<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D AMENDMENT NO. 2
Under the Securities Exchange Act of 1934
SHELDAHL, INC.
--------------
(Name of Issuer)
Common Stock, $.25 Par Value
------------------------------
(Title of Class of Securities)
822440 10 3
-----------
(CUSIP Number)
Albert A. Woodward, Esq.
Maun & Simon, PLC
2000 Midwest Plaza Building West
801 Nicollet Mall
Minneapolis, Minnesota 55402
(612) 904-7400
--------------
(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
December 6, 1999
----------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [ ].
(Cover page continued on next 5 pages)
<PAGE>
SCHEDULE 13D
CUSIP NO. 822440 10 3
<TABLE>
<CAPTION>
- ------------------------------------------------------------- ---------------------------------------------------------
<S> <C>
(1) Names of reporting persons............................
I.R.S. Identification Nos. of above persons (entities only) IRWIN L. JACOBS
- ------------------------------------------------------------- ---------------------------------------------------------
(2) Check the appropriate box if a member of a group (see
instructions) (a) X
---------------------------------------------------------
(b)
- ------------------------------------------------------------- ---------------------------------------------------------
(3) SEC use only..........................................
- ------------------------------------------------------------- ---------------------------------------------------------
(4) Source of funds (see instructions) BK, 00
- ------------------------------------------------------------- ---------------------------------------------------------
(5) Check if disclosure of legal proceedings is required
pursuant to Items 2(d) or 2(e).
- ------------------------------------------------------------- ---------------------------------------------------------
(6) Citizenship or place of organization.................. USA
- ------------------------------------------------------------- ---------------------------------------------------------
Number of shares beneficially owned by each reporting person
with:
(7) Sole voting power................................ 376,600
(8) Shared voting power.............................. 0
(9) Sole dispositive power........................... 376,600
(10) Shared dispositive power........................ 0
- ------------------------------------------------------------- ---------------------------------------------------------
(11) Aggregate amount beneficially owned by each reporting
person. 376,600
- ------------------------------------------------------------- ---------------------------------------------------------
(12) Check if the aggregate amount in Row (11) excludes
certain shares (see instructions).
- ------------------------------------------------------------- ---------------------------------------------------------
(13) Percent of class represented by amount in Row (11)... 3.4%
- ------------------------------------------------------------- ---------------------------------------------------------
(14) Type of reporting person (see instructions).......... IN
- ------------------------------------------------------------- ---------------------------------------------------------
</TABLE>
Page 2
<PAGE>
SCHEDULE 13D
CUSIP NO. 822440 10 3
<TABLE>
<CAPTION>
- ------------------------------------------------------------- ---------------------------------------------------------
<S> <C>
(1) Names of reporting persons............................
I.R.S. Identification Nos. of above persons (entities only) DANIEL T. LINDSAY
- ------------------------------------------------------------- ---------------------------------------------------------
(2) Check the appropriate box if a member of a group (see
instructions) (a) X
---------------------------------------------------------
(b)
- ------------------------------------------------------------- ---------------------------------------------------------
(3) SEC use only..........................................
- ------------------------------------------------------------- ---------------------------------------------------------
(4) Source of funds (see instructions) PF
- ------------------------------------------------------------- ---------------------------------------------------------
(5) Check if disclosure of legal proceedings is required
pursuant to Items 2(d) or 2(e).
- ------------------------------------------------------------- ---------------------------------------------------------
(6) Citizenship or place of organization.................. USA
- ------------------------------------------------------------- ---------------------------------------------------------
Number of shares beneficially owned by each reporting person
with:
(7) Sole voting power................................ 208,500
(8) Shared voting power.............................. 0
(9) Sole dispositive power........................... 208,500
(10) Shared dispositive power........................ 0
- ------------------------------------------------------------- ---------------------------------------------------------
(11) Aggregate amount beneficially owned by each reporting
person. 208,500
- ------------------------------------------------------------- ---------------------------------------------------------
(12) Check if the aggregate amount in Row (11) excludes
certain shares (see instructions).
- ------------------------------------------------------------- ---------------------------------------------------------
(13) Percent of class represented by amount in Row (11)... 1.9%
- ------------------------------------------------------------- ---------------------------------------------------------
(14) Type of reporting person (see instructions).......... IN
- ------------------------------------------------------------- ---------------------------------------------------------
</TABLE>
Page 3
<PAGE>
SCHEDULE 13D
CUSIP NO. 822440 10 3
<TABLE>
<CAPTION>
- ------------------------------------------------------------- ---------------------------------------------------------
<S> <C>
(1) Names of reporting persons............................
I.R.S. Identification Nos. of above persons (entities only) DENNIS M. MATHISEN
- ------------------------------------------------------------- ---------------------------------------------------------
(2) Check the appropriate box if a member of a group (see
instructions) (a) X
---------------------------------------------------------
(b)
- ------------------------------------------------------------- ---------------------------------------------------------
(3) SEC use only..........................................
- ------------------------------------------------------------- ---------------------------------------------------------
(4) Source of funds (see instructions) PF, BK
- ------------------------------------------------------------- ---------------------------------------------------------
(5) Check if disclosure of legal proceedings is required
pursuant to Items 2(d) or 2(e).
- ------------------------------------------------------------- ---------------------------------------------------------
(6) Citizenship or place of organization.................. USA
- ------------------------------------------------------------- ---------------------------------------------------------
Number of shares beneficially owned by each reporting person
with:
(7) Sole voting power................................ 527,401
(8) Shared voting power.............................. 0
(9) Sole dispositive power........................... 527,401
(10) Shared dispositive power........................ 0
- ------------------------------------------------------------- ---------------------------------------------------------
(11) Aggregate amount beneficially owned by each reporting
person. 527,401
- ------------------------------------------------------------- ---------------------------------------------------------
(12) Check if the aggregate amount in Row (11) excludes
certain shares (see instructions).
- ------------------------------------------------------------- ---------------------------------------------------------
(13) Percent of class represented by amount in Row (11)... 4.6%
- ------------------------------------------------------------- ---------------------------------------------------------
(14) Type of reporting person (see instructions).......... IN
- ------------------------------------------------------------- ---------------------------------------------------------
</TABLE>
(1) Includes (i) 292,683 shares of common stock issuable to Mr. Mathisen upon
conversion of 1,800 shares of Series D Convertible Preferred Stock of
Sheldahl, Inc. at the initial conversion price of $6.15 per share of common
stock; (ii) 18,000 shares of common stock issuable to Mr. Mathisen upon
exercise of outstanding warrants to purchase such common stock at a price
of $7.6875 per share of common stock; (iii) 8,333 shares of common stock
issuable to Mr. Mathisen upon exercise of an option to purchase such common
stock at a price of $5.75 per share; (iv) 60,000 shares of common stock
issuable to Mr. Mathisen upon conversion of 375 shares of Series E
Convertible Preferred Stock of
Page 4
<PAGE>
Sheldahl, Inc. at the initial conversion price of $6.25 per share of common
stock; and (v) 3,750 shares of common stock issuable to Mr. Mathisen upon
exercise of outstanding warrants to purchase such common stock at a price
of $7.8125 per share of common stock.
Page 5
<PAGE>
SCHEDULE 13D
CUSIP NO. 822440 10 3
<TABLE>
<CAPTION>
- ------------------------------------------------------------- ---------------------------------------------------------
<S> <C>
(1) Names of reporting persons............................ MARSHALL FINANCIAL GROUP, INC.
I.R.S. Identification Nos. of above persons (entities only) 41-1624808
- ------------------------------------------------------------- ---------------------------------------------------------
(2) Check the appropriate box if a member of a group (see
instructions) (a) X
---------------------------------------------------------
(b)
- ------------------------------------------------------------- ---------------------------------------------------------
(3) SEC use only..........................................
- ------------------------------------------------------------- ---------------------------------------------------------
(4) Source of funds (see instructions) WC, OO
- ------------------------------------------------------------- ---------------------------------------------------------
(5) Check if disclosure of legal proceedings is required
pursuant to Items 2(d) or 2(e).
- ------------------------------------------------------------- ---------------------------------------------------------
(6) Citizenship or place of organization.................. MINNESOTA
- ------------------------------------------------------------- ---------------------------------------------------------
Number of shares beneficially owned by each reporting person
with:
(7) Sole voting power................................ 65,000
(8) Shared voting power.............................. 0
(9) Sole dispositive power........................... 65,000
(10) Shared dispositive power........................ 0
- ------------------------------------------------------------- ---------------------------------------------------------
(11) Aggregate amount beneficially owned by each reporting
person. 65,000
- ------------------------------------------------------------- ---------------------------------------------------------
(12) Check if the aggregate amount in Row (11) excludes
certain shares (see instructions).
- ------------------------------------------------------------- ---------------------------------------------------------
(13) Percent of class represented by amount in Row (11)... 0.6%
- ------------------------------------------------------------- ---------------------------------------------------------
(14) Type of reporting person (see instructions).......... CO
- ------------------------------------------------------------- ---------------------------------------------------------
</TABLE>
Page 6
<PAGE>
INTRODUCTION
The members of this Section 13(d) filing group (the "Reporting Persons")
originally filed a Schedule 13D relating to Sheldahl, Inc. (the "Company") on
September 21, 1998. The original filing was amended on October 20, 1998. This
filing is the second amendment to the original Schedule 13D filing.
The Reporting Persons' responses to items 1-2 remain unchanged, and the
Reporting Persons hereby restate the information contained in the original
filing for those items.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OTHER THAN CONSIDERATION
In 1999, Dennis M. Mathisen received 14,635 shares of Common Stock of the
Issuer as payment in kind of a 5% per annum dividend in the amount of $90,005 on
the Series D Convertible Preferred Stock. All other information stated in Item 3
of the original Schedule 13D filing remains true and accurate.
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Persons originally acquired the Common Stock of the Issuer to
obtain an equity position in the Company. At that time, the Reporting Persons
were concerned that the Board of Directors and management of the Company were
not effectively maximizing shareholder value by producing results commensurate
with the prospects of the Company. On October 20, 1998, Dennis M. Mathisen was
elected to the Board of Directors of the Company. As a result of Mr. Mathisen's
appointment to the Board of Directors, Irwin L. Jacobs and Daniel T. Lindsay
determined that it was no longer necessary for them to act as members of the
group of Reporting Persons with respect to their ownership of the Common Stock.
Mr. Jacobs and Mr. Lindsay then withdrew as members of the "Group" within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934.
On November 19, 1999, Mr. Mathisen tendered his resignation from the Board
of Directors of the Company. In his resignation letter, Mr. Mathisen noted his
dissatisfaction with the Board of Directors, specifically the Board's efforts to
limit the activities of a special committee formed to explore strategic
alternatives to enhance shareholder value and the Board's failure to remain open
to all possible strategic alternatives. As a consequence of Mr. Mathisen leaving
the Board of Directors, Mr. Jacobs and Mr. Lindsay have determined that it is in
their best interest to rejoin the group of Reporting Persons with respect to
their ownership of the Common Stock. The Reporting Persons share Mr. Mathisen's
dissatisfaction with the direction that the Company has taken under the current
Board of Directors. The Reporting Persons continue to believe that the Board of
Directors and management of the Company have failed to maximize shareholder
value, and have refused to explore and review all strategic alternatives to
preserve enterprise value for all shareholders.
The Reporting Persons will continue to evaluate their position to determine
what, if any, actions to take with respect to the Company and their ownership
position. The Reporting Persons may explore the feasibility of, and strategies
for, seeking control and may explore, among other possibilities, (i) making a
proposal to the Company for a merger or business combination; (ii) nominating
individuals selected by the Reporting Persons as candidates for the Board of
Directors of the Company and soliciting proxies from the Company's shareholders
to vote for such nominees at the next meeting of the Company's shareholders, or
otherwise taking
Page 7
<PAGE>
action to reconstitute the Board of Directors; (iii) acquiring additional shares
of Common Stock (subject to the availability of Common Stock at prices deemed
favorable) from time-to-time in the open market, in privately negotiated
transactions or otherwise; or (iv) entering into arrangements with third-parties
who may be interested in joining with the Reporting Persons to acquire control
of the Company which arrangements may contemplate the sale or disposition of
portions of the Company's assets to such third-parties after control is
obtained.
The Reporting Persons expect to explore these and, potentially, other
alternatives designed to enhance the value of the Common Stock for all the
shareholders of the Company.
Depending upon the course of action that the Reporting Persons pursue, the
Reporting Persons may attempt to dispose of the Common Stock in the open market,
in privately negotiated transactions or otherwise.
Although the foregoing represents the range of activities presently
contemplated by the Reporting Persons with respect to the Company, it should be
noted that the possible activities of the Reporting Persons are subject to
change at any time, and there is no assurance that the Reporting Persons will
actually purchase additional Common Stock or seek to influence or obtain control
of the Company. Except as set forth above, the Reporting Persons have no present
plans or intentions which would result in or relate to any of the transactions
described in Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of December 6, 1999, the Reporting Persons beneficially owned the
amounts of Common Stock respectively set forth below. The percentage set forth
below represents the percentage of the outstanding shares of Common Stock (based
on 11,152,588 shares outstanding as of July 6, 1999, as set forth in the
Company's Schedule 10-Q filed on July 13, 1999, plus, in the case of Dennis M.
Mathisen and the Reporting Persons as a group, 292,683 shares issuable upon
conversion of the Series D Stock held by Mr. Mathisen, 18,000 shares issuable
upon exercise of Warrants held by Mr. Mathisen, 60,000 shares issuable upon
conversion of the Series E Stock held by Mr. Mathisen, 3,750 shares issuable
upon exercise of the Warrants held by Mr. Mathisen, and 8,333 shares issuable
upon exercise of the option held by Mr. Mathisen) represented by the shares of
Common Stock beneficially owned by the Reporting Persons.
<TABLE>
<CAPTION>
Reporting Person Shares of Common Stock Percent Outstanding
---------------- ---------------------- -------------------
<S> <C> <C>
Irwin L. Jacobs 376,600 3.4%
Daniel T. Lindsay 208,500 1.9%
Dennis M. Mathisen 527,401 4.6%
Marshall Financial Group 65,000 0.6%
</TABLE>
As of December 6, 1999, the Reporting Persons beneficially owned an
aggregate of 1,177,501 shares of Common Stock, including 292,683 shares of
Common Stock issuable upon conversion of the Series D Stock held by Mr.
Mathisen, 18,000 shares of Common Stock issuable upon exercise of the Warrants
held by Mr. Mathisen, 60,000 shares of Common Stock issuable upon conversion of
the Series E Stock held by Mr. Mathisen, 3,750 shares of Common Stock issuable
upon exercise of the Warrants held by Mr. Mathisen, and 8,333 shares of
Page 8
<PAGE>
Common Stock issuable upon exercise of the option held by Mr. Mathisen, in
aggregate representing approximately 10.2% of the outstanding shares of Common
Stock.
John A. Fischer, Executive Vice President and Director of Marshall
Financial Group, beneficially owns 22,323 shares of Common Stock, consisting of
16,260 shares issuable upon conversion of the Series D Stock owned by Mr.
Fischer, 1,000 shares issuable upon exercise of the Warrants held by Mr.
Fischer, 4,000 shares issuable upon conversion of the Series E Stock owned by
Mr. Fischer, 250 shares issuable upon exercise of the Warrants held by Mr.
Fischer, and 813 shares received by Mr. Fischer as payment in kind of a dividend
payable to him on the Series D Convertible Preferred Stock. Mr. Fischer's
holdings represent, in aggregate, less than 0.2% of the Common Stock. The
Reporting Persons disclaim beneficial ownership of any of the stock owned by or
issuable to Mr. Fischer.
(b) The information set forth in Items 7 through 11 of the cover
pages hereto is incorporated herein by reference.
(c) On February 19, 1999, pursuant to a Stock Purchase Agreement,
Mr. Mathisen acquired 375 shares of Series E Preferred Stock convertible into
60,000 shares of Common Stock at a conversion price of $6.25 per share of Common
Stock and Warrants to purchase 3,750 shares of Common Stock at a price of
$7.8125 per share of Common Stock.
On July 30, 1999, Mr. Mathisen acquired 14,635 shares of Common Stock as
payment of a 5% per annum dividend in the amount of $90,000 on the Series D
Convertible Preferred Stock.
On October 20, 1999, pursuant to a Stock Option Agreement, Mr. Mathisen
acquired an option to purchase 8,333 shares of Common Stock at an option price
of $5.75 per share. This option expires one year following the date of Mr.
Mathisen's resignation from the Board of Directors, or November 18, 2000.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Convertible Preferred Stock Purchase Agreement
The Convertible Preferred Stock Purchase Agreement, dated February 8, 1999,
provides, among other things, that if Mr. Mathisen should decide to dispose of
any of the Series E Stock, the Warrants or the shares of Common Stock issuable
upon conversion of the Series E Stock, Mr. Mathisen may do so only pursuant to
an effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), or pursuant to an available exemption from the
registration requirements of the Securities Act. In connection with any transfer
of any securities other than pursuant to an effective registration statement or
to the Company or to an affiliate of Mr. Mathisen or pursuant to Rule 144 under
the Securities Act, the Company may require Mr. Mathisen to provide the Company
with a written opinion of counsel experienced in the area of United States
securities laws selected by Mr. Mathisen, the form and substance of which shall
be reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred securities under the Securities
Act.
Page 9
<PAGE>
Warrants
In connection with the transactions contemplated by the Convertible
Preferred Stock Purchase Agreement, the Company issued Warrants to Dennis M.
Mathisen to purchase, upon the terms and subject to the conditions set forth
therein, up to 3,750 shares of Common Stock at an exercise price equal to
$7.8125 per share (subject to adjustment as provided therein), exercisable at
any time from February 26, 1999, through and including February 25, 2004.
Registration Rights Agreement
In connection with the transactions contemplated by the Convertible
Preferred Stock Purchase Agreement, the Company, Mr. Mathisen, and the other
purchasers of the Series E Stock named therein entered into a Registration
Rights Agreement, dated February 26, 1999. The terms of this Registration
Agreement are identical to those contained in the Series D Registration Rights
Agreement summarized in the original Schedule 13D filing.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A -- Agreement as to joint filing pursuant to Regulation Section
240.13d-1(f)(1)(iii).
Exhibit B -- Letter of resignation of Dennis M. Mathisen to the Board of
Directors of Sheldahl, Inc., dated November 19, 1999.
Exhibit C -- Convertible Preferred Stock Purchase Agreement, dated February
8, 1999, by and among Sheldahl, Inc., Dennis M. Mathisen, and the other
purchasers of Series E Stock set forth therein.
Exhibit D -- Warrant, dated February 26, 1999, issued by Sheldahl, Inc. to
Dennis M. Mathisen.
Exhibit E -- Registration Rights Agreement, dated February 26, 1999, by and
among Sheldahl, Inc., Dennis M. Mathisen, and the other purchasers of Series E
Stock set forth therein.
Page 10
<PAGE>
SIGNATURES
After reasonable inquiry, and to the best of each of the undersigned's
knowledge and belief, each of the undersigned certifies that the information set
forth in this statement is true, complete and correct.
Dated: December 6, 1999
----------------
/s/ Irwin L. Jacobs
- ------------------------------------
Irwin L. Jacobs
/s/ Daniel T. Lindsay
- ------------------------------------
Daniel T. Lindsay
/s/ Dennis M. Mathisen
- ------------------------------------
Dennis M. Mathisen
MARSHAL FINANCIAL GROUP, INC.
/s/ John A. Fischer
- ------------------------------------
By: John A. Fischer
Its: Executive Vice President
Page 11
<PAGE>
EXHIBIT A
AGREEMENT AS TO JOINT FILING
Pursuant to Regulation Section 240.13d-1(f)(1)(iii), the undersigned
acknowledge and agree that the attached Schedule 13D Amendment relating to
Sheldahl, Inc. is being filed on behalf of each of the undersigned. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
/s/ Irwin L. Jacobs MARSHALL FINANCIAL GROUP, INC.
- -----------------------------
Irwin L. Jacobs
/s/ John A. Fischer
-------------------------------------
/s/ Daniel T. Lindsay By: John A. Fischer
- ----------------------------- Its: Executive Vice President
Daniel T. Lindsay
/s/ Dennis M. Mathisen
- -----------------------------
Dennis M. Mathisen
<PAGE>
EXHIBIT B
DENNIS M. MATHISEN
903 NORTH THIRD STREET
SUITE 300
MINNEAPOLIS, MN 55401
November 19, 1999 CONFIDENTIAL
TO -- THE SHELDAHL BOARD OF DIRECTORS
I am extremely concerned about the direction of the Company as related to the
preservation of enterprise value for all Sheldahl shareholders. On October
25, 1999, less than a month ago, Sheldahl announced the formation of a
special committee of the Board, as well as the retention of U S Bancorp Piper
Jaffray, to explore strategic alternatives and maximize shareholder values
for Sheldahl. All Directors and the executive management of the Company
supported this action.
Since then, it appears that factions have developed within the Board to limit
the actions of the special committee and Piper in the exploration and review
of ALL strategic alternatives. Apparently, certain directors now want to
focus only on the possibility of developing a joint venture for the
micro-products division with another company. While this may ultimately be
the conclusion of Piper, the committee and the Board, I strongly believe that
ALL alternatives be explored, including the possible sale of the core
business or the entire Company. This, I believe, is more imperative now than
it was a month ago in light of recent events.
I now realize my views are not in harmony with Molex, Company management and
the remainder of the Board of Directors. I therefore resign as a member of
the Sheldahl Board of Directors effective immediately.
Sincerely,
/s/ DENNIS M. MATHISEN
- -------------------------------------
Dennis M. Mathisen
<PAGE>
EXHIBIT C
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Convertible Preferred Stock Purchase Agreement (the "AGREEMENT"),
dated as of February 8, 1999, among Sheldahl, Inc., a Minnesota corporation
(the "COMPANY"), and the individuals and entities 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 E Convertible
Preferred Stock, par value $1.00 per share (the "SERIES E 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 up
to 10,000 shares of Series E 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, South 8th Street, Minneapolis, Minnesota on February 26, 1999. 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
<PAGE>
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
2
<PAGE>
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 dully 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 Section 2.2 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 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;
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<PAGE>
(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 Section 2.2 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
4
<PAGE>
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 November 30, 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 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.
5
<PAGE>
(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 other 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
6
<PAGE>
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(1), "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
7
<PAGE>
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 10 shares of Common Stock for each share of Series E Preferred
Stock at a price per share equal to 125% of the Conversion Price (as defined
in the Certificate of Designation attached hereto as Exhibit B) (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
8
<PAGE>
4.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS TO
PURCHASE THE SERIES E 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
9
<PAGE>
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
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:
10
<PAGE>
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 & Vernum 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
insure 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.
11
<PAGE>
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 and delivered by such
Purchaser and with respect to the Company on the date executed and delivered
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 therefore, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
12
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its authorized representative and each Purchaser has caused this
Agreement to be executed by signing in counterpart the acceptance form
attached to this Agreement.
COMPANY:
SHELDAHL, INC.
By /s/ John V. McManus
-------------------------------
John V. McManus
Its Vice-President-Finance
13
<PAGE>
ACCEPTANCE
The undersigned hereby accepts the terms and conditions set forth in the
Convertible Preferred Stock Purchase Agreement, dated February 8, 1999, 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 E 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:
/s/ Dennis M. Mathisen
---------------------------------
By: Dennis M. Mathisen
------------------------------
Title: __________________________
Dated: February 8, 1999
14
<PAGE>
EXHIBIT A
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
Share
Purchaser Purchase Purchase # of # of State of
Name & Address Amount Price Shares Warrants Residence
- -------------- -------- --------- ------ -------- ---------
<S> <C> <C> <C> <C> <C>
</TABLE>
A-1
<PAGE>
SCHEDULE 2.1(c)
CAPITALIZATION
Common Stock authorized: 50,000,000 shares, $.25 par value
Preferred Stock authorized: 500,000 shares, $1.00 par value
- - Common Stock outstanding
as of February 8, 1999: 11,152,560 shares, $1.00 par value
- - Series B Convertible Preferred Stock
outstanding as of February 8, 1999: 167 shares
- - Series D Convertible Preferred Stock
outstanding as of February 8, 1999: 32,917 shares
- - Warrants outstanding
as of February 8, 1999: 496,982 warrants
- - Options outstanding
as of February 8, 1999: 1,589,946 options
1. Rights granted under the Rights Agreement dated June 16, 1996 and amended
July 25, 1998 between Sheldahl, Inc. and Norwest Bank Minnesota, N.A.
(150,000 shares of Series A Junior Participating Preferred Stock
reserved for issuance, subject to increase as provided therein).
2. Additional options may be granted to employees and directors of the
Company under the Company's Stock Option Plans and Employee Stock
Purchase Plan.
3. Agreement Relating to Sheldahl dated November 18, 1998 between the
Company and Molex, Incorporated providing Molex with certain rights to
participate in future stock or debt offerings by the Company, including
the Series E Preferred Stock under this Agreement.
<PAGE>
SCHEDULE 2.1(f) (UPDATE)
REQUIRED APPROVALS
1. Consent required of Norwest Bank Minnesota, N.A., Harris Trust and
Savings Bank, NBD Bank, and The CIT Group under Amended and Restated
Credit and Security Agreement with respect to payment of cash dividends.
2. Consent required of Northern Life Insurance Company under Note Purchase
Agreement dated August 31, 1995 with respect to payment of cash
dividends.
3. See Item 3 of Schedule 2.1(c) incorporated herein by reference.
<PAGE>
EXHIBIT D
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. E-1 Dated February 26, 1999
Sheldahl, Inc., a corporation organized and existing under the laws of
the State of Minnesota (the "Company"), hereby certifies that, for value
received, Dennis M. Mathisen, or his registered assigns ("Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company
up to a total of Three Thousand Seven Hundred Fifty (3,750) 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 $7.8125 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 February 25,
2004 (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 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 to 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
<PAGE>
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
<PAGE>
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 the 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.
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(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. RESERVATIONS 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
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large 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
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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
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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.
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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.
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 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 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.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
SHELDAHL, INC.
By: /s/ John V. McManus
---------------------------------
Name: John V. McManus
Title: Vice President - Finance
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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 undesigned 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 presence of:
_____________________________
<PAGE>
EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of February 26, 1999, 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.
<PAGE>
"EFFECTIVENESS DATE" means with respect to the Registration Statement to
be filed with respect to the Series E Shares and the Warrants, the earlier of
(i) the 90th day following the Closing Date or (ii) five days after a
no-review decision of the Commission.
"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 E 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 E Shares; (ii) exercise of the Series E
Warrants issued by the Company to the Purchasers; and (iii) payment of
dividends in respect of such Preferred Stocks.
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"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.
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(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 to supplemented or amended to
be filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; (iii) respond as promptly as
practicable to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and promptly provide the
Holders true and complete copies of all correspondence from and to the
Commission relating to the Registration Statement; and (iv) comply with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration
Statement during the applicable period in accordance with the intended
methods of disposition by the Holders thereof set forth in the Registration
Statement as so amended or in such Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be sold: (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment to
the Registration Statement is proposed to be filed, (B) when the Commission
notifies the Company whether there will be a "review" of such Registration
Statement and whenever the Commission comments in writing on such
Registration Statement, and (C) with respect to the Registration Statement or
any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental
authority for amendments or supplements to the Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation
of any Proceedings for that purpose; (iv) of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event that makes any statement made
in the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect
or that requires any revisions to the Registration Statement, Prospectus or
other documents so that, in the case of the Registration Statement or the
Prospectus, as the case may be, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of the
Registration Statement or (ii) any suspension of the qualifications (or
exemption from qualification) of any of the Registrable Securities for sale
in any jurisdiction, as soon as reasonably practicable.
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(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 effort 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
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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 Market and each other
securities exchange or market on which Registrable Securities are required
hereunder to be listed, and (B) in compliance with state
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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
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<PAGE>
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
Holder's proposed or to the extent that such information relates to 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 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
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<PAGE>
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.
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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 or 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
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<PAGE>
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.
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(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 effect as if such facsimile signature were the original
thereof.
(g) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota, without
regard to principles of conflicts of law.
(h) CUMULATIVE REMEDIES. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(i) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ
an alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(j) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(k) SHARES HELD BY THE COMPANY AND ITS AFFILIATES. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company
or its Affiliates (other than the Purchasers or transferees or successors or
assigns thereof if such Persons are deemed to be Affiliates solely by reason
of their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SHELDAHL, INC.
By:/s/ John V. McManus
----------------------------------------
Name: John V. McManus
Title: Vice President - Finance
PURCHASER
/s/ Dennis M. Mathisen
----------------------------------------
By: Dennis M. Mathisen
------------------------------------
Its: ___________________________________
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