1
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of __________________, 200_, among Xxxxxxxx, Inc., a Minnesota
corporation (the "Company"), and the individuals and entities listed on Schedule
I hereto (referred to herein as a "Purchaser" and collectively as the
"Purchasers").
This Agreement is made pursuant to the Stock Purchase Agreement, dated
as of November 10, 2000 (the "Purchase Agreement") among the Company and certain
of the Purchasers (the "Stock Purchasers"), the Agreement and Plan of Merger,
dated as of November 10, 2000 (the "Merger Agreement") among the Company, IFT
West Acquisition Company, International Flex Holdings, Inc. ("IFH") and the
stockholders of IFH (the "IFH Purchasers") and the Subordinated Notes and
Warrant Purchase Agreement, dated as of November 10, 2000 (the "Subordinated
Notes Purchase Agreement") among the Company and certain of the Purchasers (the
"Warrant Purchasers").
The Company and the Purchasers hereby agree as follows:
1. Definitions
Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:
"Advice" shall have meaning set forth in Section 3(j).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated", "controlling" and "controlled" have meanings
correlative to the foregoing.
"Business Day" means any day except a day on which the Nasdaq National
Market, the NYSE or the AMEX, as applicable, if the Common Stock is listed for
trading or quoted thereon at such time, is closed, and if the Common Stock is
not listed for trading or quoted on any of the Nasdaq National Market, the NYSE
or the AMEX at such time, then "Business Day" shall mean any day except
Saturday, Sunday and any day which shall be a legal holiday or a day on which
banking institutions in the State of Minnesota generally are authorized or
required by law or other government actions to close.
"Closing Date" shall have the meaning set forth in the Purchase
Agreement.
2
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value $.25 per
share.
"Common Shares" means the shares of Common Stock, par value $.25 per
share, of the Company issued to the Stock Purchasers pursuant to the Purchase
Agreement.
"Effectiveness Date" means, with respect to the Shelf Registration
Statement to be filed with respect to the Series G Shares, the first anniversary
of the Closing Date.
"Effectiveness Period" shall have the meaning set forth in
Section 2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Filing Date" means the date which is nine months after the Closing
Date.
"Holder" or "Holders" means the holder or holders, as the case may be,
from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section 5(c).
"Indemnifying Party" shall have the meaning set forth in Section 5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Merger Shares" means the shares of Common Stock, par value $.25 per
share, of the Company issued to the IFH Purchasers pursuant to the Merger
Agreement.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Preferred Stock" means the Series G Shares.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means a prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the
2
3
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by a Registration Statement, and all other amendments and
supplements to such prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such prospectus.
"Purchase Documents" means the Purchase Agreement, the Merger
Agreement, the Subordinated Notes Purchase Agreement and the Warrants.
"Registrable Securities" means the (a) the Common Shares, (b) the
Merger Shares, and (c) shares of Common Stock issuable upon (i) conversion of
the Series G Shares; (ii) payment of dividends in respect of such Preferred
Stock; and (iii) exercise of Warrants.
"Registration Statement" means any registration statement filed by the
Company with the Commission for a public offering and sale of Common Stock
(other than (i) a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, (ii) any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation, or (iii) any
registration statement filed by the Company pursuant to (x) that certain
Registration Rights Agreement dated as of July 30, 1998 by and among the Company
and certain holders of its Series D Convertible Preferred Stock, (y) that
certain Registration Rights Agreement dated as of February 26, 1999 by and among
the Company and certain holders of its Series E Convertible Preferred Stock, or
(z) that certain Registration Rights Agreement dated as of January 11, 2000 by
and among the Company and certain holders of its Series F Convertible Preferred
Stock), including (in each such case) the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Series G Shares" means the shares of Series G Preferred Stock, par
value $1.00 per share, of the Company issued to the Stock Purchasers pursuant to
the Purchase Agreement.
"Shelf Registration Statement" shall have the meaning set forth in
Section 2(a).
3
4
"Warrants" means the warrants to purchase shares of Common Stock issued
to the Warrant Purchasers pursuant to the Subordinated Notes Purchase Agreement.
2. Registration.
(a) Shelf Registration. The Company shall, on or prior to the
Filing Date, prepare and file with the Commission a Registration Statement
covering all Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415 (the "Shelf Registration Statement"). The Shelf
Registration Statement shall be on Form S-3 (or if the Company is not then
eligible to register for resale the Registrable Securities on Form S-3, in which
case such registration shall be on another appropriate form in accordance
herewith which form shall be reasonably acceptable to the Holders). The Company
shall use its commercially reasonable efforts to cause the Shelf Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event prior to the Effectiveness
Date, and to keep such Shelf Registration Statement continuously effective under
the Securities Act until the date which is two years after the date that such
Shelf Registration Statement is declared effective by the Commission or such
earlier date when all Registrable Securities covered by such Shelf Registration
Statement have been sold or may be sold without volume restrictions pursuant to
Rule 144 as determined by the counsel to the Company pursuant to a written
opinion letter, addressed to the Company's transfer agent to such effect (the
"Effectiveness Period").
(b) Incidental Registration. Whenever the Company proposes to
file a Registration Statement, prior to such filing it shall give written notice
to each Holder of its intention to do so, and upon the written request of any
Holder given within 20 days after the Company provides such notice (which
request shall state the intended method of disposition of such Registrable
Securities), the Company shall cause all Registrable Securities which the
Company has been requested to register to be registered under the Securities Act
to the extent necessary to permit their sale or other disposition in accordance
with the intended methods of distribution specified in the request of such
Holder(s). In connection with any offering under this Section 2(b) involving an
underwriting, the Company shall not be required to include any Registrable
Securities in such underwriting unless the holders thereof accept the terms of
the underwriting as agreed upon between the Company and the underwriters
selected by it, and then only in such quantity as will not, in the opinion of
the underwriters, jeopardize the success of the offering by the Company. If in
the opinion of the managing underwriter the registration of all, or part of, the
Registrable Securities which the Holders have requested to be included would
materially and adversely affect such public offering, then the Company shall be
required to include in the underwriting only that number of Registrable
Securities which the managing underwriter believes may be sold without causing
such adverse effect; provided, however, that in no such event shall less than
25% of the aggregate amount of Registrable Securities which the Holders have
requested to be included in such registration be included in such public
offering. In the event of such a reduction in the number of shares to be
included in the underwriting, the
4
5
Holders of Registrable Securities who have requested registration shall
participate in the underwriting pro rata based upon their total ownership of
Registrable Securities (or in any other proportion as agreed upon by such
Holders) and if any of such Holders would thus be entitled to include more
shares than such Holder requested to be registered, the excess shall be
allocated among such other requesting Holders pro rata based on their ownership
of Registrable Securities. No other securities requested to be included in a
Registration Statement for the account of anyone other than the Company or the
Holders shall be included in a Registration Statement unless all Registrable
Securities requested to be included in such Registration Statement are also
included. No Holder shall be required to make any representations or warranties
to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such Holder, such Holder's
Registrable Securities and such Holder's intended method of distribution and any
other representation required by law.
3. Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall:
(a) Use its commercially reasonable efforts to prepare and
file with the Commission, on or prior to the Filing Date, a Registration
Statement on Form S-3 (or if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3, in which case such registration
shall be on another appropriate form in accordance herewith which Form shall be
reasonably acceptable to the Holders) in accordance with the method or methods
of distribution thereof as specified by the Holders, and cause such Shelf
Registration Statement to become effective and remain effective as provided
herein.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Shelf Registration Statement as may
be necessary to keep the Shelf Registration Statement continuously effective as
to the applicable Registrable Securities for the Effectiveness Period and
prepare and file with the Commission such additional Registration Statements in
order to register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or supplemented by
any required Prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424 (or any similar provisions then in force) promulgated
under the Securities Act; (iii) respond as promptly as practicable to any
comments received from the Commission with respect to any Registration Statement
covering any Registrable Securities or any amendment thereto and promptly
provide the Holders true and complete copies of all correspondence from and to
the Commission relating to such Registration Statement; and (iv) comply with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by a Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the Holders thereof set forth in such Registration Statement as
so amended or in such Prospectus as so supplemented.
5
6
(c) Notify the Holders of Registrable Securities to be sold:
(i)(A) when a Prospectus or Prospectus supplement covering any Registrable
Securities or post-effective amendment to a Registration Statement covering any
Registrable Securities is proposed to be filed, (B) when the Commission notifies
the Company whether there will be a "review" of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement, and
(C) with respect to any such Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any request by the
Commission or any other Federal or state governmental authority for amendments
or supplements to a Registration Statement or Prospectus covering any
Registrable Securities or for additional information; (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of any
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event that makes any statement made in
a Registration Statement or Prospectus covering any Registrable Securities or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
any Registration Statement covering any Registrable Securities or (ii) any
suspension of the qualifications (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, as soon as reasonably
practicable.
(e) Furnish to each Holder, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the Commission.
(f) Promptly deliver to each Holder, without charge, as many
copies of the Prospectus or Prospectuses covering any Registrable Securities
(including each form of prospectus) and each amendment or supplement thereto as
such Persons may reasonably request; and the Company hereby consents to the use
of such Prospectus and each amendment or supplement thereto by each of the
selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto.
6
7
(g) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Holders in connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any Holder requests in writing, to keep each such registration
or qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by a Registration Statement; provided, however, that the Company shall
not be required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
subject the Company to any material tax in any such jurisdiction where it is not
then so subject.
(h) Upon the occurrence of any event contemplated by Section
3(c)(v), as promptly as practicable, prepare a supplement or amendment,
including a post-effective amendment, to such Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither such Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(i) Use its best efforts to cause all Registrable Securities
relating to any Registration Statement to be listed on The Nasdaq National
Market and any other securities exchange, quotation system, market or
over-the-counter bulletin board, if any, on which similar securities issued by
the Company are then listed as and when required pursuant to the Purchase
Documents.
(j) The Company may require each selling Holder to furnish to
the Company such information, including information regarding the distribution
of such Registrable Securities, as is required by law to be disclosed in a
Registration Statement covering such Registrable Securities and the Company may
exclude from such registration the Registrable Securities of any such Holder who
fails to furnish such information within a reasonable time after receiving such
request. The failure by the Company to file the Shelf Registration Statement by
the Filing Date, to cause it to become effective by the Effectiveness Date or to
maintain its effectiveness for the Effectiveness Period, if due solely to the
breach of a Holder's obligations under this Section, shall not be deemed a
breach of the Company's obligations to such Holder under this Agreement or the
applicable Purchase Document to which such Holder is a party. The rights of
Holders that timely supply such information shall not be affected by the
preceding sentence and the Company shall remain obligated hereunder to file, and
cause and maintain the effectiveness of the Shelf Registration Statement on
behalf of such Holders.
7
8
If any Registration Statement refers to any Holder by name or otherwise
as the holder of any securities of the Company, then such Holder shall have the
right to require (if such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar Federal statute then in force) the
deletion of the reference to such Holder in any amendment or supplement to such
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Each Purchaser covenants and agrees that (i) it will not sell any
Registrable Securities under any Registration Statement until it has received
copies of the Prospectus relating thereto as then amended or supplemented as
contemplated in Section 3(g) and notice from the Company that such Registration
Statement and any post-effective amendments thereto have become effective as
contemplated by Section 3(c); and (ii) the Purchaser and its officers, directors
or Affiliates, if any, will comply with the Prospectus delivery and any other
requirements of the Securities Act applicable to them in connection with sales
of Registrable Securities pursuant to such Registration Statement.
Each Holder agrees by its acquisition of such Registrable Securities
that, upon receipt of a notice from the Company of the occurrence of any event
of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(c)(v), such
Holder will forthwith discontinue disposition of such Registrable Securities
under such Registration Statement until such Holder's receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement contemplated
by Section 3(h), or until it is advised in writing (the "Advice") by the Company
that the use of the applicable Prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company, whether or not any Registration Statement covering any
Registrable Securities is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to such a Registration Statement. The
fees and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with The
Nasdaq National Market and each other securities exchange or market on which
Registrable Securities are required hereunder to be listed, and (B) in
compliance with state securities or Blue Sky laws; (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses); (iii) messenger, telephone
and delivery expenses incurred by the Company; (iv) fees and disbursements of
counsel for the Company; (v) Securities Act liability insurance, if the Company
so desires such insurance; and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees
8
9
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder, and the reasonable
fees and expenses of one legal counsel retained by the Holders.
5. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, investment advisors and employees
of each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, any Prospectus or any
form of prospectus covering any Registrable Shares or in any amendment or
supplement thereto or in any preliminary prospectus covering any Registrable
Shares, or arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or supplement
thereto, in light of the circumstances under which they were made) not
misleading, except to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon information regarding such Holder
or such Holder's proposed method of distribution of Registrable Securities
furnished to the Company by such Holder expressly for use therein. The Company
shall notify the Holders promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, the directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review) arising solely out of or based solely upon any untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus covering Registrable Shares, or arising
solely out of or based solely upon any omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading to
the extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished by such Holder to the Company
specifically for inclusion in such Registration Statement or such Prospectus and
that such information was reasonably relied upon by the Company for use in such
Registration Statement, such Prospectus or such form of prospectus. In no event
shall the liability of any selling Holder hereunder be greater in amount
9
10
than the dollar amount of the net proceeds received by such Holder upon the sale
of the Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "Indemnifying Party") in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have adversely
prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party); provided that if more than one Indemnified Party is
seeking indemnification with respect to the same Proceeding, the Indemnifying
Party shall not be required to pay for more than one separate counsel for all
such Indemnified Parties as a group. The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.
(d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in
10
11
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), the Purchaser shall not be
required to contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by the Purchaser from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that the Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6. Rule 144. The Company shall file the reports required to be filed by
it under the Securities Act and the Exchange Act in a timely manner and, if at
any time the Company is not required to file such reports, they will, upon the
request of any Holder, make publicly available other information so long as
necessary to permit sales of its securities pursuant to Rule 144. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144. Upon the
request of any Holder, the Company shall deliver to such Holder a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
11
12
7. Miscellaneous
(a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least eighty percent (80%) of the then outstanding
Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders and that does not directly or indirectly
affect the rights of other Holders may be given by Holders of at least a
majority of the Registrable Securities to which such waiver or consent relates;
provided, however, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(c) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 4:30 p.m.
(Minneapolis time) on a Business Day; (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in the Purchase Documents later than 4:30
p.m. (Minneapolis time) on any date and earlier than 11:59 p.m. (Minneapolis
time) on such date; (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service; or (iv) upon actual
receipt by the party to whom such notice is required to be given.
If to the Company: Sheldahl, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000 or
(000) 000-0000
12
13
With copies to: Xxxxxxxxx & Xxxxxx P.L.L.P.
0000 XXX Xxxxxx
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
(d) Successors and Assigns. This Agreement shall more to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall more to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Purchaser may assign its rights hereunder in the manner and to
the Persons as permitted under the Purchase Documents.
(e) Assignment of Registration Rights. The rights of each
Purchaser hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by the Purchaser to any assignee or transferee of all
or a portion of the shares of Preferred Stock, the Warrants or the Registrable
Securities if: (i) the Purchaser agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (A) the name and address of such transferee or assignee, and
(B) the securities with respect to which such registration rights are being
transferred or assigned; (iii) following such transfer or assignment the further
disposition of such securities by the transferee or assignees is restricted
under the Securities Act and applicable state securities laws to the extent
required by the Purchase Documents; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions of this Agreement; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Purchase Documents. The
rights to assignment shall apply to the Purchaser's (and to subsequent)
successors and assigns.
(f) Counterparts. This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed to be
an original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
13
14
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota, without regard
to principles of conflicts of law.
(h) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(j) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(k) Shares Held by The Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than the Purchasers or transferees or successors or
assigns thereof if such Persons are deemed to be Affiliates solely by reason of
their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
14
15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
XXXXXXXX, INC.
By:
----------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Its: President
PURCHASERS:
XXXXXXXXXXXX VENTURE PARTNERS V, L.P.
By:
----------------------------------------
Name: Xxxx X. Xxxxx,
its General Partner
AMPERSAND IV LIMITED PARTNERSHIP
BY: AMP-IV MANAGEMENT COMPANY
LIMITED LIABILITY COMPANY,
ITS GENERAL PARTNER
By:
----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Managing Member
AMPERSAND IV COMPANION FUND
LIMITED PARTNERSHIP
BY: AMP-IV MANAGEMENT COMPANY
LIMITED LIABILITY COMPANY,
ITS GENERAL PARTNER
By:
----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Managing Member
15
16
SOUND BEACH TECHNOLOGY PARTNERS, LLC
By:
----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
MOLEX INCORPORATED
By: ________________________________
Name:
Title:
16
17
SCHEDULE I
List of Purchasers
Xxxxxxxxxxxx Venture Parnters V, L.P.
Ampersand IV Limited Partnership
Ampersand IV Companion Fund Limited Partnership
Sound Beach Technology Partners, LLC
Molex Incorporated
17
