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): August 15, 2000
Sheldahl, Inc.
(Exact name of Registrant as specified in its charter)
Minnesota 0-45 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 October 26, 1999, Sheldahl, Inc., a Minnesota corporation (the
"Company"), announced it had retained USBancorp Piper Jaffray, Inc. as its
financial advisor to pursue and recommend various strategic alternatives
intended to maximize shareholder value. On June 26, 2000, the Company
announced that it had entered into an agreement with Morgenthaler Partners
and International Flex Technologies, Inc. ("IFT") pursuant to which they will
deal exclusively with each other until August 7, 2000 (the "Exclusivity
Agreement") regarding a potential acquisition of IFT by the Company and an
investment in the Company by Morgenthaler Partners, the majority owner of
IFT, and other potential investors. On August 7, 2000 the Company announced
that it had agreed to extend the Exclusivity Agreement until August 21, 2000.
In addition, on August 7, 2000, the Company also announced that it expects
earnings for its fiscal 2000 fourth quarter to be below analysts'
expectations but slightly improved over last quarter and fourth quarter last
year. On August 15, 2000, the Company announced that Morgenthaler had
invested $2 million in the Company through a debt instrument described below.
In its releases, the Company had stated that softer than expected sales in
Sheldahl's Core business is driving reduced expectations and will result in
an earnings shortfall and continued cash tightness. On August 22, 2000, the
Company announced that it had agreed to a second extension of the Exclusivity
Agreement. The extension will last until August 30, 2000 and the Exclusivity
Agreement has been modified to allow the Company to engage in discussions
regarding additional financing proposals beginning August 25, 2000. In the
event a transaction with Morgenthaler and IFT is not consummated, the Company
will immediately proceed to initiate other alternatives to strengthen its
cash flow and financial position.
In connection with its investment on August 15, 2000, the Company
issued to Morgenthaler a subordinated note in the principal amount of $2
million due December 31, 2001 (the "Note"). Interest accrues on the Note at
8% per annum compounded monthly and is prepayable at anytime without penalty
or premium. In the event the Company, Morgenthaler and IFT enter into the
transactions described above and previously announced, the Note automatically
converts into the Series G Convertible Preferred Stock to be issued to
Morgenthaler in the transactions. If the parties do not consummate the
transactions, the Note is convertible under the following conditions: (A) if
the parties' sign definitive agreements for the transactions and if all
conditions to Morgenthaler's obligations to close the IFT transaction are
met, but Morgenthaler does not proceed, the Note is convertible, at
Morgenthaler's option, to the Company's Common Stock at a conversion price of
$4.00 per share; or (B) if the parties' sign definitive agreements for the
transactions and if all conditions to the Company's obligations to close the
IFT transaction are met, but the Company does not proceed, the Note is
convertible at the lesser of (i) 50% of the Company's per share market price
on December 31, 2000 and (ii) 50% of the Company's per share market price on
the conversion date, but in no event in either case, less that $2.00 per
share; or (C) if neither A nor B are applicable, such as the Company's
shareholders do not approve the transactions, or both A and B apply, or if a
definitive agreement is not signed by December 31, 2000, then the conversion
price is the lesser of (i) 75% of the Company's per share market price on
December 31, 2000 and (ii) 75% of the Company's per share market price on the
conversion date, but in no event in either case, less that $3.00 per share.
Morgenthaler's optional conversion rights on the Note only apply after
December 31, 2000 and then only if the transactions are not closed by
December 31, 2000. Any shares Morgenthaler receives upon exercise of its
conversion options will be subject to registration rights similar to those
provided to holders of the Company's Series D, E and F Convertible Preferred
Stock.
In addition to standard terms and conditions contained in the Note, the
Company committed that it would within five business day of August 15, 2000,
issue a purchase order for various pieces of equipment for the Company's
manufacturing facilities. On August 22, 2000, the Company issued the
required purchase order, thereby satisfying the covenant contained in the
Note.
A copy of the Company's press release announcing the investment of $2
million by Morgenthaler is attached hereto as Exhibit 99.1. A copy of the
Promissory Note and Subordination Agreement executed in connection with the
investment are attached hereto as Exhibits 99.2 and 99.3, respectively. A
copy of the Company's press release announcing the second extension of the
Exclusivity Agreement is attached hereto as Exhibit 99.4.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
Exhibit 99.1 Press Release of August 15, 2000
Exhibit 99.2 Promissory Note dated August 15, 2000 between the
Company and Morgenthaler Venture Partners V, L.P.
Exhibit 99.3 Subordination Agreement by Morgenthaler Venture
Partners V, L.P. in favor of Wells Fargo Bank
Minnesota, N.A., as agent, dated as of August 15, 2000
Exhibit 99.4 Press Release of August 22, 2000
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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/ Edward L. Lundstrom
Edward L. Lundstrom, President and
Chief Executive Officer
Dated: August 23, 2000
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