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): June 16, 1996
SHELDAHL, INC.
(Exact name of Registrant as specified in its charter)
Minnesota 0-619 41-0758073
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1150 Sheldahl Road
Northfield, Minnesota 55057
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (507)663-8000
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Item 5. Other Events.
On June 16, 1996, the Board of Directors of Sheldahl, Inc. (the
"Company") declared a dividend of one Right for each outstanding share
of the Company's Common Stock, $.25 par value (the "Common Stock"),
to the stockholders of record at the close of business on July 8, 1996
(the "Record Date"). Except as set forth below, each Right entitles
the registered holder to purchase from the Company one one-hundredth
(1/100) of a share of Series A Junior Participating Preferred Stock,
$1.00 par value (the "Preferred Stock"), at a price of $170 per one
one-hundredth of a share (the "Purchase Price"). The terms of the
Rights are set forth in a Rights Agreement dated as of June 16, 1996
(the "Rights Agreement") between the Company and Norwest Bank Minnesota,
N.A., as Rights Agent.
Initially, the Rights will be attached implicitly to all Common Stock
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of ten days
following (i) a public announcement that, without the prior consent of the
Board of Directors, a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of voting securities having 15% or more of the voting
power of the Company (the "Stock Acquisition Date"), or (ii) the
commencement of (or a public announcement of an intention to make) a
tender offer or exchange offer which would result in any person or group
and related persons having beneficial ownership of voting securities
having 15% or more of the voting power of the Company (the earlier of
such dates referred to in (i) and (ii) above being called the
"Distribution Date"), the Rights will be evidenced, with respect to any
of the Common Stock certificates outstanding as of the Record Date, by
such Common Stock certificates.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with Common Stock certificates.
From as soon as practicable after the Record Date and until the
Distribution Date (or earlier redemption or expiration of the Rights),
new Common Stock certificates issued after the Record Date upon transfer
or new issuance of the Common Stock will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Stock outstanding as of the
Record Date will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of the Common Stock as of the close of business on the Distribution
Date, and the separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on June 16, 2006, unless earlier redeemed by the
Company as described below.
In the event that any person becomes the beneficial owner of 15%
or more of the voting power of the Company, ten (10) days thereafter
(the "Flip-In Event") each holder of a Right will thereafter have the
right to receive, upon exercise thereof at the then current Purchase
Price of the Right, Common Stock (or, in certain circumstances, a
combination of cash, other property, Common Stock or other securities)
which has a value of two times the Purchase Price of the Right (such
right being called the "Flip-In Right"). In the event that the Company
is acquired in a merger or other business combination transaction where
the Company is not the surviving corporation or in the event that 50% or
more of its assets or earning power is sold, proper provision shall be
made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price
of the Right, common stock of the acquiring entity which has a value
of two times the Purchase Price of the Right (such right being called
The "Flip-Over Right"). The holder of a Right will continue to have
the Flip-Over Right whether or not such holder exercises the Flip-In
Right. Upon the occurrence of the Flip-In Event, any Rights that are
or were at any time owned by an Acquiring Person shall become null and
void insofar as they relate to the Flip-In Right.
For example, at a Purchase Price of $170 per Right, if any person
becomes the beneficial owner of 15% or more of the voting power of the
Company, ten (10) days thereafter each Right other than a Right owned
by such 15% beneficial owner would entitle its holder to purchase
$340 worth of the Company's Common Stock (or other consideration, as
noted above) for $170. Assuming that the Common Stock had a per share
value of $20 at such time, the holder of each Right would effectively
be entitled to purchase 17 shares of Common Stock for $170.
Similarly, assuming, following the Stock Acquisition Date, the
occurrence of a business combination with another entity in which the
Company's Common Stock is converted or exchanged, or a sale of 50% or
more of the Company's assets or earning power, each Right would entitle
its holder to purchase $340 worth of the acquiring entity's stock for
$170.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of the Preferred Stock, (ii) upon the grant to
holders of the Preferred Stock of certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the
current market price of the Preferred Stock or (iii) upon the distribution
to holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
At any time after the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of 15% or more of the
voting power of the Company and prior to the acquisition by such person
or group of 50% or more of the voting power of the Company, the Board
of Directors of the Company may exchange the Rights (other than Rights
owned by such person or group which have become void), in whole or in
part, at an exchange ratio of one share of Common Stock, or one
one-hundredth of a share of Preferred Stock (or of a share of a class
or series of the Company's preferred stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least
1% in the Purchase Price. No fractions of shares will be issued and,
in lieu thereof, an adjustment in cash will be made based on the market
price of the Preferred Stock on the last trading date prior to the date
of exercise.
At any time prior to the earlier to occur of (i) the tenth day after
the Stock Acquisition Date, or (ii) the expiration of the Rights, the
Company may redeem the Rights in whole, but not in part, at a price of
$.001 per Right (the "Redemption Price"), which redemption shall be
effective at such time as the Board of Directors shall establish.
Additionally, the Continuing Directors may, following the Stock
Acquisition Date, redeem the then outstanding Rights in whole, but not
in part, at the Redemption Price provided that either (a) the Acquiring
Person reduces his beneficial ownership to less than 15% of the voting
power of the Company in a manner which is satisfactory to the Continuing
Directors and there are no other Acquiring Persons, or (b) such
redemption is incidental to a merger or other business combination
transaction or series of transactions involving the Company but not
involving an Acquiring Person or any person who was an Acquiring Person.
The redemption of Rights described in the preceding sentence shall be
effective only after ten (10) business days prior notice. Upon the
effective date of the redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable. Each share of Preferred Stock will have a preferential
quarterly dividend in an amount equal to 100 times the dividend declared
on each share of Common Stock. In the event of liquidation, the holders
of Preferred Stock will receive a preferred liquidation payment of $100
per whole share of Preferred Stock. Each whole share of Preferred Stock
will have 100 votes, voting together with the Common Stock. In the event
of any merger, consolidation or other transaction in which Common Stock
are exchanged, each share of Preferred Stock will be entitled to receive
100 times the amount and type of consideration received per share of
Common Stock. The rights of the Preferred Stock as to dividends and
liquidations, and in the event of mergers and consolidations, are
protected by customary anti-dilution provisions. Fractional shares of
Preferred Stock in integral multiples of one one-hundredth of a share of
Preferred Stock will be issued unless the Company elects to distribute
depositary receipts in lieu of such fractional shares. In lieu of
fractional shares other than fractions that are multiples of one
one-hundredth of a share, an adjustment in cash will be made based on the
market price of the Preferred Stock on the last trading date prior to the
date of exercise.
Until a Right is exercised, it will not entitle the holder to any
rights as a stockholder of the Company (other than those as an existing
stockholder), including, without limitation, the right to vote or to
receive dividends.
The terms of the Rights may be amended by the Board of Directors
of the Company (i) prior to the Distribution Date in any manner, and
(ii) on or after the Distribution Date to cure any ambiguity, to correct
or supplement any provision of the Rights Agreement which may be
defective or inconsistent with any other provisions, or in any manner
not adversely affecting the interests of the holders of the Rights.
As of June 16, 1996, there were 8,911,010 shares of Common Stock
issued and outstanding and 972,595 shares reserved for issuance pursuant
to the exercise of outstanding stock options. Each outstanding share of
Common Stock on July 8, 1996 will receive one Right. As long as the
Rights are attached to the Common Stock, the Company will issue one
Right for each share of Common Stock issued between the Record Date
and the Distribution Date so that all such shares will have attached
Rights. There will be 150,000 shares of Preferred Stock reserved for
issuance upon exercise of the Rights.
The Rights Agreement is designed to protect shareholders in the
event of an unsolicited attempt to acquire the Company for an inadequate
price and to protect against abusive practices that do not treat all
shareholders equally, including partial and two-tier tender offers,
coercive offers, and creeping stock accumulation programs. Such
practices can pressure shareholders into tendering their investments
prior to realizing the full value or total potential of such investments.
The Rights Agreement is intended to make the cost of such abusive
practices prohibitive and create an incentive for a potential acquiror
to negotiate in good faith with the Board. The Rights Agreement is not
intended to, and will not, prevent all unsolicited offers to acquire the
Company. If an unsolicited offer is made, and the Board determines that
it is fair and in the best interests of the Company and its shareholders,
then, pursuant to the terms of the Rights Agreement, the Board has the
authority to redeem the Rights and permit the offer to proceed.
Essentially, the Rights Agreement will provide the Board with sufficient
opportunity to evaluate the fairness of any unsolicited offer and the
credibility of the bidder, and will therefore enable the Board to
represent the interests of all shareholders more effectively. Of course,
in deciding whether to redeem the Rights in connection with any
unsolicited offer, the Board will be bound by its fiduciary obligations
to act in the best interests of the Company and its shareholders.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit B the form
of Rights Certificate, is incorporated herein by reference as Exhibit 1
hereto. The foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to such Exhibit.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
Exhibit 1. Form of Rights Agreement, dated as of June 16, 1996,
between the Company and Norwest Bank Minnesota,
National Association, is incorporated by reference to
Exhibit 1 to the Company's Form 8-A dated June 20,
1996.
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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/ James E. Donaghy
James E. Donaghy,
Chief Executive Officer
Dated: June 20, 1996
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