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 Xxxxxx 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
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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
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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
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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.
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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/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name:
Title: Authorized Signatory
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