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EXHIBIT 4.12
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of December 28, 2000, among Sheldahl, Inc., a Minnesota corporation (the
"Company"), and the individuals and entities listed on Schedule I hereto
(referred to herein as a "Purchaser" and collectively as the "Purchasers").
This Agreement is made pursuant to the Stock Purchase Agreement, dated as
of November 10, 2000, as amended, modified or supplemented from time to time,
(the "Purchase Agreement") among the Company and certain of the Purchasers (the
"Stock Purchasers"), the Agreement and Plan of Merger, dated as of November 10,
2000, as amended, modified or supplemented from time to time, (the "Merger
Agreement") among the Company, IFT West Acquisition Company, International Flex
Holdings, Inc. ("IFH") and the stockholders of IFH (the "IFH Purchasers") and
the Subordinated Notes and Warrant Purchase Agreement, dated as of November 10,
2000, as amended, modified or supplemented from time to time, (the "Subordinated
Notes Purchase Agreement") among the Company and certain of the Purchasers (the
"Warrant Purchasers").
The Company and the Purchasers hereby agree as follows:
1. Definitions
Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:
"Advice" shall have meaning set forth in Section 3(j).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated", "controlling" and "controlled" have meanings
correlative to the foregoing.
"Business Day" means any day except a day on which the Nasdaq National
Market, the NYSE or the AMEX, as applicable, if the Common Stock is listed for
trading or quoted thereon at such time, is closed, and if the Common Stock is
not listed for trading or quoted on any of the Nasdaq National Market, the NYSE
or the AMEX at such time, then "Business Day" shall mean any day except
Saturday, Sunday and any day which shall be a legal holiday or a day on which
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banking institutions in the State of Minnesota generally are authorized or
required by law or other government actions to close.
"Closing Date" shall have the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value $.25 per share.
"Common Shares" means the shares of Common Stock, par value $.25 per share,
of the Company issued to the Stock Purchasers pursuant to the Purchase
Agreement.
"Effectiveness Date" means, with respect to the Shelf Registration
Statement to be filed pursuant to Section 2(a) hereof, the first anniversary of
the Closing Date, or if the Company is not eligible to file a Registration
Statement covering all of the Registrable Securities on the Filing Date, then
the date which is three months after the date that the Shelf Registration
Statement is filed.
"Effectiveness Period" shall have the meaning set forth in Section 2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Filing Date" means the date which is nine months after the Closing Date.
"Holder" or "Holders" means the holder or holders, as the case may be, from
time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section 5(c).
"Indemnifying Party" shall have the meaning set forth in Section 5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Merger Shares" means (a) the shares of Common Stock, par value $.25 per
share, of the Company issued to the IFH Purchasers pursuant to the Merger
Agreement, and (b) the shares of Common Stock issuable upon exercise of (i) the
stock purchase warrant issued to Dublind Investments, LLC in accordance with the
Merger Agreement; and (ii) the stock option issued to Peter Nardin in accordance
with the Merger Agreement.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
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"Preferred Stock" means the Series G Shares.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means a prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to such
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
"Purchase Documents" means the Purchase Agreement, the Merger Agreement,
the Subordinated Notes Purchase Agreement and the Warrants.
"Registrable Securities" means the (a) the Common Shares, (b) the Merger
Shares, and (c) shares of Common Stock issuable upon (i) conversion of the
Series G Shares; (ii) payment of dividends in respect of such Preferred Stock;
and (iii) exercise of Warrants.
"Registration Statement" means any registration statement filed by the
Company with the Commission for a public offering and sale of Common Stock
(other than (i) a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, (ii) any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation, or (iii) any
registration statement filed by the Company pursuant to (x) that certain
Registration Rights Agreement dated as of July 30, 1998 by and among the Company
and certain holders of its Series D Convertible Preferred Stock, (y) that
certain Registration Rights Agreement dated as of February 26, 1999 by and among
the Company and certain holders of its Series E Convertible Preferred Stock, or
(z) that certain Registration Rights Agreement dated as of January 11, 2000 by
and among the Company and certain holders of its Series F Convertible Preferred
Stock), including (in each such case) the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
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"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Series G Shares" means the shares of Series G Preferred Stock, par value
$1.00 per share, of the Company issued to the Stock Purchasers pursuant to the
Purchase Agreement.
"Shelf Registration Statement" shall have the meaning set forth in Section
2(a).
"Warrants" means the warrants to purchase shares of Common Stock issued to
the Warrant Purchasers pursuant to the Subordinated Notes Purchase Agreement.
2. Registration.
(a) Shelf Registration. The Company shall prepare and file with the
Commission a Registration Statement covering all Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415 (the "Shelf
Registration Statement") on or prior to the Filing Date, or if the Company is
not eligible to file a Registration Statement covering all of the Registrable
Securities on the Filing Date, then on the earliest date possible following the
Filing Date on which the Company would be eligible to file a Registration
Statement covering all of the Registrable Securities. The Shelf Registration
Statement shall be on Form S-3 (or if the Company is not then eligible to
register for resale the Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form in accordance herewith which
form shall be reasonably acceptable to the Holders). The Company shall use its
commercially reasonable efforts to cause the Shelf Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event prior to the Effectiveness Date, and to keep
such Shelf Registration Statement continuously effective under the Securities
Act until the date which is two years after the date that such Shelf
Registration Statement is declared effective by the Commission or such earlier
date when all Registrable Securities covered by such Shelf Registration
Statement have been sold or may be sold without volume restrictions pursuant to
Rule 144 as determined by the counsel to the Company pursuant to a written
opinion letter, addressed to the Company's transfer agent to such effect (the
"Effectiveness Period").
(b) Incidental Registration. Whenever the Company proposes to file a
Registration Statement, prior to such filing it shall give written notice to
each Holder of its intention to do so, and upon the written request of any
Holder given within 20 days after the Company provides such notice (which
request shall state the intended method of disposition of such Registrable
Securities), the Company shall cause all Registrable Securities which the
Company has been requested to register to be registered under the Securities Act
to the extent necessary to permit their sale or other disposition in accordance
with the intended methods of
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distribution specified in the request of such Holder(s). In connection with any
offering under this Section 2(b) involving an underwriting, the Company shall
not be required to include any Registrable Securities in such underwriting
unless the holders thereof accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it, and then only in such
quantity as will not, in the opinion of the underwriters, jeopardize the success
of the offering by the Company. If in the opinion of the managing underwriter
the registration of all, or part of, the Registrable Securities which the
Holders have requested to be included would materially and adversely affect such
public offering, then the Company shall be required to include in the
underwriting only that number of Registrable Securities which the managing
underwriter believes may be sold without causing such adverse effect; provided,
however, that in no such event shall less than 25% of the aggregate amount of
Registrable Securities which the Holders have requested to be included in such
registration be included in such public offering. In the event of such a
reduction in the number of shares to be included in the underwriting, the
Holders of Registrable Securities who have requested registration shall
participate in the underwriting pro rata based upon their total ownership of
Registrable Securities (or in any other proportion as agreed upon by such
Holders) and if any of such Holders would thus be entitled to include more
shares than such Holder requested to be registered, the excess shall be
allocated among such other requesting Holders pro rata based on their ownership
of Registrable Securities. No other securities requested to be included in a
Registration Statement for the account of anyone other than the Company or the
Holders shall be included in a Registration Statement unless all Registrable
Securities requested to be included in such Registration Statement are also
included. No Holder shall be required to make any representations or warranties
to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such Holder, such Holder's
Registrable Securities and such Holder's intended method of distribution and any
other representation required by law.
3. Registration Procedures. In connection with the Company's registration
obligations hereunder, the Company shall:
(a) Use its commercially reasonable efforts to prepare and file with the
Commission, on or prior to the Filing Date (or if the Company is not eligible to
file a Registration Statement covering all of the Registrable Securities on the
Filing Date, then on the earliest date possible following the Filing Date on
which the Company would be eligible to file a Registration Statement covering
all of the Registrable Securities), a Registration Statement on Form S-3 (or if
the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on another
appropriate form in accordance herewith which Form shall be reasonably
acceptable to the Holders) in accordance with the method or methods of
distribution thereof as specified by the Holders, and cause such Shelf
Registration Statement to become effective and remain effective as provided
herein.
(b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Shelf Registration Statement as may be
necessary to keep the Shelf Registration Statement continuously effective as to
the applicable Registrable Securities for
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the Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities Act; (iii)
respond as promptly as practicable to any comments received from the Commission
with respect to any Registration Statement covering any Registrable Securities
or any amendment thereto and promptly provide the Holders true and complete
copies of all correspondence from and to the Commission relating to such
Registration Statement; and (iv) comply with the provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Registrable
Securities covered by a Registration Statement during the applicable period in
accordance with the intended methods of disposition by the Holders thereof set
forth in such Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify the Holders of Registrable Securities to be sold: (i)(A) when a
Prospectus or Prospectus supplement covering any Registrable Securities or
post-effective amendment to a Registration Statement covering any Registrable
Securities is proposed to be filed, (B) when the Commission notifies the Company
whether there will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement, and (C) with
respect to any such Registration Statement or any post-effective amendment, when
the same has become effective; (ii) of any request by the Commission or any
other Federal or state governmental authority for amendments or supplements to a
Registration Statement or Prospectus covering any Registrable Securities or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of any Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (v) of the occurrence of any
event that makes any statement made in a Registration Statement or Prospectus
covering any Registrable Securities or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of any Registration
Statement covering any Registrable Securities or (ii) any suspension of the
qualifications (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, as soon as reasonably practicable.
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(e) Furnish to each Holder, without charge, at least one conformed copy of
each Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.
(f) Promptly deliver to each Holder, without charge, as many copies of the
Prospectus or Prospectuses covering any Registrable Securities (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.
(g) Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the selling Holders in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any Holder requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or subject
the Company to any material tax in any such jurisdiction where it is not then so
subject.
(h) Upon the occurrence of any event contemplated by Section 3(c)(v), as
promptly as practicable, prepare a supplement or amendment, including a
post-effective amendment, to such Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither such Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(i) Use its best efforts to cause all Registrable Securities relating to
any Registration Statement to be listed on The Nasdaq National Market and any
other securities exchange, quotation system, market or over-the-counter bulletin
board, if any, on which similar securities issued by the Company are then listed
as and when required pursuant to the Purchase Documents.
(j) The Company may require each selling Holder to furnish to the Company
such information, including information regarding the distribution of such
Registrable Securities,
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as is required by law to be disclosed in a Registration Statement covering such
Registrable Securities and the Company may exclude from such registration the
Registrable Securities of any such Holder who fails to furnish such information
within a reasonable time after receiving such request. The failure by the
Company to file the Shelf Registration Statement by the Filing Date, to cause it
to become effective by the Effectiveness Date or to maintain its effectiveness
for the Effectiveness Period, if due solely to the breach of a Holder's
obligations under this Section, shall not be deemed a breach of the Company's
obligations to such Holder under this Agreement or the applicable Purchase
Document to which such Holder is a party. The rights of Holders that timely
supply such information shall not be affected by the preceding sentence and the
Company shall remain obligated hereunder to file, and cause and maintain the
effectiveness of the Shelf Registration Statement on behalf of such Holders.
If any Registration Statement refers to any Holder by name or otherwise as
the holder of any securities of the Company, then such Holder shall have the
right to require (if such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar Federal statute then in force) the
deletion of the reference to such Holder in any amendment or supplement to such
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Each Purchaser covenants and agrees that (i) it will not sell any
Registrable Securities under any Registration Statement until it has received
copies of the Prospectus relating thereto as then amended or supplemented as
contemplated in Section 3(g) and notice from the Company that such Registration
Statement and any post-effective amendments thereto have become effective as
contemplated by Section 3(c); and (ii) the Purchaser and its officers, directors
or Affiliates, if any, will comply with the Prospectus delivery and any other
requirements of the Securities Act applicable to them in connection with sales
of Registrable Securities pursuant to such Registration Statement.
Each Holder agrees by its acquisition of such Registrable Securities that,
upon receipt of a notice from the Company of the occurrence of any event of the
kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(c)(v), such Holder
will forthwith discontinue disposition of such Registrable Securities under such
Registration Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated by
Section 3(h), or until it is advised in writing (the "Advice") by the Company
that the use of the applicable Prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
4. Registration Expenses. All fees and expenses incident to the performance
of or compliance with this Agreement by the Company shall be borne by the
Company, whether or not any Registration Statement covering any Registrable
Securities is filed or becomes effective and whether or not any Registrable
Securities are sold pursuant to such a Registration Statement. The fees and
expenses referred to in the foregoing sentence shall include, without
limitation, (i)
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all registration and filing fees (including, without limitation, fees and
expenses (A) with respect to filings required to be made with The Nasdaq
National Market and each other securities exchange or market on which
Registrable Securities are required hereunder to be listed, and (B) in
compliance with state securities or Blue Sky laws; (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses); (iii) messenger, telephone
and delivery expenses incurred by the Company; (iv) fees and disbursements of
counsel for the Company; (v) Securities Act liability insurance, if the Company
so desires such insurance; and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder, and the reasonable fees and expenses
of one legal counsel retained by the Holders.
5. Indemnification
(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents, investment advisors and employees of each of them,
each Person who controls any such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable
attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out
of or relating to any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any Prospectus or any form of
prospectus covering any Registrable Shares or in any amendment or supplement
thereto or in any preliminary prospectus covering any Registrable Shares, or
arising out of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
(in the case of any Prospectus or form of prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading, except to
the extent, but only to the extent, that such untrue statements or omissions are
based solely upon information regarding such Holder or such Holder's proposed
method of distribution of Registrable Securities furnished to the Company by
such Holder expressly for use therein. The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, the directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and
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Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses (as determined by a court of
competent jurisdiction in a final judgment not subject to appeal or review)
arising solely out of or based solely upon any untrue statement of a material
fact contained in any Registration Statement, any Prospectus, or any form of
prospectus covering Registrable Shares, or arising solely out of or based solely
upon any omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
so furnished by such Holder to the Company specifically for inclusion in such
Registration Statement or such Prospectus and that such information was
reasonably relied upon by the Company for use in such Registration Statement,
such Prospectus or such form of prospectus. In no event shall the liability of
any selling Holder hereunder be greater in amount than the dollar amount of the
net proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided, that
the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any
such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party); provided that if more than one Indemnified Party is
seeking indemnification with respect to the same Proceeding, the Indemnifying
Party shall not be required to pay for more than one separate counsel for all
such Indemnified Parties as a group. The Indemnifying Party shall not be liable
for any settlement of
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any such Proceeding effected without its written consent, which consent shall
not be unreasonably withheld. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.
(d) Contribution. If a claim for indemnification under Section 5(a) or 5(b)
is unavailable to an Indemnified Party because of a failure or refusal of a
governmental authority to enforce such indemnification in accordance with its
terms (by reason of public policy or otherwise), then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses, as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), the Purchaser shall not be
required to contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by the Purchaser from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that the Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
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6. Rule 144. The Company shall file the reports required to be filed by it
under the Securities Act and the Exchange Act in a timely manner and, if at any
time the Company is not required to file such reports, they will, upon the
request of any Holder, make publicly available other information so long as
necessary to permit sales of its securities pursuant to Rule 144. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144. Upon the
request of any Holder, the Company shall deliver to such Holder a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
7. Miscellaneous
(a) Remedies. In the event of a breach by the Company or by a Holder, of
any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Holders of
at least eighty percent (80%) of the then outstanding Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders and that does not directly or indirectly affect the rights of other
Holders may be given by Holders of at least a majority of the Registrable
Securities to which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(c) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 4:30 p.m. (Minneapolis time)
on a Business Day; (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in the Purchase Documents later than 4:30 p.m. (Minneapolis
time) on any date and earlier than 11:59 p.m. (Minneapolis time) on such date;
(iii) the Business Day following the date
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of mailing, if sent by nationally recognized overnight courier service; or (iv)
upon actual receipt by the party to whom such notice is required to be given.
If to the Company: Sheldahl, Inc.
1150 Sheldahl Road
Northfield, MN 55057-9444
Attn: Edward L. Lundstrom
Fax: (507) 663-8326 or
(507) 663-8435
With copies to: Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis MN 55402
Attn: Charles P. Moorse, Esq.
Fax: (612) 371-3207
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
(d) Successors and Assigns. This Agreement shall more to the benefit of and
be binding upon the successors and permitted assigns of each of the parties and
shall more to the benefit of each Holder. The Company may not assign its rights
or obligations hereunder without the prior written consent of each Holder. Each
Purchaser may assign its rights hereunder in the manner and to the Persons as
permitted under the Purchase Documents.
(e) Assignment of Registration Rights. The rights of each Purchaser
hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by the Purchaser to any assignee or transferee of all
or a portion of the shares of Preferred Stock, the Warrants or the Registrable
Securities if: (i) the Purchaser agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (A) the name and address of such transferee or assignee, and
(B) the securities with respect to which such registration rights are being
transferred or assigned; (iii) following such transfer or assignment the further
disposition of such securities by the transferee or assignees is restricted
under the Securities Act and applicable state securities laws to the extent
required by the Purchase Documents; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions of this Agreement; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Purchase Documents. The
rights to assignment shall apply to the Purchaser's (and to subsequent)
successors and assigns.
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(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, without regard to principles
of conflicts of law.
(h) Cumulative Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.
(i) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(j) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(k) Shares Held by The Company and its Affiliates. Whenever the consent or
approval of Holders of a specified percentage of Registrable Securities is
required hereunder, Registrable Securities held by the Company or its Affiliates
(other than the Purchasers or transferees or successors or assigns thereof if
such Persons are deemed to be Affiliates solely by reason of their holdings of
such Registrable Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
SHELDAHL, INC.
By: /s/ Edward L. Lundstrom
--------------------------------------------
Name: Edward L. Lundstrom
Its: President
PURCHASERS:
MORGENTHALER VENTURE PARTNERS V, L.P.
By: /s/ John D. Lutsi
--------------------------------------------
Name: John D. Lutsi,
its General Partner
AMPERSAND IV LIMITED PARTNERSHIP
BY: AMP-IV MANAGEMENT COMPANY LIMITED
LIABILITY COMPANY,
ITS GENERAL PARTNER
By: /s/ Richard A. Charpie
--------------------------------------------
Name: Richard A. Charpie
Title: Principal Managing Member
AMPERSAND IV COMPANION FUND LIMITED PARTNERSHIP
BY: AMP-IV MANAGEMENT COMPANY LIMITED
LIABILITY COMPANY,
ITS GENERAL PARTNER
By: /s/ Richard A. Charpie
--------------------------------------------
Name: Richard A. Charpie
Title: Principal Managing Member
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SOUND BEACH TECHNOLOGY PARTNERS, LLC
By: /s/ Donald R. Friedman
--------------------------------------------
Name: Donald R. Friedman
Title: President and Chief Executive Officer
MOLEX INCORPORATED
By: /s/ Thomas S. Lee
--------------------------------------------
Name: Thomas S. Lee
Title: Vice President New Ventures
and Acquisitions
DUBLIND INVESTMENTS, LLC
By: /s/ Charles Lindsay
--------------------------------------------
Name: Charles Lindsay
Title: President
/s/ Peter Nardin
-----------------------------------------------
PETER NARDIN
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SCHEDULE I
List of Purchasers
Morgenthaler Venture Parnters V, L.P.
Ampersand IV Limited Partnership
Ampersand IV Companion Fund Limited Partnership
Sound Beach Technology Partners, LLC
Molex Incorporated
Dublind Investments, LLC
Peter Nardin
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