STOCKHOLDERS AGREEMENT
AGREEMENT dated as of July 27, 1998 by and among Kaynar Technologies
Inc., a Delaware corporation (the "PARENT"), and the other parties who are
signatories hereto (each a "STOCKHOLDER").
RECITALS
Concurrently herewith, the Parent, KTIC Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of the Parent (the
"PURCHASER"), and M&M Machine and Tool Co., a California corporation (the
"COMPANY"), are entering into an Agreement and Plan of Merger dated as of the
date hereof (as amended, supplemented or otherwise modified from time to
time, the "MERGER AGREEMENT"; terms defi xxx therein and used herein without
definition shall have the respective meanings set forth therein) pursuant to
which the Company and the Purchaser or another subsidiary of the Parent will
be merged (the "MERGER").
As a condition to the Parent's willingness to enter into the Merger
Agreement, the Parent requires that each Stockholder enter into, and each
such Stockholder has agreed to enter into, this Agreement.
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. REPRESENTATIONS AND WARRANTIES. Each Stockholder hereby
severally represents and warrants to the Parent as follows:
(a) OWNERSHIP OF SHARES.
(i) Such Stockholder is the record holder and beneficial owner
of, the number of shares of common stock, par value $10.00 per
share, of the Company (the "COMPANY COMMON STOCK") set forth
opposite such Stockholder's name on Schedule 1 hereto (such the
Company Common Stock as to such Stockholder, the "SHARES").
(ii) On the date hereof, the Shares set forth opposite such
Stockholder's name on Schedule 1 hereto constitute all of the
shares of the Company Common Stock, owned of record or beneficially
by such Stockholder. Such Shares were acquired by such Stockholder
in compliance with all federal and state securities laws.
(iii) Such Stockholder has sole power of disposition, sole
voting power with respect to the matters set forth in Section 2
hereof and sole power to demand dissenter's or appraisal rights, in
each case with respect to all of the Shares set forth opposite such
Stockholder's name on Schedule 1 hereto, with no restrictions on
such rights, subject to applicable federal securities laws and the
terms of this Agreement.
1
Stockholders Agreement
(b) POWER; BINDING AGREEMENT. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party or by which such Stockholder
is bound including, without limitation, any trust agreement, will,
testamentary document, voting agreement, stockholders agreement, voting trust
or other agreement. This Agreement has been duly and validly executed and
delivered by such Stockholder and constitutes a valid and binding agreement
of such Stockholder, enforceable against such Stockholder in accordance with
its terms. There is no beneficiary of or holder of a voting trust certificate
or other interest of any trust of which such Stockholder is Trustee or any
estate in respect of which such Stockholder is an Executor whose consent is
required for the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby by such Stockholder. If such
Stockholder is married and such Stockholder's Shares constitute community
property, this Agreement has been duly authorized, executed and delivered by,
and constitutes a valid and binding agreement of, such Stockholder's spouse,
enforceable against such person in accordance with its terms.
(c) NO CONFLICTS. Except for filings under the Xxxx Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, if applicable, (i) no filing
with, and no permit, authorization, consent or approval of, any state or
federal public body or authority is necessary for the execution of this
Agreement by such Stockholder and the consummation by such Stockholder of the
transactions contemplated hereby and (ii) neither the execution and delivery
of this Agreement by such Stockholder nor the consummation by such
Stockholder of the transactions contemplated hereby nor compliance by such
Stockholder with any of the provisions hereof shall (A) conflict with or
result in any breach of any applicable trust or estate or other
organizational documents applicable to such Stockholder, (B) result in a
violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which such
Stockholder is a party or by which such Stockholder or any of such
Stockholder's properties or assets may be bound or (C) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of such Stockholder's properties or
assets.
(d) NO ENCUMBRANCES. Such Stockholder's Shares and the
certificates representing such Shares are now and at all times during the
term hereof will be held by such Stockholder, or by a nominee or custodian
for the benefit of such Stockholder, free and clear of all liens, claims,
security interests, proxies and voting trusts, agreements, understandings or
arrangements and all other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder.
(e) BROKERS. No broker, finder or investment banker (other than
The Geneva Companies) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of such Stockholder.
2
Stockholders Agreement
(f) MERGER AGREEMENT. Each of the Stockholders hereby jointly and
severally represents and warrants that each representation and warranty given
by the Company in Article II of the Merger Agreement is true and correct as
of the date hereof and as of the Closing Date.
(g) ACKNOWLEDGEMENT. Such Stockholder understands and acknowledges
that the Parent and the Purchaser are entering into the Merger Agreement in
reliance upon (1) such Stockholder's execution and delivery of this
Agreement, and (2) the representations, warranties, and covenants of the
Company contained in the Merger Agreement. Such Stockholder further
understands and acknowledges that it is jointly and severally liable for the
Company's obligations under the Merger Agreement, including the
indemnification obligations set forth in Article VIII thereof.
2. CERTAIN COVENANTS OF STOCKHOLDERS. Except in accordance with
the terms of this Agreement, each Stockholder hereby severally covenants and
agrees as follows:
(a) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE;
RESTRICTION ON WITHDRAWAL. Such Stockholder shall not, directly or
indirectly: (i) except pursuant to the terms of the Merger Agreement and
this Agreement, and except for gifts or other transfers to family members who
(A) are signatories to this Agreement or (B) concurrently with such gift,
become signatories to and bound by all provisions of this Agreement or (C)
receive not more than $80,000 in value of such Shares in such gift (provided
that gifts or other transfers of no more than $250,000 in value of Shares in
the aggregate may be made pursuant to this clause (C)), offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect
to or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Stockholder's Shares or any interest therein; (ii) except as contemplated
hereby, grant any proxies or powers of attorney, deposit any Shares into a
voting trust or enter into a voting agreement, understanding or arrangement
with respect to any or all of such Stockholder's Shares; (iii) except at the
request of the Parent, revoke any written consent given pursuant to Section
2.1 or otherwise at the Parent's request; or (iv) take any action that would
make any representation or warranty of such Stockholder contained herein
untrue or incorrect or have the effect of preventing or disabling such
Stockholder from performing such Stockholder's obligations under this
Agreement.
(b) WAIVERS AND CONSENTS. Such Stockholder hereby waives and
agrees not to exercise any rights of appraisal or rights to dissent from the
Merger that such Stockholder may have with respect to its Shares. Such
Stockholder hereby waives any pre-emptive rights or rights of first refusal
(or similar) rights in the Company's Articles of Incorporation. Such
Stockholder consents to the execution and delivery of the Merger Agreement by
the Company and to the transactions contemplated thereby.
(c) NO TERMINATION OR CLOSURE OF TRUSTS OR ESTATES. Such
Stockholder shall not take any action to terminate, close or liquidate any
trust or estate holding Shares for which such Stockholder is Trustee or
Executor and shall take all steps necessary to maintain the existence thereof
at least until the first to occur of (i) the Effective Time and (ii) the
Termination Date (as defined below), unless, in connection with and upon such
termination, closing or liquidation, the
3
Stockholders Agreement
Shares held by such trust or estate which are presently subject to the terms
of this Agreement are transferred to one or more Stockholders and remain
subject in all respects to the terms of this Agreement, or to other persons
or entities who upon receipt of such Shares become signatories to and bound
by all provisions of this Agreement.
(d) CONFIDENTIALITY. Prior to three years after the Closing Date,
such Principal Shareholder shall not, without the prior written consent of
the Parent, disclose to any other person (other than its attorneys,
accountants, agents and other representatives and agents who have a need to
know such information and are advised of and agree to abide by the
confidentiality restrictions herein set forth) the existence or terms of the
Merger Agreement, the terms or status of any transactions contemplated
thereby or any material information concerning the Company (or the Surviving
Corporation) and its subsidiaries; PROVIDED HOWEVER, that (i) the information
subject to the foregoing provisions of this sentence shall be deemed not to
include any information generally available to the public (other than as a
result of disclosure in violation hereof by any Stockholder or any of its
affiliates, representatives or agents) and (ii) such Stockholder and its
representatives and agents shall not be restricted from making such
disclosures as are required by applicable law, provided the Parent is
provided prompt written notice of any such requirement in order to seek
appropriate remedies with respect thereto and (iii) this Section 2(d) shall
not apply to disclosures made in a Stockholder's capacity as a director,
officer or employee of the Company, the Purchaser, Surviving Corporation or
their subsidiaries in connection with the conduct of their respective
businesses.
(e) NO SOLICITATION OF TRANSACTIONS. Such Stockholder and its
representatives and agents shall immediately cease any existing discussions
or negotiations, if any, with any parties conducted heretofore with respect
to any acquisition or exchange of all or any material portion of the assets
of, or any equity interest in, the Company or any of its subsidiaries or any
business combination with the Company or an y of its subsidiaries. None of
such Stockholder or its representatives or agents shall, directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation,
partnership, person or other entity or group (other than the Parent and the
Purchaser, any affiliate or associate of the Parent and the Purchaser or any
designees of the Parent or the Purchaser) concerning any merger, sale of
assets, sale of shares of capital stock or similar transactions (including an
exchange of stock or assets) involving the Company or any subsidiary
or division of the Company.
3. INDEMNIFICATION. Each Stockholder agrees to the indemnification
provisions contained in Article VIII of the Merger Agreement and agrees to
jointly and severally in demnify such persons in accordance therein.
4. FURTHER ASSURANCES. From time to time, at the Parent's request
and without further cons ideration, each Stockholder shall execute and
deliver such additional documents and take all such further action as may be
necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement.
4
Stockholders Agreement
5. CERTAIN EVENTS. Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to such Stockholder's Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation of law or
otherwise, including without limitation such Stockholder's heirs, guardians,
administrators or successors or as a result of any divorce.
6. TERMINATION. The covenants and agreements contained herein with
respect to the Company Common Stock shall terminate on the first to occur of
(a) the Effective Time and (b) the date the Merger Agreement is terminated in
accordance with its terms and the Parent acknowledges such termination in
writing to the Stockholders (the "TERMINATION DATE").
7. STOCKHOLDERS' REPRESENTATIVE. Xxxxxx X. XxXxxxx hereby agrees
to serve as Stockholders' Representative and agrees to perform and abide by
all the duties and obligations with respect thereto under the Merger
Agreement.
8. MISCELLANEOUS.
(a) ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (i)
constitutes the entire agreement among the parties, or any of them,
with respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or otherwise without the
prior written consent of the other party, provided that the Parent
may assign, in its sole discretion, its rights and obligations
hereunder to any of its affiliates. Any attempted assignment which
does not comply with the provisions of this Section 8 shall be null
and void AB INITIO.
(b) AMENDMENTS. This Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of
a written agreement executed by the parties hereto; provided that
Schedule 1 hereto may be supplemented by the Parent by adding the
name and other relevant information concerning any stockholder of
the Company who agrees to be bound by the terms of this Agreement
without the agreement of any other party hereto, and thereafter
such added stockholder shall be treated as a "Stockholder" for all
purposes of this Agreement.
(c) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given
(and shall be deemed to have been duly given upon receipt) by
delivery in person, by cable, telecopy, telegram or telex or by
registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or
at such other addresses for a party as shall be specified by like
notice):
If to any Xxxxxx X. XxXxxxx
Stockholder: 00000 Xxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
5
Stockholders Agreement
With a copy to: Higham, XxXxxxxxx & Xxxxxxx LLP
00000 Xxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
If to the Parent: Kaynar Technologies Inc.
000 X. Xxxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
With a copy to: O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: C. Xxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
11. ENFORCEMENT. The parties agree that irreparable damage would occur
in the event th at any of the provisions of this Agreement were not
performed in accordan ce with their specific terms or were otherwise
breached. It is accordin gly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement.
12. COUNTERPARTS. This Agreement may be executed 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.
13. DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
14. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full for ce and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
6
Stockholders Agreement
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
7
Stockholders Agreement
IN WITNESS WHEREOF, the Parent and each Stockholder have caused
this Agreement to be duly executed as of the day and year first above written.
KAYNAR TECHNOLOGIES INC.
By: __________________________
Xxxxx X. Xxxxxx
Executive Vice President
STOCKHOLDERS:
XXXXXX X. XXXXXXX
_____________________________
Xxxxxx X. XxXxxxx
XXXXXX X. XXXXXXX FAMILY TRUST
UDT December 28, 1989
By: __________________________
Xxxxxx X. XxXxxxx
Trustee
XXXXXX X. XXXXXXX FAMILY TRUST #2
UDT December 27, 1991
By: __________________________
Xxxxxx X. XxXxxxx
Trustee
XXXXXX X. XXXXXXX FAMILY TRUST
UDT April 30, 1997
By: __________________________
Xxxxxx X. XxXxxxx
Trustee
8
Stockholders Agreement
Acknowledged:
M & M MACHINE AND TOOL CO.
By: __________________________
Xxxxxx X. XxXxxxx
President
9
Stockholders Agreement
SCHEDULE 1
RECORD AND BENEFICIAL OWNERSHIP OF SHARES
----------------------------------------------------------------
----------------------------------------------------------------
Name Number of Shares of
Common Stock Owned
----------------------------------------------------------------
Xxxxxx X. XxXxxxx 10,193
----------------------------------------------------------------
Xxxxxx X. XxXxxxx Family Trust 801
----------------------------------------------------------------
Xxxxxx X. XxXxxxx Family Trust #2 256
----------------------------------------------------------------
Xxxxxx X. XxXxxxx 3,750
----------------------------------------------------------------
Total 15,000
----------------------------------------------------------------
----------------------------------------------------------------
10
Stockholders Agreement
