AGREEMENT RELATING TO XXXXXXXX
This Agreement Relating to Xxxxxxxx (the "Agreement") is made as of this
18th day of November, 1998 between Xxxxxxxx, Inc., a Minnesota corporation
("Xxxxxxxx") and Molex Incorporated, a Delaware corporation ("Molex").
A. The parties have executed and delivered a Convertible Preferred Stock
Purchase Agreement (the "Purchase Agreement") pursuant to which Molex will
acquire shares of Series D Convertible Preferred Stock of Xxxxxxxx.
B. The parties have executed a Limited Liability Company Agreement to
form Modular Interconnect Systems, L.L.C. (the "Joint Venture").
C. In connection with Molex's purchase of the Preferred Shares and
participation in the Joint Venture, the parties have agreed to certain matters
relating to Xxxxxxxx as set forth in this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1
RIGHT OF FIRST REFUSAL
1.1 "ACQUISITION" shall mean (i) a transaction including a merger,
consolidation, tender offer or exchange offer involving Xxxxxxxx (other than
transactions solely between Xxxxxxxx and its subsidiaries or between Xxxxxxxx
and Molex) following which any person (as such term is used in Rule 13d-5 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934
(the "1934 Act") or group (as such term is defined in Section 13(d) of the 0000
Xxx) becomes or would become the "Beneficial Owner" (as such term is defined in
Rule 13d-3 of the 0000 Xxx) of (x) a majority of the common stock, or (y)
securities representing a majority of the combined voting power of all Voting
Securities of Xxxxxxxx, or following which persons who were Beneficial Owners of
the common stock and Voting Securities of Xxxxxxxx immediately before such
transaction do not, after such transaction, beneficially own, directly or
indirectly, a majority of the common stock and combined voting power of the
Voting Securities of Xxxxxxxx; or (ii) the disposition, by sale, exchange or
otherwise, of substantially all of the assets of Xxxxxxxx. "VOTING SECURITIES"
shall mean securities of Xxxxxxxx that are entitled to vote in the election of
directors of Xxxxxxxx.
1.2 In the event the Board of Directors of Xxxxxxxx receives a bona fide
offer (which the Board of Directors of Xxxxxxxx is willing to accept) from a
third party for an Acquisition, Xxxxxxxx will advise Molex in writing of the
terms and conditions of such offer (the "NOTICE").
1.3 Molex shall, within thirty (30) days following its receipt of the
Notice, advise Xxxxxxxx in writing whether it is willing to consummate the
Acquisition with Xxxxxxxx upon
substantially the same terms and conditions described in the Notice (but in
any event on terms not less favorable to Xxxxxxxx than those described in the
Notice), and shall provide Xxxxxxxx evidence of its ability to finance the
Acquisition.
1.4 If Molex advises Xxxxxxxx that it is willing to consummate the
Acquisition with Xxxxxxxx upon substantially the same terms and conditions
described in the Notice (but in any event on terms not less favorable than those
described in the Notice), Xxxxxxxx and Molex shall, subject to the fiduciary
duties of the Board of Directors of Xxxxxxxx determined in consultation with
Xxxxxxxx'x counsel, proceed in good faith to consummate the Acquisition within
ninety (90) days of the date on which Molex advised Xxxxxxxx that it was willing
to consummate the Acquisition upon substantially the same terms and conditions
described in the Notice.
1.5 If Molex advises Xxxxxxxx that it is not willing to consummate the
Acquisition with Xxxxxxxx upon substantially the same terms and conditions
described in the Notice, or fails to advise Xxxxxxxx of its intentions within
the 30-day period referred to in Section 1.3 above, or Molex fails to proceed in
good faith to consummate the Acquisition within the 90-day period referred to in
Section 1.4 above, Xxxxxxxx shall be free to consummate an Acquisition with any
third party upon terms and conditions that are not more favorable to the third
party than those described in the Notice.
1.6 If Xxxxxxxx wishes to solicit interests for an Acquisition, Xxxxxxxx
shall advise Molex in writing of the terms and conditions upon which it is
willing to consummate the Acquisition ("XXXXXXXX NOTICE").
1.7 Molex shall, within thirty (30) days following its receipt of the
Xxxxxxxx Notice, advise Xxxxxxxx in writing whether it is willing to consummate
the Acquisition with Xxxxxxxx upon substantially the same terms and conditions
described in the Xxxxxxxx Notice (but in any event on terms not less favorable
to Xxxxxxxx than those described in the Xxxxxxxx Notice) and shall provide
Xxxxxxxx with evidence of its ability to finance the Acquisition.
1.8 If Molex advises Xxxxxxxx that it is willing to consummate the
Acquisition with Xxxxxxxx upon substantially the same terms and conditions
described in the Xxxxxxxx Notice (but in any event on terms not less favorable
to Xxxxxxxx than those described in the Xxxxxxxx Notice), Xxxxxxxx and Molex
shall, subject to the fiduciary duties of the Board of Directors of Xxxxxxxx
determined in consultation with Xxxxxxxx'x counsel, proceed in good faith to
consummate the Acquisition within ninety (90) days of the date on which Molex
advised Xxxxxxxx that it was willing to consummate the Acquisition upon
substantially the same terms and conditions described in the Xxxxxxxx Notice.
1.9 Notwithstanding the terms of Sections 1.2, 1.3, 1.4 and 1.5, if Molex
advises Xxxxxxxx that it is not willing to consummate the Acquisition with
Xxxxxxxx upon substantially the same terms and conditions described in the
Xxxxxxxx Notice, or fails to advise Xxxxxxxx of its intentions within the 30-day
period referred to in Section 1.7 above, or Molex fails to proceed in
2
good faith to consummate the Acquisition within the 90-day period referred to
in Section 1.8 above, Xxxxxxxx shall be free to solicit for and consummate
the Acquisition with a third party upon terms and conditions that are not
more favorable to the third party than those described in the Xxxxxxxx
Notice, subject to the terms of Section 1.11.
1.10 In the event any third party advises Xxxxxxxx, after the date of a
Notice or a Xxxxxxxx Notice pursuant to which Molex has advised Xxxxxxxx that it
is willing to consummate an Acquisition with Xxxxxxxx, that the third party is
willing to enter into an Acquisition with Xxxxxxxx on terms and conditions more
favorable to Xxxxxxxx than those described in the Notice or the Xxxxxxxx Notice
(the "SECOND OFFER"), Xxxxxxxx shall advise Molex in writing of the terms and
conditions of such Second Offer (the "SECOND NOTICE"). Molex shall, within five
(5) business days following its receipt of the Second Notice, advise Xxxxxxxx in
writing whether it is willing to consummate the Acquisition with Xxxxxxxx upon
substantially the same terms and conditions described in the Second Notice (but
in any event on terms not less favorable to Xxxxxxxx than those described in the
Second Notice) and shall provide Xxxxxxxx with evidence of its ability to
finance the Acquisition. If Molex advises Xxxxxxxx that it is willing to
consummate the Acquisition with Xxxxxxxx upon substantially the same terms and
conditions described in the Second Notice (but in any event on terms not less
favorable to Xxxxxxxx than those described in the Second Notice), Xxxxxxxx and
Molex shall, subject to the fiduciary duties of the Board of Directors of
Xxxxxxxx determined in consultation with Xxxxxxxx'x counsel, proceed in good
faith to consummate the Acquisition within ninety (90) days of the date on which
Molex advised Xxxxxxxx that it was willing to consummate the Acquisition upon
substantially the same terms and conditions of the Second Notice. If Molex
advises Xxxxxxxx that it is not willing to consummate the Acquisition upon
substantially the same terms and conditions of the Second Notice, or fails to
advise Xxxxxxxx of its intentions within the five business day period referred
to in this section, or Molex fails to proceed in good faith to consummate the
Acquisition within ninety (90) days, Xxxxxxxx shall be free to consummate an
Acquisition with any third party upon terms and conditions that are not more
favorable to the third party than those described in the Second Notice.
1.11 If Xxxxxxxx shall receive offers from (i) any third party as provided
in Section 1.9; or (ii) any third party subsequent to the date of the Second
Offer that are more favorable to Xxxxxxxx or its shareholders than the Second
Offer, Xxxxxxxx shall advise Molex in writing of the terms and conditions of
such additional offers prior to accepting any such further offer and, with
respect to clause (i) above, Molex shall receive such notice at least five
business days prior to Xxxxxxxx accepting any such offer. However, in light of
the fiduciary duties of the Board of Directors of Xxxxxxxx in such a situation,
Xxxxxxxx shall be free to accept that offer which the Board of Directors of
Xxxxxxxx determines is most favorable to Xxxxxxxx or its shareholders.
Xxxxxxxx'x decision as to which party's terms are most favorable shall be final
and binding.
1.12 If the Acquisition contemplates payment of consideration (including
any tax deferral benefits and other non-cash items) to Xxxxxxxx or its
shareholders other than cash, and Molex is not able to pay or deliver to
Xxxxxxxx or its shareholders the same form of non-cash
3
consideration, Molex shall, in its notice to Xxxxxxxx to express its
intention to consummate an Acquisition, set forth in detail the form of
consideration Molex is offering in the Acquisition (the "SUBSTITUTE
CONSIDERATION"). Such Substitute Consideration shall be substantially
equivalent in value from a financial point of view to Xxxxxxxx or its
shareholders when compared to the original consideration offered to Xxxxxxxx
by a third party or solicited by Xxxxxxxx from a third party, as the case may
be. If Molex and Xxxxxxxx disagree whether the Substitute Consideration
offered by Molex is "substantially equivalent in value from a financial point
of view," the final determination shall be made by a reputable investment
bank mutually acceptable to Xxxxxxxx and Molex which has not performed
services for either Xxxxxxxx or Molex in the past twelve (12) months, which
determination shall be binding upon Molex and Xxxxxxxx; provided, however,
that the Board of Directors of Xxxxxxxx, after consultation with its counsel,
shall be satisfied in good faith that it has fulfilled its fiduciary duties
by accepting the determination of the investment bank. In the event it is
determined that Molex's Substitute Consideration is not "substantially
equivalent in value from a financial point of view," Xxxxxxxx shall provide
written notice to Molex reasonably describing such deficiency (the
"DEFICIENCY NOTICE"), in which event Molex may provide a modified offer
providing Substitute Consideration which is "substantially equivalent in
value from a financial point of view" in writing within five (5) business
days of Xxxxxxxx'x Deficiency Notice. In the event Molex does not provide
the modified offer as provided above within the time period provided above,
Xxxxxxxx shall be entitled to accept the third party offer free of any rights
of Molex under this Agreement.
SECTION 2
PREEMPTIVE RIGHTS
2.1 Except for (i) grants of options to acquire Xxxxxxxx Common Stock
under Xxxxxxxx'x employee and consultant benefit plans adopted by Xxxxxxxx and
except for Xxxxxxxx Common Stock issued upon exercise of such options granted
pursuant to such plans; (ii) shares of Xxxxxxxx Common Stock issued upon
conversion of the 15,000 shares of Series B Convertible Preferred Stock of
Xxxxxxxx and upon payment of dividends with respect to such shares; (iii) shares
of preferred stock, Common Stock or rights of Xxxxxxxx issued pursuant to
Xxxxxxxx'x Rights Agreement dated June 16, 1996 with Norwest Bank Minnesota,
N.A., as amended, (the "RIGHTS AGREEMENT"); (iv) shares of Series D Convertible
Preferred Stock of Xxxxxxxx and shares of Xxxxxxxx Common Stock issued upon
conversion thereof and upon payment of dividends with respect to such preferred
stock; and (v) shares issued upon exercise of warrants outstanding on the date
of this Agreement (including all warrants issued or to be issued with respect to
the Series D Convertible Preferred Stock), Xxxxxxxx will give Molex written
notice of its intention to issue additional Xxxxxxxx Common Stock or securities
or debt convertible into, or exercisable or exchangeable for, shares of Xxxxxxxx
Common Stock, including options and warrants (the "CONVERTIBLE SECURITIES"), in
a private or public equity or debt offering. If such notice is given by
Xxxxxxxx, Molex shall have the right to purchase a portion of such Xxxxxxxx
Common Stock or Convertible Securities in such number which, when combined with
the Xxxxxxxx Common Stock owned beneficially by Molex, will equal the percentage
of the issued and outstanding Xxxxxxxx Common Stock after such purchase which
Molex beneficially owned immediately prior to the
4
issuance of such additional Xxxxxxxx Common Stock or Convertible Securities
(and including solely for the purpose of determining the number of shares
Molex beneficially owned immediately prior to such issuance the number of
shares issued by Xxxxxxxx during the term of this Agreement in transactions
described in Section 2.4 below which Molex would have been entitled to
purchase as a result of such transaction (and which were not purchased under
the second or fifth sentence of Section 2.4) if the rights in this Section
2.1 would have applied to such issuance); in no event, however, shall (i)
Molex's ownership following any purchase under this Section 2.1 exceed 15% of
the issued and outstanding Xxxxxxxx Common Stock (as determined pursuant to
Section 4.1); or (ii) Molex's Beneficial Ownership (as defined in the Rights
Agreement) following such purchase result in Molex being an "Acquiring
Person" (as defined in the Rights Agreement).
2.2 EXERCISE OF PREEMPTIVE RIGHTS. In order to exercise its purchase
rights hereunder, Molex must within ten business days after receipt of written
notice from Xxxxxxxx describing in reasonable detail the stock or securities
being offered, the purchase price thereof, the payment and other terms and
conditions thereof and Molex's percentage allotment, deliver a written notice to
Xxxxxxxx describing its election hereunder.
2.3 EXPIRATION OF OFFERING PERIOD. Upon the expiration of the ten-day
period described above, Xxxxxxxx shall be entitled to sell such Xxxxxxxx Common
Stock or Convertible Securities which Molex has not elected to purchase for a
period of 90 days following such expiration on substantially the same terms and
conditions as those offered to Molex.
2.4 NO RIGHTS IN CERTAIN TRANSACTIONS. Notwithstanding the foregoing,
Molex shall not be entitled to the preemptive rights set forth in Section 2.1
above in connection with an issuance by Xxxxxxxx of its Common Stock or
Convertible Securities in an acquisition of assets or the business of a third
party where Xxxxxxxx is the continuing or surviving entity, but where such
transaction is not an Acquisition. For a period of two years from the date
hereof, in the event Xxxxxxxx issues shares of Common Stock or Convertible
Securities in a transaction described in this Section 2.4, it shall offer Molex
the right to purchase a number of shares of Xxxxxxxx Common Stock necessary to
allow Molex to beneficially own, after giving effect to such transaction
described in this Section 2.4, the lesser of (i) the percentage of issued and
outstanding Xxxxxxxx Common Stock which Molex beneficially owned on the date
immediately prior to such transaction; or (ii) 15% of the issued and outstanding
Xxxxxxxx Common Stock (as determined pursuant to Section 4.1). The purchase
price for such shares shall be at a price equivalent to the value of the
Xxxxxxxx Common Stock received by the third party or shareholders of the third
party to such transaction. Molex shall exercise this right within ten business
days after receipt of written notice from Xxxxxxxx and, notwithstanding clause
(ii) in the first sentence of Section 4.1, this Agreement shall not terminate in
the event Molex has exercised such right prior to the termination of such ten
business day period. Notwithstanding clause (ii) in the first sentence of
Section 4.1, after the two-year period described above, this Agreement shall not
terminate in the event an issuance of Common Stock or Convertible Securities
resulting from an event described in this Section 2.4 causes Molex to
beneficially own less than 5% of the
5
issued and outstanding Xxxxxxxx Common Stock (a "Termination Event") if
either (i) Xxxxxxxx provides Molex with the right to purchase shares of
Xxxxxxxx'x Common Stock or Convertible Securities in an amount necessary to
allow Molex to beneficially own 5% of the issued and outstanding Xxxxxxxx
Common Stock after such issuance and Molex exercises such purchase rights
within ten business days after receipt of written notice from Xxxxxxxx
describing the stock or securities to be offered and the purchase price
thereof; or (ii) Molex purchases shares in the market to increase its
beneficial ownership of Xxxxxxxx Common Stock to 5% or more within 90 days of
the Termination Event.
SECTION 3
BOARD REPRESENTATION
3.1 BOARD REPRESENTATION. At least fifteen (15) days prior to the meeting
of the Board of Directors of Xxxxxxxx establishing the slate of directors for
the next scheduled Annual Meeting of Shareholders of Xxxxxxxx, Xxxxxxxx shall
provide Molex with a notice of such meeting. Prior to the date of such
directors' meeting, Molex shall give the nominating committee of Xxxxxxxx'x
Board of Directors, in writing, the names of two director candidates selected
from Molex's executive management team. Xxxxxxxx will nominate and solicit
proxies for the election of one such candidate submitted by Molex as a member of
the Board of Directors of Xxxxxxxx at that Annual Meeting of Shareholders and at
each succeeding Annual Meeting of Shareholders of Xxxxxxxx; provided, however,
that after termination of this Agreement pursuant to Section 4, Xxxxxxxx shall
no longer be obligated to nominate and solicit proxies for the election of such
designee of Molex as a director of Xxxxxxxx and such nominee shall, if requested
by the Board of Directors of Xxxxxxxx, resign from the Xxxxxxxx Board of
Directors. At the first meeting of the Board of Directors after the date of
this Agreement, Molex's designee (as described above) shall be appointed by the
Board of Directors as a Board member.
SECTION 4
MISCELLANEOUS
4.1 TERM AND TERMINATION. This Agreement shall terminate and Molex shall
have no further rights under this Agreement on the earliest to occur of the
following: (i) when Molex first ceases to beneficially own at least 75% of the
number of shares of Xxxxxxxx Common Stock owned beneficially by Molex as of the
date of this Agreement, as indicated on Exhibit A; (ii) subject to Section 2.4,
when Molex first ceases to beneficially own at least 5% of the issued and
outstanding Xxxxxxxx Common Stock; or (iii) completion of an Acquisition. For
purposes of this Agreement, when determining the issued and outstanding Xxxxxxxx
Common Stock or the Xxxxxxxx Common Stock owned beneficially by Molex, (i) all
issued and outstanding shares of Series B Convertible Preferred Stock and
Series D Convertible Preferred Stock shall be deemed converted to Common Stock;
(ii) all warrants to purchase Common Stock outstanding on the date of this
Agreement (and not subsequently exercised) shall be deemed issued and
outstanding until they terminate; and (iii) all subsequently issued and
outstanding Convertible Securities (other than options granted to employees or
directors and Convertible Securities that are out of
6
the money) shall be deemed converted to Common Stock. With respect to (i)
and (iii) immediately above, the number of shares of Xxxxxxxx Common Stock to
be issued upon conversion shall be determined as of the date a determination
is to be made pursuant to this Agreement. A determination of the issued and
outstanding Xxxxxxxx Common Stock as of July 30, 1998 is set forth on Exhibit A.
4.2 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Minnesota as applied to contracts entered into solely
between residents of, and to be performed entirely within, such state.
4.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. This Agreement may not be assigned by a party without the prior
written consent of the other party.
4.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and
thereof and supersedes all prior agreements and understandings among the parties
relating to the subject matter hereof. Neither this Agreement nor any term
hereof may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against which enforcement of any such amendment,
waiver, discharge or termination is sought.
4.5 NOTICES AND DATES. Any notice or other communication given under this
Agreement shall be sufficient if in writing and sent by registered or certified
mail, return receipt requested, postage prepaid, by facsimile, by hand delivery
or overnight mail to a party at its address set forth below (or at such other
address as shall be designated for such purpose by such party in a written
notice to the other party hereto):
if to Sheldahl: Sheldahl, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx XX 00000
Attention: Xxxxx X. Xxxxxxx
Fax: 000-000-0000
with a copy to: Xxxxxxxxx & Xxxxxx P.L.L.P.
0000 XXX Xxxxxx
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx XX 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: 000-000-0000
7
if to Molex: Molex Incorporated
0000 Xxxxxxxxxx Xxxxx
Xxxxx XX 00000
Attention: Xxxxxxxxx X. Xxxxxxxx
Fax: 000-000-0000
With a copy to: Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx XX 00000
Attention: Xxxxxxx Xxxx
Fax: 000-000-0000
All such notices and communications shall be effective when received by the
addressee. In the event that any date provided for in this Agreement falls on a
Saturday, Sunday or legal holiday, such date shall be deemed extended to the
next business day.
4.6 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restriction
of this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
4.7 COSTS AND EXPENSES. Each party hereto shall pay its own costs and
expenses incurred in connection herewith, including the fees of its counsel,
auditors and other representatives, whether or not the transactions contemplated
herein are consummated.
4.8 NO THIRD PARTY RIGHTS. Nothing in this Agreement shall create or be
deemed to create any rights in any person or entity not a party to this
Agreement.
4.9 REMEDIES. Xxxxxxxx and Molex acknowledge that a breach of this
Agreement by one party could cause the other party damage which may not be
adequately compensated by damages at law. Therefore, Xxxxxxxx and Molex agree
that, in addition to other relief afforded by law, seeking an injunction for
specific performance shall be a proper mode of relief for violations of this
Agreement.
8
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective authorized officers as of the date aforesaid.
XXXXXXXX, INC.
By /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Its President
-------------------------------
MOLEX INCORPORATED
By /s/ Xxxxxx X. Xxx
--------------------------------
Its Vice President New Ventures & Acquisitions
---------------------------------------------
9
EXHIBIT A
BENEFICIAL OWNERSHIP OF XXXXXXXX, INC.
BY MOLEX INCORPORATED
As of July 30, 1998
Common Shares
-------------
Common Shares Issued and Outstanding 9,660,615
Series B Preferred (including dividends
converted at $6.01 through 7/30/98) 1,330,795
Outstanding Warrants 167,812
Series D Warrants 329,170
Series D Preferred (converted at $6.15) 5,352,358
----------
Total Xxxxxxxx Common Stock (per Section 3.1) 16,840,750
----------
----------
Molex Incorporated 340,000
Series D Warrants 120,000
Series D Preferred $12.0M 1,951,219
----------
Molex Incorporated Ownership 2,411,219
----------
----------
Molex Incorporated Percentage Ownership 14.32%
