<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
KAYNAR TECHNOLOGIES INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
[KTI LOGO]
KAYNAR TECHNOLOGIES INC.
500 NORTH STATE COLLEGE BOULEVARD
SUITE 1000
ORANGE, CALIFORNIA 92868-1638
March 31, 1998
Dear Stockholder:
You are invited to attend the Company's first Annual Meeting of stockholders
to be held on Tuesday, April 28, 1998, at 9:00 a.m. at the Anaheim Marriott
Hotel, 700 West Convention Way, Anaheim, California.
I hope that you will attend the meeting in person. The Board of Directors
and management look forward to greeting those stockholders able to attend. The
enclosed proxy materials contain details concerning the matters to be considered
during the Annual Meeting. At the Annual Meeting you will be asked to elect five
directors of the Company and to ratify the selection of Arthur Andersen LLP as
the Company's independent accountants. You will note that the Board of Directors
recommends a vote FOR the election of each of the five directors and FOR
ratification of the selection of Arthur Andersen.
Please complete, sign and return your Proxy Card in the enclosed envelope at
your earliest convenience to assure that your shares will be represented and
voted at the Annual Meeting, even if you cannot attend.
I look forward to seeing you at the Annual Meeting. On behalf of the Board
of Directors, I would like to express our appreciation for your continued
interest in the affairs of the Company.
[/S/ JORDAN A. LAW]
Jordan A. Law
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
<PAGE>
KAYNAR TECHNOLOGIES INC.
500 NORTH STATE COLLEGE BOULEVARD
SUITE 1000
ORANGE, CALIFORNIA 92868-1638
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The annual meeting of stockholders of Kaynar Technologies Inc., a Delaware
corporation (the "Company"), will be held at the Anaheim Marriott, 700 West
Convention Way, Anaheim, California, on Tuesday, April 28, 1998 at 9:00 a.m.,
for the following purposes:
1. To elect the directors to the Board of Directors until their respective
successors are duly elected and qualified;
2. To ratify the selection of Arthur Andersen LLP as independent
accountants of the Company for the fiscal year ending December 31, 1998;
and
3. To transact such other business as may properly come before the meeting
and any and all adjournments or postponements thereof.
Only stockholders of record at the close of business on March 16, 1998 are
entitled to notice of and to vote at the annual meeting and any adjournments
thereof.
Your attention is called to the Proxy Statement on the following pages.
WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE SIGN, DATE AND RETURN THE ENCLOSED
PROXY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. If you attend the meeting, you
may vote your shares in person, which will revoke any previously executed proxy.
If your shares are held of record by a broker, bank or other nominee and you
wish to attend the meeting, you must obtain a letter from the broker, bank or
other nominee confirming your beneficial ownership of the shares and bring it to
the meeting. In order to vote your shares at the meeting, you must obtain from
the record holder a proxy issued in your name.
Regardless of how many shares you own, your vote is very important. PLEASE
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS,
[/s/ D.A. WERNER]
D.A. Werner
SECRETARY
Orange, California
March 31, 1998
<PAGE>
[KTI LOGO]
KAYNAR TECHNOLOGIES INC.
500 NORTH STATE COLLEGE BOULEVARD
SUITE 1000
ORANGE, CALIFORNIA 92868-1638
------------------------
PROXY STATEMENT
---------------------
INTRODUCTION
This Proxy Statement and enclosed Proxy Card are being first mailed on or
about March 31, 1998 to the stockholders of Kaynar Technologies Inc., a Delaware
corporation (the "Company"), for use at the annual meeting of stockholders of
the Company to be held at the Anaheim Marriott Hotel, 700 West Convention Way,
Anaheim, California, on Tuesday, April 28, 1998 at 9:00 a.m. and any
adjournments thereof (the "Annual Meeting"), for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE. ANY PROXY RECEIVED IN TIME FOR THE ANNUAL MEETING WILL BE VOTED AS
SPECIFIED. IF NO INSTRUCTIONS ARE GIVEN, THE PROXIES WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES NAMED BELOW UNDER THE CAPTION "ELECTION OF DIRECTORS,"
WHICH IS DESIGNATED AS PROPOSAL NO. 1; AND FOR THE RATIFICATION OF THE SELECTION
OF ARTHUR ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE YEAR
ENDING DECEMBER 31, 1998, WHICH IS DESIGNATED AS PROPOSAL NO. 2. A PROXY MAY BE
REVOKED BY WRITTEN NOTICE RECEIVED BY THE SECRETARY OF THE COMPANY AT ANY TIME
PRIOR TO THE VOTING THEREOF OR BY ATTENDING THE MEETING IN PERSON AND VOTING
YOUR SHARES.
The Board of Directors has fixed the close of business on March 16, 1998 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting (the "Record Date"). Only stockholders of record
of the Company's Common Stock, par value $.01 per share (the "Common Stock"), at
the close of business on the Record Date are entitled to notice of and to vote
at the Annual Meeting. The Common Stock constitutes the only class of securities
of the Company authorized to vote. As of the close of business on March 16,
1998, there were 3,704,000 shares of Common Stock outstanding and entitled to
vote at the Annual Meeting. Holders of Common Stock are entitled to one vote for
each share held by them on all matters properly brought before the Annual
Meeting. Under the Company's Certificate of Incorporation and applicable state
law, a stockholder is not entitled to cumulate his or her vote in the election
of directors.
The presence, in person or by proxy, of holders entitled to cast at least a
majority of the outstanding shares of Common Stock is necessary to constitute a
quorum for the transaction of business at the Annual Meeting. Assuming the
presence of a quorum at the Annual Meeting, the affirmative vote of a majority
of all votes cast on the matter will be required for the election of each of the
five director nominees and for the ratification of the selection of Arthur
Andersen LLP to serve as the Company's independent accountants. Under Delaware
law, abstentions and broker non-votes (i.e., proxies from brokers or nominees
who disclaim their authority to vote such shares on a particular matter) will be
counted for purposes of determining whether a quorum has been obtained. In all
matters, abstentions will be counted, but broker non-votes will not be counted,
for purposes of determining whether a proposal has been approved. Accordingly,
assuming the presence of a quorum, abstentions will have the effect of a vote
against a proposal.
<PAGE>
The Board of Directors knows of no matters to come before the Annual Meeting
other than the matters referred to in this Proxy Statement. If, however, any
matters properly come before the Annual Meeting, it is the intention of each of
the persons named in the accompanying proxy to vote such proxies in accordance
with such person's discretionary authority to act in such person's best
judgment.
This solicitation is made by the Board of Directors on behalf of the
Company. Costs of the solicitation will be borne by the Company. Further
solicitation of proxies may be made by telephone, telegraph, fax or personal
interview by the directors, officers and employees of the Company, who will not
receive additional compensation for the solicitation. Corporate Investor
Communications, Inc. has been retained to assist in the solicitation of proxies,
for which it will be paid a fee of $3,500 plus reimbursement of out-of-pocket
expenses. The Company will also reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending proxy materials to stockholders.
The principal executive offices of the Company are located at 500 North
State College Boulevard, Suite 1000, Orange, California, 92868-1638.
The Company's 1997 Annual Report, including the financial statements for the
fiscal year ended December 31, 1997, is being mailed to stockholders
concurrently with this Proxy Statement. The Annual Report, however, is not part
of the proxy materials.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
Pursuant to the Company's Certificate of Incorporation, the members of the
Board of Directors are elected at each annual meeting of stockholders and hold
office until their successors have been duly elected and qualified. The Board of
Directors currently consists of five members.
As of the Record Date, General Electric Capital Corporation ("GECC") held
5,206,000 shares of the Company's Series C Convertible Preferred Stock, par
value $.01 per share (the "Series C Preferred Stock"), which constitutes all
issued and outstanding Series C Preferred Stock. Each share of Series C
Preferred Stock is convertible on a one-to-one ratio for Common Stock, subject
to adjustment.
GECC has the right to designate two individuals whom the Company will
nominate for election to the Board of Directors pursuant to a Stockholders
Agreement dated May 6, 1997, among the Company and its then-existing
stockholders (the "Stockholders Agreement") as long as the outstanding Series C
Preferred Stock represents 40% or more of the Fully Diluted Shares. "Fully
Diluted Shares" is defined in the Stockholders Agreement as the sum of (i) the
outstanding Common Stock and (ii) the shares of Common Stock issuable upon
conversion or exercise of all outstanding convertible securities, options and
warrants convertible into, or exercisable for, Common Stock at that time or
within sixty days thereafter. If the Series C Preferred Stock represents 25% or
more, but less than 40%, of the Fully Diluted Shares, GECC will have the right
to designate one individual that the Company will nominate for election to the
Board of Directors. As of the Record Date, GECC owned 58.4% of the Fully Diluted
Shares. GECC has designated Burton J. Kloster, Jr. and Richard P. Strubel as
individuals to be nominated for election to the Board of Directors.
The Board of Directors has nominated Norman A. Barkeley, Jordan A. Law,
David A. Werner, and Messrs. Kloster and Strubel (collectively, the "Nominees")
to continue to serve as the directors of the Company. The Board of Directors
anticipates that each of the Nominees will serve, if elected, as a director.
However, if any person nominated by the Board of Directors is unable to serve,
the proxy confers upon the holders thereof discretionary authority to vote for
the election of such other person or persons as the Board of Directors may
recommend.
The Board of Directors will consider an individual for election to the Board
of Directors recommended by a stockholder of record if the stockholder submits
the nomination in compliance with the
2
<PAGE>
requirements of the Company's Bylaws. See "Stockholder Proposals" for a summary
of these requirements.
INFORMATION REGARDING NOMINEES
The following information is furnished as of the Record Date with respect to
each of the five persons who are Nominees for election to the Board of
Directors.
<TABLE>
<CAPTION>
PERCENT OF
PERCENT OF FULLY
AMOUNT AND NATURE OF COMMON DILUTED
DIRECTOR BENEFICIAL OWNERSHIP STOCK COMMON
NAME AGE(1) SINCE OF COMMON STOCK(2)(3) OUTSTANDING STOCK(4)
- ------------------------------------------- --------- --------- ---------------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Norman A. Barkeley......................... 67 1997 5,750 * *
Burton J. Kloster, Jr...................... 66 1997 10,250 * *
Jordan A. Law.............................. 55 1993 352,544 9.5% 4.0%
Richard P. Strubel......................... 58 1997 3,250 * *
David A. Werner............................ 45 1993 341,564 9.2% 3.8%
</TABLE>
- ------------------------
* Less than one percent.
(1) As of December 31, 1997.
(2) The number of shares beneficially owned by each stockholder is determined
under rules promulgated by the Securities and Exchange Commission (the
"SEC"), and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership
includes any shares as to which the individual has sole or shared voting
power or investment power and also any shares which the individual has the
right to acquire within 60 days after the Record Date. The inclusion herein
of such shares, however, does not constitute an admission that the named
stockholder is a direct or indirect beneficial owner of such shares. Except
as provided under applicable state marital property laws or as otherwise
noted, each person or entity named in the table has sole voting power and
investment power with respect to all shares of capital stock listed as owned
by such person or entity.
(3) For each of Messrs. Barkeley, Kloster, and Strubel, the amount listed
includes options exercisable within 60 days of the Record Date to purchase
250 shares of Common Stock.
(4) "Fully Diluted Common Stock" means, as of the Record Date, the sum of (i)
the number of shares of Common Stock outstanding and (ii) the number of
shares of Common Stock issuable upon conversion or exercise of all
outstanding convertible securities, options and warrants convertible into,
or exercisable for, Common Stock at that time or within sixty days
thereafter.
NORMAN A. BARKELEY has been chairman since July 1988, chief executive
officer from July 1988 to December 1996, and president from July 1988 to
December 1995 of Ducommun Incorporated, an aerospace equipment manufacturer.
BURTON J. KLOSTER, JR. has been retired since September 1995. Until his
retirement, Mr. Kloster was a director of GECC since September 1989, senior vice
president of GECC since October 1984 and vice president, general counsel and
secretary of GECC since March 1976.
JORDAN A. LAW has served as President and Chief Executive Officer of the
Company since October 1993. Mr. Law also serves as Chairman of the Board of
Directors. Mr. Law was president of Aerospace Fastening Systems Group ("AFSG")
of Microdot, Inc., a Delaware corporation ("Old Microdot") from July 1991 to
January 1994.
3
<PAGE>
RICHARD P. STRUBEL has been managing director since June 1990 of Tandem
Partners, Inc., a management services firm. Mr. Strubel was president and chief
executive officer of Old Microdot from January 1984 to October 1994. Mr. Strubel
is a director of Children's Memorial Medical Center located in Chicago and is a
trustee of the University of Chicago. Mr. Strubel also is a trustee of numerous
institutional and retail mutual funds managed by Goldman, Sachs & Co. and a
trustee of the Benchmark Funds, a family of institutional mutual funds managed
by The Northern Trust Company.
DAVID A. WERNER has served as Executive Vice President of the Company since
December 1996 and Secretary of the Company since October 1993. Mr. Werner served
as Vice President and Treasurer of the Company from October 1993 to December
1996. Mr. Werner was vice president and chief financial officer of Old Microdot
from July 1990 to January 1994. Mr. Werner is also a director of Lumber Yard
Supply, a privately-held corporation, and is a certified public accountant.
Messrs. Law, Werner, and Strubel each served as an executive officer of Old
Microdot, which filed a petition under Chapter 11 of the federal bankruptcy laws
in June 1993.
VOTE. The favorable vote of a majority of votes cast for each nominee is
required for election to the Board of Directors. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF THE NOMINEES. PROXIES RECEIVED
WILL BE VOTED FOR EACH OF THE NOMINEES UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN
THE PROXY.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
BOARD OF DIRECTORS. The Company is managed by a Board of Directors composed
of five members, three of whom are not employees of the Company. The Board of
Directors held a total of three meetings during 1997 either in person or by
telephonic conference. Attendance at meetings of the Board of Directors and
Board committees during 1997 by each director was 100%.
BOARD COMMITTEES. The Board of Directors has established an Audit Committee
and a Compensation Committee. As long as the outstanding Series C Preferred
Stock represents 40% or more of the Fully Diluted Shares, each committee must
include the two directors who were designated by GECC. If the outstanding Series
C Preferred Stock represents 25% or more, but less than 40%, of the Fully
Diluted Shares, each committee must include the one director who was designated
by GECC.
AUDIT COMMITTEE. The Audit Committee reviews, acts on and reports to the
Board of Directors with respect to various auditing and accounting matters,
including the selection of the Company's independent accountants, the scope of
annual audits, fees to be paid, the performance of the auditors, and the
accounting practices and audit results of the Company. The Audit Committee
currently consists of two non-employee directors, Messrs. Kloster and Strubel.
The Audit Committee met once during 1997.
COMPENSATION COMMITTEE. The Compensation Committee determines the salaries
and bonus compensation of the Company's executive officers and provides input as
to the salaries and bonus compensation of certain other employees of, and
consultants to, the Company. The Compensation Committee also approves the
Company's incentive compensation and stock plans. The Compensation Committee
currently consists of three non-employee directors, Messrs. Barkeley, Kloster
and Strubel. The Compensation Committee met twice during 1997.
OTHER COMMITTEES. The Bylaws of the Company provide that the Board of
Directors may establish other committees from time to time. The Board of
Directors does not have a standing nominating committee. The full Board of
Directors performs the function of such a committee and will consider nominees,
if any, for election to the Board of Directors who are recommended in accordance
with the provisions of the Bylaws.
4
<PAGE>
COMPENSATION OF DIRECTORS
Non-employee directors are paid $10,000 per year plus $1,000 per meeting for
attending Board meetings or meeting of any Board committee not immediately
preceding or following a meeting of the Board of Directors. Directors who are
employees of the Company are not paid for their services as directors. All
directors, however, are reimbursed for certain expenses in connection with
attendance at Board of Directors and Board committee meetings.
Non-employee directors also participate in the Company's 1997 Stock
Incentive Plan (the "Plan"). Under the Plan, on each January 31 commencing in
1998, each non-employee director received and automatically will receive an
annual grant of options to purchase 500 shares of Common Stock. Upon joining the
Board of Directors, each non-employee director also receives an initial grant of
options to purchase 1,000 shares of Common Stock. All such options have an
exercise price equal to 100% of the fair market value of the Common Stock on the
date of the grant and vest in 25% increments on each successive anniversary date
of the grant. The options generally expire on the earlier of two years after a
termination of service or five years after the date of the grant.
On May 9, 1997, each non-employee director, Messrs. Barkeley, Kloster and
Strubel, received an initial grant of options to purchase 1,000 shares of Common
Stock at an exercise price of $14.50 per share. On January 30, 1998, Messrs.
Barkeley, Kloster and Strubel each received an annual grant of options to
purchase 500 shares of Common Stock at an option exercise price of $26.75 per
share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to March 1997, Messrs. Law and Werner comprised the entire Board of
Directors and, in such capacity, participated in deliberations concerning
executive compensation. During this period, Messrs. Law and Werner also served
as executive officers of the Company. Since the formation of the Compensation
Committee in March 1997, each member of the Compensation Committee has been a
non-employee director of the Company.
EXECUTIVE OFFICERS
Set forth below is certain information concerning the executive officers of
the Company. Officers are appointed by the Board of Directors. All of the
executive officers have employment agreements with the Company as of the Record
Date. See "Employment Contracts and Termination of Employment and Change in
Control Arrangements" below.
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT AND NATURE PERCENT OF FULLY
OF BENEFICIAL COMMON DILUTED
OFFICER OWNERSHIP OF STOCK COMMON
NAME AGE(1) SINCE COMMON STOCK(2) OUTSTANDING STOCK(3)
- ------------------------------------------------ --------- --------- ------------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Jordan A. Law................................... 55 1993 352,544 9.5% 4.0%
PRESIDENT AND CHIEF EXECUTIVE OFFICER
David A. Werner................................. 45 1993 341,564 9.2% 3.8%
EXECUTIVE VICE PRESIDENT
Robert L. Beers................................. 51 1993 210,000 5.7% 2.4%
SENIOR VICE PRESIDENT, MARKETING AND BUSINESS
DEVELOPMENT
LeRoy A. Dack................................... 53 1993 214,976 5.8% 2.4%
DIVISION PRESIDENT, KAYNAR/K-FAST
Joseph M. Varholick............................. 46 1993 55,760 1.5% *
DIVISION PRESIDENT, MICRODOT/RECOIL
</TABLE>
- ------------------------
* Less than one percent.
5
<PAGE>
(1) As of December 31, 1997.
(2) The number of shares beneficially owned by each stockholder is determined
under rules promulgated by the SEC, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares as to which the individual has sole
or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days after the Record Date.
The inclusion herein of such shares, however, does not constitute an
admission that the named stockholder is a direct or indirect beneficial
owner of such shares. Except as provided under applicable state marital
property laws or as otherwise noted, each person or entity named in the
table has sole voting power and investment power with respect to all shares
of capital stock listed as owned by such person or entity.
(3) "Fully Diluted Common Stock" means, as of the Record Date, the sum of (i)
the number of shares of Common Stock outstanding and (ii) the number shares
of Common Stock issuable upon conversion or exercise of all outstanding
convertible securities, options and warrants convertible into, or
exercisable for, Common Stock at that time or within sixty days thereafter.
Biographical information on Messrs. Law and Werner is set forth under
"Information Regarding Nominees" above.
ROBERT L. BEERS has been Senior Vice President, Marketing and Business
Development, of the Company since December 1996. From January 1994 to December
1996, Mr. Beers served as Vice President, Sales and Marketing of the Company.
From June 1991 to January 1994, Mr. Beers was vice president, sales and
marketing, of AFSG.
LEROY A. DACK has been President of the Company's Kaynar and K-Fast
divisions since December 1996. From January 1994 to December 1996, Mr. Dack
served as Vice President and General Manager of the Company's Kaynar division.
From May 1991 to January 1994, Mr. Dack was vice president and general manager
of the Kaynar division of Old Microdot.
JOSEPH M. VARHOLICK has been President of the Company's Microdot division
since December 1996 and Recoil division since July 1997. From January 1994 to
December 1996, Mr. Varholick served as Vice President and General Manager of the
Microdot division. From September 1993 to January 1994, Mr. Varholick was vice
president and general manager of the Microdot Inserts division of Old Microdot.
From May 1992 to September 1993, Mr. Varholick was managing director of Microdot
Aerospace Limited (U.K.), a subsidiary of Old Microdot.
EXECUTIVE COMPENSATION
The following table sets forth a summary of the aggregate indicated
compensation awarded to, earned by, or paid to the Chief Executive Officer of
the Company and the four most highly compensated other executive officers of the
Company whose total annual salary and bonus for the year ended December 31, 1997
was in excess of $100,000 (the "Named Executive Officers").
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
--------------
ANNUAL COMPENSATION SHARES OF
------------------------------------------------- COMMON STOCK
OTHER ANNUAL SUBJECT TO
NAME AND POSITION YEAR SALARY BONUS COMPENSATION OPTIONS
- -------------------------------------------------- --------- ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Jordan A. Law 1997 $ 190,000 $ 250,000 -- 13,000
PRESIDENT AND CHIEF EXECUTIVE 1996 175,000 181,000 -- 0
OFFICER 1995 164,000 123,000 -- 0
David A. Werner 1997 170,000 202,000 -- 12,000
EXECUTIVE VICE PRESIDENT 1996 150,000 144,000 -- 0
1995 139,000 98,000 -- 0
Robert L. Beers 1997 136,000 115,000 -- 7,000
SENIOR VICE PRESIDENT, 1996 124,000 77,000 $ 4,769(1) 0
MARKETING AND BUSINESS DEVELOPMENT 1995 118,000 52,000 -- 0
LeRoy A. Dack 1997 137,000 158,000 -- 11,000
DIVISION PRESIDENT, KAYNAR/K-FAST 1996 122,000 80,000 -- 0
1995 118,000 53,000 -- 0
Joseph M. Varholick 1997 127,500 81,000 -- 10,000
DIVISION PRESIDENT, MICRODOT/RECOIL 1996 110,000 67,000 -- 0
1995 101,000 39,000 -- 0
</TABLE>
- ------------------------
(1) This amount compensated Mr. Beers for vacation time not taken.
OPTION GRANTS
OPTION GRANTS IN FISCAL YEAR 1997. The following table sets forth grants of
options during the fiscal year ended December 31, 1997 to the Named Executive
Officers. No stock appreciation rights were granted to, and no options were
exercised by, any Named Executive Officer during fiscal 1997.
OPTION GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------- VALUE AT ASSUMED
NO. OF ANNUAL RATES OF STOCK
SHARES % OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED PER SHARE FOR OPTION TERM(1)
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ---------------------
NAME GRANTED(2) FISCAL 1997(3) PRICE(4) DATE 5% ($) 10%($)
- ------------------------------------- ----------- ----------------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jordan A. Law........................ 13,000 11.6% $ 25.00 Aug. 2002 $ 90,000 $ 198,000
David A. Werner...................... 12,000 10.7% 25.00 Aug. 2002 83,000 183,000
Robert L. Beers...................... 7,000 6.2% 25.00 Aug. 2002 48,000 107,000
LeRoy A. Dack........................ 11,000 9.8% 25.00 Aug. 2002 76,000 168,000
Joseph M. Varholick.................. 10,000 8.9% 25.00 Aug. 2002 69,000 153,000
</TABLE>
- ------------------------
(1) Potential realizable value is based on the assumption that the Common Stock
price appreciates at the annual rate shown (compounded annually) from the
date of grant until the end of the option term. Such assumptions are
prescribed by certain rules promulgated by the Commission and are not
intended to forecast future appreciation, if any, in the price of the Common
Stock. The actual value, if any, an executive may realize will depend on the
excess of the stock price over the exercise price on the date the option is
exercised (if the executive were to sell the shares on the date of
exercise); there
7
<PAGE>
is no assurance that the value realized will be at or near the potential
realizable value as calculated in this table.
(2) Stock options were granted under the Plan on August 27, 1997 with an
exercise price equal to $25 per share, for a term (subject to earlier
termination following a termination of employment or a change in control) of
five years, and exercisable no earlier than the first anniversary of the
date of grant. The options vest in four equal annual installments. Options
under the Plan may result in payments following the resignation or other
termination of employment with the Company or as a result of a change in
control. Vested options under the Plan generally must be exercised within a
period of twelve months following a termination by reason of death or
disability and three months following a termination for other reasons except
for cause, unless the Compensation Committee otherwise provides. The Plan
permits the Compensation Committee, which administers the Plan, to
accelerate, extend or otherwise modify benefits payable under the applicable
awards in various circumstances as the Compensation Committee shall
determine, including a change in control, but an option generally will not
be accelerated to a date less than six months after its grant date.
(3) During fiscal year 1997, the Company granted options to 66 employees to
purchase an aggregate of 112,400 shares of its Common Stock. All grants were
made at exercise prices equal to the market price on the grant date.
(4) The exercise price may be paid in any combination of cash, promissory notes
and shares of Common Stock or pursuant to certain cashless exercise
procedures, in each case as permitted under the Plan. In addition, holders
may be permitted to offset or surrender shares or deliver already owned
shares in satisfaction of applicable tax withholding requirements.
FISCAL YEAR-END 1997 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR- FISCAL YEAR-
END END ($) (1)
------------- -------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Jordan A. Law............................................................. 0 / 13,000 0 / 45,500
David A. Werner........................................................... 0 / 12,000 0 / 42,000
Robert L. Beers........................................................... 0 / 7,000 0 / 24,500
LeRoy A. Dack............................................................. 0 / 11,000 0 / 38,500
Joseph M. Varholick....................................................... 0 / 10,000 0 / 35,000
</TABLE>
- ------------------------
(1) This amount represents solely the difference between the market value on
December 31, 1997 ($28.50) of those unexercised options which had an
exercise price below such market price (i.e., "in-the-money" options") and
the respective exercise prices of the options. No assumptions or
representations regarding the "value" of such options are made or intended.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
In May 1997, the Company entered into employment agreements with Messrs.
Law, Werner, Beers, Dack and Varholick. The agreements provided for 1997 annual
base salaries for such officers of $190,000, $170,000, $136,000, $137,000 and
$125,000 (subsequently amended to $130,000 in July 1997), respectively, which
are subject to discretionary increases and annual review. For 1998, the annual
review increased those annual base salaries to $225,000, $184,000, $147,000,
$170,000 and $143,000, respectively. The duration of each agreement is one year
(two years for Messrs. Law and Werner); however, each agreement contains an
automatic renewal provision that takes effect every six months unless notice
that the agreement will not be
8
<PAGE>
renewed is given at least 30 days prior to a renewal date. The agreements
provide for participation in all annual bonus, incentive, savings and retirement
and benefit plans offered generally to Company employees.
Prior to a change in control (as defined in each employment agreement), the
Company may terminate an agreement with or without cause. If within one year
following a change in control of the Company, the Company either terminates an
agreement other than for cause or an employee terminates his agreement for good
reason, the Company will pay an amount equal to the sum (or, for Messrs. Law and
Werner, twice the sum) of (i) the highest annual base salary paid to the
employee during the three most recent calendar years ending prior to the year
the change in control occurs and (ii) the amount of the highest bonus or bonuses
paid to the employee for any calendar year ending prior to the year the change
in control occurs.
CERTAIN TRANSACTIONS
FINANCIAL ARRANGEMENTS. The Company entered into the following financing
arrangements with GECC which are believed by the Company to have been obtained
on commercially reasonable terms:
CURRENT LOANS
CREDIT AGREEMENT. In January 1994, the Company entered into a Credit
Agreement (as amended, the "Credit Agreement") with GECC, which provides for
both a term loan and a revolving credit facility (the "Revolver"). The term loan
under the Credit Agreement, which is secured by substantially all of the
Company's assets, was initially issued in the amount of $15.8 million for use in
connection with the AFSG acquisition. Amendments to the Credit Agreement in
December 1994, August 1995, August 1996, December 1996, June 1997, October 1997
and December 1997 increased that amount to a maximum of $28.2 million, the
proceeds of which have been used for working capital purposes, capital
expenditures and additional acquisitions. Quarterly principal repayments
commenced April 1, 1995 and are payable through the maturity date, January 3,
2001. Interest is payable monthly at a rate equal to the 30-day commercial paper
rate plus 1.5% (which was 7.1% as of December 31, 1997). As of December 31,
1997, $21,525,000 in total principal was outstanding under the term loan.
Interest expense on the term loan was approximately $1,907,000 for 1997.
The Revolver is a $21.0 million revolving credit facility, the availability
of which is limited by the lesser of the sum of specified portions of qualified
accounts receivable and inventory and $21.0 million. Interest is payable
monthly, beginning on the date of advance, at a rate equal to the 30-day
commercial paper rate plus 1.5% (which was 7.1% as of December 31, 1997). The
Revolver expires on January 3, 2001. No amount was outstanding under the
Revolver as of December 31, 1997. The average amount outstanding under the
Revolver was approximately $1.3 million in 1997. Interest expense on the
Revolver was approximately $129,000 for 1997.
RECOIL TERM LOAN AGREEMENT. Recoil Pty, an Australian subsidiary of the
Company that was formed to acquire the Australian assets of Recoil, entered into
a separate term loan agreement with GECC in August 1996 to finance the
acquisition, which was amended in October 1997 (as so amended, the "Recoil Term
Loan"). At December 31, 1997, the outstanding principal under the Recoil Term
Loan, which is due and payable on January 3, 2001, was $4.0 million. Interest on
the Recoil Term Loan is payable monthly at a rate equal to the 30-day commercial
paper prime rate plus 1.5% (which was 7.1% as of December 31, 1997). Interest
expense on the Recoil Term Loan for 1997 was approximately $451,000.
PRIOR LOANS
TERM LOAN AGREEMENT. In January 1994, the Company and GECC entered into a
Term Loan Agreement (the "Term Loan Agreement"), pursuant to which GECC loaned
$4.8 million to the Company, which was due and payable on January 3, 1999.
Interest on this term loan, pursuant to the terms of the Term Loan Agreement,
accrued at the fixed rate of 11.5% from January 1, 1996 until May 9, 1997 when
the loan was paid in full. Interest expense on the loan was approximately
$140,000 for 1997.
In August 1996, GECC loaned an additional $4.0 million to the Company under
the Term Loan Agreement for the purchase of certain assets of Recoil Pty Ltd.,
an Australian corporation. Interest on this loan was payable monthly at a rate
equal to the 30 day commercial paper rate plus 1.5% (which was 7.1%
9
<PAGE>
as of December 31, 1997). This loan was paid in full on May 9, 1997. Interest
expense on the loan for 1997 is included within the interest expense computation
for the Credit Agreement.
PAYMENT-IN-KIND (PIK) DIVIDEND NOTE AGREEMENT. In lieu of quarterly cash
dividends on the previously-issued and since-retired shares of the Company's
Series A and Series B Preferred Stock, the Company issued PIK dividend notes to
GECC. Interest on the PIK dividend notes accrued at the rate of 11.5% from
January 1, 1996 until each PIK dividend note was paid in full on May 9, 1997.
Total interest expense on all PIK dividend notes was approximately $282,000 for
1997.
INITIAL PUBLIC OFFERING
In May 1997, the Company completed its initial public offering of shares of
Common Stock (the "Offering") which raised gross proceeds of $33.4 million
pursuant to an underwriting agreement with Lehman Brothers Inc. and PaineWebber
Incorporated acting as representatives. Of the 2.3 million shares sold, 200,000
shares were on behalf of GECC as selling stockholder. At the time of the
Offering, GECC indirectly owned approximately 23% of PaineWebber Group, which is
the holding company of PaineWebber Incorporated. As a result, the Offering was
subject to the requirements of Rule 2720 of the National Association of
Securities Dealers, Inc., which required that the offering price be no higher
than that recommended by a "qualified independent underwriter" meeting certain
standards. In accordance with that requirement, Lehman Brothers Inc. recommended
the public offering price, performed due diligence investigations, and reviewed
and participated in the preparation of the prospectus and registration statement
in connection with the Offering. The Company paid a total of $2,334,500 in the
form of underwriting discounts and commissions in connection with the Offering.
OTHER ARRANGEMENTS
In the ordinary course of business, the Company supplies fasteners, inserts
and other products to the Aircraft Engines Division of the General Electric Co.
("GE"). GE is the indirect parent company of GECC. The Company made direct sales
of approximately $13.0 million to the GE Aircraft Engines Division in 1997,
representing approximately 9% of the Company's net sales in 1997. The Company
believes that its sales to the GE Aircraft Engines Division have been conducted
at competitive market rates. The Company believes that its financial
transactions with GECC have not played a role in the bids or related
negotiations with the GE Aircraft Engines Division.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION GUIDELINES
OBJECTIVES OF THE COMPANY'S EXECUTIVE COMPENSATION PROGRAM. The Company's
overall compensation philosophy is to provide compensation that will attract,
retain and reward experienced, highly motivated executives who are capable of
leading the Company effectively and continuing its growth.
ELEMENTS OF THE PROGRAM. In order to achieve these objectives, the
Compensation Committee has adopted a program with three separate components that
it believes provide a combination of cash and equity-based compensation with
appropriate incentives for executive officers to achieve the business objectives
of the Company. In particular, the Compensation Committee believes that:
- FIRST, the Company should offer competitive base salaries within its
industry and among companies of similar sizes;
- SECOND, a substantial portion of total annual executive officer
compensation should be "at risk" through short-term incentives relating to
measured financial performance; and
- THIRD, by utilizing long-term incentives created through the Plan, the
Company should better align the interests of management with those of its
stockholders.
BASE SALARY. Each executive officer's base salary is reviewed annually.
Salary adjustments are determined by a number of factors including promotion,
performance, inflation, internal equity, increases in levels of responsibility
and the market rate for similar positions. In 1997, the Company reviewed salary
surveys of comparably sized companies to assist the Compensation Committee in
determining appropriate base salaries for the executive officers.
10
<PAGE>
SHORT-TERM INCENTIVE COMPENSATION. The Company's short-term incentive
program promotes the Company's philosophy that a substantial portion of the
total annual executive officer compensation should be "at-risk" by providing
executives with direct financial incentives on an annual basis based on the
Company's actual return on average capital employed and other factors that the
Compensation Committee may deem appropriate from time to time. The level of
incentive pay opportunity, by position, is established prior to the beginning of
the fiscal year by the Committee and approved by the Board of Directors.
LONG-TERM INCENTIVE COMPENSATION. The Compensation Committee believes that
awards of stock options issued pursuant to the Plan promote the interest of the
Company by providing performance incentives to executive officers and key
employees who are responsible for the management, growth and financial success
of the Company. Options are priced at 100% of the fair market value of the
Common Stock on the date of grant. In general, each option vests and becomes
exercisable with respect to 25% of the underlying shares of Common Stock on each
successive anniversary date of the grant. Since the options have no economic
value to recipients until the price of the Company's Common Stock exceeds the
exercise price, and since the option grants require the recipient to serve for a
period of time before all or a portion of the option may be exercised, the
Compensation Committee believes that executives are motivated to manage their
businesses in ways that over the long term will benefit stockholders through an
increased stock price.
As a general rule, the Committee considers the level of the recipient's job
responsibility, his or her potential impact on the Company's performance and the
frequency and amount of prior option grants in arriving at the number of shares
to be granted under the Plan. Neither the Company nor the Compensation Committee
has established a target ownership level for equity holding in the Company by
executive officers and key employees.
CEO COMPENSATION. Mr. Law is the Chairman of the Board and Chief Executive
Officer of the Company. In applying the factors discussed above, his base pay of
$190,000 in effect for 1997 was 9% greater than 1996, reflecting an increase
determined by survey data for similar positions and responsibility.
Mr. Law's incentive compensation earned in 1997 totaled $250,000, based
primarily upon actual company financial performance, and was paid in cash. Mr.
Law's total incentive compensation for 1997 represents a 38% increase over the
amount earned in 1996 and 132% of his base salary in effect for 1997. The
Company's financial performance generated an above target incentive for Mr. Law
based on exceeding by a significant margin the financial goals set prior to the
beginning of the year. In 1997, Mr. Law received options to purchase 13,000
shares of Common Stock at an exercise price of $25.00 per share in recognition
of his effective leadership based on the Company substantially exceeding the
targeted levels for sales, earnings before interest and taxes, and return on
average capital employed.
SECTION 162(M) ISSUES. The Compensation Committee has reviewed the
potential consequences for the Company of Section 162(m) of the Internal Revenue
Code, as amended, which imposes a limit on tax deductions for annual
compensation in excess of $1 million to any of the five most highly compensated
executive officers. The Compensation Committee's policy with respect to Section
162(m) is to make reasonable efforts to ensure that compensation is deductible
to the extent permitted, while preserving the authority to pay compensation that
may not be deductible if that is considered advisable to appropriately reward
executive officers for their performance. Section 162(m) had no impact on the
Company in 1997 and is currently expected to have little or no impact in 1998.
Submitted by the Compensation
Committee:
Norman A. Barkeley
Burton J. Kloster, Jr.
Richard P. Strubel
PERFORMANCE GRAPH
The SEC requires the Company to present a chart comparing the cumulative
total stockholder return on its shares with the cumulative total stockholder
return on (1) a broad equity market index and (2) a published industry index or
peer group. The graph compares the yearly percentage change in the
11
<PAGE>
Company's cumulative total stockholder return with the cumulative total return
of the Russell 2000 Index and an Aerospace/Defense Industry Peer Group for the
periods indicated. Although the chart would normally be for a five-year period,
the shares of the Company began public trading on May 9, 1997 and, as a result,
the following chart commences as of such date. The graph assumes that the shares
of the Common Stock were purchased at the Offering price of $14.50 per share and
that the value of the investment in each of the Common Stock and the indices was
$100 at the beginning of the period. The graph further assumes the reinvestment
of dividends.
The historical information set forth below is not necessarily indicative of
future price performance. Data for the Russell 2000 Index and the
Aerospace/Defense Industry Peer Group were provided to the Company by the Frank
Russell Company.
TOTAL RETURN PERFORMANCE(1)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
KTIC RUSSELL 2000 PEER GROUP
<S> <C> <C> <C>
5/9/97 $100.00 $100.00 $100.00
2Q97 $116.94 $109.97 $108.77
3Q97 $192.74 $126.33 $126.71
4Q97 $183.87 $122.10 $123.55
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDING
------------------------------------------
INDEX 5/9/97 6/31/97 9/30/97 12/31/97
- ---------------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Kaynar Technologies Inc............................................... $ 100.00 $ 116.94 $ 192.74 $ 183.87
Russell 2000.......................................................... $ 100.00 $ 109.97 $ 126.33 $ 122.10
Aerospace/Defense Industry Peer Group................................. $ 100.00 $ 108.77 $ 126.71 $ 123.55
</TABLE>
- ------------------------
(1) The Aerospace/Defense Industry Peer Group used in the Performance Graph
consists of the following companies: AAR Corp., Aeroquip-Vickers Inc., BE
Aerospace Inc., Coltec Industries, Crane Co., Curtiss-Wright Corp., Ducommun
Inc., Hexcel Corp., MOOG Inc., SPS Technologies Inc., Fairchild Corp., and
Thiokol CP.
12
<PAGE>
PRINCIPAL STOCKHOLDERS
The table below sets forth information as of March 16, 1998 with respect to
the only persons or groups known by the Company to be the beneficial owners of
5% or more of the outstanding shares of Common Stock, based upon Schedule 13G
reports filed with the Commission and the number of shares of Common Stock
beneficially owned by its officers and directors as a group.
Each of the persons listed below, other than GECC, which has reported that
it may be considered a beneficial owner of more than 5% of the Company's
outstanding shares of Common Stock has certified that, to the best of its
knowledge and belief, the shares were acquired in the ordinary course of
business and were not acquired for the purpose of and do not have the effect of
changing or influencing the control of the Company and were not acquired in
connection with or as a participant in any transaction having such purpose or
effect. The number of shares of Common Stock beneficially owned by each director
is set forth in "Information Regarding Nominees" and by each Named Executive
Officer in "Executive Officers."
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK OR COMMON STOCK
EQUIVALENTS BENEFICIALLY OWNED(1)(2)
----------------------------------------------
NAME AND ADDRESS COMMON STOCK FULLY DILUTED
OF BENEFICIAL OWNER NUMBER PERCENTAGE PERCENTAGE(3)
- ---------------------------------------------------------------------- ---------- ----------------- ---------------
<S> <C> <C> <C>
General Electric Capital Corporation(4) 5,206,000 0.0% 58.4%
201 High Ridge Road
Stamford, Connecticut 06927
The Northwestern Mutual Life Insurance Co.(5) 242,700 6.6% 2.7%
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Delaware Management Company Inc.(6) 237,200 6.4% 2.7%
2005 Market Street
Philadelphia, Pennsylvania 19103
Wellington Management Company, LLP(7) 198,500 5.4% 2.2%
75 State Street
Boston, Massachusetts 02109
All directors and executive officers as a group (8 persons) (8) 1,194,094 32.2% 13.4%
</TABLE>
- ------------------------
(1) Shares of Series C Preferred Stock are treated as Common Stock equivalents
because they are convertible at any time into Common Stock at a one-to-one
conversion rate, subject to adjustment in certain circumstances.
(2) The number of shares beneficially owned by each stockholder is determined
under rules promulgated by the SEC, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares as to which the individual has sole
or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days after March 16, 1998. The
inclusion herein of such shares, however, does not constitute an admission
that the named stockholder is a direct or indirect beneficial owner of such
shares. Except as provided under applicable state marital property laws or
as otherwise noted, each person or entity named in the table has sole voting
power and investment power with respect to all shares of capital stock
listed as owned by such person or entity.
(3) "Fully Diluted Percentage" means, as of the Record Date, the sum of (i) the
number of shares of Common Stock outstanding and (ii) the number of shares
of Common Stock issuable upon conversion or exercise of all outstanding
convertible securities, options and warrants convertible into, or
exercisable for, Common Stock at that time or within sixty days thereafter.
(4) A Schedule 13G filed February 12, 1998 indicates that the reporting entities
also include General Electric Capital Services, Inc. ("GECS"), the parent
company of GECC, and GE, the parent company
13
<PAGE>
of GECS, both of whom have disclaimed beneficial ownership of the shares.
GECC only holds shares of Series C Preferred Stock and its holdings
constitute all of the outstanding shares of Series C Preferred Stock.
(5) A Schedule 13G filed February 4, 1998 indicates that the reporting entity is
an insurance company, which has sole voting power and disposition power with
respect to all of the shares, and states that the shares are held by two
investment company affiliates registered under the Investment Company Act of
1940: (i) 232,200 held by the Growth Stock Portfolio of Northwestern Mutual
Series Fund, Inc. and (ii) 10,500 shares held by the Aggressive Growth Stock
Fund of Mason Street Funds, Inc.
(6) A Schedule 13G filed February 9, 1998 indicates that the reporting entity is
a parent holding company, which has sole voting power with respect to 66,900
shares and sole disposition power with respect to all of the shares.
(7) A Schedule 13G filed February 1, 1998 indicates that the reporting entity is
both a registered investment adviser and a parent holding company, which has
sole voting power with respect to 174,500 shares and sole disposition power
with respect to all of the shares.
(8) Includes options to purchase shares of Common Stock under the Plan which are
currently exercisable or exercisable within 60 days of the Record Date.
PROPOSAL NO. 2: RATIFICATION OF SELECTION OF
INDEPENDENT ACCOUNTANTS
(ITEM 2 ON PROXY CARD)
Subject to ratification by the stockholders, the Board of Directors, on the
recommendation of the Audit Committee, has selected Arthur Andersen LLP as
independent accountants to audit the financial statements of the Company for the
fiscal year ending December 31, 1998. Arthur Andersen LLP has served as the
principal independent accountants for the Company since 1993. The Company has
also engaged Arthur Andersen LLP for tax consulting on an on-going basis and,
from time to time, to assist the Company in evaluating proposed acquisitions.
There are no other affiliations between the Company and Arthur Andersen LLP, its
partners, associates or employees, other than as pertain to the engagement of
Arthur Andersen LLP as independent accountants for the Company in previous
fiscal years or as described above.
If the stockholders of the Company do not ratify the selection of Arthur
Andersen LLP, or if such firm should decline to act or otherwise become
incapable of acting, or if the employment should be discontinued, the Board of
Directors, on the recommendation of the Audit Committee, will appoint substitute
independent accountants. A representative of Arthur Andersen LLP will be present
at the Annual Meeting, will be given the opportunity to make a statement if he
or she so desires, and will be available to respond to appropriate questions.
VOTE. The favorable vote of a majority of votes cast regarding the proposal
is required to ratify the selection of Arthur Andersen LLP. THE BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR
THE YEAR ENDING DECEMBER 31, 1998. PROXIES RECEIVED WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY OTHERWISE IN THE PROXY.
OTHER MATTERS
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
paid by the Company. Solicitation will be made primarily by mail, but regular
employees of the Company, without additional remuneration, may solicit proxies
by telephone, telegram, facsimile and personal interviews. The Company will also
request person, firms, or corporations holding shares in their name or in the
names of their nominees, which are beneficially owned by others, to send proxy
materials to and obtain proxies from such beneficial owners. The Company will
reimburse such holders for their reasonable expenses.
14
<PAGE>
The Company has retained Corporate Investor Communications, Inc. to assist
in the solicitation of proxies. Corporate Investor Communications, Inc. will be
paid approximately $3,500, plus out-of-pocket expenses, for its services.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10% of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and to furnish copies of such
forms to the Company. Based solely on a review of the copies of such forms
furnished to the Company and/or on written representations that no filings were
required, the Company believes that during its past fiscal year all of its
officers, directors and greater than 10% owners complied with the filing
requirements of Section 16(a) with the exception of (i) Mr. Kloster; (ii) Robert
M. Nelson, the Company's chief accounting officer; and (iii) GECC, each of whom
did not timely file Form 3. In all cases, the untimely filings were inadvertent
and in no case did the late filing of a Form 3 result in the failure to timely
report any purchase or sale transaction.
REPORTS
The Annual Report for the fiscal year ended December 31, 1997, describing
the Company's operations and including audited financial statements, has been
mailed prior to or concurrently with this Proxy Statement. THE COMPANY WILL
PROVIDE A COPY OF ITS MOST RECENT REPORT TO THE SEC ON FORM 10-K UPON THE
WRITTEN REQUEST OF ANY BENEFICIAL OWNER OF THE COMPANY'S SECURITIES AS OF THE
RECORD DATE WITHOUT CHARGE EXCEPT FOR THE COST OF REPRODUCING EXHIBITS. SUCH
REQUESTS SHOULD BE ADDRESSED TO KAYNAR TECHNOLOGIES INC., 500 NORTH STATE
COLLEGE BOULEVARD, SUITE 1000, ORANGE, CALIFORNIA 92868-1638, ATTENTION: DAVID
A. WERNER, SECRETARY.
STOCKHOLDER PROPOSALS
For a matter to be properly presented at the Annual Meeting by a
stockholder, the Secretary of the Company must have received written notice
thereof after December 31, 1997 and on or before March 1, 1998, as specified in
the Company's Bylaws.
A stockholder proposal submitted pursuant to Exchange Act Rule 14a-8 for
inclusion in the Company's proxy statement and form of proxy for the 1999 annual
meeting stockholders must be received by the Company by December 2, 1998. Such a
proposal must also comply with the requirements as to form and substance
established by the Commission for such proposals. A stockholder otherwise
desiring to bring discussion before an annual meeting of stockholders (including
any proposal relating to the nomination of a director to be elected to the Board
of Directors) must submit a proposal that is received at the principal executive
offices of the Company not less than sixty nor more than ninety days prior to
next year's annual meeting. Any such proposal should be mailed to: Secretary,
Kaynar Technologies Inc., 500 North State College Boulevard, Suite 1000, Orange,
California 92868-1638. Copies of the Certificate of Incorporation and Bylaws may
be obtained by providing a written request to the Secretary of the Company at
that address.
OTHER BUSINESS
The Board of Directors does not know of any other business that will be
presented for consideration at the Annual Meeting. If any other business
properly comes before the Annual Meeting or any adjournment or postponement
thereof, the proxy holders will vote in regard thereto according to their
discretion insofar as such proxies are not limited to the contrary.
15
<PAGE>
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
TODAY.
Dated: March 31, 1998 By order of the Board of Directors,
[/s/ D.A. WERNER]
David A. Werner
SECRETARY
16
<PAGE>
KAYNAR TECHNOLOGIES INC.
BOARD OF DIRECTORS PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
AT 9:00 A.M., TUESDAY, APRIL 28, 1998
The undersigned stockholder of Kaynar Technologies Inc. (the "Company")
hereby revokes any proxy or proxies previously granted and appoints W. Robert
Morrow and Violeta Rotz, or either of them, as proxies, each with full powers
of substitution and resubstitution, to vote the shares of the undersigned at
the above-stated Annual Meeting and at any adjournments thereof:
- FOLD AND DETACH HERE -
<PAGE>
Please mark your votes as indicated in this example /X/
1. Election of Directors.
FOR all nominees listed below (except as provided to the contrary below) / /
WITHHOLD AUTHORITY to vote for all nominees below / /
Norman A. Barkeley, Burton J. Kloster Jr., Jordan A. Law, Richard P.
Strubel, and David A. Werner.
(INSTRUCTION: To withhold authority to vote for any individual nominee(s),
write that nominee's name in the space provided below.)
- ----------------------------------------------------------------------
2. Ratification of the Selection of Arthur Andersen LLP as Independent
Accountants
FOR / /
WITHHOLD AUTHORITY / /
3. On any other business that may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE REVERSE SIDE. IF A CHOICE IS NOT
INDICATED WITH RESPECT TO ITEM (1) THIS PROXY WILL BE VOTED "FOR" EACH OF THE
NOMINEES LISTED AND WITH RESPECT TO ITEM (2) THIS PROXY WILL BE VOTED "FOR"
RATIFYING THE SELECTION OF INDEPENDENT ACCOUNTANTS. THE PROXIES WILL USE THEIR
DISCRETION WITH RESPECT TO ANY MATTER REFERRED TO IN ITEM (3). THIS PROXY IS
REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.
RECEIPT HEREWITH OF THE COMPANY'S ANNUAL REPORT AND NOTICE OF MEETING AND PROXY
STATEMENT, DATED MARCH 31, 1998, IS HEREBY ACKNOWLEDGED.
PLEASE SIGN, DATE AND MAIL TODAY.
Signature(s)_______________________________________ Dated _________, 1998
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
- FOLD AND DETACH HERE -
