SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): July 28,1998.
Sheldahl, Inc.
(Exact name of Registrant as specified in its charter)
Minnesota 0-45 41-0758073
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1150 Sheldahl Road
Northfield, Minnesota 55057
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (507) 663-8000.
<PAGE>
Item 5. Other Events.
On July 28, 1998, Sheldahl, Inc. (the Company) and Molex Incorporated
formed a joint venture to design, market and assemble modular interconnect
systems to replace wiring harnesses in primarily the automotive market. A
Current Report on Form 8-K with respect to the joint venture was filed by the
Company on August 28, 1998, and included as Exhibit 10.1 a copy of the Limited
Liability Company Agreement between the Company and Molex (the Agreement).
Certain portions of the Agreement were deleted, and such deleted portions were
subject to a request for confidential treatment from the Securities and
Exchange Commission. The purpose of this amendment is to re-file the
Agreement, as the Company has revised its request for confidential
treatment from the SEC.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibit 10.1 (*) Limited Liability Company Agreement of Modular
Interconnect Systems, L.L.C., dated July 28, 1998.
(*) Certain portions of this Exhibit have been deleted and filed
separately with the Commission pursuant to a request for confidential treatment
under Rule 24b-2. Spaces corresponding to the deleted portions are represented
by brackets with asterisks.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Sheldahl, Inc.
By /s/ John V. McManus
John V. McManus, Vice President-Finance
Dated: January 11, 1998
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
MODULAR INTERCONNECT SYSTEMS, L.L.C.
THE MEMBERSHIP INTEREST REPRESENTED BY THIS DOCUMENT (I) IS SUBJECT TO
RESTRICTIONS AS TO ITS SALE, TRANSFER, HYPOTHECATION, OR ASSIGNMENT AS SET
FORTH IN THIS LIMITED LIABILITY COMPANY AGREEMENT AND (II) HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE RESOLD OR TRANSFERRED WITHOUT
APPROPRIATE REGISTRATION OR THE AVAILABILITY OF EXEMPTIONS FROM SUCH
REQUIREMENTS.
<PAGE>
TABLE OF CONTENTS
ARTICLE I Definitions
ARTICLE II Organization
2.1 Company
2.2 Certificate of Formation
2.3 Bylaws
2.4 Associated Agreements
2.5 Purpose
2.6 Place of Business
2.7 Term
ARTICLE III Representations and Warranties
3.1 Representations and Warranties of Molex
3.2 Representations and Warranties of Sheldahl
ARTICLE IV Capital Structure
4.1 Members' Percentage Interests and Capital Contributions
4.2 Additional Capital Contributions
ARTICLE V Future Financing of the Company/Capital
Accounts/Allocations/Distributions
5.1 Future Financing
5.2 Capital Accounts; Maintenance Generally
5.3 Allocation of Net Profits and Net Losses
5.4 Minimum Gain Chargeback
5.5 Member Nonrecourse Debt Minimum Gain Chargeback
5.6 Qualified Income Offset
5.7 Gross Income Allocation
5.8 Allocation of Nonrecourse Deductions
5.9 Allocation of Member Nonrecourse Deductions
5.10 Allocation of Regulations Section 1.704-1(b)(2)(iv)(m)
Adjustments
5.11 I.R.C. Section 704(c) Tax Allocations
5.12 Distributions
5.13 Return of Capital
ARTICLE VI Management of the Company
6.1 The Managers; Approval of Members.
6.2 Special Approvals
6.3 Default Under Supply Agreement
6.4 Meetings of Managers/Conduct of Business
6.5 Remuneration of Managers
6.6 Chairman
6.7 Officers of the Company
6.8 Authority and Duties of Officers
6.9 Operation of the Company
6.10 Limitation on Liability of Managers and Officers;
Indemnification
6.11 Liability to Third Parties
6.12 Business Plan
6.13 Reimbursements
6.14 Insurance
6.15 Indemnity
ARTICLE VII Exclusive Efforts and Non-Solicitation
7.1 Exclusive Efforts
7.2 Non-Solicitation
ARTICLE VIII Nondisclosure of Information
8.1 Confidentiality
8.2 Duty of Care
ARTICLE IX Rights and Obligations of Members
9.1 Limited Liability
9.2 Participation in Management
9.3 Restrictions on Transfer
9.4 Agreement with Transferees
9.5 Third Party Transfer Procedures
9.6 Withdrawal from Company
9.7 Default
9.8 Bankruptcy
9.9 Change of Ownership of a Member
9.10 Failure to Meet Business Goals
9.11 Survival of Obligations
9.12 Substituted Members
9.13 Additional Members
9.14 Exclusion of Consequential Damages
9.15 Ownership of Sheldahl Property
ARTICLE X Dissolution
10.1 Dissolution
10.2 Liquidator
10.3 Distribution Priority
10.4 Purchase of Assets
10.5 Associated Agreements
10.6 Intellectual Property
10.7 Validity of Agreement
10.8 No Recourse
10.9 Final Accounting
10.10 Use of Company's Name
ARTICLE XI Dispute Resolution
11.1 Invoking Procedure
11.2 Investigation
11.3 Neutral
11.4 Schedule
11.5 Discovery
11.6 Written Submission
11.7 Representatives
11.8 Structure
11.9 Mandatory
11.10 Fees
11.11 Later Proceedings
ARTICLE XII Financial Matters
12.1 Books and Records
12.2 Financial Reports
12.3 Fiscal Year
12.4 Company Funds
12.5 Tax Matters Partner
ARTICLE XIII Appraisal Procedure
13.1 Selection of Appraisers
13.2 Appraisal Procedure
13.3 Appraisal Considerations
13.4 Qualifications of Appraisers
ARTICLE XIV Buy/Sell Procedure
14.1 Offering Notice
14.2 Buy/Sell Offer
14.3 Buy/Sell Procedure
14.4 Closing
14.5 Closing Adjustments
14.6 Conducting of Company Business Prior to Closing
ARTICLE XV Sale of Components; Use of Tooling Capacity;
15.1 Sale of Components
15.2 Sheldahl Development Loans
15.3 Audit Rights
15.4 Development Schedules
ARTICLE XVI Miscellaneous
16.1 Notices
16.2 Governing Law
16.3 Headings
16.4 Construction and Amendment
16.5 Successors and Assigns
16.6 Counterparts
16.7 Entire Agreement
16.8 Validity
16.9 Waiver
16.10 Terminology and Construction
16.11 No Third-Party Rights
16.12 Expenses
16.13 Publicity
16.14 Waiver of Jury Trial
EXHIBIT 1A Associated Agreements
EXHIBIT 1A-1 Molex Technology License
EXHIBIT 1A-2 Sheldahl Technology License
EXHIBIT 1A-3 Molex Supply Agreement
EXHIBIT 1A-4 Sheldahl Supply Agreement
EXHIBIT 1A-5 Development Agreement
EXHIBIT 1B Business Plan
EXHIBIT 1D Sheldahl Property
EXHIBIT 2.2 Certificate of Formation
EXHIBIT 2.3 Bylaws
EXHIBIT 2.5
EXHIBIT 3.2(c) Description of Lien on Sheldahl Property
EXHIBIT 6.1 Initial Managers
EXHIBIT D Initial Officers
EXHIBIT 9.3 Description of Lien on Sheldahl's Interest
EXHIBIT 9.10 Business Goals
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
MODULAR INTERCONNECT SYSTEMS, L.L.C.
THIS LIMITED LIABILITY COMPANY AGREEMENT is made and entered into as of
July 28, 1998, by and between Molex Incorporated, a Delaware corporation
having its principal place of business at 2222 Wellington Court, Lisle,
Illinois 60532 (Molex), and Sheldahl, Inc., a Minnesota corporation, having
its principal place of business at 1150 Sheldahl Road, Northfield, Minnesota
55057 (Sheldahl), for the purpose of forming Modular Interconnect Systems,
L.L.C., a Delaware limited liability company (the Company) in accordance with
the provisions hereinafter set forth.
WITNESSETH:
WHEREAS, Molex, designs, manufactures, and markets interconnection
products;
WHEREAS, Sheldahl designs, manufactures, and markets flexible circuits;
WHEREAS, Molex and Sheldahl recognize that they may use their
complementary strengths and expertise to develop and sell modular
interconnect systems, utilizing flexible circuits developed by Sheldahl and
interconnection products developed by Molex, as an alternative to
conventional automotive wiring harnesses and flex circuit assemblies.
NOW, THEREFORE, in consideration of the mutual agreements, promises,
and undertakings hereinafter set forth, Molex and Sheldahl agree as follows:
ARTICLE 1
Definitions
The following terms, as used herein, shall have the following
respective meanings:
"Acquired Member" as used herein shall have the meaning assigned
to it in Section 9.9.
"ADR" as used herein means the non-binding alternative dispute
resolution process provided for in Article 11.
"Agreement" as used herein means this Limited Liability Company
Agreement, as amended or restated from time to time.
"Associated Agreement(s)" as used herein shall mean the contracts
described on Exhibit 1A and the promissory notes described in Section 4.2
(each as the same may be amended or supplemented from time to time).
"Authorized Individuals" as used herein shall have the meaning
assigned to it in Section 11.1.
"Bankruptcy Laws" as used herein means Title 11, U.S. Code, or
any similar federal or state law for the relief of debtors.
"Bankrupt Member" as used herein shall have the meaning assigned
to it in Section 9.8.
"Business Plan" as used herein shall mean the business plan of
the Company which each of the Members shall agree on no later than August 1,
1998 and which shall be in substantially the form attached hereto as Exhibit
1B, as such plan may be modified, supplemented, and amended from time-to-time
by the Managers pursuant to Sections 6.2(u) and 6.12.
"Business Scope" shall have the meaning assigned to it in
Section 2.5.
"Buy-Out Remedy" shall have the meaning assigned to it in
Section 9.7(b).
"Buy/Sell Closing" as used herein shall have the meaning assigned
to it in Section 14.4.
"Buy/Sell Notice" as used herein shall have the meaning assigned
to it in Section 14.1.
"Buy/Sell Offer" as used herein shall have the meaning assigned
to it in Section 14.2.
"Bylaws" as used herein shall mean the Bylaws of the Company
referenced in Section 2.3, as amended from time to time, which Bylaws are
expressly incorporated herein by reference as part of this Agreement.
"Capital Account" as used herein shall mean the capital account
maintained for each Member in accordance with Section 5.2 of this Agreement.
"Capital Contribution" as used herein shall mean, with respect to
any Member, the amount of capital contributed by such Member to the Company
in accordance with Article IV or Article V of this Agreement.
"Certificate of Formation" as used herein shall mean the
certificate of formation of the Company, as amended or restated from time to
time, filed in the Office of the Secretary of State of the State of Delaware
in accordance with the Delaware Act.
"Change of Ownership" shall mean the occurrence of any of the
following with respect to a Member:
(a) approval by the stockholders of such Member of any of the
following:
(i) a merger, reorganization or consolidation ("Merger")
with respect to which the individuals and entities who were
the respective beneficial owners of the Voting Securities
of the Member immediately before such Merger do not, after
such Merger, beneficially own, directly or indirectly, more
than 50% of the voting power of the Voting Securities of
the corporation resulting from such Merger in substantially
the same proportion as their ownership immediately before
such Merger, or
(ii) the sale or other disposition of all or substantially
all of the assets of the Member, other than in connection
with a transaction or transactions with one or more wholly-
owned subsidiaries of such Member.
(b) any person (as such term is used in Rule 13d-5 of the SEC)
under the 1934 Act) or group (as such term is defined in
Section 13(d) of the 1934 Act), other than any employee
benefit plan (or any related trust) of a Member or, with
respect to Molex, other than a member or members of the
Krehbiel Family, (i) acquires securities representing a
number of votes entitled to elect a majority of the
directors of a Member, or (ii) enters into any arrangement
in which a third party is granted or obtains the power or
ability, without restriction or condition, to direct
substantially all of the business operations of a Member.
"Company" as used herein shall have the meaning assigned to it in
the introductory paragraph of this Agreement.
"Control" (including, with correlative meanings, the terms
"Controlled by" and "under common Control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or
otherwise.
"Customers" as used herein shall mean all purchasers, including
dealers and end-users, of Products and parts or components thereof.
"Default Notice Period" shall mean the later of 30 days following
(i) receipt by a Defaulting Member of written notice from a non-Defaulting
Member of the occurrence of any Event of Default or (ii) the final resolution
of any dispute as to whether a default has occurred.
"Defaulting Member" shall have the meaning assigned to it in
Section 9.7(a).
"Delaware Act" as used herein means the Delaware Limited
Liability Company Act, 6 Del. C. 18-101, et seq., as amended from time to
time.
"Development Agreement" shall have the meaning assigned to it in
Exhibit 1A.
"Dissolution" as used herein shall have the meaning assigned to
it in Section 10.3.
"Event of Default" as used herein shall have the meaning assigned
to it in Section 9.7(a).
"Fair Market Value Of The Interest" as used herein shall have the
meaning assigned to it in Section 9.7(b).
"Financial Plan" as used herein shall mean the financial plan of
the Company included within the Business Plan, as such financial plan may be
modified, supplemented, and amended from time-to-time by the Managers
pursuant to Sections 6.2(u) and 6.12.
"Indemnitee" as used herein shall have the meaning assigned to it
in Section 6.10(b).
"Interest" as used herein shall mean the ownership interest of a
Member in the Company (which shall be considered personal property for all
purposes), consisting of (i) such Member's Percentage Interest in Net
Profits, Net Losses, allocations of other items of income, gain, deduction
and loss, and distributions, (ii) such Member's right to vote or grant or
withhold consents with respect to Company matters as provided herein or in
the Delaware Act, and (iii) such Member's other rights and privileges as
herein provided.
"Invoking Member" as used herein shall have the meaning assigned
to it in Section 14.1.
"I.R.C." as used herein means the Internal Revenue Code of 1986,
as amended.
"Krehbiel Family" as used herein shall have the meaning assigned
to it in the certificate of incorporation of Molex.
" [ ******* Confidential Treatment Requested ] " shall have the
meaning assigned to it in the Technology License Agreement between the
Company and Sheldahl.
"Liquidator" as used herein shall have the meaning assigned to it
in Section 10.2.
"Managers" as used herein shall mean the persons designated by
the Members pursuant to Section 6.1 hereof and all other persons who may from
time to time be duly elected or appointed to serve as Managers in accordance
with the provisions hereof, in each case so long as such person shall
continue in office in accordance with the terms hereof, and reference herein
to a Manager or the Managers shall refer to such person or persons in his,
her, or their capacity as Managers hereunder.
"Member Nonrecourse Debt" as used herein shall have the same
meaning as the term "partner nonrecourse debt" in Regulations
Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" as used herein shall have
the same meaning as the term "partner nonrecourse debt minimum gain" in
Regulations Section 1.704-2(i)(2) and shall be determined in the manner set
forth in Regulations Section 1.704-2(i)(3).
"Member Transfer" as used herein shall have the meaning assigned
to it in Section 9.3(a).
"Members" as used herein shall mean Molex and Sheldahl and all
other persons who may from time to time become Members as herein provided.
"Minimum Gain" as used herein shall have the same meaning as the
term "partnership minimum gain" in Regulations Section 1.704-2(b)(2) and (d).
"Molex" as used herein shall have the meaning assigned to it in
the introductory paragraph of this Agreement.
"Net Profits" or "Net Losses" as used herein shall mean for each
fiscal year the Company's taxable income or loss determined under I.R.C.
Section 703(a) and adjusted as follows:
(a) Tax exempt income of the Company shall increase Net Profits
and shall decrease Net Losses.
(b) Expenditures described in Regulations
Section 1.704-l(b)(2)(iv)(i) shall decrease Net Profits and
increase Net Losses.
(c) If the value of property of the Company reflected in the
Members' Capital Accounts is adjusted in accordance with
Sections 5.2(c)(i) or (ii) or 5.2(d) hereof, the amount of
such adjustment shall be treated as a gain or loss in
determining Net Profits or Net Losses.
(d) If the value of property of the Company reflected in the
Members' Capital Accounts is adjusted pursuant to
Section 5.2(c) or (d), the Company disposes of such
property, and such disposition results in a gain or loss
that is recognized for federal income tax purposes, then
such gain or loss shall be computed by using the value of
such property as it is reflected in the Members' Capital
Accounts in lieu of the tax basis of such property.
(e) If the value of property of the Company as reflected in the
Members' Capital Accounts is adjusted in accordance with
Section 5.2(c), the amount of depreciation, depletion, or
amortization for such property shall be the Revised
Depreciation.
(f) If an adjustment of the Members' Capital Accounts is
required by Regulations Section 1.704-1(b)(2)(iv)(m)
because of a distribution to a Member other than a
distribution in liquidation of such Member's Interest, the
amount of such adjustment shall be treated for purposes of
determining Net Profits or Net Losses as gain, if it
increases the tax basis of property of the Company, or as a
loss, if it decreases the tax basis of such property of the
Company.
(g) None of the allocations set forth in Sections 5.4 through
5.11 shall be taken into account in determining Net Profits
and Net Losses.
"Net Sales" as used herein shall mean sales of Products minus a
reasonable allowance for returns and discounts and excluding any
extraordinary or non-recurring gains determined in accordance with generally
accepted accounting procedures.
"Neutral" as used herein shall have the meaning assigned to it in
Section 11.3.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Nonrecourse Deductions" as used herein shall have the same
meaning as in Regulations Section 1.704-2(b)(1).
"Percentage Interest" as used herein shall mean a Member's share
of the Net Profits and Net Losses and Taxable Income or Loss of the Company
and the Member's right to receive distributions of the Company's assets. The
Percentage Interest of each Member shall initially be the percentage set
forth opposite such Member's name in Section 4.1(c). The combined Percentage
Interest of all Members shall at all times equal 100 percent.
"Prime Rate" shall mean interest at the rate of the prime lending
rate as published in the table money rates in the National Edition of The
Wall Street Journal on the date of the determination of such rate, or if such
publication is not published on such date, as published in the most recent
edition of the National Edition of the Wall Street Journal.
"Products" as used herein shall mean (i) any assembly which
utilizes both circuits [ ******* Confidential Treatment Requested ]
developed by Sheldahl and [ ******* Confidential Treatment Requested ]
connectors developed by Molex [ ******* Confidential Treatment Requested ]
, (ii) any [ ******* Confidential Treatment Requested ] assembly within
the target applications referenced in Exhibit 2.5 utilizing Sheldahl circuits
[ ******* Confidential Treatment Requested ] created by [ *******
Confidential Treatment Requested ] , and (iii) other products which the
Managers agree to designate as Products pursuant to the provisions of
Section 6.2.
"Purchaser" as used herein shall have the meaning assigned to it
in Section 13.1.
"Recipient" as used herein shall have the meaning assigned to it
in Section 8.1.
"Regulations" as used herein means the Treasury Regulations,
including Temporary Treasury Regulations, promulgated under the I.R.C., as
from time to time in effect.
"Related Company(ies)" as used herein shall mean any corporation
or other legal entity which (a) owns a majority interest in or Controls any
Member; (b) is Controlled by, or the majority interest of which is owned by,
any Member; or (c) owns a majority interest in, Controls, is Controlled by,
or the majority interest of which is owned by, any corporation or other legal
entity described in clause (a) or (b) of this sentence.
"Responding Member" as used herein shall have the meaning
assigned to it in Section 14.1.
"Revised Depreciation" as used herein shall be determined as
follow: if the value of property of the Company as reflected in the Capital
Accounts of the Members differs from its adjusted basis for federal income
tax purposes because of an adjustment pursuant to Section 5.2(c) or (d), in
lieu of the amount of depreciation, cost recovery deduction, or amortization
prescribed under the I.R.C. for any period, such depreciation, cost recovery
deduction, or amortization shall be the amount that bears the same
relationship to the adjusted value of such property as reflected in the
Capital Accounts of the Members as the depreciation, cost recovery deduction,
or amortization computed for federal income tax purposes with respect to such
property for such period bears to the adjusted tax basis of such property.
If such property has a zero adjusted tax basis, Revised Depreciation may be
determined under any reasonable method selected by the Company.
"Royalty Payments" as used herein shall have the meaning assigned
to it in the Development Agreement.
"SEC" means the Securities and Exchange Commission.
"Seller" as used herein shall have the meaning assigned to it in
Section 9.5(a).
"Sheldahl" as used herein shall have the meaning assigned to it
in the introductory paragraph of this Agreement.
"Sheldahl Development Costs" as used herein shall have the
meaning assigned to it in the Development Agreement.
"Sheldahl Property" as used herein shall mean the property
identified on Exhibit 1D.
"Supply Agreement" as used herein shall have the meaning assigned
to it in Exhibit 1A.
"Support Agreements" as used herein shall have the meaning
assigned to it in Exhibit 1A.
"Taxable Income or Loss" shall mean income or loss as determined
under I.R.C. Section 703 and/or other applicable sections of the I.R.C.
"Transfer" as used herein shall have the meaning assigned to it
in Section 9.3(a).
"Technology License Agreements" shall have the meaning assigned
to it in Exhibit 1A.
"Voting Securities" of a corporation means securities of such
corporation that are entitled to vote in the election of directors of such
corporation.
ARTICLE 2
Organization
2.1 Company. Subject to the terms and conditions of this Agreement,
the Members hereby form and agree to jointly operate a limited liability
company to be named Modular Interconnect Systems, L.L.C., which shall engage
in the business described herein.
2.2 Certificate of Formation. Concurrently with or as soon as
possible after the execution of this Agreement, the Managers shall cause the
Certificate of Formation, in the form attached hereto as Exhibit 2.2, to be
filed in the Office of the Secretary of State of the State of Delaware in
accordance with the requirements of the Delaware Act. From time to time, the
Managers shall cause to be filed, and the Members agree to execute, such
further certificates of formation, qualifications to do business, fictitious
name certificates, or like filings in such jurisdictions as may be necessary
or appropriate in connection with the conduct of the Company's business or to
provide notification of the limitation of liability of Members and Managers
under applicable law.
2.3 Bylaws. The Bylaws of the Company shall originally be in the
form attached hereto as Exhibit 2.3, which Bylaws are hereby approved and
adopted by the Members. The Bylaws may be amended from time to time as
provided therein and in Section 6.2(a) hereof.
2.4 Associated Agreements. The execution and delivery of, and
performance by the Company of its obligations under, the Associated
Agreements, and any agreements, instruments, or other documents contemplated
thereby to be entered into by the Company in connection therewith, are hereby
authorized (without requirement for further approval under Article VI
hereof), and the Chairman, the President, and any Vice President of the
Company are, and each of them acting alone is, authorized to execute and
deliver such documents on behalf of the Company.
2.5 Purpose. The business and purposes of the Company shall be (i)
to design, develop and manufacture Products for sale to Customers in
accordance with the terms and conditions set forth in this Agreement, the
Business Plan, and in the Associated Agreements (and as further described in
Exhibit 2.5) and to conduct activities incidental thereto and (ii) to engage
in such other business activities that may be undertaken by a limited
liability company under the Delaware Act as the Members may from time to time
mutually determine (the "Business Scope").
2.6 Place of Business. The Company shall initially conduct its
business at the facilities of Molex in Lisle, Illinois and at the facility of
Sheldahl in Clarkston, Michigan. Notwithstanding the foregoing, the business
of the Company may be conducted at such other place or places as the Managers
may from time to time determine. The Members expect that, between 12 and 18
months following the date of this Agreement, the Company will transition its
business from the Molex facility in Lisle, Illinois to a facility to be
leased by the Company in Detroit, Michigan. The registered office of the
Company in the State of Delaware shall be located at 1013 Centre Road,
Wilmington, New Castle County, Delaware 19801, and the registered agent of
the Company for service of process at such address shall be the Corporation
Service Company (or such other registered office and registered agent as the
Managers may from time to time select).
2.7 Term. The Company shall dissolve on December 31, 2098, unless
sooner dissolved as hereinafter provided.
ARTICLE 3
Representations and Warranties
3.1 Representations and Warranties of Molex. Molex hereby represents
and warrants to Sheldahl as follows (such representations and warranties on
the date of this Agreement being true and correct in all material respects):
(a) Molex is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Molex has
the corporate power and authority to own, lease, and operate its
assets, properties, and businesses and to enter into this
Agreement and to carry out its obligations hereunder. The
execution, delivery, and performance of this Agreement by Molex
have been duly authorized by all necessary corporate action on
the part of Molex, this Agreement is legally binding upon Molex
in accordance with its terms and the Associated Agreements will
be binding upon Molex in accordance with their terms following
the execution of such agreements by Molex.
(b) The execution, delivery, and performance by Molex of this
Agreement, the Associated Agreements and the transactions
contemplated hereby and thereby will not (i) violate the
provisions of any order, judgment, or decree of any court or
other governmental agency or any arbitrator applicable to Molex
or the certificate of formation or bylaws of Molex; (ii) result
in a material breach of or constitute (with due notice or lapse
of time or both) a material default under any contract or
agreement to which Molex is a party or by which Molex is bound;
or (iii) violate any provision of law of the United States of
America or any state thereof, the violation of which is likely to
have a material adverse effect on the business, operations or
condition (financial or otherwise) of Molex or the Company.
3.2 Representations and Warranties of Sheldahl. Sheldahl hereby
represents and warrants to Molex as follows (such representations and
warranties on the date of this Agreement being true and correct in all
material respects):
(a) Sheldahl is a corporation duly organized, validly existing and in
good standing under the laws of the State of Minnesota. Sheldahl
has the corporate power and authority to own, lease and operate
its assets, properties, and business and to enter into this
Agreement and to carry out its obligations hereunder. The
execution, delivery, and performance of this Agreement and the
Associated Agreements by Sheldahl have been duly authorized by
all necessary corporate action on the part of Sheldahl, this
Agreement is legally binding upon Sheldahl in accordance with its
terms and the Associated Agreements will be binding upon Sheldahl
in accordance with their terms following the execution of such
agreements by Sheldahl.
(b) The execution, delivery, and performance by Sheldahl of this
Agreement, the Associated Agreements and the transactions
contemplated hereby and thereby will not (i) violate the
provisions of any order, judgment, or decree of any court or
other governmental agency or any arbitrator applicable to
Sheldahl or the articles of formation or bylaws of Sheldahl; (ii)
result in a material breach of or constitute (with due notice or
lapse of time or both) a material default under any contract or
agreement to which Sheldahl is a party or by which Sheldahl is
bound; or (iii) violate any provision of law of the United States
of America or any state thereof, the violation of which is likely
to have a material adverse effect on the business, operations or
condition (financial or otherwise) of Sheldahl or the Company.
(c) Immediately prior to Sheldahl contributing the Sheldahl Property
to the Company, Sheldahl was the sole owner of the Sheldahl
Property, free and clear of all licenses, liens, security
interest and encumbrances other than the lien described on
Exhibit 3.2(c). Sheldahl Property does not infringe upon the
proprietary or intellectual property rights of any person. As of
the date of this Agreement, Sheldahl has irrevocably contributed,
assigned, transferred, conveyed and delivered to the Company, its
successors and assigns, free and clear of all liens, a joint
undivided interest in and to the Sheldahl Property such that all
right, title and interest in the Sheldahl Property is jointly
owned by the Company and Sheldahl.
ARTICLE 4
Capital Structure
4.1 Members' Percentage Interests and Capital Contributions.
(a) Molex (i) will contribute [ ******* Confidential Treatment
Requested ] in cash to the Company on or before [*******
Confidential Treatment Requested ] , and (ii) will contribute an
additional [ ******* Confidential Treatment Requested ] in
cash to the Company on or prior to [ ******* Confidential
Treatment Requested ] .
(b) Sheldahl has contributed to the Company on or prior to the date
hereof the Sheldahl Property which property has a fair market
value of [ ******* Confidential Treatment Requested ] .
(c) The Percentage Interests assigned to Molex and Sheldahl in
respect of their initial Capital Contributions under Sections
4.1(a) and 4.1(b), respectively, are as follows:
Member Percentage Interest
______ ___________________
Molex 60%
Sheldahl 40%
The Members agree that Molex shall have a Percentage Interest of 60% as of
the date of this Agreement and that such Percentage Interest shall not be
adjusted as of the payment of the amounts referenced in Section 4.1(a)(i)
or (ii). The initial cash contributions referenced in Section 4.1(a)(i)
shall be used for general corporate purposes to develop business
opportunities for the Company and to fund the operations of the Company
during the first twelve months of its operations. The Managers shall amend
the foregoing identification of Members and Percentage Interests from time
to time as necessary to reflect the transfer of Interests and the admission
of additional or substituted Members, in each case as herein provided.
4.2 Additional Capital Contributions.
(a) In addition to the contributions identified in
Section 4.1(a) hereof, Molex shall contribute to the Company additional
cash as follows:
(i) [ ******* Confidential Treatment Requested ] on or
before [******* Confidential Treatment Requested ]
, plus
(ii) [ ******* Confidential Treatment Requested ] on or
before [******* Confidential Treatment Requested ]
, plus
(iii) upon the approval of the Managers, cash in an amount
equal to the product of Molex' Percentage Interest
and the amount of additional capital required by the
Managers up to an aggregated maximum additional
contribution by Molex and Sheldahl of [ *******
Confidential Treatment Requested ] , exclusive of
additional contributions otherwise required by this
Agreement.
(b) In addition to the contribution identified in
Section 4.1(b) hereof, Sheldahl shall contribute to the Company additional
cash as follows:
(i) [ ******* Confidential Treatment Requested ] on or
before [******* Confidential Treatment Requested ]
, plus
(ii) [ ******* Confidential Treatment Requested ] on or
before [******* Confidential Treatment Requested ] ,
plus
(iii) upon the approval of the Managers, cash in an amount
equal to the product of Sheldahl's Percentage
Interest and the amount of additional capital
required by the Managers up to an aggregated maximum
additional contribution by Molex and Sheldahl of [
******* Confidential Treatment Requested ] ,
exclusive of additional contributions otherwise
required by this Agreement.
(c) At the request of Sheldahl, Molex will loan to Sheldahl
cash sufficient to permit Sheldahl to make Sheldahl's additional capital
contributions pursuant to Section 4.2(b). Such loan or loans shall be
unsecured and shall be evidenced by promissory notes executed by Sheldahl and
delivered to Molex, shall bear interest at LIBOR, plus 1%, interest shall be
payable quarterly and principal shall be payable on or before the third
anniversary of the loan. The promissory notes referenced in the preceding
sentence shall be in form and substance agreed to by Molex and Sheldahl.
(d) Except as set forth in Sections 4.1 and 4.2, no Member
shall be required or permitted to make additional Capital Contributions to
the Company except as consented to by the Members pursuant to Sections 5.1(c)
and 6.2(g) hereof.
ARTICLE 5
Future Financing of the Company/Capital
Accounts/Allocations/Distributions
5.1 Future Financing. The Members anticipate that in the future the
Company may require additional funds for capital expenditures or working
capital requirements. Such additional funding shall be obtained from any of
the following sources, subject to approval by the Members:
(a) cash reserves of the Company;
(b) loans to be obtained from banks and other such independent
sources, in which event the Members shall exert reasonable
efforts to assist the Company in obtaining any such loans;
provided, however, that neither Member shall be required to
guarantee any such loan except upon the determination of such
Member, in its sole discretion, to guarantee any such loan.
(c) additional Capital Contributions made to the Company by the
Members, in proportion to their Percentage Interests, in amounts
determined by mutual agreement of the Members;
(d) loans to be made to the Company by (i) the Members and/or (ii) a
Related Company of either of the Members; or
(e) any other funding source mutually agreed upon by the Members.
5.2 Capital Accounts; Maintenance Generally . A single separate
Capital Account shall be maintained for each Member.
(a) Each Member's Capital Account shall be increased by (i) the
amount of money contributed by such Member to the Company, (ii)
the fair market value of property contributed by such Member to
the Company (net of liabilities secured by such contributed
property that the Company is considered to assume or take subject
to under I.R.C. Section 752), and (iii) the allocations to such
Member of Net Profits and the amount of any items of income and
gain allocated to such Member under Sections 5.6 through 5.10
hereof.
(b) Each Member's Capital Account shall be decreased by (1) the
amount of money distributed to such Member by the Company, (2)
the fair market value of property distributed to such Member by
the Company (net of liabilities secured by such distributed
property that such a partner is considered to assume or take
subject to under I.R.C. Section 752), and (3) such Member's
distributive share of Net Losses and the amount of any items of
deduction or loss allocated to such Member under Sections 5.8
through 5.10.
(c) The Capital Account of each Member shall, upon the occurrence of
an event described in Section 5.2(d), be adjusted to reflect the
revaluation of the Company's property (including intangibles such
as goodwill) pursuant to Treasury Regulation Sections 1.704-
1(b)(2)(iv)(f) and 1704-1(b)(2)(iv)(g). Such adjustment shall be
equal to the total unrealized income gain, loss or deduction
inherent in such property (that has not been reflected in the
Capital Accounts previously) as if there were a taxable
disposition of such property for its fair market value (taking
Section 7701(g) of the Code into account) on the date of such
adjustment. Such adjustment to the Capital Accounts under this
Section 5.2(c) shall be allocated among the Members pursuant to
Section 5.3, based on the ownership interests of the Members
immediately prior to the transaction giving rise to the
adjustment under these Sections 5.2(c) and (d).
(d) The following events shall give rise to an adjustment of the
Capital Accounts of the Members pursuant to Section 5.2(c).
(i) The contribution of money or other property (other than a
de minimis amount) to the Company by a new or existing
Member as consideration for an interest in the Company.
(ii) The liquidation of the Company or a distribution of money
or other property (other than a de minimis amount) by the
Company to a retiring Member as consideration for an
interest in the Company.
(e) Any Member who shall receive an interest (or whose Interest shall
be increased) by means of a transfer to him or her of all or part
of the Interest of another Member shall have a Capital Account
which reflects the Capital Account of the transferred Interest
(or the applicable percentage thereof in the case of a transfer
of a part of an Interest).
(f) Notwithstanding any provision in this Agreement to the contrary,
the Members intend that each Member's Capital Account shall be
maintained and adjusted in accordance with the I.R.C. and the
Regulations, including, without limitation, (i) the adjustments
permitted or required by I.R.C. Section 704(b) and, to the extent
applicable, the principles expressed in I.R.C. Section 704(c) and
(ii) the adjustments required to maintain Capital Accounts in
accordance with the "substantial economic effect test" set forth
in the Regulations under I.R.C. Section 704(b).
5.3 Allocation of Net Profits and Net Losses. After the allocations
required by Sections 5.4 through 5.10 hereof have been made, Net Profits and
Net Losses shall be allocated among the Members in accordance with their
respective Percentage Interests. Subject to Section 5.11, Taxable Income or
Loss shall, after allocations required by Sections 5.4 through 5.10 have been
made, be allocated among the Members in accordance with their Percentage
Interests.
5.4 Minimum Gain Chargeback. If there is a net decrease in Minimum
Gain for a fiscal year, to the extent required in Regulations
Section 1.704-2(f), each Member shall be allocated items of income and gain
for such fiscal year, and, if necessary, for subsequent fiscal years in
accordance with Regulations Section 1.704-2(j)(2)(iii), equal to the Member's
share of the net decrease in Minimum Gain within the meaning of Regulations
Section 1.701-2(g)(2). The items of income and gain to be allocated pursuant
to this Section shall be those items described in Regulations Sections
1.704-2(f)(6) and (j)(2)(i). This Section 5.4 is intended to constitute a
"minimum gain chargeback" within the meaning of Regulations
Section 1.704-2(f).
5.5 Member Nonrecourse Debt Minimum Gain Chargeback. If there is a
net decrease in Member Nonrecourse Debt Minimum Gain for a fiscal year, to
the extent required in Regulations Section 1.704-2(i)(4), each Member with a
share of that Member Nonrecourse Debt Minimum Gain, determined in accordance
with Regulations Section 1.704-2(i)(5), as of the beginning of such fiscal
year shall be allocated items of income and gain for such fiscal year, and if
necessary for subsequent fiscal years in accordance with Regulations
Section 1.704-2(j)(2)(iii), equal to the Member's share of the net decrease
in Member Nonrecourse Debt Minimum Gain, determined in accordance with
Regulations Section 1.704-2(i)(4). The items of income and gain to be
allocated pursuant to this Section shall be those items described in
Regulations Section 1.704-2(i)(4) and (j)(2). This Section 5.5 is intended
to constitute a "partner nonrecourse debt minimum gain chargeback" within the
meaning of Regulations Section 1.704-2(i)(4).
5.6 Qualified Income Offset. If a Member unexpectedly receives an
adjustment, allocation, or distribution described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), such Member shall be allocated
items of income and gain (consisting of a pro rata portion of each item of
the income, including gross income, and gain of the Company for such fiscal
year) in an amount and manner sufficient to eliminate as quickly as possible
and, to the extent required by the Regulations, the deficit Capital Account
balance of such Member in excess of the amounts that such Member is deemed
obligated to restore pursuant to Regulations Section 1.704-2(g)(1) and
1.704-2(i)(5). The allocations made pursuant to this Section 5.6 shall be
made after all other allocations pursuant to Sections 5.3 through 5.5 and 5.8
through 5.10 have been made. This Section 5.6 constitutes a "qualified
income offset" within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(d).
5.7 Gross Income Allocation. In the event that any Member has a
deficit Capital Account at the end of any fiscal year in excess of the amount
that such Member is deemed obligated to restore pursuant to Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be allocated
items of income and gain in the amount of such excess. The allocations made
pursuant to this Section 5.7 shall be made after all other allocations
pursuant to Sections 5.3 through 5.6 and 5.8 through 5.10 have been made.
5.8 Allocation of Nonrecourse Deductions. Nonrecourse Deductions for
each taxable year shall be allocated among the Members in accordance with
their respective Percentage Interests.
5.9 Allocation of Member Nonrecourse Deductions. Member Nonrecourse
Deductions shall be allocated to the Members that bear the economic risk of
loss with respect to the Member Nonrecourse Debt in accordance with
Regulations Section 1.704-2(i)(1).
5.10 Allocation of Regulations Section 1.704-1(b)(2)(iv)(m)
Adjustments. If an adjustment to the Capital Accounts of the Members is
required by Regulations Section 1.704-1(b)(2)(iv)(m)(2) or (4) because of a
distribution in complete liquidation of a Member's Interest, the amount of
such adjustment shall be treated as an item of gain, if it increases the tax
basis of property of the Company, or as an item of loss, if it decreases the
tax basis of property of the Company. If Regulations
Section 1.704-1(b)(2)(iv)(m)(2) applies to the adjustment to the Capital
Accounts, such items of gain or loss shall be allocated to the Members in
accordance with their Percentage Interests. If Regulations
Section 1.704-1(b)(2)(iv)(m)(4) applies to the adjustment to the Capital
Accounts, such items of gain or loss shall be allocated to the Member
receiving the distribution.
5.11 I.R.C. Section 704(c) Tax Allocations. Solely for tax purposes,
and in accordance with I.R.C. Section 704(c), income, gain, loss, and
deductions with respect to property contributed to the Company by a Member
shall be shared among the Members so as to take account of the variation
between the basis of the property to the Company for federal income tax
purposes and its fair market value at the time of its contribution. If the
value of any property of the Company reflected in the Members' Capital
Accounts is adjusted pursuant to Section 5.2(c)(i) or (ii), thereafter,
allocations of depreciation, depletion, amortization, and gain or loss with
respect to such property shall be determined so as to take into account the
variation between the adjusted tax basis and the adjusted value of such
property as reflected in the Members' Capital Accounts in the same manner as
under I.R.C. Section 704(c). The Members shall mutually agree before any
method or methods permitted under Regulations Section 1.704-3 are used for
making such allocations. Absent agreement to the contrary by the Members,
the "traditional" method will be followed per Regulations Section 1.704-3(b).
5.12 Distributions.
(a) Within sixty (60) days following the end of each fiscal year of
the Company, the Company shall advise each Member in writing of
the income that the Company will be reporting for each Member for
such fiscal year pursuant to the I.R.C. and the provisions
hereof.
(b) Commencing with the fiscal quarter ending June 30, 2003, and
continuing thereafter within 60 days following the end of each
fiscal quarter of the Company, the Company, subject to
Section 18-607 of the Delaware Act, shall make distributions to
Members in an aggregate amount equal to thirty percent of the Net
Profits of the Company for such fiscal quarter. Notwithstanding
the preceding sentence, the Company shall make no distribution
for any fiscal quarter for which Net Profits are less than eight
percent of Net Sales. Distributions pursuant to this
Section 5.12(b) shall be made to Members pro rata based on their
respective Percentage Interests.
(c) Notwithstanding anything in this Section 5.12 or elsewhere in
this Agreement to the contrary, no distribution shall be made to
any Member following the occurrence of an Event of Default by
such Member. If the defaulting Member shall dispute whether a
default has occurred, or the amount of the direct loss, damage,
cost, or expense incurred by the non-Defaulting Member as a
result of a default, the matter shall promptly be submitted to
the dispute resolution procedure set forth in Article XI hereof
and any distributions otherwise payable to the defaulting Member
shall be paid into an escrow account pursuant to an escrow
agreement in form and substance agreed to by the Members pending
resolution of the dispute. Payment shall be made from the escrow
account to the non-Defaulting Member to the extent required to
compensate such Member for any direct loss, damage, cost or
expense incurred by the non-Defaulting Member as a result of a
default and the remainder to the Defaulting Member. If it is
determined that an Event of Default did not occur, all withheld
distributions shall be paid to the Member from which the
distributions were withheld.
5.13 Return of Capital. Except as herein provided with respect to
distributions during the term of the Company or following Dissolution, no
Member has the right to demand a return of such Member's Capital Contribution
(or the balance of such Member's Capital Account). Further, no Member has
the right (i) to demand and receive any distribution from the Company in any
form other than cash or (ii) to bring an action of partition against the
Company or its property. The Managers shall have no personal liability for
the repayment of the capital contributed by Members.
ARTICLE 6
Management of the Company
6.1 The Managers; Approval of Members.
(a) Except as otherwise provided herein or in the Bylaws, and subject
to the approval rights of the Members hereunder or under the
Bylaws or the Delaware Act, (i) the business and affairs of the
Company shall be managed by or under the direction of the
Managers and (ii) the power to act for or to bind the Company
shall be vested exclusively in the Managers, subject to the
Managers' authority to delegate powers and duties to officers and
others as set forth herein and in the Bylaws. Subject to
obtaining any necessary approvals hereunder, the Managers shall
have the power and authority to execute and deliver contracts,
instruments, filings, notices, certificates, and other documents
of whatsoever nature on behalf of the Company (including, without
limitation, the Certificate of Formation and any amendments
thereto and any other certificates required or permitted to be
filed by or on behalf of the Company pursuant to the Delaware Act
or like law of any other jurisdiction). Except as otherwise
required by applicable law, any such contract, instrument,
certificate, or other document shall require the signature of
only one Manager or the signature of such officer, employee, or
agent to whom authority has been delegated by the Managers.
(b) The number of Managers shall be five (5). Three (3) of the
Managers and their successors shall be appointed by Molex, and
two (2) of the Managers and their successors shall be appointed
by Sheldahl. The initial Managers and the Member appointing each
of them are shown on Exhibit 6.1(b). Each Manager shall serve at
the pleasure of the Member that appointed him or her. Upon the
death, resignation, or removal of any Manager, the Member that
appointed him or her shall promptly appoint his or her successor.
Each Member represents that the Managers appointed by such Member
are employees of such Member and, unless otherwise agreed by the
Members, covenants to only appoint its employees or employees of
the Company as Managers.
(c) Except as otherwise provided herein, or as may otherwise be
required by the Delaware Act, decisions of the Managers shall be
taken by an affirmative vote of a majority of the Managers at a
meeting attended by at least four Managers, or by unanimous
written consent of the Managers. Each Member shall use its best
efforts to cause the Managers appointed by such Member to attend
all duly called meetings. Each Manager shall have one vote on
all matters submitted to the Managers for approval.
(d) The following matters in particular shall be determined by the
Managers:
(i) subject to Sections 6.6 and 6.7, election of the Chairman
and the President;
(ii) decisions as to any capital expenditure or capital project
(whether by purchase or lease) in excess of One Hundred
Thousand Dollars ($100,000) to the extent included in the
Business Plan;
(iii) decisions as to the giving of any guarantee or indemnity to
secure the liabilities or obligations of any other person
or entity;
(iv) decisions as to the disposition of assets having either a
book or market value of more than One Hundred Thousand
Dollars ($100,000) in value;
(v) entering into, making any material amendment to or
terminating any joint venture or profit sharing agreements,
patent or technology license agreements, Product
distribution agreements, partnership agreements, and any
other material contract or transaction; and
(vi) determination of the compensation of the officers of the
Company who are employees of the Company and not employed
by one of the Members;
(e) From the date of this Agreement until the second anniversary of
the date of this Agreement, the Managers shall hold regular
meetings at least once every sixty days. Thereafter the Managers
may, subject to an amendment to the Bylaws, reduce the frequency
of regular meetings.
(f) Any action requiring the approval of the Members shall require
the consent of each Member, without regard to such Member's
Percentage Interest.
6.2 Special Approvals. Notwithstanding the general authority of the
Managers under Section 6.1, the following matters shall, except as provided
in (l) below, require the approval of (i) a majority of the Managers
appointed by Molex, and (ii) a majority of the Managers appointed by
Sheldahl:
(a) any restatement, amendment, supplement or repeal of this
Agreement or the Bylaws;
(b) any merger or consolidation of or involving the Company;
(c) any lease, sale, exchange, conveyance, or other transfer or
disposition of all, or substantially all, of the assets of the
Company;
(d) a change of the name of the Company;
(e) engaging in a business other than as provided for by this
Agreement;
(f) payment of distributions to the Members (other than those
provided for in Section 5.12(b) and except in connection with the
Dissolution and winding up of the Company);
(g) the contribution of additional capital by any Member to the
Company (other than as provided for in Article IV);
(h) the assignment of any of the property of the Company in trust for
the benefit of creditors, or the making or filing, or
acquiescence in the making or filing by any other person, of a
petition or other action requesting the reorganization or
liquidation of the Company under the Bankruptcy Laws;
(i) the issuance of any additional Interests or, except as otherwise
provided in Article IX in connection with the transfer of an
Interest, the admission of additional or substituted Members;
(j) any transaction between the Company and any Member or a Related
Company of any Member;
(k) production by or on behalf of the Company of component parts
which are available from either Sheldahl or Molex;
(l) purchase by or on behalf of the Company of component parts from
suppliers other than Sheldahl or Molex, provided, however, that
if, except as permitted by the applicable Supply Agreement,
either Member is unable to consistently supply to the Company
component parts which both (i) meet the Company's specifications
within 180 days following notice by the Company and (ii) are
available in such quantities as the Company shall request within
180 days following notice by the Company (such quantities so
requested to be consistent with the forecast of estimated
requirements provided pursuant to the applicable Supply
Agreement), then a majority of the Managers appointed by the
other Member shall have the sole power to approve and direct the
purchase by or on behalf of the Company of component parts from
suppliers other than Sheldahl or Molex;
(m) decisions as to borrowing, finance leases, or the creation of
security interest, liens, or mortgages in or on any property or
assets of the Company, in amounts that exceed One Hundred
Thousand Dollars ($100,000);
(n) decisions as to making any loan, advance, or giving credit in
amounts that exceed One Hundred Thousand Dollars ($100,000);
(o) selection of independent auditors (but not tax preparers);
(p) material decisions regarding the initiation, defense, conduct, or
settlement of litigations, arbitrations, or other disputes
involving amounts in excess of One Hundred Thousand Dollars
($100,000);
(q) decisions as to the source for providing final assembly and test
of the Products;
(r) entering into, making any material amendment to or terminating
any Associated Agreement to which the Company is a party, or any
contract, agreement, lease, or other arrangement with a Member or
Related Company, or waiving any material right of the Company
under any Associated Agreement;
(s) approval of any annual budget, strategic plan, Financial Plan or
Business Plan for the Company;
(t) acquiring, purchasing, or subscribing for, or selling or
otherwise disposing of, any shares, debentures, mortgages, or
securities (or any interest therein) in any company or any other
entity;
(u) establishing any new branch, office, factory, or other permanent
establishment or forming any subsidiary company or entity of the
Company;
(v) any changes to the definition of Products contained in this
Agreement;
(w) any change in the Business Purpose of the Company;
(x) the determination of the terms of use of the applications
described in Section 6.9(a); and
(y) any other matter that is subject to the agreement, consent, or
approval of the Members hereunder (unless previously considered
by the Members).
6.3 Default Under Supply Agreement. In the event of the continuance
of an event of default under a Supply Agreement, the Managers appointed by
the Member not a party to such agreement shall have the power to approve and
direct the enforcement of such agreement by the Company.
6.4 Meetings of Managers/Conduct of Business. Meetings of the
Managers shall be held as set forth in the Bylaws and determinations to be
made by the Managers in connection with the conduct of business of the
Company shall be made in the manner provided in the Bylaws, unless otherwise
provided in this Agreement.
6.5 Remuneration of Managers. The Managers shall receive no
compensation from the Company for performing their services as Managers. It
is understood that each of the Members shall be solely responsible for the
payment of the salaries, benefits, retirement allowances, and travel and
lodging expenses for all Managers appointed by it.
6.6 Chairman. The Managers shall have a Chairman (being one of the
Managers) who initially shall be appointed by Molex. The Chairman shall also
be an officer and shall serve a one-year term. After the initial one-year
term, successor Chairmen shall be appointed as provided in Section 6.1(d)(i).
6.7 Officers of the Company. The officers of the Company shall be a
President, a Treasurer, a Secretary, and such other officers as may be
determined by the Managers. The initial officers of the Company are
identified on Exhibit D hereto.
6.8 Authority and Duties of Officers. The officers of the Company
shall have such authority and shall perform such duties as are customarily
incident to their respective offices, and/or such other or additional
authority and duties as may be specified in or determined pursuant to the
Bylaws or delegated by the Managers.
6.9 Operation of the Company.
(a) [ ******* Confidential Treatment Requested ] . In the event of
a dispute as to whether a product is encompassed by the preceding
sentence, the Managers appointed by Sheldahl and the Managers
appointed by Molex shall attempt to resolve such dispute and, in
the event such dispute shall not be resolved within 10 days,
either Member may invoke the dispute resolution process contained
in Article XI.
(b) The Members and/or the Company shall enter into the agreements
described on Exhibit 1A on the terms and conditions specified on
Exhibit 1A and such other reasonable terms and conditions as
shall be agreed to by the parties to such agreements.
6.10 Limitation on Liability of Managers and Officers;
Indemnification.
(a) No Manager or officer of the Company shall have any liability to
the Company or the Members for any losses sustained or
liabilities incurred as a result of any act or omission of such
Manager or officer if (i) the Manager or officer acted in good
faith and in a manner he or she reasonably believed to be in, or
not opposed to, the interests of the Company, and, with respect
to any criminal proceeding, had no reason to believe his or her
conduct was unlawful and (ii) the conduct of the Manager or
officer did not constitute actual fraud, gross negligence, or
willful misconduct.
(b) The Company shall indemnify and hold harmless the Managers and
officers of the Company (individually, an "Indemnitee") from and
against any and all losses, claims, demands, costs, damages,
liabilities, expenses of any nature (including reasonable
attorneys' fees and disbursements), judgments, fines,
settlements, and other amounts arising from any and all claims,
demands, actions, suits, or proceedings, civil, criminal,
administrative, or investigative, in which an Indemnitee may be
involved, or threatened to be involved, as a party or otherwise,
arising out of or incidental to the business of the Company,
regardless of whether an Indemnitee continues to be a Manager or
officer at the time any such liability or expense is paid or
incurred, if (i) the Indemnitee acted in good faith and in a
manner it or he or she reasonably believed to be in, or not
opposed to, the interests of the Company, and, with respect to
any criminal proceeding, had no reason to believe his or her
conduct was unlawful and (ii) the Indemnitee's conduct did not
constitute actual fraud, gross negligence or willful misconduct.
(c) Expenses incurred by an Indemnitee in defending any claim,
demand, action, suit, or proceeding subject to this Section 6.10
shall, from time to time, be advanced by the Company prior to the
final disposition of such claim, demand, action, suit, or
proceeding upon receipt by the Company of an undertaking by or on
behalf of the Indemnitee to repay such amounts if it is
ultimately determined that such person is not entitled to be
indemnified as authorized in this Section 6.10. The
indemnification provided by this Section 6.10 shall be in
addition to any other rights to which an Indemnitee may be
entitled under any agreement, consent of the Members, as a matter
of law or equity, or otherwise, shall continue as to an
Indemnitee who has ceased to serve in such capacity and shall
inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee. Subject to the foregoing
sentence, the provisions of this Section 6.10 are for the benefit
of the Indemnities and shall not be deemed to create any rights
for the benefit of any other persons.
6.11 Liability to Third Parties. The debts, obligations, and
liabilities of the Company, whether arising in contract, tort, or otherwise,
shall be solely the debts, obligations, and liabilities of the Company, and
no Manager shall be obligated personally for any such debt, obligation, or
liability by reason of his or her acting as a Manager of the Company.
6.12 Business Plan.
(a) Except as otherwise set forth in this Agreement, not later than
60 days prior to the expiration of any Company fiscal year during
the term of this Agreement the Managers shall prepare and deliver
to each Member a Business Plan for the immediately succeeding
fiscal year, which shall cover the general business direction,
policies and programs for the Company during such year, which
direction shall be within the Business Scope. Each Business Plan
shall include as a part thereof a Financial Plan for the Company
fiscal year covered by the Business Plan setting forth projected
Company revenues and all projected Company costs and expenses for
such company fiscal year.
(b) The Business Plan for the Company attached as Exhibit 1B is
hereby ratified and approved by the Members. With regard to
subsequent Company Fiscal years, the Managers shall have a period
of 30 days after receipt of any proposed Business Plan within
which to give their approval to such Business Plan, in the manner
required under Section 6.2. Where approval of a proposed
Business Plan is required under this Section 6.12 and such
proposed Business Plan does not receive the approval of the
Managers prior to expiration of such 30-day period, such proposed
Business Plan shall be deemed disapproved, whereupon Company
costs and expenses incurred during the next succeeding Company
fiscal year shall not exceed the amounts or differ from the types
set forth in the Financial Plan for the immediately preceding
Company fiscal year. The Managers may at any time approve a
Business Plan to cover a period of a year or less, which proposed
Business Plan may add to, modify or amend the terms of any
existing Business Plan.
6.13 Reimbursements. Except as may be provided in this Agreement or
in the Associated Agreements or as may be approved by the Members pursuant to
Section 6.2, no Member, no Related Party nor any such Member's or Related
Party's officer, director, employee or agent shall receive any compensation
or other payments from the Company for its services, or be entitled to
reimbursement from Company funds for any expenses incurred by it, except that
the Managers in performing their obligations as such shall be reimbursed for
the out-of-pocket expenses incurred by them in managing the Company and its
business.
6.14 Insurance.
(a) In the discretion of the Managers, the Company shall procure and
maintain in full force and effect appropriate insurance, the
premiums for which shall be an expense of the Company. Examples
of such insurance include:
(i) Insurance on the assets of the Company, and all
improvements thereto against all loss or damage by fire,
lightning, flood, wind and all other risks covered by the
Standard Coverage "All Risk" endorsements.
(ii) Worker's compensation and similar employee benefits as
required by law.
(iii) Commercial general liability insurance on an occurrence
basis, including personal injury, bodily injury, death or
property damage liability, and automobile liability
insurance.
(iv) Excess liability coverage insuring the same risks as the
underlying coverage for the benefit of the Members and the
Company as named insureds.
(v) Environmental liability insurance.
(vi) Third party product recall expense insurance for
manufacturing errors.
(vii) Such other insurance as the Members shall from time to time
deem necessary.
(b) All insurance policies shall be issued in the name of the
Company. The insurance shall not contain any provision for co-
insurance coverage and shall include coverage against punitive
damages to the extent allowed by law.
(c) All insurance shall be effected under valid and enforceable
policies issued by insurers of recognized responsibility
satisfactory to the Members, and shall, to the extent obtainable,
provide that (x) such policies shall not be cancelled without at
least 30 days' prior written notice to each Member, and (y) any
loss payable thereunder shall be payable notwithstanding any act
or negligence of any named insured.
6.15 Indemnity.
(a) Each Member covenants and agrees to defend, indemnify and hold
harmless the Company, Related Companies and their respective
officers, directors and employees from and against any claim,
suit, loss or damage, including reasonable attorneys fees,
arising out of or relating to (i) any third party suits
(excluding suits by Related Parties) to the extent arising out of
or relating to the breach by such Member or its employees or
agents of the terms of this Agreement or (ii) the breach by such
Member's Related Companies (or their respective employees or
agents) of the obligations imposed on such Related Companies
under this Agreement.
(b) Any party seeking indemnification (the "Indemnified Party") shall
promptly notify the indemnifying party in writing of any claim
believed to be subject to indemnification; provided, however,
that no delay on the part of the Indemnified Party in providing
such notice shall relieve the indemnifying party from its
indemnification obligations except to the extent the indemnifying
party is prejudiced thereby. The Indemnified Party shall allow
the indemnifying party to control the defense of any third party
claim for which the Indemnified Party seeks indemnity under this
Section 6.15 and shall cooperate in the indemnifying party's
defense thereof, at the expense of the indemnifying party. If
the indemnifying party assumes the defense of any such claim, the
indemnifying party's sole obligation with respect to such claim
shall be limited to holding the Indemnified Party harmless from
and against any judgments or settlements approved by the
indemnifying party in connection with the claim, which consent
will not be unreasonably withheld or delayed. In the event the
indemnifying party shall not assume the defense of any such
claim, the Indemnified Party shall have the right, following
written notice to the indemnifying party, to undertake to defend
or settle such claim on behalf of and for the account of and risk
of loss of the indemnifying party. Regardless of which party
controls the settlement or defense of any claim, both parties
shall act in good faith and no entry of judgment or settlement of
a claim may be agreed to without the written consent of both the
Indemnified Party and the indemnifying party, which consent shall
not be unreasonably withheld or delayed; provided, however, that
the Indemnifying Party may settle any such claim solely for the
payment of money provided that the Indemnified Party receives a
full release and has no obligations with respect to such
settlement.
ARTICLE 7
Exclusive Efforts and Non-Solicitation
7.1 Exclusive Efforts. Each Member agrees with the Company and the
other Member that, so long as it is a Member of the Company and except (a) as
provided for in any employment agreement with any employee of the Company,
and (b) as provided for in Section 15.1 of this Agreement, such Member and
each of its Related Companies shall direct its efforts in the design,
development, manufacturer, and sale of Products to Customers through the
Company and shall not start up, acquire, operate, or otherwise participate
in, independently or in cooperation with any third party, any business that
develops, manufactures, markets, or sells Products to Customers or otherwise
competes with the Company within target applications referenced in Exhibit
2.5. Except as restricted by this Section 7.1, each of the Members and its
Related Companies shall be free to engage in any other businesses or
activities and to receive the income and benefits thereof (and neither the
Company nor any other Member shall have any interest therein by reason of
this Agreement), and no Member shall have any duty or obligation to present
to the Company or any other Member any such other business opportunities that
are outside the scope of the purposes of the Company.
7.2 Non-Solicitation. Each Member agrees it will not, during the
term of this Agreement and for a period [ ***** Confidentiality Treatment
Requested *****] following the earlier of Dissolution or such Member ceasing
to be a Member, without the prior written consent of the Company (if the
Company is then in existence) and the other Members, directly or indirectly
(except by general newspaper or similar advertisement) solicit for employment
employees of the Company or the other Members, provided, however, that, (i)
upon Dissolution of the Company, a Member may solicit any employee of the
Company who had been an employee of such Member immediately prior to
accepting employment with the Company and (ii) upon a Member ceasing to be a
Member of the Company, the Company may solicit the employees of the Member
ceasing to be a Member who are providing services on a leased basis to the
Company on substantially a full-time basis. Each Member will cause its
Related Companies (other than the Company) to comply with this Section 7.2 in
the same manner required of such Member.
ARTICLE 8
Nondisclosure of Information
8.1 Confidentiality.
(a) All disclosures of trade secrets, know-how, financial
information, or other confidential information made by the
Company or any Member under or in connection with this Agreement
or the Associated Agreements, as well as the terms of this
Agreement and all Associated Agreements, shall be received and
maintained in confidence by the recipient (the "Recipient") and
each Recipient shall treat all such trade secrets, know-how,
financial information or other confidential information as the
confidential property of the disclosing party and shall not use
same other than for the benefit of the Company under this
Agreement. The Recipient shall not disclose same to any other
person except:
(i) to the extent persons directly responsible for the
performance of the obligations of this Agreement and for
the effective operation of the Company require such
information in connection with the performance of the
obligations of this Agreement and the effective operation
of the Company;
(ii) to the extent professional advisers of the Members and the
Company require such information in connection with
providing their services to the Members and/or to the
Company; and
(iii) to the extent disclosures of such information by employees
of the Company to suppliers, distributors, customers and
other persons are necessary or appropriate for the
effective carrying on of business by the Company provided
such suppliers, distributors, customers and other persons
execute a non-disclosure agreement prohibiting the further
disclosure of such information.
Notwithstanding the provisions of this Section 8.1(a), either
Member may, to the extent required by law or the regulations of
any agency or self-regulatory agency, file this Agreement with
any governmental authority, agency or self-regulatory agency
provided that such Member gives the other Member notice prior to
such filing as far in advance as reasonably possible (but in any
event not less than 5 days prior to such filing) and reasonably
cooperates with the other Member in seeking confidential
treatment of any provision or provisions of this Agreement
requested to be kept confidential by such other Member.
(b) Notwithstanding the provisions of Section 8.1(a), information
disclosed by the Company or any Member shall not be considered
confidential information pursuant to this Section 8.1 to the
extent that:
(i) such information is required by law to be disclosed by the
Members or the Company, provided that Recipient shall
(A) provide the disclosing party with prompt notice of such
demand (and in any event prior to disclosure),
(B) cooperate with the disclosing party in resisting such
disclosure or seeking suitable protection prior to such
disclosure, and (C) disclose only such confidential
information as Recipient is compelled by law to disclose;
(ii) the Recipient is able to show that such information was
known to the Recipient prior to such disclosure;
(iii) the Recipient is able to show that such information was
independently developed by the Recipient without use of any
confidential information of the Company or any other
Member;
(iv) the Recipient is able to show such information was acquired
by the Recipient from a third party without a continuing
restriction on use; or
(v) such information which was, or becomes, publicly available
through no breach of this Agreement by the Recipient or its
representatives.
The content of this Agreement or any other contract or agreement entered into
by among the Members and/or the Company shall be considered the confidential
information of the Company and each Member which is a party to any such
agreement and shall not be disclosed without the prior written consent of the
Company and the non-disclosing Member or Members; provided, however, that a
Member may disclose to third parties the existence of the Company and the
names of the Members. Notwithstanding the provisions of this Section 8.1(b),
either Member may, to the extent required by law or the regulations of any
agency or self-regulatory agency, file this Agreement with any governmental
authority, agency or self-regulatory agency provided that such Member gives
the other Member notice prior to such filing as far in advance as reasonably
possible (but in any event not less than 5 days prior to such filing) and
reasonably cooperates with the other Member in seeking confidential treatment
of any provision or provisions of this Agreement requested to be kept
confidential by such other Member.
8.2 Duty of Care. The Company and each Member will take such steps
as lie within its power to assure that all of its Managers, directors,
officers and employees, or of the Managers, directors, officers and employees
of its Related Companies, to whom confidential information is disclosed take
all proper precautions to prevent the unauthorized disclosure and use of the
confidential information referenced in Section 8.1. Each Member shall cause
all such Managers, officers and employees to execute and deliver to the
Company such agreement or agreements related to the non-solicitation, non-
competition, confidentiality and assignment of intellectual property rights
as the Company shall reasonably request.
ARTICLE 9
Rights and Obligations of Members
9.1 Limited Liability. No Member shall be personally liable for any
debts, liabilities, or obligations of the Company; provided that each Member
shall be responsible (i) for the making of any Capital Contribution required
to be made to the Company by such Member pursuant to the terms hereof and
(ii) for the amount of any distribution made to such Member that must be
returned to the Company pursuant to the Delaware Act.
9.2 Participation in Management. No Member, as such, shall take any
part in the management and control of the business of the Company nor shall
any Member, by reason of its status as such, have any right to transact any
business for the Company or any authority or power to sign for or bind the
Company. Notwithstanding the foregoing, Members shall have the right to
approve or disapprove or otherwise consent or withhold consent with respect
to such matters as are specified in this Agreement, the Bylaws or the
Delaware Act; and provided that Members may take such actions on behalf of
the Company and execute documents or otherwise bind the Company to the
extent, if any, that such powers are delegated to any such Member by the
Managers from time to time.
9.3 Restrictions on Transfer.
(a) Except as expressly permitted by this Agreement, no Member shall,
without in each instance obtaining the prior approval of the
remaining Members, sell, assign or otherwise transfer, or
mortgage, charge or otherwise encumber, or suffer or permit any
third party to sell, assign or otherwise transfer, or mortgage,
charge or otherwise encumber (collectively "Transfer"), all or
any part of its Interest, or contract to do, suffer or permit
(other than the lien described on Exhibit 9.3) any of the
foregoing. Any such Transfer or attempted transfer by a Member
of its Interest, including an attempted Transfer as a result of
the foreclosure of the lien described on Exhibit 9.3 (a "Member
Transfer" ) in violation of this Agreement shall be void and of
no force or effect. Upon the Transfer by a Member of all of its
Interest in a manner permitted or required pursuant to the
provisions of this Article IX, such Member shall be deemed to
have withdrawn as a Member and shall have no further rights as a
Member hereunder.
(b) Either Member may Transfer all or any part of its Interest to the
other Member upon such terms as may be agreed between them (and,
in the case of a Transfer of all of the Interest of a Member, the
other Member may designate a third party to purchase all or part
of the Interest and to be admitted as a substituted Member and
continue the business of the Company without Dissolution).
(c) Either Member may Transfer all of its Interest to any of its
Related Companies which is not a competitor of the other Member;
provided, however, that such transfer shall not relieve the
Member Transferring its Interest of any liability pursuant to
this Agreement and such Transferring Member shall remain liable
for all of its obligations pursuant to this Agreement, and all of
the liabilities of the Related Company to whom the Interest is
Transferred.
(d) If at any time a Transfer is attempted to be made in violation of
the provisions of this Agreement, then the Non-transferring
Member shall, in addition to its rights and remedies under this
Agreement and at law and in equity, be entitled to a decree or
order restraining and enjoining such Transfer. The Members
expressly acknowledge and agree in this regard that damages at
law will be difficult to ascertain in the event of any such
violation of this Agreement, and would constitute an inadequate
remedy for a breach or threat of breach of the provisions of this
Agreement concerning Transfers as set forth above.
9.4 Agreement with Transferees. No transfer by a Member of its
Interest to a person other than a Member shall be effective to make such
transferee a Member or entitle such transferee to any of the benefits or
rights hereunder until such transferee agrees in writing (i) to assume and be
bound by all of the terms and provisions of this Agreement and all of the
obligations of the transferring Member hereunder, and (ii) to be subject to
all of the restrictions to which the transferring Member is subject under the
terms of this Agreement and any further agreements with respect to the
Company and its business. No permitted transfer of an Interest to a person
other than a Member hereunder shall be effective until the Company shall have
received and have accepted the written agreement of the third-party
transferee required by this Section 9.4, with the Company's acceptance of
such transferee's agreement to be no later than the fifth day of the calendar
month next following the month during which such transferee's agreement was
received. A transferee of a Member's Interest shall be entitled to receive
from the Company distributions of cash and other Company property, and
allocations of Net Profit and Loss with respect to such Member's Interest,
only after the effective date of such transfer.
9.5 Third Party Transfer Procedures.
(a) In the event either Member wishes to Transfer all of its Interest
to a third party (any such Member being herein referred to as
"Seller"), it shall first offer to Transfer such Interest to the
other Member at the price and on the terms and conditions offered
by the third party by providing written notice thereof, which
notice shall include a copy of the written offer made by such
third party, including all terms and conditions thereof, and
shall identify the third party by name. Within forty-five (45)
days of the receipt of Seller's notice, the other Member may
either (i) accept the offer to purchase the Interest at the price
and on the other terms set forth in the third party offer,
(ii) decline such offer, or (iii) require Seller to obtain from
the third party an irrevocable written offer to purchase such
other Member's Interest at a price per percentage of Interest
equal to the third party offer price. In the event that the
other Member does not take any such action in response to the
notice, it shall be deemed to have declined the offer.
(b) If the other Member accepts the offer of the Seller pursuant to
the clause (i) of Section 9.5(a), then the other Member, or a
Related Company designated by it, shall purchase the offered
Interest pursuant to the terms of the third party offer (and, as
applicable, may cause the Related Company purchaser to be
admitted as a substituted Member and continue the business of the
Company without Dissolution). If the other Member declines the
offer, Seller shall have the right to Transfer its Interest to
such third party at a price not less than that included in
Seller's notice, and otherwise on terms and conditions
substantially the same as set forth in the Seller's notice,
within ninety (90) days of the date of Seller's notice (and at
the time of closing of the Transfer, the transferee shall be
admitted as a substituted Member with respect to the transferred
Interest and the business of the Company shall be continued). If
the other Member takes the action referenced in clause (iii) of
Section 9.5(a) and the third party makes an irrevocable written
offer to purchase the other Member's Interest as therein provided
within thirty (30) days, then the other Member and Seller shall
jointly sell their respective Interests to the third party within
one hundred and twenty (120) days of the date of Seller's notice.
If the third party does not make such an offer, then Seller shall
have no right to make the Transfer.
9.6 Withdrawal from Company. No Member shall be entitled to withdraw
as a Member from the Company except pursuant to a Transfer by such Member of
its entire Interest pursuant to and as permitted by this Agreement or upon
Dissolution and completion of the subsequent liquidation, winding up and
termination of the Company and its business. Except as otherwise provided in
this Agreement, no Member may withdraw any of its capital contributions or
the balance in its Capital Account without the approval of the other Members.
9.7 Default.
(a) The occurrence of any of the following events shall constitute an
Event of Default ("Event of Default") hereunder on the part of
the Member with respect to which such event occurs (the
"Defaulting Member"):
(i) any representation or warranty made by the Member herein
was false or misleading in any material respect as of the date of
this Agreement the result of which has a material adverse effect
on the Company or the other Member; or
(ii) except as otherwise provided in this Section 9.7(a), the
Member shall fail to perform or observe any material covenant or
agreement contained in this Agreement, to be performed or
observed by such Member or a Related Company, which failure shall
remain unremedied for 90 days after Notice thereof shall have
been given to such Member by any other Member; or
(iii) the Transfer of an Interest by such Member in violation of
the restrictions on transfer set forth in this Agreement
(including a Transfer as a result of the foreclosure of the lien
described on Exhibit 9.3); or
(iv) the failure of either Sheldahl or Molex to continuously use
commercially reasonable efforts to satisfy its obligations
pursuant to the applicable Supply Agreement within 180 days of
receipt of a notice of the Company that Sheldahl or Molex, as
applicable, has not substantially met its obligations to supply
components to the Company in the volumes and of the quality
required by the applicable Supply Agreement.
(v) the failure of such Member to make an additional capital
contribution to which it has given its approval or otherwise as
required under this Agreement, which failure remains unremedied
for 90 days after notice thereof shall be given to such Member by
the Company.
(b) Upon the occurrence of an Event of Default by the Defaulting
Member, the other Member may, without prejudice to any other
remedies available to it at law or in equity but subject to
Section 9.14, deliver written notice to the Defaulting Member
within the Default Notice Period electing either (x) to dissolve
the Company pursuant to Section 10.1(d) or (y) to purchase the
defaulting Member's Interest at the fair market value of the
Interest determined pursuant to Article XIII (the "Fair Market
Value Of The Interest") less the amount of any direct loss,
damage, cost, or expense incurred by the non-Defaulting Member as
a result of a default for which amounts have been placed into an
escrow agreement pursuant to this Agreement (the "Buy-Out
Remedy"). If the Defaulting Member shall dispute whether a
default has occurred, the matter shall promptly be submitted to
the dispute resolution procedure set forth in Article XI hereof.
In the event that the other Member determines to purchase the
interest of the Defaulting Member pursuant to clause (y) above,
then the Member whose interest is to be acquired shall be deemed
to be a withdrawing Member and to have given notice of an offer
to sell its Interest to the other Member at the Fair Market Value
Of The Interest determined pursuant to Article XIII, and the
operative provisions of Article XIII shall be applicable.
(c) The closing of the purchase of the Defaulting Member's Interest
hereunder shall take place not later than 30 days after
determination of the purchase price of the Defaulting Member's
Interest. If the closing of the purchase pursuant to this
Section 9.7 shall occur on or prior to [ ******* Confidential
Treatment Requested ] , the purchasing Member shall deliver to
the Defaulting Member recourse promissory notes providing for the
payment of 20 percent of the purchase price, without interest, on
each of the first, second, third, fourth, and fifth anniversaries
of such closing. If the closing of the purchase pursuant to this
Section 9.7 shall occur after [ ******* Confidential Treatment
Requested ] , the purchasing Member shall deliver to the
Defaulting Member 20 percent of the purchase price on the date of
the closing and shall deliver to the Defaulting Member recourse
promissory notes bearing interest at the Prime Rate providing for
the payment of the remainder of the purchase price on each of the
first, second, third, and fourth anniversaries of such closing.
In addition, in either case, the purchasing Member shall pledge
its Interest as collateral for the promissory notes delivered to
the Defaulting Member. Any amounts due and payable at the time
of Closing pursuant to any loans made by the non-Defaulting
Member to the Defaulting Member shall be immediately set-off
against the purchase price otherwise payable by the non-
Defaulting Member for the purchase of the Defaulting Member's
Interest.
(d) From and after the occurrence of an Event of Default, and during
the exercise of the Buy-Out Remedy as set forth herein, the
Defaulting Member shall not be entitled to receive any
distributions of cash or other Company property hereunder, but
rather all cash and other Company property that would otherwise
be distributable to the Defaulting Member shall be paid into an
interest bearing escrow account pursuant to an escrow agreement
in form and substance agreed to by the Members. The escrowed
amounts shall be paid to the non-Defaulting Member to the extent
such Member incurred any direct loss, damage, cost or expense
incurred as a result of the default by the Defaulting Member.
Any amount remaining in the escrow account following such payment
shall be paid to the Defaulting Member.
(e) The purchase of any Company Interest pursuant to this Agreement,
whether of a Defaulting Member or otherwise, shall be governed by
the following additional terms: (i) the Interest purchased shall
be free and clear of all security interests, charges, liens and
encumbrances, (ii) if the purchased Interest cannot be
transferred free and clear of all security interests, charges,
liens or encumbrances, the purchasers thereof shall have the
right to deduct liens of a fixed or ascertainable amount in
determining such purchase price and assume such obligations or
taken any other action available to purchaser under this
Agreement, at law or in equity, and (iii) all parties acquiring
any interest in a Member's Interest hereunder shall acquire such
Interest subject to the purchase provisions of this Agreement.
(f) Subject to Section 9.14, the rights and remedies of the Members
hereunder shall not be mutually exclusive, i.e., the exercise of
one or more of the provisions of this Section 9.7 shall not
preclude the exercise of any other provisions hereof or any other
remedy at law or in equity, cumulatively. Each of the Members
confirms that damages at law will be an inadequate remedy for a
breach or threatened breach of this Agreement and agrees that, in
the event of a breach or threatened breach of any provision
hereof, the respective rights and obligations hereunder shall be
enforceable by specific performance, injunction or other
equitable remedy, but nothing herein contained is intended to,
nor shall it, limit or affect any rights at law or by statute or
otherwise of any Member as against any other Member for a breach
or threatened breach of any provision of this Agreement, it being
the intention of this Section 9.7 to make clear the agreement of
the Members that the respective rights and obligations of the
Members hereunder shall be enforceable in equity as at law or
otherwise.
9.8 Bankruptcy. Upon the occurrence of an event of bankruptcy as
described in Section 18-304 of the Delaware Act of a Member (the "Bankrupt
Member"), the other Member shall have a right within the later of 90 days of
such other Member's receipt of written notice from the Bankrupt Member of the
occurrence of the bankruptcy or 30 days following the lifting of any
automatic stay imposed in connection with such bankruptcy to (a) purchase
all, but not less than all, of the Bankrupt Member's Interest at the Fair
Market Value Of The Interest for cash at the closing, (b) invoke the Buy/Sell
Procedure or, (c) dissolve the Company pursuant to Section 10.1. In
addition, (i) the Company hereby agrees that the non-Bankrupt Member shall,
within the later of 90 days of receipt by such Member of written notice from
the Bankrupt Member of the occurrence of its bankruptcy or 30 days following
the lifting of any automatic stay imposed in connection with such bankruptcy,
have the right to purchase the assets of the Company at the fair market value
of such assets determined on a going concern basis as of the date of such
determination in accordance with the procedures for the valuation of the Fair
Market Value of the Interest set forth in Article XIII, and (ii) promptly
following the sale of such assets, the Company shall be dissolved as provided
for in Article X. The Bankrupt Member shall give written notice of the
occurrence of the bankruptcy of such Member to the Company and the other
Members as soon as reasonably possible following such bankruptcy.
9.9 Change of Ownership of a Member. In the event of the Change of
Ownership of a Member (the "Acquired Member") without the prior written
consent of the other Member, the other Member shall have a right within the
earlier of 90 days after (i) Members' receipt of such other Member's receipt
of written notice from the Acquired Member of the occurrence of the Change of
Ownership, or (ii) such other Member becoming aware of the occurrence of the
Change of Ownership to (a) purchase all, but not less than all, of the
Acquired Member's Interest at the Fair Market Value Of The Interest (such
purchase to occur as promptly as possible following the delivery of written
notice from the other Member of its election to purchase the Acquired
Member's Interest) on the terms provided for in the third sentence and the
fourth sentence of Section 9.7(c), (b) invoke the Buy/Sell Procedure, (c)
dissolve the Company pursuant to Section 10.1 or (d) make no change in the
ownership of the Interests. The Acquired Member shall give written notice of
the Change of Ownership to the Company and the other Members as soon as
reasonably possible following such Change of Ownership.
9.10 Failure to Meet Business Goals. In the event the Company shall
fail to achieve the business goals specified on Exhibit 9.10 in all material
respects by the periods indicated on Exhibit 9.10, then each of Molex and
Sheldahl shall have the right, exercisable within 90 days after [*****
Confidential Treatment Requested ***** ] and subject to the limitations
contained in this Section 9.10, to invoke the Buy/Sell Procedure; provided,
however, that in the event the Invoking Member withdraws its Buy/Sell Offer
within the 15-day period provided for in Section 14.3, the other Member shall
have the right to invoke the Buy/Sell Procedure within the greater of (i) 90
days after [***** Confidential Treatment Requested ***** ], and (ii) 30
days from the date of such revocation of the Buy/Sell Procedure. Neither
Molex or Sheldahl shall have the right to invoke the Buy/Sell Procedure
pursuant to this Section 9.10 if the Company is within [***** Confidential
Treatment Requested ***** ] of its sales goal as established in the Financial
Plan for calendar year [***** Confidential Treatment Requested ***** ] and
within [***** Confidential Treatment Requested ***** ] of its net profit
goal as established in the Financial Plan for calendar year [*****
Confidential Treatment Requested ***** ].
9.11 Survival of Obligations. Dissolution of the Company and any
termination of the Associated Agreements for any cause shall not release any
party from any liability which at the time of Dissolution or termination has
already accrued to any Member, nor affect in any way the survival of the
rights, duties, and obligations of any party provided for in Article VIII of
this Agreement.
9.12 Substituted Members. Any transferee acquiring the Interest of a
Member as permitted under this Article IX shall be deemed admitted as a
substituted Member with respect to the Interest transferred concurrently with
the effectiveness of the Transfer (provided that such transferee, unless
already a Member, shall, as a condition to such admission, execute a
counterpart of this Agreement, agreeing thereby to be bound by all of the
terms and conditions hereof), and such substituted Member shall be entitled
to all of the rights and benefits under this Agreement of the transferor of
such Interest. No purported Transfer of any Interest, or any portion thereof
or interest therein, in violation of the terms of this Agreement (including
any Transfer occurring by operation of law) shall vest the purported
transferee with any rights, powers, or privileges hereunder, and no such
purported transferee shall be deemed for any purposes as a Member hereunder
or have any right to vote or consent with respect to Company matters, to
inspect Company records, to maintain derivative proceedings, to maintain any
action for an accounting, or to exercise any other rights of a Member
hereunder or under the Delaware Act.
9.13 Additional Members. Additional Members may be admitted to the
Company only with the approval of the Members pursuant to Section 6.2(i).
The Capital Contribution and the Percentage Interest of any additional Member
shall be as determined by the Members approving the admission (and the
Percentage Interest of all other Members shall be adjusted to reflect the
Percentage Interest granted to the additional Member, pro rata based on
relative Percentage Interests immediately prior to the admission of the
additional Member). Any additional Member shall execute a counterpart of
this Agreement, agreeing thereby to be bound by all of the terms and
provisions hereof; provided that prior to or concurrently with the admission
of an additional Member, the Members shall adopt such amendments to this
Agreement as they deem appropriate to cause the provisions hereof that
contemplate only two Members to be appropriately modified to operate in the
context of three or more Members.
9.14 Exclusion of Consequential Damages. In no events shall either
Member be liable to the other Member or to the Company, or their respective
successors or assigns, for any indirect, special or consequential damages
under this Agreement or the Associated Agreements.
9.15 Ownership of Sheldahl Property. The Company and Sheldahl shall
each be deemed to own an undivided joint interest in the Sheldahl Property
free and clear of all royalty or similar obligations and free and clear of
all obligations to report to the other with respect to the use of such
intellectual property; provided that Sheldahl may, upon not less than 30 days
notice to the Company, transfer its interest in the Sheldahl Property. Such
ownership rights shall be non-assessable. The Company shall not Transfer any
interest in the Sheldahl Property without the prior consent of Sheldahl,
which consent shall not be unreasonably withheld or delayed. All
intellectual property subsequently developed by the Company or Sheldahl based
on the Sheldahl Property shall be owned by the entity developing such
intellectual property free and clear of all royalty or similar obligations
and free and clear of all obligations to report to the other with respect to
use of such intellectual property. Promptly following the execution and
delivery of this Agreement, Sheldahl shall deliver to the Company and Molex a
detailed description of the Sheldahl Property.
ARTICLE 10
Dissolution
10.1 Dissolution. The Company shall be dissolved upon the earliest to
occur of the following:
(a) the withdrawal, bankruptcy, or dissolution of any Member or the
occurrence of any other event that terminates the continued
membership of any Member in the Company under the Delaware Act,
unless the business of the Company is continued by the consent of
all remaining Members within ninety (90) days following the
occurrence of any such event;
(b) all or substantially all of the Company's assets and properties
have been sold and reduced to cash;
(c) upon the mutual agreement of the Members;
(d) the Company is dissolved pursuant to the provisions of
Sections 9.7, 9.8 or 9.9;
(e) the end of the Company's term; or
(f) the occurrence of any other event causing a Dissolution of the
Company under Section 18-801 of the Delaware Act.
10.2 Liquidator. Upon Dissolution, the Managers, or if there is no
remaining Manager, such person as is designated by the Members (the remaining
Managers or such person being herein referred to as the "Liquidator") shall
proceed to wind up the business and affairs of the Company in accordance with
the terms hereof and the requirements of the Delaware Act. A reasonable
amount of time shall be allowed for the period of winding up in light of
prevailing market conditions and so as to avoid undue loss in connection with
any sale of Company assets. This Agreement shall remain in full force and
effect during the period of winding up.
10.3 Distribution Priority. Upon the dissolution of the Company
("Dissolution"), the Company assets shall be liquidated and the affairs of
the Company shall be wound up and terminated by the Liquidator. Upon
completion of such liquidation and winding up, but not later than the end of
the Company taxable year in which Dissolution occurs (or 90 days after
Dissolution, if later), and after taking into account all Capital Account
adjustments for the Company taxable year during which Dissolution occurs,
including the allocation of all profits and losses pursuant to this
Agreement, except as provided in the Development Agreement, the assets of the
Company shall be liquidated and disposed of and distributed as follows:
(a) First, available cash shall be used to pay all debts and
liabilities of the Company and expenses of the liquidation and
winding up; if the Company lacks sufficient cash to pay such
debts and expenses, then the Managers shall sell assets
sufficient to generate adequate cash;
(b) Second, available cash shall be used to set up reserves (to be
held in a special interest-bearing account) which the Managers or
the liquidating trustee may deem reasonably necessary for any
contingent or unforeseen liabilities or obligations of the
Company; provided, however, that at the expiration of such time
as the Managers or such trustee shall deem advisable (not to
exceed two (2) years from the event which caused Dissolution
except in the cash of any litigation matter, where the length of
time such reserves are maintained shall be determined by the
Managers or the liquidating trustee in its sole discretion), the
balance of such reserves remaining after payment of such
contingent liabilities shall be distributed in the manner
hereafter set forth in this Article X; if the Company lacks
sufficient cash to establish such reserves, then the Managers
shall sell assets sufficient to generate adequate cash;
(c) Third, to the Members in the amount of the positive balances in
their Capital Accounts; and
(d) Finally, to the Members in proportion to their then Percentage
Interests; provided, however, that if a Dissolution occurs prior
to June 30, 2000 then in proportion to the capital contributions
actually made by each Member pursuant to Section 4.1.
10.4 Purchase of Assets. Each Member shall have a first right to
purchase the assets of the Company upon Dissolution. If only one Member
wishes to exercise such right of purchase with respect to particular assets,
then the terms of purchase shall be as agreed upon between the Members,
provided that if mutually acceptable terms cannot be so agreed upon, the
assets shall be sold by the Liquidator on the best available terms and either
Member may submit a bid. If both Members wish to purchase all, or the same
part, of the Company's assets, and no agreement can be reached between the
Members as to which is to purchase the assets, each Member may submit a bid
for the assets to the Liquidator, and the Liquidator shall approve the sale
of the assets to the Member offering the higher cash price. In lieu of the
foregoing purchase procedures, assets of the Company remaining after
satisfaction of the claims of third party creditors may be distributed in
kind to the Members in such manner as may be agreed upon among all Members.
10.5 Associated Agreements. Upon Dissolution, the Associated
Agreements shall terminate or be extended in accordance with their respective
terms.
10.6 Intellectual Property. Upon Dissolution, and notwithstanding
Section 10.4, the Members shall be deemed to own jointly all intellectual
property owned by the Company and all intellectual property subsequently
developed by either Member based on the proprietary rights of the Company,
free and clear of all royalty or similar obligations and free and clear of
all obligations to report to the other with respect to such Members use of
such intellectual property. Such ownership rights shall be non-assessable
and freely transferrable; provided, however, that neither Member (nor any
transferee or licensee of either Member) may transfer or license any interest
in such intellectual property to a competitor of the other Member. The value
of an undivided interest in the intellectual property to be distributed to
each of the Members pursuant to this Section 10.6 shall be equal to one-half
of the fair market value of such intellectual property established by
agreement of the Members and, absent agreement, the fair market value thereof
determined by the arbitrators pursuant to Article XI of this Agreement. Each
Member shall cooperate with the other Member in seeking patents with respect
to such intellectual property or in enforcing any patent issued with respect
to such intellectual property, in each case at the expense of the Member
requesting the cooperation.
10.7 Validity of Agreement. Notwithstanding any Dissolution of the
Company, prior to such time as the Company shall be terminated as provided
herein, the Company's business and the affairs of the Members, as such, shall
continue to be governed by this Agreement.
10.8 No Recourse. If distributions are insufficient to return to any
Member the full amount of such Member's Capital Contributions, such Member
shall have no recourse against any other Member or any Manager. No Member
shall have any obligation to restore, or otherwise pay to the Company, any
other Member, or any third party, the amount of any deficit balance in such
Member's Capital Account upon Dissolution and liquidation. Following the
completion of the winding up of the affairs of the Company and the
distribution of its assets, the Company shall be deemed terminated and the
Liquidator shall file a certificate of cancellation in the Office of the
Secretary of State of the State of Delaware as required by Section 18-203 of
the Delaware Act. The provisions of Section 6.10, Section 6.11, Section
6.15, Section 7.2, Article VIII (relating to confidentiality following
Dissolution), Section 9.1, Section 9.11, Section 9.14, Section 9.15,
Section 10.5, Section 10.6, Section 10.7, this Section 10.8, Section 10.10,
Article XI, Section 15.1 (other than (a) of Section 15.1), Section 15.3 and
Article XVI shall survive termination of the Company and shall continue to
apply to any Member ceasing to be a Member for any reason.
10.9 Final Accounting. The Managers or the liquidating trustee shall
provide to each Member a financial statement setting forth the assets and
liabilities of the Company as of the date of liquidation and all profits and
losses realized by the Company upon completion of the liquidation of Company
assets. Upon compliance by the Managers or the liquidating trustee, as
applicable, with the foregoing distribution plan, the Members shall cease to
be such.
10.10 Use of Company's Name. Upon Dissolution, winding up and
termination of the Company and its business, no Member shall use the name of
any other Member in the conduct of its separate business without the prior
consent of such other Member, nor shall any Member use the Company name in
the conduct of its separate business without the approval of the other
Member.
ARTICLE 11
Dispute Resolution
11.1 Invoking Procedure. In the event of a dispute between the
Members arising out of or related to this Agreement, either Member may invoke
the procedures specified in this Article by giving written notice to the
other Member. Such written notice will describe briefly the nature of the
dispute and shall identify an individual with authority to settle the dispute
on behalf of that Member. The Member receiving such notice shall have ten
(10) days within which to designate an individual with authority to settle
the dispute on its behalf and to notify the other Member of its designation
(the individuals so designated shall be referred to as the "Authorized
Individuals").
11.2 Investigation. The Authorized Individuals shall make whatever
investigation each deems appropriate and promptly thereafter, but no later
than thirty (30) days from the date of the original notice invoking these
procedures, shall commence discussions concerning resolution of the dispute.
If the dispute has not been resolved within sixty (60) days from the date of
the original notice invoking these procedures, the Members shall submit the
matter to ADR in accordance with the following procedure.
11.3 Neutral. The Members shall have ten (10) days from the
expiration of the sixty (60) day period referred to in Section 11.2 or the
agreement of the Members to submit the matter to ADR, whichever occurs first,
within which to agree upon a mutually acceptable person not affiliated with
either party ("Neutral"). If no Neutral has been selected within that time
period, the Members agree jointly to request the American Arbitration
Association, or other mutually agreed-upon organization, to supply within ten
(10) days a list of ten (10) potential Neutrals with qualifications as
specified by the Members in the joint request. Within seven (7) days of
receipt of the list, the Members shall rank the proposed candidates
independently, exchange rankings and select as the Neutral the individual who
receives the highest combined ranking who is available to serve.
11.4 Schedule. In consultation with the Neutral, the Members shall
designate a mutually convenient time and place for the ADR, and unless
circumstances require otherwise, such time shall be not later than forty-five
(45) days after the selection of the Neutral.
11.5 Discovery. In the event one or both Members have substantial
need for information in the possession of the other Member or a need to take
certain limited depositions and/or production of principal documents in order
to prepare for the ADR, the Members shall attempt in good faith to agree on a
plan for the expeditious exchange of such information. Should they fail to
reach agreement, either Member may request a meeting with the Neutral who
shall assist them in reaching an accommodation.
11.6 Written Submission. One week prior to the first scheduled
session of the ADR, each Member shall deliver to the Neutral and to the other
Member a written summary of its views on the matter in dispute. The summary
shall be no longer than twenty double-spaced pages unless the Members agree
otherwise.
11.7 Representatives. In the ADR, each Member shall be represented by
the Authorized Individual and by counsel. In addition, each Member may bring
additional persons as necessary to respond to questions or contribute
information as needed. The number of such additional persons to be allowed
shall be mutually agreed by the Members with the assistance of the Neutral,
if necessary.
11.8 Structure. The Neutral is authorized to conduct joint and
separate meetings with the Members and to help the Members structure whatever
form of presentation of the matter in dispute is most likely to facilitate
resolution. Notwithstanding the form of the presentation, it is the intent
of the Members to provide an opportunity for their Authorized Individual,
with or without the assistance of counsel, and with the assistance of the
Neutral, to negotiate a resolution of the matters in dispute. In the event
the Neutral holds separate private caucuses with either Member, he or she
shall keep confidential all information learned in such private caucuses
unless specifically authorized to make disclosure of the information to the
other Member. There shall be no stenographic, visual, or audio record made
of the ADR.
11.9 Mandatory. The Members agree to participate in the ADR to its
conclusion as designated by the Neutral and not to terminate negotiations
concerning resolution of the matters in dispute until at least two (2) weeks
thereafter. Each Member agrees not to commence a lawsuit or seek other
remedies prior to the conclusion of the two-week post-ADR negotiation period,
provided that either Member may commence litigation on any date after which
the commencement of litigation could be barred by an applicable statute of
limitations or in order to request an injunction to prevent irreparable harm.
In such event, the Members agree (except as prohibited by court order) to
continue to participate in the ADR to its conclusion. Following the
expiration of the two-week post-ADR negotiation period, either party may
pursue any remedy available to it at law or equity and the determination of
the Neutral shall not be binding on either Member.
11.10 Fees. The fees of, and authorized costs incurred by, the Neutral
shall be advanced by the Company and shared equally by the Members who shall
reimburse the Company. The Neutral shall be disqualified as a witness,
consultant, expert, or counsel for any Member with respect to the matters in
dispute and any related matters.
11.11 Later Proceedings. The ADR is a compromise negotiation for
purposes of the Federal Rules of Evidence and state rules of evidence. The
entire procedure is confidential. All conduct, statements, promises, offers,
views, and opinions, whether oral or written, made in the course of the ADR
by any of the Members, their agents, employees, representatives, or other
invitees to the ADR and by the Neutral, who is the parties' joint agent for
purposes of these compromise negotiations, are confidential and shall, in
addition and where appropriate, be deemed to be work product and privileged.
Such conduct, statements, promises, offers, views, and opinions shall not be
discoverable or admissible for any purposes, including impeachment, in any
litigation or other proceeding involving the Members and shall not be
disclosed to anyone not an agent, employee, expert, witness, or
representative for any of the Members. Evidence otherwise discoverable or
admissible is not excluded from discovery or admission as a result of its use
in the ADR.
ARTICLE 12
Financial Matters
12.1 Books and Records. The books and records of the Company shall be
maintained on an accrual basis in accordance with generally accepted
accounting principles. These and all other records of the Company shall be
maintained at the principal office of the Company (initially at the
facilities of Molex in Lisle, Illinois or at such other locations approved by
the Members) and shall be available for examination by the Members as
provided in the Bylaws.
12.2 Financial Reports. The Managers shall cause to be prepared
(i) as of the end of each calendar month and fiscal year of the Company,
(ii) as of the date of Dissolution of the Company, and (iii) as of such
additional dates as the Managers may direct, in accordance with generally
accepted accounting principles consistently applied, appropriate financial
statements showing the assets, liabilities, capital, profits, expenses,
losses, and recovered and unrecovered capital expenditures of the Company and
a statement showing all amounts credited and debited to each Member's Capital
Account and of each Member's distributive share, for federal income tax
purposes, of income, gains, deductions, losses, and credits (or items
thereof) arising out of Company operations, as required by law, and a further
statement reconciling any difference between the Member's respective Capital
Accounts as shown in such financial statements and their Capital Accounts as
determined in accordance with the provisions of this Agreement. A copy of
each such monthly report shall be delivered to each Member on or before the
15th day of the next following month and a copy of the annual report shall be
delivered to each Member within 90 days after the last day of the Company's
fiscal year.
12.3 Fiscal Year. The fiscal year of the Company shall end on June
30.
12.4 Company Funds. Pending application or distribution, the funds of
the Company shall be deposited in such bank accounts, or invested in such
interest-bearing or noninterest-bearing investments, including, without
limitation, federally insured checking and savings accounts, certificates of
deposit, government issued or backed securities, or mutual funds investing
primarily in such types of securities, as shall be designated by the
Managers. Such funds shall not be commingled with the funds of any other
person. Withdrawals therefrom shall be made upon such signatures as the
Managers may designate.
12.5 Tax Matters Partner. The Managers shall cause all tax returns
for the Company to be returned and timely filed with the appropriate
authorities. The Managers shall make their bet efforts to provide to the
Members estimates of such information as shall be necessary for the
preparation by the Members of their Federal income tax returns within 60 days
after the end of the fiscal year, and shall provide such information in final
form within 90 days after the end of the fiscal year. The Company and each
Member hereby designates Molex as the "tax matters partner" for purposes of
I.R.C. 6231 and the Regulations promulgated thereunder. Copies of all
notices received by the tax matters partner shall promptly be sent to the
Company and the other Member. All returns, filings, elections, agreements
and other documents or correspondence to or with any taxing authority on
behalf of the Company, including in connection with an examination or audit,
shall be furnished to the Members for review and approval, which approval
shall not be unreasonably withheld, at least 10 days (30 days in the case of
a federal income tax return) prior to the date on which such matters are
required to be filed or otherwise submitted.
ARTICLE 13
Appraisal Procedure
13.1 Selection of Appraisers. If the Members are unable to agree upon
the Fair Market Value Of The Interest to be sold pursuant to this Agreement
at the Fair Market Value Of The Interest, then the purchasing Member
("Purchaser") and the Member whose Interest is being sold ("Seller"), within
20 days after the giving of the Buy/Sell Offer or other notice of the
exercise of purchase rights at fair market value provided for pursuant to
this Agreement, shall select a disinterested appraiser. If the Seller and
the Purchaser are unable to agree upon the selection of an appraiser, then
each shall select an independent appraiser.
13.2 Appraisal Procedure. Within 20 days of the appointment of the
appraiser(s), Seller, Purchaser and the appraiser(s) shall meet at a location
mutually agreed to by the parties, and in a proceeding held in accordance
with the rules of the Commercial American Arbitration Association each of
Seller and Purchaser shall submit to the appraiser(s) its proposal for the
Fair Market Value Of The Interest(s) to be sold, and shall be allowed to
present such evidence and testimony in support thereof as is allowed under
the rules of the Commercial American Arbitration Association. The
appraiser(s) shall be instructed that, within 7 days after the date on which
the Seller, Purchaser and the appraiser(s) conclude such meeting, the
appraiser(s) shall provide to each Member a written statement setting out the
Fair Market Value Of The Interest and explaining in detail the basis of the
appraiser(s) calculation. If the Members shall have selected a single
appraiser, the Fair Market Value Of The Interest shall be the amount
determined by such appraiser. If the Members shall have selected two
appraisers, and if the Fair Market Value Of The Interest determined by the
higher of the two appraisers is less than 120% of the Fair Market Value Of
The Interest determined by the lesser of the two appraisers, then the Fair
Market Value Of The Interest shall be the average of the amount determined by
the two appraisers. If the Fair Market Value Of The Interest determined by
the higher of the appraisers is equal to or greater than 120% of the value
determined by the lesser of the two appraisers, then the Seller and Purchaser
shall meet again and attempt to agree upon the Fair Market Value Of The
Interest. If the Seller and the Purchaser are not able to agree on the Fair
Market Value Of The Interest within 7 days of receipt of the second of the
two appraisals, they shall instruct the two appraisers to select a third
appraiser. Within 7 days of the appointment of the third appraiser, the
appraisers shall meet, and in a proceeding held in accordance with the rules
of the Commercial American Arbitration Association each of the first two
appraisers shall submit to the third appraiser its appraisal of the Fair
Market Value Of The Interest(s). The first two appraisers, the Seller, and
the Purchaser shall provide to the third appraiser such information as the
third appraiser reasonably requests. The third appraiser shall be instructed
that within 7 days after the date on which the appraisers conclude such
meeting, the third appraiser shall provide to each Member a written statement
setting out the Fair Market Value Of The Interest. In such case the Fair
Market Value Of The Interest shall be the average of the values determined by
the two closest appraisers. The Fair Market Value Of The Interest selected
by the appraiser(s) shall be binding upon Seller and Purchaser, and shall be
promptly communicated by Notice to each of Seller and Purchaser. The cost of
the Appraisal Procedure shall be an expense of the Company.
13.3 Appraisal Considerations . Fair Market Value Of The Interest of
a Member shall in all cases be equal to the product of (i) the Percentage
Interest of such Member and (ii) the fair market value of the Company. In
determining the fair market value of the Company, the appraiser(s) may, to
the extent the appraiser(s) deem(s) it appropriate, consider the cash price
which a sophisticated purchaser under no compulsion to purchase would pay on
the effective date of the appraisal for the Company, net of all financing
then encumbering the Company's assets. A sophisticated purchaser shall be
one who would take into account the nature, extent, maturity date and other
terms of the liabilities of the Company, whether fixed or contingent,
including the favorable or unfavorable nature of the financing then
encumbering the company's assets, and the prospects of the Company. The Fair
Market Value Of The Interest shall be determined taking into account any
liens, security interests, charges or encumbrances to which Purchaser will
take the Interest subject but without taking into account discounts for the
lack of the marketability of the Interests or minority discount.
13.4 Qualifications of Appraisers. All appraisers selected hereunder
shall not be affiliated with any of the Members and shall have at least 10
years of experience valuing businesses which are similar in nature to the
Company.
ARTICLE 14
Buy/Sell Procedure
14.1 Offering Notice. Where the purchase price for the Interest(s) of
any Member or Members being sold pursuant to this Agreement is to be
determined pursuant to the Buy/Sell Procedure, the Member with a right to
purchase (the "Invoking Member") may, in its sole discretion, give Notice (in
any case a "Buy/Sell Notice") to the other Member (the "Responding Member")
of its intent to rely on this Article XIV and to invoke the Buy/Sell
Procedure.
14.2 Buy/Sell Offer. The Buy/Sell Notice shall contain an offer to
purchase all, but not less than all, of the Interest of the Responding Member
(the "Buy/Sell Offer") at the Fair Market Value of such Interest determined
in accordance with Article XIII. The Buy/Sell Offer must be made in the form
of an all cash, fully financed, non-contingent, binding offer to purchase.
14.3 Buy/Sell Procedure. The Invoking Member may, in its sole
discretion, for a period of 15 days following determination of the Fair
Market Value of the Responding Member's Interest pursuant to Article XIII,
withdraw the Buy/Sell Offer. If the Invoking Member does not withdraw the
Buy/Sell Offer within such 15-day period, then the Responding Member must,
within 45 days thereafter, give to the Invoking Member a written notice of
election to either sell to the Invoking Member its Interest at the purchase
price and on the terms and conditions set forth in the Buy/Sell Offer, or to
purchase from the Invoking Member the Interest of the Invoking Member at the
Fair Market Value thereof and on the other terms specified in the Buy/Sell
Offer.
14.4 Closing. The closing of any sale of an Interest in the Company
pursuant to this Article XIV ("Buy/Sell Closing") shall be held at the
principal offices of the Company, unless otherwise mutually agreed upon, on a
mutually acceptable date not more than 120 days after the date of the
determination of the Buy/Sell Price. The purchase price payable for a
Member's Interest shall be paid at the Buy/Sell Closing by wire transfer at
the direction of the selling Member.
14.5 Closing Adjustments. The price to be paid for the selling
Member's Interest shall be adjusted as follows: there shall be determined, as
of the date of Buy/Sell Closing, (a) the aggregate amount of all additional
capital contributions made by the selling Member, if any, between the date
upon which the price for such Interest was established and the date of
Buy/Sell Closing, and (b) the aggregate amount of all distributions, whether
of capital or otherwise, if any, made to the selling Member during such
period. If the amount determined under (a) exceeds the amount determined
under (b), the Selling Member shall receive a credit against the purchase
price in an amount equal to such excess; if the amount determined under (b)
exceeds the amount determined under (a), the purchaser shall receive a credit
against the purchase price in an amount equal to such excess. Any Member
transferring its Interest shall transfer such Interest free and clear of all
liens, encumbrances or interests of any third party and shall execute or
cause to be executed any and all documents required to fully transfer such
Interest to the acquiring Member, including, but not limited to, any
documents necessary to evidence such transfer and all documents required to
release any interest of any other party who may claim an interest in such
Member's Interest. Any existing monetary default of the selling Member under
this Agreement shall be cured out of the proceeds from such sale at Buy/Sell
Closing. Following the date of Buy/Sell Closing, the selling Member shall
have no further rights to any distributions of cash or other company assets
or distributions attributable to any period or event after the date of
Buy/Sell Closing, nor any allocations of profits or losses for any such
period, and all such rights shall vest in the purchasing Member.
14.6 Conducting of Company Business Prior to Closing. During the
period between the date the Buy/Sell Notice is delivered by the Invoking
Member and the date of the Buy/Sell Closing, and except as otherwise provided
in this Agreement, the Managers and the Members will continue to operate the
Company in accordance with the terms of this Agreement.
ARTICLE 15
Sale of Components; Use of Tooling Capacity;
Development of Sheldahl's Intellectual Property
15.1 Sale of Components. Each of Molex and Sheldahl, shall have the
right to sell the same types of components developed by it for sale to the
Company to any other third party; provided that (a) so long as it is a Member
of the Company, each Member shall ensure that the [ ******* Confidential
Treatment Requested ] and (b) with respect to any sales to be made by
Sheldahl, (i) any funds loaned by Molex to Sheldahl pursuant to the terms of
this Agreement or any Associated Agreement and all accrued interest therein
have been paid by Sheldahl to Molex (or shall have been forgiven by Molex)
and an amount equal to the Sheldahl Development Costs shall have been paid to
Molex from Sheldahl (or otherwise excused or relieved by the terms of this
Agreement or any Associated Agreement), (ii) such sales are made after [
******* Confidential Treatment Requested ] or (iii) such sales comply with
Section 6 of the Development Agreement. The provisions of subsection (b) of
the foregoing sentence shall only apply to components developed, or produced
using equipment funded, from the expenditure of Sheldahl Development Costs
and shall not apply to components Sheldahl sells as of the date of this
Agreement.
15.2 Sheldahl Development Loans. If requested by Sheldahl, Molex will
consider, at its sole discretion and subject to reasonable terms and
conditions, financing Sheldahl's independent development of the tooling of
its flexible circuit product for a period of [ ******* Confidential
Treatment Requested ] at LIBOR plus 1% with Molex holding Sheldahl's
interest in the Company as collateral for such loan. If Molex does finance a
portion of Sheldahl's independent development of its flexible circuit product
in an amount equal to [ ******* Confidential Treatment Requested ] or
more, then Sheldahl hereby grants the Company a license to tool and produce
the [ ******* Confidential Treatment Requested ] for sale only in the
Company's assemblies of Products (as defined as of the date of such license)
whether or not Sheldahl has experienced a Change of Ownership, and the
provisions of the Technology License Agreement between the Company and
Sheldahl shall be amended by the Company and Sheldahl to provide for such
license. A royalty consistent with the industry norm and as agreed by the
Members and the Company will be paid by the Company to Sheldahl.
15.3 Audit Rights. Each Member may, upon reasonable notice to the
other Member, audit the books and records of the other Member of the extent
such books and records relate to the performance of such other Member's
obligations pursuant to Section 15.1(a). Each Member shall maintain its
books and records in sufficient detail to permit the verification of such
Member's obligation pursuant to Section 15.1(a). Any such audit shall be
conducted during regular business hours at the facilities of Member being
audited and shall not unreasonably interfere with such Member's business
activities. Such audit shall be conducted at the expense of the Member
conducting the audit unless such audit shall reveal the other Member has
failed to comply with Section 15.1(a), in which event such other Member shall
pay for all costs and expenses associated with the audit. Audits shall be
conducted not more than once during any six month period.
15.4 Development Schedules. Not less than 45 days following the date
of this Agreement, each Member shall deliver to the other, for approval, a
detailed schedule, including the estimated delivery dates and a description
of components, for the development by such Member of components to be sold to
the Company.
ARTICLE 16
Miscellaneous
16.1 Notices. All notices under this Agreement shall be in writing
and shall be deemed properly given hereunder when (i) delivered by personal
service, (ii) delivered by courier service, (iii) telecopied and confirmed
immediately in writing by a copy mailed by registered or certified mail,
postage prepaid, return receipt requested, or (iv) when received, if sent by
certified or registered mail, postage prepaid, return receipt requested, to
the Members at the addresses hereinafter set forth and to the Company at its
principal place of business. The addresses for notices are as follows:
If to Molex, to:
Molex Incorporated
2222 Wellington Ct.
Lisle, Illinois 60532
Attn: Martin Slark
Facsimile: (630) 969-1352
Copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60603
Attn: Michael Froy
Facsimile: (312) 876-7934
If to Sheldahl, to:
Sheldahl, Inc.
1150 Sheldahl Road
Northfield, Minnesota 55057
Attn: Edward Lundstrom
Facsimile: (507) 663-8234
Copy to:
Lindquist Vennum P.L.L.P.
4200 IDS Center
Minneapolis, Minnesota 55402
Attn: Charles Moorse
Facsimile: (612) 371-3207
Any party may change its address for the purpose of this Section 16.1
by notice to the other given in the manner set forth above.
16.2 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware in a like
manner as an agreement made and wholly to be performed in the State of
Delaware.
16.3 Headings. The Article and Section headings of this Agreement are
for convenience only, do not form a part of this Agreement, and shall not in
any way affect the interpretation hereof.
16.4 Construction and Amendment. No oral explanation of or oral
information relating to this Agreement offered by either party hereto shall
alter the meaning or interpretation of this Agreement. Except as otherwise
provided in Section 4.1(c), no amendment of the terms of this Agreement or of
the Bylaws shall be binding on either party hereto unless reduced to writing
and duly executed by each of the Members.
16.5 Successors and Assigns. Subject to the restrictions on Transfer
set forth in Article IX, this Agreement shall bind and inure to the benefit
of the parties hereto and their respective successors and assigns.
16.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which shall constitute one and the same agreement.
16.7 Entire Agreement. The terms and conditions contained herein and
in the Associated Agreements constitute the entire agreement between the
Members concerning the subject matter hereof, and shall supersede all
previous communications, either oral or written, between the parties hereto,
and no agreement or understanding varying or extending this Agreement shall
be binding upon either Member unless in writing, signed by a duly authorized
officer or representative of each Member.
16.8 Validity. In the event that any provision of this Agreement
shall be held to be invalid or unenforceable, the same shall not affect in
any respect whatsoever the validity or enforceability of the remainder of
this Agreement.
16.9 Waiver. No consent or waiver, expressed or implied, by a Member
to or of any breach or default by the other Member in the performance by such
other Member of its obligations hereunder shall be deemed or construed to be
a consent or waiver to or of any other breach or default in the performance
by such other Member of the same or any other obligations of such other
Member hereunder. Failure on the part of a Member to complain of any act or
failure to act on the part of any other Member or to declare such other
Member in default, irrespective of how long such failure continues, shall not
constitute a waiver by such Member of its rights hereunder unless such
default is cured prior to the date upon which such default becomes an Event
of Default. The giving of approval by a Member in any one instance shall not
limit or waive the necessity to obtain such Member's approval in any future
instance.
16.10 Terminology and Construction. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; and the singular shall include the plural and vice
versa. Titles of Articles, Sections, and Exhibits are for convenience only,
and neither limit nor amplify the provisions of this Agreement. Except as
specifically provided, references to Articles, Sections, and Exhibits in this
Agreement refer to Articles and Sections of, and Exhibits to, this Agreement.
The use herein of the word "including," when following any general statement,
term or matter, shall not be construed to limit such statement, term or
matter to the specific items or matters set forth immediately following such
word or to similar items or matters, whether or not non-limiting language
(such as "without limitation," or "but not limited to," or words of similar
import) is used with reference thereto, but rather shall be deemed to refer
to all other items or matters that could reasonably fall within the broadest
possible scope of such general statement, term or matter. The Members agree
that the terms and conditions of this Agreement and the Related Agreements
are the result of negotiations between them and that neither this Agreement
nor any of the Related Agreements shall be construed in favor of or against
either Member by reason of the extent to which such Member of its
professional advisors participated in the preparation of such agreements.
16.11 No Third-Party Rights. Except for the indemnification
obligations of the Company provided for in Section 6.10, this Agreement shall
not (directly, indirectly, contingently or otherwise) confer or be construed
as conferring any rights or benefits on any person that is not named a Member
or a permitted transferee of a Member hereunder.
16.12 Expenses. Each Member shall be responsible for its own legal,
accounting, and other expenses incurred in connection with the transactions
contemplated by this Agreement and the Associated Agreements.
16.13 Publicity. Each Member shall submit to the other Member all
advertising, written sales promotions, press releases and other publicity
matters relating to this Agreement or the Associated Agreements which mention
the name of the Company or the other Member or reference this Agreement or
any of the transactions contemplated by this Agreement and shall not publish
or use such advertising, written sales promotion, press releases or other
publicity matters without the prior written consent of the other Member.
Notwithstanding the foregoing sentence, in the event either Member is
required to issue a press release relating to this Agreement or the
Associated Agreements or any of the transactions contemplated by this
Agreement by the laws or regulations of any governmental authority, agency or
self-regulatory agency, such Member shall (a) give notice and a copy of the
proposed press release to the other Member as far in advance as reasonably
possible and (b) make any changes to such press release reasonably requested
by the other Member.
16.14 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY LAW,
AND AS SEPARATELY BARGAINED-FOR CONSIDERATION, EACH MEMBER AND THE COMPANY
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
ASSOCIATED AGREEMENT, THE OBLIGATIONS OR THE PARTY'S CONDUCT IN RESPECT OF
ANY OF THE FOREGOING.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year
first set forth above.
MEMBERS
MOLEX INCORPORATED
By:
Title:
SHELDAHL, INC.
By:
Title:
<PAGE>
EXHIBIT 1A
Associated Agreements
1. Technology License Agreement. Promptly following the execution
and delivery of this Agreement, Molex and the Company will enter into the
technology license agreement attached hereto as Exhibit 1A-1 and Sheldahl and
the Company will enter into the technology license agreement attached hereto
as Exhibit 1A-2 (collectively, the "Technology License Agreements").
2. Supply Agreements. Promptly following the execution and delivery
of this Agreement, Molex and the Company shall enter into the supply
agreement attached hereto as Exhibit 1A-3 and Sheldahl and the Company shall
enter into the supply agreement in substantially the form attached hereto as
Exhibit 1A-4 (collectively, the "Supply Agreements").
3. Development Agreement. Promptly following the execution and
delivery of this Agreement, Molex, Sheldahl and the Company shall enter into
the agreement for the reimbursement of the Sheldahl Development Cost in
substantially the form attached as Exhibit 1A-5 (the "Development
Agreement").
4. Support Agreements. Each Member agrees to make its employees and
resources reasonably available to the Company (or cause its Related Companies
to make their employees and resources reasonably available) pursuant to
contracts on terms and conditions agreed to by the Company and Molex or
Sheldahl (or their Related Companies), as appropriate. As soon as reasonably
possible following the execution and delivery of this Agreement (but in any
event prior to either Member providing services to the Company), each Member
shall enter into agreements with the Company pursuant to which each agrees to
provide managerial, engineering, marketing and administrative support
services to the Company as agreed to by the Company and such Member
(collectively, the "Support Agreements"), including operations prior to
transition to Detroit facility, the costs of which shall be reimbursed by the
Company. Such agreements shall specify the reporting structure of the staff
provided to the Company pursuant to such agreements. The Support Agreements
shall provide that, except for the Managers, employees of Molex or Sheldahl
(or their Related Companies) providing services to the Company shall be at
the expense of the Company with Molex or Sheldahl (or their Related
Companies), as appropriate, being reimbursed for the salary and benefits
costs of such employees in such amounts as they shall mutually agree;
provided, however, that each Member shall be responsible for the relocation
of its employees in connection with such employees providing services to the
Company or in connection with such employees becoming employees of the
Company.
<PAGE>
EXHIBIT 1A-1
Molex Technology License
TECHNOLOGY LICENSE AGREEMENT
This Technology License Agreement (the Agreement) is made as of this
___ day of July, 1998, by and between Molex Incorporated, a Delaware
corporation having its principal place of business at 2222 Wellington Court,
Lisle, Illinois 60532 (Molex), and Modular Interconnect Systems, L.L.C., a
Delaware limited liability company, having its principal place of business at
400 Hulet Drive, Bloomfield Hills, Michigan 48302 (Licensee).
RECITALS:
A. Molex and Sheldahl, Inc., a Minnesota corporation, having its
principal place of business at 1150 Sheldahl Road, Northfield, Minnesota
55057 ("Sheldahl"), have entered into a Limited Liability Company Agreement
of even date herewith (the "L.L.C. Agreement") for the purpose of forming
the Licensee;
B. Molex has developed or intends on developing certain patents and
copyrights and/or confidential information, know-how and trade secrets all
relating to [ ******* Confidential Treatment Requested ] connectors
[******* Confidential Treatment Requested ] , including, without limitation,
engineering and technical data, manufacturing techniques, designs, skills,
methods, procedures, tools, templates, and other such information
(collectively, the "Molex Intellectual Property");
C. Sheldahl has developed or intends on developing certain patents
and copyrights and/or confidential information, know-how and trade secrets
all relating to [ ******* Confidential Treatment Requested ] (as defined
in the Technology License Agreement dated the date hereof between Sheldahl
and Licensee), including, without limitation, engineering and technical data,
manufacturing techniques, designs, skills, methods, procedures, tools,
templates, and other such information (collectively, the "Sheldahl
Intellectual Property");
D. Molex and Sheldahl have each agreed to enter into a Technology
License Agreement with Licensee to grant a non-exclusive license to certain
of each party's respective intellectual property for the purpose of
developing and selling modular interconnect systems, utilizing [*******
Confidential Treatment Requested ] circuits developed by Sheldahl and [
******* Confidential Treatment Requested ] connections developed by Molex,
as an alternative to conventional automotive wiring harnesses and flex
circuit assemblies;
E. Molex and Sheldahl have each agreed that the Technology License
Agreements to be entered into by Molex and Sheldahl respectively shall not
take effect unless and until there is a Change of Ownership (as defined in
the L.L.C. Agreement) and the party not experiencing a Change of Ownership
purchases the other party's membership interest in Licensee pursuant to
Section 9.9 of the L.L.C. Agreement; and
F. Licensee desires to acquire a non-exclusive license of the Molex
Intellectual Property on the terms and conditions hereinafter set forth; and
G. Molex is willing to grant such a license under the terms and
conditions hereinafter set forth. NOW, THEREFORE, for and in consideration
of the mutual promises and valuable consideration set forth herein, the
parties hereby agree as follows:
1. Grant of License. During the Term set forth in paragraph 2
hereof, Molex hereby grants to Licensee the non-sublicensable,
non-transferable, non-exclusive right to tool and produce Molex [ *******
Confidential Treatment Requested ] connectors [ ******* Confidential
Treatment Requested ] using Molex Intellectual Property existing on the
commencement of the Term (as defined in Section 2) for the sole and exclusive
purpose of incorporating Molex [ ******* Confidential Treatment Requested ]
connectors using Molex Intellectual Property into products for sale only in
Licensee's assemblies of products encompassed by the definition of Products
in the L.L.C. Agreement on the date of the Change of Ownership of Molex which
results in the commencement of the Term as provided for in Section 2 of this
Agreement (the Permitted Products). All rights of Molex not expressly
granted to Licensee herein are reserved to Molex, including, without
limitation, any patents on [ ******* Confidential Treatment Requested ]
connectors developed by Molex which are not used in assemblies of Permitted
Products produced by Licensee.
2. Term. The term of this license (the Term) shall commence as of
the date on which Sheldahl purchases Molex's membership interest in Licensee
pursuant to Section 9.9 of the L.L.C. Agreement following a Change of Control
of Molex and shall continue in full force and effect during the remaining
term of the L.L.C. Agreement. The Term shall terminate automatically when the
L.L.C. Agreement terminates.
3. Non-exclusivity. Molex shall be free to practice the inventions
and to make, use and sell products covered by the Molex Intellectual
Property.
4. Consideration and royalties. Molex grants this license in
consideration of the execution of the L.L.C. Agreement and the execution of a
comparable Technology License Agreement between Sheldahl and Licensee. The
license granted herein is royalty-free.
5. Improvements. Any improvements, further discoveries, inventions,
technology, know-how, enhancements, modifications or other developments
developed by Licensee and relating to the Molex Intellectual Property, as
that term is defined in this Agreement (Improvements), including, without
limitation, patents on [ ******* Confidential Treatment Requested ]
connectors, whether or not patented or patentable in any country, shall be
and remain the property of Molex.
6. Warranties.
(a) Molex represents, warrants and covenants that:
(i) it has full legal power and authority to enter into this
Agreement and to fully perform all of its obligations hereunder;
(ii) to Molex's knowledge, except as may be disclosed to
Licensee, no part of the Molex Intellectual Property infringes
the rights of any third party;
(iii) to Molex's knowledge, except as may be disclosed to
Licensee, no part of the Molex Intellectual Property is being
infringed;
(b) Licensee represents, warrants and covenants that:(i) it has the
full legal power and authority to enter into this Agreement and to
fully perform all of its obligations hereunder;
(ii) its performance hereunder will comply with all applicable
law, ordinances, regulations and codes.
(c) Notwithstanding the foregoing, there are no implied warranties of
title, merchantability or fitness. Neither party shall be liable to
the other for incidental or consequential losses, damages or expenses.
7. Indemnification.
(a) Molex hereby agrees to defend, indemnify
and hold harmless Licensee and its shareholders, officers, directors,
employees, agents, affiliates from any claim, suit, loss or damage, including
reasonable attorney's fees, arising out of (i) any breach of Molex's
warranties hereunder, or (ii) any claim that the Molex Intellectual Property
infringes upon the proprietary rights of any person. The indemnification
provided for in (ii) of the proceeding sentence shall not apply to the extent
Molex shall specifically disclose to Licensee any potential infringement by
any item encompassed by the definition of Molex Intellectual Property prior
to the commencement of the Term. In the event Molex shall disclose any such
potential infringement to Licensee, Licensee shall have the right, upon
notice to Molex, to exclude such potentially infringing item from the
definition of Molex Intellectual Property and the terms of this Agreement
shall not apply to any such item.
(b) Licensee hereby agrees to defend, indemnify and hold harmless
Molex and its shareholders, officers, directors, employees, agents,
affiliates and licensees from any claim, suit, loss or damage, including
reasonable attorney's fees, arising out of (i) any breach of Licensee's
warranties hereunder, (ii) any aspect of Licensee's performance hereunder, or
(iii) the manufacture, use or sale of Permitted Products under this Agreement
other than that which is the subject of indemnification by Molex.
(c) Any party seeking indemnification (the "Indemnified Party")
shall promptly notify the indemnifying party in writing of any claim believed
to be subject to indemnification; provided, however, that no delay on the
part of the Indemnified Party shall relieve the indemnifying party from its
indemnification obligations except to the extent the indemnifying party is
prejudiced thereby. The Indemnified Party shall allow the indemnifying party
to control the defense of any third party claim for which the Indemnified
Party seeks indemnity under this Section 7(c) and shall cooperate in the
indemnifying party's defense thereof, at the expense of the indemnifying
party. If the indemnifying party assumes the defense of any such claim, the
indemnifying party's sole obligation with respect to such claim shall be
limited to holding the Indemnified Party harmless from and against any
judgments or settlements approved by the indemnified party in connection with
the claim, which consent will not be unreasonably withheld or delayed. In
the event the indemnifying party shall not assume the defense of any such
claim, the Indemnified Party shall have the right, following written notice
to the indemnifying party, to undertake to defend or settle such claim on
behalf of and for the account of and risk of loss of the indemnifying party.
Regardless of which party controls the settlement or defense of any claim,
both parties shall act in good faith and no entry of judgment or settlement
of a claim may be agreed to without the written consent of both the
Indemnified Party and the indemnifying party, which consent shall not be
unreasonably withheld or delayed; provided, however, that the indemnifying
party may settle any such claim solely for the payment of money provided that
the Indemnified Party receives a full release and has no obligations with
respect to such settlement.
8. Notification of Infringement. In the event that Licensee becomes
aware of any infringement of the Molex Intellectual Property, Licensee shall
promptly notify Molex who may in its sole discretion pursue or not pursue the
infringement. Licensee shall cooperate in any pursuit of such infringement.
9. Patent. Any products manufactured or sold under any of Molex's
patents shall be marked with a patent or patent pending notice. Permitted
Products sold by Licensee pursuant to this Agreement shall be at least of a
quality consistent with products manufactured by Molex.
10. Confidentiality. (a) All disclosures of trade secrets,
know-how, financial information, or other confidential information made by
either party under or in connection with this Agreement, as well as the terms
of this Agreement, shall be received and maintained in confidence by the
recipient (the "Recipient") and each Recipient shall treat all such trade
secrets, know-how, financial information or other confidential information as
the confidential property of the disclosing party and shall not use same
other than as permitted under this Agreement. The Recipient shall not
disclose same to any other person except:
(i) to the extent persons directly responsible for the performance of
the obligations of this Agreement require such information in
connection with the performance of the obligations of this
Agreement;
(ii) to the extent professional advisers of the Recipient require such
information in connection with providing their services to such
party; and
(iii) to the extent disclosures of such information by employees of the
Recipient to suppliers, distributors, customers and other persons
are necessary or appropriate for the effective carrying on of
business by the Recipient provided such suppliers, distributors,
customers and other persons execute a non-disclosure agreement
prohibiting the further disclosure of such information.
(b) Notwithstanding the provisions of Section_10(a), information disclosed
by either party shall not be considered confidential information pursuant to
this Section 10 to the extent that:
(i) such information is required by law to be disclosed by such
party, provided that Recipient shall (A) provide the disclosing party
with prompt notice of such demand (and in any event prior to
disclosure), (B) cooperate with the disclosing party in resisting such
disclosure or seeking suitable protection prior to such disclosure, and
(C) disclose only such confidential information as Recipient is
compelled by law to disclose;
(ii) the Recipient is able to show that such information was known to
the Recipient prior to such disclosure;
(iii) the Recipient is able to show that such information was
independently developed by the Recipient without use of any
confidential information of the other party;
(iv) the Recipient is able to show such information was acquired by
the Recipient from a third party without a continuing restriction on
use; or
(v) such information which was, or becomes, publicly available
through no breach of this Agreement by the Recipient or its
representatives.
(c) Each party will take such steps as lie within its power to assure that
all of its managers, directors, officers and employees, or of the managers,
directors, officers and employees of its Related Companies (as defined in the
L.L.C. Agreement), to whom confidential information is disclosed take all
proper precautions to prevent the unauthorized disclosure and use of the
confidential information referenced in this Section 10.
(d) Either party may, to the extent required by law or the regulations of
any agency or self-regulatory agency, file this Agreement with any
governmental authority, agency or self-regulatory agency provided that such
party gives the other party notice prior to such filing as far in advance as
reasonably possible (but in any event not less than 5 days prior to such
filing) and reasonably cooperates with the other party in seeking
confidential treatment or any provision or provisions of this Agreement
requested to be kept confidential by such other party. If either party is
required to issue a press release related to this Agreement by the laws or
regulations of any governmental authority, agency or self-regulatory agency,
such party shall (a) give notice and a copy of the proposed press release to
the other party as far in advance as reasonably possible and (b) make changes
to such press release reasonably requested by the other party.
11. Assignment. This Agreement shall be binding on and inure to the
benefit of the permitted successors to the parties. Licensee may not assign
or otherwise transfer any of its rights and obligations under this Agreement,
except as authorized by the L.L.C. Agreement.
12. Governing Law. This Agreement, its validity, interpretation, and
performance shall be governed by the laws of the State of Illinois, United
States of America.
13. Waiver. No consent or waiver, expressed or implied, by a party
to or of any breach or default by the other party in the performance by such
other party of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such other party of the same or any other obligations of such other party
hereunder. The giving of approval by a party in any one instance shall not
limit or waive the necessity to obtain such party's approval in any future
instance.
14. Notices. All notices under this Agreement shall be in writing
and shall be deemed properly given hereunder when (i) delivered by personal
service, (ii) delivered by courier service, (iii) telecopied and confirmed
immediately in writing by a copy mailed by registered or certified mail,
postage prepaid, return receipt requested, or (iv) when received, if sent by
certified or registered mail, postage prepaid, return receipt requested, to
the address of a party first stated above or to the Company at its principal
place of business. Any party may change its address for the purpose of this
Section 12 by notice to the other given in the manner set forth above.
15. Severability. Should any part of any provision of this Agreement
be held unenforceable, such part or provision shall be deemed to be
independent of all other parts or provisions of this Agreement, and all of
the other parts and provisions shall remain in full force and effect. With
respect to any part or provision of this Agreement that is deemed by a court
to be unenforceable as written, but may be rendered enforceable by limitation
thereof, the parties hereto agree that such part of provision shall be
amended so as to render it enforceable to the fullest extent permitted under
the applicable law.
16. Headings. The Article and Section headings of this Agreement are
for convenience only, do not form a part of this Agreement, and shall not in
any way affect the interpretation hereof.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which shall constitute one and the same agreement.
18. No-Third Party Rights. This Agreement shall not (directly,
indirectly, contingently or otherwise) confer or be construed as conferring
any rights or benefits on any person other than the parties hereto.
19. Entire Agreement. This Agreement and the provisions of the
L.L.C. Agreement related to the Agreement sets forth the entire agreement and
understanding between the parties hereto relating to the subject matter
hereof. No modification or waiver of any of the provisions hereof shall be
valid unless in writing and signed by an authorized representative of the
party against whom such modification or waiver is sought to be enforced.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above written.
Molex Incorporated Modular Interconnect Systems, L.L.C.
By: __________________________ By: __________________________
Name: Name:
Title: Title:
<PAGE>
EXHIBIT 1A-2
Sheldahl Technology License
TECHNOLOGY LICENSE AGREEMENT
This Technology License Agreement is made as of this ___ day of July,
1998, by and between Sheldahl, Inc., a Minnesota corporation, having its
principal place of business at 1150 Sheldahl Road, Northfield, Minnesota
55057 (Sheldahl), and Modular Interconnect Systems, L.L.C., a Delaware
limited liability company, having its principal place of business at 400
Hulet Drive, Bloomfield Hills, Michigan 48302 (Licensee).
RECITALS:
A. Sheldahl and Molex Incorporated, a Delaware corporation having
its principal place of business at 2222 Wellington Court, Lisle, Illinois
60532 ("Molex"), have entered into a Limited Liability Company Agreement of
even date herewith (the "L.L.C. Agreement") for the purpose of forming the
Licensee;
B. Sheldahl has developed or intends on developing certain patents
and copyrights and/or certain confidential information, know-how and trade
secrets relating solely and exclusively to the tooling, production and
development of [ ******* Confidential Treatment Requested ] (as defined
below) including, without limitation in each case, engineering and technical
data, manufacturing techniques, designs, skills, methods, procedures, tools,
templates, and other such information (collectively, the "Sheldahl
Intellectual Property"). [ ******* Confidential Treatment Requested ] ;
C. Molex has developed or intends on developing certain patents and
copyrights and/or certain confidential information, know-how and trade
secrets all relating to [ ******* Confidential Treatment Requested ]
connectors [ ******* Confidential Treatment Requested ] which Molex
produces as of the date of this Agreement, including, without limitation,
engineering and technical data, manufacturing techniques, designs, skills,
methods, procedures, tools, templates, and other such information
(collectively, the "Molex Intellectual Property");
D. Sheldahl and Molex have each agreed to enter into a Technology
License Agreement with Licensee to grant a non-exclusive license to certain
of each party's respective intellectual property for the purpose of
developing and selling modular interconnect systems, utilizing [ *******
Confidential Treatment Requested ] developed by Sheldahl and [ *******
Confidential Treatment Requested ] connectors developed by Molex, as an
alternative to conventional automotive wiring harnesses and flex circuit
assemblies;
E. Sheldahl and Molex have each agreed that the Technology License
Agreements to be entered into by Sheldahl and Molex respectively shall not
take effect unless and until there is a Change of Ownership (as is defined in
the L.L.C. Agreement) and the party not experiencing a Change of Ownership
purchases the other party's membership interest in Licensee pursuant to
Section 9.9 of the L.L.C. Agreement; and
F. Licensee desires to acquire a non-exclusive license of the
Sheldahl Intellectual Property on the terms and conditions hereinafter set
forth; and
G. Sheldahl is willing to grant such a license under the terms and
conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual promises and
valuable consideration set forth herein, the parties hereby agree as follows:
1. Grant of License. During the Term set forth in paragraph 2
hereof, Sheldahl hereby grants to Licensee the non-sublicensable,
non-transferable, non-exclusive right to tool and produce [ *******
Confidential Treatment Requested ] using Sheldahl Intellectual Property
existing on the commencement of the Term (as defined in Section 2) for the
sole and exclusive purpose of incorporating the [******* Confidential
Treatment Requested ] into products for sale only in Licensee's assemblies
of products encompassed by the definition of Products in the L.L.C. Agreement
on the date of the Change of Ownership of Sheldahl which results in the
commencement of the Term as provided for in Section 2 of this Agreement (the
"Permitted Products"). All rights of Sheldahl not expressly granted to
Licensee herein are reserved to Sheldahl, including, without limitation, any
patents on [ ******* Confidential Treatment Requested ] developed by
Sheldahl which are not used in assemblies of Permitted Products produced by
Licensee.
2. Term. The term of this license (the "Term") shall commence as
of the date on which Molex purchases Sheldahl's membership interest in
Licensee pursuant to Section 9.9 of the L.L.C. Agreement following a Change
of Ownership of Sheldahl and shall continue in full force and effect during
the remaining term of the L.L.C. Agreement. The Term shall terminate
automatically when the L.L.C. Agreement terminates.
3. Non-exclusivity. Sheldahl shall be free to practice the
inventions and to make, use and sell products covered by the Sheldahl
Intellectual Property.
4. Consideration and royalties. Sheldahl grants this license in
consideration of the execution of the L.L.C. Agreement and the execution of a
comparable Technology License Agreement between Molex and Licensee. The
license granted herein is royalty-free.
5. Improvements. Any improvements, further discoveries, inventions,
technology, know-how, enhancements, modifications or other developments
developed by Licensee and relating to the Sheldahl Intellectual Property, as
that term is defined in this Agreement ("Improvements"), including, without
limitation, patents on [ ******* Confidential Treatment Requested ] ,
whether or not patented or patentable in any country, shall be and remain the
property of Sheldahl.
6. Warranties.
(a) Sheldahl represents, warrants and covenants that:
(i) it has full legal power and authority to enter into this Agreement
and to fully perform all of its obligations hereunder;
(ii) to Sheldahl's knowledge, except as may be disclosed to Licensee,
no part of the Sheldahl Intellectual Property infringes the rights of
any third party;
(iii) to Sheldahl's knowledge, except as may be disclosed to Licensee,
no part of the Sheldahl Intellectual Property is being infringed;
(b) Licensee represents, warrants and covenants that:
(i) it has the full legal power and authority to enter into this
(ii) its performance hereunder will comply with all applicable law,
ordinances, regulations and codes.
(c) Notwithstanding the foregoing, there are no implied warranties of title,
merchantability or fitness. Neither party shall be liable to the other for
incidental or consequential issues, damages or expenses.
7. Indemnification. (a) Sheldahl hereby agrees to defend, indemnify and
hold harmless Licensee and its shareholders, officers, directors, employees,
agents, affiliates from any claim, suit, loss or damage, including reasonable
attorney's fees, arising out of (i) any breach of Sheldahl's warranties
hereunder or (ii) any claim that the Sheldahl Intellectual Property infringes
upon the proprietary rights of any person. The indemnification provided for
in (ii) of the proceeding sentence shall not apply to the extent Sheldahl
shall specifically disclose to Licensee any potential infringement by any
item encompassed by the definition of Sheldahl Intellectual Property prior to
the commencement of the Term. In the event Sheldahl shall disclose any such
potential infringement to Licensee, Licensee shall have the right, upon
notice to Sheldahl, to exclude such potentially infringing item from the
definition of Sheldahl Intellectual Property and the terms of this Agreement
shall not apply to any such item.
(b) Licensee hereby agrees to defend, indemnify and hold harmless Sheldahl
and its shareholders, officers, directors, employees, agents, affiliates and
licensees from any claim, suit, loss or damage, including reasonable
attorney's fees, arising out of (i) any breach of Licensee's warranties
hereunder, (ii) any aspect of Licensee's performance hereunder, or (iii) the
manufacture, use or sale of Permitted Products under this Agreement, other
than that which is the subject of indemnification by Sheldahl.
(c) Any party seeking indemnification (the "Indemnified Party") shall
promptly notify the indemnifying party in writing of any claim believed to be
subject to indemnification; provided, however, that no delay on the part of
the Indemnified Party shall relieve the indemnifying party from its
indemnification obligations except to the extent the indemnifying party is
prejudiced thereby. The Indemnified Party shall allow the indemnifying party
to control the defense of any third party claim for which the Indemnified
Party seeks indemnity under this Section 7(c) and shall cooperate in the
indemnifying party's defense thereof, at the expense of the indemnifying
party. If the indemnifying party assumes the defense of any such claim, the
indemnifying party's sole obligation with respect to such claim shall be
limited to holding the Indemnified Party harmless from and against any
judgments or settlements approved by the indemnified party in connection with
the claim, which consent will not be unreasonably withheld or delayed. In
the event the indemnifying party shall not assume the defense of any such
claim, the Indemnified Party shall have the right, following written notice
to the indemnifying party, to undertake to defend or settle such claim on
behalf of and for the account of and risk of loss of the indemnifying party.
Regardless of which party controls the settlement or defense of any claim,
both parties shall act in good faith and no entry of judgment or settlement
of a claim may be agreed to without the written consent of both the
Indemnified Party and the indemnifying party, which consent shall not be
unreasonably withheld or delayed; provided, however, that the indemnifying
party may settle any such claim solely for the payment of money provided that
the Indemnified Party receives a full release and has no obligations with
respect to such settlement.
8. Notification of Infringement. In the event that Licensee becomes
aware of any infringement of the Sheldahl Intellectual Property, Licensee
shall promptly notify Sheldahl who may in its sole discretion pursue or not
pursue the infringement. Licensee shall cooperate in any pursuit of such
infringement.
9. Patents. Any products manufactured or sold under any of
Sheldahl's patents shall be marked with a patent or patent pending notice.
Permitted Products sold by Licensee pursuant to this Agreement shall be at
least of a quality consistent with products manufactured by Sheldahl.
10. Confidentiality. (a) All disclosures of trade secrets,
know-how, financial information, or other confidential information made by
either party under or in connection with this Agreement, as well as the terms
of this Agreement, shall be received and maintained in confidence by the
recipient (the "Recipient") and each Recipient shall treat all such trade
secrets, know-how, financial information or other confidential information as
the confidential property of the disclosing party and shall not use same
other than as permitted under this Agreement. The Recipient shall not
disclose same to any other person except:
(i) to the extent persons directly responsible for the performance of
the obligations of this Agreement require such information in
connection with the performance of the obligations of this Agreement;
(ii) to the extent professional advisers of the Recipient require such
information in connection with providing their services to such party;
and
(iii) to the extent disclosures of such information by employees of the
Recipient to suppliers, distributors, customers and other persons are
necessary or appropriate for the effective carrying on of business by
the Recipient provided such suppliers, distributors, customers and
other persons execute a non-disclosure agreement prohibiting the
further disclosure of such information.
(b) Notwithstanding the provisions of Section 10(a), information disclosed
by either party shall not be considered confidential information pursuant to
this Section 10 to the extent that:
(i) such information is required by law to be disclosed by such
party, provided that Recipient shall (A) provide the disclosing party
with prompt notice of such demand (and in any event prior to
disclosure), (B) cooperate with the disclosing party in resisting such
disclosure or seeking suitable protection prior to such disclosure, and
(C) disclose only such confidential information as Recipient is
compelled by law to disclose;
(ii) the Recipient is able to show that such information was known to
the Recipient prior to such disclosure;
(iii) the Recipient is able to show that such information was
independently developed by the Recipient without use of any
confidential information of the other party;
(iv) the Recipient is able to show such information was acquired by
the Recipient from a third party without a continuing restriction on
use; or
(v) such information which was, or becomes, publicly available
through no breach of this Agreement by the Recipient or its
representatives.
(c) Each party will take such steps as lie within its power to assure that
all of its managers, directors, officers and employees, or of the managers,
directors, officers and employees of its Related Companies (as defined in the
L.L.C. Agreement), to whom confidential information is disclosed take all
proper precautions to prevent the unauthorized disclosure and use of the
confidential information referenced in this Section 10.
(d) Either party may, to the extent required by law or the regulations of any
agency or self-regulatory agency, file this Agreement with any governmental
authority, agency or self-regulatory agency provided that such party gives
the other party notice prior to such filing as far in advance as reasonably
possible (but in any event not less than 5 days prior to such filing) and
reasonably cooperates with the other party in seeking confidential treatment
or any provision or provisions of this Agreement requested to be kept
confidential by such other party. If either party is required to issue a
press release related to this Agreement by the laws or regulations of any
governmental authority, agency or self-regulatory agency, such party shall
(a) give notice and a copy of the proposed press release to the other party
as far in advance as reasonably possible and (b) make changes to such press
release reasonably requested by the other party.
11.Assignment. This Agreement shall be binding on and inure to the
benefit of the permitted successors to the parties. Licensee may not assign
or otherwise transfer its rights and obligations under this Agreement.
12. Governing Law. This Agreement, its validity, interpretation, and
performance shall be governed by the laws of the State of Minnesota, United
States of America, without reference to principles of choice of laws or
conflicts of the law thereof.
13. Waiver. No consent or waiver, expressed or implied, by a party to
or of any breach or default by the other party in the performance by such
other party of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such other party of the same or any other obligations of such other party
hereunder. The giving of approval by a party in any one instance shall not
limit or waive the necessity to obtain such party's approval in any future
instance.
14. Notices. All notices under this Agreement shall be in writing and
shall be deemed properly given hereunder when (i) delivered by personal
service, (ii) delivered by courier service, (iii) telecopied and confirmed
immediately in writing by a copy mailed by registered or certified mail,
postage prepaid, return receipt requested, or (iv) when received, if sent by
certified or registered mail, postage prepaid, return receipt requested, to
the address of a party first stated above or to the Company at its principal
place of business. Any party may change its address for the purpose of this
Section 12 by notice to the other given in the manner set forth above.
15. Severability. Should any part of any provision of this Agreement
be held unenforceable, such part or provision shall be deemed to be
independent of all other parts or provisions of this Agreement, and all of
the other parts and provisions shall remain in full force and effect. With
respect to any part or provision of this Agreement that is deemed by a court
to be unenforceable as written, but may be rendered enforceable by limitation
thereof, the parties hereto agree that such part of provision shall be
amended so as to render it enforceable to the fullest extent permitted under
the applicable law.
16. Headings. The Article and Section headings of this Agreement are
for convenience only, do not form a part of this Agreement, and shall not in
any way affect the interpretation hereof.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which shall constitute one and the same agreement.
18. No-Third Party Rights. This Agreement shall not (directly,
indirectly, contingently or otherwise) confer or be construed as conferring
any rights or benefits on any person other than the parties hereto.
19. Entire Agreement. This Agreement and the provisions of the L.L.C.
Agreement related to this Agreement set forth the entire agreement and
understanding between the parties hereto relating to the subject matter
hereof. No modification or waiver of any of the provisions hereof shall be
valid unless in writing and signed by an authorized representative of the
party against whom such modification or waiver is sought to be enforced.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above written.
Sheldahl, Inc. Modular Interconnect System, L.L.C.
By: __________________________ By: __________________________
Name: Name:
Title: Title:
<PAGE>
EXHIBIT 1A-3
Molex Supply Agreement
SUPPLY AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of July,
1998, by and between MOLEX INCORPORATED, 2222 Wellington Court, Lisle,
Illinois 60532 ("Seller") and MODULAR INTERCONNECT SYSTEMS, L.L.C., 400
Hulet Drive, Bloomfield Hills, Michigan 48302 ("Buyer").
Recitals:
A. Seller designs, manufactures, distributes and sells automotive
interconnection products and other component parts, and has entered into a
joint venture with Sheldahl, Inc. to form and operate Buyer for the purpose
of developing and selling modular interconnect systems.
B. Buyer desires to purchase automotive interconnection products and
other component parts from Seller, and Seller is willing to sell such
products to Buyer on the terms and conditions set forth below.
Terms and Conditions:
In consideration of the mutual agreements, promises and undertakings
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
Section 1
PURCHASE OF PRODUCTS
1.1 Requirements. Seller shall sell to Buyer, and Buyer shall
purchase from Seller, all of Buyer's requirements for the automotive
interconnection products and component parts set forth in Exhibit A attached
hereto ("Products"). Exhibit A may be changed from time to time upon written
agreement of the parties, provided that at such time the parties shall
determine under what conditions such additional Products shall be supplied by
Seller to Buyer; provided, however, that the parties shall review price [
******* Confidential Treatment Requested ] . Buyer and Seller agree that,
upon the request of either party, Buyer and Seller shall review the cost of
Products to Buyer under this Agreement and, if agreed to by Buyer and Seller
in each of their sole discretion, modify such price. [ *******
Confidential Treatment Requested ] .
1.2 Product Estimates. To assist Seller in planning, Buyer shall
provide Seller with its annual forecast of estimated requirements for
Products in writing not less than ninety (90) days prior to the next
succeeding year and shall update such estimate each month on a rolling
quarterly basis. Seller shall have no obligation to supply Products in
excess of 110% of such estimated requirements during any quarterly period,
although Seller shall use its reasonable efforts to meet Buyer's unexpected
increased needs beyond such amount.
Section 2
TERMS OF SALE
2.1 Orders. Buyer shall place all orders in writing and all orders
are subject to approval and acceptance in writing by Seller. Notwithstanding
any different terms which may be contained in Seller's sales or Buyer's order
forms, all purchases and sales of Products hereunder shall be made on the
terms and conditions set forth in Exhibit B attached hereto. In the event of
any consistencies between this Agreement and the terms and conditions in
Exhibit B, this Agreement shall be controlling.
2.2 Prices. The price of the Products to Buyer shall be equal to [
******* Confidential Treatment Requested ] . For purposes of this Section
2.2, "Cost" is defined in Exhibit C attached hereto. Buyer shall have the
right to audit Seller with respect to such Costs at all reasonable times, and
Seller shall cooperate with Buyer in the performance of such audit by making
its books, records and personnel reasonably available to Buyer. In the event
Buyer finds a discrepancy, Seller shall adjust the price of Products charged
to Buyer and provide a refund or credit against further purchases.
2.3 Increase in Prices. Seller will hold the prices for Products
quoted by Seller for the life of each of the Buyer's programs, except for
material cost increases or decreases it receives from its suppliers, or for a
maximum period of five (5) years, whichever is shorter.
2.4 Payment. Payment shall be made by Buyer net thirty (30) days
from the date of invoice or date of shipment, whichever is later. A service
charge of one and one-half percent (1-1/2%) per month or the maximum
permissible rate will be added to all past due accounts.
Section 3
PERFORMANCE REQUIREMENTS
3.1 Product Development. The parties may engage in the development of
new products to be sold by Seller to Buyer hereunder as mutually agreed upon
by officers of both parties.
3.2 Product Availability. The Products subject to this Agreement
shall be the Products listed in Exhibit A. During the term of this
Agreement, Seller may not modify or withdraw a Product from the market except
with the prior written consent of Buyer and then only in accordance with the
Production, Part and Approval Process ("PPAP") operating principles in effect
for customers of Buyer who are purchasing a product, a component of which
includes that Product.
3.3 Availability of Data.
3.3.1 Seller shall maintain data, technical information and the
like relating to the manufacture, safety, quality control and specifications
of the Products at its headquarters in accordance with its standard practices
and procedures, and will make such data reasonably available to Buyer on
request to the extent it is non-confidential or proprietary to Seller.
3.3.2 All disclosures of trade secrets, know-how, financial
information, or other proprietary information ("Proprietary Information")
made by either party under or in connection with this Agreement, as well as
the terms of this Agreement, shall be received and maintained in confidence
by the recipient (the "Recipient") and each Recipient shall treat all such
Proprietary Information as the confidential property of the disclosing party
and shall not use same other than as permitted under this Agreement. The
Recipient shall not disclose same to any other person except:
3.3.2.1 to the extent persons directly responsible for the
performance of the obligations of this Agreement require such
information in connection with the performance of the obligations of
this Agreement;
3.3.2.2 to the extent professional advisers of the Recipient
require such information in connection with providing their services to
such party; and
3.3.2.3 to the extent disclosures of such information by
employees of the Recipient to suppliers, distributors, customers and
other persons are necessary or appropriate for the effective carrying
on of business by the Recipient provided such suppliers, distributors,
customers and other persons execute a non-disclosure agreement
prohibiting the further disclosure of such information.
3.3.3 Notwithstanding the provisions of Section 3.3.2, information
disclosed by either party shall not be considered Proprietary Information
pursuant to this Section 3.3 to the extent that:
3.3.3.1 such information is required by law to be disclosed
by such party, provided that Recipient shall (A) provide the disclosing
party with prompt notice of such demand (and in any event prior to
disclosure), (B) cooperate with the disclosing party in resisting such
disclosure or seeking suitable protection prior to such disclosure, and
(C) disclose only such Proprietary Information as Recipient is
compelled by law to disclose;
3.3.3.2 the Recipient is able to show that such information
was known to the Recipient prior to such disclosure;
3.3.3.3 the Recipient is able to show that such information
was independently developed by the Recipient without use of any
confidential information of the other party;
3.3.3.4 the Recipient is able to show such information was
acquired by the Recipient from a third party without a continuing
restriction on use; or
3.3.3.5 such information which was, or becomes, publicly
available through no breach of this Agreement by the Recipient or its
representatives.
3.3.4 Each party will take such steps as lie within its power to
assure that all of its managers, directors, officers and employees, or of the
managers, directors, officers and employees of its Related Companies (as
defined in the L.L.C. Agreement), to whom Proprietary Information is
disclosed take all proper precautions to prevent the unauthorized disclosure
and use of the confidential information referenced in this Section 3.3.
3.4 Seller's Marks. Except for such rights as inure to Buyer in
connection with its purchase of Products, and except as otherwise agreed to
by Seller, Buyer is granted no rights pursuant to this Agreement to use the
name, service mark and/or trademarks of Seller.
3.5 Cover. In addition to Buyer's ability to purchase products
elsewhere in the event of force majeure as provided in Section 5.10, Buyer
shall have the right to cancel any order with respect to any Products not yet
delivered and purchase products elsewhere in the event Seller is unable
consistently to supply Buyer with the quantity of Products ordered within the
delivery times agreed upon, provided that Buyer provides Seller with written
notice and an opportunity to cure such failure pursuant to Section 4.3.1.
Section 4
TERM AND TERMINATION
4.1 Term. Unless terminated sooner as provided in Sections 4.2, 4.3
or 4.4, the term of this Agreement shall commence on the date hereof and
continue until the later of (i) 24 months after Dissolution, (ii) 24 months
after the Buy/Sell Closing in which Seller's membership interest in Buyer is
purchased, (iii) 24 months after any other purchase of Seller's membership
interest in Buyer, or (iv) the life of any program pursuant to which Buyer is
selling to customers products, a component of which is a Product, at the time
of such Dissolution, Buy/Sell Closing or other purchase of Seller's
membership interest in Buyer. For purposes of this Section 4.1,
"Dissolution" and "Buy-Sell Closing" shall have the meanings assigned to such
terms in Sections 10.3 and 14.4, respectively, of the Limited Liability
Company Agreement of Modular Interconnect Systems, L.L.C., dated as of
__________________, 1998 ("L.L.C. Agreement").
4.2 Automatic Termination. This Agreement shall terminate
automatically if Seller is dissolved.
4.3 Termination by Notice. The non-breaching party may terminate
this Agreement effective immediately by written notice to the other party
upon happening of any of the following events:
4.3.1 Either party fails to fulfill or perform any one or more
of the duties, obligations or responsibilities undertaken by that party
herein and does not cure that failure within one hundred eighty (180) days of
receipt of written notice thereof from the non-breaching party.
4.3.2 The other party's inability, or its admission in writing
of its inability, to pay debts as they mature; or the other party's
insolvency; or appointment by a court of a temporary or permanent receiver,
trustee or custodian for the business of the other party; or an assignment
for the benefit of creditors of the other party; or
4.3.3 The assignment or attempted assignment, except as
permitted by Section 5.7 hereof, by the other party of any interest in this
Agreement without the prior written consent of the non-breaching party.
4.4 Assignee Right to Terminate. In the event that this Agreement is
assigned to Sheldahl, Inc. in connection with the Dissolution, Buy/Sell
Closing or other purchase of Seller's membership interest in Buyer, Sheldahl,
Inc. may terminate this Agreement at any time thereafter upon not less than
thirty (30) days prior written notice to Seller.
4.5 Seller's Obligations.
4.5.1 Seller's obligations to supply Products to Buyer as
provided in Section 4.1 shall be subject to the following: Products shall be
supplied to Buyer, or to Sheldahl, Inc. if this Agreement is assigned to
Sheldahl, Inc., [ ******* Confidential Treatment Requested ] .
4.5.2 In the event of termination of this Agreement for any
reason, Buyer shall immediately pay to Seller all amounts due to Seller under
any outstanding purchase orders.
Section 5
GENERAL PROVISIONS
5.1 Relationship. The relationship established by this Agreement is
that of buyer and seller. Neither Buyer nor any of its agents or employees
shall be deemed to be the representative, employee or agent of Seller for any
purpose whatsoever, and the relationship of Buyer to Seller is that of an
independent contractor, and they or any of them shall have no right or
authority to assume or create any obligation of any kind, expressed or
implied, on behalf of Seller.
5.2 Modifications, Amendments and Waivers. This Agreement may not be
modified or amended, including by custom, usage of trade or course of dealing
or performance, except by an instrument in writing signed by duly authorized
officers of both of the parties hereto. Performance of any obligation
required of a party hereunder may be waived only by a written waiver signed
by a duly authorized officer of the other party, which waiver shall be
effective only with respect to the specific obligation described therein.
The waiver by either party of a breach of any obligation of the other shall
not operate or be construed as a waiver of any subsequent breach of the same
provision or any other provision of this Agreement, nor a waiver by that
party of its right at any time thereafter to require strict compliance with
all terms and conditions of this Agreement.
5.3 Compliance with Law. The parties shall comply with all
applicable laws and regulations in performing their respective duties
hereunder.
5.4 Exclusion of Consequential Damages. In no event shall either
party be liable to the other party and its successors or assigns, for any
indirect, special or consequential damages, including, without limitation,
lost profits, costs of delay, any failure of delivery, costs of lost or
damaged data or documentation, or other liabilities to third parties arising
from any source.
5.5 Survivability. All obligations of the parties which expressly or
by their nature survive termination or expiration or transfer of this
Agreement shall continue in full force and effect subsequent to and
notwithstanding such termination or expiration or transfer and until they are
satisfied or by their nature expire.
5.6 Severability. In the event that any provision hereof is found
invalid or unenforceable pursuant to judicial decree or decision, the
remainder of this Agreement shall remain valid and enforceable according to
its terms.
5.7 Assignment; Subcontracting. Except as provided below, neither
party may delegate its duties hereunder without the prior written consent of
the other party and this Agreement shall not be assignable by either party.
Any attempt by either party to delegate any of its duties or to assign any of
its rights hereunder without the prior written consent of the other party
shall be null and void. Notwithstanding the foregoing, upon prior written
notice to the other party, either party shall be entitled to assign any part
or all of this Agreement (including but not limited to its rights and
obligations contained herein) to a Related Company, provided that the
assignor continues to remain liable and responsible to the other party for
such Related Company's performance hereunder. For purposes of this Section
5.7, "Related Company" is defined in Exhibit C attached hereto. Buyer shall
assign this Agreement to Sheldahl, Inc. at Sheldahl's request upon
Dissolution, the Buyer/Seller Closing or other purchase of Seller's
membership interest in Buyer, provided that Sheldahl, Inc. assumes Buyer's
obligations hereunder after the date of assignment, except that the
requirements aspects of this Agreement shall be limited to the specific
Products and applications of Buyer as of such date. Seller may subcontract
its production obligations hereunder only if (i) the Cost of the Product is
not affected, (ii) the customer purchasing such Product approves the
subcontracting pursuant to the PPAP operating principles in effect for that
customer, and (iii) Buyer's prior written consent is obtained, which consent
shall not be unreasonably withheld.
5.8 Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the parties and their respective legal representatives,
successors and permitted assigns.
5.9 Governing Law. This Agreement shall be construed and enforced in
accordance with the substantive laws of the State of Illinois, without regard
to its conflict of laws provisions.
5.10 Force Majeure. No liability hereunder shall result to either
party from delay in performance or non-performance caused by circumstances
beyond the reasonable control of that party, including, but not limited to,
acts of god, fire, flood or other casualty, war, government action, accident,
labor strikes or other difficulty, or shortage of or inability to obtain
fuel, energy, material, equipment or transportation. In the event of any
delay in a party's performance due in whole or in part to any cause beyond
that party's reasonable control, that party shall promptly notify the other
party in writing of such event and shall have such additional time for
performance as may be reasonably necessary under the circumstances.
Notwithstanding the foregoing, if such event continues for more than thirty
(30) days Buyer may cancel any order with respect to any Products not
delivered and purchase products elsewhere, and Buyer shall be under no
obligation to accept or pay for the same or compensate Seller for any expense
which it may have incurred.
5.11 Notices. Unless otherwise specifically provided, all notices
required or permitted by this Agreement shall be in writing and may be
delivered personally, or sent by facsimile, by certified mail, return receipt
requested, or by overnight courier service, to the parties at the following
addresses or facsimile numbers, unless the parties are subsequently notified
of any change of address or facsimile number in accordance with this Section
5.12:
If to Seller:
Molex Incorporated
2222 Wellington Court
Lisle, Illinois 60532
Attn: Martin Slark
Facsimile: (630) 969-1352
If to Buyer:
Modular Interconnect Systems, L.L.C.
400 Hulet Drive
Bloomfield Hills, Michigan 48302
Attn: Bob Fuerst
Facsimile: (248) 322-8020
With a copy to:
Sheldahl, Inc.
1150 Sheldahl Road
Northfield, Minnesota 55057
Attn: Ed Lundstrom
Facsimile: (607) 663-8234
Any notice shall be deemed to have been received as follows: (1) by personal
delivery, upon receipt; (2) by facsimile, one (1) business day after
transmission; (3) by overnight commercial delivery service, one (1) business
day after delivery to such commercial delivery service; or (4) by certified
mail, three (3) business days after mailing. If notice is sent by facsimile,
a confirming copy of the notice shall also be sent by mail.
5.12 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, and both of which
together shall constitute one and the same instrument.
5.13 Entire Agreement. This Agreement, together with the Exhibits
hereto, constitutes the entire understanding and contract between the parties
with respect to the subject matter hereof and supersedes any and all prior
and contemporaneous, oral or written representations, communications,
understandings and agreement between the parties with respect to the subject
matter hereof. The parties acknowledge and agree that neither of the parties
is entering into this Agreement on the basis of any representations or
promises not expressly contained herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date specified above.
SELLER:
MOLEX INCORPORATED
BY:
Its:
BUYER:
MODULAR INTERCONNECT SYSTEMS, L.L.C.
BY:
Its:
<PAGE>
Exhibit A
PRODUCTS
[ ******* Confidential Treatment Requested ] .
Exhibit B
TERMS AND CONDITIONS OF PURCHASE AND SALE
ALL PURCHASES AND SALES OF PRODUCTS UNDER THIS SUPPLY AGREEMENT ARE SUBJECT
TO THE FOLLOWING TERMS AND CONDITIONS:
1. Agreement. These terms and conditions shall govern all purchases and
sales of Products under the Supply Agreement between Seller and Buyer.
No terms or conditions in any way adding to, modifying or otherwise
changing the provisions stated herein shall be binding upon either
party unless made in writing and signed and approved by an officer of
both parties. These terms will not be modified by Seller's shipment of
Products following receipt of Buyer's purchase order, shipping request
or similar forms containing printed terms and conditions conflicting or
inconsistent with the terms herein, or by Seller's use of its own sales
forms with printed terms and conditions conflicting or inconsistent
with the terms herein.
2. Orders Subject to Acceptance. All orders are subject to acceptance in
writing by Seller at its principal office. An acknowledgement of each
order must be returned by Seller to Buyer promptly alter the receipt of
same, and must contain price and definite delivery data. Signing of an
acknowledgement, or holding an order ten (10) days or longer, shall
constitute an acceptance of an order.
3. Prices. All prices are set forth in Section 2.2 of the Supply
Agreement and are F.O.B. Factory, and exclude all federal, state or
local taxes. All taxes and excises of any nature whatsoever now or
hereafter levied by governmental authority, whether federal, state or
local, either directly or indirectly, upon the sale or transportation
of any goods covered hereby, shall be paid and borne by Buyer.
4. Payment. All accounts shall be paid net at Seller's principal office
within thirty (30) days after the date of invoice or date of shipment,
whichever is later. A service charge of the lesser of 1-1/2% per month or
the maximum permissible rate will be added to all past due accounts.
5. Material and Manufacture. All material must conform strictly to
specifications. On any new parts, a sample must be approved by Buyer
before Seller proceeds with manufacture of a quantity run.
6. Quantity. Seller must furnish the entire quantity ordered hereunder
and said quantity cannot be varied by Seller unless Buyer's director of
purchasing agrees in writing to accept a different quantity. Buyer
reserves the right to reject any unauthorized quantities and to return
same to Seller at Seller's risk and expense. Notwithstanding the
foregoing, Seller shall have the option, upon written notice to Buyer,
of manufacturing, shipping and billing a portion of Buyer's order and
later, within the time specified in Buyer's order, manufacturing,
shipping and billing the remainder of any such order.
7. Delivery Terms. Seller will attempt to meet the requirements of Buyer's
delivery schedule but shall be obligated only to the delivery schedule
shown on the order acknowledgment. All delivery expenses, including
transportation, insurance and other shipping costs, shall be for
Buyer's account.
8. Title/Risk of Loss. Delivery of goods to carrier shall be deemed
delivery to Buyer, and thereupon title to such goods, and risk of loss
or damage, shall be Buyer's. Any claim by Buyer against seller for
shortage or damage occurring prior to such delivery must be made in
writing within thirty (30) days after receipt of shipment and
accompanied by original transportation bill signed by carrier noting
that carrier received goods from Seller in the condition claimed. Any
claim by Buyer for damage occurring during shipment shall be made
directly against the freight carrier, with a copy of such claim
promptly forwarded to Seller.
9. Buyer's Inspection. All Products purchased hereunder will be
subject to Buyer's right of inspection and rejection. Buyer shall have
thirty (30) days from receipt of the Products to inspect them and to
notify Seller of any nonconformance. Buyer may reject any Products
which do not conform to the terms of this Agreement or any order, or,
with Seller's consent, may repair or correct them at Seller's cost. If
rejected, they will be held for disposition at Seller's risk and
expense. Any payment on account thereof will be promptly refunded by
Seller. Any inspection by Buyer of Products at Seller's plant during
or after manufacture, whether or not such inspection at said plant is
provided for by the terms hereof, shall be provisional only, and shall
not constitute final inspection, nor be construed as a waiver of the
foregoing right of inspection and rejection after receipt of same.
10. Buyer's Changes. Buyer shall have the right at any time to make
changes in drawings, specifications, or both of them, relating to any
order by giving Seller written notice of such change. If such changes
cause an increase or decrease in the amount due under an order or in
the time required for Seller's performance, an equitable adjustment
shall be made by mutual agreement between the parties hereto.
11. Cancellation. Buyer reserves the right to cancel all or any part of
the undelivered portion of any order if Seller does not make deliveries
as specified, time being of the essence of this contract, or if Seller
breaches any of the terms hereof including, without limitation, the
warranties of Seller. Any provisions herein for delivery of Products
or the rendering of services by installments shall not be construed as
making the obligations of Seller severable.
12. Buyer's Termination. Buyer may at any time for its convenience
terminate any order, in whole or in part, by written or by facsimile
notice, or by verbal notice confirmed in writing. If an order is
terminated for Buyer's convenience, any claim of Seller shall be
settled on the basis of the reasonable costs it has incurred in the
performance of that order, plus five percent (5%).
13. Force Majeure. No liability hereunder shall result to either party
from delay in performance or non-performance caused by circumstances
beyond the reasonable control of that party, including, but not limited
to, acts of god, fire, flood or other casualty, war, government action,
accident, labor strikes or other difficulty, or shortage of or
inability to obtain fuel, energy, material, equipment or
transportation. In the event of any delay in a party's performance due
in whole or in part to any cause beyond that party's reasonable
control, that party shall promptly notify the other party in writing of
such event and shall have such additional time for performance as may
be reasonably necessary under the circumstances. Notwithstanding the
foregoing, if such event continues for more than thirty (30) days Buyer
may cancel any order with respect to any Products not delivered and
purchase products elsewhere, and Buyer shall be under no obligation to
accept or pay for the same or compensate Seller for any expense which
it may have incurred.
14 Warranty and Disclaimer. Seller warrants to Buyer that any Products
sold hereunder will be free from defects in workmanship and materials
under normal conditions of use for six (6) months from the date of
delivery to Buyer. This warranty will survive acceptance of the
Products.
THE FOREGOING WARRANTY IS IN LIEU OF AND EXCLUDES ALL OTHER WARRANTIES
WHETHER EXPRESS OR IMPLIED BY OPERATION OF LAW OR OTHERWISE, INCLUDING
BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS.
Seller's liability and Buyer's sole remedy hereunder for a breach of
warranty is expressly limited, at Seller's election, to repair or
replacement (in the form originally shipped) of Products not complying
with this agreement, or to the repayment of, or crediting Buyer with,
an amount equal to the purchase price of such Products.
Any claim by Buyer with reference to the Products sold hereunder for
any cause shall be deemed waived by Buyer unless submitted to Seller in
writing within ninety (90) days from the date Buyer discovered, or
should have discovered, any claimed breach.
15. Limitation of Remedies. Seller shall not be liable for incidental or
consequential losses, damages or expenses, directly or indirectly
arising from the sale, handling or use of the Products, or from any
other cause with respect to the Products or any order, whether such
claim is based upon breach of contract, breach of warranty, strict
liability in tort, negligence or any other legal theory.
16. Security. If Buyer fails to fulfill the terms of payment or if Seller
shall have any doubt at any time as to Buyer's financial condition,
Seller may decline to make further deliveries except upon receipt of
cash or satisfactory security. This requirement will not release Buyer
from any previous obligation. Seller's rights under this Section shall
be in addition to all other rights and remedies available to Seller
upon Buyer's default.
17. Compliance with Laws. In fulfilling this order, Seller shall comply
with all applicable laws and governmental regulations and orders,
federal, state, local and foreign. With respect to goods produced in
the United States, Seller specifically warrants that all goods
furnished hereunder will be produced and sold in compliance with all
applicable requirements of the Fair Labor Standards Act, as amended,
including Section 6, 7 and 12, and the regulations and orders issued
under Section 14 thereof, and that it will certify such compliance on
each invoice submitted in connection with this order.
18. Seller's Indemnification. Seller shall indemnify and hold harmless
Buyer, and its successors, assigns, employees and agents, from and
against all claims, direct losses, penalties, damages (excluding
incidental and consequential damages), costs and expenses (including
reasonable attorneys' fees) arising out of (a) any alleged or actual
infringement or contributory infringement of any letters patent or
trade secrets or trademarks or service marks by reason of the use, sale
or lease of any Products purchased hereunder, excepting unpatented
staple articles of commerce, Products manufactured in accordance with
Buyer's design, or otherwise non-infringing Products incorporated into
a product of Buyer, (b) any alleged or actual defects in the Products,
whether latent or patent, and whether of design, warning or
manufacture, (but excluding any claims arising out of designs provided
by Buyer), or (c) any alleged or actual failure of the Products to
include necessary safety features or otherwise conform to the
requirements of any federal, state or local health or safety law,
standard regulation or ordinance, when used in a manner and for a
purpose intended by Seller. Buyer shall duly notify Seller of any such
claims, proceedings or suits, and Seller shall, at its own expense,
defend all claims, proceedings or suits against Buyer, its successors,
assigns, officers directors, employees or agents, in which any of the
aforesaid claims are alleged. At its own expense, Buyer may be
represented by counsel of its own choosing in connection with any such
claim, proceeding or suit. In the event that it is determined that
Seller was not solely responsible for the entire claim, Buyer shall
reimburse Seller for any expenses Seller has incurred under this
provision on a pro rata basis in proportion to each party's or third
party's share of the responsibility for the claim. In addition, if
Seller fails timely to deliver Products ordered hereunder, Seller shall
reimburse Buyer for the cost of any work in process for a customer that
is cancelled as a result of such delay or parts in Buyer's inventory
which have become obsolete as a result of such delay.
19. Insurance. Seller agrees to procure and maintain, at its own expense,
products liability and other appropriate insurance covering Seller's
obligations hereunder, and including Buyer as one of the name insureds.
Seller agrees to furnish evidence of said insurance satisfactory to
Buyer as Buyer may request from time to time. All policies of
insurance procured or maintained hereunder (a) shall provide that
coverage thereunder shall not be terminated without ten (10) day's
written notice to Buyer, and (b) shall apply separately to each insured
against whom claim is made or suit is brought and shall contain no
provision which excludes coverage under a claim made by one insured
under the policy against another insured under the policy.
20. Assignment; Subcontracting. This order may not be assigned or
subcontracted by Buyer or Seller, in whole or in part, except as
provided in Section 5.8 of the Supply Agreement.
21. Waiver. Waiver by either party of any breach of these terms and
conditions shall not be construed as a waiver of any other breach, and
failure to exercise any right arising from any default hereunder shall
not be deemed a waiver of such right which may be exercised at any
subsequent time.
22. Severability. In the event that any one or more of these terms or
conditions is held invalid, illegal or unenforceable, such provision or
provisions shall be severed and the remaining terms and conditions
shall remain binding and effective.
23. Controlling Law. This agreement shall be deemed to have been executed
and delivered in the state where Seller has its principal place of
business. Except as otherwise provided herein, this agreement and all
rights and obligations hereunder, including matters of construction,
validity and performance, shall be governed by the internal laws of the
state where the Seller has its principal place of business, including
the Uniform Commercial Code as enacted in that jurisdiction, without
giving effect to that jurisdiction's choice of law principles.
<PAGE>
Exhibit C
DEFINITIONS
[ ******* Confidential Treatment Requested ] .
"Related Company" as used herein shall mean any corporation or other legal
entity which (a) owns a majority interest in or controls any party; (b) is
controlled by, or the majority interest of which is owned by, any party; or
(c) owns a majority interest in, controls, is controlled by, or the majority
interest of which is owned by, any corporation or other legal entity
described in clause (a) or (b) of this sentence.
<PAGE>
EXHIBIT 1A-4
Sheldahl Supply Agreement
SUPPLY AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of July,
1998, by and between SHELDAHL, INC., 1150 Sheldahl Road, Northfield,
Minnesota 55057 ("Seller") and MODULAR INTERCONNECT SYSTEMS, L.L.C., 400
Hulet Drive, Bloomfield Hills, Michigan 48302 ("Buyer").
Recitals
A. Seller designs, manufactures, distributes and sells automotive
flexible circuits and other component parts, and has entered into a joint
venture with Molex Incorporated to form and operate Buyer for the purpose of
developing and selling modular interconnect systems.
B. Buyer desires to purchase automotive flexible circuits and other
component parts from Seller, and Seller is willing to sell such products to
Buyer on the terms and conditions set forth below.
Terms and Conditions
In consideration of the mutual agreements, promises and undertakings
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
Section 1
PURCHASE OF PRODUCTS
1.1 Requirements. Seller shall sell to Buyer, and Buyer shall
purchase from Seller, all of Buyer's requirements for the automotive flexible
circuits and component parts set forth in Exhibit A attached hereto
("Products"). Exhibit A may be changed from time to time upon written
agreement of the parties, provided that at such time the parties shall
determine under what conditions such additional Products shall be supplied by
Seller to Buyer; provided, however, that the parties shall review price [
******* Confidential Treatment Requested ] . Buyer and Seller agree that,
upon the request of either party, Buyer and Seller shall review the cost of
Products to Buyer under this Agreement and, if agreed to by Buyer and Seller
in each of their sole discretion, modify such price. [ ******* Confidential
Treatment Requested ] .
1.2 Product Estimates. To assist Seller in planning, Buyer shall
provide Seller with its annual forecast of estimated requirements for
Products in writing not less than ninety (90) days prior to the next
succeeding year and shall update such estimate each month on a rolling
quarterly basis. Seller shall have no obligation to supply Products in
excess of 110% of such estimated requirements during any quarterly period,
although Seller shall use its reasonable efforts to meet Buyer's unexpected
increased needs beyond such amount.
Section 2
TERMS OF SALE
2.1 Orders. Buyer shall place all orders in writing, and all orders
are subject to approval and acceptance in writing by Seller. Notwithstanding
any different terms which may be contained in Seller's sales or Buyer's order
forms, all purchases and sales of Products hereunder shall be made on the
terms and conditions set forth in Exhibit B attached hereto. In the event of
any inconsistences between this Agreement and the terms and conditions in
Exhibit B, this Agreement shall be controlling.
2.2 Prices. The price of the Products to Buyer shall be equal to [
******* Confidential Treatment Requested ] . For purposes of this Section
2.2, "Cost" is defined in Exhibit C attached hereto. Buyer shall have the
right to audit Seller with respect to such Costs at all reasonable times, and
Seller shall cooperate with Buyer in the performance of such audit by making
its books, records and personnel reasonably available to Buyer. In the event
Buyer finds a discrepancy, Seller shall adjust the price of Products charged
to Buyer and provide a refund or credit against future purchases.
2.3 Increase in Prices. Seller will hold the prices for Products
quoted by Seller for the life of each of the Buyer's programs, except for
material cost increases or decreases it receives from its suppliers, or for a
maximum period of five (5) years, whichever is shorter.
2.4 Payment. Payment shall be made by Buyer net thirty (30) days
from the date of invoice or date of shipment, whichever is later. A service
charge of one and one-half percent (1-1/2%) per month or the maximum
permissible rate will be added to all past due accounts.
Section 3
PERFORMANCE REQUIREMENTS
3.1 Product Development. The parties may engage in the development
of new products to be sold by Seller to Buyer hereunder as mutually agreed
upon by officers of both parties.
3.2 Product Availability. The Products subject to this Agreement
shall be the Products listed in Exhibit A. During the term of this
Agreement, Seller may not modify or withdraw a Product from the market except
with the prior written consent of Buyer and then only in accordance with the
Production, Part and Approval Process ("PPAP") operating principles in effect
for customers of Buyer who are purchasing a product, a component of which
includes that Product.
3.3 Availability of Data.
3.3.1 Seller shall maintain data, technical information and the
like relating to the manufacture, safety, quality control and specifications
of the Products at its headquarters in accordance with its standard practices
and procedures, and will make such data reasonably available to Buyer on
request to the extent it is non-confidential or proprietary to Seller.
3.3.2 All disclosures of trade secrets, know-how, financial
information, or other proprietary information ("Proprietary Information")
made by either party under or in connection with this Agreement, as well as
the terms of this Agreement, shall be received and maintained in confidence
by the recipient (the "Recipient") and each Recipient shall treat all such
Proprietary Information as the confidential property of the disclosing party
and shall not use same other than as permitted under this Agreement. The
Recipient shall not disclose same to any other person except:
3.3.2.1 to the extent persons directly responsible for the
performance of the obligations of this Agreement require such
information in connection with the performance of the obligations of
this Agreement;
3.3.2.2 to the extent professional advisers of the Recipient
require such information in connection with providing their services to
such party; and
3.3.2.3 to the extent disclosures of such information by
employees of the Recipient to suppliers, distributors, customers and
other persons are necessary or appropriate for the effective carrying
on of business by the Recipient provided such suppliers, distributors,
customers and other persons execute a non-disclosure agreement
prohibiting the further disclosure of such information.
3.3.3 Notwithstanding the provisions of Section 3.3.2, information
disclosed by either party shall not be considered Proprietary Information
pursuant to this Section 3.3 to the extent that:
3.3.3.1 such information is required by law to be disclosed
by such party, provided that Recipient shall (A) provide the disclosing
party with prompt notice of such demand (and in any event prior to
disclosure), (B) cooperate with the disclosing party in resisting such
disclosure or seeking suitable protection prior to such disclosure, and
(C) disclose only such Proprietary Information as Recipient is
compelled by law to disclose;
3.3.3.2 the Recipient is able to show that such information
was known to the Recipient prior to such disclosure;
3.3.3.3 the Recipient is able to show that such information
was independently developed by the Recipient without use of any
confidential information of the other party;
3.3.3.4 the Recipient is able to show such information was
acquired by the Recipient from a third party without a continuing
restriction on use; or
3.3.3.5 such information which was, or becomes, publicly
available through no breach of this Agreement by the Recipient or its
representatives.
3.3.4 Each party will take such steps as lie within its power to
assure that all of its managers, directors, officers and employees, or of the
managers, directors, officers and employees of its Related Companies (as
defined in the L.L.C. Agreement), to whom Proprietary Information is
disclosed take all proper precautions to prevent the unauthorized disclosure
and use of the confidential information referenced in this Section 3.3.
3.4 Seller's Marks. Except for such rights as inure to Buyer in
connection with its purchase of Products, and except as otherwise agreed by
Seller, Buyer is granted no rights pursuant to this Agreement to use the
name, service mark and/or trademarks of Seller.
3.5 Cover. In addition to Buyer's ability to purchase products
elsewhere in the event of force majeure as provided in Section 5.10, Buyer
shall have the right to cancel any order with respect to any Products not yet
delivered and purchase products elsewhere in the event Seller is unable
consistently to supply Buyer with the quantity of Products ordered within the
delivery times agreed upon, provided that Buyer provides Seller with written
notice and an opportunity to cure such failure pursuant to Section 4.3.1.
Section 4
TERM AND TERMINATION
4.1 Term. Unless terminated sooner as provided in Sections 4.2, 4.3
or 4.4 the term of this Agreement shall commence on the date hereof and
continue until the later of (i) 24 months after Dissolution, (ii) 24 months
after the Buy/Sell Closing in which Seller's membership interest in Buyer is
purchased, (iii) 24 months after any other purchase of Seller's membership
interest in Buyer, or (iv) the life of any program pursuant to which Buyer is
selling to customers products, a component of which is a Product, at the time
of such Dissolution, Buy/Sell Closing, or other purchase of Seller's
membership interest in Buyer. For purposes of this Section 4.1,
"Dissolution" and "Buy-Sell Closing" shall have the meanings assigned to such
terms in Sections 10.3 and 14.4., respectively, of the Limited Liability
Company Agreement of Modular Interconnect Systems, L.L.C., dated as of
__________________, 1998 ("L.L.C. Agreement").
4.2 Automatic Termination. This Agreement shall terminate
automatically if Seller is dissolved.
4.3 Termination by Notice. The non-breaching party may terminate
this Agreement effective immediately by written notice to the other party
upon happening of any of the following events:
4.3.1 Either party fails to fulfill or perform any one or more
of the duties, obligations or responsibilities undertaken by that party
herein and does not cure that failure within one hundred eighty (180) days of
receipt of written notice thereof from the non-breaching party.
4.3.2 The other party's inability, or its admission in writing
of its inability, to pay debts as they mature; or the other party's
insolvency; or appointment by a court of a temporary or permanent receiver,
trustee or custodian for the business of the other party; or an assignment
for the benefit of creditors of the other party; or
4.3.3 The assignment or attempted assignment, except as
permitted by Section 5.7 hereof, by the other party of any interest in this
Agreement without the prior written consent of the non-breaching party.
4.4 Assignee Right to Terminate. In the event that this Agreement is
assigned to Molex Incorporated in connection with the Dissolution, Buy/Sell
Closing or other purchase of Seller's membership interest in Buyer, Molex
Incorporated may terminate this Agreement at any time thereafter upon not
less than thirty (30) days prior written notice to Seller.
4.5 Seller's Obligations.
4.5.1 Seller's obligations to supply Products to Buyer as
provided in Section 4.1 shall be subject to the following: Products shall be
supplied to Buyer, or to Molex Incorporated if this Agreement is assigned to
Molex Incorporated, [ ******* Confidential Treatment Requested ] .
4.5.2 In the event of termination of this Agreement for any
reason, Buyer shall immediately pay to Seller all amounts due to Seller under
any outstanding purchase orders.
Section 5
GENERAL PROVISIONS
5.1 Relationship. The relationship established by this Agreement is
that of buyer and seller. Neither Buyer nor any of its agents or employees
shall be deemed to be the representative, employee or agent of Seller for any
purpose whatsoever, and the relationship of Buyer to Seller is that of an
independent contractor, and they or any of them shall have no right or
authority to assume or create any obligation of any kind, expressed or
implied, on behalf of Seller.
5.2 Modifications, Amendments and Waivers. This Agreement may not be
modified or amended, including by custom, usage of trade or course of dealing
or performance, except by an instrument in writing signed by duly authorized
officers of both of the parties hereto. Performance of any obligation
required of a party hereunder may be waived only by a written waiver signed
by a duly authorized officer of the other party, which waiver shall be
effective only with respect to the specific obligation described therein.
The waiver by either party of a breach of any obligation of the other shall
not operate or be construed as a waiver of any subsequent breach of the same
provision or any other provision of this Agreement, nor a waiver by that
party of its right at any time thereafter to require strict compliance with
all terms and conditions of this Agreement.
5.3 Compliance with Law. The parties shall comply with all
applicable laws and regulations in performing their respective duties
hereunder.
5.4 Exclusion of Consequential Damages. In no event shall either
party be liable to the other party and its successors or assigns, for any
indirect, special or consequential damages, including, without limitation,
lost profits, costs of delay, any failure of delivery, costs of lost or
damaged data or documentation, or other liabilities to third parties arising
from any source.
5.5 Survivability. All obligations of the parties which expressly or
by their nature survive termination or expiration or transfer of this
Agreement shall continue in full force and effect subsequent to and
notwithstanding such termination or expiration or transfer and until they are
satisfied or by their nature expire.
5.6 Severability. In the event that any provision hereof is found
invalid or unenforceable pursuant to judicial decree or decision, the
remainder of this Agreement shall remain valid and enforceable according to
its terms.
5.7 Assignment; Subcontracting. Except as provided below, neither
party may delegate its duties hereunder without the prior written consent of
the other party and this Agreement shall not be assignable by either party.
Any attempt by either party to delegate any of its duties or to assign any of
its rights hereunder without the prior written consent of the other party
shall be null and void. Notwithstanding the foregoing, upon prior written
notice to the other party, either party shall be entitled to assign any part
or all of this Agreement (including but not limited to its rights and
obligations contained herein) to a Related Company, provided that the
assignor continues to remain liable and responsible to the other party for
such Related Company's performance hereunder. For purposes of this Section
5.7, "Related Company" is defined in Exhibit C attached hereto. Buyer shall
assign this Agreement to Molex Incorporated at Molex's request upon
Dissolution, the Buy/Sell Closing or other purchase of Seller's membership
interest in Buyer, provided that Molex Incorporated assumes Buyer's
obligations hereunder after the date of assignment, except that the
requirements aspects of this Agreement shall be limited to the specific
Products and applications of Buyer as of such date. Seller may subcontract
its production obligations hereunder only if (i) the Cost of the Product is
not affected, (ii) the customer purchasing such Product approves the
subcontracting pursuant to the PPAP operating principles in effect for that
customer, and (iii) Buyer's prior written consent is obtained, which consent
shall not be unreasonably withheld.
5.8 Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the parties and their respective legal representatives,
successors and permitted assigns.
5.9 Governing Law. This Agreement shall be construed and enforced in
accordance with the substantive laws of the State of Minnesota, without
regard to its conflict of laws provisions.
5.10 Force Majeure. No liability hereunder shall result to either
party from delay in performance or non-performance caused by circumstances
beyond the reasonable control of that party, including, but not limited to,
acts of god, fire, flood or other casualty, war, government action, accident,
labor strikes or other difficulty, or shortage of or inability to obtain
fuel, energy, material, equipment or transportation. In the event of any
delay in a party's performance due in whole or in part to any cause beyond
that party's reasonable control, that party shall promptly notify the other
party in writing of such event and shall have such additional time for
performance as may be reasonably necessary under the circumstances.
Notwithstanding the foregoing, if such event continues for more than thirty
(30) days Buyer may cancel any order with respect to any Products not
delivered and purchase products elsewhere, and Buyer shall be under no
obligation to accept or pay for the same or compensate Seller for any expense
which it may have incurred.
5.11 Notices. Unless otherwise specifically provided, all notices
required or permitted by this Agreement shall be in writing and may be
delivered personally, or sent by facsimile, by certified mail, return receipt
requested, or by overnight courier service, to the parties at the following
addresses or facsimile numbers, unless the parties are subsequently notified
of any change of address or facsimile number in accordance with this Section
5.12:
If to Seller:
Sheldahl, Inc.
1150 Sheldahl Road
Northfield, Minnesota 55057
Attn: Ed Lundstrom
Facsimile: (507) 663-8234
If to Buyer:
Modular Interconnect Systems, L.L.C.
400 Hulet Drive
Bloomfield Hills, Michigan 48302
Attn: Bob Fuerst
Facsimile: (248) 322-8020
With a copy to:
Molex Incorporated
2222 Wellington Court
Lisle, Illinois 60532
Attn: Martin Slark
Facsimile: (630) 969-1352
Any notice shall be deemed to have been received as follows: (1) by personal
delivery, upon receipt; (2) by facsimile, one (1) business day after
transmission; (3) by overnight commercial delivery service, one (1) business
day after delivery to such commercial delivery service; or (4) by certified
mail, three (3) business days after mailing. If notice is sent by facsimile,
a confirming copy of the notice shall also be sent by mail.
5.12 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, and both of which
together shall constitute one and the same instrument.
5.13 Entire Agreement. This Agreement, together with the Exhibits
hereto, constitutes the entire understanding and contract between the parties
with respect to the subject matter hereof and supersedes any and all prior
and contemporaneous, oral or written representations, communications,
understandings and agreement between the parties with respect to the subject
matter hereof. The parties acknowledge and agree that neither of the parties
is entering into this Agreement on the basis of any representations or
promises not expressly contained herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date specified above.
SELLER:
SHELDAHL, INC.
BY:
Its:
BUYER:
MODULAR INTERCONNECT SYSTEMS, L.L.C.
BY:
Its:
<PAGE>
Exhibit A
PRODUCTS
<PAGE>
Exhibit B
TERMS AND CONDITIONS OF PURCHASE AND SALE
ALL PURCHASES AND SALES OF PRODUCTS UNDER THIS SUPPLY AGREEMENT ARE SUBJECT
TO THE FOLLOWING TERMS AND CONDITIONS:
1. Agreement. These terms and conditions shall govern all purchases and
sales of Products under the Supply Agreement between Seller and Buyer.
No terms or conditions in any way adding to, modifying or otherwise
changing the provisions stated herein shall be binding upon either
party unless made in writing and signed and approved by an officer of
both parties. These terms will not be modified by Seller's shipment of
Products following receipt of Buyer's purchase order, shipping request
or similar forms containing printed terms and conditions conflicting or
inconsistent with the terms herein, or by Seller's use of its own sales
forms with printed terms and conditions conflicting or inconsistent
with the terms herein.
2. Orders Subject to Acceptance. All orders are subject to acceptance in
writing by Seller at its principal office. An acknowledgement of each
order must be returned by Seller to Buyer promptly alter the receipt of
same, and must contain price and definite delivery data. Signing of an
acknowledgement, or holding an order ten (10) days or longer, shall
constitute an acceptance of an order.
3. Prices. All prices are set forth in Section 2.2 of the Supply
Agreement and are F.O.B. Factory, and exclude all federal, state or
local taxes. All taxes and excises of any nature whatsoever now or
hereafter levied by governmental authority, whether federal, state or
local, either directly or indirectly, upon the sale or transportation
of any goods covered hereby, shall be paid and borne by Buyer.
4. Payment. All accounts shall be paid net at Seller's principal office
within thirty (30) days after the date of invoice or date of shipment,
whichever is later. A service charge of the lesser of 1-1/2% per month or
the maximum permissible rate will be added to all past due accounts.
5. Material and Manufacture. All material must conform strictly to
specifications. On any new parts, a sample must be approved by Buyer
before Seller proceeds with manufacture of a quantity run.
6. Quantity. Seller must furnish the entire quantity ordered hereunder
and said quantity cannot be varied by Seller unless Buyer's director of
purchasing agrees in writing to accept a different quantity. Buyer
reserves the right to reject any unauthorized quantities and to return
same to Seller at Seller's risk and expense. Notwithstanding the
foregoing, Seller shall have the option, upon written notice to Buyer,
of manufacturing, shipping and billing a portion of Buyer's order and
later, within the time specified in Buyer's order, manufacturing,
shipping and billing the remainder of any such order.
7. Delivery Terms. Seller will attempt to meet the requirements of
Buyer's delivery schedule but shall be obligated only to the delivery
schedule shown on the order acknowledgment. All delivery expenses,
including transportation, insurance and other shipping costs, shall be
for Buyer's account.
8. Title/Risk of Loss. Delivery of goods to carrier shall be deemed
delivery to Buyer, and thereupon title to such goods, and risk of loss
or damage, shall be Buyer's. Any claim by Buyer against seller for
shortage or damage occurring prior to such delivery must be made in
writing within thirty (30) days after receipt of shipment and
accompanied by original transportation bill signed by carrier noting
that carrier received goods from Seller in the condition claimed. Any
claim by Buyer for damage occurring during shipment shall be made
directly against the freight carrier, with a copy of such claim
promptly forwarded to Seller.
9. Buyer's Inspection. All Products purchased hereunder will be
subject to Buyer's right of inspection and rejection. Buyer shall have
thirty (30) days from receipt of the Products to inspect them and to
notify Seller of any nonconformance. Buyer may reject any Products
which do not conform to the terms of this Agreement or any order, or,
with Seller's consent, may repair or correct them at Seller's cost. If
rejected, they will be held for disposition at Seller's risk and
expense. Any payment on account thereof will be promptly refunded by
Seller. Any inspection by Buyer of Products at Seller's plant during
or after manufacture, whether or not such inspection at said plant is
provided for by the terms hereof, shall be provisional only, and shall
not constitute final inspection, nor be construed as a waiver of the
foregoing right of inspection and rejection after receipt of same.
10. Buyer's Changes. Buyer shall have the right at any time to make
changes in drawings, specifications, or both of them, relating to any
order by giving Seller written notice of such change. If such changes
cause an increase or decrease in the amount due under an order or in
the time required for Seller's performance, an equitable adjustment
shall be made by mutual agreement between the parties hereto.
11. Cancellation. Buyer reserves the right to cancel all or any part of
the undelivered portion of any order if Seller does not make deliveries
as specified, time being of the essence of this contract, or if Seller
breaches any of the terms hereof including, without limitation, the
warranties of Seller. Any provisions herein for delivery of Products
or the rendering of services by installments shall not be construed as
making the obligations of Seller severable.
12. Buyer's Termination. Buyer may at any time for its convenience
terminate any order, in whole or in part, by written or by facsimile
notice, or by verbal notice confirmed in writing. If an order is
terminated for Buyer's convenience, any claim of Seller shall be
settled on the basis of the reasonable costs it has incurred in the
performance of that order, plus five percent (5%).
13. Force Majeure. No liability hereunder shall result to either party
from delay in performance or non-performance caused by circumstances
beyond the reasonable control of that party, including, but not limited
to, acts of god, fire, flood or other casualty, war, government action,
accident, labor strikes or other difficulty, or shortage of or
inability to obtain fuel, energy, material, equipment or
transportation. In the event of any delay in a party's performance due
in whole or in part to any cause beyond that party's reasonable
control, that party shall promptly notify the other party in writing of
such event and shall have such additional time for performance as may
be reasonably necessary under the circumstances. Notwithstanding the
foregoing, if such event continues for more than thirty (30) days Buyer
may cancel any order with respect to any Products not delivered and
purchase products elsewhere, and Buyer shall be under no obligation to
accept or pay for the same or compensate Seller for any expense which
it may have incurred.
14 Warranty and Disclaimer. Seller warrants to Buyer that any Products
sold hereunder will be free from defects in workmanship and materials
under normal conditions of use for six (6) months from the date of
delivery to Buyer. This warranty will survive acceptance of the
Products.
THE FOREGOING WARRANTY IS IN LIEU OF AND EXCLUDES ALL OTHER WARRANTIES
WHETHER EXPRESS OR IMPLIED BY OPERATION OF LAW OR OTHERWISE, INCLUDING
BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS.
Seller's liability and Buyer's sole remedy hereunder for a breach of
warranty is expressly limited, at Seller's election, to repair or
replacement (in the form originally shipped) of Products not complying
with this agreement, or to the repayment of, or crediting Buyer with,
an amount equal to the purchase price of such Products.
Any claim by Buyer with reference to the Products sold hereunder for
any cause shall be deemed waived by Buyer unless submitted to Seller in
writing within ninety (90) days from the date Buyer discovered, or
should have discovered, any claimed breach.
15. Limitation of Remedies. Seller shall not be liable for incidental or
consequential losses, damages or expenses, directly or indirectly
arising from the sale, handling or use of the Products, or from any
other cause with respect to the Products or any order, whether such
claim is based upon breach of contract, breach of warranty, strict
liability in tort, negligence or any other legal theory.
16. Security. If Buyer fails to fulfill the terms of payment or if Seller
shall have any doubt at any time as to Buyer's financial condition,
Seller may decline to make further deliveries except upon receipt of
cash or satisfactory security. This requirement will not release Buyer
from any previous obligation. Seller's rights under this Section shall
be in addition to all other rights and remedies available to Seller
upon Buyer's default.
17. Compliance with Laws. In fulfilling this order, Seller shall comply
with all applicable laws and governmental regulations and orders,
federal, state, local and foreign. With respect to goods produced in
the United States, Seller specifically warrants that all goods
furnished hereunder will be produced and sold in compliance with all
applicable requirements of the Fair Labor Standards Act, as amended,
including Section 6, 7 and 12, and the regulations and orders issued
under Section 14 thereof, and that it will certify such compliance on
each invoice submitted in connection with this order.
18. Seller's Indemnification. Seller shall indemnify and hold harmless
Buyer, and its successors, assigns, employees and agents, from and
against all claims, direct losses, penalties, damages (excluding
incidental and consequential damages), costs and expenses (including
reasonable attorneys' fees) arising out of (a) any alleged or actual
infringement or contributory infringement of any letters patent or
trade secrets or trademarks or service marks by reason of the use, sale
or lease of any Products purchased hereunder, excepting unpatented
staple articles of commerce, Products manufactured in accordance with
Buyer's design, or otherwise non-infringing Products incorporated into
a product of Buyer, (b) any alleged or actual defects in the Products,
whether latent or patent, and whether of design, warning or
manufacture, (but excluding any claims arising out of designs provided
by Buyer), or (c) any alleged or actual failure of the Products to
include necessary safety features or otherwise conform to the
requirements of any federal, state or local health or safety law,
standard regulation or ordinance, when used in a manner and for a
purpose intended by Seller. Buyer shall duly notify Seller of any such
claims, proceedings or suits, and Seller shall, at its own expense,
defend all claims, proceedings or suits against Buyer, its successors,
assigns, officers directors, employees or agents, in which any of the
aforesaid claims are alleged. At its own expense, Buyer may be
represented by counsel of its own choosing in connection with any such
claim, proceeding or suit. In the event that it is determined that
Seller was not solely responsible for the entire claim, Buyer shall
reimburse Seller for any expenses Seller has incurred under this
provision on a pro rata basis in proportion to each party's or third
party's share of the responsibility for the claim. In addition, if
Seller fails timely to deliver Products ordered hereunder, Seller shall
reimburse Buyer for the cost of any work in process for a customer that
is cancelled as a result of such delay or parts in Buyer's inventory
which have become obsolete as a result of such delay.
19. Insurance. Seller agrees to procure and maintain, at its own expense,
products liability and other appropriate insurance covering Seller's
obligations hereunder, and including Buyer as one of the name insureds.
Seller agrees to furnish evidence of said insurance satisfactory to
Buyer as Buyer may request from time to time. All policies of
insurance procured or maintained hereunder (a) shall provide that
coverage thereunder shall not be terminated without ten (10) day's
written notice to Buyer, and (b) shall apply separately to each insured
against whom claim is made or suit is brought and shall contain no
provision which excludes coverage under a claim made by one insured
under the policy against another insured under the policy.
20. Assignment; Subcontracting. This order may not be assigned or
subcontracted by Buyer or Seller, in whole or in part, except as
provided in Section 5.8 of the Supply Agreement.
21. Waiver. Waiver by either party of any breach of these terms and
conditions shall not be construed as a waiver of any other breach, and
failure to exercise any right arising from any default hereunder shall
not be deemed a waiver of such right which may be exercised at any
subsequent time.
22. Severability. In the event that any one or more of these terms or
conditions is held invalid, illegal or unenforceable, such provision or
provisions shall be severed and the remaining terms and conditions
shall remain binding and effective.
23. Controlling Law. This agreement shall be deemed to have been executed
and delivered in the state where Seller has its principal place of
business. Except as otherwise provided herein, this agreement and all
rights and obligations hereunder, including matters of construction,
validity and performance, shall be governed by the internal laws of the
state where the Seller has its principal place of business, including
the Uniform Commercial Code as enacted in that jurisdiction, without
giving effect to that jurisdiction's choice of law principles.
<PAGE>
Exhibit C
DEFINITIONS
[ ******* Confidential Treatment Requested ] .
"Related Company" as used herein shall mean any corporation or other legal
entity which (a) owns a majority interest in or controls any party; (b) is
controlled by, or the majority interest of which is owned by, any party; or
(c) owns a majority interest in, controls, is controlled by, or the majority
interest of which is owned by, any corporation or other legal entity
described in clause (a) or (b) of this sentence.
<PAGE>
EXHIBIT 1A-5
Development Agreement
This Development Agreement (the "Agreement") is made as of this
day of July, 1998, by and between SHELDAHL, INC., a Minnesota corporation,
having its principal place of business at 1150 Sheldahl Road, Northfield,
Minnesota 55057 ("Sheldahl"), MOLEX INCORPORATED, a Delaware corporation,
having its principal place of business at 2222 Wellington Court, Lisle,
Illinois 60532 ("Molex"), and MODULAR INTERCONNECT SYSTEMS, L.L.C., a
Delaware limited liability company, having its principal place of business at
400 Hulet Drive, Bloomfield Hills, Michigan 48302 ("Modular Interconnect").
RECITALS:
A. Sheldahl and Molex have entered into a Limited Liability Company
Agreement of even date herewith (the "L.L.C. Agreement") for the purpose of
forming Modular Interconnect;
B. Sheldahl intends on converting certain of its intellectual
property into products to be sold to Modular Interconnect and to create
process tooling for production of components to be sold to Modular
Interconnect (the "Developed Property");
C. Molex intends on reimbursing Sheldahl up to [***** Confidential
Treatment Requested *****] of the costs of the Developed Property, [*****
Confidential Treatment Requested *****] of which shall be expended by
Sheldahl toward product development and [***** Confidential Treatment
Requested *****] of which shall be expended by Sheldahl toward product
tooling costs (the "Sheldahl Development Costs"); and
D. All terms used in this Agreement and not otherwise defined shall
have the meaning given such terms in the L.L.C. Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises and
valuable consideration set forth herein, the parties hereto agree as follows:
1. Sheldahl Development Payments. Subject to the provisions of this
Agreement, Molex shall reimburse Sheldahl for the Sheldahl Development Costs
in up to three installments. The first installment shall be paid on the
[***** Confidential Treatment Requested *****] of the date of the Agreement,
the second installment shall be paid on the [***** Confidential Treatment
Requested *****] of the date of this Agreement and the third installment
shall be paid on the [***** Confidential Treatment Requested *****] of the
date of this Agreement or, in the event any of such dates are not a day on
which Molex is open for business, on the next succeeding day on which Molex
is open for business (each such payment date is referred to individually as a
"Development Payment Date" and collectively as the "Development Payment
Dates").
2. Period for Payment. Notwithstanding anything in this Agreement
to the contrary, Molex shall have no obligation to make any Sheldahl
Development Payment (other than those accrued under Section 1 above) on or
after the earlier of (i) [***** Confidential Treatment Requested *****]
after the date hereof, (ii) the Dissolution of Modular Interconnect,
(iii) Sheldahl or Molex ceasing to be a Member, or (iv) the occurrence of an
Event of Default by Sheldahl.
3. Development Schedule. Promptly following the execution and
delivery of this Agreement but in any event prior to the reimbursement by
Molex of any Sheldahl Development Costs, Sheldahl shall deliver to Molex for
its approval a description of the items for which the Sheldahl Development
Costs will be spent and a schedule pursuant to which Sheldahl will incur the
Sheldahl Development Costs (including approximate dates and amounts). Such
description and schedule shall be consistent with paragraph C of the recitals
of this Agreement.
4. Payment Requests. In order to receive reimbursement for the
Sheldahl Development Costs expended by Sheldahl, Sheldahl shall submit to
Molex no later than on a calendar quarterly basis (the "Payment Request")
original receipts evidencing the expenditure by Sheldahl of the amounts for
which Sheldahl is seeking payment, a description of the expenditure in
reasonable detail and such other information as Molex shall reasonably
request. Molex shall pay to Sheldahl the undisputed amounts requested by
Sheldahl pursuant to a Payment Request on the applicable Development Payment
Date.
5. Ownership of Developed Product; Product and Market Knowledge.
Sheldahl shall be the sole owner of any Developed Property which results from
the expenditure of the Sheldahl Development Costs.
6. Use by Modular Interconnect. Modular Interconnect shall have
preference with respect to the capacity of any tooling developed or acquired
by Sheldahl using funds provided by Molex pursuant to this Agreement (the
"Development Agreement Funded Tooling"). To the extent the Development
Agreement Funded Tooling is not required to meet the requirements of Modular
Interconnect, Sheldahl shall be entitled to use the Development Agreement
Funded Tooling to produce and sell the same types of components developed for
sale to Modular Interconnect to other parties, provided that Sheldahl
satisfies the conditions to such sales set forth in Section 15.1(a) and (b)
of the L.L.C. Agreement. To the extent the Development Agreement Funded
Tooling is not required to meet the requirements of Modular Interconnect,
Sheldahl shall also be entitled to use the Development Agreement Funded
Tooling to produce and sell products which do not compete with the Products,
provided that Sheldahl pays Molex an amount equal to [***** Confidential
Treatment Requested *****] of the gross product price received by Sheldahl
as a result of the sale of the Non-Competing Product (the "Royalty Payments")
until Sheldahl has repaid any amounts owed as a result of loans made to
Sheldahl and, in addition, Sheldahl has paid to Molex an amount equal to all
Sheldahl Development Payments.
7. Payment of Royalty Payments. The Royalty Payments shall be paid
to Molex by Sheldahl within 15 days of the end of any calendar quarter in
which Sheldahl received payment in respect of any sale of any Non-Competing
Product. The Royalty Payments shall be applied against the amounts owed by
Sheldahl to Molex as a result of loans or payments made by Molex pursuant to
the terms of this Agreement, the L.L.C. Agreement or pursuant to any
Associated Agreement until (a) an amount equal to any funds paid by Molex to
Sheldahl for product development and tooling pursuant to this Agreement and
the L.L.C. Agreement have been received by Molex, and (b) any outstanding
loans and accrued interest thereon owed by Sheldahl to Molex have been repaid
by Sheldahl to Molex. The Royalty Payments shall be applied (a) first,
against any amounts owed to Molex by Sheldahl as a result of a default by
Sheldahl under any promissory note given by Sheldahl to Molex on a pro rata
basis based on the aggregate outstanding principal amounts of such notes; (b)
second, against any interest owed to Molex by Sheldahl pursuant to any
promissory note given by Sheldahl to Molex on a pro rata basis based on the
aggregate outstanding principal amounts of such notes; (c) third, against
Sheldahl Development Payments or other amounts paid by Molex to Sheldahl for
product development and tooling; and (d) fourth, against any principal
amounts of any loans outstanding from Molex to Sheldahl on a pro rata basis
based on the aggregate outstanding principal amounts of such notes.
8. Payment Upon Dissolution of Modular Interconnect. Prior to any
distribution otherwise payable to Sheldahl pursuant to Section 10.3 of the
L.L.C. Agreement, Modular Interconnect shall deduct from the amounts
otherwise payable to Sheldahl an amount equal to the Sheldahl Development
Costs reimbursed by Molex less applied Royalty Payments, and pay such amount
to Molex. Sheldahl hereby assigns any right, title and interest in such
amounts to Molex.
9. Audit Rights. Molex may, upon reasonable notice to Sheldahl,
audit the books and records of Sheldahl to the extent such books and records
relate to (i) the expenditure of Sheldahl Development Costs and (ii) the
calculation and payment of Royalty Payments by Sheldahl. Sheldahl shall
maintain its books and records in sufficient detail to permit the
verification of (i) the expenditure of Sheldahl Development Costs and (ii)
the calculation and payment of Royalty Payments. Any such audit shall be
conducted during regular business hours at the facilities of Sheldahl and
shall not unreasonably interfere with Sheldahl's business activities. If an
audit reveals that Sheldahl has underpaid Molex with respect to any Royalty
Payments, Sheldahl shall promptly remit such underpaid amounts plus interest
at Prime Rate. If an audit reveals that Sheldahl has overpaid any amounts to
Molex, Molex shall promptly repay such amounts to Sheldahl plus interest at
Prime Rate. Prior to making any payments referenced in the preceding
sentence, Molex shall be reimbursed for the cost of the audit from the
payments which would otherwise be paid to Sheldahl provided that the amounts
underpaid by Sheldahl exceed $50,000. So long as Molex shall have the right
to receive any Royalty Payments pursuant to this Agreement, Sheldahl shall,
upon the request of Molex, furnish to Molex a description of the Non-
Competing Products in reasonable detail, the amount of each sale for each
such Non-Competing Product and the dates on which each Non-Competing Product
was sold.
10. Assignment. This Agreement shall be binding on and inure to the
benefit of the permitted successors to the parties. The parties to this
Agreement may not, without the prior written permission of the other parties
or in connection with the Transfer of an Interest as permitted by the L.L.C.
Agreement, assign or otherwise Transfer its rights and obligations under this
Agreement.
11. Governing Law. This Agreement, its validity, interpretation, and
performance shall be governed by the laws of the State of Illinois, United
States of America, without reference to principles of choice of laws or
conflicts of the law thereof.
12. Waiver. No consent or waiver, expressed or implied, by a party
to or of any breach or default by the other party in the performance by such
other party of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or any other breach or default in the performance by
such other party of the same or any other obligations of such other party
hereunder. The giving of approval by a party in any one instance shall not
limit or waive the necessity to obtain such party's approval in any future
instance.
13. Notices. All notices under this Agreement shall be in writing
and shall be deemed properly given hereunder when (i) delivered by personal
service, (ii) delivered by courier service, (iii) telecopied and confirmed
immediately in writing by a copy mailed by registered or certified mail
immediately in writing by a copy mailed by registered or certified mail,
postage prepaid, return receipt requested, or (iv) when received, if sent by
certified or registered mail, postage prepaid, return receipt requested, to
the address of a party first stated above.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year
first set forth above.
MODULAR INTERCONNECT MOLEX INCORPORATED
SYSTEMS L.L.C.
By: By:
Title: Title:
SHELDAHL, INC.
By:
Title:
<PAGE>
EXHIBIT 1D
Sheldahl Property
Sheldahl shall transfer an undivided ownership interest in the following
property:
1. To the extent not limited by nondisclosure agreements, all customer
specific information related to vehicle modular interconnect systems,
including without limitation, design cycles, material testing
requirements, and development plans, concept prove-out, designs, design
validation, and key personnel. Sheldahl shall provide a list of all
such customer specific information immediately following the execution
and delivery of the Agreement and the parties shall agree to the
contents of such list as promptly as possible following the execution
and delivery of the Agreement.
2. All active and pending programs as of the date of this Agreement
related to vehicle modular interconnect systems which can incorporate
Molex interconnects.
3. Product knowledge of vehicle modular interconnect systems developed by
Sheldahl as of the date of the Agreement.
4. Market knowledge of vehicle modular interconnect systems developed by
Sheldahl as of the date of the Agreement.
5. Market knowledge and Product knowledge of vehicle modular interconnect
systems developed by Sheldahl in the future as related to projects
developed jointly by (i) Sheldahl with the Company or (ii) Sheldahl,
Molex and the Company; provided, however, that, pursuant to Section 5
of the Development Agreement, Sheldahl shall be the sole owner of the
Developed Property (as defined in the Development Agreement). The
Company shall not adjust Sheldahl's capital contribution as set forth
in Article IV as a result of Sheldahl's performance or failure to
perform its obligations pursuant to the preceding sentence.
The parties have also agreed that Molex shall transfer an undivided ownership
interest in market knowledge and Product knowledge of vehicle modular
interconnect systems developed by Molex in the future as relates to projects
developed jointly by (i) Molex with the Company or (ii) Sheldahl, Molex and
the Company.
<PAGE>
EXHIBIT 2.2
CERTIFICATE OF FORMATION
OF
MODULAR INTERCONNECT SYSTEMS, L.L.C.
The undersigned, an authorized natural person, for the purpose of
forming a limited liability company, under the provisions and subject to the
requirements of the State of Delaware (particularly Chapter 18, Title 6 of
the Delaware Code and the acts amendatory thereof and supplemental thereto,
and known, identified, and referred to as the "Delaware Limited Liability
Company Act"), hereby certifies that:
FIRST: The name of the limited liability company (hereinafter called
the "limited liability company") is Modular Interconnect Systems, L.L.C.
SECOND: The address of the registered office and the name and the
address of the registered agent of the limited liability company required to
be maintained by Section 18-104 of the Delaware Limited Liability Company Act
are Corporation Service Company, 1013 Centre Road, Wilmington, Delaware
19805.
Executed on _________, 1998.
By: _______________________________
Name:
<PAGE>
EXHIBIT 2.3
BYLAWS OF MODULAR INTERCONNECT SYSTEMS, L.L.C.
Introduction
A. Agreement. These Bylaws shall be subject to the Limited Liability
Company Agreement, as from time to time in effect (the "Agreement"), of
Modular Interconnect Systems, L.L.C., a Delaware limited liability company
(the "Company"). In the event of any inconsistency between the terms hereof
and the terms of the Agreement, the terms of the Agreement shall control.
B. Definitions. Capitalized terms used herein and not herein defined
are used as defined in the Agreement.
ARTICLE 1
Meetings of Members
Section 1. Place of Meetings and Meetings by Telephone. Meetings of
Members shall be held at any place designated by the Managers. In the
absence of any such designation, meetings of Members shall be held at the
principal place of business of the Company. Any meeting of the Members may
be held by conference telephone or similar communications equipment so long
as all Members participating in the meeting can hear one another, and all
Members participating by telephone or similar communications equipment shall
be deemed to be present in person at the meeting.
Section 2. Call of Meetings. Meetings of the Members may be called
at any time by the Managers or by the Chairman or the President for the
purpose of taking action upon any matter requiring the vote or authority of
the Members as provided herein or in the Agreement or upon any other matter
as to which such vote or authority is deemed by the Managers or the Chairman
or the President to be necessary or desirable. Meetings of the Members shall
be called promptly by the Managers upon the written request of any Member.
Section 3. Notice of Meetings of Members. All notices of meetings of
Members shall be sent or otherwise given in accordance with Section 4 of this
Article I not less than ten (10) nor more than ninety (90) days before the
date of the meeting. The notice shall specify (i) the place, date, and hour
of the meeting, and (ii) the general nature of the business to be transacted.
Section 4. Manner of Giving Notice. Notice of any meeting of Members
shall be given personally or by telephone to each Member or sent by
registered or certified mail, by telegram or telecopy (or similar electronic
means), or by a nationally recognized overnight courier, charges prepaid,
addressed to the Member at the address of that Member appearing on the books
of the Company or given by the Member to the Company for the purpose of
notice. Notice shall be deemed to have been given at the time (i) when
delivered either personally or by telephone, (ii) at the time when deposited
or with a nationally recognized overnight courier, (iii) at the time when
sent by telegram or telecopy (or similar electronic means), or (iv) at the
time when delivered (or when delivery is refused) when sent by registered or
certified mail.
Section 5. Adjourned Meeting; Notice. Any meeting of Members,
whether or not a quorum is present, may be adjourned from time to time by the
vote of the majority of the Percentage Interests represented at that meeting,
either in person or by proxy. When any meeting of Members is adjourned to
another time or place, notice need not be given of the adjourned meeting,
unless a new record date of the adjourned meeting is fixed or unless the
adjournment is for more than sixty (60) days from the date set for the
original meeting, in which case the Managers shall set a new record date and
shall give notice in accordance with the provisions of Sections 3 and 4 of
this Article I. At any adjourned meeting, the Company may transact any
business that might have been transacted at the original meeting.
Section 6. Quorum; Voting. At any meeting of the Members, all of the
Members, present in person or by proxy, shall constitute a quorum for all
purposes. Except as otherwise required by the Agreement, these Bylaws, or
applicable law, all matters shall be determined by unanimous vote of the
Members. Each Member shall have one vote on all matters submitted to the
Members for approval.
Section 7. Waiver of Notice by Consent of Absent Members. The
resolutions duly adopted in the manner provided herein at a meeting of
Members, however called and noticed and wherever held, shall be as valid as
though taken at a meeting duly held after regular call and notice if a quorum
is present either in person or by proxy and if either before or after the
meeting, each person entitled to vote who was not present in person or by
proxy signs a written waiver of notice or a consent to a holding of the
meeting or an approval of the minutes. The waiver of notice or consent need
not specify either the business to be transacted or the purpose of any
meeting of Members. Attendance by a person at a meeting shall also
constitute a waiver of notice of that meeting, except when the person objects
at the beginning of the meeting to the transaction of any business because
the meeting is not lawfully called or convened and except that attendance at
a meeting is not a waiver of any right to object to the consideration of
matters not included in the notice of the meeting if that objection is
expressly made at the beginning of the meeting.
Section 8. Member Action by Written Consent Without a Meeting.
Except as provided in the Agreement, any action that may be taken at any
meeting of Members may be taken without a meeting and without prior notice if
a consent in writing setting forth the action so taken is signed by all of
the Members. Any such written consent may be executed and given by telecopy
or similar electronic means. Such consents shall be filed with the Secretary
of the Company and shall be maintained in the Company's records.
Section 9. Record Date for Member Notice, Voting, and Giving
Consents.
(a) For purposes of determining the Members entitled to vote or act
at any meeting or adjournment thereof, the Managers may fix in
advance a record date which shall not be greater than ninety (90)
days nor fewer than five (5) days before the date of any such
meeting. If the Managers do not so fix a record date, the record
date for determining Members entitled to notice of or to vote at
a meeting of Members shall be at the close of business on the
business day immediately preceding the day on which notice is
given, or if notice is waived, at the close of business on the
business day next preceding the day on which the meeting is held.
(b) The record date for determining Members entitled to give consent
to action in writing without a meeting, (i) when no prior action
of the Managers has been taken, shall be the day on which the
first written consent is given or (ii) when prior action of the
Managers has been taken, shall be (x) such date as determined for
that purpose by the Managers, which record date shall not precede
the date upon which the resolution fixing it is adopted by the
Managers and shall not be more than 20 days after the date of
such resolution or (y) if no record date is fixed by the Managers
the record date shall be the close of business on the day on
which the Managers adopt the resolution relating to that action.
(c) Only Members of record on the record date as herein determined
shall have any right to vote or to act at any meeting or give
consent to any action relating to such record date, provided that
no Member who transfers all or part of such Member's Interest
after a record date (and no transferee of such Interest) shall
have the right to vote or act with respect to the transferred
Interest as regards the matter for which the record date was set.
Section 10. Proxies. Every Member entitled to vote or act on any
matter at a meeting of Members shall have the right to do so either in person
or by proxy, provided that an instrument authorizing such a proxy to act is
executed by the Member in writing and dated not more than eleven (11) months
before the meeting, unless the instrument specifically provides for a longer
period. A proxy shall be deemed executed by a Member if the Member's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission, or otherwise) by the Member or the Member's attorney-in-fact.
A valid proxy that does not state that it is irrevocable shall continue in
full force and effect unless (i) revoked by the person executing it before
the vote pursuant to that proxy by a writing delivered to the Company stating
that the proxy is revoked, by a subsequent proxy executed by or attendance at
the meeting and voting in person by the person executing that proxy or
(ii) written notice of the death or incapacity of the maker of that proxy is
received by the Company before the vote pursuant to that proxy is counted. A
proxy purporting to be executed by or on behalf of a Member shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger.
ARTICLE
Managers and Meetings of Managers
Section 1. Powers. The powers of the Managers shall be as provided
in the Agreement.
Section 2. Number of Managers. The number of Managers shall be as
provided in the Agreement.
Section 3. Vacancies. Vacancies in the authorized number of Managers
may be filled as provided in the Agreement.
Section 4. Place of Meetings and Meetings by Telephone. All meetings
of the Managers may be held at any place that has been designated from time
to time by resolution of the Managers. In the absence of such a designation,
regular meetings shall be held at the principal place of business of the
Company. Any meeting, regular or special, may be held by conference
telephone or similar communications equipment so long as all Managers
participating in the meeting can hear one another, and all Managers
participating by telephone or similar communications equipment shall be
deemed to be present in person at the meeting.
Section 5. Regular Meetings. Regular meetings of the Managers shall
be held at least once every 60 days at such times and at such places as shall
be fixed by the Managers. Such regular meetings may be held without notice.
Section 6. Special Meetings. Special meetings of the Managers for
any purpose or purposes may be called at any time by not less than two (2)
Managers including, at least, one Manager appointed by Molex and one Manager
appointed by Sheldahl. Notice of the time and place of a special meeting
shall be delivered personally or by telephone to each Manager and sent by
registered or certified mail, by telegram or telecopy (or similar electronic
means), or by nationally recognized overnight courier, charges prepaid,
addressed to each Manager at that Manager's address as it is shown on the
records of the Company. In case the notice is mailed, it shall be deposited
in the United States mail at least ten (10) calendar days before the time of
the holding of the meeting and shall be deemed given at the time when
delivered (or when delivery is refused). In case the notice is delivered
personally or by telephone or by telegram, telecopy (or similar electronic
means), or overnight courier, it shall be given at least two (2) calendar
days before the time of the holding of the meeting. Any oral notice given
personally or by telephone may be communicated either to the Manager or to a
person at the office of the Manager who the person giving the notice has
reason to believe will promptly communicate it to the Manager. The notice
need not specify the purpose of the meeting.
Section 7. Quorum. Not less than four (4) Managers shall constitute
a quorum for the transaction of business, except to adjourn as provided in
Section 9 of this Article II. Every act or decision done or made by the
affirmative vote of a majority of the Managers present at a meeting duly held
at which a quorum is present shall be regarded as the act of the Managers,
except to the extent that the vote of a higher number of Managers is required
by the Agreement, these Bylaws, or applicable law.
Section 8. Waiver of Notice. Notice of any meeting need not be given
to any Manager who either before or after the meeting signs a written waiver
of notice, a consent to holding the meeting, or an approval of the minutes.
The waiver of notice or consent need not specify the purpose of the meeting.
All such waivers, consents, and approvals shall be filed with the records of
the Company or made a part of the minutes of the meeting. Notice of a
meeting shall also be deemed given to any Manager who attends the meeting
without protesting before or at its commencement the lack of notice to that
Manager.
Section 9. Adjournment. A majority of the Managers present, whether
or not constituting a quorum, may adjourn any meeting to another time and
place. Notice of the time and place of holding an adjourned meeting need not
be given unless the meeting is adjourned for more than forty-eight (48)
hours, in which case notice of the time and place shall be given before the
time of the adjourned meeting in the manner specified in Section 6 of this
Article II.
Section 10. Action Without a Meeting. Any action to be taken by the
Managers at a meeting may be taken without such meeting by the written
consent of the Managers then in office. Any such written consent may be
executed and given by telecopy or similar electronic means. Such written
consents shall be filed with the minutes of the proceedings of the Managers.
Section 11. Delegation of Power. Any Manager may, by power of
attorney, delegate his or her power for a period not exceeding six (6) months
at any one time to any other Manager or Managers; provided that in no case
shall fewer than two (2) Managers personally exercise the powers granted to
the Managers, except as otherwise provided by resolution of the Managers. A
Manager represented by another Manager pursuant to such power of attorney
shall be deemed to be present for purposes of establishing a quorum and
satisfying any voting requirements. All such delegates shall serve at the
pleasure of the Managers. To the extent applicable, notice shall be given
to, and action may be taken by, any delegate of the Managers as herein
provided with respect to notice to, and action by, the Managers.
ARTICLE
Officers
Section 1. Officers. The officers of the Company shall be a
Chairman, a President, a Secretary, and a Treasurer. The Company may also
have, at the discretion of the Managers, such other officers as may be
appointed in accordance with the provisions of Section 3 of this Article III.
Any number of offices may be held by the same person. The Chairman shall be
a Manager and any other officer may but need not be a Manager.
Section 2. Election of Officers. Subject to provisions of the
Agreement applicable to initial appointment and term of officers, the
officers of the Company, except such officers as may be appointed in
accordance with the provisions of Section 3 or 5 of this Article III, shall
be chosen by the Managers, and each shall serve at the pleasure of the
Managers, subject to the rights, if any, of an officer under any contract of
employment.
Section 3. Subordinate Officers. The Managers may appoint and may
empower the Chairman or President to appoint such other officers as the
business of the Company may require, each of whom shall hold office for such
period, have such authority and perform such duties as are provided in these
Bylaws or as the Managers (or, to the extent the power to prescribe
authorities and duties of subordinate officers is delegated to him or her,
the Chairman or President) may from time to time determine.
Section 4. Removal and Resignation of Officers. Subject to the
rights, if any, of an officer under any contract of employment, any officer
may be removed, with or without cause, by the Managers at any regular or
special meeting of the Managers or by such officer, if any, upon whom such
power of removal may be conferred by the Managers; provided, however, that
during the first year of his or her incumbency, any officer initially
designated by a Member shall only be removed by the Member that designated
him or her. Any officer may resign at any time by giving written notice to
the Company. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and unless
otherwise specified in that notice, the acceptance of the resignation shall
not be necessary to make it effective. Any resignation is without prejudice
to the rights, if any, of the Company under any contract to which the officer
is a party.
Section 5. Vacancies in Offices. A vacancy in any office because of
death, resignation, removal, disqualification, or other cause shall be filled
in the manner prescribed in these Bylaws for regular appointment to that
office; provided that as to any officer initially designated by a Member any
such vacancy occurring during the first year of such officer's incumbency
shall be filled by the Member that designated such officer. The President may
make temporary appointments to a vacant office pending action by the Managers
or a Member.
Section 6. Chairman. The Chairman shall if present preside at
meetings of the Managers and shall exercise and perform such other powers and
duties as may from time be assigned to him or her by the Managers or
prescribed by the Agreement or these Bylaws.
Section 7. President. Subject to the supervisory powers of the
Chairman, the President shall be the chief operating officer of the Company
and shall, subject to the control of the Managers and the Chairman, have
general supervision, direction, and control of the business and the officers
of the Company. He or she shall preside at all meetings of the Members and,
in the absence of the Chairman, at all meetings of the Managers. He or she
shall have the general powers and duties of management usually vested in the
office of President of a corporation and shall have such other powers and
duties as may be prescribed by the Managers, the Agreement, or these Bylaws.
Section 8. Vice Presidents. In the absence or disability of the
President, the Vice Presidents, in order of their rank as fixed by the
Managers, shall perform all duties of the President and when so acting shall
have all powers of and be subject to all the restrictions upon the President.
The Vice Presidents shall have such other powers and perform such other
duties as from time to time may be prescribed for them respectively by the
Managers or the President or the Chairman or by these Bylaws.
Section 9. Secretary. The Secretary shall keep or cause to be kept
at the principal place of business of the Company or such other place as the
Managers may direct a book of minutes of all meetings and actions of
Managers, committees, or other delegates of Managers and Members with the
time and place of holding, whether regular or special, and, if special, how
authorized, the notice given, the names of those present at Managers'
meetings or committee or other delegate meetings, the Percentage Interest
present or represented at meetings of Members, and the proceedings. The
Secretary shall keep or cause to be kept at the principal place of business
of the Company a register or a duplicate register showing the names of all
Members and their addresses, the number and classes of Percentage Interest
held by each, the number and date of certificates issued for the same, if
any, and the number and date of cancellation of every certificate surrendered
for cancellation. The Secretary shall give or cause to be given notice of
all meetings of the Members and of the Managers (or committees or other
delegates thereof) required to be given by these Bylaws or by applicable law
and shall have such other powers and perform such other duties as may be
prescribed by the Managers or the President or the Chairman or by these
Bylaws.
Section 10. Treasurer. The Treasurer shall keep and maintain or
cause to be kept and maintained adequate and correct books and records of
accounts of the properties and business transactions of the Company,
including accounts of the assets, liabilities, receipts, disbursements,
gains, losses, and capital and retained earnings of the Company. The books
of account shall at all reasonable times be open to inspection by any
Manager. The Treasurer shall deposit all monies and other valuables in the
name and to the credit of the Company with such depositaries as may be
designated by the Managers. He or she shall disburse the funds of the
Company as may be ordered by the Managers, shall render to the President, the
Chairman, and Managers, whenever they request it, an account of all of his or
her transactions as chief financial officer and of the financial condition of
the Company, and shall have other powers and perform such other duties as may
be prescribed by the Managers or the President or the Chairman or these
Bylaws.
ARTICLE
Records and Reports
Section 1. Maintenance and Inspection of Share Register. The Company
shall maintain at its principal place of business a record of its Members,
giving the names and addresses of all Members and the Percentage Interest
held by each Member. Subject to such reasonable standards (including
standards governing what information and documents are to be furnished and at
whose expense) as may be established by the Managers from time to time, each
Member has the right to obtain from the Company from time to time upon
reasonable demand for any purpose reasonably related to the Member's interest
as a Member of the Company a record of the Company's Members.
Section 2. Maintenance and Inspection of Bylaws. The Company shall
keep at its principal place of business the original or a copy of these
Bylaws as amended to date, which shall be open to inspection by the Members
at all reasonable times during office hours.
Section 3. Maintenance and Inspection of Other Records. The
accounting books and records, minutes of proceedings of the Members and the
Managers and any committees or delegates of the Managers, and all other
information pertaining to the Company that is required to be made available
to the Members under the Delaware Act shall be kept at such place or places
designated by the Managers or in the absence of such designation, at the
principal place of business of the Company. The minutes shall be kept in
written form and the accounting books and records and other information shall
be kept either in written form or in any other form capable of being
converted into written form. The books of account and records of the Company
shall be maintained in accordance with generally accepted accounting
principles consistently applied during the term of the Company, wherein all
transactions, matters, and things relating to the business and properties of
the Company shall be currently entered. Subject to such reasonable standards
(including standards governing what information and documents are to be
furnished and at whose expense) as may be established by the Managers from
time to time, minutes, accounting books and records, and other information
shall be open to inspection upon the written demand of any Member at any
reasonable time during usual business hours for a purpose reasonably related
to the Member's interests as a Member. Any such inspection may be made in
person or by an agent or attorney and shall include the right to copy and
make extracts. Notwithstanding the foregoing, the Managers shall have the
right to keep confidential from Members for such period of time as the
Managers deem reasonable any information which the Managers reasonably
believe to be in the nature of trade secrets or other information the
disclosure of which the Managers in good faith believe is not in the best
interests of the Company or could damage the Company or its business or which
the Company is required by law or by agreement with a third party to keep
confidential.
Section 4. Inspection by Managers. Every Manager shall have the
right at any reasonable time to inspect all books, records, and documents of
every kind and the physical properties of the Company for a purpose
reasonably related to his or her position as Manager. This inspection by a
Manager may be made in person or by an agent or attorney and the right of
inspection includes the right to copy and make extracts of documents.
ARTICLE
General Matters
Section 1. Checks, Drafts, Evidence of Indebtedness. All checks,
drafts, or other orders for payment of money, notes, or other evidence of
indebtedness issued in the name of or payable to the Company shall be signed
or endorsed in such manner and by such person or persons as shall be
designated from time to time in accordance with the resolution of the
Managers.
Section 2. Contracts and Instruments; How Executed. The Managers,
except as otherwise provided in the Agreement or these Bylaws, may authorize
any Manager(s), officer(s), or agent(s) to enter into any contract or execute
any instrument in the name of and on behalf of the Company and this authority
may be general or confined to specific instances; and unless so authorized or
ratified by the Managers or within the agency power of an officer (or
otherwise specified in the Agreement or these Bylaws), no officer, agent, or
employee shall have any power or authority to bind the Company by any
contract or engagement or to pledge its credit or to render it liable for any
purpose or for any amount.
Section 3. Representation of Shares of Other Entities Held by the
Company. The Chairman or the President or any Vice President or any other
person authorized by the Managers or by any of the foregoing designated
officers is authorized to vote or represent on behalf of the Company any and
all shares of any corporation, partnership, trust, or other entity, foreign
or domestic, standing in the name of the Company. The authority granted may
be exercised in person or by a proxy duly executed by such designated person.
Section 4. Seal. The Managers may approve and adopt an official
Company seal, which may be altered by them at any time. Unless otherwise
required by the Managers, any seal so adopted shall not be necessary to be
placed on, and its absence shall not impair the validity of, any document,
instrument, or other paper executed and delivered by or on behalf of the
Company.
ARTICLE
Amendments and Incorporation by Reference into Agreement
Section 1. Amendment. These Bylaws may be restated, amended,
supplemented, or repealed only as provided for in the Agreement.
Section 2. Incorporation by Reference of Bylaws into Agreement.
These Bylaws and any amendments thereto shall be deemed incorporated by
reference in the Agreement.
<PAGE>
EXHIBIT 2.5
The Members contemplate that the purpose of the Company will be to create a
new family of modular interconnect system, primarily for the automotive
industry, utilizing flexible circuits developed by Sheldahl and
interconnection products developed by Molex. This combined technology will
be offered as an alternative to conventional automotive wiring harnesses and
flex circuit assemblies. [ ******* Confidential Treatment Requested ] .
<PAGE>
EXHIBIT 3.2(c)
Description of Lien on Sheldahl Property
A lien on all the assets of Sheldahl (including the Sheldahl Property) in
favor of Norwest Bank Minnesota, National Association existed prior to the
execution and delivery of the consent of Norwest Bank Minnesota, National
Association attached to this Exhibit 3.2(c).
<PAGE>
EXHIBIT 6.1
Initial Managers
A. Molex-Appointed Managers:
1. [ ******* Confidential Treatment Requested ]
2. [ ******* Confidential Treatment Requested ]
3. [ ******* Confidential Treatment Requested ]
B. Sheldahl-Appointed Managers:
1. [ ******* Confidential Treatment Requested ]
2. [ ******* Confidential Treatment Requested ]
<PAGE>
EXHIBIT D
Initial Officers
Chairman [ ******* Confidential Treatment Requested ]
President [ ******* Confidential Treatment Requested ]
Treasurer [ ******* Confidential Treatment Requested ]
Secretary [ ******* Confidential Treatment Requested ]
<PAGE>
EXHIBIT 9.3
Description of Lien on Sheldahl's Interest
Norwest Bank Minnesota, National Association has the interest in Sheldahl's
Interest indicated on the consent of Norwest Bank Minnesota, National
Association attached to Exhibit 3.2(c).
<PAGE>
EXHIBIT 9.10
Business Goals
The following are the business goals for purposes of Section 9.10 of
the Agreement:
[ ******* Confidential Treatment Requested ].
<PAGE>
EXHIBIT 10.1
NOTE: Certain portions of this exhibit have been deleted and filed
separately with the Commission pursuant to a request for confidential
treatment under Rule 24b-2. Spaces corresponding to the deleted portions are
represented by brackets with asterisks.
<PAGE>
