SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended March 1, 1996 Commission File Number: 0-45
SHELDAHL, INC.
(exact name of registrant as specified in its charter)
Minnesota 41-0758073
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
Northfield, Minnesota 55057
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (507) 663-8000
As of April 3, 1996, 8,883,882 shares of the Registrant's common stock
were outstanding.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
YES X NO
<PAGE>
PART I: FINANCIAL INFORMATION
SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Six Months Ended
March 1, March 3,
(in thousands, except per share data) 1996 1995
Net sales $55,051 $43,048
Cost of sales 42,930 34,611
______ ______
Gross profit 12,121 8,437
______ ______
Expenses:
Sales and marketing 4,535 4,556
General and administrative 2,450 1,737
Research and development 1,200 1,109
Interest 389 146
______ ______
Total expenses 8,574 7,548
______ ______
Income from operations before
provision for income taxes 3,547 889
Provision for income taxes 1,065 235
______ ______
Net income $2,482 $ 654
====== ======
Net income per share $ 0.30 $ 0.10
====== ======
Weighted average common shares and
common share equivalents outstanding 8,188 6,879
====== ======
Three Months Ended
March 1, March 3,
(in thousands, except per share data) 1996 1995
Net sales $28,954 $21,960
Cost of sales 22,520 17,922
______ ______
Gross profit 6,434 4,038
______ ______
Expenses:
Sales and marketing 2,314 2,281
General and administrative 1,280 873
Research and development 510 578
Interest 6 128
______ ______
Total expenses 4,110 3,860
______ ______
Income from operations before
provision for income taxes 2,324 178
Provision for income taxes 700 43
______ ______
Net income $ 1,624 $ 135
====== ======
Net income per share $ 0.18 $ 0.02
====== ======
Weighted average common shares and
common share equivalents outstanding 9,119 6,919
====== ======
SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
(in thousands) March 1, September 1,
1996 1995
(Unaudited)
Current assets:
Cash and cash equivalents $ 693 $ 1,045
Accounts receivable, net 18,982 17,637
Inventories 11,409 12,509
Other current assets 1,536 732
Deferred income taxes 650 849
______ ______
Total current assets 33,270 32,772
______ ______
Plant and equipment:
Construction in progress 36,267 32,654
Plant and equipment, at cost 76,991 68,672
Less: accumulated depreciation (44,336) (41,471)
______ ______
Net plant and equipment 68,922 59,855
______ ______
Other assets 1,396 1,559
______ ______
$103,588 $ 94,186
====== ======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt $ 429 $ 4,179
Accounts payable 10,066 9,113
Accrued compensation 1,271 1,262
Other accruals 2,202 1,886
______ ______
Total current liabilities 13,968 16,440
Long-term debt 13,563 33,864
Other long term obligation 2,674 2,683
Deferred income taxes 774 247
______ ______
Shareholders' investment:
Common stock 2,219 1,708
Additional paid-in capital 50,977 22,311
Retained earnings 19,415 16,933
______ ______
Total shareholders' investment 72,611 40,952
______ ______
$103,588 $ 94,186
====== ======
SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
Six Months Ended
(in thousands) March 1, March 3,
1996 1995
Operating activities:
Net income $ 2,482 $ 654
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,180 2,340
Deferred income tax provision 724 110
Net change in other operating activities:
Accounts receivable (1,345) (933)
Inventories 1,100 (1,754)
Prepaid expenses and other current assets (804)
(522)
Other assets 68 (625)
Accounts payable and accrued liabilities 1,276
164
Other non-current liabilities (10) (38)
______ ______
Net cash provided by (used in) operating
activities 6,671 (604)
______ ______
Investing activities:
Capital expenditures, net (12,151) (13,232)
______ ______
Financing activities:
Borrowings (repayments) under revolving
credit facilities, net (23,832) 12,020
Repayments of long-term debt (217) (136)
Issuance of common stock 29,177 661
Net cash provided by financing activities 5,128 12,545
______ ______
Decrease in cash (352) (1,355)
Cash at beginning of period 1,045 2,008
______ ______
Cash at end of period $ 693 $ 653
====== ======
Supplemental cash flow information:
Income taxes paid $ 70 $ 105
====== ======
Interest paid $ 1,556 $ 672
====== ======
<PAGE>
SHELDAHL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
These condensed and unaudited financial statements have been
prepared by the Company pursuant to the rules and regulations of
the Securities and Exchange Commission. In the opinion of
management, these condensed financial statements reflect all
adjustments, of a normal and recurring nature, necessary for a
fair statement of the interim periods, on a basis consistent with
the annual audited statements. Certain information, accounting
policies and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
such rules and regulations. Although these disclosures should be
considered adequate, the Company suggests that these condensed
financial statements be read in conjunction with the financial
statements and summary of significant accounting policies and
notes thereto included in the Company's latest annual report on
Form 10-K.
1) Inventories
Inventories, which are valued at the lower of last-in
first-out cost or market, consists of (in thousands):
March 1, 1996 September 1, 1995
Raw materials $ 2,678 $ 4,267
Work-in-process 6,139 5,649
Finished goods 3,727 3,663
LIFO reserve (1,135) (1,070)
_______ _______
$11,409 $12,509
======= =======
2) Restated Credit and Security Agreement
On March 12, 1996, the Company amended its credit agreement with
three banks. The amended agreement consists of a $35 million
revolving note based on, and secured by, the Company's
inventories, accounts receivable, and equipment. As of March
1, 1996, $6,700,000 was outstanding under the revolving note
agreement. On March 12, 1996, the remaining credit line,
approximately $30 million, was available for the Company's use.
The credit agreement expires December 31, 1998, but also contains
options to extend the agreement. Interest accrues at prime plus
up to 1.0% or the libor rate plus up to 3.5%, based on the
Company's net worth, as defined. Commitment fees are charged at
0.25% on the unused portion. The interest rate as of March
1, 1996 was 8.25%.
3) Consortium for the Development of Multi-Chip Module Laminates
(MCM-L)
On January 10, 1994, the Company entered into a Consortium
Agreement sponsored by the Advanced Projects Research Agency
(ARPA), a United States Government Agency. The purpose of the
Consortium is to accelerate the development and commercialization
of the multi-chip module laminate (MCM-L). As a Consortium
member, the Company expected to receive approximately $9 million
in funding through January 1996 from ARPA to further test, design
and develop the manufacturing processes for the Company's NOVACLAD
and Z-LINK products which are to be used in constructing MCM-L.
In November 1995, ARPA extended the agreement to September 30,
1996, and increased its funding commitment by $2.0 million.
During this time, the Company joined two smaller ARPA funded
consortia under which the Company will receive approximately $1.1
million through the fourth quarter of fiscal 1997. During the
three and six months ended March 1, 1996, the Company incurred
$474,000 and $1,516,600, respectively, in manufacturing, selling,
research and development and administrative costs, of which
$661,000 was reimbursed by ARPA. To date, the Company has
received a total of $8,148,000 of funding through ARPA As of
March 1, 1996, the Company has recorded a $1,573,000 receivable
from ARPA. The remaining expenses to be reimbursed by ARPA is
expected to be $2,579,000.
<PAGE>
SHELDAHL, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONSOLIDATED OPERATING RESULTS AND FINANCIAL CONDITION
Six Months Ended March 3, 1995 and March 1, 1996
The following table sets forth information about the Company's revenue for the
six months ended March 1, 1996 as compared with the six months ended March 3,
1995.
Six Months EndedSix Months Ended Gross %
Markets 3/1/96 3/3/95 Change Change
Automotive $38,913 $24,340 $14,574 60%
Datacommunications 5,628 6,941 (1,313) (19%)
Aerospace/Defense 4,607 5,208 (601) (12%)
Industrial 4,195 3,869 326 8%
Consumer 1,708 2,690 (982) (37%)
_______ _______ _______ _____
Total $55,051 $43,048 $12,003 28%
======= ======= ======= =====
As indicated above, the automotive market continues a strong growth trend.
The Company has been strategically focused on this market over the last
six years and expects this market to continue to grow. The current year's
growth is due primarily to flexible circuitry applications for the fast
growing engine control unit market segment for cars and sports vehicles.
Overall demand is strong in most segments of the automotive market,
although there has been a 20% decline in materials used in air bags due
to pricing pressures and customers' desire for multiple supply sources.
Datacommunications market sales through the first six months of fiscal
1996 have declined $1.3 million, the direct result of lower sales of high
and printers and end of product life cycle of certain computer
applications. The Company selectively targets a narrow segment of the
traditional flex circuit applications for the datacom market. Growth in
datacom sales is expected to come from production at the Company's new
102,000 square foot facility in Longmont, Colorado. This facility will
manufacture Novaclad, ViaGrid and high-density substrates used in the
packaging of integrated circuits (ICs).
Aerospace and defense sales declined due to the sale of the Hoskins
product aviation line at the start of fiscal year 1996. Hoskins
accounted for $1,789,000 in sales for the first six months of 1995.
Partially offsetting this loss were increased sales in vacuum
deposited materials and fabricated devices.
The industrial market sales reflect revenue from the Company's joint
venture in China more than offsetting lost sales due to softer demand
and pricing pressures in the Company's splicing tape product line.
The decline in consumer market sales was primarily due to inventory
adjustments by a key customer. The Company expects the consumer market
sales to return to comparable levels in the second half of fiscal 1996.
Gross profit increased $3,684,000 or 44% from $8,437,000 for the six
months ended March 3, 1995 to $12,121,000 for the six months ended
March 1, 1996. As a percentage of sales, gross profit was 19.6% in
1995 and 22.0% in 1996. Increased sales and greater facility
utilization contributed to the increase in gross profit dollars and
percent. Reducing gross profit was higher operational costs supporting
pre-production activities in the pilot operation in Longmont, Colorado.
Sales and marketing expense declined $21,000 from $4,556,000 for the six
months ended March 3, 1995 to $4,535,000 for the six months ended
March 1, 1996. As a percentage of sales, sales and marketing expense
was 10.6% in 1995 and 8.2% in 1996. The Company continues to invest
in the promotion of its new products and business.
Net general and administrative expenses increased $713,000 from
$1,737,000 for the six months ended March 3, 1995 to $2,450,000 for
the six months ended March 1, 1996. Gross general and administrative
expenses increased $436,000 from $2,191,000 for the six months ended
March 3, 1995 to $2,627,000 for the six months ended March 1, 1996.
ARPA credits applied to general and administrative expenses during
the first six months of fiscal 1996 was $177,000, while ARPA credits
for the first six months of fiscal 1995 was $454,000. Consulting fees
relating to the Company's joint venture activity, as well as activities
relating to the Company's 40th anniversary celebration accounted for
the remaining increase in general and administrative expenses.
Net research and development expenses increased $91,000 from
$1,109,000 for the six months ended March 3, 1995 to $1,200,000 for
the six months ended March 1, 1996. ARPA credits applied to research
and development expenses were $237,000 in 1995 and $364,000 in 1996.
Gross research and development expenses, therefore, increased
$218,000 from $1,346,000 for the six months ended March 3, 1995 to
$1,564,000 for the six months ended March 1, 1996. Personnel and
materials costs increased not only to support the MCM-L Consortium,
but also for process advancements in the Company's core interconnect
operations.
Net interest expense increased $243,000 from $146,000 for the six
months ended March 3, 1995 to $389,000 for the six months ended
March 1, 1996. The following table sets forth information concerning
the Company interest cost.
Six Months EndedSix Months Ended
3/1/96 3/3/95 Change
Gross interest expense $ 1,549 $ 622 $ 927
Capitalized interest (916) (476) (440)
Interest income (244) - (244)
_______ _______ _______
$ 389 $ 146 $ 243
======= ======= =======
Gross interest expense for 1996 is much higher than 1995 due to the
increased average outstanding borrowings for the period. Borrowings
during the first six months of 1996 began at $38 million, decreased
to $27 million on or about November 21, 1995 and further decreased
to $14 million at March 1, 1996. November 21, 1995 was the closing
date of the $29.1 million stock offering and March 1, 1996 was the
effective date of amending the revolving credit arrangement. Between
these two dates, the Company had approximately $14 million invested
in high grade short-term interest bearing securities, which resulted
in the interest income of $244,000.
Borrowings during the first six months of fiscal 1995 began at
$15 million and increased to $22 million at March 3, 1995.
Capitalized interest increased because of the Company's significant
investment in construction in progress in Longmont, Colorado.
Construction in progress began in 1995 at $12 million and had
increased to $24 million by March 3, 1995. In 1996, construction
in progress began at $33 million and at March 1, 1996 stands at
$36 million.
Operating profit increased $2,658,000 or 298% from $889,000 for the
six months ended March 3, 1995 to $3,547,000 for the six months
ended March 1, 1996. Provision for income taxes for the six months
ended March 1, 1996 was $1,065,000. The effective tax rate for
1996 is estimated to be 30%. Net income increased $1,828,000 or
180% from $654,000 for the six months ended March 3, 1995 to
$2,482,000 for the six months ended March 1, 1996.
Three Months Ended March 3, 1995 and March 1, 1996
The following table gives information about the Company's revenue
for the three months ended March 1, 1996 as compared with the three
months ended March 3, 1995.
Three Months EndedThree Months Ended Gross %
Market 3/1/96 3/3/95 Change Change
Automotive $21,230 $12,489 $ 8,741 70%
Datacommunications 2,220 3,456 (1,236) (36%)
Aerospace/Defense 2,869 2,619 250 10%
Industrial 1,731 2,122 (391) (18%)
Consumer 904 1,274 (370) (29%)
_______ _______ _______ _______
Total $28,954 $21,960 $ 6,994 32%
======= ======= ======= =======
Gross profit for the quarter increased $2,396,000 or 59% from
$4,038,000 for the three months ended March 3, 1995 to $6,434,000
for the three months ended March 1, 1996. As a percentage of sales,
gross profit was 18.4% in 1995 and 22.2% in 1996. Increased sales
and greater facility utilization by the Company's core business was
offset in part by expenses, net of ARPA credits, attributed to the
pilot operations in Longmont, Colorado, amounting to approximately $1.4
million. Without the pilot operations, gross profit would have been
26.7% of sales for the quarter.
Total expenses increased $250,000 or 6.5%. Expressed as a percentage
of sales, total expenses were 17.6% in 1995 and 14.2% in 1996. The
decline in interest expense was offset by increases in general and
administrative expenses.
Sales and marketing expenses increased $33,000 or 1.4% from $2,281,000
for the three months ended March 3, 1995 to $2,314,000 for the three
months ended March 1, 1996.
General and administrative expenses increased $407,000 or 46.6% from
$873,000 for the three months ended March 1, 1995 to $1,280,000 for
the three months ended March 1, 1996. A $167,000 decline in ARPA
credits and increases in consulting expenses related to the Company's
joint venture activity as well as costs associated with activities
surrounding the Company's 40th anniversary celebration accounted
for the increase.
Research and development expenses declined $68,000 or 11.8% from
$578,000 for the three months ended March 3, 1995 to $510,000 for
the three months ended March 1, 1996. The decline is a combination
of increased activities offset by a shifting of ARPA credits to the
research and development areas.
Interest costs and activities for the noted periods are explained below:
Three Months Ended Three Months Ended
3/1/96 3/3/95 Change
Gross interest expense $ 611 $ 398 $ 213
Capitalized interest (391) (270) (121)
Interest income (214) - (214)
_______ _______ _______
$ 6 $ 128 $ (122)
======= ======= =======
As a result of increased sales and gross margin performance, pretax
operating income increased $2,146,000 or 1300% from $178,000 for the
three months ended March 3, 1995 to $2,324,000 for the three months
ended March 1, 1996. Income taxes for the current quarter were
provided at 30%, resulting in net income of $1,624,000. This compares
with $135,000 for the three months ended March 3, 1995.
Prospective Information
Significant operating events will take place during the next six
months of operations of the Company. First, the ARPA funded
consortium will be completing its purpose and funding will slow
dramatically in early fiscal 1997. The Company has no obligation
to any member after the consortium objective and related ARPA
funding are completed. Only normal business relationships will
remain among the members of the MCM-L consortium.
Secondly, the Company's Longmont production facility will begin
its start up process during the Company's fiscal third quarter.
Initially, sales are not expected to be of sufficient volume to
offset operational expenses. Therefore the start-up of the
Longmont operations is likely to have a negative impact on the
Company's operating results during the second half of fiscal 1996 and
until such time sales increase enough to cover fixed expenses.
Other Factors
The Company has limited foreign currency risks from its international
sales. Major contracts have "risk sharing" arrangements with the
customer, allowing repricing in the event of long-term and/or
significant foreign currency fluctuations.
To deal with short-term fluctuations, the Company, from time-to-time,
will use a variety of natural and contractual hedging techniques
to minimize its exposure to foreign currency fluctuations.
Historical transactions have not been material in nature.
Currently, less than 5% of the Company's estimated fiscal 1996 sales
will be priced in a foreign currency. As of March 1, 1996, the
Company has no open contracts on any foreign currency.
Financial Condition
As indicated in Footnote 2, the Company has restructured its
financing with its bankers. The new financing package allows
the Company to borrow up to $35 million. Borrowings at March 1,
1996 was $6.7 million. The remaining debt capacity, along with
operating cash flows, will adequately support the Company's
operations and anticipated capital expenditures beyond the end of
fiscal 1996. The current ratio increased to 2.4 to 1 as of March 1,
1996, from 2.0 to 1 at the start of fiscal 1996, while the long-
term debt to equity ratio has improved to .19 to 1.0 as of March 1,
1996.
<PAGE>
PART II - OTHER INFORMATION
SHELDAHL, INC. AND SUBSIDIARY
FORM 10-Q
Item 4. Submission of Matters to a Vote of Security Holders
On January 10, 1996, Sheldahl, Inc. held its Annual Meeting of
Shareholders. Of the 6,833,926 shares of common stock eligible
to vote, 5,449,147 shares were represented at the meeting and
votes were taken on the following matters:
A) The votes cast for the eight (8) directors to serve until
the next annual meeting of shareholders were:
For Withhold Authority
James E. Donaghy 5,440,463 8,683
John G. Kassakian 5,443,091 6,055
Gerald E. Magnuson 5,409,923 39,224
William B. Miller 5,439,724 9,423
Kenneth J. Roering 5,439,942 9,205
Richard S. Wilcox 5,442,580 6,567
Beekman Winthrop 5,443,192 5,955
James S. Womack 5,435,807 13,340
B) The votes cast to approve the appointment of Arthur Andersen
LLP as independent auditors for the current fiscal year were:
For 5,429,613 Against 11,891 Abstain 7,643 Broker Non-Vote 0
Item 6. Exhibits and Reports on Form 8-K
A) Exhibits
2 Financial Data Schedule
10.1 Fourth Amendment to Amended and Restated Credit and
Security Agreement dated March 12, 1996, among Norwest
Bank, Harris Bank, NBD Bank and Sheldahl, Inc.
10.2 Fifth Amendment to Amended and Restated Credit and
Security Agreement dated March 12, 1996, among Norwest
Bank, Harris Bank, NBD Bank and Sheldahl, Inc.
11 Statement Regarding Computation of Earnings Per Share
B) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during
the quarter ended March 1, 1996.
<PAGE>
SIGNATURES
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.
(Registrant)
Dated: April 3, 1996 By /s/ James E. Donaghy
President and
Chief Executive Officer
Dated: April 3, 1996 By /s/ John V. McManus
Vice President, Finance
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MARCH 1, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> AUG-30-1996 AUG-30-1996
<PERIOD-END> MAR-01-1996 MAR-01-1996
<CASH> 693 693
<SECURITIES> 0 0
<RECEIVABLES> 18982 18982
<ALLOWANCES> 0 0
<INVENTORY> 11409 11409
<CURRENT-ASSETS> 33270 33270
<PP&E> 113258 113258
<DEPRECIATION> 44336 44336
<TOTAL-ASSETS> 103588 103588
<CURRENT-LIABILITIES> 13968 13968
<BONDS> 0 0
<COMMON> 2219 2219
0 0
0 0
<OTHER-SE> 70392 70392
<TOTAL-LIABILITY-AND-EQUITY> 103588 103588
<SALES> 55051 28954
<TOTAL-REVENUES> 55051 28954
<CGS> 42930 22520
<TOTAL-COSTS> 8185 4104
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 389 6
<INCOME-PRETAX> 3547 2324
<INCOME-TAX> 1065 700
<INCOME-CONTINUING> 2482 1624
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2482 1624
<EPS-PRIMARY> .30 .18
<EPS-DILUTED> .30 .18
</TABLE>
Exhibit 11
SHELDAHL, INC. AND SUBSIDIARY
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share data)
For The Six Months Ended
March 1, March 3,
1996 1995
Primary Earnings Per Share
Weighted average number of issued
shares outstanding 7,925 6,626
Effect of exercise of stock options
under the treasury stock method 263 253
______ _____
Weighted average shares outstanding used
to compute primary earnings per share 8,188 6,879
====== ======
Net income $ 2,482 $ 654
====== ======
Net income per share $ 0.30 $ 0.10
====== ======
Fully diluted earnings per share
Weighted average number of issued
shares outstanding 7,925 6,626
Effect of exercise of stock options
under the treasury stock method 313 274
______ ______
Weighted average shares outstanding used
to compute fully diluted earnings per share 8,238 6,900
====== ======
Net income $ 2,482 $ 654
====== ======
Net income per share $ 0.30 $ 0.10
====== ======
For The Three Months Ended
March 1, March 3,
1996 1995
Primary Earnings Per Share
Weighted average number of issued
shares outstanding 8,856 6,650
Effect of exercise of stock options
under the treasury stock method 263 269
______ ______
Weighted average shares outstanding used
to compute primary earnings per share 9,119 6,919
====== ======
Net income $ 1,624 $ 135
====== ======
Net income per share $ 0.18 $ 0.02
====== ======
Fully diluted earnings per share
Weighted average number of issued
shares outstanding 8,856 6,650
Effect of exercise of stock options
under the treasury stock method 313 274
______ ______
Weighted average shares outstanding used
to compute fully diluted earnings per share 9,169 6,924
====== ======
Net income $ 1,624 $ 135
====== ======
Net income per share $ 0.18 $ 0.02
====== ======
<PAGE>
FOURTH AMENDMENT
TO
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
This Fourth Amendment is made as of the 29th day of January, 1996,
by and among SHELDAHL, INC., a Minnesota corporation (the "Borrower");
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association ("Norwest"); HARRIS TRUST AND SAVINGS BANK, a bank organized
and existing under the laws of the state of Illinois ("Harris"); and
NBD BANK, a Michigan banking corporation ("NBD"); (together with
Norwest and Harris the "Lenders" and each a "Lender"), and Norwest
as Agent for and on behalf of the Lenders (in such capacity, the
"Agent").
Recitals
The Borrower, Norwest and Harris have entered into an Amended and
Restated Credit and Security Agreement dated as of November 24, 1993,
as amended by a First Amendment to Amended and Restated Credit
Agreement dated as of December 2, 1993, a Second Amendment to
Amended and Restated Credit Agreement dated May 12, 1994, and a
Third Amendment to Amended and Restated Credit Agreement dated
January 24, 1995 (as amended, the "Credit Agreement") under which
Norwest, Harris and NBD have agreed to make certain revolving credit
and term loans available to the Borrower.
The Borrower and the Lenders have agreed to amend the Credit
Agreement to (i) adjust the Revolving Basic Increment and the Term
Basic Increment, (ii) decrease the unused Commitment Fee, (iii)
discontinue the Capital Expenditure Cumulative Limit and increase
the Capital Expenditure Limitation, (iv) discontinue the Cumulative
Minimum Fixed Charge Coverage Ratio, (v) decrease the Tangible Net
Worth covenant for 1996 and (vi) waive certain defaults for the
fiscal year 1996.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. Defined Terms. Capitalized terms used in this Fourth Amendment
which are defined in the Credit Agreement shall have the same meanings as
defined therein, unless otherwise defined herein.
2. Amended Definitions. Section 1.1 of the Credit Agreement is
hereby amended by (i) deleting the definitions of "Capital Expenditure
Cumulative Limit" and "Fixed Charge Coverage Ratio" and (ii) deleting the
definition of "Capital Expenditure Annual Limit" in its entirety and
substituting in its place the following:
"Capital Expenditure Annual Limit" means $25,000,000 for each fiscal
year of the Borrower, commencing with the fiscal year ending August 30,
1996."
3. Interest Rates. Section 2.10(a) of the Credit Agreement is
hereby amended in its entirety to read as follows:
"(a) Basic Increments. Effective December 1, 1995, the
Revolving Basic Increment and the Term Basic Increment shall be
adjusted as of the first day of each of the Borrower's fiscal quarters
on the basis of the ratio of the Borrower's Debt to Tangible Net Worth
as at the end of the previous fiscal quarter, as set forth below:
Debt to Tangible Revolving Basic Term Basic
Net Worth Increment Increment
1.50 to 1.00 and above 1.50% 1.50%
1.00 to 1.00 through
1.49 to 1.00 1.00% 1.00%
0.76 to 1.00 through
0.99 to 1.00 0.50% 0.50%
Below 0.75 to 1.00 0.00% 0.00%
4. Unused Commitment Fee. Section 2.16(b) of the Credit Agreement
is hereby amended by deleting the reference to "one-half of one percent
(0.50%) per annum" as it appears therein and substituting in its place
"one-quarter of one percent (0.25%) per annum".
5. Tangible Net Worth. Section 6.13 of the Credit Agreement is
hereby amended by deleting the reference to "$39,500,000" as it appears
on reference to fiscal year 1996, and substituting in its place
"$38,500,000".
6. Minimum Fixed Charge Coverage Ratio. Section 6.16 of the
Credit Agreement is hereby deleted in its entirety.
7. Capital Expenditures. Section 7.11 of the Credit Agreement
is hereby amended by deleting it in its entirety and substituting in
its place the following:
"Section 7.11 Capital Expenditures. The Borrower will not,
and will not permit any Subsidiary to, expend or contract to expend
for Capital Expenditures in excess of the Capital Expenditure Annual
Limit during any fiscal year of the borrower".
8. Waiver of Defaults. The Borrower is in default of Section
6.13 of the Credit Agreement as a result of the Borrower's Tangible
Net Worth for fiscal year 1996 being less than $39,500,000. The
Borrower is also in default of Section 6.15 of the Credit Agreement
as a result of the Borrower's consolidated Interest and Rent Coverage
Ratio for fiscal year 1996 being less than 2.00 to 1.00 (each a
"Default", and together the "Defaults").
Upon the terms and subject to the conditions set forth in
this Amendment, the Lender hereby waives the Defaults from the first
day of fiscal year 1996 through the date hereof. This waiver shall
be effective only in this specific instance and for the specific
purpose for which it is given, and this waiver shall not entitle
the Borrower to any other or further waiver in any similar or other
circumstances.
9. Conditions Precedent. This Fourth Amendment shall be
effective when the Lender shall have received an executed original
hereof, together with a Certificate of the Secretary of the Borrower
certifying that (i) the articles of incorporation and bylaws of the
Borrower, which were previously certified and delivered to the
Lender pursuant to the certificate of the Borrower's secretary dated
as of January 24, 1995, continue in full force and effect and have
not been amended or otherwise modified, and (ii) the officers and
agents of the Borrower who have been previously certified to the
Lender as being authorized to sign and to act on behalf of the
Borrower continue to be so authorized, or setting forth the sample
signatures of each of the officers and agents of the Borrower
authorized to execute and deliver this Amendment and all other
documents, agreements and certificates on behalf of the Borrower.
10. Representations and Warranties. To induce the Lenders to
enter into this fourth Amendment, the Borrower hereby represents and
Warrants to the Lenders as follows:
(a) The Loan Documents constitute the legal, valid and binding
agreements of the Borrower, are subject to no defenses, counterclaims,
rights of offset or recoupment and are enforceable in accordance with
their respective terms.
(b) The Notes constitute the legal, valid and binding obligations
of the Borrower, are subject to no defenses, counterclaims, rights of
offset or recoupment and are enforceable in accordance with their
respective terms.
(c) The Borrower has all requisite power and authority to execute
this Amendment and to perform all of its obligations hereunder, and
(d) The execution, delivery and performance by the Borrower of
this Amendment have been duly authorized by all necessary corporate
action and do not (1) require any authorization, consent or approval
by any governmental department, commissions, board, bureau, agency or
instrumentality, domestic or foreign, (2) violate (A) any provision
of any law, rule or regulations of any order, writ, injunction or
decree presently in effect, having applicability to the Borrower,
or (B) the articles of incorporation or by-laws of the Borrower, or
(3) result in the breach or constitute a default under any indenture
or loan or credit agreement or any other agreement, lease or
instrument to which the Borrower is a party or by which it or its
properties may be bound or affected.
(e) The representations and warranties contained in Article V
of the Credit Agreement are true and correct as of the date hereof
as though made on and as of this date, except to the extent that such
representations and warranties relate solely to an earlier date.
11. Release. The Borrower hereby releases and forever discharges
the Lenders and each of their respective former and present directors,
officers, employees, agents and representatives of and from every and
all claims, demands, causes of action (at law or in equity) and
liabilities, of any kind or nature, whether known or unknown,
liquidated or unliquidated, absolute or contingent, which the Borrower
ever had, presently has or claims to have against a Lender or any of
its respective directors, officers, employees, agents or
representatives of or relating to events, occurrences, actions,
inactions or any other matters occurring prior to the date of the
Amendment.
12. No Other Waiver. Except as set forth in paragraph 8 hereof,
the execution of this Fourth Amendment shall not be deemed to be a
waiver of any Default or Event of Default under the Credit Agreement
or breach, default or event of default under any Security Document
or other document held by the Lenders, whether or not known to the
Lenders and whether or not existing on the date of the Amendment.
13. Costs and Expenses. The Borrower hereby reaffirms its
agreement under Section 10.7 of the Credit Agreement to pay or
reimburse the Agent, among other costs and expenses, all expenses
incurred by the Agent in connection with the amendment, performance
or enforcement of the Loan Documents, including without limitation,
all reasonable fees and disbursements of legal counsel of the Agent.
14. References. Except as expressly amended hereby, all provision
of the Loan Documents shall remain in full force and effect. After the
effective date hereof, each reference to any Loan Document or any other
document executed in connection with the Credit Agreement to the
"Credit Agreement" or to "this Agreement", "hereunder" or "hereof"
or words of like import referring to the Credit Agreement shall be
deemed to refer to the Credit Agreement as amended hereby.
15. Execution in Counterparts. This Amendment may be executed
in any number of counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one in the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
SHELDAHL, INC.
By /s/ John V. McManus
Its Vice President, Finance
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as
Lender and Agent
By /s/ Ronald E. Gockowski
Its Vice President
HARRIS TRUST AND SAVINGS BANK
By /s/ Cathy Ciolek
Its Vice President
NBD BANK
By /s/ Thomas Gordy
Its Vice President
<PAGE>
</text)
FIFTH AMENDMENT
TO
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
This Fifth Amendment is made as of the 12th day of
March, 1996, by and among SHELDAHL, INC., a Minnesota corporation
(the "Borrower"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a
national banking association ("Norwest"), HARRIS TRUST AND SAVINGS
BANK, a bank organized and existing under the laws of the State of
Illinois ("Harris"), NBD BANK, a bank organized and existing under
the laws of the State of Michigan ("NBD", together with Norwest
and Harris, the "Lenders" and each a "Lender") and Norwest, as
agent for and on behalf of the Lenders (in such capacity, the
"Agent").
Recitals
The Borrower and the Lenders have entered into an
Amended and Restated Credit and Security Agreement dated as of
November 24, 1993, as amended by a First Amendment to Amended and
Restated Credit Agreement dated as of December 2, 1993, a Second
Amendment to Amended and Restated Credit Agreement dated May 12,
1994, a Third Amendment to Amended and Restated Credit Agreement
dated January 24, 1995 and a Fourth Amendment to Amended and
Restated Credit Agreement dated January 29,1996 (as amended, the
"Credit Agreement") under which the Lenders have severally agreed
to make certain revolving credit and term loans available to the
Borrower.
The Borrower and the Lenders have agreed to amend the
Credit Agreement, among other things, to (i) increase the
revolving credit facility, (ii) extend the maturity date of the
facility and (iii) provide additional interest rate options for
the facility.
NOW, THEREFORE, in consideration of the premises and
of the mutual covenants and agreements herein contained, it is
agreed as follows:
SEQ{ SEQ level2 \r0 \h 1. Defined Terms.
Capitalized terms used in this Fifth Amendment which are defined
in the Credit Agreement shall have the same meanings assigned to
them in the Credit Agreement, unless otherwise defined herein.
SEQ{ SEQ level2 \r0 \h 2. Amended Definitions.
Section 1.1 of the Credit Agreement is hereby amended by deleting
the definitions "Revolving Floating Rate", "Revolving Floating Rate
Spread", "Term Advance", "Term Commitment Amount", "Term Floating
Rate", "Term Floating Rate Spread" and "Term Notes" and substituting
or adding, as the case may be, the following definitions:
"Banking Day" means any day other than a Saturday or
Sunday on which national banks are open for business in
Minneapolis, Minnesota, Chicago, Illinois and Detroit,
Michigan, and, in addition, if such day relates to a
Eurodollar Advance or the fixing of a Eurodollar Rate, a day
on which dealings in U.S. dollar deposits are carried on in
the London Interbank Eurodollar market.
"Borrowing Base" means, at any time, the lesser of:
( SEQ{ SEQ level3 \r0 \h a) The aggregate Revolving
Commitment Amounts of the Lenders, or
( SEQ{ SEQ level3 \r0 \h b) The sum of
( SEQ{ SEQ level4 \r0 \h i) 80% of Eligible
Accounts, plus
( SEQ{ SEQ level4 \r0 \h ii) 60% of Eligible
Raw Materials Inventory, plus
( SEQ{ SEQ level4 \r0 \h iii) 50% of
Eligible Finished Goods Inventory, plus
( SEQ{ SEQ level4 \r0 \h iv) 20% of Eligible
Other Inventory, plus
( SEQ{ SEQ level4 \r0 \h v) 50% of the net
book value of Eligible Equipment, in no event,
however, to exceed $20,000,000 prior to December
31, 1997 or $15,000,000 thereafter.
"Capital Expenditure Limit" means $25,000,000 for the
Borrower's fiscal year 1996 and, for each subsequent fiscal
year, an amount mutually agreed upon by the Borrower and the
Required Lenders; provided, however, that if on or prior to
the sixtieth (60th) day following the end of the prior
fiscal year, the Borrower and the Required Lenders are
unable to agree, in writing, upon the appropriate level of
Capital Expenditures for the immediately succeeding fiscal
year, the Required Lenders may, in their discretion, declare
an Event of Default as of such date.
"Eligible Equipment" means all Equipment owned by the
Borrower free and clear of any other lien, security interest
or encumbrance.
"Eurodollar Advance" means any Advance which bears
interest at a rate determined by reference to the Eurodollar
Rate.
"Eurodollar Base Rate" means, with respect to an
Interest Period, the rate per annum equal to the rate
(rounded up to the nearest one-sixteenth of one percent
(1/16%)) determined by the Agent to be a rate at which U.S.
dollar deposits are offered to major banks in the London
interbank eurodollar market for funds to be made available
on the first day of such Interest Period and maturing at the
end of such Interest Period, as determined by the Agent
between the opening of business and 12:00 noon, Minneapolis,
Minnesota time, on the second Banking Day prior to the
beginning of such Interest Period.
"Eurodollar Rate" means, with respect to an Interest
Period, the rate obtained by adding (i) the applicable
Eurodollar Rate Spread to (ii) the rate obtained by dividing
(A) the applicable Eurodollar Base Rate by (B) a percentage
equal to one (1.00) minus the applicable percentage
(expressed as a decimal) prescribed by the Board of
Governors of the Federal Reserve System (or any successor
thereto) for determining reserve requirements applicable to
eurodollar fundings (currently referred to as "Eurocurrency
Liabilities" in Regulation D) or any other reserve
requirements applicable to a member bank of the Federal
Reserve System with respect to such eurodollar liabilities.
"Eurodollar Rate Basic Increment" has the meaning
specified in Section 2.10(a).
"Eurodollar Rate Spread" has the meaning specified in
Section 2.10.
"Fifth Amendment" means that certain Fifth Amendment
to Amended and Restated Credit and Security Agreement dated
as of March 12, 1996 by and among the Borrower, the Lenders
and the Agent.
"Floating Rate" means, at all times, an annual rate
obtained by adding (i) the Base Rate and (ii) the Floating
Rate Spread, which Floating Rate shall change when and as
the Base Rate changes.
"Floating Rate Advance" means any Advance which bears
interest at a rate determined by reference to the Floating
Rate.
"Floating Rate Basic Increment" has the meaning
specified in Section 2.10(a).
"Floating Rate Spread" has the meaning specified in
Section 2.10.
"Interest Period" means, relative to any Eurodollar
Advance, the period beginning on (and including) the date on
which such Eurodollar Advance is made or continued as, or
converted into, a Eurodollar Advance pursuant to Sections
2.1(a), (b) or (c) and shall end on (but exclude) the day
which numerically corresponds to such date one (1), two (2),
three (3) or six (6) months thereafter (or, if such month
has no numerically corresponding day, on the last Banking
Day of such month), as the Borrower may select in its
relevant notice pursuant to Sections 2.1(a), (b) or (c);
provided, however, that:
( SEQ{ SEQ level3 \r0 \h c) the Borrower shall not
be permitted to select Interest Periods to be in effect at
any one time which have expiration dates occurring on more
than two (2) different dates;
( SEQ{ SEQ level3 \r0 \h d) if an Interest Period
would otherwise end on a day which is not a Banking day,
such Interest Period shall end on the next following Banking
Day (unless such next following Banking Day is the first
Banking Day of a calendar month, in which case such Interest
Period shall end on the next preceding Banking Day); and
( SEQ{ SEQ level3 \r0 \h e) no Interest Period may
end later than the Maturity Date.
"Maturity Date" means December 31, 1998, unless
extended by the Lenders in their sole discretion upon
request of the Borrower, in no event, however, to be
extended beyond December 31, 2001.
SEQ{ SEQ level2 \r0 \h 3. Obtaining Revolving
Advances. Section 2.1(a), (b) and (c) are hereby deleted and the
following subsections are inserted in place thereof:
"( SEQ{ SEQ level3 \r0 \h a) Procedures for
Borrowing. Each Borrowing shall be funded by the Lenders as
either Floating Rate Advances or Eurodollar Advances, as the
Borrower shall specify in the related notice pursuant to
this subsection (a) or subsections (b) or (c) below.
Floating Rate Advances and Eurodollar Advances may be
outstanding at the same time. It is understood, however,
that in the case of a Borrowing which is to bear interest at
a Eurodollar Rate, the principal amount of the Borrowing
shall be in an amount equal to $1,500,000 or a higher
integral multiple of $500,000. The Borrower shall give
notice to the Agent of each proposed Borrowing not later
than 10:30 a.m., Minneapolis, Minnesota time, on a Banking
Day which, in the case of a Borrowing that is to bear
interest initially at a Floating Rate, is the proposed date
of such Borrowing or, in the case of a Borrowing that is to
bear interest initially at the Eurodollar Rate, is at least
three (3) Banking Days prior to the proposed date of such
Borrowing. Each such notice shall be effective upon receipt
by the Agent, shall be in writing or by telephone or
telecopy transmission, to be confirmed in writing by the
Borrower if so requested by the Agent and shall specify
whether the Borrowing is to bear interest initially at a
Floating Rate or a Eurodollar Rate, and in the case of a
Borrowing that is to bear interest initially at a Eurodollar
Rate, shall specify the Interest Period to be applicable
thereto. Promptly upon receipt of such notice (but in no
event later than 12:00 Noon, Minneapolis, Minnesota time,
with respect to a Floating Rate Advance, and the close of
business, with respect to a Eurodollar Advance, in each case
on the Banking Day of receipt of such notice), the Agent
shall advise each Lender of the proposed Borrowing. At or
before 2:00 p.m., Minneapolis, Minnesota, time, on the date
of the requested Borrowing, each Lender shall provide the
Agent at the principal office of the Agent in Minneapolis,
Minnesota with immediately available funds covering such
Lender's Percentage of such Borrowing, and subject to the
satisfaction of the conditions precedent set forth in
Article IV with respect to such Borrowing, the Agent shall
pay over such funds to the Borrower prior to the close of
business on the date of the requested Borrowing.
( SEQ{ SEQ level3 \r0 \h b) Converting Floating Rate
Advances to Eurodollar Advances; Procedures. So long as no
Default or Event of Default shall exist, the Borrower may
convert all or any part of any outstanding Floating Rate
Advance into a Eurodollar Advance by giving notice to the
Agent of such conversion not later than 10:30 a.m.,
Minneapolis, Minnesota time, on a Banking Day which is at
least three (3) Banking Days prior to the date of the
requested conversion. Each such notice shall be in writing
or by telephone or telecopy transmission, to be confirmed in
writing by the Borrower if so requested by the Agent, shall
specify the date and amount of such conversion, the total
amount of the Advance to be so converted and the Interest
Period therefor. Each conversion of a Floating Rate Advance
shall be on a Banking Day, and the aggregate amount of each
such conversion of a Floating Rate Advance to a Eurodollar
Advance shall be in an amount equal to $1,500,000 or a
higher integral multiple of $500,000.
( SEQ{ SEQ level3 \r0 \h c) Procedures at End of an
Interest Period. Unless the Borrower requests a new
Eurodollar Advance in accordance with the procedures set
forth below, or prepays the principal of an outstanding
Eurodollar Advance at the expiration of an Interest Period,
the Agent shall automatically and without request of the
Borrower, convert each Eurodollar Advance to a Floating Rate
Loan on the last day of the relevant Interest Period. So
long as no Default or Event of Default shall exist, the
Borrower may cause all or any part of any outstanding
Eurodollar Loan to continue to bear interest at a Eurodollar
Rate after the end of the then applicable Interest Period by
notifying the Agent not later than 10:30 a.m., Minneapolis,
Minnesota time on a Banking Day which is at least three (3)
Banking Days prior to the first day of the new Interest
Period. Each such notice shall be in writing or by
telephone or telecopy transmission to be confirmed in
writing by the Borrower if so requested by the Agent shall
be effective when requested by the Agent, and shall specify
the first day of the applicable Interest Period, the amount
of the expiring Eurodollar Advance to be continued and the
Interest Period therefor. Each new Interest Period shall
begin on a Banking Day and the aggregate amount of each
Advance bearing a new Eurodollar Rate shall be in an amount
equal to $1,500,000 or a higher integral multiple of
$500,000.
( SEQ{ SEQ level3 \r0 \h d) Setting and Notice of
Rates. The applicable Eurodollar Rate for each Interest
Period shall be determined by the Agent between the opening
of business and 12:00 Noon, Minneapolis, Minnesota time, on
the second Banking Day prior to the beginning of such
Interest Period, whereupon notice thereof (which may be by
telephone) shall be given by the Agent to the Borrower and
each Lender. Each such determination of the applicable
Eurodollar Rate shall be conclusive and binding upon the
parties hereto, in the absence of demonstrable error. The
Agent, upon written request of the Borrower or any Lender,
shall deliver to the Borrower or such requesting Lender a
statement showing the computations used by the Agent in
determining the applicable Eurodollar Rate hereunder."
SEQ{ SEQ level2 \r0 \h 4. Term Advances.
Concurrent with, or prior to, execution of this Fifth Amendment,
all Term Advances shall be paid in full. The Lenders' obligation
to make new Term Advances to the Borrower is hereby terminated.
Consistent with the foregoing, Sections 2.6 and 2.7 of the Credit
Agreement are hereby deleted.
SEQ{ SEQ level2 \r0 \h 5. Interest. Section 2.8
of the Credit Agreement is hereby amended in its entirety to read
as follows:
"Section 2.8 Interest. The outstanding principal
balance of each Revolving Advance shall bear interest
at the Floating Rate unless a Eurodollar Rate has been
elected by the Borrower in accordance with Section
2.1, in which case the specified Eurodollar Rate shall
apply to that portion of such outstanding principal as
shall have been designated by the Borrower in
accordance with Section 2.1. Accrued interest on each
Eurodollar Advance shall be payable on the last day of
the Interest Period related to such Eurodollar
Advance; provided, however, that if any Interest
Period is longer than three (3) months, interest shall
be payable monthly in arrears on the first day of each
month occurring after commencement of such Interest
Period and on the last day of the Interest Period.
Accrued interest on each Floating Rate Advance shall
be payable in arrears on the first day of each month
and at maturity or conversion of such Floating Rate
Advance to a Eurodollar Advance."
SEQ{ SEQ level2 \r0 \h 6. Basic Increments. The
introductory clause of Section 2.10 and Section 2.10(a) are hereby
amended in their entirety to read as follows:
"2.10 Interest Rate Spreads. The "Floating Rate
Spread" and the "Eurodollar Rate Spread", respectively,
mean the sum of (i) the applicable Floating Rate Basic
Increment or the Eurodollar Rate Basic Increment, as
the case may be, and (ii) the Default Increment,
determined in accordance with the following:
(a) Basic Increments. The
Floating Rate Basic Increment and the Eurodollar
Rate Basic Increment shall be adjusted as of the
first day of each of the Borrower's fiscal
quarters on the basis of the ratio of the
Borrower's Debt to Tangible Net Worth as of the
end of the previous fiscal quarter, in
accordance with the following:
Debt to Tangible Floating Rate Eurodollar Rate
Net Worth Ratio Basic Increment Basic Increment
1.00 and above 1.00% 3.50%
to 1.00
0.76 to 1.00 through 0.50% 3.00%
0.99 to 1.00
0.50 to 1.00 through 0.00% 2.50%
0.75 to 1.00
Below 0.50 to 1.00 0.00% 2.00%
SEQ{ SEQ level2 \r0 \h 7. Prepayments. Section 2.11 of
the Credit Agreement is hereby amended as follows:
( SEQ{ SEQ level3 \r0 \h a) Section 2.11(b)(3) is
hereby amended in its entirety to read as follows:
"(3) If such reduction occurs at any time other
than the Maturity Date, the Borrower shall pay to the
Lenders a premium in an amount equal to a percentage
of the reduction, computed as follows:
( SEQ{ SEQ level4 \r0 \h i) one-half of one
percent (.50%), if the reduction occurs on or
before the first anniversary of the date of the
Fifth Amendment; and
( SEQ{ SEQ level4 \r0 \h ii) one-quarter of one
percent (.25%), if the reduction occurs after
the first anniversary of the date of the Fifth
Amendment."
( SEQ{ SEQ level3 \r0 \h b) Section 2.11(c) is
amended in its entirety to read as follows:
(c) "Prepayment of Eurodollar Advances. In
the event of either a mandatory or a voluntary
prepayment of Eurodollar Advances, any such prepayment
shall (i) be accompanied by accrued interest on such
partial prepayment through the date of prepayment and
additional compensation calculated in accordance with
Section 2.11(e), (ii) be in an aggregate amount equal
to the applicable minimum Eurodollar Advance amount
specified in Section 2.1(a) and, after application of
any such prepayment, shall not result in a Eurodollar
Advance remaining outstanding in an amount less than
such minimum amount, (iii) be in an aggregate amount
equal to $1,500,000 or a higher integral multiple of
$500,000 and (iv) unless notified by the Borrower in
writing to the contrary, be applied by the Agent to
outstanding Floating Rate Advances (pro rata among all
Lenders) and, if no Floating Rate Advances are then
outstanding, to outstanding Eurodollar Advances (pro
rata among all Lenders) in such order of application
as the Agent shall elect."
( SEQ{ SEQ level3 \r0 \h c) A new subsection (e) is
hereby added to Section 2.11 which reads as follows:
"(e) The Borrower hereby agrees that upon
demand by any Lender (which demand shall be
accompanied by a statement setting forth the basis for
the calculations of the amount being claimed), the
Borrower will indemnify such Lender against any loss
or expense which such Lender may have sustained or
incurred (including, without limitation, any net loss
or expense incurred by reason of the liquidation or
re-employment of deposits or other funds acquired by
such Lender to fund or maintain a Eurodollar Advance)
or which such Lender may be deemed to have sustained
or incurred, as reasonably determined by such Lender,
(i) as a consequence of any failure by the Borrower to
make any payment when due of any amount due hereunder
in connection with any Eurodollar Advance, (ii) due to
any failure of the Borrower to borrow or convert any
Eurodollar Advance on a date specified therefor or
(iii) due to any payment or prepayment of any
Eurodollar Advance on a date other than the last date
of the applicable Interest Period for such Eurodollar
Advance. For this purpose, all notices under Sections
2.1(a), (b) and (c) shall be deemed irrevocable.
Notwithstanding any provision of this Agreement to the
contrary, each Lender shall be entitled to fund and
maintain all or any part of its Eurodollar Advances in
any manner it deems fit, it being understood, however,
that for purposes of this Agreement (specifically
including, this subsection (e)) all determinations
hereunder shall be made as if each Lender had actually
funded and maintained such Eurodollar Advance during
each Interest Period for such Eurodollar Advance
through the purchase of deposits having a maturity
corresponding to such Interest Period and bearing an
interest rate equal to the appropriate Eurodollar Rate
for such Interest Period."
SEQ{ SEQ level2 \r0 \h 8. Prior Letter of Credit.
Section 2.16(d) of the Credit Agreement is hereby amended by
adding thereto the following sentence:
"Notwithstanding the foregoing, effective as of
October 15, 1996, the fee with respect to the Prior
Letter of Credit shall accrue on a daily basis
computed at an annual rate of one and three quarters
percent (1.75%) of the face amount thereof until such
date as the prior Letter of Credit shall terminate by
its terms."
SEQ{ SEQ level2 \r0 \h 9. Increased Costs; Funding
Exceptions. A new Section 2.18 is hereby added to the Credit
Agreement which reads as follows:
"Section 2.18 Increased Costs; Funding Exceptions.
( SEQ{ SEQ level3 \r0 \h a) Increased Costs on
Eurodollar Advances. If Regulation D of the Board of
Governors of the Federal Reserve System or, after the date
of this Agreement, the adoption of any applicable law, rule
or regulation, or any change in any existing law, or any
change in the interpretation or administration thereof by
any governmental authority, central bank or comparable
agency charged with the interpretation or administration
thereof, or compliance by a Lender with any request or
directive (whether or not having the force of law) of any
such authority, central bank or comparable agency, shall:
(i) subject a Lender to or cause the
withdrawal or termination of any exemption previously
granted to a Lender with respect to, any tax, duty or
other charge with respect to its Eurodollar Advances
or its obligation to make Eurodollar Advances, or
shall change the basis of taxation of payments to a
Lender of the principal of or interest under this
Agreement in respect of its Eurodollar Advances or its
obligation to make Eurodollar Advances (except for
changes in the rate of tax on the overall net income
of a Lender imposed by the jurisdictions in which a
Lender's principal executive office is located); or
(ii) impose, modify or deem applicable any
reserve (including, without limitation, any reserve
imposed by the Board of Governors of the Federal
Reserve System, but excluding any reserve included in
the determination of interest rates pursuant to
Section 2.8, special deposit or similar requirement
against assets of, deposits with or for the account
of, or credit extended by a Lender; or
(iii) impose on any Lender any other condition
affecting its making, maintaining or funding of its
Eurodollar Advances or its obligation to make
Eurodollar Advances;
and the result of any of the foregoing is to increase the
cost to an affected Lender of making or maintaining any
Eurodollar Advance, or to reduce the amount of any sum
received or receivable by such Lender under this Agreement
or under its Note with respect to a Eurodollar Advance, then
the affected Lender shall notify the Borrower and the Agent
of such increased cost and within fifteen (15) days after
demand by such Lender (which demand shall be accompanied by
a statement setting forth the basis of such demand) and the
Borrower shall pay to such Lender such additional amount or
amounts as will compensate the Lender for such increased
cost or such reduction shall be payable by the Borrower or
any period longer than ninety (90) days prior to the date on
which notice thereof is delivered to the Borrower. Each
Lender will promptly notify the Borrower of any event of
which it has knowledge, occurring after the date hereof,
which will entitle such Lender to compensation pursuant to
this Section 2.18. If the Borrower receives notice from a
Lender of any event which will entitle such Lender to
compensation pursuant to this Section 2.18, the Borrower may
prepay any then outstanding Eurodollar Advances or notify
the affected Lender that any pending request for a
Eurodollar Advance shall be deemed to be a request for a
Floating Rate.
( SEQ{ SEQ level3 \r0 \h b) Basis for Determining
Interest Rate Inadequate or Unfair. If with respect to any
Interest Period:
( SEQ{ SEQ level4 \r0 \h i) the Agent determines
that, or the Required Lenders determine and advise the
Agent that, deposits in U.S. dollars (in the
applicable amounts) are not being offered in the
London interbank eurodollar market for such Interest
Period; or
( SEQ{ SEQ level4 \r0 \h ii) the Agent otherwise
determines, or the Required Lenders determine and
advise the Agent (which determination shall be binding
and conclusive on all parties), that by reason of
circumstances affecting the London interbank
eurodollar market adequate and reasonable means do not
exist for ascertaining the applicable Eurodollar Rate;
or
( SEQ{ SEQ level4 \r0 \h iii) the Agent
determines, or the Required Lenders determine and
advise the Agent, that the Eurodollar Rate as
determined by the Agent will not adequately and fairly
reflect the cost to the Lenders of maintaining or
funding a Eurodollar Advance for such Interest Period,
or that the making or funding of Eurodollar Advances
has become impracticable as a result of an event
occurring after the date of this Agreement which in
the opinion of such Lenders materially affects such
Eurodollar Advances;
then the Agent shall promptly notify the affected parties
and ( SEQ{ SEQ level5 \r0 \h A)in the event of any
occurrence described in the foregoing clause (i) the
Borrower shall enter into good faith negotiations with each
affected Lender in order to determine an alternate method to
determine the Eurodollar Rate for such Lender, and during
the pendency of such negotiations with any Lender, such
Lender shall be under no obligation to make any new
Eurodollar Advances, and ( SEQ{ SEQ level5 \r0 \h B)in the
event of any occurrence described in the foregoing clauses
(i) or (iii), for so long as such circumstances shall
continue, no Lender shall be under any obligation to make
any new Eurodollar Advances.
( SEQ{ SEQ level3 \r0 \h c) Illegality. In the
event that any change in (including the adoption of any new)
applicable laws or regulations, or any change in the
interpretation of applicable laws or regulations by any
governmental authority, central bank, comparable agency or
any other regulatory body charged with the interpretation,
implementation or administration thereof, or compliance by a
Lender with any request or directive (whether or not having
the force of law) of any such authority, central bank,
comparable agency or other regulatory body, should make it
or, in the good faith judgment of the affected Lender, shall
raise a substantial question as to whether it is unlawful
for such Lender to make, maintain or fund Eurodollar
Advances, then ( SEQ{ SEQ level4 \r0 \h i)the affected
Lender shall promptly notify the Borrower and the Agent, (
SEQ{ SEQ level4 \r0 \h ii)the obligation of the affected
Lender to make, maintain or convert into Eurodollar Advances
shall, upon the effectiveness of such event, be suspended
for the duration of such unlawfulness, and ( SEQ{ SEQ level4
\r0 \h iii)for the duration of such unlawfulness, any
notice by the Borrower pursuant to Sections 2.1(a), (b) or
(c) requesting the affected Lender to make or convert into
or roll over Eurodollar Advances shall be construed as a
request to make or to continue making Floating Rate
Advances."
SEQ{ SEQ level2 \r0 \h 10. Minimum Tangible Net
Worth. The Credit Agreement is hereby amended in its entirety to
read as follows:
"Section 6.13 Minimum Tangible Net Worth. The
Borrower and its Subsidiaries will maintain their
consolidated Tangible Net Worth, calculated as at the
end of each fiscal month of the Borrower, (i) as of
December 31, 1995, at not less than $63,000,000 and
(ii) as of December 31 of each year thereafter (each
herein a "Determination Date") at not less than
TNWR + (.50 x NI),
where:
TNWR = the minimum Tangible Net Worth
requirement for the immediately
preceding Determination Date, computed
in accordance with this Section 6.13;
and
NI = the consolidated Net Income of the
Borrower and its Subsidiaries for the
fiscal year ending on the Determination
Date as of which Tangible Net Worth is
being determined."
SEQ{ SEQ level2 \r0 \h 11. Maximum Debt to
Tangible Net Worth. Section 6.14 is hereby amended in its
entirety to read as follows:
"Section 6.14 Maximum Debt to Tangible
Net Worth Ratio. The Borrower and its Subsidiaries
will maintain their consolidated Debt to Tangible Net
Worth, calculated as at the end of each fiscal month
of the Borrower, at not more than 1.50 to 1.00."
SEQ{ SEQ level2 \r0 \h 12. Minimum Net Income.
Section 6.15 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"Section 6.15 Minimum Net Income. The Borrower and
its Subsidiaries will have Net Income for fiscal year
1996 in an amount not less than $5,000,000 and will
have Net Income for each subsequent fiscal year at a
level mutually agreed upon by the Borrower and the
Required Lenders; provided, however, that if on or
prior to the sixtieth (60th) day following the end of
the prior fiscal year, the Borrower and the Required
Lenders are unable to agree, in writing, upon the
appropriate level of Net Income for any subsequent
fiscal year, the Required Lenders may, in their
discretion, declare an Event of Default as of such
date.
SEQ{ SEQ level2 \r0 \h 13. Revolving
Commitments. The Commitments of the Lenders and their respective
Percentages as set forth on the signature page of the Credit
Agreement are hereby amended in their entirety to read as follows:
Norwest:
Revolving Commitment Amount: $11,666,666.67
Percentage of Revolving Commitment Amount: 33 1/3%
Harris:
Revolving Commitment Amount: $11,666,666.67
Percentage of Revolving Commitment Amount: 33 1/3%
NBD:
Revolving Commitment Amount: $11,666,666.66
Percentage of Revolving Commitment Amount: 33 1/3%
SEQ{ SEQ level2 \r0 \h 14. Issuance of New
Promissory Notes. To evidence the new Commitments of the Lenders
and in replacement for (but not in payment of) the Revolving Notes
currently held by the Lenders, the Borrower agrees to issue and
deliver to the Lenders the following Notes (the "New Notes"):
( SEQ{ SEQ level3 \r0 \h a) A Revolving Note of the
Borrower payable to the order of Norwest in an amount
corresponding to the Revolving Commitment Amount of Norwest,
in substantially the form of Exhibit D attached hereto.
( SEQ{ SEQ level3 \r0 \h b) A Revolving Note of the
Borrower payable to the order of Harris in an amount
corresponding to the Revolving Commitment Amount of Norwest,
in substantially the form of Exhibit E attached hereto.
( SEQ{ SEQ level3 \r0 \h c) A Revolving Note of the
Borrower payable to the order of NBD in an amount
corresponding to the Revolving Commitment Amount of Norwest,
in substantially the form of Exhibit F attached hereto.
The New Notes shall be issued in replacement for the Revolving
Notes previously held by the Lenders, respectively, and all
references in the Credit Agreement and in each other Loan Document
to the Notes or the Revolving Notes shall be deemed references to
the New Notes issued in accordance with this Fifth Amendment.
SEQ{ SEQ level2 \r0 \h 15. Representations and
Warranties. To induce the Lenders to enter into this Fifth
Amendment, the Borrower hereby represents and warrants to the
Lenders as follows:
( SEQ{ SEQ level3 \r0 \h a) The Loan Documents
constitute the legal, valid and binding agreements of the
Borrower, are subject to no defenses, counterclaims, rights
of offset or recoupment and are enforceable in accordance
with their respective terms.
( SEQ{ SEQ level3 \r0 \h b) The New Notes, when
executed and delivered hereunder, will constitute the legal,
valid and binding obligations of the Borrower, are subject
to no defenses, counterclaims, rights of offset or
recoupment and are enforceable in accordance with their
respective terms.
( SEQ{ SEQ level3 \r0 \h c) The Borrower has all
requisite power and authority to execute this Amendment, the
New Notes and all other documents contemplated herein and to
perform all of its obligations hereunder and thereunder.
( SEQ{ SEQ level3 \r0 \h d) The execution, delivery
and performance by the Borrower of this Amendment, the New
Notes and all other documents contemplated herein have been
duly authorized by all necessary corporate action and do not
( SEQ{ SEQ level4 \r0 \h i) require any authorization,
consent or approval by any governmental department,
commission, board, bureau, agency or instrumentality,
domestic or foreign, ( SEQ{ SEQ level4 \r0 \h ii)violate (
SEQ{ SEQ level7 \r0 \h A)any provision of any law, rule or
regulation or of any order, writ, injunction or decree
presently in effect, having applicability to the Borrower or
( SEQ{ SEQ level7 \r0 \h B)the articles of incorporation or
by-laws of the Borrower, or ( SEQ{ SEQ level4 \r0 \h
iii)result in the breach or constitute a default under any
indenture or loan or credit agreement or any other
agreement, lease or instrument to which the Borrower is a
party or by which it or its properties may be bound or
affected.
( SEQ{ SEQ level3 \r0 \h e) The representations and
warranties contained in Article V of the Credit Agreement
are true and correct as of the date hereof as though made on
and as of this date, except to the extent that such
representations and warranties relate solely to an earlier
date.
SEQ{ SEQ level2 \r0 \h 16. Fees. The Borrower
hereby agrees to pay to the Lenders a non-refundable fee of
$15,000 to induce the Lenders to enter into this Fifth Amendment,
payable upon execution and delivery hereof, of which $5,000 shall
be paid to Harris, $5,000 shall be paid to Norwest and $5,000
shall be paid to NBD.
SEQ{ SEQ level2 \r0 \h 17. Conditions Precedent
to Effectiveness of this Fifth Amendment. This Fifth Amendment
shall become effective on the business day on which the Agent
shall have received the following, each in form and substance
satisfactory to the Agent, but in no event shall the Agent receive
the same later than the close of business on April 30, 1996:
( SEQ{ SEQ level3 \r0 \h a) This Fifth Amendment,
duly executed on behalf of the Borrower and each Lender.
( SEQ{ SEQ level3 \r0 \h b) The New Notes, duly
executed on behalf of the Borrower.
( SEQ{ SEQ level3 \r0 \h c) A Fourth Amendment to
Mortgage, Assignment of Rents and Indemnity (the "Mortgage
Amendment"), duly executed on behalf of the Borrower and
each Lender, together with a title insurance update
endorsement, in form and content acceptable to the Agent.
( SEQ{ SEQ level3 \r0 \h d) A certified copy of the
resolutions adopted by the Board of Directors of the
Borrower approving the execution and delivery of this Fifth
Amendment, the New Notes, the Mortgage Amendment and such
other documents as are contemplated hereby.
( SEQ{ SEQ level3 \r0 \h e) An opinion of the
Borrower's counsel as to such matters as the Agent may
reasonably request.
( SEQ{ SEQ level3 \r0 \h f) Evidence satisfactory to
the Agent of payment by the Borrower of the fees described
in paragraph 16 above, together with the costs and expenses
incurred by the Agent, including attorneys' fees and
expenses, in connection with the preparation and negotiation
of this Fifth Amendment and other matters as contemplated
hereby.
SEQ{ SEQ level2 \r0 \h 18. Release. The
Borrower hereby releases and forever discharges the Lenders and
each of their respective former and present directors, officers,
employees, agents and representatives of and from every and all
claims, demands, causes of action (at law or in equity) and
liabilities, of any kind or nature, whether known or unknown,
liquidated or unliquidated, absolute or contingent, which the
Borrower ever had, presently has or claims to have against a
Lender or any of its respective directors, officers, employees,
agents or representatives of or relating to events, occurrences,
actions, inactions or any other matters occurring prior to the
date of this Fifth Amendment.
SEQ{ SEQ level2 \r0 \h 19. No Other Waiver. The
execution of this Fifth Amendment shall not be deemed to be a
waiver of any Default or Event of Default under the Credit
Agreement or breach, default or event of default under any
Security Document or other document held by the Lenders, whether
or not known to the Lenders and whether or not existing on the
date of this Fifth Amendment.
SEQ{ SEQ level2 \r0 \h 20. Costs and Expenses.
The Borrower hereby reaffirms its agreement under Section 10.7 of
the Credit Agreement to pay or reimburse the Agent, among other
costs and expenses, all reasonable expenses incurred by the Agent
in connection with any future amendment, performance or
enforcement of the Loan Documents, including without limitation,
all reasonable fees and disbursements of legal counsel to the
Agent; but the Borrower shall not be required to pay or reimburse
the Agent for the legal fees incurred by the Agent in preparation
of this Fifth Amendment.
SEQ{ SEQ level2 \r0 \h 21. References. Except
as expressly amended hereby, all provisions of the Loan Documents
shall remain in full force and effect. After the effective date
hereof, each reference to any Loan Document or any other document
executed in connection with the Credit Agreement to the "Credit
Agreement" or to "this Agreement", "hereunder" or "hereof" or words
of like import referring to the Credit Agreement shall be deemed
to refer to the Credit Agreement as amended hereby.
SEQ{ SEQ level2 \r0 \h 22. Execution in
Counterparts. This Fifth Amendment may be executed in any number
of counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one in the same instrument.
M1:0111643.06
IN WITNESS WHEREOF, the parties hereto have caused
this Fourth Amendment to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
SHELDAHL, INC.
By /s/John V. McManus
Its Vice President, Finance
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as
Lender and Agent
By /s/Laura Oberst
Its Vice President
HARRIS TRUST AND SAVINGS BANK
By /s/Cathy Ciolek
Its Vice President
NBD BANK
By /s/Marguerite Mullins
Its Vice President
M1:0111643.06
Exhibit D to
Fifth Amendment
REVOLVING NOTE
$11,666,666.67 Minneapolis,
Minnesota
March 12, 1996
For value received, the undersigned, SHELDAHL, INC., a
Minnesota corporation (the "Borrower"), hereby promises to pay on
the Maturity Date (as defined in the Credit Agreement described
below), to the order of NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association (the "Lender"), at the
main office of Norwest Bank Minnesota, National Association, as
agent (the "Agent") in Minneapolis, Minnesota, or at any other
place designated at any time in accordance with the Credit
Agreement, in lawful money of the United States of America and in
immediately available funds, the principal sum of Eleven Million
Six Hundred Sixty Six Thousand Six Hundred Sixty Six and 67/100
Dollars ($11,666,666.67) or, if less, the aggregate unpaid
principal amount of all Revolving Advances (as defined in the
Credit Agreement) made by the Lender to the Borrower under the
Credit Agreement, together with interest on the principal amount
hereunder remaining unpaid from time to time (the "Principal
Balance"), computed on the basis of the actual number of days
elapsed and a 360-day year, from the date hereof until this Note
is fully paid at the rate or rates applicable to Revolving
Advances from time to time under the Amended and Restated Credit
and Security Agreement dated as of November 24, 1993, as amended
by a First Amendment dated as of December 2, 1993, by a Second
Amendment dated as of May 12, 1994, by a Third Amendment dated as
of January 24, 1995, by a Fourth Amendment dated January 29, 1996
and by a Fifth Amendment of even date herewith, by and among the
undersigned, the Lender, the Agent, and certain other Lenders as
therein described (as the same may hereafter be amended, restated
or supplemented, the "Credit Agreement").
Interest accruing on the Principal Balance shall be
due and payable as provided in the Credit Agreement. This Note
may be prepaid only in accordance with the Credit Agreement.
This Note is issued, in part, in replacement of and in
substitution for, the Borrower's revolving note dated January 24,
1995 and, in any event, is subject to the Credit Agreement, which
provides, among other things, for acceleration hereof. This Note
is a Revolving Note referred to in the Credit Agreement.
This Note is secured, among other things, pursuant to
the Credit Agreement and all Security Documents as therein
defined, and may now or hereafter be secured by one or more other
security agreements, mortgages, deeds of trust, assignments or
other instruments or agreements.
The Borrower hereby agrees to pay all costs of
collection, including attorneys' fees and legal expenses in the
event this Note is not paid when due, whether or not legal
proceedings are commenced.
Presentment or other demand for payment, notice of
dishonor and protest are expressly waived.
SHELDAHL,
INC.
By /S/John V. McManus
Its Vice President, Finance
Exhibit E to
Fifth Amendment
REVOLVING NOTE
$11,666,666.67 Minneapolis, Minnesota
March 12, April 9, 1996
For value received, the undersigned, SHELDAHL, INC., a
Minnesota corporation (the "Borrower"), hereby promises to pay on
the Maturity Date (as defined in the Credit Agreement described
below), to the order of HARRIS TRUST AND SAVINGS BANK, a bank
organized and existing under the laws of the State of Illinois
(the "Lender"), at the main office of Norwest Bank Minnesota,
National Association, as agent (the "Agent") in Minneapolis,
Minnesota, or at any other place designated at any time in
accordance with the Credit Agreement, in lawful money of the
United States of America and in immediately available funds, the
principal sum of Eleven Million Six Hundred Sixty Six Thousand Six
Hundred Sixty Six and 67/100 Dollars ($11,666,666.67) or, if less,
the aggregate unpaid principal amount of all Revolving Advances
(as defined in the Credit Agreement) made by the Lender to the
Borrower under the Credit Agreement, together with interest on the
principal amount hereunder remaining unpaid from time to time (the
"Principal Balance"), computed on the basis of the actual number
of days elapsed and a 360-day year, from the date hereof until
this Note is fully paid at the rate or rates applicable to
Revolving Advances from time to time under the Amended and
Restated Credit and Security Agreement dated as of November 24,
1993, as amended by a First Amendment dated as of December 2,
1993, by a Second Amendment dated as of May 12, 1994, by a Third
Amendment dated as of January 24, 1995, by a Fourth Amendment
dated as of January 29, 1996 and by a Fifth Amendment of even date
herewith, by and among the undersigned, the Lender, the Agent, and
certain other Lenders as therein described (as the same may
hereafter be amended, restated or supplemented, the "Credit
Agreement").
Interest accruing on the Principal Balance shall be
due and payable as provided in the Credit Agreement. This Note
may be prepaid only in accordance with the Credit Agreement.
This Note is issued, in part, in replacement of and in
substitution for the Borrower's revolving note dated January 24,
1995 and, in any event, is subject to the Credit Agreement, which
provides, among other things, for acceleration hereof. This Note
is a Revolving Note referred to in the Credit Agreement.
This Note is secured, among other things, pursuant to
the Credit Agreement and all Security Documents as therein
defined, and may now or hereafter be secured by one or more other
security agreements, mortgages, deeds of trust, assignments or
other instruments or agreements.
The Borrower hereby agrees to pay all costs of
collection, including attorneys' fees and legal expenses in the
event this Note is not paid when due, whether or not legal
proceedings are commenced.
Presentment or other demand for payment, notice of
dishonor and protest are expressly waived.
SHELDAHL,
INC.
By /S/John V. McManus
Its Vice President, Finance
Exhibit F to
Fifth
Amendment
REVOLVING NOTE
$11,666,666.66 Minneapolis, Minnesota
March 12, April 9, 1996
For value received, the undersigned, SHELDAHL, INC., a
Minnesota corporation (the "Borrower"), hereby promises to pay on
the Maturity Date (as defined in the Credit Agreement described
below), to the order of NBD BANK, a bank organized and existing
under the laws of the State of Michigan (the "Lender"), at the
main office of Norwest Bank Minnesota, National Association, as
agent (the "Agent") in Minneapolis, Minnesota, or at any other
place designated at any time in accordance with the Credit
Agreement, in lawful money of the United States of America and in
immediately available funds, the principal sum of Eleven Million
Six Hundred Sixty Six Thousand Six Hundred and Sixty Six and
66/100 Dollars ($11,666,666.66) or, if less, the aggregate unpaid
principal amount of all Revolving Advances (as defined in the
Credit Agreement) made by the Lender to the Borrower under the
Credit Agreement, together with interest on the principal amount
hereunder remaining unpaid from time to time (the "Principal
Balance"), computed on the basis of the actual number of days
elapsed and a 360-day year, from the date hereof until this Note
is fully paid at the rate or rates applicable to Revolving
Advances from time to time under the Amended and Restated Credit
and Security Agreement dated as of November 24, 1993, as amended
by a First Amendment dated as of December 2, 1993, by a Second
Amendment dated as of May 12, 1994, by a Third Amendment dated as
of January 24, 1995, by a Fourth Amendment dated as of January 29,
1996 and by a Fifth Amendment of even date herewith, by and among
the undersigned, the Lender, the Agent, and certain other Lenders
as therein described (as the same may hereafter be amended,
restated or supplemented, the "Credit Agreement").
Interest accruing on the Principal Balance shall be
due and payable as provided in the Credit Agreement. This Note
may be prepaid only in accordance with the Credit Agreement.
This Note is issued, in part, in replacement of and in
substitution for the Borrower's revolving notes dated January 24,
1995 and, in any event, is subject to the Credit Agreement, which
provides, among other things, for acceleration hereof. This Note
is a Revolving Note referred to in the Credit Agreement.
This Note is secured, among other things, pursuant to
the Credit Agreement and all Security Documents as therein
defined, and may now or hereafter be secured by one or more other
security agreements, mortgages, deeds of trust, assignments or
other instruments or agreements.
The Borrower hereby agrees to pay all costs of
collection, including attorneys' fees and legal expenses in the
event this Note is not paid when due, whether or not legal
proceedings are commenced.
Presentment or other demand for payment, notice of
dishonor and protest are expressly waived.
SHELDAHL,
INC.
By /S/John V. McManus
Its Vice President, Finance
<PAGE>
