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EXHIBIT 4.3
AMENDED AND RESTATED SUBORDINATED NOTES AND WARRANT PURCHASE AGREEMENT
This Amended and Restated Subordinated Notes and Warrant Purchase
Agreement (this "Agreement"), dated as of December 28, 2000, among Sheldahl,
Inc., a Minnesota corporation (the "Company"), and the purchasers listed on
Schedule I attached hereto (sometimes referred to herein as a "Purchaser" and
collectively as the "Purchasers").
PRELIMINARY STATEMENTS
The Company and the Purchasers entered into a Subordinated Notes and
Warrant Purchase Agreement dated as of November 10, 2000 (the "Original
Agreement").
Subject to the terms and conditions set forth in this Agreement, the
Company desires to issue and sell to the Purchasers and the Purchasers severally
desire to purchase from the Company 12% Senior Subordinated Notes in an
aggregate principal amount of up to $6,500,000 (the "Notes"). In consideration
for the agreement of the Purchasers to purchase the Notes, the Company desires
to issue to the Purchasers and the Purchasers desire to acquire from the Company
warrants (the "Warrants") to purchase in the aggregate 1,526,814 shares of
common stock, par value $.25 per share, of the Company ("Common Stock"), all
subject to the terms and conditions in this Agreement, which amends and restates
the Original Agreement in its entirety, and the other Transaction Documents (as
hereinafter defined).
Accordingly, the Company and the Purchasers agree as follows:
ARTICLE I
ISSUANCE OF THE NOTES AND THE WARRANTS
1.1 Authorization of Issuance.
(a) The Company has authorized the issuance of Notes in the aggregate
principal amount of $6,500,000, such Notes to be substantially in the form of
Exhibit A attached hereto.
(b) The Company has authorized the issuance of Warrants to purchase an
aggregate of 1,526,814 shares of Common Stock, such Warrants to be substantially
in the form of Exhibit B attached hereto.
(c) Each Purchaser shall be entitled to receive Warrants at the rate of
234,894.4615 Warrants per $1,000,000 principal amount of Notes actually
purchased.
(d) The Notes and the Warrants are sometimes collectively referred to
herein as the "Securities." As used herein, the term "Warrant" refers to a
warrant to purchase one
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share of Common Stock (or such other number of shares of Common Stock as a
result of any adjustments made pursuant to the anti-dilution provisions of the
Warrants) and a designated number of Warrants refers to warrants to purchase the
same number of shares of Common Stock (or such other number of shares of Common
Stock as a result of any adjustments made pursuant to the anti-dilution
provisions of the Warrants).
1.2 Purchase Commitments.
(a) Morgenthaler Venture Partners V, L.P. ("Morgenthaler") agrees to
purchase in accordance with and subject to the terms and conditions hereof Notes
in the aggregate principal amount of $1,750,000 and a corresponding number of
Warrants determined in accordance with Section 1.1(c) hereof.
(b) Ampersand LP agrees to purchase in accordance with and subject to
the terms and conditions hereof Notes in the aggregate principal amount of
$735,000 and a corresponding number of Warrants determined in accordance with
Section 1.1(c) hereof.
(c) Ampersand CFLP agrees to purchase in accordance with and subject to
the terms and conditions hereof Notes in the aggregate principal amount of
$15,000 and a corresponding number of Warrants determined in accordance with
Section 1.1(c) hereof.
(d) Molex agrees to purchase in accordance with and subject to the
terms and conditions hereof Notes in the aggregate principal amount of
$4,000,000 and a corresponding number of Warrants determined in accordance with
Section 1.1(c) hereof.
1.3 The Closing.
(a) The closing of the purchase and sale of the Securities (the
"Closing") shall take place at the offices of Lindquist & Vennum P.L.L.P., 4200
IDS Center, 80 South 8th Street, Minneapolis, Minnesota simultaneous with the
closing of the transactions contemplated by the Agreement and Plan of Merger,
dated as of November 10, 2000, among the Company, IFT West Acquisition Company
(the "Merger Sub"), International Flex Holdings, Inc. ("IFH") and the
shareholders of IFH (as amended, the "Merger Agreement") and the Stock Purchase
Agreement (as amended, the "Stock Purchase Agreement"), dated as of November 10,
2000, among the Company and the purchasers named therein. The date of the
Closing is hereinafter referred to as the "Closing Date."
(b) At the Closing:
(1) the Company shall deliver to each Purchaser, (A) Notes in
the principal amount set forth below the name of such Purchaser on
Schedule I attached hereto, dated the Closing Date and duly executed by
the Company; (B) the number of Warrants set forth below the name of
such Purchaser on Schedule I attached hereto, dated the Closing Date
and duly executed by the Company; and (C) all other documents,
instruments and writings required to have been delivered at or
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prior to the Closing by the Company to the Purchasers pursuant to this
Agreement, and
(c) each Purchaser shall deliver to the Company the purchase price set
forth below the name of such Purchaser on Schedule I attached hereto by wire
transfer of same day funds to an account designated by the Company in writing
two business days before the Closing.
ARTICLE II
PROVISIONS OF THE NOTES AND THE WARRANTS
2.1 The Notes. Subject to the provisions for optional prepayment in
Section 2.5 hereof and Article VIII hereof, the aggregate principal amount of
the Notes, together with all accrued interest thereon, shall be due and payable
in immediately available United States dollars on the fifth anniversary of the
Closing Date (the "Maturity Date").
2.2 Interest Payments. The Company shall pay interest on the
outstanding principal balance of the Notes at a rate equal to 12% per annum,
payable quarterly in arrears and computed on the basis of a 360-day year of
twelve months. Interest on the outstanding principal balance of the Notes shall
be payable quarterly on March 31, June 30, September 30 and December 31 of each
year. At the option of the Company, interest may be paid by the Company in the
form of cash or additional Notes (the "Additional Notes") until the first
anniversary of the Closing Date unless an Event of Default (as defined in
Section 8.1 hereof) has occurred and is continuing as of such interest payment
date, in which case, interest payable on such interest payment date shall be
payable only in cash. Thereafter, interest may only be paid in cash. The term
"Notes" as used herein shall include each Note and each Additional Note. In the
event the interest rate payable on the Notes exceeds the maximum rate of
interest permissible under any applicable law (the "Maximum Legal Rate") at any
time, the interest rate payable on the Notes shall be equal to the Maximum Legal
Rate at such time.
2.3 Default Interest. If the Company defaults in the payment of the
principal of, premium, if any, or accrued interest on the Notes, or on any other
amount due hereunder, the Company shall, on or upon demand from time to time,
pay interest on such overdue amount from the date when due up to and including
the date of actual payment (before as well as after judgment) at a rate equal to
the lower of 15% per annum or the Maximum Legal Rate.
2.4 Payments. The aggregate principal amount of the Notes shall be due
and payable on the Maturity Date. The Company shall make payment of principal of
and premium, if any, or accrued interest on the Notes, or any other amount due
to the Purchasers under this Agreement, as provided herein or in the Notes. All
payments
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hereunder shall be in United States dollars by wire transfer of same day funds.
Whenever any payment hereunder shall become due, or otherwise would occur, on a
day that is not a business day, such payment shall be made on the next
succeeding business day and such extension of time shall in such case be
included in the computation of such interest payable, or other amount, if
applicable. If at any time any payment made by the Company hereunder is
rescinded or must otherwise be restored or returned upon the insolvency,
bankruptcy or reorganization of the Company or otherwise, such payment
obligations of the Company hereunder shall be reinstated as though such payment
had been due but not made when due.
2.5 Optional Redemption of the Notes. Upon notice given as provided
below, the Company, at its option, may redeem the Notes as a whole, or from time
to time in part (in a minimum amount and otherwise in multiples of $100,000), in
each case at the principal amount so to be prepaid, together with interest
accrued thereon to the date fixed for such prepayment, plus a premium based on
the principal amount being redeemed as follows:
Date of Prepayment Premium
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Prior to the first anniversary of the Closing Date 4%
Prior to the second anniversary of the Closing Date 3%
Prior to the third anniversary of the Closing Date 2%
Prior to the fourth anniversary of the Closing Date 1%
Prior to the fifth anniversary of the Closing Date 0%
2.6 Mandatory Redemption.
(a) Except as otherwise provided in Section 2.8 hereof, concurrently
with the receipt by the Company or any of its subsidiaries of the cash proceeds
from (i) the issuance of any shares, interests, participations or other
equivalents of corporate stock or membership interests ("Capital Stock") of any
of the Company's subsidiaries or options or warrants to acquire Capital Stock of
any of the Company's subsidiaries or (ii) any sale or other disposition of
assets by the Company or any of its subsidiaries (excluding granting any
Permitted Liens), the Company shall apply such cash proceeds (net of expenses
payable by the Company or any of its subsidiaries to any person other than an
affiliate of the Company in connection with the issuance thereof and net of
accrued interest as a result of such redemption) to the redemption of Notes in
accordance with Section 2.5 hereof; provided, however, that the Company may
first apply such cash proceeds to repay Senior Debt (as hereinafter defined) and
any excess proceeds remaining thereafter shall be applied to redeem the Notes as
provided in Section 2.5 hereof and provided, further, that the Company shall
have no obligation to apply to such redemption (x) the first $1,000,000 of net
cash proceeds received by the Company or any subsidiary from all such issuances
subsequent to the Closing Date and (y) the first $1,000,000 of net cash proceeds
received by the Company or any subsidiary from all sales or other dispositions
of assets subsequent the Closing Date.
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(b) Notwithstanding the foregoing, if the Company or any of its
subsidiaries sells or disposes of equipment in the ordinary course of business,
the Company shall not be obligated to use such cash proceeds to redeem the Notes
pursuant to this Section 2.6.
(c) If the Company requests by written notice delivered to the holders
of outstanding Notes any waiver, amendment or modification of the terms of
Article VII hereof and the holders of sixty six and two-thirds percent (66-?%)
of the outstanding Notes have not given approval of such waiver, amendment or
modification within 30 days of delivery of such written request, the Company
shall have the right to redeem all but not less than all of the outstanding
Notes pursuant to Section 2.5 hereof without payment of any redemption premium,
provided that such redemption has been completed within 60 days of delivery of
such written request.
2.7 Notice of Redemption. The Company shall give the holder of each
Note irrevocable written notice of any redemption pursuant to Section 2.5 or 2.6
hereof not less than 5 days nor more than 20 days prior to the date specified
for such redemption, specifying such date and the principal amount of the Notes
held by such holder to be redeemed on such date and stating that such redemption
is to be made pursuant to Section 2.5 or 2.6 hereof. Notice of redemption having
been given as aforesaid, the principal amount of the Notes specified in such
notice, together with accrued and unpaid interest (if any) thereon through the
redemption date with respect thereto, shall become due and payable on such
redemption date.
2.8 Change in Control.
(a) In the event of any Change in Control (as hereinafter defined),
each holder of Notes shall have the right, at its option, to require the Company
to purchase all or any portion of such holder's Notes on the date (the "Change
in Control Payment Date") which is 20 business days after the date the Change in
Control Notice (as hereinafter defined) is required to be mailed at the
redemption price that would be applicable were such Notes redeemed in accordance
with Section 2.5 hereof on such date.
(b) For purposes of this Agreement, the term "Change in Control" means
the occurrence of any of the following: (i) the sale, lease, transfer,
conveyance or other disposition (other than by way of merger or consolidation),
in one or a series of related transactions, of all or substantially all of the
assets of the Company and its subsidiaries, taken as a whole, to any "person" or
"group" (as such terms are used in Section 13(d)(3) and Section 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), other than
Morgenthaler and its affiliates, Ampersand LP and its affiliates, Ampersand CFLP
and its affiliates or Molex and its affiliates (collectively, the "Permitted
Holders"); (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company; (iii) any person or group (as defined above), other
than the Permitted Holders, becomes the "beneficial owner" of 35% or more of the
voting power of the voting stock of the Company; or (iv) during any consecutive
two-year period, individuals, who at the
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beginning of such period constituted the Board of Directors (together with any
new directors whose election by the Board of Directors or whose nomination for
election by the stockholders of the Company was approved by a vote of a majority
of the directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office. For so long as the Permitted Holders hold a majority
of the outstanding shares of the Company's Series G Preferred Stock, those
directors elected by the holders of the Company's Series G Preferred Stock shall
not be considered in applying clause (iv) above. In addition, any change in the
identity of a person occupying a board seat resulting from the loss by the
holders of the Series G Preferred Stock of the right to elect one or more
directors shall not be considered in applying clause (iv) above.
(c) The Company shall send all holders of the Notes, within 5 business
days after the occurrence of any Change in Control, a notice of the occurrence
of such Change in Control (the "Change in Control Notice") and each holder of
Notes who wishes to have its Notes repurchased pursuant to this Section 2.8
shall so indicate by written notice delivered to the Company within 10 business
days of receipt of the Change in Control Notice. Each Change in Control Notice
shall state:
(1) the Change in Control Payment Date;
(2) the date by which the right to have Notes purchased must
be exercised;
(3) that such right is conditioned on receipt of notice from
the holders;
(4) the purchase price, if the right to have Notes purchased
is exercised;
(5) a description of the procedure which the holders of Notes
must follow to exercise the right to have Notes purchased;
(6) that the purchase is being made pursuant to this Section
2.8;
(7) that any Note not tendered will continue to accrue
interest if interest is then accruing; and
(8) that, unless the Company defaults in making payment
therefor, any Note purchased shall cease to accrue interest after the
Change in Control Payment Date.
(d) No failure of the Company to give the foregoing notice shall limit
any holder's right to exercise a right to have Notes purchased.
(e) If any Senior Debt is outstanding, or any amounts are owing
thereunder or in respect thereof, at the time of the occurrence of a Change in
Control, prior to the mailing of the notice to holders of the Notes, but in any
event within 10 business days after the
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date the Change in Control Notice is required to be mailed, the Company shall
(i) repay or cause the borrowers thereunder to repay in full all obligations and
terminate all commitments under or in respect of such Senior Debt or (ii) cause
such borrowers to obtain the requisite consents under such Senior Debt to permit
the repurchase of the Notes as described above. The Company must first comply
with the covenant described in the preceding sentence before it shall be
required to purchase Notes pursuant to this Section 2.8 in the event of a Change
in Control; provided, however, that the Company's failure to timely comply with
the covenant described in the preceding sentence shall constitute an Event of
Default as described in Section 8.1(c) hereof.
(f) The Company shall not be required to purchase all or any portion of
the Notes under subparagraph (a) of this Section 2.8 if a third party offers to
purchase the Notes in the manner, at the time and otherwise in compliance with
the requirements set forth in this Section 2.8, and timely purchases all Notes
or portions thereof validly tendered and not withdrawn under this Section 2.8.
2.9 Partial Redemptions Pro Rata. Upon any partial redemption of the
Notes pursuant to Section 2.5 or 2.6 hereof, the principal amount so redeemed
shall be allocated to all Notes at the time outstanding in proportion to the
respective outstanding principal amounts thereof.
2.10 Retirement of the Notes. The Company shall not redeem or otherwise
retire in whole or in part prior to their stated final maturity (other than by
redemption pursuant to Section 2.5, 2.6 or 2.8 hereof or upon acceleration of
such final maturity pursuant to Section 8.1 hereof), or purchase or otherwise
acquire, directly or indirectly, Notes held by any holder unless the Company
shall have offered to redeem or otherwise retire, purchase or acquire, as the
case may be, the same proportion of the aggregate principal amount of Notes held
by each holder of Notes at the time outstanding upon the same terms and
conditions. Any Notes so redeemed or otherwise retired, purchased or acquired by
the Company shall not be deemed to be outstanding for any purpose under this
Agreement.
2.11 Subordination. The Purchasers agree to subordinate their interest
in and to the unpaid principal amount of and interest on the Notes to the
interest of lenders of the Company existing as of the date hereof and banks or
other lending institutions providing debt financing to the Company after the
date hereof (collectively, the "Senior Lenders"); provided however, that the
holders of the Notes will not be obligated to subordinate their interests to
more than an aggregate of $45,000,000 of Indebtedness owed to such Senior
Lenders ("Senior Debt"). The Purchasers agree that they will enter into an
Intercreditor Agreement with the Senior Lenders on or prior to the Closing Date
that will contain customary terms and that is acceptable to the Purchasers and
the Senior Lenders. Notwithstanding the foregoing, the Intercreditor Agreement
to be entered into by the holders of the Notes pursuant to this Section 2.11
must provide the holders of the Notes with cross-acceleration rights (subject to
any standstill agreements), the ability to vote their interests in a bankruptcy
of the Company, no pay-over in a bankruptcy and a maximum
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standstill provision of 180 days that cannot be exercised more than once in any
365 day period.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations, Warranties and Agreements of the Company. The
Company hereby makes the following representations and warranties to the
Purchasers, subject to those matters set forth in the letter dated the date
hereof from the Company to the Purchasers initialed by those parties (the
"Disclosure Letter"). Any matter disclosed in the Disclosure Letter with respect
to a specific section of this Agreement shall be deemed disclosed with respect
to all sections of this Agreement to which it reasonably relates, but only to
the extent such disclosure is significantly adequate to inform the Purchasers of
its relevance to such other section. For the purposes of this Article III, any
reference to the subsidiaries of the Company as of the Closing Date shall
exclude IFH. The Company hereby agrees to deliver to the Purchasers an updated
Disclosure Letter within 30 days after the Closing Date to reflect the merger of
the Merger Sub with and into IFH (the "Merger").
(a) Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota. Each of
the Company's subsidiaries is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. Except as set forth in Part
3.1(a) of the Disclosure Letter, each of the Company and its subsidiaries has
the requisite corporate power and authority to own, operate or lease its
properties and to carry on its business as it is now being conducted, and is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not have a
Material Adverse Effect (as hereinafter defined) on the Company. Part 3.1(a) of
the Disclosure Letter lists all of the Company's directly or indirectly owned
subsidiaries. The term "subsidiary" or "subsidiaries" means, with respect to the
Company, any person, corporation, partnership, joint venture or other legal
entity of which the Company (either alone or through or together with any other
subsidiary), owns, directly or indirectly, stock or other equity interests the
holders of which are generally entitled to more than 50% of the vote for the
election of the Board of Directors or other governing body of such corporation
or other legal entity. The term "Material Adverse Effect," as used in this
Agreement with respect to the Company, shall mean any adverse change,
circumstance or effect that, would (i) have a material adverse effect on the
business, financial condition, assets or results of operations of the Company
and its subsidiaries, taken as a whole, or (ii) prevent or materially delay the
ability of the Company to consummate the transactions contemplated hereby, other
than any delays occasioned by review by the Securities and
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Exchange Commission (the "Commission") of the preliminary proxy statement or the
definitive proxy statement (including any amendment or supplement thereto, the
"Proxy Statement") relating to the Merger.
(b) Authorization; Enforcement. Except as set forth on Part 3.1(b) of
the Disclosure Letter, the Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement, the Notes, the Warrants, the Registration Rights Agreement (defined
in Section 5.1(i) hereof) and the Security Agreement (defined in Section 4.8
hereof), if any, and the Deed of Trust (defined in Section 4.8 hereof), if any
(the "Transaction Documents"), and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
other Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company. This Agreement has been duly and
validly executed by the Company and, when duly executed and delivered by the
Purchasers, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application. On the Closing Date, each of
the Transaction Documents will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
(c) Capitalization.
(1) The authorized, issued and outstanding capital stock of
the Company as of November 1, 2000 is set forth in Part 3.1(c) of the
Disclosure Letter. Each of the outstanding shares of capital stock of
the Company is duly authorized, validly issued, full paid and
nonassessable. Except as specifically disclosed in Part 3.1(c) of the
Disclosure Letter, no shares of the capital stock or other securities
of the Company are entitled to preemptive or similar rights, nor is any
holder of shares of the capital stock or other securities of the
Company entitled to preemptive or similar rights. Except as disclosed
in Part 3.1(c) of the Disclosure Letter, as of November 1, 2000, there
are no outstanding options, warrants or commitments of any character
whatsoever relating to, or, except as a result of the purchase and sale
of the Warrants hereunder and the shares of Common Stock issuable upon
the exercise thereof (the "Warrant Shares"), securities, rights or
obligations convertible into or exchangeable for, or giving any person
any right to subscribe for or acquire any shares of Common Stock, or
contracts, commitments, understandings, or arrangements by which the
Company is bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of
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Common Stock, or any shares of Common Stock reserved for issuance.
Except as disclosed in Part 3.1(c) of the Disclosure Letter, (i) the
Company has no obligation (contingent or otherwise) to purchase, redeem
or otherwise acquire any shares of its capital stock or any interest
therein or to pay any dividend or make any other distribution in
respect thereof, (ii) the Company has no obligation to provide funds
(other than normal accounts or notes payable) to or make any investment
in (in the form of a loan, capital contribution or otherwise) an entity
other than its subsidiaries, (iii) there are no restrictions on the
transfer of the Company's capital stock other than those arising from
securities laws or contemplated by this Agreement or the other
Transaction Documents, and (iv) the issue and sale of the Securities
will not obligate the Company to issue shares of Common Stock or other
securities to any person other than the Purchasers and will not result
in a right of any holder of the Company's securities to adjust the
exercise or conversion or reset price under such securities.
(2) Each of the outstanding shares of capital stock of each of
the Company's subsidiaries is duly authorized, validly issued, fully
paid and nonassessable, and is owned of record and beneficially by the
Company free and clear of any liens, claims, encumbrances or defects of
any kind (collectively, "Liens") other than any security interest held
by Wells Fargo Bank N.A. There is no outstanding subscription, option,
warrant, call, right, agreement, commitment, understanding or
arrangement relating to the issuance, sale, delivery, transfer or
redemption of any shares of capital stock of any subsidiary.
(3) Except as set forth on Part 3.1(c) of the Disclosure
Letter, there are no voting trusts or other agreements or
understandings to which the Company or any of its subsidiaries is a
party with respect to the voting of the capital stock of the Company or
any of its subsidiaries.
(d) Issuance of Shares. Except as set forth in Part 3.1(d) of the
Disclosure Letter, the maximum number of Warrant Shares has been duly authorized
and reserved for issuance upon exercise of the Warrants, and, when issued as
provided in the Warrants against payment therefor in accordance with the terms
of the Warrants, such Warrant Shares will be duly authorized, validly issued,
fully paid and nonassessable and free from any and all restrictions, including,
without limitation, preemptive rights, restrictions with respect to the voting,
transfer and other rights exercisable by a holder of shares of Common Stock and
any Liens, except as set forth in any required legends thereon, including those
required under the Governance Agreement between the Company and certain of the
Purchasers (the "Governance Agreement").
(e) No Conflicts. Except as specifically set forth in Part 3.1(e) of
the Disclosure Letter, the execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Articles of
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Incorporation or Bylaws of the Company or its subsidiaries; (ii) subject to
obtaining the consents referred to in Section 3.1(f) hereof, conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party; or (iii)
subject to obtaining the Required Approvals (as hereinafter defined), result in
a violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or
any of its subsidiaries is subject (other than a violation of any federal and
state securities laws requiring filings with such authorities and the delivery
of certain information pursuant to Rule 502(b)(1) promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), and applicable state
securities laws, to the Purchasers who are deemed not to be accredited investors
as a result of a failure of the representations and warranties of the Purchasers
set forth in Section 3.2(c) hereof to be accurate), or by which any property or
asset of the Company or any of its subsidiaries is bound or affected, except in
the case of each of clauses (ii) and (iii), such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations that would
not in the aggregate have a Material Adverse Effect on the Company.
(f) Consents and Approvals. Except as specifically set forth in Part
3.1(f) of the Disclosure Letter, and assuming that the representations and
warranties of the Purchasers contained in Section 3.2 hereof are true and
correct in all material respects, the Company is not required to obtain any
consent, waiver, authorization or order of, or make any filing or registration
with, any court or other federal, state, local or other governmental authority
or other person in connection with the execution, delivery and performance by
the Company of the Transaction Documents, except for (i) the filing of the
Registration Statement(s) (as defined in the Registration Rights Agreement) with
the Commission; (ii) the application(s) or any letter(s) acceptable to and
approved by the National Association of Securities Dealers, Inc. ("NASD") for
the designation of the Warrant Shares for trading on the Nasdaq Stock Market
(and with any other national securities exchange or market on which the Common
Stock is then listed); (iii) any filings, notices, registrations or approvals
under applicable federal or state securities laws and any filing or approval
that may be required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"); (iv) the filing of the Proxy Statement with
the Commission to obtain approval to mail to the Company's shareholders of the
transactions contemplated by the Merger Agreement and the Stock Purchase
Agreement, clearance from the Commission to mail such Proxy Statement to the
Company's shareholders and the receipt of such shareholder approval or the
filing with the Nasdaq Stock Market for an exemption from the requirement of
obtaining such approval of the Company's shareholders and the receipt of such
exemption; (v) the filing of any UCC Financing Statements or other documents as
may be required by the Purchasers to perfect the security interests created by
the Security Agreement and the Deed of Trust; and (vi) other than, in all other
cases, where the failure to obtain such consent, waiver, authorization or order,
or to give or make such notice or filing, (x) would not materially impair or
delay the ability of the Company to
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effect the Closing and to deliver the Securities (and, upon conversion of the
Warrants, the Warrant Shares) to the Purchasers in the manner contemplated
hereby and by the Registration Rights Agreement or (y) would not otherwise have
a Material Adverse Effect on the Company (together with the consents, waivers,
authorizations, orders, notices and filings referred to in Part 3.1(f) of the
Disclosure Letter, the "Required Approvals").
(g) Litigation; Proceedings. Except as set forth in the SEC Documents
(as hereinafter defined), or Part 3.1(g) of the Disclosure Letter, as of the
date hereof, there are no material suits, claims, actions, proceedings,
including arbitration proceedings or alternative dispute resolution proceedings,
or investigations pending or, to the best knowledge of the Company, threatened
against the Company or any of its subsidiaries or any of their properties before
or by any court, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) that could have a Material Adverse
Effect on the Company.
(h) No Default or Violation. Except as set forth in Part 3.1(h) of the
Disclosure Letter, neither the Company nor any subsidiary (i) is in default
under or in violation of any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, including, without limitation, the Limited Liability
Company Agreement of Modular Interconnect Systems, L.L.C., dated as of July 28,
1998, between Molex and the Company (the "Molex Joint Venture Agreement"); or
(ii) is in violation of any order of any court, arbitrator or governmental body,
except as could not reasonably be expected to, in any such case (individually or
in the aggregate) have or result in a Material Adverse Effect.
(i) SEC Documents; Financial Statements. Except as set forth in Part
3.1(i) of the Disclosure Letter, the Company has filed all reports required to
be filed by it under the Exchange Act, including, pursuant to Section 13(a) or
15(d) thereof, for the three years preceding the date hereof (the foregoing
materials being collectively referred to herein as the "SEC Documents"), on a
timely basis, or has received a valid extension of such time of filing and has
filed any such SEC Documents prior to the expiration of any such extension.
Except as provided in Part 3.1(i) of the Disclosure Letter, as of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder. The financial statements
of the Company included in the SEC Documents comply in all material respects
with applicable accounting requirements and the published rules and regulations
of the Commission with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved, except as may be
otherwise indicated in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company as
of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal
year-end audit adjustments. Since the date of the financial statements included
in the Company's last filed Quarterly Report
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on Form 10-Q for the quarter ended May 28, 2000, except as has been specifically
disclosed in writing to the Purchasers by the Company or in the Merger Agreement
or the Disclosure Letter referenced herein or therein, (i) there has been no
event, occurrence or development that has had a Material Adverse Effect (ii) the
Company has not incurred any liabilities (contingent or otherwise) other than
(x) liabilities incurred in the ordinary course of business consistent with past
practice and (y) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or otherwise required to be disclosed in
filings made with the Commission, (iii) the Company has not altered its method
of accounting or the identity of its auditors and (iv) the Company has not
declared or made any payment or distribution of cash or other property to its
stockholders or officers or directors (other than in compliance with existing
Company stock option and stock purchase plans) with respect to its capital
stock, or purchased or redeemed (or made any agreements to purchase or redeem)
or split, combined, subdivided or reclassified any shares of its capital stock.
(j) Changes. Since September 1, 2000, except as otherwise disclosed in
Part 3.1(j) of the Disclosure Letter:
(1) there has been no Material Adverse Effect on the Company;
(2) the Company has not adopted any amendment to its Articles
of Incorporation or Bylaws;
(3) other than grants under the Company's stock plans and
issuances upon exercise of options granted under the Company's stock
plans, neither the Company nor any subsidiary has issued, reissued,
pledged or sold, or authorized the issuance, reissuance, pledge or sale
of (i) additional shares of capital stock of any class, or securities
convertible into, exchangeable for or evidencing the right to
substitute for, capital stock of any class, or any rights, warrants,
options, calls, commitments or any other agreements of any character,
to purchase or acquire any capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to
subscribe for, capital stock; or (ii) any other securities in respect
of, in lieu of, or in substitution for, shares or any other shares of
capital stock;
(4) neither the Company nor any of its subsidiaries declared,
set aside or paid any dividend or other distribution (whether in cash,
securities or property or any combination thereof) in respect of any
class or series of its capital stock other than between the Company and
any of its wholly-owned subsidiaries;
(5) neither the Company nor any of its subsidiaries has split,
combined, subdivided, reclassified or redeemed, purchased or otherwise
acquired or proposed to redeem or purchased or otherwise acquired any
shares of its capital stock or any of its other securities;
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(6) the Company and its subsidiaries have conducted their
respective businesses only in the ordinary and usual course; and
(7) there has not been the loss, damage or destruction of any
material property of the Company.
(k) Compliance with Laws. Except as set forth in Part 3.1(k) of the
Disclosure Letter, (i) the Company and its subsidiaries are in compliance, in
all material respects, with any applicable law, rule or regulation of any United
States federal, state, local, or foreign government or agency thereof which
affects the business, properties or assets of the Company and its subsidiaries,
the non-compliance with which would have a Material Adverse Effect on the
Company; and (ii) no notice, charge, claim, action or assertion has been
received by the Company or any of its subsidiaries or has been filed, commenced
or, to the Company's knowledge, threatened against the Company or any of its
subsidiaries alleging any such violation. To the best of the knowledge of the
Company, except as provided in Part 3.1(k) of the Disclosure Letter, all
material licenses, permits and approvals required under such laws, rules and
regulations are in full force and effect.
(l) ERISA.
(1) Part 3.1(l) of the Disclosure Letter lists each "employee
pension benefit plan" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"))
(hereinafter a "Pension Plan") and "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA, hereinafter a "Welfare Plan"), in
each case maintained or contributed to, or required to be maintained or
contributed to, by the Company, any of its subsidiaries or any other
person that, together with the Company, is treated as a single employer
under Section 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended (the "Code") (each a "Commonly Controlled Entity") for
the benefit of any present or former employees of the Company or any of
its subsidiaries. Neither the Company nor any of its subsidiaries has
maintained, or incurred any liability whatsoever, with respect to a
multi-employer plan (as defined in Section 4001(a)(3) of ERISA). The
Company has made available to the Purchasers true, complete and correct
copies of (i) each Pension Plan and Welfare Plan (collectively, the
"Benefit Plans"); (ii) the most recent annual report on Form 5500 as
filed with the Internal Revenue Service with respect to each applicable
Benefit Plan; (iii) the most recent summary plan description (or
similar document) with respect to each applicable Benefit Plan; (iv)
the most recent actuarial report or valuation with respect to each plan
that is a "defined benefit pension plan" (as defined in Section 3(35)
of ERISA); and (v) each trust agreement relating to any Benefit Plan.
(2) Each Benefit Plan has been administered in all material
respects in accordance with its terms. To the best of the knowledge of
the Company and except where a failure would not have a Material
Adverse Effect on the Company,
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the Company, its subsidiaries and all the Benefit Plans are in
compliance with the applicable provisions of ERISA, the Code, and all
other laws, ordinances or regulations of any governmental entities. To
the best knowledge of the Company, there are no investigations by any
governmental entities, termination proceedings or other claims (except
claims for benefits payable in the normal operations of the Benefit
Plans), suits or proceedings against or involving any Benefit Plan or
asserting any rights to or claims for benefits under any Benefit Plan.
(3) All contributions to the Benefit Plans required to be made
by the Company or any of its subsidiaries in accordance with the terms
of the Benefit Plans, any applicable collective bargaining agreement
and, when applicable, Section 302 of ERISA or Section 412 of the Code,
have been made, there has been no application for or waiver of the
minimum funding standards imposed by Section 412 of the Code with
respect to any Benefit Plan that is a Pension Plan and no Pension Plan
had an "accumulated funding deficiency" within the meaning of Section
412(a) of the Code as of the end of the most recently completed plan
year.
(4) Except as set forth in Part 3.1(l) of the Disclosure
Letter, (i) each Pension Plan that is intended to be a tax-qualified
plan has been the subject of a determination letter from the Internal
Revenue Service to the effect that such Pension Plan and each related
trust is qualified and exempt from Federal income taxes under Sections
401(a) and 501(a), respectively, of the Code; (ii) no such
determination letter has been revoked, and revocation has not been
threatened; (iii) to the best knowledge of the Company, no event has
occurred and no circumstances exist that would adversely affect the
tax-qualification of such Pension Plan; and (iv) such Pension Plan has
not been amended since the effective date of its most recent
determination letter in any respect that might adversely affect its
qualification, increase its cost or require security under Section 307
of ERISA. The Company has made available a copy of the most recent
determination letter received with respect to each Pension Plan for
which such a letter has been issued, as well as a copy of any pending
application for a determination letter.
(5) No non-exempt "prohibited transaction" (as defined in
Section 4975 of the Code or Section 406 of ERISA) has occurred that
involves the assets of any Benefit Plan; no Pension Plan has been
terminated or has been the subject of a "reportable event" (as defined
in Section 4043 of ERISA and the regulations thereunder) for which the
30-day notice requirement has not been waived by the Pension Benefit
Guaranty Corporation ("PBGC"); and none of the Company, any of its
subsidiaries or any trustee, administrator or other fiduciary of any
Benefit Plan has engaged in any transaction or acted in a manner that
could, or has failed to act so as to, subject the Company, any such
subsidiary or any trustee, administrator or other fiduciary to any
liability for breach of fiduciary duty under ERISA or any other
applicable law.
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(6) No Commonly Controlled Entity has incurred any liability
to a Pension Plan (other than for contributions not yet due) or to the
PBGC (other than for the payment of premiums not yet due).
(7) No Commonly Controlled Entity has (i) engaged in a
transaction described in Section 4069 of ERISA that could subject the
Company to a liability at any time after the date hereof; or (ii) acted
in a manner that could, or failed to act so as to, result in fines,
penalties, taxes or related charges under (x) Section 502(c), (i) or
(1) of ERISA, (y) Section 4071 of ERISA or (z) Chapter 43 of the Code.
(8) The Company and its subsidiaries comply with the
applicable requirements of parts 6 and 7 of subtitle B of Title I of
ERISA ((S)(S) 601 et seq.) with respect to each Benefit Plan that is a
group health plan, as such term is defined in Section 5000(b)(1) of the
Code.
(9) Part 3.1(l) of the Disclosure Letter lists (i) all
employment agreements between the Company or any of its subsidiaries
and any of their respective directors, officers or employees; (ii) all
agreements and plans pursuant to which any director, officer or
employee of the Company or any of its subsidiaries is entitled to
benefits upon termination of their employment or a Change in Control of
the Company; (iii) all option plans of the Company; and (iv) all bonus,
incentive, deferred compensation, supplemental retirement, health, life
or disability insurance, dependent care, severance and other fringe
benefit or employee benefit plans, programs or arrangements of the
Company or any of its subsidiaries.
(10) Except as set forth on Part 3.1(l) of the Disclosure
Letter, there is no contract, agreement, plan or arrangement covering
any employee of the Company or any of its subsidiaries that (i)
requires the payment of severance, termination, bonus or other
benefits, or accelerated vesting of benefits, for any employee solely
as a result of the transactions contemplated by this Agreement, or (ii)
could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G or 162(m) of the Code.
(m) Assets. Except as set forth in Part 3.1(m) of the Disclosure
Letter, the Company and each of its subsidiaries has good, valid and marketable
title to, or, in the case of leased properties and assets, valid leasehold
interests in, (i) all of its material tangible properties and assets (real and
personal), including, without limitation, all the properties and assets
reflected in the consolidated balance sheet as of August 27, 1999 contained in
the SEC Documents, except as indicated in the notes thereto and except for
properties and assets reflected in the consolidated balance sheet as of August
27, 1999 contained in the SEC Documents which have been sold or otherwise
disposed of in the ordinary course of business after such date and except where
the failure to have such good, valid and marketable title would not have a
Material Adverse Effect on the Company; and (ii) all the tangible properties and
assets purchased by the Company and any of its
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subsidiaries since August 27, 1999, except for such properties and assets which
have been sold or otherwise disposed of in the ordinary course of business and
except where the failure to have such good, valid and marketable title would not
have a Material Adverse Effect on the Company; in each case subject to no
encumbrance, Lien, charge or other restriction of any kind or character, except
for (A) Liens reflected in or securing obligations reflected in the consolidated
balance sheet as of August 27, 1999 or May 26, 2000 contained in the SEC
Documents, (B) Liens consisting of zoning or planning restrictions, easements,
permits and other restrictions or limitations on the use of real property or
irregularities in title thereto which do not materially detract from the value
of, or impair the use of, such property by the Company or any of its
subsidiaries in the operation of its respective business, (C) Liens for current
taxes, assessments or governmental charges or levies on property not yet due and
delinquent, and (D) such encumbrances, Liens, charges or other restrictions
which could not reasonably be expected to have a Material Adverse Effect on the
Company.
The Company has good and marketable title to all of its properties and
assets (including real property and tangible and intangible personal property),
in each case free and clear of all Liens other than Permitted Liens.
(n) No Undisclosed Liabilities. Except (i) as disclosed in the
Company's consolidated balance sheet as of September 1, 2000 or the schedules
thereto or the Disclosure Letter; and (ii) for liabilities and obligations (1)
incurred in the ordinary course of business and consistent with past practice
since August 27, 1999; or (2) pursuant to the terms of this Agreement, neither
the Company nor any of its subsidiaries has any liabilities or obligations of
any nature, accrued, contingent or otherwise, required by GAAP to be reflected
in, reserved against or otherwise described in the consolidated balance sheet of
the Company (including the notes thereto) which, individually or in the
aggregate, would have a Material Adverse Effect on the Company.
(o) Intellectual Property. Except as provided in Part 3.1(o) of the
Disclosure Letter:
(1) To the best of the knowledge of the Company, the Company
and its subsidiaries own or have the right to use all Intellectual
Property (as hereinafter defined) necessary for the Company and its
subsidiaries to conduct their business as it is currently conducted and
consistent with past practice and such ownership and right to use shall
not be affected by the transactions contemplated by this Agreement.
(2) Except as set forth in Part 3.1(o) of the Disclosure
Letter, to the best of the knowledge of the Company, (i) all of the
Intellectual Property used by the Company and its subsidiaries is
subsisting and unexpired, free of all Liens, other than Liens that
would not have a Material Adverse Effect on the Company, and has not
been abandoned; and (ii) does not infringe the Intellectual Property
rights of any
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third party. Except as set forth in Part 3.1(o) of the Disclosure
Letter, (i) none of the Intellectual Property owned by the Company and
its subsidiaries is the subject of any license, security interest or
other agreement granting rights therein to any third party (except for
contracts relating to data, databases or software licensed to third
parties in the ordinary course of the Company's or its subsidiaries'
businesses); (ii) no judgment, decree, injunction, rule or order has
been rendered by any governmental entity which would limit, cancel or
question the validity of, or the Company's or its subsidiaries' rights
in and to, any Intellectual Property owned by the Company; (iii) the
Company has not received notice of any pending or threatened suit,
action or proceeding that seeks to limit, cancel or question the
validity of, or the Company's or its subsidiaries' rights in and to,
any Intellectual Property; and (iv) the Company and its subsidiaries
take reasonable steps to protect, maintain and safeguard the
Intellectual Property owned by the Company, including any Intellectual
Property for which improper or unauthorized disclosure would impair its
value or validity, and have caused their employees to execute
agreements in connection with the foregoing.
(3) For purposes of this Agreement "Intellectual Property"
shall mean all material rights, privileges and priorities provided
under U.S., state and foreign law relating to intellectual property,
including (i) all (A) inventions, discoveries, processes, formulae,
designs, methods, techniques, procedures, concepts, developments,
technology, new and useful improvements thereof and know-how relating
thereto, whether or not patented or eligible for patent protections;
(B) copyrights and copyrightable works, including computer
applications, programs, software, databases and related items; (C)
trademarks, service marks, trade names, and trade dress, the goodwill
of any business symbolized thereby, and all common-law rights relating
thereto; and (D) trade secrets and other confidential information; and
(ii) all registrations, applications, recordings, and licenses or other
similar agreements related to the foregoing.
(p) Taxes. The Company and each of its subsidiaries have (i) filed all
Tax Returns (as hereinafter defined) which they are required to file under
applicable laws and regulations; (ii) paid all Taxes (as hereinafter defined)
which have become due and payable; and (iii) accrued as a liability on the
balance sheet included in the Company's financial statements described in
Section 3.1(i) hereof, all Taxes which were accrued but not yet due and payable
as of the date thereof, except for failures to take any such actions which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. The Company has provided the Purchasers with information, that is
complete and correct in all material respects, with respect to the Company's net
operating loss carry forwards and other tax attributes. For purposes of this
Agreement, "Tax" or "Taxes" shall mean any federal, state, local or foreign
income, gross receipts, franchise, estimated, alternative minimum, add-on
minimum, sales, use, transfer, conveyance, registration, value added, excise,
natural resources, severance, stamp, occupation, premium, windfall profit,
environmental, customs, duties, real property, commercial reit, personal
property, capital
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stock, social security, unemployment, disability, payroll, license, employee or
other withholding, or other tax of any kind, including any interest or penalties
in respect of the foregoing, and "Tax Returns" shall mean returns, declarations,
reports, information returns, or other documents filed or required to be filed
in connection with the determination, assessment or collection of Taxes of any
person or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
(q) Environmental Laws and Regulations. Except as disclosed in Part
3.1(q) of the Disclosure Letter:
(1) The Company and its subsidiaries hold and are in
compliance in all material respects with all Environmental Permits (as
hereinafter defined), and, to the best of the knowledge of the Company,
the Company and its subsidiaries are otherwise in compliance in all
material respects with all Environmental Laws (as hereinafter defined);
(2) As of the date hereof, there is no pending Environmental
Claim (as hereinafter defined) against the Company or any of its
subsidiaries and, to the best of the knowledge of the Company, there is
no such threatened Environmental Claim;
(3) Neither the Company nor any of its subsidiaries has
entered into any consent decree, consent order or consent agreement
under any Environmental Law that would have a Material Adverse Effect
on the Company;
(4) To the best of the knowledge of the Company, there are no
(A) underground storage tanks, (B) polychlorinated biphenyls, (C)
friable asbestos or asbestos-containing materials, (D) sumps, (E)
surface impoundments, (F) landfills, or (G) sewers or septic systems
present at any facility currently owned, leased, operated or otherwise
used by the Company or any of its subsidiaries the presence of which
would have a Material Adverse Effect on the Company;
(5) To the best of the knowledge of the Company or any of its
subsidiaries, there are no past (including with respect to assets or
businesses formerly owned, leased or operated by the Company or any of
its subsidiaries) or present actions, activities, events, conditions or
circumstances, including without limitation the release, threatened
release, emission, discharge, generation, treatment, storage or
disposal of Hazardous Materials (as hereinafter defined) the occurrence
of which would have a Material Adverse Effect on the Company;
(6) No modification, revocation, reissuance, alteration,
transfer, or amendment of the Environmental Permits, or any review by,
or approval of, any third party of the Environmental Permits is
required in connection with the execution or delivery of this Agreement
or the consummation of the transactions contemplated
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hereby or the continuation of the business of the Company or its
subsidiaries, as currently conducted, following such consummation; and
(7) To the extent required by GAAP, the Company and its
subsidiaries have accrued or otherwise provided for all damages,
liabilities, penalties or costs that they may incur in connection with
any claim pending or threatened against them, or any requirement that
is or may be applicable to them, under any Environmental Laws, and such
accrual or other provision is reflected in the Company's most recent
consolidated financial statements included in the SEC Documents filed
prior to the date hereof.
For purposes of this Agreement, the following terms shall have the
following meanings: (i) "Environmental Claim" shall mean any written or oral
notice, claim, demand, action, suit, complaint, proceeding or other
communication by any person alleging liability or potential liability (including
liability or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property damage, personal
injury, fines or penalties) arising out of, relating to, based on or resulting
from (A) the presence, discharge, emission, release or threatened release of any
Hazardous Materials at any location, whether or not owned, leased or operated by
the Company or any of its subsidiaries, or (B) circumstances forming the basis
of any violation or alleged violation of any Environmental Law or Environmental
Permit, or (C) otherwise relating to obligations or liabilities under any
Environmental Laws; (ii) "Environmental Permits" shall mean all material
permits, licenses, registrations and other governmental authorizations required
under Environmental Laws for the Company and its subsidiaries to conduct their
operations and businesses on the date hereof and consistent with past practices;
(iii) "Environmental Laws" shall mean all applicable federal, state and local
statutes, rules, regulations, ordinances, orders, decrees and common law
relating in any manner to contamination, pollution or protection of the
environment or the effect of Hazardous Material on human health, including the
Comprehensive Environmental Response, Compensation and Liability Act, the Solid
Waste Disposal Act, the Clean Air Act, the Clean Water Act, the Toxic Substances
Control Act, the Occupational Safety and Health Act, the Emergency Planning and
Community-Right-to-Know Act, the Safe Drinking Water Act, all as amended, and
similar state laws, in each case in effect on the date hereof; and (iv)
"Hazardous Materials" shall mean all hazardous or toxic substances, wastes,
materials or chemicals, petroleum (including crude oil or any fraction thereof)
and petroleum products, friable asbestos and asbestos-containing materials,
pollutants, contaminants and all other materials, and substances regulated as
hazardous or toxic pursuant to any Environmental Law.
(r) Contracts; Debt Instruments.
(1) All contracts, agreements, guarantees, leases and
executory commitments other than Plans (each, a "Contract") that are
material to the Company and its subsidiaries, taken as a whole (each, a
"Material Contract") are
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valid and binding obligations of the Company and, to the best of the
knowledge of the Company and its subsidiaries, the valid and binding
obligation of each other party thereto. Except as disclosed in Part
3.1(r) of the Disclosure Letter, neither the Company, nor to the best
of the knowledge of the Company and its subsidiaries, any other party
thereto, is in violation of or in default in any material respect of,
nor has there occurred an event or condition which with the passage of
time or giving of notice (or both) would constitute a default under or
permit the termination of, any such Material Contract unless such
violation or default would not have a Material Adverse Effect on the
Company.
(2) The Company has made available true, correct and complete
copies of all of the following contracts to which the Company or any of
its subsidiaries is a party or by which any of them is bound
(collectively, the "Specified Contracts"): (i) contracts with any
directors, officers, key employees or affiliates of the Company; (ii)
collective bargaining agreements for which the Company or any of its
domestic subsidiaries is a party; (iii) pending contracts (A) for the
sale of any of the assets of the Company or any of its subsidiaries,
other than contracts entered into in the ordinary course of business,
or (B) for the grant to any person of any preferential rights to
purchase any of its assets, other than in the ordinary course of
business; (iv) contracts which restrict, in any material respect, the
Company or any of its subsidiaries from competing in any line of
business or with any person in any geographical area; (v) indentures,
credit agreements, security agreements, mortgages, guarantees,
promissory notes and other contracts relating to the borrowing of money
involving Indebtedness for borrowed money; (vi) contracts with any
stockholders or group of stockholders of the Company beneficially
owning 5% or more of the Company's outstanding capital stock on the
date hereof; (vii) material acquisition, merger, asset purchase or sale
agreements entered into since January 1, 1997 (other than agreements
for the purchase and sale of materials or products in the ordinary
course of business); (viii) contracts relating to any material joint
venture, partnership, strategic alliance or other similar agreement;
(ix) licenses, whether the Company is licensee or licensor and material
leases; and (x) all other agreements, contracts or instruments entered
into which, to the best of the knowledge of the Company, are material
to the Company and its subsidiaries taken as a whole.
(3) Part 3.1(r) of the Disclosure Letter provides accurate and
complete information (including amount and name of payee) with respect
to all Indebtedness of the Company or any of its subsidiaries as of
September 1, 2000. For purposes hereof, "Indebtedness" of any person
shall mean all items of indebtedness of such person for borrowed money
and purchase money indebtedness, including, without limitation,
capitalized lease obligations which, in accordance with GAAP, would be
included in determining liabilities as shown on the liability side of
the balance sheet of such person as of the date as of which
indebtedness is to be determined, but excluding accounts payable
arising within the ordinary course of business
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consistent with past practice, and shall also include all Contingent
Obligations. For purposes hereof, "Contingent Obligation" shall mean,
as applied to any person, any direct or indirect liability, contingent
or otherwise, of that person with respect to any Indebtedness, capital
lease (other than as lessor), dividend, letter of credit, surety bond
or other obligation of another, including, without limitation, any such
obligation, directly or indirectly, guaranteed, endorsed (other than
for collection or deposit in the ordinary course of business), co-made
or discounted or sold with recourse by that person, or in respect of
which that person is otherwise, directly or indirectly, liable. The
amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported.
(s) Non-Competition Agreements. Except as provided in Part 3.1(s) of
the Disclosure Letter, neither the Company nor any of its subsidiaries is a
party or is otherwise subject to any agreement which (i) purports to restrict or
prohibit in any material respect any of them or any corporation affiliated with
any of them from, directly or indirectly, engaging in any business currently
engaged in by the Company or any of its affiliates; or (ii) would restrict or
prohibit, in any material respect, the Company or any of its subsidiaries from
engaging in such business.
(t) Interested Party Transactions. Except as provided in the SEC
Documents or set forth in Part 3.1(t) of the Disclosure Letter, no member,
manager, officer or affiliate of the Company or any of its subsidiaries has or
has had, directly or indirectly, (i) an economic interest in any person which
has furnished or sold or furnishes or sells services or products that the
Company or one of its subsidiaries furnishes or sells or proposes to furnish or
sell; (ii) an economic interest in any person that purchases from or sells or
furnishes to the Company or any one of its subsidiaries any goods or services;
(iii) any economic interest in any contract or lease with the Company or any one
of its subsidiaries; or (iv) any contractual or other arrangement with the
Company or one of its subsidiaries; provided however, that ownership of no more
than one percent (1%) of the outstanding voting stock of a publicly traded
corporation shall not be deemed an "economic interest" in any "person" for
purposes of this subsection (t).
(u) Insurance. Except as disclosed in the SEC Documents, all material
fire and casualty, general liability, business interruption, product liability
and sprinkler and water damage insurance policies maintained by the Company or
any of its subsidiaries are with nationally recognized insurance carriers,
provide coverage for all normal risks incident to the business of the Company
and its subsidiaries and their respective properties and assets and are in
character and amount appropriate for the business conducted by the Company,
except as would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
(v) Investment Company Act and Public Utility Holding Company Act. The
Company is neither an "investment company" nor an "affiliate" of an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940, as
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amended. The Company is neither a "holding company" as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 1935, as amended.
(w) Solvency. The fair value of the aggregate assets of the Company
exceeds, and immediately following the issue of the Notes and Warrants on the
Closing Date and giving effect to the obligations of the Company under the same,
will exceed its total liabilities (including subordinated, unmatured,
unliquidated, disputed and contingent liabilities). Neither the assets of the
Company are, nor immediately following the sale of the Notes and Warrants on the
Closing Date hereunder will they be, unreasonably small in relation to any
business or transaction in which such corporation is or is about to be engaged.
The Company does not intend to, nor believes that it will, nor should it
reasonably believe it will, incur debts beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash to be received
by the Company and the amounts to be payable on or in respect of its
obligations).
(x) Use of Proceeds; Margin Stock. None of the proceeds of the sale of
the Securities will be used for the purpose of purchasing or carrying any
"margin stock" as defined in Regulations U, T, X, or N of the Board of Governors
of the Federal Reserve System, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry "margin stock,"
or for any other purpose which might constitute transactions contemplated by
this Agreement a "purpose credit" within the meaning of Regulations U, T, X or
N. The Company is not engaged in the business of extending credit for the
purpose of purchasing or carrying margin stocks. The Company has not taken and
will not take any action which might cause any violation of Regulations U, T, X,
N or any other regulations of the Board of Governors of the Federal Reserve
System or any violation of Section 7 of the Exchange Act or any rule or
regulation promulgated thereunder, in each case as now in effect or as the same
may hereinafter be in effect.
(y) The Security Documents. If required to be executed and delivered in
accordance with the provisions hereof, the provisions of the Security Agreement
and the Deed of Trust will be effective to create in favor of the holders of the
Notes a legal, valid and enforceable security interest in all right, title and
interest of the collateral described therein (the "Collateral") to the extent
that a security interest can be created therein under the Uniform Commercial
Code, and, on the date of the Closing, the holders of the Notes will have a
fully perfected lien on, and security interest in the Collateral described
therein (to the extent such security interest can be perfected by filing a UCC-1
financing statement or, to the extent required by the Security Agreement, by
taking possession of the Collateral, or by filing such Deed of Trust), subject
to no other Liens other than Permitted Liens.
(z) Certain Fees. Except as set forth in Part 3.1(z) of the Disclosure
Letter, no fees or commissions will be payable by the Company to any broker,
financial advisor or consultant, finder, placement agent, investment banker,
bank or other person with respect
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to the transactions contemplated by this Agreement, the other Transaction
Documents, the Merger Agreement and the Stock Purchase Agreement. The Purchasers
shall have no obligation with respect to any fees incurred by the Company or any
other person (other than IFH) or with respect to any claims made by or on behalf
of other persons for fees of a type contemplated in this Section 3.1(z) that may
be due in connection with the transactions contemplated by this Agreement, the
other Transaction Documents, the Merger Agreement and the Stock Purchase
Agreement.
(aa) Listing and Maintenance Requirements. Except as set forth in Part
3.1(aa) of the Disclosure Letter, the Company has not, in the two years
preceding the date hereof received notice (written or oral) from the Nasdaq
Stock Market, any stock exchange, market or trading facility on which the Common
Stock is or has been listed (or on which it has been quoted) to the effect that
the Company is not in compliance with the listing or maintenance requirements of
such exchange, market or trading facility. Except as set forth in Part 3.1(aa)
of the Disclosure Letter, the Company is, and has no reason to believe that it
will not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements.
(bb) Registration Rights. Except as set forth in Part 3.1(bb) of the
Disclosure Letter, the Company has not granted or agreed to grant to any person
any rights to have any securities of the Company registered with the Commission
or any other governmental authority which have not been satisfied.
(cc) Labor Relations. No labor problem with respect to any of the
employees of the Company exists or, to the knowledge of the Company, is imminent
that is likely to have or result in a Material Adverse Effect.
(dd) Permits. Except as provided in Part 3.1(dd) of the Disclosure
Letter, each of the Company and its Subsidiaries is in possession of all
material franchises, grants, authorizations, licenses, permits, easements,
variances, exceptions, consents, certificates, approvals and orders of any
governmental entity necessary for the Company or any of its Subsidiaries to own,
lease and operate its properties or to carry on its business as it is now being
conducted (the "Company Permits"), and, as of the date of this Agreement, no
suspension or cancellation of any of the Company Permits is pending or, to the
best of the Company's knowledge, threatened.
(ee) Disclosure. The representations, warranties and other statements
of the Company contained in this Agreement and the other certificates furnished
to the Purchasers by the Company pursuant hereto, taken as a whole, do not
contain any untrue statement of a material fact or, to the best of the knowledge
of the Company, omit to state a material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances made, not
materially misleading as of the date hereof.
(ff) Knowledge. Whenever a representation or warranty made by the
Company refers to the best of the knowledge of the Company or its subsidiaries,
such knowledge
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shall be deemed to consist only of the actual knowledge of the executive
officers of the Company or its subsidiaries and the Merger Sub.
(gg) Rights Agreement. Assuming the accuracy of the representations in
Sections 3.2 (h) and (l) hereof:
(1) The Company has taken all action which may be required
under Rights Agreement, so that: the acquisition of shares of Common
Stock, Series G Preferred Stock and/or Warrants (1) pursuant to the
Merger Agreement, the Stock Purchase Agreement or this Agreement, (2)
upon conversion of shares of Series G Preferred Stock, (3) upon
exercise of the Warrants and/or (4) as dividends on the Series G
Preferred Stock, in all cases as adjusted for stock splits, dividends,
recapitalizations and the like and any other events requiring
adjustment under the anti-dilution provisions of applicable governing
instruments alone shall not cause (X) any Purchaser, or any of its
"Affiliates" or "Associates" (as such terms are defined in Rule 12b-2
under the Exchange Act), to be deemed an "Acquiring Person" under the
Rights Agreement or (Y) a "Distribution Date" , a "Stock Acquisition
Date" or "Acquisition Event" (as such terms are defined in the Rights
Agreement) to occur.
(2) the acquisition of shares of Common Stock, Series G
Preferred Stock and/or Warrants (1) pursuant to this Agreement, the
Stock Purchase Agreement or the Subordinated Debt Agreement, (2) upon
conversion of shares of Series G Preferred Stock, (3) upon exercise of
the Warrants and (4) as dividends on the Series G Preferred Stock, in
all cases as adjusted for stock splits, dividends, recapitalizations
and the like and any other events requiring adjustment under the
anti-dilution provisions of applicable governing instruments, have been
approved by a committee of the Board of Directors of the Company, as
required in Section 302A.673, subd. 1(d) of the MBCA.
(hh) Board Approval. Assuming the accuracy of the representations in
Section 3.2(h) hereof, the consummation of the transactions contemplated by the
Transaction Documents, the Stock Purchase Agreement and the Merger Agreement and
the issuance of the Warrants and the Warrant Shares has been approved by a
committee of the Board of Directors of the Company, as required in Section
302A.673, subdivision 1(d) of the Minnesota Business Corporation Act (the
"MBCA").
(ii) Opinion of Financial Advisor. U.S. Bancorp Piper Jaffray has
delivered to the Board of Directors of the Company its opinion to the effect
that, as of the date hereof, the transactions contemplated by this Agreement,
the Merger Agreement and the Stock Purchase Agreement taken as a whole are fair,
from a financial point of view, to the Company and its shareholders.
3.2 Representations and Warranties of the Purchasers. Each Purchaser,
severally and not jointly, hereby represents and warrants to the Company as
follows:
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(a) Organization; Authority. Such Purchaser is a duly formed, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization or an individual, in each case, with the requisite
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents to which it is a party and otherwise
to carry out its obligations hereunder and thereunder. The execution and
delivery of this Agreement by such Purchaser, and the consummation by it of the
transactions contemplated hereby, have been duly authorized by all necessary
action on the part of such Purchaser. This Agreement has been duly executed and
delivered by such Purchaser and constitutes the valid and legally binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity.
(b) Investment Intent. Such Purchaser is acquiring the Securities for
its own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof or interest
therein, without prejudice, however, to such Purchaser's right, subject to the
provisions of this Agreement and the Registration Rights Agreement, at all times
to sell or otherwise dispose of all or any part of such Securities pursuant to
an effective registration statement under the Securities Act and in compliance
with applicable state securities laws or under an exemption from such
registration.
(c) Purchaser Status. At the time such Purchaser was offered the
Securities it was, and at the date hereof it is, and at the Closing Date it will
be, an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (4) under
the Securities Act.
(d) Experience of Purchaser. Such Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment to its satisfaction.
(e) Ability of Purchaser to Bear Risk of Investment. On the Closing
Date, such Purchaser is able to bear the economic risk of an investment in the
Securities and is able to afford a complete loss of such investment.
(f) Access to Information. Each Purchaser acknowledges that it has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Securities, and the merits and risks
of investing in the Securities; (ii) access to information about the Company and
the Company's financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information which the Company
possesses or can acquire without unreasonable effort or
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expense that is necessary to make an informed investment decision with respect
to its investment.
(g) Reliance. Each Purchaser understands and acknowledges that (i) the
Securities are being offered and sold to the Purchaser without registration
under the Securities Act in a private placement that is exempt from the
registration provisions of the Securities Act under Section 4(2) of the
Securities Act or Regulation D promulgated thereunder; and (ii) the availability
of such exemption depends in part on, and the Company will rely upon the
accuracy and truthfulness of, the foregoing representations and such Purchaser
hereby consents to such reliance.
(h) No Affiliation. No Purchaser is an "Affiliate" or "Associate" (as
such terms are defined in Rule 12b-2 under the Exchange Act) of any other
Purchaser or is acting in concert with any other Purchaser, except (i) that
Ampersand LP and Ampersand CFLP may be deemed to be Affiliates or Associates of
one another, (ii) to the extent that a member or partner of a Purchaser or a
member of a partner of a Purchaser is a member or partner of another Purchaser
or a member or partner of a member or partner of another Purchaser, (iii) by
virtue of the existence of the Governance Agreement and/or the Voting Agreement
among Ampersand LP, Ampersand CFLP and Morgenthaler relating to voting of the
shares of the Series G Preferred Stock being issued and sold pursuant to the
Stock Purchase Agreement in an election of directors to the Company's Board of
Directors (the "Voting Agreement"), and (iv) as otherwise provided in any
Transaction Document. No Purchaser beneficially owns (as determined pursuant to
Rule 13d-3 under the Exchange Act) any securities of any other Purchaser, except
(A) Ampersand LP and Ampersand CFLP may be deemed to beneficially own the
securities of one another, (B) to the extent that a member or partner of a
Purchaser or a member of a partner of a Purchaser is a member or partner of
another Purchaser or a member or partner of a member or partner of another
Purchaser, (C) by virtue of the existence of the Governance Agreement and/or the
Voting Agreement, and (D) as otherwise provided in any Transaction Document. No
Purchaser is an "interested shareholder" of the Company or an "affiliate" or
"associate" thereof, as such terms are defined in Section 302A.011 of the MBCA
resulting from any share purchase, contract, arrangement or understanding, other
than this Agreement, the Merger Agreement or any acquisition of shares approved
by a committee of the Board of Directors of the Company as required in Section
302A.673, subdivision 1(d) of the MBCA.
(i) No Conflicts. The execution, delivery and performance of the
Transaction Documents by such Purchaser and the consummation by such Purchaser
of the transactions contemplated thereby do not and will not (i) conflict with
or violate any provision of its certificate or articles of incorporation,
bylaws, partnership agreement or other governing instrument, as applicable (each
as amended through the date hereof), or (ii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which such Purchaser is subject
(including foreign, federal and state securities laws and regulations).
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(j) Consents and Approvals. Such Purchaser is not required to obtain
any consent, waiver, authorization or order of, or make any filing or
registration with, any court or other foreign, federal, state, local or other
governmental authority or other person in connection with the execution,
delivery and performance by such Purchaser of the Transaction Documents.
(k) Litigation; Proceedings. There is no action, suit, notice of
violation, proceeding or investigation pending, or to the knowledge of such
Purchaser, threatened against or affecting such Purchaser before or by any
court, governmental or administrative agency or regulatory authority (federal,
state, county, local or foreign) which would adversely affect the legality,
validity or enforceability of any of the Transaction Documents in any respect or
adversely impair such Purchaser's ability to perform fully on a timely basis its
obligations under the Transaction Documents.
(l) Beneficial Ownership of Sheldahl Stock. At and after the Closing
Date, except as provided on Schedule II attached hereto and except by virtue of
the existence of the Governance Agreement and/or the Voting Agreement, no
Purchaser shall be a Beneficial Owner (as hereinafter defined) of fifteen
percent (15%) or more of outstanding shares of Common Stock. For purposes of
this Section 3.2(l), "Beneficial Owner" shall have the meaning set forth in
Section 1(d) of the Rights Agreement. Each Purchaser has been provided, upon its
request, with a copy of such definition and has had an opportunity to review it
with such Purchaser's legal counsel.
(m) Residency. Each Purchaser is a resident of or has a principal place
of business in the state set forth below its name on Schedule I attached hereto.
(n) Certain Fees. Except as set forth in Schedule 3.2(n) attached
hereto, the Purchasers have not incurred any fees or commissions which would
obligate the Company to pay any fees or commissions to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
person with respect to the transactions contemplated by this Agreement, the
other Transaction Documents, the Merger Agreement and the Stock Purchase
Agreement.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) If any Purchaser should decide to dispose of any of the Securities
held by it, such Purchaser understands and agrees that it may do so only
pursuant to an effective registration statement under the Securities Act, to the
Company or pursuant to an available exemption from the registration requirements
of the Securities Act. In connection with any transfer of any Securities other
than pursuant to an effective registration statement or to the Company or to an
affiliate of such Purchaser or pursuant to Rule 144 under the
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Securities Act ("Rule 144"), the Company may require the transferor thereof to
provide to the Company a written opinion of counsel experienced in the area of
United States securities laws selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred securities
under the Securities Act.
(b) (1) Each Purchaser agrees to the imprinting, so long as is required
by this Section 4.1(b), of the following legend on the Notes:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
(2) Each Purchaser agrees to the imprinting, so long as is required by
this Section 4.1(b), of the following legend on the Warrants:
NEITHER THESE SECURITIES NOR THE SECURITIES UNDERLYING THESE
SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
(3) Each Purchaser agrees to the imprinting, so long as is required by
this Section 4.1(b), of the following legend on the Warrant Shares:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
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SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
THE CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST
AND WITHOUT CHARGE, A FULL STATEMENT OF THE DESIGNATIONS,
PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF THE SHARES OF
EACH CLASS OR SERIES OF CAPITAL STOCK AUTHORIZED TO BE ISSUED,
SO FAR AS THEY HAVE BEEN DETERMINED, AND THE AUTHORITY OF THE
BOARD TO DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF THE
SUBSEQUENT CLASSES OR SERIES.
THE SHARES OF COMMON STOCK OF SHELDAHL, INC. INTO WHICH THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE CONVERTIBLE
ENTITLE THE HOLDER THEREOF TO CERTAIN RIGHTS AS SET FORTH IN
THE RIGHTS AGREEMENT BETWEEN SHELDAHL, INC. AND WELLS FARGO
BANK, N.A., DATED AS OF JUNE 16, 1996 AND AMENDED ON JULY 25,
1998 AND NOVEMBER 10, 2000 (THE "RIGHTS AGREEMENT"), A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF SHELDAHL, INC.
UNDER CERTAIN CIRCUMSTANCES, SUCH RIGHTS ISSUED TO OR HELD BY
AN ACQUIRING PERSON, OR AFFILIATE OR ASSOCIATE THEREOF (AS
DEFINED IN THE RIGHTS AGREEMENT), AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS, MAY BECOME NULL AND VOID.
The Warrants and the Warrant Shares shall not contain any other legend
(other than those legends that identify the existence of the Rights Agreement)
if the Warrants and the Warrant Shares have been sold pursuant to Rule 144, or
if in the written opinion of counsel to the Company experienced in the area of
United States securities laws such other legend is not required under applicable
requirements of the Securities Act (including judicial interpretation and
pronouncements issued by the staff of the Commission). The Company makes no
representation, warranty or agreement as to the availability of any exemption
from registration under the Securities Act with respect to any resale of any
Securities.
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4.2 Use Of Proceeds. The Company shall use the net proceeds from the
issuance of the Securities for general corporate purposes, including the
retirement of existing Indebtedness.
4.3 Commercially Reasonable Efforts. Subject to the terms and
conditions herein provided and to applicable legal requirements, each of the
parties hereto agrees to use its commercially reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done, and assist and
cooperate with the other parties hereto in doing, as promptly as practicable,
all things necessary, proper or advisable under applicable laws and regulations
to ensure that the conditions set forth in Article V hereof are satisfied.
4.4 Consents. Each of the parties will use its commercially reasonable
efforts to obtain as promptly as practicable all Required Approvals.
4.5 No Publicity; Confidentiality. The mutual press release with
respect to the execution of this Agreement, the Merger Agreement, the Stock
Purchase Agreement and the other Transaction Documents shall be a joint press
release acceptable to the Company and the Purchasers. Thereafter, so long as
this Agreement is in effect, neither the Company, on the one hand, nor the
Purchasers, on the other, shall issue any press release or otherwise make any
public statements inconsistent with the mutual press release or the terms of the
transactions contemplated by this Agreement, the Merger Agreement, the Stock
Purchase Agreement or by the other Transaction Documents with respect to the
transactions contemplated hereby or thereby without prior consultation with the
other party and after using reasonable efforts to agree upon the text of any
press release, except as may be required by law (it being understood and agreed
that the Company intends to file a Current Report on Form 8-K with respect to
the transactions contemplated hereby and by the Merger Agreement, the Stock
Purchase Agreement and the other Transaction Documents promptly after the date
hereof). The Company shall provide the Purchasers with a copy of its Form 8-K
prior to filing the same with the Commission and the ability to comment on the
same.
4.6 Conduct of Business. Except as expressly contemplated by this
Agreement or set forth in the Disclosure Letter or with the prior written
consent of the Purchasers, during the period from the date of this Agreement to
the time the Merger becomes effective in accordance with applicable law (the
"Effective Time"), the Company will, and will cause each of its subsidiaries to,
conduct its operations only in the ordinary and usual course of business
consistent with past practice and will use its commercially reasonable efforts,
and will cause each of its subsidiaries to use its commercially reasonable
efforts, to preserve intact the business organization of the Company and each of
its subsidiaries, to keep available the services of its and their present
officers and key employees, and to preserve the good will of those having
business relationships with it. Without limiting the generality of the
foregoing, and except as otherwise expressly contemplated by this Agreement or
as set forth in the Disclosure Letter, the Company will not, and will not permit
any of its subsidiaries to, prior to the Effective Time, without the prior
written consent of the
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Purchasers, except as otherwise provided in Part 4.6 of the Disclosure Letter,
incur, assume or pre-pay, or modify or amend or seek or obtain any consents
under or waivers of the terms of, any Indebtedness of the Company or its
subsidiaries, except that the Company and its subsidiaries may (i) incur or
pre-pay Indebtedness in the ordinary course of business in amounts and for
purposes consistent with past practice under existing lines of credit; (ii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person in
the ordinary course of business consistent with past practice; (iii) make any
loans, advances or capital contributions to, or investments in, any other person
but only in the ordinary course of business consistent with past practice and
loans, advances, capital contributions or investments between any wholly owned
subsidiary of the Company and the Company or another wholly owned subsidiary of
the Company; or (iv) issue and sell 12% Senior Subordinated Notes in the
aggregate principal amount up to $5,000,000 on terms identical to those
contained herein, provided that the Company (A) keeps the Purchasers apprised of
discussions relating to the issuance and sale of such additional notes, (B)
notifies the Purchasers upon obtaining a firm commitment for the sale of such
additional notes and (C) provides the Purchasers with any closing documentation
relating to the sale of such additional notes.
4.7 [Intentionally omitted.]
4.8 Consent of Secured Lenders. The Company shall use its reasonable
best efforts to obtain the consent of its Senior Lenders that have a security
interest in its or its subsidiaries assets to permit the Purchasers to have a
subordinate lien on the assets secured by such Senior Lenders. To the extent the
Company is able to obtain such consents, the Company and the Purchasers will
enter into a security agreement (the "Security Agreement") and/or deed of trust
(the "Deed of Trust") in form and substance substantially the same as the
security agreements and/or deeds of trust that the Company is a party to as of
the date of this Agreement, with such changes as are necessary to reflect the
Purchasers' subordinate interest in such assets. The Purchasers acknowledge that
the Company has advised them that Wells Fargo Bank N.A. has indicated that it
will not consent to the granting to the holders of the Notes any security
interest in the assets of the Company.
4.9 Financial Covenants. During the period from the date of this
Agreement to the Closing Date, the Company and the Purchasers shall in good
faith negotiate financial covenants of the Company and its subsidiaries relating
to capital expenditures and the maintenance of a total debt service coverage
ratio and minimum EBITDA from the Closing Date going forward. To the extent
agreement on such financial covenants is not reached by the Closing Date, such
financial covenants shall be substantially similar to those contained in any
documentation between the Company and the Senior Lenders in place on the Closing
Date.
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4.10 Expenses of Molex. On the earlier of the Closing Date and the date
on which this agreement is terminated in accordance with section 9.1 hereof, the
Company shall pay the reasonable expenses and disbursements incurred by Molex,
including the fees and out-of-pocket expenses and disbursements of legal counsel
to Molex, in connection with the negotiation and execution of this Agreement and
any other document executed in connection herewith and the Closing.
ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligation of the Purchasers to
Purchase the Securities on the Closing Date. The obligation of each Purchaser
hereunder to acquire and pay for the Securities is subject to the satisfaction
or waiver by such Purchaser, at or before the Closing, of each of the following
conditions (it being understood that for purposes of this Section 5.1, any
reference to the subsidiaries of the Company as of the Closing Date shall
exclude IFH):
(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company contained herein shall be true and
correct, in all material respects, as of the date hereof and at and as of the
Closing Date with the same effect as if made at and as of the Closing Date
(except to the extent such representations specifically relate to an earlier
date in which case such representations shall be true and correct as of such
earlier date).
(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants and
agreements required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing Date.
(c) No Material Adverse Change. There shall not have occurred since
June 1, 2000 any change, circumstance or event (whether or not known by the
Purchasers or disclosed in the Disclosure Letter) that has had or may reasonably
be expected to have (i) a material adverse effect on the business, financial
condition, assets, results of operations or prospects of Company, IFH and their
respective subsidiaries, taken as a whole, (ii) a material adverse effect on the
business, financial condition, assets, results of operations or prospects of the
Company's MicroProducts business taken alone or (iii) prevent or materially
delay the ability of the Company to consummate the transactions contemplated by
this Agreement and the other Transaction Documents.
(d) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
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(e) No Suspensions of Trading in Common Stock. The trading of shares of
Common Stock shall not have been suspended by the Commission or on the Nasdaq
Stock Market (except for any suspension of trading of limited duration solely to
permit dissemination of material information regarding the Company or any
suspension of trading of securities generally).
(f) Legal Opinion. The Company shall have delivered to such Purchaser a
legal opinion of Lindquist & Vennum, P.L.L.P., dated the Closing Date,
substantially in the form of Exhibit C attached hereto, with only such changes
therein from such form as are required to reflect changes in facts and
circumstances in matters dealt with in any of the representations and warranties
of the Company set forth in Section 3.1 hereof.
(g) Required Approvals.
(i) The Company shall have obtained the consent or approval of
each person listed on Part 3.1(f) of the Disclosure Letter;
(ii) All other Required Approvals shall have been obtained by
the Company; and
(iii) Any other governmental or regulatory notices, approvals
or other requirements necessary to consummate the transactions
contemplated hereby and to operate the Company's business after the
Closing Date in all material respects as it was operated prior thereto
and as it is presently contemplated to be conducted in the future shall
have been given, obtained or complied with, as applicable.
(h) Delivery of Notes and Warrants. The Company shall have delivered to
such Purchaser or such Purchaser's designee duly executed Notes and Warrants at
the Closing to be received by each Purchaser, registered in the name of such
Purchaser, each in form satisfactory to such Purchaser.
(i) Registration Rights Agreement. The Purchasers shall have received
an executed Registration Rights Agreement, dated as of the date hereof, in the
form of Exhibit D (the "Registration Rights Agreement") attached hereto from the
Company.
(j) Stock Purchase Agreement. All of the conditions to the Purchasers'
obligation under the Stock Purchase Agreement (other than the conditions related
to this Agreement) shall have been satisfied or waived by the parties thereto at
or before the Closing Date.
(k) Merger. All of the conditions to IFH's obligations under the Merger
Agreement (other than the conditions related to this Agreement) shall have been
satisfied or waived by the parties thereto at or before the Closing Date and the
Merger of the Merger Sub into IFH shall have become effective in accordance with
the terms of the Merger Agreement.
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(l) Secretary's Certificate and Other Documents. The Purchasers shall
have received from the Company on the Closing Date (i) a copy of its certificate
of incorporation, including all amendments thereto, certified by the Secretary
of State of its jurisdiction of incorporation and a certificate as to the good
standing of the Company in such jurisdiction as of the Closing Date, (ii) a
certificate of an officer of the Company dated as of the Closing Date and
certifying to the Purchasers that the Purchasers have received (A) a correct and
complete copy of the Company's certificate of incorporation and bylaws as in
effect on the Closing Date and at all times subsequent to the date of the
resolutions described in the following clause (B), (B) a correct and complete
copy of resolutions duly adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of the Transaction
Documents, the sale of the Notes and Warrants hereunder, and the other
transactions contemplated hereby and thereby, as applicable, and (C) as to the
incumbency and specimen signature of each officer of the Company who shall
execute any Transaction Document or any other document delivered in connection
therewith; and (iii) such other documents as the Purchasers and their counsel
may reasonably request.
(m) Officer's Certificate. The Company shall have delivered to the
Purchasers on the Closing Date a certificate signed on its behalf by its
President, Chief Executive Officer or Chief Financial Officer certifying that
the conditions specified in Sections 5.1(a) and (b) hereof have been fulfilled.
(n) Intercreditor Agreement. The Purchasers and the Senior Lenders
shall have executed an Intercreditor Agreement on terms consistent with those
contained herein and in form and substance satisfactory to the Purchasers and
the Senior Lenders.
(o) Security Agreement. On the Closing Date, if the Company has
received the consents referred to in Section 4.8 hereof, the Company shall have
duly authorized, executed and delivered the Security Agreement, together with
such UCC Financing Statements as may be required by the Purchasers to perfect
the security interests created by the Security Agreement.
(p) Deed of Trust. On the Closing Date, if the Company has received the
consents referred to in Section 4.8 hereof, the Company shall have duly
authorized, executed and delivered the Deed of Trust.
(q) Expenses. All closing fees and expenses associated with the filing
and recording of any documents necessary under the Security Agreement and the
Deed of Trust owing by the Company to the Purchasers or otherwise, under the
terms of this Agreement, the other Transaction Documents or any other document
executed in connection herewith or therewith shall be paid to the Purchasers or
other party to which owed on the date of the Closing.
(r) Intentionally Omitted.
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(s) Amendment to Rights Agreement. In reliance upon the accuracy of the
representations in Sections 3.2(h) and (l) hereof, the Company shall have
amended the Rights Agreement to allow for the acquisition of shares of Common
Stock, Series G Preferred Stock and/or Warrants (1) pursuant to the Merger
Agreement, the Stock Purchase Agreement or this Agreement, (2) upon conversion
of shares of Series G Preferred Stock, (3) upon exercise of the Warrants and/or
(4) as dividends on the Series G Preferred Stock, in all cases as adjusted for
stock splits, dividends, recapitalizations and the like and any other events
requiring adjustment under the anti-dilution provisions of applicable governing
instruments alone without causing (X) any Purchaser, or any of its "Affiliates"
or "Associates" (as such terms are defined in Rule 12b-2 under the Exchange
Act), to be deemed an "Acquiring Person" under the Rights Agreement or (Y) a
"Distribution Date" , a "Stock Acquisition Date" or "Acquisition Event" (as such
terms are defined in the Rights Agreement) to occur.
(t) Board Approval. In reliance upon the accuracy of the
representations in Sections 3.2(h) and (l) hereof, a committee of the board of
directors of the Company shall have approved the acquisition of shares of Common
Stock, Series G Preferred Stock and/or Warrants (1) pursuant to the Merger
Agreement, the Stock Purchase Agreement or this Agreement, (2) upon conversion
of shares of Series G Preferred Stock, (3) upon exercise of the Warrants and (4)
as dividends on the Series G Preferred Stock, in all cases as adjusted for stock
splits, dividends, recapitalizations and the like and any other events requiring
adjustment under the anti-dilution provisions of applicable governing
instruments, as required in Section 302A.673, subd. 1(d) of the MBCA.
(u) Consolidated Net Working Capital. The consolidated Net Working
Capital (as hereinafter defined) of the Company and its consolidated
subsidiaries as of September 1, 2000 (as determined in accordance with GAAP
consistently applied) shall have been not less than $250,000 less than
$20,000,000. For the purpose of this Section 5.1(u), "Net Working Capital "
shall mean current assets minus current liabilities. For purposes of the
preceding sentence, liabilities that by their terms have a maturity date after
September 1, 2001 shall be characterized as long-term liabilities rather than
short-term liabilities without regard to their characterization as long-term
liabilities or short-term liabilities for GAAP purposes.
(v) Total Bank Debt. The Total Bank Debt (as hereinafter defined) of
the Company and its subsidiaries as of September 1, 2000 shall not have exceeded
$35,100,000. For purposes of this Section 5.1(v), "Total Bank Debt" shall mean
all outstanding bank debt included in current liabilities and long term
liabilities including but not limited to all outstanding mortgages.
5.2 Conditions Precedent to the Company's Obligations on the Closing
Date. The obligations of the Company to consummate the Closing hereunder are
subject to the following conditions:
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(a) Accuracy of the Representations and Warranties of the Purchasers.
The representations and warranties of the Purchasers contained herein shall be
true and correct in all material respects as of the date when made and as of the
Closing Date, as though made on and as of such date.
(b) Performance by the Purchasers. The Purchasers shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Purchasers at or prior to the Closing Date.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) Required Approvals. All Required Approvals shall have been
obtained.
(e) Payment of Purchase Price. Each Purchaser shall have paid the
purchase price set forth below the Purchaser's name on Schedule I attached
hereto for the Securities being purchased at the Closing.
(f) Merger. All of the conditions to the Company's and the Merger Sub's
obligations under the Merger Agreement (other than the conditions related to
this Agreement) shall have been satisfied or waived by the parties thereto at or
before the Closing Date and the Merger of the Merger Sub into IFH shall have
become effective in accordance with the terms of the Merger Agreement.
(g) Stock Purchase Agreement. All of the conditions to the Company's
obligations under the Stock Purchase Agreement (other than the conditions
related to this Agreement) shall have been satisfied or waived by the parties
thereto at or before the Closing Date.
(h) Security Agreement. If the Company has received the consents
referred to in Section 4.8 hereof, the Purchasers shall have duly executed and
delivered the Security Agreement.
(1) Deed of Trust. If the Company has received the consents
referred to in Section 4.8 hereof, the Purchasers shall have duly
executed and delivered the Deed of Trust.
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ARTICLE VI
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees with the Purchasers that,
immediately after the Closing Date and for so long as any Note or any monetary
obligation under this Agreement remains outstanding, the Company shall, except
to the extent waived by the holders of at least sixty six and two-thirds percent
(66-?%) of the outstanding principal amount of the Notes, comply with the
covenants set forth in this Article VI:
6.1 Payment of Principal, Premium and Interest. The Company shall duly
and punctually pay the principal of (and premium, if any) and interest on the
Notes in accordance with the terms of the Notes, this Agreement and the other
Transaction Documents.
6.2 Corporate Existence. The Company shall do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its
corporate existence and any necessary state or other qualifications (other than
any qualifications the absence of which, in the aggregate, would not result in a
Material Adverse Effect).
6.3 Obligations and Taxes. The Company shall pay or discharge, or cause
to be paid or discharged, before the same shall become delinquent (a) all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its business or property unless such taxes,
assessments or governmental charges are being paid in accordance with the terms
of an agreement with the applicable taxing authority, (b) all lawful claims for
labor, materials and supplies, (c) all required payments under any Indebtedness
and (d) all other obligations; provided however, that, in each case, it shall
not be required to pay or discharge or to cause to be paid or discharged any
such amount so long as the validity or amount thereof shall be contested in good
faith in an appropriate manner and appropriate reserves and accruals have been
made with respect thereto.
6.4 Performance under Agreements. The Company shall perform its
obligations under this Agreement, each other Transaction Document, and each
other contract to which it is a party; provided however, that the Company shall
not be required to so perform its obligations under any contract (other than the
Stock Purchase Agreement, the Merger Agreement, this Agreement and any other
Transaction Document) to the extent it is reasonably contesting such obligations
in good faith and in an appropriate manner and, if required by GAAP, it has made
appropriate reserves and accruals with respect thereto.
6.5 Access to Properties and Inspections. The Company shall maintain
financial records in accordance with accounting practices and controls
sufficient to allow the Company to prepare the financial statements,
certificates and reports required by Section 6.10 hereof; and, upon written
notice, at all reasonable times and as often as the Purchasers may reasonably
request, permit any authorized representative or agent of any Purchaser to visit
and inspect its physical properties and reports and permit any authorized
representative or agent of any Purchaser to discuss its affairs, finances and
condition with such officers, key employees and independent chartered
accountants acting as auditors
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as the Purchasers shall deem appropriate. Delivery of a copy of this Agreement
to the respective independent accountants acting as auditors shall constitute
instructions to such accountants to discuss the financial condition of the
Company with the Purchasers and their representatives, and to permit the
Purchasers and their representatives to inspect, copy and make extracts from all
financial statements, analyses, work papers and other documents and information
(including electronically stored documents and information) prepared by such
accountants with respect to the Company.
6.6 Defense of Claims. The Company shall diligently defend itself and
its properties from and against any lawsuits or claims.
6.7 Notice of Litigation, Claims, Etc. The Company shall promptly upon
obtaining notice of the occurrence thereof (but in no event more than 10 days
after obtaining notice of the occurrence thereof), provide the Purchasers with
written notice of any of the following events:
(a) the issuance by any governmental authority of any injunction, order
or decision involving the Company or any of its properties;
(b) the filing or commencement or any action, suit or proceeding
against or affecting the Company or the properties of the Company, whether at
law or in equity or by or before any court if such event might reasonably be
interpreted to have a Material Adverse Effect, or any United States, state, or
other governmental authority;
(c) the imposition of any Lien which is not a Permitted Lien;
(d) any claim, demand or action impairing title to any of the
properties or assets of the Company;
(e) any other adverse action by or notice from a governmental authority
with respect to the Company or any of its respective properties;
(f) any default by the Company under any contract of Indebtedness in
excess of $250,000 other than a lease or conditional sales contract for
immaterial amounts; and
(g) any development in the business or affairs of the Company which is
likely, in the reasonable judgment of the Company, to have a Material Adverse
Effect.
Each notice shall specify, as applicable, (i) the nature and extent
thereof, (ii) any rights of any other parties thereto with respect to
termination, acceleration or similar provisions and (iii) any corrective action
taken or proposed to be taken with respect thereto.
6.8 Proceeds. The Company shall use the net proceeds from the issuance
of the Securities for general corporate purposes, including the retirement of
existing Indebtedness.
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6.9 Compliance. The Company shall comply in all material respects with
all applicable laws and maintain all required clearances, consents, permits and
approvals of governmental authorities.
6.10 Financial Statements and Reports. The Company shall furnish to the
Purchasers:
(a) as soon as available but in any event within ninety (90) days after
the end of each fiscal year (commencing with the fiscal year ending September 1,
2000) balance sheets, income statements and cash flow statements of the Company,
showing its financial condition as at the end of such fiscal year and the
results of its operations for such fiscal year, all the foregoing financial
statements (other than any consolidating schedules) to be audited by independent
chartered accountants of nationally-recognized standing reasonably acceptable to
the Purchasers and prepared in accordance with GAAP.
(b) as soon as available but in any event within 45 days after the end
of each fiscal quarter, commencing with the fiscal quarter including the Closing
Date, the unaudited balance sheets, income statements and cash flow statements
(along with comparisons to budget), showing the financial condition as at the
end of such fiscal quarter, and the results of operations for such fiscal
quarter and for the then elapsed portion of the fiscal year, for the Company in
each case prepared in accordance with GAAP, subject to normal year-end
adjustments (none of which alone or in the aggregate would result in a Material
Adverse Effect) and the absence of notes thereto;
(c) as soon as received, copies of any notice of potential liability or
charge or complaint received by the Company from any governmental authority
which could reasonably cause the Company or any of its subsidiaries to incur
liabilities in excess of $250,000;
(d) concurrently with the statements provided pursuant to clauses (a)
and (c) a certificate of the Chief Financial Officer of the Company containing a
narrative management discussion and analysis of the financial condition and
results of operations of the Company for the periods covered by such statements;
(e) promptly upon their becoming available, copies of any statements,
reports and other communications, if any, which the Company shall have generally
provided to its stockholders, or to the Senior Lenders, or material statements,
reports and other communications to particular stockholders or to the Company's
directors;
(f) promptly upon receipt thereof, copies of all financial and
management reports submitted to the Company by its independent auditors in
connection with each annual audit of the books of the Company;
(g) promptly, from time to time, such other information (in writing if
so requested) regarding the assets and properties (including the collateral) and
operations, business
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affairs and financial condition of the Company as the Purchasers may reasonably
request; and
(h) all filings with the Commission.
Each certificate of the financial officer of the Company (and, in the
case of year-end financial statements and reports, the independent auditors of
the Company) delivered under this Section 6.10 shall certify that the statement
or report to which such certificate relates fairly presents in all material
respects the financial position and results of operations of the Company at the
dates thereof and for the periods then ended and has been prepared in accordance
with GAAP, in the case of unaudited financial statements, subject to normal
year-end audit adjustments (none of which alone or in the aggregate would result
in a Material Adverse Effect) and the absence of notes thereto, no Event of
Default has occurred and is continuing and to the best of the financial
officer's knowledge no event or condition has occurred which would have a
Material Adverse Effect on the Company. The audit report with respect to the
financial statements referred to in clause (a) (excluding the financial
statements for the fiscal year ending September 1, 2000) shall not contain a
"going concern" or like qualification or exception or any qualification arising
out of the scope of the audit.
6.11 Insurance. The Company shall maintain insurance on its business
and properties to such extent and against such risks, including fire and other
risks insured against by extended coverage, and workers' compensation insurance
and public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with, the use of any
properties owned, occupied or controlled by the Company, in each case as is
customary with companies similarly situated and in the same or similar
businesses, and shall provide evidence to the Purchasers of such insurance upon
their request.
6.12 Notification of Event of Default. The Company shall immediately
notify the Purchasers in writing of (a) the occurrence of any default or any
Event of Default hereunder or under its Senior Debt of which it becomes aware
and (b) any event or condition which has or could reasonably be expected to have
a Material Adverse Effect and specify what steps, if any, are being taken to
cure the same.
6.13 Fiscal Year. The Company shall maintain its current fiscal year
for financial reporting purposes; provided, however, that the Company may
without the consent of the Purchasers change its fiscal year as may be approved
by its Board of Directors so long as the Company delivers written notice to the
Purchasers of such change within 30 days of Board approval of such change.
6.14 Further Assurances. The Company shall duly execute and deliver, or
cause to be duly executed and delivered, at its own cost and expense, such
further instruments and documents and take or cause to be taken all such action,
in each case as may be necessary or proper in the reasonable judgment of the
Purchasers, to carry out the
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provisions and purposes of this Agreement and the other Transaction Documents
and to better assure and confirm unto the Purchasers, its rights and remedies
under this Agreement and the other Transaction Documents.
6.15 Maintenance of Properties. The Company shall keep and maintain all
property material to the conduct of its business as in good working order and
condition, ordinary wear and tear excepted, as such property is in as of the
date hereof.
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees with the Purchasers that,
immediately after the Closing Date and for so long as any Note or any monetary
obligation under this Agreement remains outstanding, the Company shall, except
to the extent waived by the holders of at least sixty six and two-thirds percent
(66-?%) of the outstanding principal amount of the Notes, comply with the
covenants set forth in this Article VII:
7.1 Indebtedness. The Company shall not and shall cause its
subsidiaries to not incur, create, assume or suffer or permit to exist any
Indebtedness, except (a) Indebtedness under and pursuant to the terms of this
Agreement and the other Transaction Documents (including the issuance of the
Additional Notes) and (b) Senior Debt in an amount not to exceed $45,000,000 in
the aggregate.
7.2 Liens. The Company shall not incur, create, assume or suffer or
permit to exist any Lien on any of its property or assets or on any income or
rights in respect of any thereof, except (the "Permitted Liens"):
(a) Liens incurred and arising out of surety bonds, appeal bonds,
statutory obligations, bids, performance and return of money and similar
obligations and pledges or deposits made in the ordinary course of business in
connection with worker compensation, unemployment insurance, old age pensions
and other social security benefits;
(b) Liens imposed by law, including carriers', warehousemen's,
mechanics', materialmen's and vendors' Liens incurred in the ordinary course of
business and securing obligations which are not yet due or which are being
contested in good faith by appropriate proceedings, and in any such case as to
which it shall have set aside adequate cash reserves in accordance with GAAP;
(c) Liens securing the payment of taxes, assessments and governmental
charges or levies, either not yet due and payable or being contested in good
faith by appropriate legal or administrative proceedings, and in any such case
as to which it shall have set aside adequate cash reserves in accordance with
GAAP;
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(d) zoning restrictions, easements, licenses, reservations, provisions,
covenants, conditions, waivers, restrictions on the use of property or minor
irregularities of title which do not in the aggregate impair the use of any
parcel of property material to the operation of the business of the Company or
the value of such property for the purpose of the business of the Company;
(e) Liens securing purchase money Indebtedness; provided, however, that
each such Lien does not secure any other Indebtedness and does not encumber any
property other than that property acquired with the proceeds of such
Indebtedness;
(f) extensions and renewals of Liens permitted hereunder; provided,
however, that the Indebtedness secured thereby is not increased and the Lien
does not encumber any property not encumbered by the Lien so extended or
renewed;
(g) Liens existing on the date hereof or the Closing Date and listed on
Part 7.2 of the Disclosure Letter;
(h) Liens securing capital or operating leases within the ordinary
course of business consistent with past practice;
(i) Liens securing Senior Debt; and
(j) Liens securing the Notes.
7.3 Restricted Payments. The Company and its subsidiaries shall not
declare or make (a) any dividend or other distribution on any shares of the
capital stock of the Company (other than stock splits, stock dividends or the
distribution of shares of capital stock of the Company pursuant to the exercise
of the Warrants and dividends payable in the form of Common Stock to holders of
the Company's Series D, E, F and G Convertible Preferred Stock) or its
subsidiaries (other than distributions to the Company), or (b) any payment on
account of the purchase, redemption, retirement or acquisition of (i) any shares
of capital stock of the Company or its subsidiaries or (ii) any option, warrant
or other right to acquire shares of the capital stock of the Company or its
subsidiaries.
7.4 Nature of Business; Place of Business. The Company and its
subsidiaries shall not conduct any business or operations other than the
business or operations conducted on the date hereof and on the Closing Date;
provided, however, that the Company and its subsidiaries may engage in business
or operations which are complementary to the business and operations of the
Company and its subsidiaries. The Company and it subsidiaries shall not change
their corporate structure nor their principal place of business. The Company
shall not change its state of incorporation without providing notice to the
Purchasers.
7.5 Charter, Bylaw and Transaction Document Amendment. The Company
shall not amend, modify or supplement its articles of incorporation or bylaws
(except as provided
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for in section 3.8 of the Stock Purchase Agreement) in any manner that the
Purchasers deem will adversely affect the rights of the Purchasers under this
Agreement or any other Transaction Document or their ability to enforce the same
or amend, modify or supplement the Transaction Documents without the consent of
the Purchasers.
7.6 Transactions with Affiliates. The Company will not, and will not
permit any of its subsidiaries to, enter into any transaction, including,
without limitation, the purchase, sale, lease or exchange of property, real or
personal, the purchase or sale of any security, the borrowing or lending of any
money, or the rendering of any service, with any person or entity affiliated
with the Company or any of its subsidiaries (including officers, directors and
shareholders owning 3% (three percent) or more of the Company's outstanding
capital stock (other than the purchasers of the Series G Preferred Stock)),
except in the ordinary course of and pursuant to the reasonable requirements of
its business and upon fair and reasonable terms not less favorable than would be
obtained in a comparable arms-length transaction with any other person or entity
not affiliated with the Company, without the prior written consent of the
holders of sixty six and two-thirds percent (66-2/3%) of the outstanding
principal of the Notes.
7.7 Mergers. The Company shall not, nor shall it permit any of its
subsidiaries to, in a single transaction or through a series of related
transactions, merge or consolidate with another corporation or other business
entity, except that any wholly-owned subsidiary of the Company may merge with
another wholly-owned subsidiary of the Company or with the Company (so long as
the Company is the surviving corporation).
7.8 Asset Sales. The Company shall not, and shall not permit any of its
subsidiaries to, directly or indirectly, in a single transaction or a series of
related transactions, sell, lease, transfer or otherwise dispose of or suffer to
be sold, leased, transferred, abandoned or otherwise disposed of, all or any
part of its assets except: (i) inventory sold in the ordinary course of
business, (ii) equipment sold or disposed of in the ordinary course of business
and (iii) assets in transactions not otherwise permitted by subsections (i) and
(ii) so long as (A) the Company or applicable subsidiary receives consideration
at the time of such transaction equal to at least the fair market value of the
assets sold; (B) not less than 80% of the consideration received by the Company
or such subsidiary was in the form of cash or cash equivalents; and (C) the sale
of such assets would not have a Material Adverse Effect.
7.9 Use of Proceeds. The Company shall not use the net proceeds from
the issuance of the Securities to purchase or carry "margin securities."
7.10 Contracts. The Company shall prohibit its subsidiaries from
entering into any contract, commitment, understanding, or arrangement by which
the subsidiaries are restricted from making distributions or other payments to
the Company. The Company will not, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement (other than this Agreement or
an agreement with a Senior Lender) that
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prohibits, restricts or imposes any condition upon the ability of the Company to
create, incur or permit to exist any Lien upon any of its property or assets
(other than Permitted Liens); provided that the foregoing shall not apply to
customary provisions in capital or operating leases but solely with respect to
the property being leased, and restrictions and conditions imposed by law or by
this Agreement or any other agreement relating to Senior Debt permitted by this
Agreement.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Events. In case of the happening of any of the following events
(each, an "Event of Default"):
(a) the Company shall fail to make any payment on principal of the
Notes when and as the same shall become due and payable including at the due
date thereof, by acceleration or otherwise; or
(b) the Company shall fail to pay any premium, interest or other
obligation due hereunder when and as the same shall become due and payable,
whether at the due date thereof, by acceleration or otherwise; or
(c) the Company shall fail timely to perform its obligations under
Section 2.8(e) hereof; or
(d) default shall be made in the due observance or performance by the
Company of any covenant or agreement contained in Section 6.1or 6.2 or Article
VII of this Agreement, and such default shall continue unremedied for thirty
(30) days after written notice thereof to the Company by the Purchasers; or
(e) a material breach by the Company of its obligations under the
Warrants shall have occurred; or
(f) default shall be made in the due observance or performance by the
Company of any other covenant or agreement to be observed or performed under
this Agreement or any other Transaction Document, and such default shall
continue unremedied for thirty (30) days (or such lesser period as may be
required as a result of such default) after written notice thereof to the
Company by the Purchasers; or
(g) any representation or warranty made by the Company contained in
this Agreement or in any other Transaction Document or in any certificate,
financial statement or other instrument furnished by or on behalf of the Company
pursuant to this Agreement or such other Transaction Document shall prove to
have been false or misleading in any material respect when made or furnished; or
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(h) the Company or any of its subsidiaries shall (i) voluntarily
commence any proceeding or file any petition or proposal or any notice of its
intent to commence or file any such proceeding, petition or proposal seeking
relief under the U.S. Bankruptcy Code or any other federal, state bankruptcy,
insolvency or similar law, (ii) consent to the institution of, or fail to
controvert in a timely and appropriate manner, any such proceeding or the filing
of any such petition or proposal, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator or similar official for any such
Person or for any substantial part of its property or assets, (iv) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors,
(vi) fail generally to pay its debts as they become due or (vii) take any
corporate or stockholder action in furtherance of any of the foregoing; or
(i) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Company or any of its subsidiaries or of any substantial part
of the property or assets thereof, under Title 11 of the United States Code or
any other federal, state bankruptcy, insolvency or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar official
for the Company or any of its subsidiaries or for any substantial part of their
property or (iii) the winding-up or liquidation of the Company or any of its
subsidiaries, and such proceeding, petition or order shall continue unstayed and
in effect for a period of 60 consecutive days; or
(j) a final judgment for the payment of money in an amount in excess of
$500,000 shall be rendered by a court or other tribunal against the Company or
any of its subsidiaries and shall remain undischarged for a period of 60
consecutive days during which such judgment and any levy or execution thereof
shall not have been effectively stayed or vacated; or
(k) any event shall occur or condition shall exist or fail to occur or
exist if the effect of such occurrence, existence or failure is to accelerate
the maturity of any Indebtedness of the Company or any of its subsidiaries in a
principal amount in excess of $500,000 or any such Indebtedness shall not be
paid when due, whether at maturity, by acceleration or otherwise, or the holder
of any Lien upon property of the Company shall commence foreclosure of such
Lien; or
(l) any Transaction Document shall cease to be in full force and effect
and enforceable against the Company in accordance with its terms; or
(m) there shall have occurred with respect to the Company a Change in
Control; or
(n) to the extent a Security Agreement or Deed of Trust is executed in
connection with this Agreement, either of the Security Agreement or Deed of
Trust shall cease to be, in any material respect, in full force and effect, or
shall cease, in any material respect, to give the holders of the Notes the
Liens, rights, powers and privileges purported
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to be created thereby in favor of such holders, or the Company shall default in
the due performance or observance of any material term, covenant or agreement on
its part to be performed or observed pursuant to either of the Security
Agreement or Deed of Trust and such default shall continue for 30 or more days
after written notice to the Company; or
(o) the Company or an ERISA Affiliate (as defined therein) shall fail
to pay when due an amount or amounts aggregating in excess of $500,000 which it
shall have become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Benefit Plan shall be filed under Title IV of ERISA by any ERISA
Affiliate, any plan administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer any Benefit Plan; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Benefit Plan must be terminated; or there shall
occur a complete or partial withdrawal from or a default, within the meaning of
Section 4219 (c) (5) of ERISA, with respect to, one or more multi-employer plans
which could cause one or more ERISA Affiliates to incur a payment obligation in
excess of $500,000; or
(p) there shall have occurred any event which would constitute a
Material Adverse Effect;
then, and in any such event, and at any time thereafter during the continuance
of such event, subject to the terms of the Intercreditor Agreement, the
Purchasers may, by notice to the Company, take any of the following actions at
the same or different times: (i) terminate forthwith the commitment hereunder to
purchase the Notes and (ii) declare the Notes (if outstanding) to be forthwith
due and payable, whereupon the entire unpaid principal of the Notes, together
with accrued interest thereon, the then applicable redemption premium, if any,
and all other obligations, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Company, anything contained herein or in the
Notes or the other Transaction Documents to the contrary notwithstanding (except
for the Intercreditor Agreement), and (iii) exercise any and all other remedies
provided under any Transaction Document upon the occurrence and continuance of
an Event of Default.
Notwithstanding the foregoing, in the case of an Event of Default arising under
subsections (g) or (h) of Section 8.1 hereof with respect to the Company or any
subsidiary of the Company, all outstanding Notes will ipso facto become due and
payable without further action or notice.
All rights and remedies of the Purchasers under this Agreement and all covenants
and obligations of the Company hereunder, are subject to the terms and
conditions of the Intercreditor Agreement. In the event of any conflict between
the terms of this Agreement and the terms of the Intercreditor Agreement, the
terms of the Intercreditor Agreement shall control.
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ARTICLE IX
TERMINATION
9.1 Termination. Notwithstanding any provision in this Agreement to the
contrary, this Agreement may be terminated, and the transactions contemplated by
this Agreement abandoned, at any time on or prior to the Closing Date: (i) by
mutual written consent of the Company and each of the Purchasers; (ii) by the
Company at any time if any of the conditions set forth in Section 5.2 hereof
will not be able to be satisfied on or prior to the Final Date (as defined in
Section 7.5 of the Merger Agreement as constituted on the date hereof), through
no fault of the Company, unless such condition is waived in writing by the
Company; (iii) by any of the Purchasers at any time if any of the conditions set
forth in Section 5.1 hereof will not be able to be satisfied on or prior to the
Final Date (as defined in Section 7.5 of the Merger Agreement as constituted on
the date hereof), through no fault of the Purchasers, unless such conditions are
waived in writing by each of the Purchasers; or (iv) immediately by any of the
Purchasers in the event either the Merger Agreement or the Stock Purchase
Agreement shall terminate in accordance with its respective terms.
9.2 Notice of Termination. If the Company or any of the Purchasers
desires to terminate this Agreement pursuant to Section 9.1 hereof, other than
pursuant to Section 9.1(iv) hereof, that party must give written notice to the
other parties. Upon receipt of that notice, this Agreement will terminate
without further action by any party.
9.3 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 9.1 hereof, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or shareholders, other than as provided in the Merger
Agreement and Stock Purchase Agreement. Nothing contained in this Section 9.3
shall relieve any party from any liability for any breach of this Agreement or
impair the right of any party to compel specific performance by another party of
its obligations under this Agreement; provided, however, that termination as
provided in Section 9.1(iv) hereof shall not be deemed a breach of this
Agreement.
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ARTICLE X
AMENDMENTS
The Company and the holders of the Notes may amend or supplement this
Agreement and the Notes with the written consent of the holders of Notes of at
least eighty-five (85%) percent in aggregate principal amount of the Notes then
outstanding, and any existing Event of Default and its consequences or
compliance with any provision of this Agreement or the Notes may be waived with
the consent of the holders of sixty six and two-thirds percent (66-?%) in
principal amount of the then outstanding Notes. Notwithstanding the foregoing,
without the consent of each holder of the Notes affected, an amendment or waiver
may not (with respect to any Notes held by a non-consenting holder of Notes):
(iv) reduce the aggregate principal amount of the Notes held by any
holder;
(v) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes;
(vi) reduce the rate of or change the time for payment of interest on
any Note;
(vii) waive an Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the holders of at least sixty six and two-thirds percent (66-?%)
in aggregate principal amount of the then outstanding Notes and a waiver of the
payment default that resulted from such acceleration);
(viii) make any Note payable in money other than that stated in the
Notes;
(ix) make any change in the provisions of this Agreement relating to
waivers of past Events of Default or the rights of holders of Notes to receive
payments of principal of or interest on the Notes;
(x) waive a payment of a redemption premium or mandatory redemption
with respect to any Note; or
(xi) make any change in the foregoing amendment and waiver provisions.
ARTICLE XI
MISCELLANEOUS
11.1 Entire Agreement. This Agreement, together with the Exhibits and
Schedules attached hereto, the other Transaction Documents, the Merger
Agreement, the Stock Purchase Agreement and the Governance Agreement contains
the entire
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understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written, with
respect to such matters.
11.2 Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be deemed to have been
received (a) upon hand delivery (receipt acknowledged) or delivery by telex
(with correct answer back received), telecopy or facsimile (with transmission
confirmation report) at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered on a
business day after during normal business hours where such notice is to be
received); or (b) on the business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
If to the Company: Sheldahl, Inc.
1150 Sheldahl Road
Northfield, MN 55057-9444
Attn: Edward L. Lundstrom, President
Fax: (507) 663-8326 or
(507) 663-8435
With copies to: Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis MN 55402
Attn: Charles P. Moorse, Esq.
Fax: (612) 371-3207
If to a Purchaser: To the address set forth on Schedule I attached
hereto.
or such other address as may be designated in writing hereafter, in the
same manner, by such person.
11.3 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
11.4 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
Neither the Company nor any Purchaser may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding anything to the contrary contained herein, each Purchaser may
assign its rights hereunder in connection with any sale or transfer of such
Purchaser's Securities to any Affiliate or Associate of such Purchaser as long
as the transferee Affiliate or Associate agrees in writing to be bound by
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the applicable provisions of this Agreement, in which case the term "Purchaser"
shall be deemed to refer to such transferee as though such transferee were an
original signatory hereto.
11.5 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
11.6 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof.
11.7 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become binding with respect to each Purchaser on the
date the acceptance form hereto is executed by such Purchaser and with respect
to the Company on the date executed by the Company, it being understood that
both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
11.8 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
11.9 Survival of Representations and Warranties. The representations
and warranties made in this Agreement, or in any instrument delivered pursuant
to this Agreement, shall not survive beyond the Closing, except the
representations and warranties in Section 3.2 hereof, which shall survive the
Closing indefinitely. Nothing in the forgoing sentence shall be deemed to limit
the Purchasers' ability to rely on the representations and warranties contained
in Section 3.1 hereof or in any updated Disclosure Letter, and the Company's
ability to rely on the representations and warranties contained in Section 3.2
hereof, in making their respective determinations to consummate the Closing of
the purchase and sale of the Securities. All covenants and agreements shall
survive in accordance with their respective terms.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its authorized representative and each Purchaser has caused this
Agreement to be executed by signing in counterpart the acceptance form attached
to this Agreement.
COMPANY:
SHELDAHL, INC.
By: /s/ Edward L. Lundstrom
--------------------------------------
Name: Edward L. Lundstrom
Title: President
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ACCEPTANCE
The undersigned hereby accepts the terms and conditions set forth in
the Amended and Restated Subordinated Notes and Warrant Purchase Agreement,
dated December 28, 2000, among Sheldahl, Inc., a Minnesota corporation (the
"Company"), and certain Purchasers listed in Schedule I attached thereto as the
terms and conditions applicable to the purchase of Notes and Warrants of the
Company by the undersigned. By execution of this Acceptance, the undersigned
hereby makes each of the representations contained in Section 3.2 thereof of the
Amended and Restated Subordinated Notes and Warrant Purchase Agreement.
PURCHASER:
MORGENTHALER VENTURE PARTNERS V, L.P.
By: /s/ John D. Lutsi
--------------------------------------
Name: John D. Lutsi
Title: General Partner
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ACCEPTANCE
The undersigned hereby accepts the terms and conditions set forth in
the Amended and Restated Subordinated Notes and Warrant Purchase Agreement,
dated December 28, 2000, among Sheldahl, Inc., a Minnesota corporation (the
"Company"), and certain Purchasers listed in Schedule I attached thereto as the
terms and conditions applicable to the purchase of Notes and Warrants of the
Company by the undersigned. By execution of this Acceptance, the undersigned
hereby makes each of the representations contained in Section 3.2 thereof of the
Amended and Restated Subordinated Notes and Warrant Purchase Agreement.
PURCHASER:
AMPERSAND IV LIMITED PARTNERSHIP
By: AMP-IV MANAGEMENT COMPANY
LIMITED LIABILITY COMPANY,
Its general partner
By: /s/ Stuart A. Auerbach
--------------------------------------
Name: Stuart A. Auerbach
Title: Managing Member
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ACCEPTANCE
The undersigned hereby accepts the terms and conditions set forth in
the Amended and Restated Subordinated Notes and Warrant Purchase Agreement,
dated December 28, 2000, among Sheldahl, Inc., a Minnesota corporation (the
"Company"), and certain Purchasers listed in Schedule I attached thereto as the
terms and conditions applicable to the purchase of Notes and Warrants of the
Company by the undersigned. By execution of this Acceptance, the undersigned
hereby makes each of the representations contained in Section 3.2 thereof of the
Amended and Restated Subordinated Notes and Warrant Purchase Agreement.
PURCHASER:
AMPERSAND IV COMPANION FUND
LIMITED PARTNERSHIP
By: AMP-IV MANAGEMENT COMPANY
LIMITED LIABILITY COMPANY,
Its general partner
By: /s/ Stuart A. Auerbach
--------------------------------------
Name: Stuart A. Auerbach
Title: Managing Member
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ACCEPTANCE
The undersigned hereby accepts the terms and conditions set forth in
the Amended and Restated Subordinated Notes and Warrant Purchase Agreement,
dated December 28, 2000, among Sheldahl, Inc., a Minnesota corporation (the
"Company"), and certain Purchasers listed in Schedule I attached thereto as the
terms and conditions applicable to the purchase of Notes and Warrants of the
Company by the undersigned. By execution of this Acceptance, the undersigned
hereby makes each of the representations contained in Section 3.2 thereof of the
Amended and Restated Subordinated Notes and Warrant Purchase Agreement.
PURCHASER:
MOLEX INCORPORATED
By: /s/ Thomas S. Lee
--------------------------------------
Name: Thomas S. Lee
Title: Vice President New Ventures
and Acquisitions
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SCHEDULE I
SCHEDULE OF PURCHASERS
PURCHASER NAME AND ADDRESS
--------------------------
Morgenthaler Venture Ampersand IV Limited Ampersand IV Companion Molex Incorporated
Partners V, L.P. Partnership Fund Limited Partnership 2222 Wellington Court
Terminal Tower 55 William Street 55 William Street Lisle, Illinois 60532
50 Public Square Suite 240 Suite 240
Suite 2700 Wellesley, MA 02481 Wellesley, MA 02481
Cleveland, OH 44113
PRINCIPAL AMOUNT OF
NOTES PURCHASED AT
CLOSING $1,750,000 $735,000 $15,000 $4,000,000
WARRANTS PURCHASED AT
CLOSING 411,065 172,647 3,524 939,578
CLOSING PURCHASE
PRICE $1,750,000 $735,000 $15,000 $4,000,000
STATE OF RESIDENCE OH MA MA IL
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SCHEDULE II
BENEFICIAL OWNERSHIP OF SHELDAHL STOCK IN EXCESS OF 15%
At and after the Closing, Morgenthaler will be the Beneficial Owner of 15% or
more of outstanding shares of Common Stock.
Immediately prior to the Closing, Molex will be the Beneficial Owner of 15% or
more of outstanding shares of Common Stock.