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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): October 25, 2001
Sheldahl, Inc.
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(Exact name of Registrant as specified in its charter)
Minnesota 0-45 41-0758073
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(State or other jurisdiction (Commission (I.R.S. Employer of
incorporation) File Number) Identification No.)
1150 Sheldahl Road
Northfield, Minnesota 55057
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (507) 663-8000
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Items 1, 2, 3, 4, 6, 8 and 9 are not included.
ITEM 5. OTHER EVENTS
On October 25, 2001, the Company entered into a Subordinated Notes and
Warrant Purchase Agreement (the "Debt Agreement") with Morgenthaler Partners
VII, L.P. ("Morgenthaler"), Ampersand IV Limited Partnership ("Ampersand") and
Molex Incorporated ("Molex") pursuant to which the Morgenthaler, Ampersand and
Molex extended $7,000,000 in financing to the Company (the "Loan"), on the terms
described below.
Subordinated Notes and Warrant Purchase Agreement.
Under the terms of the Debt Agreement, Morgenthaler, Ampersand and
Molex (the "Purchasers") purchased an aggregate of $7,000,000 of 17% Senior
Subordinated Notes (the "Notes") ("the "Debt Investment"). Of the $7,000,000
Debt Investment, Morgenthaler purchased $4,600,000 of the Notes and Ampersand
and Molex each purchased $1,200,000 of the Notes. In connection with the Notes,
the Purchasers were issued warrants (the "Warrants") for the purchase of an
aggregate of approximately 3.12 million shares of the Company's common stock.
The Warrants were issued at an exercise price of $.01 per share of common stock
issuable. The Warrants expire on October 25, 2008. Additionally, for each year
in which any portion of the Loan remains outstanding, the Company will issue
additional Warrants to purchase an aggregate of 261,010 shares of the Company's
common stock. These Warrants will be issued to Morgenthaler, Ampersand and Molex
pro rata according to their proportionate share of the Debt Investment.
Under the terms of the Debt Agreement, interest on the Notes is payable
quarterly at the rate of 17% per annum, beginning January 1, 2002. The Notes are
subordinate to the obligations of the Company to Wells Fargo Bank Minnesota,
N.A. ("Wells Fargo"). Two subsidiaries of the Company, International Flex
Technologies, Inc. and International Flex Holdings, Inc., guaranty the loan. The
Debt Investment is secured by all of the non-real property assets of the Company
and its subsidiaries, International Flex Technologies, Inc. and International
Flex Holdings, Inc.
The Notes (and all accrued interest) are due and payable October 25,
2006, or earlier upon certain issuances of capital stock or upon the sale of
assets by the Company. Proceeds from the issuance of capital stock or sale of
assets must first be applied to the Credit and Security Agreement by and among
the Company and Wells Fargo, as agent for other senior lenders (the "Credit
Agreement") and the $5,000,000 of indebtedness of the Subordinated Secured Notes
Purchase Agreement of May 23, 2001.
The Debt Agreement, and Form of Note and Form of Warrant issuable
thereunder, are incorporated herein by reference to Exhibits hereto. The
foregoing description of the Debt Agreement and the Notes does not purport to be
complete and is qualified in its entirety by reference to such Exhibits.
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Bank Amendment
In connection with the consummation of the Debt Investment, Wells Fargo
Bank Minnesota, N.A. and the Company executed the Eleventh Amendment to the
Credit Agreement. The Eleventh Amendment to Credit Agreement establishes new
covenants based on minimum EBITDA and allows the Company to sell certain of its
foreign accounts receivable to a third party. In connection with the Eleventh
Amendment to Credit Agreement, the Company extended the term of certain warrants
issued to Wells Fargo. The warrants were originally issued for the purchase of
100,000 shares, but have been adjusted according to anti-dilution formulas. The
warrants will now expire on October 25, 2006 and have an adjusted exercise price
of $0.41 per share.
7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(C) Exhibits
Exhibit 4.1. Subordinated Notes and Warrant Purchase Agreement
dated October 25, 2001 among Sheldahl, Inc. and the
entities listed on Schedule I thereto.
Exhibit 4.2. Form of Note to Subordinated Notes and Warrant
Purchase Agreement.
Exhibit 4.3. Form of Warrant to Subordinated Notes and Warrant
Purchase Agreement.
Exhibit 4.4. Security Agreement dated October 25, 2001 made by
Sheldahl, Inc. and certain subsidiaries listed on
Schedule I thereto to Morgenthaler Partners VII,
L.P., as Agent.
Exhibit 4.5. Eleventh Amendment to Credit and Security Agreement
dated October 25, 2001 between the Company and Wells
Fargo Bank Minnesota N. A., as Agent.
Exhibit 99.0. Press release of October 26, 2001.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SHELDAHL, INC.
By: /s/ Peter Duff
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Peter Duff, Vice President - Finance
Dated: October 30, 2001
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