one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to
be an original but all of which taken together shall constitute one
and the same agreement.
(q) Headings. The article and section
headings set forth in this letter agreement are included for
convenience of reference only and shall not affect the meaning or
interpretation of this letter agreement or any provision hereof.
* * * * *
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If the foregoing meets with your approval, please countersign below
and return an executed copy of this letter agreement to the
undersigned at the address set forth above, whereupon this letter
shall constitute a binding agreement among us as of the date first
written above.
Sincerely,
ARGONAUT TECHNOLOGIES, INC.
/s/ Xxxxx X. Xxxxxxxxxxx
Xxxxx X. Xxxxxxxxxxx
President and Chief Executive Officer
AGREED AND ACCEPTED:
JEWELCOR MANAGEMENT, INC.
Xxxxxxx Xxxxxxxx
President
/s/ Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
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