<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Sheldahl, Inc.
----------------
(Name of Issuer)
Common Stock, par value $.25 per share
--------------------------------------
(Title of Class of Securities)
822440103
--------------
(CUSIP Number)
Louis A. Hecht, Esq.
Corporate Secretary and General Counsel
Molex Incorporated
2222 Wellington Court
Lisle, Illinois 60532-1682
(630) 969-4550
-------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 30, 1998
-----------------------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rules 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [ ]
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act.
(Continued on following page)
<PAGE> 2
CUSIP No. 822440103 13D
1 NAME OF REPORTING PERSON Molex Incorporated
2 CHECK THE APPROPRIATE BOX (a) [ ]
IF A MEMBER OF A GROUP (b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF 7 SOLE VOTING POWER 2,411,220
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 2,411,220
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE POWER 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,441,220
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) - 20.6%*
14 TYPE OF REPORTING PERSON CO
*/ Based upon the 9,660,615 shares of the Company's Common Stock represented to
be outstanding as of July 29, 1998 by the Company in the Stock Purchase
Agreement (as defined herein). Includes 340,000 shares of the Company's
Common Stock held by Molex, assumes the exercise of the Warrant (as defined
herein) held by Molex to acquire 120,000 shares of the Company's Common
Stock and assumes the conversion of the 12,000 shares of the Company's
Series D Convertible Preferred Stock held by Molex into Common Stock.
<PAGE> 3
CUSIP No. 822440103 13D
ITEM 1. SECURITY AND ISSUER
This statement relates to the common stock, par value $.25 per share
(the "Common Stock"), of Sheldahl, Inc. a Minnesota corporation (the
"Company"). The Company's principal executive offices are located at 1150
Sheldahl Road, Northfield, Minnesota 55057.
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed by Molex Incorporated, a Delaware corporation
("Molex"). Molex is a leading manufacturer of electronic, electrical and fiber
optic interconnection products and systems; switches; and application tooling.
The address of the principal business and principal office of Molex is 2222
Wellington Court, Lisle, Illinois 60532-1682.
Information responsive to Items 2(a), 2(b), 2(c) and 2(f) of Schedule
13D in respect of each of the directors and executive officers of Molex is set
forth in Annex I to this Schedule 13D and is incorporated herein by reference.
Frederick A. Krehbiel, Chairman of the Board and Chief Executive Officer of
Molex, and John H. Krehbiel, Jr., President and a director of Molex, are the
trustees of the John H. Krehbiel Trust dated May 14, 1981, as amended and
restated (the "Trust"). The Trust, Frederick A. Krehbiel and John H.
Krehbiel, Jr. are general and limited partners of the Krehbiel Limited
Partnership, an Illinois limited partnership (the "Partnership"). The Trust
was formed for estate planning purposes, and the Partnership was formed for the
purpose of consolidating voting power and control with respect to shares of
Molex capital stock beneficially owned by certain members of the Krehbiel
family into one entity. Partnership actions with respect to shares of Molex
capital stock held by the Partnership, including the exercise of voting rights
and any action to sell, exchange or otherwise dispose of such shares, require
the unanimous approval of the Trust, Frederick A. Krehbiel and John H.
Krehbiel, Jr. Beneficial ownership of Molex capital stock by the Trust,
Frederick A. Krehbiel and John H. Krehbiel, Jr. provides such parties, if
acting in concert, with virtual power to elect or remove the members of the
Board of Directors of Molex and determine the outcome of matters requiring
approval of the stockholders of Molex. The address of the principal business
and principal office of the Trust and the Partnership is c/o Molex
Incorporated, 2222 Wellington Court, Lisle, Illinois 60532-1682.
During the last five years, neither Molex nor, to its knowledge, the
Trust, the Partnership, or any of their respective trustees, partners,
directors or executive officers (i) has been convicted in any criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) has
been a party to any civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
<PAGE> 4
CUSIP No. 822440103 13D
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On July 30, 1998, Molex purchased 12,000 shares (the "Shares") of the
Company's Series D Convertible Preferred Stock (the "Series D Preferred
Stock"), with a par value of $1.00 per share and a stated value of $1,000 per
share (the "Stated Value"), from the Company at a cost of $1,000 per share, or
an aggregate of $12,000,000, pursuant to that certain Convertible Preferred
Stock Purchase Agreement dated as of July 30, 1998 (the "Stock Purchase
Agreement") among the Company, Molex and certain other purchasers of Series D
Preferred Stock named therein. As partial consideration for the transaction,
the Company issued a warrant (the "Warrant") to Molex to purchase up to 120,000
shares of the Company's Common Stock at an exercise price equal to $7.6875 per
share (subject to adjustment as provided therein), exercisable at any time from
July 30, 1998 (the "Closing Date") through and including July 29, 2001. All
funds used by Molex to purchase the Shares were obtained from the working
capital of Molex.
ITEM 4. PURPOSE OF TRANSACTION
Molex acquired the Shares and the Warrant for the purpose of acquiring an
additional equity investment in the Company.
Molex may purchase additional securities of the Company from time to time,
which may result in acquiring control of the Company, or propose, or exercise
its right of first refusal described in Item 6 below with respect to, an
extraordinary business transaction involving the Company, either itself,
through entities under its control and/or in concert with others, either in
open market transactions, in privately- negotiated transactions or otherwise
depending on Molex's evaluation of the Company's business, prospects and
financial condition, the market for the stock of the Company, the terms and
conditions of the transaction, other opportunities available to Molex,
prospects for Molex's own business, general market conditions, financial market
conditions and other factors Molex may deem relevant to its investment
decisions. Molex also may, subject to the transfer restrictions contained in
the Stock Purchase Agreement and Registration Rights Agreement discussed in
item 6 below, either itself, through entities under its control and/or in
concert with others, dispose of some or all of its investment in the Company
depending on similar considerations. Such dispositions may be made from time
to time in open market transactions, underwritten public offerings,
privately-negotiated transactions or otherwise, on such terms and at such
prices as Molex shall determine. A purchase or sale of additional securities
of the Company by Molex could result in a change of control and/or a change in
management and policies of the Company or lead to an extraordinary corporate
transaction.
Except as set forth in this Item 4 or in Item 6 below, neither Molex, nor
to its knowledge, the Trust, the Partnership or any of their respective
trustees, partners, directors or executive officers has any present plans or
proposals that relate to or that could result in any of the actions specified
in clauses (a) through (j) of Item 4 of Schedule 13D.
<PAGE> 5
CUSIP No. 822440103 13D
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the date hereof, Molex beneficially owned 2,411,220 shares
of Common Stock, or approximately 20.6% of the shares of Common Stock
outstanding (assuming exercise of the Warrant and conversion of the Series D
Preferred Stock held by Molex into Common Stock). To Molex's knowledge,
neither the Trust nor the Partnership, nor any of the trustees, partners,
directors or executive officers of Molex, the Trust or the Partnership,
beneficially owns any shares of Common Stock, except that (a) by virtue of
their collective authority as members of the Board of Directors of Molex, the
directors of Molex may be deemed to share the power to direct the vote, and to
direct the disposition, of the shares of Common Stock by Molex and (b) by
virtue of their beneficial ownership of Molex capital stock described in Item 1
hereof, the Trust, Frederick A. Krehbiel and John H. Krehbiel, Jr. may be
deemed to share the power to direct the vote, and to direct the disposition, of
the shares of Common Stock beneficially owned by Molex. Any such indirect
beneficial ownership is hereby disclaimed. The percentages used in this
paragraph 5(a) are calculated based upon the 9,660,615 shares of Common Stock
represented to be outstanding as of July 29, 1998 by the Company in the Stock
Purchase Agreement.
(b) Molex has sole voting power and sole investment power with respect to
the 2,411,220 Shares of Common Stock that it beneficially owned as of the date
hereof. To Molex's knowledge, neither the Trust nor the Partnership, nor
any of the trustees, partners, directors or executive officers of Molex, the
Trust or the Partnership, has any sole or shared voting power or investment
power with respect to any shares of Common Stock, except that, (a) by virtue of
their collective authority as members of the Board of Directors of Molex, the
directors of Molex may be deemed to share the power to direct the vote, and to
direct the disposition, of the shares of Common Stock beneficially owned by
Molex and (b) by virtue of their beneficial ownership of Molex capital stock
described in Item 1 hereof, the Trust, Frederick A. Krehbiel and John H.
Krehbiel, Jr. may be deemed to share the power to direct the vote, and to direct
the disposition, of the shares of Common Stock beneficially owned by Molex. Any
such indirect beneficial ownership is hereby disclaimed.
(c) The responses to Items 3 and 4 of this statement are incorporated
herein by reference. In addition, Molex has effected the following purchases
of Common Stock during the preceding 60 days:
<TABLE>
<CAPTION>
Date of Purchase No. of Shares Price Per Share
---------------- ------------- ---------------
<S> <C> <C>
6/3/98 65,000 $9.0480
6/4/98 15,000 $9.1250
6/5/98 20,000 $9.3440
7/7/98 20,000 $8.4840
7/8/98 20,000 $8.5625
</TABLE>
Except as set forth in Items 3 and 4 above and in this Item 5(c), neither Molex
nor to its knowledge, the Trust, the Partnership, or any of their respective
trustees, partners, directors
<PAGE> 6
CUSIP No. 822440103 13D
or executive officers has effected any transactions in the Common Stock during
the preceding 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
On July 30, 1998, Molex purchased 12,000 Shares of Series D Preferred
Stock from the Company pursuant to the Stock Purchase Agreement.
Certificate of Designation
The Certificate of Designation, Preferences and Rights of Series D
Convertible Preferred Stock of the Company, dated July 30, 1998 (the
"Certificate of Designation"), provides, among other things, that holders of
Series D Preferred Stock are entitled to receive, annually on July 30 of each
year, in arrears, dividends on the Series D Preferred Stock at a rate per share
(as a percentage of the Stated Value per share) equal to 5% per annum, payable
(except in certain limited circumstances) in shares of Common Stock or, at the
option of the Company, in cash, provided that such payment may not be made
until all accrued and unpaid dividends on the Company's Series B Preferred
Stock previously issued by the Company ("Series B Preferred Stock") for all
past dividend periods have been paid and all conversion notices related thereto
have been honored to the date of such payment.
Except in certain limited circumstances set forth in the Certificate of
Designation and as otherwise required by law, the Series D Preferred Stock
has no voting rights. Upon any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of the Series D
Preferred Stock are entitled to receive out of the assets of the Company,
whether such assets are capital or surplus, an amount per share equal to the
Stated Value plus accrued but unpaid dividends per share, whether declared or
not, after payment of all amounts due the holders of the Series B Preferred
Stock but before any distribution or payment is made to the holders of the
Company's Junior Securities (as defined in the Certificate of Designation),
including the Common Stock.
Each share of Series D Preferred Stock is convertible by the holder thereof
into shares of Common Stock at the Conversion Ratio (as defined below) at the
option of the holder in whole or in part at any time after the Closing Date.
If, at any time after six months following the Closing Date, the Per Share
Market Value (as defined in the Certificate of Designation) of the Common Stock
is greater than $12.30 for at least 30 consecutive business days and the average
daily trading volume of the Common Stock on the Nasdaq National Market for such
30 consecutive business days exceeds 50,000 shares (subject to adjustment as
provided therein), then the Company may, upon 10 days notice provided
thereafter, require the conversion of all but not less than all of the then
outstanding Series D Preferred Stock at the Conversion Ratio calculated on the
Company Conversion Date (as
<PAGE> 7
CUSIP No. 822440103 13D
defined in the Certificate of Designation). All, but not less than all, of the
then outstanding Series D Preferred Stock shall automatically be converted at
the Conversion Ratio on the date of the closing of a Public Offering (as
defined below) or such other date as directed by the managing underwriter.
"Conversion Ratio" with respect to a share of Series D Preferred Stock
means a fraction, of which the numerator is the Stated Value of such share plus
accrued and unpaid dividends (including any accrued but unpaid interest
thereon) but only to the extent not paid in cash in accordance with the
Certificate of Designation, and of which the denominator is the Conversion
Price at such time. The "Conversion Price" is initially $6.15, subject to
adjustment from time to time as provided in the Certificate of Designation.
"Public Offering" means a firm commitment underwritten public offering
of Common Stock under which the gross cash proceeds to the Company (after
underwriting discounts, commissions and fees) are at least $25 million and in
which the offering price in such public offering is not less than 200% of the
Conversion Price.
Stock Purchase Agreement
The Stock Purchase Agreement provides, among other things, that if
Molex should decide to dispose of any of the Shares, the Warrant or the shares
of Common Stock issuable upon conversion of the Shares, exercise of the Warrant
or which may be issued as payment of dividends on the Shares in accordance with
the Certificate of Designation (collectively, the "Securities"), Molex may only
do so only pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), or pursuant to an available
exemption from the registration requirements of the Securities Act. In
connection with any transfer of any Securities other than pursuant to an
effective registration statement or to the Company or to an affiliate of Molex
or pursuant to Rule 144 under the Securities Act, the Company may require Molex
to provide the Company with a written opinion of counsel experienced in the
area of United States securities laws selected by Molex, the form and substance
of which shall be reasonably satisfactory to the Company, to the effect that
such transfer does not require registration of such transferred securities
under the Securities Act.
Warrant
In connection with the transactions contemplated by the Stock Purchase
Agreement, the Company issued the Warrant to Molex to purchase, upon the terms
and subject to the conditions set forth therein, up to 120,000 shares of Common
Stock at an exercise price equal to $7.6875 per share (subject to adjustment as
provided therein), exercisable at any time from the Closing Date through and
including July 29, 2001.
Registration Rights Agreement
In connection with the transactions contemplated by the Stock Purchase
Agreement, the Company, Molex and the other purchasers of the Series D
Preferred Stock named therein entered into a Registration Rights Agreement
dated as of July 30, 1998 (the "Registration
<PAGE> 8
CUSIP No. 822440103 13D
Rights Agreement"), pursuant to which the Company agreed to prepare and file
with the Securities and Exchange Commission (the "Commission") within 25 days
after the Closing Date a shelf registration statement (the "Registration
Statement") covering all Registrable Securities (as defined below) for an
offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act. The Company has agreed to use commercially reasonable efforts
to cause the Registration Statement to be declared effective under the
Securities Act as promptly as possible after the filing thereof, but in any
event within 90 days after the Closing Date and to keep the Registration
Statement continuously effective under the Securities Act until the date which
is two years after the date that the Registration Statement is declared
effective by the Commission or such earlier date when all the Registrable
Securities covered by the Registration Statement have been sold or may be sold
without volume restrictions pursuant to Rule 144 under the Securities Act as
determined by counsel to the Company pursuant to a written opinion letter
addressed to the Company's transfer agent to such effect.
Pursuant to the Registration Rights Agreement, Molex has agreed that
(i) it will not sell any Registrable Securities under the Registration
Statement until it has received copies of the Prospectus (as defined in the
Registration Rights Agreement) as then amended or supplemented and notice from
the Company that such Registration Statement and any post-effective amendments
thereto have become effective and (ii) Molex and its officers, directors or
affiliates will comply with the Prospectus delivery and any other requirements
of the Securities Act applicable to them in connection with sales of
Registrable Securities pursuant to the Registration Statement.
Pursuant to the Registration Statement, Molex has also agreed, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Sections 3(c)(ii) through 3(c)(v) of the Registration Rights
Agreement (generally relating to the issuance of stop orders suspending the
effectiveness of the Registration Statement, requests for additional
information and related matters), Molex will discontinue disposition of the
Registrable Securities under the Registration Statement until Molex's receipt
of copies of the supplemented Prospectus and/or amended Registration Statement
or until it is advised in writing by the Company that the use of the applicable
Prospectus may be resumed and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.
The rights of Molex under the Registration Rights Agreement, including
the right to have the Company register the Registrable Securities for resale in
accordance with the terms thereof, are automatically assignable by Molex to any
assignee or transferee of all or a portion of the Series D Preferred Stock, the
Warrant or the Registrable Securities, provided that certain conditions set
forth in the Registration Rights Agreement are satisfied.
"Registrable Securities" means, with respect to the Registration Statement
to be filed after the Closing Date, the shares of Common Stock issuable upon
(i) conversion of the Series D Preferred Stock, (ii) exercise of the Series D
Warrants (as defined in the Registration Rights Agreement), including the
Warrant and (iii) payment of dividends in respect of such Series D Preferred
Stock.
<PAGE> 9
CUSIP No. 822440103 13D
Rights Amendment
On July 25, 1998, the Board of Directors of the Company authorized an
amendment (the "Rights Amendment") to, and effective July 25th, 1998 the
Company and Norwest Bank Minnesota, N.A. amended, Section 1(a) of the Company's
Rights Agreement dated as of June 16, 1996. Section 1(a), as amended and in
its entirety, is as follows:
"(a) Acquiring Person shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates (as such term is hereinafter
defined) and Associates (as such term is hereinafter defined) of such Person,
without the prior approval of a majority of the Board of Directors, shall be the
Beneficial Owner (as such term is hereinafter defined) of voting securities
having fifteen percent (15%) or more of the then voting power of the Company,
but shall not include the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan; provided, however, that if a Person is the Beneficial Owner at
the close of business on the date of this Agreement of fifteen percent (15%) or
more of the voting power of the Company, such Person shall not be deemed an
Acquiring Person unless and until such Person acquires any additional Common
Stock in any manner other than pursuant to a stock dividend, stock split,
recapitalization or similar transaction that does not affect the percentage of
outstanding Common Stock beneficially owned by such Person. Notwithstanding the
foregoing or the last sentence of this Section 1(a), no Person shall become an
Acquiring Person as the result of an acquisition of Common Stock by the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to fifteen percent (15%) or
more of the then voting power of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of fifteen percent
(15%) or more of the then voting power of the Company then outstanding by reason
of shares purchased by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common Stock of the
Company, then such Person shall be deemed to be an Acquiring Person.
Notwithstanding the foregoing, if a majority of the Continuing Directors then in
office determines in good faith that a Person who would otherwise be an
Acquiring Person, as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares of Common Stock so that
such Person would no longer be an Acquiring Person, as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be deemed
to be an Acquiring Person for any purposes of this Agreement. Notwithstanding
the foregoing, Molex Incorporated and its Affiliates and Associates shall not be
deemed an Acquiring Person until such time as any one of them becomes the
Beneficial Owner of twenty-two percent (22%) or more of the voting power of the
Company and references to fifteen percent (15%) in this Agreement shall be
deemed to refer to twenty-two percent (22%) when applied to Molex Incorporated
and its Affiliates and Associates; provided that Common Stock received by Molex
Incorporated as dividends paid or accrued on the Company's Series D Convertible
Preferred Stock (the Series D Preferred) shall be excluded from such Beneficial
Ownership calculation for Molex Incorporated and its Affiliates and Associates
so long as such Beneficial Ownership includes only shares of the Company's
Common Stock owned as of the date hereof, shares of Series D Preferred, shares
of Series D
<PAGE> 10
CUSIP No. 822440103 13D
Preferred converted into Common Stock, Common Stock received as dividends paid
or accrued on the Series D Preferred and Common Stock issued directly to Molex
Incorporated after the date hereof of the Company."
The foregoing summary of certain provisions of the Certificate of
Designation, the Stock Purchase Agreement, the Warrant, the Registration Rights
Agreement and the Rights Amendment is not intended to be complete and is
qualified by reference to such documents set forth in Exhibits 1 through 5
attached hereto.
Additional Agreements
In connection with the transactions contemplated by the Stock Purchase
Agreement, the Company has granted Molex the right to select one representative
for nomination to the Board of Directors of the Company, a right of first
refusal to purchase the Company in the event that the Board of Directors elects
to sell the Company and certain preemptive rights with respect to future equity
offerings. The documentation memorializing the granting of such rights has not
yet been finalized.
Except as summarized above, to Molex's knowledge, there exist no contracts,
arrangements, understandings or relationships (legal or otherwise) among Molex,
the Trust, the Partnership and their respective trustees, partners,
executive officers or directors or between such persons and any person with
respect to any securities of the Company, including but not limited to, transfer
or voting of any of the securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits, division of profits
or loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Certificate of Designation, Preferences and Rights of Series D
Convertible Preferred Stock of the Company, dated July 30, 1998.
2. Convertible Preferred Stock Purchase Agreement, dated as of July
30, 1998, among the Company, Molex and the other purchasers of
Series D Preferred Stock set forth therein.
3. Warrant, dated as of July 30, 1998, issued by the Company to Molex.
4. Registration Rights Agreement, dated as of July 30, 1998, among
the Company, Molex and the other purchasers of Series D Preferred
Shares set forth therein.
5. Amendment No. 1, dated as of July 25, 1998, to Rights Agreement,
dated as of June 16, 1996, between the Company and Norwest Bank
Minnesota, National Association.
<PAGE> 11
CUSIP No. 822440103 13D
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
hereby certify that the information set forth in this statement is true,
complete and correct.
Dated: August 10, 1998
MOLEX INCORPORATED
By: /s/ LOUIS A. HECHT
--------------------------------
Name: Louis A. Hecht
Title: Corporate Secretary and
General Counsel
<PAGE> 12
CUSIP No. 822440103 13D
ANNEX I
Set forth below are the name, business address and present principal
occupation of each of the directors and executive officers of Molex. Except as
otherwise noted, each such person is a citizen of the United States and the
business address of each such person is c/o Molex Incorporated, 2222 Wellington
Court, Lisle, Illinois 60532-1682.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION,
CITIZENSHIP AND BUSINESS ADDRESS
NAME IF OTHER THAN AS INDICATED ABOVE
---- --------------------------------
Directors
<S> <C>
Frederick A. Krehbiel . . . . . Chairman and Chief Executive Officer
Molex Incorporated
John H. Krehbiel, Jr. . . . . . President and Chief Operating Officer
Molex Incorporated
Robert J. Potter . . . . . . . President and Chief Executive Officer
R.J. Potter Company
(business consulting)
Williams Square, Suite 1110
5215 North O'Connor Boulevard
Irving, TX 75039
Edgar D. Jannotta . . . . . . . Senior Director, William Blair & Company, LLC
(securities and investment banking)
222 West Adams Street
Chicago, IL 60606
F.L. Krehbiel . . . . . . . . . Assistant to the Regional President (Americas) -
Global Desktop Business
Molex Incorporated
Donald G. Lubin . . . . . . . . Partner
Sonnenschein Nath & Rosenthal (law firm)
8000 Sears Tower
Chicago, Illinois 60606
</TABLE>
<PAGE> 13
CUSIP No. 822440103 13D
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION,
CITIZENSHIP AND BUSINESS ADDRESS
NAME IF OTHER THAN AS INDICATED ABOVE
---- --------------------------------
<S> <C>
Masahisa Naitoh . . . . . . . . Senior Advisor for The Institute of Energy
Economics, Japan (private think tank)
Senior Managing Director of Itochu Corporation
(Japanese global trading firm)
International Advisory Board
Member of Elf Acquitane
(French global financial institution)
5-1, Kita-Aoyama 2-chome, Minato-ku
Tokyo 107-8077, Japan
(citizen of Japan)
Michael J. Birck . . . . . . . President and Chief Executive Officer
Tellabs, Inc.
(telecommunications equipment)
4951 Indiana Avenue
Lisle, IL 60532
Douglas K. Carnahan . . . . . . Retired
Former Senior Vice President and General Manager of
Measurement Systems Organization of Hewlett-Packard
Company
(computers, computer peripherals and
instrumentation)
4410 West Chinden
Meridian, ID 83642
Executive Officers
------------------
Frederick A. Krehbiel . . . . . Chairman and Chief Executive Officer
John H. Krehbiel, Jr. . . . . . President and Chief Operating Officer
J. Joseph King . . . . . . . . Executive Vice President
Raymond C. Wieser . . . . . . . Senior Vice President, Americas Region
Robert B. Mahoney . . . . . . . Corporate Vice President, Treasurer and Chief
Financial Officer
</TABLE>
<PAGE> 14
CUSIP No. 822440103 13D
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION,
CITIZENSHIP AND BUSINESS ADDRESS
NAME IF OTHER THAN AS INDICATED ABOVE
---- --------------------------------
<S> <C>
Ronald L. Schubel . . . . . . . Corporate Vice President and Regional President,
Far East South
Werner W. Fichtner . . . . . . Corporate Vice President and Regional President,
Europe
Molex Services GmbH
Dingolfinger Strasse 4
D-81673
Munich, Germany
(citizen of Germany)
Goro Tokuyama . . . . . . . . . Corporate Vice President, Regional President, Far
East North and President of Molex Japan Co., Ltd.
1-5-4 Fukami-Higashi
Yamato City, Kanagawa
242-8585 Japan
(citizen of Japan)
Martin P. Slark . . . . . . . . Corporate Vice President and Regional President,
Americas
James E. Fleischhacker . . . . Corporate Vice President and President, DataComm
Division Americas
Kathi M. Regas . . . . . . . . Corporate Vice President
Louis A. Hecht . . . . . . . . Corporate Secretary and General Counsel
</TABLE>
<PAGE> 1
EXHIBIT 1
SHELDAHL, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES D
CONVERTIBLE PREFERRED STOCK
Pursuant to Section 302A.401 of the Minnesota Business Corporation
Act:
I, the undersigned officer of Sheldahl, Inc., a Minnesota corporation
(the "Company"), in accordance with the provisions of Section 302A.401, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Articles of Incorporation of the Company, the Board of Directors on July
25, 1998 adopted the following resolution creating a series of Thirty-Two
Thousand Nine Hundred Seventeen (32,917) shares of preferred stock designated
as Series D Convertible Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Company in accordance with the provisions of its Articles of
Incorporation, a series of preferred stock known as the Series D Convertible
Preferred Stock be, and hereby is, created and that the designation and amount
thereof and the rights and preferences of the shares of such preferred stock
are as follows:
Section 1. Designation, Amount and Par Value. The series of
preferred stock shall be designated as the Series D Convertible Preferred Stock
(the "Series D Preferred Stock"), and the number of shares so designated shall
be 32,917 (which shall not be subject to increase without the prior written
consent of the holders of a majority of the shares of Series D Preferred Stock
then outstanding). Each share of Series D Preferred Stock shall have a par
value of $1.00 per share and a stated value of $1,000 per share (the "Stated
Value").
Section 2. Dividends.
(a) the holders of Series D Preferred Stock shall
be entitled to receive, annually on July 30 of each year, in arrears, each a
"Dividend Payment Date," dividends on the Preferred Stock at the rate per share
(as a percentage of the Stated Value per share) equal to 5% per annum, payable,
in shares of Common Stock (as defined in Section 6) or at the option of the
Company, in cash, provided such payment shall not be made unless and until all
accrued and unpaid dividends on the Company s Series B Preferred Stock
previously issued by the Company (the Series B Preferred Stock ) for all past
dividend periods shall have been paid and all conversion notices related
thereto have been honored to the date of such payment. Dividends on the Series
D Preferred Stock shall be calculated on the basis of a 360-day year, shall
accrue daily commencing with the Original Issue Date (as defined in Section 6),
and shall be deemed to accrue on such date whether or not declared and whether
or not there are profits, surplus or other funds of the Company legally
available for the payment of dividends. The party that holds the Series D
Preferred Stock on the applicable Dividend Payment Date for any dividend
payment will be entitled to receive such dividend payment and any other accrued
and unpaid dividends
<PAGE> 2
which accrued prior to such Dividend Payment Date.
(b) Notwithstanding anything to the contrary contained herein, the
Company may not issue shares of Common Stock in payment of dividends (and must
deliver cash in respect thereof) on the Series D Preferred Stock if:
(i) the shares of Common Stock to be issued in respect
of such dividends are not registered for resale pursuant to an effective
registration statement that names the recipient of such dividend as a selling
stockholder thereunder and may not be sold without volume restrictions pursuant
to Rule 144 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), as determined by counsel to the Company pursuant to a
written opinion letter, addressed to the Company's transfer agent in form and
substance acceptable to the holders of a majority of the shares of Series D
Preferred Stock then outstanding; or
(ii) the shares of Common Stock to be issued in respect of
such dividends are not designated for quotation on the Nasdaq National Market
(or listed for trading on The New York Stock Exchange (the "NYSE") or the
American Stock Exchange (the "AMEX")).
(c) So long as any Series D Preferred Stock shall remain
outstanding, except with respect to the redemption or exchange of "rights"
under the Rights Agreement, dated as of June 16, 1996, between the Company and
Norwest Bank Minnesota, N.A. (the "Rights Agreement") and the Series A Junior
Participating Stock reserved for issuance in connection therewith, neither the
Company nor any subsidiary thereof shall redeem, purchase or otherwise acquire
directly or indirectly any Junior Securities (as defined in Section 6), nor
shall the Company directly or indirectly pay or declare any dividend or make
any distribution (other than a dividend or distribution described in Section 5)
upon, nor shall any distribution be made in respect of, any Junior Securities,
nor shall any monies be set aside for or applied to the purchase or redemption
(through a sinking fund or otherwise) of any Junior Securities unless all
accrued and unpaid dividends on the Series D Preferred Stock for all past
dividend periods shall have been paid.
Section 3. Voting Rights. Except as otherwise provided herein
and as otherwise required by law, the Series D Preferred Stock shall have no
voting rights. However, so long as any shares of Series D Preferred Stock are
outstanding, the Company shall not and shall cause its subsidiaries not to,
without the affirmative vote of all of the holders of the Series D Preferred
Stock then outstanding, alter or change adversely the powers, preferences or
rights given to the Series D Preferred Stock; (b) alter or amend this
Certificate of Designation in a manner adverse to the holders of Series D
Preferred Stock; (c) authorize or create any class of stock ranking as to
dividends or distribution of assets upon a Liquidation (as defined in Section
4) or otherwise senior to or pari passu with the Series D Preferred Stock,
except for the Series B Preferred Stock; (d) amend its articles of
incorporation, bylaws or other charter documents so as to affect adversely any
rights of any holders of Series D Preferred Stock; (e) increase the authorized
number of shares of Series D Preferred Stock; or (f) enter into any agreement
with respect to the foregoing.
- 2 -
<PAGE> 3
Section 4. Liquidation. Upon any liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary (a Liquidation ),
the holders of Series D Preferred Stock shall be entitled to receive out of the
assets of the Company, whether such assets are capital or surplus, for each
share of Series D Preferred Stock an amount equal to the Stated Value plus all
accrued but unpaid dividends per share, whether declared or not, after payment
of all amounts due the holders of Series B Preferred Stock but before any
distribution or payment shall be made to the holders of any Junior Securities,
and if the assets of the Company shall be insufficient to pay in full such
amounts after payment of all amounts due the holders of the Series B Preferred
Stock, then the entire assets to be distributed to the holders of Series D
Preferred Stock shall be distributed among the holders of Series D Preferred
Stock ratably in accordance with the respective amounts that would be payable
on such shares if all amounts payable thereon were paid in full. A sale,
conveyance or disposition of all or substantially all of the assets of the
Company or the effectuation by the Company of a transaction or series of
related transactions in which more than 50% of the voting power of the Company
is disposed of, or a consolidation or merger of the Company with or into any
other company or companies shall not be treated as a Liquidation, but instead
shall be subject to the provisions of Section 5. The Company shall mail
written notice of any such Liquidation, not less than 30 days prior to the
payment date stated therein, to each record holder of Series D Preferred Stock.
Section 5. Conversion.
(a) (i) Each share of Series D Preferred Stock is convertible by
the holder thereof into shares of Common Stock at the Conversion Ratio (as
defined in Section 6) at the option of the holder in whole or in part at any
time after the Original Issue Date. The holder shall effect conversions by
surrendering the certificate or certificates representing the shares of Series
D Preferred Stock to be converted to the Company, together with the form of
conversion notice attached hereto as Exhibit A (the "Holder Conversion
Notice"), a copy of which, notwithstanding anything herein to the contrary,
shall also be promptly sent to the Company's transfer agent and the Company's
counsel. Each Holder Conversion Notice shall specify the number of shares of
Series D Preferred Stock to be converted and the date on which such conversion
is to be effected, which date may not be prior to the date on which the holder
delivers such Conversion Notice by facsimile (the "Holder Conversion Date").
If no Holder Conversion Date is specified in a Holder Conversion Notice, the
Holder Conversion Date shall be the date that the Holder Conversion Notice is
deemed delivered pursuant to Section 5(h). If the holder is converting less
than all shares of Series D Preferred Stock represented by the certificate or
certificates tendered by the holder with the Holder Conversion Notice, or if a
conversion hereunder cannot be effected in full for any reason, the Company
shall promptly deliver to such holder (in the manner and within the time set
forth in Section 5(b)) a certificate for such number of shares as have not been
converted.
(ii) If, at any time after six months following the Original
Issue Date, (A) the Per Share Market Value is greater than 200% of the Initial
Conversion Price (as defined in Section 5(c)) for at least 30 consecutive
Business Days; and (B) the average daily trading volume of the Common Stock on
the Nasdaq National Market for such 30 consecutive Business Days exceeds
- 3 -
<PAGE> 4
50,000 shares (as adjusted for stock splits, reverse stock splits and stock
dividends), then the Company may, upon 10 days notice provided thereafter,
require the conversion of all but not less than all of the then outstanding and
unconverted shares of Series D Preferred Stock at the Conversion Ratio
calculated on the Company Conversion Date (as defined below) by delivering to
the holders a notice in the form attached hereto as Exhibit B (the "Company
Conversion Notice"). Each Company Conversion Notice under this Section shall
specify the date on which such conversion is to be effected, which date may not
be prior to the 10th day after the Company delivers such Company Conversion
Notice by facsimile (the "Company Conversion Date"). If no Company Conversion
Date is specified in a Company Conversion Notice given under this Section, the
Company Conversion Date shall be the 11th day after the Company Conversion
Notice is deemed delivered pursuant to Section 5(h). Nothing contained herein
shall limit a holder's right to convert any or all of the Preferred Stock held
by it prior to the Company Conversion Date.
(iii) All, but not less than all, of the then outstanding and
unconverted shares of Series D Preferred Stock shall automatically be converted
at the Conversion Ratio on the date of the closing of a Public Offering (as
defined in Section 6) or such date as directed by the managing underwriter (the
Public Offering Conversion Date ). Nothing contained herein shall limit a
holder s right to convert any or all of the Preferred Stock held by it prior to
the Public Offering conversion Date. The Company shall deliver a Company
Conversion Notice to the holders of Series D Preferred Stock not less than five
business days prior to the filing of any registration statement in connection
with such Public Offering.
A Holder Conversion Date, a Company Conversion Date and a Public
Offering Conversion Date are sometimes referred to herein as a "Conversion
Date" and a Holder Conversion Notice and a Company Conversion Notice are
sometimes referred to as a "Conversion Notice."
(b) Not later than ten Business Days after the Conversion Date and
receipt by the Company of an original share certificate representing the shares
of Series D Preferred Stock to be converted, the Company will deliver to the
holder (i) a certificate or certificates which shall be free of restrictive
legends and trading restrictions (other than those required by Section 3.1(b)
of the Purchase Agreement or as may be required by the Rights Agreement)
representing the number of shares of Common Stock being acquired upon the
conversion of shares of Series D Preferred Stock; (ii) one or more certificates
representing the number of shares of Series D Preferred Stock not converted;
(iii) a bank check in the amount of accrued and unpaid dividends (if the
Company has elected or is required hereunder to pay accrued dividends in cash);
and (iv) if the Company has elected and is permitted hereunder to pay accrued
dividends in shares of Common Stock, certificates, which shall be free of
restrictive legends and trading restrictions (other than those required by the
Purchase Agreement or as may be required by the Company's Rights Agreement),
representing such number of shares of Common Stock as equals such dividend
divided by the Conversion Price on the Conversion Date; provided, however, that
the Company shall not be obligated to issue certificates evidencing the shares
of Common Stock issuable upon conversion of any shares of Preferred Stock until
certificates evidencing such
- 4 -
<PAGE> 5
shares of Series D Preferred Stock are either delivered for conversion to the
Company or the transfer agent for the Series D Preferred Stock or Common Stock,
or the holder of such Series D Preferred Stock notifies the Company that such
certificates have been lost, stolen or destroyed and provides a bond (or other
adequate security) reasonably satisfactory to the Company to indemnify the
Company from any loss incurred by it in connection therewith.
(c) (i) The conversion price for each share of Series D
Preferred Stock (the "Conversion Price") on any Conversion Date shall be $6.15
(the Initial Conversion Price ), as adjusted from time to time as provided in
this Section 5(c).
(ii) If the Company, at any time while any shares of
Series D Preferred Stock are outstanding, (a) shall pay a stock dividend or
otherwise make a distribution or distributions on shares of its Junior
Securities payable in shares of Common Stock, (b) subdivide outstanding shares
of Common Stock into a larger number of shares, (c) combine outstanding shares
of Common Stock into a smaller number of shares, or (d) issue by
reclassification of shares of Common Stock any shares of capital stock of the
Company, the Conversion Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding before such
event and of which the denominator shall be the number of shares of Common
Stock outstanding after such event. Any adjustment made pursuant to this
Section 5(c)(ii) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification.
(iii) If the Company, at any time while any shares of
Series D Preferred Stock are outstanding, shall issue rights or warrants to all
holders of Common Stock entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the Per Share Market Value of
Common Stock at the record date mentioned below, the Conversion Price shall be
multiplied by a fraction, of which the denominator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding on the
date of issuance of such rights or warrants plus the number of additional
shares of Common Stock offered for subscription or purchase, and of which the
numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding on the date of issuance of such rights or warrants
plus the number of shares which the aggregate offering price of the total
number of shares so offered would purchase at such Per Share Market Value.
Such adjustment shall be made whenever such rights or warrants are issued, and
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such rights or warrants. However, upon the
expiration of any right or warrant to purchase Common Stock the issuance of
which resulted in an adjustment in the Conversion Price pursuant to this
Section 5(c)(iii), if any such right or warrant shall expire and shall not have
been exercised, the Conversion Price shall immediately upon such expiration be
recomputed and effective immediately upon such expiration be increased to the
price which it would have been (but reflecting any other adjustments in the
Conversion Price made pursuant to the provisions of this Section 5 after the
issuance of such rights or warrants) had the adjustment of the Conversion Price
made upon the issuance of such rights or warrants been made on the basis of
offering for subscription or
- 5 -
<PAGE> 6
purchase only that number of shares of Common Stock actually purchased upon the
exercise of such rights or warrants actually exercised.
(iv) If the Company, at any time while shares of Series D
Preferred Stock are outstanding, shall distribute to all holders of Common
Stock (and not to holders of Series D Preferred Stock) evidences of its
indebtedness or assets or rights or warrants to subscribe for or purchase any
security (excluding those referred to in Sections 5(c)(ii) and (iii) above),
then in each such case the Conversion Price at which each share of Series D
Preferred Stock shall thereafter be convertible shall be determined by
multiplying the Conversion Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution
by a fraction of which the denominator shall be the Per Share Market Value of
Common Stock determined as of the record date mentioned above, and of which the
numerator shall be such Per Share Market Value of the Common Stock on such
record date less the then fair market value at such record date of the portion
of such assets or evidence of indebtedness so distributed applicable to one
outstanding share of Common Stock as determined by the Board of Directors in
good faith; provided, however, that in the event of a distribution exceeding
ten percent (10%) of the net assets of the Company, such fair market value
shall be determined by a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing (which may be the firm that regularly examines the financial
statements of the Company) (an "Appraiser") selected in good faith by the
holders of a majority in interest of the shares of Series D Preferred Stock
then outstanding and reasonably acceptable to the Company. In either case the
adjustments shall be described in a statement provided to the holders of Series
D Preferred Stock of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of Common
Stock. Such adjustment shall be made whenever any such distribution is made
and shall become effective immediately after the record date mentioned above.
(v) All calculations under this Section 5 shall be made
to the nearest cent or the nearest 1/100th of a share, as the case may be.
(vi) Whenever the Conversion Price is adjusted pursuant to
Section 5(c)(ii),(iii) or (iv), the Company shall promptly mail to each holder
of Series D Preferred Stock, a notice setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.
(vii) In case of any reclassification of the Common Stock,
any consolidation or merger of the Company with or into another person pursuant
to which the Company will not be the surviving entity, the sale or transfer of
all or substantially all of the assets of the Company or any compulsory share
exchange pursuant to which the Common Stock is converted into other securities,
cash or property, the holders of the Series D Preferred Stock then outstanding
shall convert such shares only into the shares of stock and other securities,
cash and property receivable upon or deemed to be held by holders of Common
Stock following such reclassification, consolidation, merger, sale, transfer or
share exchange, and the holders of the Series D Preferred Stock shall be
entitled upon such event to receive such amount of securities,
- 6 -
<PAGE> 7
cash or property as the shares of the Common Stock of the Company into which
such shares of Series D Preferred Stock could have been converted immediately
prior to such reclassification, consolidation, merger, sale, transfer or share
exchange would have been entitled. The terms of any such consolidation,
merger, sale, transfer or share exchange shall include such terms so as to
continue to give to the holder of Series D Preferred Stock the right to receive
the securities, cash or property set forth in this Section 5(c)(vii) upon any
conversion or redemption following such consolidation, merger, sale, transfer
or share exchange. This provision shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share
exchanges.
(viii) If:
A. the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
B. the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
C. the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights; or
D. the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock of the
Company, any consolidation or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; or
E. the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company;
then the Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of Series D Preferred Stock, and shall cause to
be mailed to the holders of Series D Preferred Stock at their last addresses as
they shall appear upon the stock books of the Company, at least 20 calendar
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided, however,
that the failure to mail such notice or any defect therein or in the mailing
thereof shall not affect the validity of the corporate action required to be
specified in
- 7 -
<PAGE> 8
such notice.
(d) The Company will at all times reserve and keep available out
of its authorized and unissued Common Stock solely for the purpose of issuance
upon conversion of Series D Preferred Stock and payment of dividends on Series
D Preferred Stock, each as herein provided, free from preemptive rights or any
other actual or contingent purchase rights of persons other than the holders of
Series D Preferred Stock, not less than such number of shares of Common Stock
as shall, upon the conversion of all outstanding shares of Series D Preferred
Stock and payment of dividends hereunder. All shares of Common Stock that
shall be so issuable shall, upon issue, be duly authorized, validly issued and
fully paid, nonassessable and freely tradeable (except as may be required
pursuant to Section 3.1(b) of the Purchase Agreement).
(e) Upon a conversion hereunder the Company shall not be required
to issue stock certificates representing fractions of shares of Common Stock,
but may if otherwise permitted, make a cash payment in respect of any final
fraction of a share based on the Per Share Market Value at such time. If the
Company elects not, or is unable, to make such a cash payment, the holder of a
share of Preferred Stock shall be entitled to receive, in lieu of the final
fraction of a share, one whole share of Common Stock.
(f) The issuance of certificates for shares of Common Stock on
conversion of Series D Preferred Stock shall be made without charge to the
holders thereof for any documentary stamp or similar taxes that may be payable
in respect of the issue or delivery of such certificates, provided that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate upon
conversion in a name other than that of the holder of such shares of Series D
Preferred Stock so converted and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been
paid.
(g) Shares of Series D Preferred Stock converted into Common Stock
shall be canceled and shall have the status of authorized but unissued shares
of undesignated stock.
(h) Any and all notices or other communications or deliveries to
be provided by the holders of the Series D Preferred Stock hereunder shall be
in writing and delivered personally, by facsimile, sent by a nationally
recognized overnight courier service or sent by certified or registered mail,
postage prepaid, addressed to the attention of the Chief Executive Officer of
the Company at the facsimile telephone number or address of the principal place
of business of the Company as set forth in the Purchase Agreement. Any and all
notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile, sent by a
nationally recognized overnight courier service or sent by certified or
registered mail, postage prepaid, addressed to each holder of Series D
Preferred Stock at the facsimile telephone number or address of such holder
appearing on the books of the Company, or if no such facsimile telephone number
or address appears, at the principal place of business of the holder. Any
notice or other communication or deliveries hereunder shall be
- 8 -
<PAGE> 9
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 11:59 p.m. (Central Time)
on such date of transmission; (ii) four days after deposit in the United States
mails; (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service; or (iv) upon actual receipt by
the party to whom such notice is required to be given.
Section 6. Definitions. For the purposes hereof, the following
terms shall have the following meanings:
"Business Day" means any day except a day on which the Nasdaq National
Market, the NYSE or the AMEX, as applicable, if the Common Stock is listed for
trading or quoted thereon at such time, is closed, and if the Common Stock is
not listed for trading or quoted on any of the Nasdaq National Market, the NYSE
or the AMEX at such time, then "Business Day" shall mean any day except
Saturday, Sunday and any day which shall be a legal holiday or a day on which
banking institutions in the State of Minnesota generally are authorized or
required by law or other government actions to close.
"Common Stock" means the common stock, $.25 par value per share, of
the Company and stock of any other class into which such shares may hereafter
have been reclassified or changed.
"Conversion Ratio" with respect to a share of Series D Preferred Stock
means, at any time, a fraction, of which the numerator is the Stated Value of
such share plus accrued but unpaid dividends (including any accrued but unpaid
interest thereon) but only to the extent not paid in cash in accordance with
the terms hereof, and of which the denominator is the Conversion Price at such
time.
"Junior Securities" means the Common Stock and all equity securities
(other than the Series B and Series D Preferred Stock) of the Company.
"Original Issue Date" means the date of the first issuance of any
shares of the Series D Preferred Stock regardless of the number of transfers of
any particular shares of Series D Preferred Stock and regardless of the number
of certificates which may be issued to evidence such Preferred Stock.
"Per Share Market Value" means on any particular date (a) the closing
bid price per share of the Common Stock on such date on the Nasdaq National
Market or other stock exchange or quotation system on which the Common Stock is
then listed or quoted or if there is no such price on such date, then the
closing bid price on such exchange or quotation system on the date nearest
preceding such date, or (b) if the Common Stock is not listed or quoted then on
the Nasdaq National Market or any stock exchange or quotation system, the
closing bid price for a share of Common Stock in the over-the-counter market,
as reported by the Nasdaq Stock Market, Bloomberg, L.P. or in the National
Quotation Bureau Incorporated or similar
- 9 -
<PAGE> 10
organization or agency succeeding to its functions of reporting prices) at the
close of business on such date, or (c) if the Common Stock is not then reported
by the National Quotation Bureau Incorporated (or similar organization or
agency succeeding to its functions of reporting prices), then the average of
the "Pink Sheet" quotes for the relevant conversion period, as determined in
good faith by the holder, or (d) if the Common Stock is not then publicly
traded the fair market value of a share of Common Stock as determined by an
Appraiser mutually acceptable to the holders and the Company.
"Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
"Public Offering" means a firm commitment underwritten public offering
of Common Stock under which the gross cash proceeds to the Company (after
underwriting discounts, commissions and fees) are at least $25 million and in
which the offering price in such public offering is not less than 200% of the
Conversion Price.
"Purchase Agreement" means the Convertible Preferred Stock Purchase
Agreement, dated as of the Original Issue Date, among the Company and the
original holders of the Series D Preferred Stock.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated the Original Issue Date, by and among the Company and the
original holders of Series D Preferred Stock.
"Underlying Shares" means the shares of Common Stock into which the
Shares are convertible in accordance with the terms hereof and the Purchase
Agreement.
"Underlying Shares Registration Statement" means an Underlying Shares
Registration Statement, pursuant to the Registration Rights Agreement, covering
among other things the resale of the shares of Common Stock issuable upon
conversion of the Series D Preferred Stock including dividends thereon.
IN WITNESS WHEREOF, I have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 30th
day of July, 1998.
SHELDAHL, INC.
By /s/ JOHN V. MCMANUS
----------------------------------
Its Vice President
- 10 -
<PAGE> 11
EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(To be Executed by the Registered Holder
in order to Convert Shares of Series D Preferred Stock)
The undersigned hereby elects to convert the number of shares of Series D
Convertible Preferred Stock indicated below, into the number of shares of
Common Stock, par value $.25 per share (the Common Stock ), of Sheldahl, Inc.
(the Company ) indicated below, as of the date written below. If shares are
to be issued in the name of a person other than undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company
in accordance therewith. No fee will be charged to the holder for any
conversion, except for such transfer taxes, if any.
Conversion calculations:
Date to Effect Conversion
--------------------------------------------
Number of shares of Series D Preferred Stock
to be Converted
--------------------------------------------
Number of shares of Common Stock to be Issued
--------------------------------------------
Applicable Conversion Price
--------------------------------------------
Signature
--------------------------------------------
Name
--------------------------------------------
Address
- 11 -
<PAGE> 12
EXHIBIT B
NOTICE OF CONVERSION AT
THE ELECTION OF THE COMPANY
Sheldahl, Inc. (the "Company") hereby represents and warrants that the
conditions precedent to a Company Conversion pursuant to [Section 5(a)(ii)]
[Section 5(a)(iii)] have been satisfied and therefore hereby notifies the
addressee hereof that the Company hereby elects to exercise its right to
convert [ ] shares of its Series D Convertible Preferred Stock (the
"Preferred Stock") held by the Holder into shares of Common Stock, par value
$.25 per share (the "Common Stock") of the Company according to the terms
hereof, as of the date written below. No fee will be charged to the Holder for
any conversion hereunder, except for such transfer taxes, if any which may be
incurred by the Company if shares are to be issued in the name of a person
other than the person to whom this notice is addressed.
Conversion calculations:
Date to Effect Conversion
Number of shares of Preferred Stock to be Converted
Number of shares of Common Stock to be Issued
Applicable Conversion Price
Name of Holder
Address of Holder
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<PAGE> 1
EXHIBIT 2
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Convertible Preferred Stock Purchase Agreement (the "Agreement"),
dated as of July 30, 1998, among Sheldahl, Inc., a Minnesota corporation (the
"Company"), and the individuals and entities listed on Exhibit A hereto
(sometimes referred to herein as a "Purchaser" and collectively as the
"Purchasers").
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to the Purchasers and the Purchasers
desire to acquire shares of the Company's Series D Convertible Preferred Stock,
par value $1.00 per share (the "Series D Preferred").
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, the Company and the Purchasers agree as follows:
ARTICLE I
PURCHASE AND SALE OF PREFERRED SHARES
1.1 Purchase and Sale.
(a) Subject to the terms and conditions set forth herein, at the
Closing (as defined below), the Company shall issue and sell to the Purchasers
and the Purchasers, severally and not jointly, shall purchase 32,917 shares of
Series D Preferred (the "Shares").
(b) The Shares shall have the respective rights, preferences and
privileges set forth in the Certificate of Designation attached hereto as
Exhibit B (the "Certificate of Designation"), which shall be filed on or prior
to the Closing Date (as defined below) by the Company with the Secretary of
State of Minnesota. The Shares, the Warrants (as defined in Section 3.2) and
the Underlying Shares (as defined in Section 2. 1 (d)) are sometimes
collectively referred to herein as the "Securities."
1.2 Purchase Price. The purchase price per Share shall be $1,000.
1.3 The Closing.
(a) The Closing of the purchase and sale of the Shares (the "Closing")
shall take place at the offices of Lindquist & Vennum P.L.L.P., 4200 IDS
Center, 80 South 8th Street, Minneapolis, Minnesota, immediately following
the execution hereof, or such later date as the parties shall agree. The date
of the Closing is hereinafter referred to as the "Closing Date."
(b) At the Closing, the Company shall deliver (A) to each Purchaser, a
stock certificate registered in the name of such Purchaser for such number of
Shares set forth opposite such Purchaser's name on Exhibit A; (B) to each
Purchaser, a Warrant to purchase that number of shares of Common Stock of the
Company set forth opposite such Purchaser's name on Exhibit A; and (C) all
other documents, instruments and writings required to have
<PAGE> 2
been delivered at or prior to the Closing by the Company to Purchasers pursuant
to this Agreement. At the Closing, each Purchaser shall deliver to the Company
the purchase price set forth opposite such Purchaser's name on Exhibit A by
wire transfer of same day funds.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The
Company hereby makes the following representations and warranties to the
Purchasers:
(a) Organization. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Minnesota,
with the requisite corporate power and authority to own and use its properties
and assets and to carry on its business as currently conducted.
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement, the Certificate of Designation, the
Registration Rights Agreement (defined in Section 4.1(h)) and the Warrants (the
"Transaction Documents") and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of each Transaction Document by the
Company and the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary action on the part of the Company.
Each Transaction Document has been duly executed by the Company and, when
delivered or filed in accordance with the terms hereof, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
(c) Capitalization. The authorized, issued and outstanding capital
stock of the Company is set forth in Schedule 2.1(c). Except as specifically
disclosed in Schedule 2.1(c), no shares of Common Stock of the Company are
entitled to preemptive or similar rights, nor is any holder of the Common Stock
of the Company entitled to preemptive or similar rights. Except as disclosed
in Schedule 2.1(c), there are no outstanding options, warrants or commitments
of any character whatsoever relating to, or, except as a result of the purchase
and sale of the Shares and Warrants hereunder, securities, rights or
obligations convertible into or exchangeable for, or giving any person any
right to subscribe for or acquire any shares of Common Stock of the Company, or
contracts, commitments, understandings, or arrangements by which the Company is
bound to issue additional shares of the Company's Common Stock, or securities
or rights convertible or exchangeable into shares of the Company's Common
Stock.
(d) Issuance of Shares and Warrants. The Shares and the Warrants
are duly authorized and, when issued in accordance with the terms hereof, the
Certificate of
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<PAGE> 3
Designation or the Warrants, as the case may be, shall be validly issued, fully
paid and non-assessable. As of the Closing Date, the Company will have and, at
all times while any Shares or any Warrants are outstanding, will maintain, an
adequate reserve of duly authorized shares of its Common Stock to enable it to
perform its obligations under this Agreement, the Warrants and the Certificate
of Designation with respect to the number of Shares and Warrants issued and
outstanding at such Closing Date. The shares of Common Stock issuable upon
conversion of the Shares and exercise of the Warrants and which may be issued
as payment of dividends on the Shares are collectively referred to herein as
the "Underlying Shares." When issued in accordance with the terms hereof, the
Certificate of Designation or the Warrants, as the case may be, the Underlying
Shares will be duly authorized, validly issued, fully paid (except that
Underlying Shares issued upon exercise of Warrants shall be fully paid upon
delivery of the applicable exercise price therefor) and non-assessable, free
and clear of all liens, claims, encumbrances or defects of any kind
(collectively, "Liens"), except as set forth in any required legends thereon.
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its Articles of Incorporation or Bylaws; or (ii)
subject to obtaining the consents referred to in Section 2.1(f), conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company is a party; or (iii) result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company is
subject (other than (x) a violation of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), as a result of a failure
of the representations and warranties of the Purchasers set forth in the first
sentence of Section 2.2(h) to be accurate; or (y) a violation of any federal
and state securities laws requiring filings with such authorities and the
delivery of certain information pursuant to Rule 502(b)(1) promulgated under
the Securities Act of 1933, as amended (the "Securities Act"), and applicable
state securities laws, to the Purchasers who are deemed not to be accredited
investors as a result of a failure of the representations and warranties of the
Purchasers set forth in Section 2.2(c) to be accurate), or by which any
property or asset of the Company is bound or affected, except in the case of
each of clauses (ii) and (iii), such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as could not reasonably
be expected to, individually or in the aggregate, have or result in a material
adverse effect on the results of operations, assets or financial condition of
the Company and its subsidiaries, taken as a whole (a "Material Adverse
Effect").
(f) Consents and Approvals. Except as specifically set forth in
Schedule 2.1(f), and assuming that the representations and warranties of the
Purchasers contained in Section 2.2 are true and correct in all respects, the
Company is not required to obtain any consent, waiver, authorization or order
of, or make any filing or registration with, any court or other federal, state,
local or other governmental authority or other person in connection with the
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<PAGE> 4
execution, delivery and performance by the Company of the Transaction
Documents, except for (i) the filings of the Certificate of Designation with
respect to the Shares with the Secretary of State of Minnesota; (ii) the
filing of the Underlying Securities Registration Statement(s) (as defined in
the Registration Rights Agreement) with the Securities and Exchange Commission
(the "Commission"); (iii) the application(s) or any letter(s) acceptable to and
approved by the National Association of Securities Dealers, Inc. ("NASD") for
the designation of the Underlying Shares for trading on the Nasdaq National
Market (and with any other national securities exchange or market on which the
Common Stock is then listed); (iv) any filings, notices or registrations under
applicable federal or state securities laws and any filing that may be required
under the HSR Act as a result of a failure of the representations and
warranties of the Purchasers set forth in the first sentence of Section 2.2(h)
to be accurate; and (v) other than, in all other cases, where the failure to
obtain such consent, waiver, authorization or order, or to give or make such
notice or filing, would not materially impair or delay the ability of the
Company to effect the Closing and to deliver to the Purchasers the Shares (and,
upon conversion of the Shares and exercise of Warrants, the Underlying Shares)
in the manner contemplated hereby and by the Registration Rights Agreement
(together with the consents, waivers, authorizations, orders, notices and
filings referred to in Schedule 2.1(f), the "Required Approvals").
(g) Litigation; Proceedings. There is no action, suit, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its properties
before or by any court, governmental or administrative agency or regulatory
authority (federal, state, county, local or foreign) which could reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect.
(h) No Default or Violation. Neither the Company nor any subsidiary
(i) is in default under or in violation of any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound; or (ii) is in violation of any
order of any court, arbitrator or governmental body, except as could not
reasonably be expected to, in any such case (individually or in the aggregate)
have or result in a Material Adverse Effect.
(i) SEC Documents. The Company has filed all reports required to
be filed by it under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including, pursuant to Section 13(a) or 15(d) thereof, for the
three years preceding the date hereof (the foregoing materials being
collectively referred to herein as the "SEC Documents"), on a timely basis, or
has received a valid extension of such time of filing and has filed any such
SEC Documents prior to the expiration of any such extension. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder. The financial statements
of the Company included in the SEC Documents comply in all material respects
with applicable accounting requirements and the published rules and regulations
of the Commission with respect thereto. Such financial statements have been
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<PAGE> 5
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved, except as may be otherwise
indicated in such financial statements or the notes thereto, and fairly present
in all material respects the financial position of the Company as of and for
the dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal year-end
audit adjustments. Since the date of the financial statements included in the
Company's last filed Quarterly Report on Form 10-Q for the quarter ended
February 27, 1998, there has been no event, occurrence or development that has
had a Material Adverse Effect which has not been specifically disclosed to the
Purchasers by the Company.
2.2 Representations and Warranties of the Purchasers. Each Purchaser,
severally and not jointly, hereby represents and warrants to the Company as
follows:
(a) Organization; Authority. Such Purchaser is a corporation duly
incorporated or a limited partnership duly formed, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation
or an individual, in each case, with the requisite power and authority to enter
into and to consummate the transactions contemplated by the Transaction
Documents to which it is a party and otherwise to carry out its obligations
hereunder and thereunder. The purchase by such Purchaser of Securities
hereunder has been duly authorized by all necessary action on the part of such
Purchaser. Each of this Agreement and the Registration Rights Agreement has
been duly executed and delivered by such Purchaser and constitutes the valid
and legally binding obligation of such Purchaser, enforceable against such
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity.
(b) Investment Intent. Such Purchaser is acquiring the Securities
for its own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof or interest
therein, without prejudice, however, to such Purchaser's right, subject to the
provisions of this Agreement and the Registration Rights Agreement, at all
times to sell or otherwise dispose of all or any part of such Securities
pursuant to an effective registration statement under the Securities Act and in
compliance with applicable state securities laws or under an exemption from
such registration.
(c) Purchaser Status. At the time such Purchaser was offered the
Shares and the Warrants, it was and, at the date hereof, it is, and at the
Closing Date it will be, an "accredited investor" as defined in Rule 501(a)(1),
(2), (3) or (4) under the Securities Act.
(d) Experience of Purchaser. Such Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment to its satisfaction.
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<PAGE> 6
(e) Ability of Purchaser to Bear Risk of Investment. On the Closing
Date, such Purchaser is able to bear the economic risk of an investment in the
Securities and is able to afford a complete loss of such investment.
(f) Access to Information. Each Purchaser acknowledges that it
has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Securities, and the
merits and risks of investing in the Securities; (ii) access to information
about the Company and the Company's financial condition, results of operations,
business, properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional
information which the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision
with respect to its investment.
(g) Reliance. Each Purchaser understands and acknowledges that (i) the
Securities are being offered and sold to the Purchaser without registration
under the Securities Act in a private placement that is exempt from the
registration provisions of the Securities Act under Section 4(2) of the
Securities Act or Regulation D promulgated thereunder; and (ii) the
availability of such exemption depends in part on, and the Company will rely
upon the accuracy and truthfulness of, the foregoing representations and such
Purchaser hereby consents to such reliance.
(h) No Affiliation. No Purchaser is an Affiliate or Associate (as such
terms are defined in Rule 12b-2 under the Exchange Act) of any other
Purchaser or is acting in concert with any other Purchaser. No Purchaser
beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act)
any Securities of any other Purchaser.
(i) No Conflicts. The execution, delivery and performance of the
Transaction Documents by such Purchaser and the consummation by such Purchaser
of the transactions contemplated thereby do not and will not (i) conflict with
or violate any provision of its certificate or articles of incorporation,
bylaws, partnership agreement or other governing instrument, as applicable
(each as amended through the date hereof), or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which such Purchaser is subject
(including foreign, federal and state securities laws and regulations).
(j) Consents and Approvals. Except for Schedule 13D and Form 4 filings
by Molex Incorporated, such Purchaser is not required to obtain any consent,
waiver, authorization or order of, or make any filing or registration with, any
court or other foreign, federal, state, local or other governmental authority
or other person in connection with the execution, delivery and performance by
such Purchaser of the Transaction Documents.
(k) Litigation; Proceedings. There is no action, suit, notice of
violation, proceeding or investigation pending, or to the knowledge of such
Purchaser, threatened against
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<PAGE> 7
or affecting such Purchaser before or by any court, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) which would adversely affect the legality, validity or enforceability
of any of the Transaction Documents in any respect or adversely impair such
Purchaser's ability to perform fully on a timely basis its obligations under
the Transaction Documents.
(l) Beneficial Ownership of Sheldahl Stock. At and after the Closing,
no Purchaser shall be a Beneficial Owner of fifteen percent (15%) or more of
outstanding shares of the Company's Common Stock. For purposes of this Section
2.2(l), "Beneficial Owner" shall have the meaning set forth in Section 1(d) of
the Rights Agreement dated June 16, 1996, as amended effective July 25, 1998,
by and between the Company and Norwest Bank Minnesota, N.A., as the same may be
amended or modified from time to time (the "Rights Agreement"). Each Purchaser
has been provided, upon its request, with a copy of such definition and has had
an opportunity to review it with such Purchaser's legal counsel. Each Purchaser
acknowledges that the transactions contemplated by the Transaction Documents
shall not be deemed to have received any required approval under the terms of
such Rights Agreement. Notwithstanding the foregoing, for purposes of Molex
Incorporated, such references above to fifteen percent (15%) shall be deemed to
refer to twenty-two percent (22%).
(m) Residency. Each Purchaser is a resident of the state set forth
opposite its name on Exhibit A attached hereto.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions.
(a) If any Purchaser should decide to dispose of any of the Securities
held by it, such Purchaser understands and agrees that it may do so only
pursuant to an effective registration statement under the Securities Act, to
the Company or pursuant to an available exemption from the registration
requirements of the Securities Act. In connection with any transfer of any
Securities other than pursuant to an effective registration statement or to the
Company or to an Affiliate of such Purchaser or pursuant to Rule 144 under the
Securities Act ("Rule 144"), the Company may require the transferor thereof to
provide to the Company a written opinion of counsel experienced in the area of
United States securities laws selected by the transferor, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such transferred
securities under the Securities Act.
(b) Each Purchaser agrees to the imprinting, so long as is required by
this Section 3.1(b), of the following legend on the Securities:
[NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
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<PAGE> 8
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE]] [THE SECURITIES REPRESENTED
HEREBY] HAVE [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS.
[FOR SHARES ONLY] SHELDAHL, INC. WILL FURNISH WITHOUT CHARGE TO EACH
SHAREHOLDER WHO SO REQUESTS A STATEMENT OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS
OF THE CLASS OF STOCK OR SERIES THEREOF TO WHICH THE SHARES REPRESENTED BY
THIS CERTIFICATE ARE A PART AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS.
The Underlying Shares issuable upon conversion of Shares and exercise
of the Warrants, as the case may be, shall not contain the legend set forth
above (or any other legend other than those that identify the existence of the
Rights Agreement) if the conversion of such Shares or exercise of the Warrants,
as the case may be, occurs at any time while the Underlying Securities
Registration Statement is effective under the Securities Act or in the event
there is not an effective Underlying Securities Registration Statement at such
time, if the Underlying Shares have been sold pursuant to Rule 144, or if in
the written opinion of counsel to the Company experienced in the area of United
States securities laws such legend is not required under applicable
requirements of the Securities Act (including judicial interpretation and
pronouncements issued by the staff of the Commission). The Company makes no
representation, warranty or agreement as to the availability of any exemption
from registration under the Securities Act with respect to any resale of any
Securities.
3.2 The Warrants. At the Closing, the Company shall issue and deliver
Common Stock purchase warrants (the "Warrants") entitling the Purchasers to
purchase, on the terms and conditions set forth in Exhibit C hereto, an
aggregate of 329,170 shares of Common Stock at a price per share equal to
$7.6875, (the "Warrant Exercise Price"). Each Purchaser shall receive that
number of Warrants as is set forth opposite the Purchaser's name on Exhibit A.
3.3 Use Of Proceeds. The Company shall use the Net Proceeds from the
placement of the Shares and Warrants to enhance the Company's capital
structure, provide capital liquidity and repay debt.
ARTICLE IV
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<PAGE> 9
CONDITIONS
4.1 Conditions Precedent to the Obligation of the Purchasers to
Purchase the Series D Shares. The obligation of each Purchaser hereunder to
acquire and pay for the Shares and the Warrants is subject to the satisfaction
or waiver by such Purchaser, at or before the Closing, of each of the following
conditions:
(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company contained herein shall be true
and correct in all material respects as of the date when made and as of the
Closing Date, as though made on and as of such date;
(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Company at or prior to the Closing Date;
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement;
(d) No Suspensions of Trading in Common Stock. The trading in the
Common Stock shall not have been suspended by the Commission or on the Nasdaq
National Market (except for any suspension of trading of limited duration
solely to permit dissemination of material information regarding the Company or
any suspension of trading of securities generally);
(e) Legal Opinion. The Company shall have delivered to such Purchaser
an opinion of outside legal counsel to the Company as to the matters attached
hereto as Exhibit D and dated the Closing Date;
(f) Required Approvals. All Required Approvals shall have been obtained;
(g) Delivery of Stock Certificates and Warrants. The Company shall
have delivered to such Purchaser or such Purchaser's designee the stock
certificate(s) representing the Shares being purchased at the Closing and the
Warrants to be received by each Purchaser, registered in the name of such
Purchaser, each in form satisfactory to such Purchaser;
(h) Registration Rights Agreement. The Company and the Purchasers
shall have entered into the Registration Rights Agreement in the form of
Exhibit E.
4.2 Conditions Precedent to the Company's Obligations. The
obligations of the Company hereunder are subject to the following conditions:
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<PAGE> 10
(a) Accuracy of the Representations and Warranties of Purchasers.
The representations and warranties of the Purchasers contained herein shall be
true and correct in all material respects as of the date when made and as of
the Closing Date, as though made on and as of such date;
(b) Performance by the Purchasers. The Purchasers shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Purchasers at or prior to the
Closing Date;
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement;
(d) Required Approvals. All Required Approvals shall have been obtained;
(e) Payment of Purchase Price. Each Purchaser shall have paid the
purchase price set forth opposite the Purchaser's name on Exhibit A.
ARTICLE V
MISCELLANEOUS
5.1 Fees and Expenses. Each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement, except as set forth in
the Registration Rights Agreement. Each Purchaser shall be responsible for
such Purchaser's own tax liability that may arise as a result of the investment
hereunder or the transactions contemplated by this Agreement.
5.2 Entire Agreement: Amendments. This Agreement, together with
the Exhibits and Schedules hereto, the Registration Rights Agreement, the
Certificate of Designation (when filed) and the Warrants referenced in Section
3.2, contains the entire understanding of the parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, with respect to such matters.
5.3 Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be deemed to have been
received (a) upon hand delivery (receipt acknowledged) or delivery by telex
(with correct answer back received), telecopy or facsimile (with transmission
confirmation report) at the address or number designated below (if delivered
on a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered on a
business day after during normal business hours where such notice is to be
received); or (b) on the business day following the date of mailing by express
courier service, fully prepaid,
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<PAGE> 11
addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
If to the Company: Sheldahl, Inc.
1150 Sheldahl Road
Northfield, MN 55057-9444
Attn: John V. McManus
Fax: (507) 663-8326 or
(507) 663-8435
With copies to: Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis MN 55402
Attn: Charles P. Moorse, Esq.
Fax: (612) 371-3207
If to a Purchaser: To the address set forth on Exhibit A
or such other address as may be designated in writing hereafter, in the same
manner, by such person.
5.4 Amendment; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and each Purchaser; or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. No waiver
of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
5.5 Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
5.6 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. Neither the Company nor any Purchaser may assign this Agreement or
any rights or obligations hereunder without the prior written consent of the
other. Notwithstanding anything to the contrary contained herein, each
Purchaser may assign its rights hereunder in connection with any sale or
transfer of such Purchaser's Securities to any Affiliate of such Purchaser as
long as the transferee Affiliate agrees in writing to be bound by the
applicable provisions of this Agreement, in which case the term "Purchaser"
shall be deemed to refer to such transferee as though such
- 11 -
<PAGE> 12
transferee were an original signatory thereto.
5.7 No Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
5.8 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Minnesota
without regard to the principles of conflicts of law thereof.
5.9 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become binding with respect to each Purchaser on the
date the acceptance form hereto is executed by such Purchaser and with respect
to the Company on the date executed by the Company, it being understood that
both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature page were an original thereof.
5.10 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement
shall not in any way be affected or impaired thereby and the parties will
attempt to agree upon a valid and enforceable provision which shall be a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its authorized representative and each Purchaser has caused this
Agreement to be executed by signing in counterpart the acceptance form attached
to this Agreement.
COMPANY:
SHELDAHL, INC.
By /s/John V. McManus
-----------------------------------
John V. McManus
Its Vice President - Finance
- 12 -
<PAGE> 13
ACCEPTANCE
The undersigned hereby accepts the terms and conditions set forth in
the Convertible Preferred Stock Purchase Agreement, dated July 30, 1998, among
Sheldahl, Inc., a Minnesota corporation (the "Company") and certain Purchasers
listed in Exhibit A thereto as the terms and conditions applicable to the
purchase of Shares of Series D Convertible Preferred Stock of the Company by
the undersigned. By execution of this Acceptance, the undersigned hereby makes
each of the representations contained in Section 2.2 of the Convertible
Preferred Stock Purchase Agreement.
PURCHASER:
MOLEX INCORPORATED
By: /s/ Thomas F. Lee
------------------------------------
Title: V.P., New Ventures & Acquisitions
----------------------------------
<PAGE> 1
EXHIBIT 3
NEITHER THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
SHELDAHL, INC.
WARRANT
Warrant No. 1 Dated July 30, 1998
Sheldahl, Inc., a corporation organized and existing under the laws of
the State of Minnesota (the "Company"), hereby certifies that, for value
received, Molex Incorporated, or its registered assigns ("Holder"), is entitled,
subject to the terms set forth below, to purchase from the Company up to a total
of 120,000 shares of Common Stock, par value $.25 per share (the "Common
Stock"), of the Company (each such share, a AWarrant Share@ and all such shares,
the "Warrant Shares") at an exercise price equal to $7.6875 per share (as
adjusted from time to time as provided in Section 7, the "Exercise Price"), at
any time and from time to time from and after the date hereof and through and
including July 29, 2001 (the "Expiration Date"), and subject to the following
terms and conditions:
1. Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
2. Registration of Transfers and Exchanges.
(a) The Company shall register the transfer of any portion of
this Warrant in the Warrant Register, upon surrender of this Warrant, with the
Form of Assignment attached hereto duly completed and signed, to the Company at
the office specified in or pursuant to Section 3(b). Upon any such registration
or transfer, a new warrant to purchase Common Stock, in substantially the form
of this Warrant (any such new warrant, a "New Warrant"), evidencing the portion
of this Warrant so transferred shall be issued to the transferee and a New
Warrant evidencing the remaining portion of this Warrant not so transferred, if
any, shall be issued to the transferring Holder. The acceptance of the New
Warrant by the transferee thereof shall be deemed the acceptance of such
transferee of all of
<PAGE> 2
the rights and obligations of a holder of a Warrant. Holder may not transfer
this Warrant or any portion thereof unless such transfer represents the right to
purchase at least 10,000 Warrant Shares or such lesser amount as constitutes the
entire Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof by
the Holder to the office of the Company specified in or pursuant to Section 3(b)
for one or more New Warrants, evidencing in the aggregate the right to purchase
the number of Warrant Shares which may then be purchased hereunder. Any such New
Warrant will be dated the date of exchange.
3. Duration and Exercise of Warrants.
(a) This Warrant shall be exercisable by the registered Holder
on any business day before 5:00 p.m., Minneapolis time, at any time and from
time to time on or after the date hereof to and including the Expiration Date.
At 5:00 p.m., Minneapolis time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.
This Warrant may not be redeemed by the Company.
(b) Subject to Sections 2(b), 5 and 9, upon surrender of this
Warrant, with the Form of Election to Purchase attached hereto duly completed
and signed, to the Company at its office at 1150 Sheldahl Road, Northfield, MN
55057-9444, Attention: Vice President, Finance, or at such other address as the
Company may specify in writing to the then registered Holder, and upon payment
of the Exercise Price multiplied by the number of Warrant Shares that the Holder
intends to purchase hereunder, in lawful money of the United States of America,
in cash via wire transfer or by certified or official bank check or checks, all
as specified by the Holder in the Form of Election to Purchase, the Company
shall promptly (but in no event later than five business days after the Date of
Exercise (as defined herein)) issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate for the Warrant Shares issuable upon
such exercise, free of restrictive legends other than as required by the
Convertible Preferred Stock Purchase Agreement of even date herewith between the
Holder and the Company. Any person so designated by the Holder to receive
Warrant Shares shall be deemed to have become holder of record of such Warrant
Shares as of the Date of Exercise of this Warrant.
A "Date of Exercise" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the holder hereof to be
purchased.
(c) This Warrant may be exercisable in whole or in part provided
a partial exercise shall require a minimum exercise of Warrants to purchase at
least 25,000 Warrant Shares.
4. Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided,
<PAGE> 3
however, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than that of the
Holder, and the Company shall not be required to issue or cause to be issued or
deliver or cause to be delivered the certificates for Warrant Shares unless or
until the person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid. The Holder shall be responsible for
all other tax liability that may arise as a result of holding or transferring
this Warrant or receiving Warrant Shares upon exercise hereof.
5. Replacement of Warrant. If this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
indemnity, if reasonably satisfactory to it. Applicants for a New Warrant under
such circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.
6. Reservation of Warrant Shares. The Company covenants that it will
at all times reserve and keep available out of the aggregate of its authorized
but unissued Common Stock, solely for the purpose of enabling it to issue
Warrant Shares upon exercise of this Warrant as herein provided, the number of
Warrant Shares which are then issuable and deliverable upon the exercise of this
entire Warrant. The Company covenants that all Warrant Shares that shall be so
issuable and deliverable shall, upon issuance and the payment of the applicable
Exercise Price in accordance with the terms hereof, be duly and validly
authorized, issued and fully paid and nonassessable.
7. Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 7. Upon each such adjustment of the
Exercise Price pursuant to this Section 7, the Holder shall thereafter prior to
the Expiration Date be entitled to purchase, at the Exercise Price resulting
from such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend or otherwise make a distribution or
distributions on shares of its Common Stock (as defined below) or on any other
class of capital stock (and not the Common Stock) payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock into a larger number of
shares, or (iii) combine outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding before such event and of which the denominator shall
be the number of shares of Common Stock (excluding treasury shares, if any)
outstanding after
<PAGE> 4
such event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision or combination, and shall
apply to successive subdivisions and combinations.
(b) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person pursuant to
which the Company will not be the surviving entity, the sale or transfer of all
or substantially all of the assets of the Company in which the consideration
therefor is equity or equity equivalent securities or any compulsory share
exchange pursuant to which the Common Stock is converted into other securities
or property, then the Holder shall have the right thereafter to exercise this
Warrant only into the shares of stock and other securities and property
receivable upon or deemed to be held by holders of Common Stock following such
reclassification, consolidation, merger, sale, transfer or share exchange, and
the Holder shall be entitled upon such event to receive such amount of
securities or property equal to the amount of Warrant Shares such Holder would
have been entitled to had such Holder exercised this Warrant immediately prior
to such reclassification, consolidation, merger, sale, transfer or share
exchange. The terms of any such consolidation, merger, sale, transfer or share
exchange shall include such terms so as to continue to give to the Holder the
right to receive the securities or property set forth in this Section 7(b) upon
any exercise following any such reclassification, consolidation, merger, sale,
transfer or share exchange.
(c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to holders
of this Warrant) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to in
Sections 7(a), (b) and (d)), then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
a nationally recognized or major regional investment banking firm or firm of
independent certified public accountants of recognized standing (which may be
the turn that regularly examines the financial statements of the Company) (an
"Appraiser") mutually selected in good faith by the holders of a majority in
interest of the Warrants then outstanding and the Company. Any determination
made by the Appraiser shall be final.
(d) If, at any time while this Warrant is outstanding, the
Company shall issue or cause to be issued rights or warrants to acquire or
otherwise sell or distribute shares of Common Stock to all holders of Common
Stock for a consideration per share less than the Exercise Price then in effect,
then, forthwith upon such issue or sale, the Exercise Price shall be reduced to
the price (calculated to the nearest cent) determined by dividing (i) an amount
equal to the sum of (A) the number of shares of Common Stock outstanding
immediately
<PAGE> 5
prior to such issue or sale multiplied by the Exercise Price, and (B) the
consideration, if any, received or receivable by the Company upon such issue or
sale by (ii) the total number of shares of Common Stock outstanding immediately
after such issue or sale.
(e) For the purposes of this Section 7, the following clauses
shall also be applicable:
(i) Record Date. In case the Company shall take a record
of the holders of its Common Stock for the purpose of entitling them (A) to
receive a dividend or other distribution payable in Common Stock or in
securities convertible or exchangeable into shares of Common Stock, or (B) to
subscribe for or purchase Common Stock or securities convertible or
exchangeable into shares of Common Stock, then such record date shall be deemed
to be the date of the issue or sale of the shares of Common Stock deemed to
have been issued or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(ii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.
(f) All calculations under this Section 7 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(g) if:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights; or
(iv) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock of the
Company, any consolidation or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets of the Company, or any
Compulsory Share exchange whereby the Common Stock is converted into other
securities, cash or property; or
(v) the Company shall authorize the dissolution,
liquidation or winding up of the affairs of the Company,
<PAGE> 6
then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 20 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
8. Payment of Exercise Price. The Holder shall pay the Exercise
Price in the manner provided in Section 3(b).
9. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 9, be issuable
on the exercise of this Warrant, the Company shall, at its option, (i) pay an
amount in cash equal to the Exercise Price multiplied by such fraction; or (ii)
round the number of Warrant Shares issuable, up to the next whole number.
10. Notices. Any and all notices or other communications or
deliveries hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in this
Section; (ii) the business day following the date of mailing, if sent by
nationally recognized overnight courier service; or (iii) upon actual receipt by
the party to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Company, to Sheldahl, Inc., 1150 Sheldahl
Road, Northfield, MN 55057-9444, Attention: Vice President, Finance, or to
facsimile no. (507) 663-8326 or (507) 663-8435; or (ii) if to the Holder, to the
Holder at the address or facsimile number appearing on the Warrant Register or
such other address or facsimile number as the Holder may provide to the Company
in accordance with this Section 10.
11. Warrant Agent.
(a) The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days= notice to the Holder, the Company may appoint a
new warrant agent.
(b) Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Company
<PAGE> 7
or any new warrant agent shall be a party or any corporation to which the
Company or any new warrant agent transfers substantially all of its corporate
trust or shareholders services business shall be a successor warrant agent
under this Warrant without any further act. Any such successor warrant agent
shall promptly cause notice of its succession as warrant agent to be mailed (by
first class mail, postage prepaid) to the Holder at the Holder's last address
as shown on the Warrant Register.
12. Miscellaneous.
(a) This Warrant shall be binding on and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. This Warrant may be amended only in writing signed by the Company and
the Holder.
(b) Subject to Section 12(a), above, nothing in this
Warrant shall be construed to give to any person or corporation other than the
Company and the Holder any legal or equitable right, remedy or cause under this
Warrant; this Warrant shall be for the sole and exclusive benefit of the
Company and the Holder.
(c) This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of Minnesota without
regard to the principles of conflicts of law thereof.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(e) In case any one or more of the provisions of this
Warrant shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
<PAGE> 8
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
SHELDAHL, INC.
By: /s/ JOHN V. MCMANUS
-----------------------------------
Name: John V. McManus
Title: Vice President - Finance
<PAGE> 9
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To Sheldahl, Inc.:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase ___________
shares of Common Stock ("Common Stock"), par value $.25 per share, of Sheldahl,
Inc. and encloses herewith $__________ in cash via wire transfer or certified or
official bank check or checks, which sum represents the aggregate Exercise Price
(as defined in the Warrant) for the number of shares of Common Stock to which
this Form of Election to Purchase relates, together with any applicable taxes
payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
(Please print name and address)
<PAGE> 10
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ___________________________ the right represented by the within Warrant to
purchase __________ shares of Common Stock of Sheldahl, Inc. to which the within
Warrant relates and appoints ___________________ attorney to transfer said right
on the books of Sheldahl, Inc. with full power of substitution in the premises.
Dated: ___________________
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant)
Address of Transferee
In the presence of:
---------------------------
<PAGE> 1
EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of July 30, 1998, among Sheldahl, Inc., a Minnesota corporation (the
"Company"), and the individuals and entities listed on Exhibit A hereto
(referred to herein as a "Purchaser" and collectively as the "Purchasers").
This Agreement is made pursuant to the Convertible Preferred Stock Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers
(the "Purchase Agreement").
The Company and the Purchasers hereby agree as follows:
1. Definitions
Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Advice" shall have meaning set forth in Section 3(j).
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated", "controlling" and "controlled" have
meanings correlative to the foregoing.
"Business Day" means any day except a day on which the Nasdaq
National Market, the NYSE or the AMEX, as applicable, if the Common Stock is
listed for trading or quoted thereon at such time, is closed, and if the Common
Stock is not listed for trading or quoted on any of the Nasdaq National Market,
the NYSE or the AMEX at such time, then "Business Day" shall mean any day
except Saturday, Sunday and any day which shall be a legal holiday or a day on
which banking institutions in the State of Minnesota generally are authorized
or required by law or other government actions to close.
"Closing Date" shall have the meaning set forth in the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value $.25 per
share.
"Effectiveness Date" means (i) with respect to the Registration
Statement to be filed with respect to the Series D Shares and the Warrants, the
90th day following the Closing
<PAGE> 2
Date.
"Effectiveness Period" shall have the meaning set forth in Section
2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended. "Filing Date" means the 25th day following the Closing Date.
"Holder" or "Holders" means the holder or holders, as the case may
be, from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section
5(c).
"Indemnifying Party" shall have the meaning set forth in Section
5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Preferred Stock" means the shares of Series D Preferred Stock, par
value $1.00 per share, of the Company issued to the Purchasers pursuant to the
Purchase Agreement.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"Registrable Securities" means, with respect to the Registration
Statement to be filed after the Closing, the shares of Common Stock issuable
upon (i) conversion of the Series D Shares; (ii) exercise of the Series D
Warrants issued by the Company to the Purchasers; and (iii) payment of
dividends in respect of such Preferred Stock.
"Registration Statement" means the registration statements
contemplated by Section 2(a) (and any additional Registration Statements
contemplated in the definition of Registrable Securities), including (in each
case) the Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all
- 2 -
<PAGE> 3
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
2. Shelf Registration. On or prior to the Filing Date, the Company
shall prepare and file with the Commission a "Shelf" Registration
Statement covering all Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415. The Registration Statement shall be on
Form S-3 (or if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith which form shall be reasonably
acceptable to the Holders). The Company shall (i) not permit any securities
other than the Registrable Securities to be included in the Registration
Statement; and (ii) use its commercially reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, but in any event prior to the
Effectiveness Date, and to keep such Registration Statement continuously
effective under the Securities Act until the date which is two years after the
date that such Registration Statement is declared effective by the Commission
or such earlier date when all Registrable Securities covered by such
Registration Statement have been sold or may be sold without volume
restrictions pursuant to Rule 144 as determined by the counsel to the Company
pursuant to a written opinion letter, addressed to the Company's transfer agent
to such effect (the "Effectiveness Period").
3. Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall:
(a) Prepare and file with the Commission, on or prior to
the Filing Date, a Registration Statement on Form S-3 (or if the Company is not
then eligible to register for resale the Registrable Securities on Form S-3, in
which case such registration shall be on another appropriate form in accordance
herewith which Form shall be reasonably acceptable to the Holders) in
accordance with the method or methods of distribution thereof as specified by
the Holders, and cause the Registration Statement to become effective and
remain effective as provided herein.
- 3 -
<PAGE> 4
(b) (i) Prepare and file with the Commission such
amendments, including post-effective amendments, to the Registration Statement
as may be necessary to keep the Registration Statement continuously effective
as to the applicable Registrable Securities for the Effectiveness Period and
prepare and file with the Commission such additional Registration Statements in
order to register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or supplemented by
any required Prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; (iii) respond as promptly as practicable
to any comments received from the Commission with respect to the Registration
Statement or any amendment thereto and promptly provide the Holders true and
complete copies of all correspondence from and to the Commission relating to
the Registration Statement; and (iv) comply with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in
such Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be
sold: (i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement is proposed to be filed, (B) when the
Commission notifies the Company whether there will be a "review" of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement, and (C) with respect to the Registration Statement or
any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or
for additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any
or all of the Registrable Securities or the initiation of any Proceedings for
that purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; and (v) of the
occurrence of any event that makes any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
the Registration Statement or (ii) any suspension of the qualifications (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as soon as reasonably practicable.
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<PAGE> 5
(e) Furnish to each Holder, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the Commission.
(f) Promptly deliver to each Holder, without charge, as
many copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.
(g) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Holders in connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for offer
and sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any Holder requests in writing, to keep each such registration
or qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by a Registration Statement; provided, however, that the Company shall
not be required to qualify generally to do business in any jurisdiction where
it is not then so qualified or to take any action that would subject it to
general service of process in any such jurisdiction where it is not then so
subject or subject the Company to any material tax in any such jurisdiction
where it is not then so subject.
(h) Upon the occurrence of any event contemplated by
Section 3(c)(v), as promptly as practicable, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(i) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on The Nasdaq National
Market and any other securities exchange, quotation system, market or
over-the-counter bulletin board, if any, on which similar securities issued by
the Company are then listed as and when required pursuant to the Purchase
Agreement.
(j) The Company may require each selling Holder to furnish to
the Company such information, including information regarding the distribution
of such Registrable Securities, as is required by law to be disclosed in the
Registration Statement and the Company may
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<PAGE> 6
exclude from such registration the Registrable Securities of any such Holder
who fails to furnish such information within a reasonable time after receiving
such request. The failure by the Company to file the Registration Statement by
the Filing Date, to cause it to become effective by the Effectiveness Date or
to maintain its effectiveness for the Effectiveness Period, if due solely to
the breach of a Holder's obligations under this Section, shall not be deemed a
breach of the Company's obligations to such Holder under this Agreement or the
Purchase Agreement. The rights of Holders that timely supply such information
shall not be affected by the preceding sentence and the Company shall remain
obligated hereunder to file, and cause and maintain the effectiveness of the
Registration Statement on behalf of such Holders.
If the Registration Statement refers to any Holder by name or otherwise as
the holder of any securities of the Company, then such Holder shall have the
right to require (if such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar Federal statute then in force)
the deletion of the reference to such Holder in any amendment or supplement to
the Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Each Purchaser covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as contemplated in
Section 3(g) and notice from the Company that such Registration Statement and
any post-effective amendments thereto have become effective as contemplated by
Section 3(c); and (ii) the Purchaser and its officers, directors or Affiliates,
if any, will comply with the Prospectus delivery and any other requirements of
the Securities Act applicable to them in connection with sales of Registrable
Securities pursuant to the Registration Statement.
Each Holder agrees by its acquisition of such Registrable Securities that,
upon receipt of a notice from the Company of the occurrence of any event
of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(c)(v), such
Holder will forthwith discontinue disposition of such Registrable Securities
under the Registration Statement until such Holder's receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement contemplated
by Section 3(h), or until it is advised in writing (the "Advice') by the
Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus
or Registration Statement.
4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company, whether or not the Registration Statement is filed or becomes
effective and whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing
fees (including, without limitation, fees and expenses (A) with respect to
filings required to be made with The Nasdaq National Market and each other
securities exchange or market on which Registrable Securities are required
hereunder to be listed, and (B) in compliance with state
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<PAGE> 7
securities or Blue Sky laws; (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in the
Registration Statement but not including printing expenses of a financial
printer; (iii) messenger, telephone and delivery expenses incurred by the
Company; (iv) fees and disbursements of counsel for the Company; (v) Securities
Act liability insurance, if the Company so desires such insurance; and (vi)
fees and expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this Agreement. In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated
by this Agreement (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder. The Holders shall bear the expenses and fees of any legal counsel
retained by them.
5. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, investment advisors and employees
of each of them, each Person who controls any such Holder (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that such untrue statements or omissions are based solely upon information
regarding such Holder furnished to the Company by such Holder expressly for use
therein, which information was reasonably relied on by the Company for use
therein or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities. The
Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with
the transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, the directors,
officers, agents and employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against
all Losses
- 7 -
<PAGE> 8
(as determined by a court of competent jurisdiction in a final judgment not
subject to appeal or review) arising solely out of or based solely upon any
untrue statement of a material fact contained in the Registration Statement,
any Prospectus, or any form of prospectus, or arising solely out of or based
solely upon any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading to the extent, but only
to the extent, that such untrue statement or omission is contained in any
information so furnished by such Holder to the Company specifically for
inclusion in the Registration Statement or such Prospectus and that such
information was reasonably relied upon by the Company for use in the
Registration Statement, such Prospectus or such form of prospectus or to the
extent that such information relates to such Holder or such Holder's proposed
method of distribution of Registrable Securities. In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Party and the payment of
all fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that it shall be finally determined
by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party); provided that if more than one Indemnified Party is
seeking indemnification with respect to the same Proceeding, the Indemnifying
Party shall not be required to pay for more than one separate counsel for all
such Indemnified Parties as a group. The Indemnifying Party shall not be
liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No Indemnifying
Party shall, without the prior written consent of the
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<PAGE> 9
Indemnified Party, effect any settlement of any pending Proceeding in respect
of which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
(d) Contribution. If a claim for indemnification under Section 5(a)
or 5(b) is unavailable to an Indemnified Party because of a failure or refusal
of a governmental authority to enforce such indemnification in accordance
with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses, as well as any
other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include, subject to the limitations set
forth in Section 5(c), any reasonable attorneys' or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), the Purchaser
shall not be required to contribute, in the aggregate, any amount in excess of
the amount by which the proceeds actually received by the Purchaser from the
sale of the Registrable Securities subject to the Proceeding exceeds the amount
of any damages that the Purchaser has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. 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.
The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6. Rule 144. The Company shall file the reports required to be filed
by it under the Securities Act and the Exchange Act in a timely manner and, if
at any time the Company is not required to file such reports, they will, upon
the request of any Holder, make publicly available other information so long
as necessary to permit sales of its securities pursuant to Rule 144. The
Company further covenants that it will take such further action as any Holder
may
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<PAGE> 10
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144; provided,
however, that the Company shall not be obligated to provide an opinion to any
Holder regarding the sale of Registrable Securities pursuant to exemptions
provided by Rule 144. Upon the request of any Holder, the Company shall
deliver to such Holder a written certification of a duly authorized officer as
to whether it has complied with such requirements.
7. Miscellaneous
(a) Remedies. In the event of a breach by the Company or
by a Holder, of any of their obligations under this Agreement, each Holder or
the Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
The Company and each Holder agree that monetary damages would not provide
adequate compensation for any losses incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least two-thirds of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders and that does not directly or indirectly affect the rights of
other Holders may be given by Holders of at least a majority of the Registrable
Securities to which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding sentence.
(c) Notices. Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (i) the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified in this Section prior to 4:30 p.m.
(Minneapolis time) on a Business Day; (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in the Purchase Agreement later than 4:30
p.m. (Minneapolis time) on any date and earlier than 11:59 p.m. (Minneapolis
time) on such date; (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service; or (iv) upon actual
receipt by the party to whom such notice is required to be given.
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<PAGE> 11
If to the Company: Sheldahl, Inc.
1150 Sheldahl Road
Northfield, MN 55057-9444
Attn: John V. McManus
Fax: (507) 663-8326 or
(507) 663-8435
With copies to: Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis MN 55402
Attn: Charles P. Moorse, Esq.
Fax: (612) 371-3207
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
(d) Successors and Assigns. This Agreement shall more to
the benefit of and be binding upon the successors and permitted assigns of each
of the parties and shall more to the benefit of each Holder. The Company may
not assign its rights or obligations hereunder without the prior written
consent of each Holder. Each Purchaser may assign its rights hereunder in the
manner and to the Persons as permitted under the Purchase Agreement.
(e) Assignment of Registration Rights. The rights of
each Purchaser hereunder, including the right to have the Company register for
resale Registrable Securities in accordance with the terms of this Agreement,
shall be automatically assignable by the Purchaser to any assignee or
transferee of all or a portion of the shares of Preferred Stock, the Warrants
or the Registrable Securities if: (i) the Purchaser agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment; (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (A) the name and address of such transferee or
assignee, and (B) the securities with respect to which such registration rights
are being transferred or assigned; (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws to the
extent required by the Purchase Agreement; (iv) at or before the time the
Company receives the written notice contemplated by clause (ii) of this
Section, the transferee or assignee agrees in writing with the Company to be
bound by all of the provisions of this Agreement; and (v) such transfer shall
have been made in accordance with the applicable requirements of the Purchase
Agreement. The rights to assignment shall apply to the Purchaser's (and to
subsequent) successors and assigns.
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<PAGE> 12
(f) Counterparts. This Agreement may be executed in any
number of counterparts, each of which when executed and delivered shall be
deemed to be an original and, all of which taken together shall constitute one
and the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the original
thereof.
(g) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Minnesota, without
regard to principles of conflicts of law.
(h) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(j) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(k) Shares Held by The Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than the Purchasers or transferees or successors or
assigns thereof if such Persons are deemed to be Affiliates solely by reason of
their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
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<PAGE> 13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
SHELDAHL, INC.
By: /s/ John V. McManus
-----------------------------------------
Name: John V. McManus
Title: Vice President - Finance
PURCHASER
MOLEX INCORPORATED
By: /s/ Thomas F. Lee
-----------------------------------------
Its: V.P., New Ventures & Acquisitions
----------------------------------------
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<PAGE> 1
EXHIBIT 5
AMENDED RIGHTS AGREEMENT
This Amendment No. 1 to Rights Agreement is entered into effective this
25th day of July, 1998 by and between Sheldahl, Inc., a Minnesota corporation
(the "Company") and Norwest Bank Minnesota, N.A., (the "Rights Agent").
WHEREAS, the Company and the Rights Agent entered into that certain
Rights Agreement dated as of June 16, 1996 (the "Agreement") and now desire to
amend Section 1(a) of the Rights Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, Section 1(a) of the Rights Agreement is hereby amended
in its entirety as follows:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as
such term is hereinafter defined) and Associates (as such term is
hereinafter defined) of such Person, without the prior approval of a
majority of the Board of Directors, shall be the Beneficial Owner (as
such term is hereinafter defined) of voting securities having fifteen
percent (15%) or more of the then voting power of the Company, but
shall not include the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company, or any entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan; provided,
however, that if a Person is the Beneficial Owner at the close of
business on the date of this Agreement of fifteen percent (15%) or more
of the voting power of the Company, such Person shall not be deemed an
Acquiring Person unless and until such Person acquires any additional
Common Stock in any manner other than pursuant to a stock dividend,
stock split, recapitalization or similar transaction that does not
affect the percentage of outstanding Common Stock beneficially owned by
such Person. Notwithstanding the foregoing or the last sentence of this
Section 1(a), no Person shall become an "Acquiring Person" as the
result of an acquisition of Common Stock by the Company which, by
reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to fifteen percent
(15%) or more of the then voting power of the Company then outstanding;
provided, however, that if a Person shall become the Beneficial Owner
of fifteen percent (15%) or more of the then voting power of the
Company then outstanding by reason of shares purchased by the Company
and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Stock of the Company, then
such Person shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if a majority of the Continuing
Directors then in office determines in good faith that a Person who
would otherwise be an "Acquiring Person", as defined pursuant to the
foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable a
sufficient number of shares of Common Stock so that such Person would
no longer be
<PAGE> 2
an Acquiring Person, as defined pursuant to the foregoing provisions of
this paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement. Notwithstanding
the foregoing, Molex Incorporated and its Affiliates and Associates
shall not be deemed an Acquiring Person until such time as any one of
them becomes the Beneficial Owner of twenty-two percent (22%) or more
of the voting power of the Company and references to "fifteen percent
(15%)" in this Agreement shall be deemed to refer to "twenty-two
percent (22%)" when applied to Molex Incorporated and its Affiliates
and Associates; provided that Common Stock received by Molex
Incorporated as dividends paid or accrued on the Company's Series D
Convertible Preferred Stock (the "Series D Preferred") shall be
excluded from such Beneficial Ownership calculation for Molex
Incorporated and its Affiliates and Associates so long as such
Beneficial Ownership includes only shares of the Company's Common Stock
owned as of the date hereof, shares of Series D Preferred, shares of
Series D Preferred converted into Common Stock, Common Stock received
as dividends paid or accrued on the Series D Preferred and Common Stock
issued directly to Molex Incorporated after the date hereof by the
Company.
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to be duly executed and attested as of the day and year first above written.
SHELDAHL, INC.
Attest:
By /s/ John V. McManus By /s/ Edward L. Lunstrom
---------------------------- ----------------------------------
Its VP-Finance Its President
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NORWEST BANK MINNESOTA, N.A.
By /s/ Kenneth Swanson
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Its Vice President
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