SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): August 18, 1998
(July 30, 1998)
Sheldahl, Inc.
(Exact name of Registrant as specified in its charter)
Minnesota 0-45 41-0758073
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1150 Sheldahl Road
Northfield, Minnesota 55057
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (507) 663-8000
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Item 5. Other Events
General
On July 2, 1998, the Board of Directors of Sheldahl, Inc., a Minnesota
corporation (the Company), authorized a private placement of its newly created
Series D Convertible Preferred Stock, $1.00 par value per share, and Warrants
(the Warrants) to purchase shares of the Companys Common Stock, $.25 par
value per share (the Preferred Stock), to a group of accredited investors
(the Investors). On July 25, 1998 the Board approved the pricing for the
private placement. The Board also authorized granting the Investors
certain registration rights with regard to the shares of Common Stock
underlying the Preferred Stock and the Warrants. The closing of the
private placement occurred on July 30, 1998.
Preferred Stock
The Company sold an aggregate of 32,917 shares of the Preferred Stock to the
Investors for an aggregate purchase price of $32,917,000, pursuant to the
Convertible Preferred Stock Purchase Agreement among the Company and the
Investors (the Agreement).
The Preferred Stock is entitled to 5% dividends, payable upon conversion, in
shares of Common Stock or cash, at the option of the Company. The
Preferred Stock is convertible into shares of the Companys Common Stock at
any time. Each holder of Preferred Stock is entitled to convert each share
of Preferred Stock into that number of shares of Common Stock that equals
$1,000 plus accrued dividends divided by the Conversion Price. The
Conversion Price is $6.15 per share. The Conversion Price is subject to
adjustment for certain dilution and market price events.
The Company may require holders of Preferred Stock to convert to Common Stock
provided that the Companys Common Stock trades at certain pre-set price
levels. The Company may also redeem the Preferred Stock under certain
circumstances. The Company is obligated to redeem the Preferred Stock, at
the option of the holders, in the event the Company defaults under certain
obligations which are part of the terms of the Preferred Stock.
The Agreement between the Company and the Investors, and the Certificate of
Designation for the Preferred Stock, are incorporated herein by reference as
Exhibits 4.1 and 4.2 hereto. The foregoing description of the Agreement
and the Preferred Stock does not purport to be complete and is qualified in
its entirety by reference to such exhibits.
In connection with the sale of the Preferred Stock, on July 25, 1998, the
Companys Board of Directors amended the Companys Rights Plan to increase the
threshold percentage from fifteen (15%) to twenty-two (22%), subject to
certain conditions with respect to one of the Investors, Molex Incorporated
(Molex) and also approved Molexs acquisition under the Minnesota Business
Combination Act.
Warrant
In connection with the issuance of the Preferred Stock, the Company also
granted to each Investor a Warrant to purchase shares of the Companys Common
Stock. The aggregate amount of shares of Common Stock the Company is obligated
to issue under the Warrants is 329,170 at an exercise price of $7.6875 per
share.
The form of Warrant issued by the Company to the Investors is incorporated
herein by reference as Exhibit 4.3 hereto.
Registration Rights
The Company granted the Investors certain registration rights. The
registration rights cover all shares of Common Stock issuable to the Investors
upon conversion of the Preferred Stock and upon exercise of the Warrants. The
Company is obligated to file a shelf Registration Statement within twenty-five
(25) days of July 30, 1998 on Form S-3.
The Registration Rights Agreement between the Company and the Investors
specifying the terms of the registration rights is incorporated herein by
reference as Exhibit 4.4 hereto. The foregoing description of the Registration
Rights does not purport to be complete and is qualified in its entirety by
reference to such Exhibit.
Additional Agreements
In connection with the transactions contemplated by the Agreement, the
Company 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.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibit 4.1 Convertible Preferred Stock Purchase Agreement among the
Company, and the Investors.
Exhibit 4.2 Certificate of Designation, Preferences and Rights of Series
D Convertible Preferred Stock.
Exhibit 4.3 Form of Warrant.
Exhibit 4.4 Registration Rights Agreement.
Exhibit 4.5 Press Release
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Sheldahl, Inc.
By /s/ John V. McManus
John V. McManus,
Vice President, Finance
Dated: August 18, 1998.
<PAGE>
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 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 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 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 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.
(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 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 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
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:
(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, 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 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____________________________
John V. McManus
Its Vice President - Finance
<PAGE>
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:
___________________________________
By: ________________________________
Title: _______________________________
<PAGE>
EXHIBIT A
Schedule of Purchasers
Share
Purchaser Purchase Purchase # of # of State of
Name & Address Amount Price Shares Warrants Residence
<PAGE>
EXHIBIT B
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 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.
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 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 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 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, 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 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 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 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____________________________
Its Vice President
<PAGE>
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
<PAGE>
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
<PAGE>
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. __ 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, ______________________, or its registered assigns (Holder), is
entitled, subject to the terms set forth below, to purchase from the Company
up to a total of _______ shares of Common Stock, par value $.25 per share (the
Common Stock), of the Company (each such share, a Warrant 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 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, 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 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 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,
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 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>
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:
Name: John V. McManus
Title: Vice President - Finance
<PAGE>
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>
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>
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 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 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.
(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.
(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 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 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 (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 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 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.
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.
(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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SHELDAHL, INC.
By:_______________________________
Name: John V. McManus
Title: Vice President - Finance
PURCHASER
____________________________________
By: _______________________________
Its: _____________________________
<PAGE>
FOR IMMEDIATE RELEASE
July 28, 1998 Contacts: John McManus
Vice President, Finance
Sheldahl, Inc. Sheldahl, Inc.
1150 Sheldahl Road 507/663-8337
Northfield, MN 55057
Neil Lefort
VP, Public Relations
Molex Incorporated
630/527-4344
Elin Raymond
The Sage Group
612/321-9897
SHELDAHL ANNOUNCES PRIVATE PLACEMENT - MOLEX INCORPORATED LEAD INVESTOR
Formation of Modular Interconnect Systems completed - a joint venture of
Sheldahl, Inc. and Molex Incorporated to offer automotive interconnect systems
Northfield, MN - Sheldahl, Inc. (Nasdaq: SHEL) announced today that it
has received commitments from investors to purchase $32.7 million of its new
Series D 5% Convertible Preferred Stock in a private placement. Closing is
expected in a few days. The proceeds will be used to pay debt and for the
growth of its Micro Products business, which supplies ViaThin proprietary
high-density substrate for semiconductors to the datacom and automotive
markets. Sheldahl believes that the world-wide market opportunity for
Sheldahl's ViaThin products is currently about $1.0 billion per year.
The lead investor in this placement is Molex Incorporated (Nasdaq: MOLX,
MOLXA), a long-time Sheldahl customer, market partner, and currently owner of
approximately 4% of Sheldahl common stock. With conversion of the preferred
shares just purchased, Molex will own slightly less than 15% of Sheldahl
common. At the invitation of Sheldahl's Board of Directors, a member of
Molex's operating management team will join Sheldahl's Board.
Said James E. Donaghy, Sheldahl's Chief Executive Officer, The support
and confidence expressed by our investors confirms the shared vision we have
for Sheldahl. I welcome Molex as a more significant investor and look forward
to strengthening and expanding our existing alliances. Molex's global presence
in our industry will aid Sheldahl in securing increased global market position
for its proprietary products.
At the same time, the two companies announced that they have completed
the formation of a joint venture company to design, market and assemble
interconnect systems to replace wiring harnesses in automobiles. The new
company, named Modular Interconnect Systems, will use proprietary flexible
products from Sheldahl and proprietary connectors from Molex in its product
offering. Sheldahl believes that the world-wide market for automobile wiring
harnesses is currently estimated at $5.0 billion per year.
Sheldahl is a leading producer of high-density substrates, high-quality
flexible printed circuitry, and flexible laminates, primarily for sale to the
automotive electronics and datacommunications markets. The Company, which is
headquartered in Northfield, Minnesota, has operations in Northfield;
Longmont, Colorado; Detroit, Michigan; facilities in South Dakota; and a sales
office in Hong Kong, China; and Mainz, Germany. Sheldahl's common stock trades
on the Nasdaq National Market tier of the Nasdaq Stock Market under the
symbol: SHEL. Sheldahl news and information can be found on the World Wide Web
at http://www.sheldahl.com.
Molex Incorporated is a 60 year-old manufacturer of electronic,
electrical and fiber optic interconnection products and systems, switches and
application tooling. Based in Lisle, Illinois, USA, the Company operates 47
manufacturing facilities in 21 countries and employs more than 12,000 people.
Revenues for the fiscal year ended June 30, 1998 were $1.62 billion.
Statements contained here, other than historical data, may be forward-looking
and subject to risks and uncertainties including, but not limited to, those
set forth in the Company's annual report. 10K, 10Q, and other SEC filings.
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