-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, NbFSKn+ESYtcxFf4IIxLRQBB6EaK5ETWMxqP9EgtNcEQthJd5vchbLmXYlJoQoEY VWcvaDoGJMbP8x5ppm6CTA== 0000089615-95-000008.txt : 19950417 0000089615-95-000008.hdr.sgml : 19950417 ACCESSION NUMBER: 0000089615-95-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19950303 FILED AS OF DATE: 19950410 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHELDAHL INC CENTRAL INDEX KEY: 0000089615 STANDARD INDUSTRIAL CLASSIFICATION: 3672 IRS NUMBER: 410758073 STATE OF INCORPORATION: MN FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00045 FILM NUMBER: 95527757 BUSINESS ADDRESS: STREET 1: 1150 SHELDAHL RD CITY: NORTHFIELD STATE: MN ZIP: 55057 BUSINESS PHONE: 5076638000 FORMER COMPANY: FORMER CONFORMED NAME: SCHJELDAHL G T CO DATE OF NAME CHANGE: 19741017 10-Q 1 QTR 2 10-Q 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 3, 1995 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 5, 1995, 6,691,257 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 PART I: FINANCIAL INFORMATION SHELDAHL, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited Six Months Ended March 3, February 25, (in thousands, except per share data) 1995 1994 Net sales $43,048 $41,908 Cost of sales 34,611 33,130 ______ ______ Gross profit 8,437 8,778 ______ ______ Expenses: Sales and marketing 4,556 3,754 General and administrative 1,737 2,083 Research and development 1,109 1,351 Interest 146 460 ______ ______ Total expenses 7,548 7,648 ______ ______ Income before provision for income taxes and cumulative effect of changes in methods of accounting 889 1,130 Provision for income taxes 235 289 ______ ______ Income before cumulative effect of changes in methods of accounting 654 841 Cumulative effect of change in method of accounting for income taxes - 1,422 Cumulative effect of change in method of accounting for postretirement benefits - (875) ______ ______ Net income $ 654 $ 1,388 ====== ====== Per share amounts: Income before accounting changes $ 0.10 $ 0.16 Accounting change - income taxes - 0.28 Accounting change - postretirement benefits - (0.17) ______ ______ Net income per share $ 0.10 $ 0.27 ====== ====== Weighted average common shares and common share equivalents outstanding 6,879 5,096 ====== ====== The accompanying notes are an integral part of these statements. SHELDAHL, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited Three Months Ended March 3, February 25, (in thousands, except per share data) 1995 1994 Net sales $21,960 $21,739 Cost of sales 17,922 17,035 ______ ______ Gross profit 4,038 4,704 ______ ______ Expenses: Sales and marketing 2,281 1,903 General and administrative 873 1,103 Research and development 578 568 Interest 128 234 ______ ______ Total expenses 3,860 3,808 ______ ______ Income before provision for income taxes 178 896 Provision for income taxes 43 224 ______ ______ Net income $ 135 $ 672 ====== ====== Net income per share $ 0.02 $ 0.13 ====== ====== Weighted average common shares and common share equivalents outstanding 6,919 5,116 ====== ====== The accompanying notes are an integral part of these statements. SHELDAHL, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS ASSETS (in thousands) March 3, September 2, 1995 1994 (Unaudited) Current assets: Cash $ 653 $ 2,008 Accounts receivable, net 15,396 14,463 Inventories 12,322 10,568 Prepaid expenses and other current assets 1,000 478 Deferred tax benefits 1,523 1,429 ______ ______ Total current assets 30,894 28,946 ______ ______ Plant and equipment, at cost 84,181 68,101 Less: accumulated depreciation 39,942 37,832 ______ ______ Net plant and equipment 44,239 30,269 ______ ______ Other assets 1,549 924 Deferred tax benefits - 181 ______ ______ $76,682 $60,320 ====== ====== LIABILITIES AND SHAREHOLDERS' INVESTMENT Current liabilities: Current maturities of long-term debt $ 951 $ 2,021 Accounts payable 10,812 6,589 Accrued salaries and commissions 1,279 1,324 Other accrued liabilities 1,553 2,431 Reserve for discontinued operation 425 489 Income taxes payable 92 150 ______ ______ Total current liabilities 15,112 13,004 ______ ______ Long-term debt 20,917 7,963 ______ ______ Other non-current liabilities 2,856 2,871 ______ ______ Shareholders' investment: Common stock 1,672 1,648 Additional paid-in capital 21,672 21,035 Retained earnings 14,453 13,799 ______ ______ Total shareholders' investment 37,797 36,482 ______ ______ $76,682 $60,320 ====== ====== The accompanying notes are an integral part of these statements. SHELDAHL, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited Six Months Ended (in thousands) March 3, February 25, 1995 1994 Operating activities: Net income $ 654 $ 1,388 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,340 2,080 Deferred income tax provision 110 158 Cumulative effect of accounting changes - (547) Net change in other operating activities: Accounts receivable (933) (1,477) Inventories (1,754) (660) Prepaid expenses and other current assets (522) (254) Other assets (625) (426) Accounts payable and accrued liabilities 222 (1,590) Income taxes-payable (58) - Other non-current liabilities (38) (52) ______ ______ Net cash used in operating activities (604) (1,380) ______ ______ Investing activities: Capital expenditures, net (13,232) (4,877) Net cash flows used in discontinued operation (64) (402) ______ ______ Net cash used in investing activities (13,296) (5,279) ______ ______ Financing activities: Borrowings (repayments) under revolving credit facilities, net 12,020 (638) Proceeds from issuance of long-term debt - 10,465 Repayments of long-term debt (136) (3,475) Issuance of common stock 661 163 ______ ______ Net cash provided by financing activities 12,545 6,515 ______ ______ Decrease in cash (1,355) (144) Cash at beginning of period 2,008 442 ______ ______ Cash at end of period $ 653 $ 298 ====== ====== Supplemental cash flow information: Income taxes paid $ 105 $ 18 ====== ====== Interest paid $ 179 $ 549 ====== ====== The accompanying notes are an integral part of these statements. 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 3, 1995 September 2, 1994 Raw materials $ 5,512 $ 4,403 Work-in-process 6,031 5,245 Finished goods 1,694 1,835 LIFO reserve (915) (915) ______ ______ $12,322 $10,568 ====== ====== 2) Post Retirement Benefits In December 1990, the Financial Accounting Standard Board issued Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" (SFAS No. 106). SFAS No. 106 requires that the expected cost of these benefits be charged to expense during the years that the employees render service. The Company adopted SFAS No. 106 on August 28, 1993, and recorded a one-time charge of $875,000, net of income tax benefits of $525,000, in the accompanying 1994 financial statement of operations. 3) Income Taxes Effective August 28, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109), under which deferred income tax assets and liabilities are recognized for the differences between financial and income tax reporting basis of assets and liabilities based on enacted tax rates and laws. The Company recorded a $1,422,000 increase to net income in 1994 to reflect the adoption of SFAS No. 109. 4) Restated Credit and Security Agreement During the second quarter of fiscal 1995, the Company amended its credit agreement with three banks. The agreement consists of a $15 million revolving note based on, and secured by, the Company's inventories and accounts receivable, and a $20 million term note collateralized by equipment. As of March 3, 1995, $7,883,000 was borrowed under the revolving note agreement and an additional $7,117,000 was available for the Company's use. The Company had an outstanding balance of $12,301,000 at March 3, 1995, under the term note. The Company may borrow an additional $6,200,000 to fund future capital expenditures under this term note. The term note calls for quarterly payments commencing January 1, 1996. The amount of the payment will be based on the balance outstanding at that time. The credit agreement expires December 31, 1997, but also contains an option to extend the agreement to December 31, 1999. Interest accrues at prime plus up to 2.5%, based on the Company's net worth, as defined. Commitment fees are charged at 0.5% on the revolver's unused portion. The interest rate as of March 3, 1995, was 9.5% for the revolving note and 10.0% for the term note. 5) 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 expects 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. During the three and six months ended March 3, 1995, the Company incurred $1,465,000 and $3,066,000, respectively, in manufacturing, selling, research and development and administrative costs that were refunded by ARPA. To date, the Company has received a total of $6,146,000 of funding through the Consortium. As of March 3, 1995, the Company has recorded a $330,000 receivable from ARPA. The remaining expenses to be reimbursed by the ARPA Consortium will be $2,520,000 through 1997. SHELDAHL, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED OPERATING RESULTS AND FINANCIAL CONDITION Six Months Ended February 25, 1994 and March 3, 1995 Net sales increased $1,140,000 or 2.7% from $41,908,000 for the six months ended February 25, 1994, to $43,048,000 for the six months ended March 3, 1995. Automotive market product sales increased $1,845,000 or 8.2% from $22,495,000 for the six months ended February 25, 1994, to $24,340,000 for the six months ended March 3, 1995. Sales of automotive interconnect systems increased $819,000 or 4.2% from $19,704,000 for the six months ended February 25, 1994, to $20,523,000 for the six months ended March 3, 1995, as a result of the Company's successful design and sales efforts to major automotive customers. Sales of flexible materials for automotive products increased $1,026,000 or 36.8% to $3,817,000 compared with $2,791,000 for the same period in fiscal 1994, primarily reflecting the Company's continued expansion into the rapidly growing automotive airbag market. Datacommunication market sales declined $3,476,000 or 33.4% from $10,417,000 for the six months ended February 25, 1994, to $6,941,000 for the six months ended March 3, 1995. This decline related principally to reduced sales of the Company's interconnect systems serving the laptop computer and cellular phone segments of the datacommunication market. Aerospace/defense market sales increased $249,000 or 5.0% from $4,959,000 for the six months ended February 25, 1994, to $5,208,000 for the six months ended March 3, 1995. Consumer market sales increased $1,173,000 or 77.3% totaling $2,690,000 for the six months ended March 3, 1995, compared with $1,517,000 for the same period in fiscal 1994, due to an increase in customer demand for the Company's interconnect products. Industrial market sales increased $1,349,000 or 53.5% from $2,520,000 for the six months ended February 25, 1994, to $3,869,000 for the six months ended March 3, 1995. Increased customer demand contributed to the rise in industrial sales. Gross profit decreased $341,000 or 3.9% from $8,778,000 for the six months ended February 25, 1994, to $8,437,000 for the six months ended March 3, 1995. Gross profit as a percentage of sales decreased to 19.6% compared with 20.9% for the same period in fiscal 1994. Increased material and labor costs, as well as start up costs associated with a record number of new products in the second quarter, resulted in lower gross profit in the first half of 1995. Sales and marketing expense increased $802,000 or 21.4% from $3,754,000 for the six months ended February 25, 1994, to $4,556,000 for the six months ended March 3, 1995. Sales and marketing expense as a percentage of sales increased to 10.6% for the six months ended March 3, 1995, compared with 9.0% for the same period in fiscal 1994. This was influenced by increased spending on proposal material, product advertising and shows and exhibit expense to promote new business and products. Net general and administrative expenses decreased $346,000 or 16.6% from $2,083,000 for the six months ended February 25, 1994, to $1,737,000 for the six months ended March 3, 1995. Gross general and administrative expenses increased $56,000 or 2.6% from $2,135,000 for the six months ended February 25, 1994, to $2,191,000 for the six months ended March 3, 1995. Slightly higher labor costs contributed to this increase. During the first six months of fiscal 1995, $454,0000 of ARPA credits were applied to general and administrative costs, decreasing gross expenses. See Note 5 of the accompanying financial statements for additional information regarding ARPA. Net research and development expenses decreased $242,000 or 17.9% from $1,351,000 for the six months ended February 25, 1994, to $1,109,000 for the six months ended March 3, 1995. Gross research and development costs decreased $183,000 or 12.0% from $1,529,000 for the six months ended February 25, 1994, to $1,346,000 for the six months ended March 3, 1995. The decrease was influenced by reduced research and development material costs as the Novaflex process development is nearing completion. During the first six months of fiscal 1995, $237,000 of ARPA credits were applied to research and development costs, thus decreasing expenses. See Note 5 of the accompanying financial statements for additional information regarding ARPA. Net interest expense decreased $314,000 or 68.3% from $460,000 for the six months ended February 25, 1994, to $146,000 for the six months ended March 3, 1995. Interest costs capitalized to projects contributed to this decrease. Capitalized interest increased $313,000 or 192% from $163,000 for the six months ended February 25, 1994, to $476,000 for the six months ended March 3, 1995. This was due to the $16,000,000 increase in construction projects in process. Operating profit declined $241,000 or 21.3% from $1,130,000 for the six months ended February 25, 1994, to $889,000 for the six months ended March 3, 1995. Lower margins and higher marketing expenses contributed to the decrease. Provision for income taxes for the six months ended March 3, 1995, was $235,000. The effective tax rate for fiscal 1995 is estimated to be 26%. Income from continuing operations for the six months ended March 3, 1995, was $654,000, a decrease of $187,000 or 22.2% as compared to $841,000 for the six months ended February 25, 1994. Earnings per share from continuing operations before accounting changes for the six months ended March 3, 1995, were $0.10 per share compared with $0.16 per share for the six months ended February 25, 1994. Average shares outstanding increased from approximately 5,130,000 in fiscal 1994 to 6,900,000 in fiscal 1995. SHELDAHL, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED OPERATING RESULTS AND FINANCIAL CONDITION Three Months Ended February 25, 1994 and March 3, 1995 Net sales increased $221,000 or 1.0% from $21,739,000 for the three months ended February 25, 1994, to $21,960,000 for the three months ended March 3, 1995. Sales to the automotive market increased $1,315,000 or 11.8% from $11,174,000 for the three months ended February 25, 1994, to $12,489,000 for the three months ended March 3, 1995. Increased design applications of interconnect systems for anti-lock brakes, sensors and instrumentation, plus flexible materials for airbags contributed to this sales growth. Sales to the datacommunication market decreased $2,401,000 or 41.0% from $5,857,000 for the three months ended February 25, 1994, to $3,456,000 for the three months ended March 3, 1995. This decline related principally to reduced sales of the Company's interconnect systems serving the laptop computer and cellular phone segments of the datacommunication market. Aerospace/defense market sales increased $315,000 or 13.7% from $2,304,000 for the three months ended February 25, 1994, to $2,619,000 for the three months ended March 3, 1995. Consumer market sales increased $498,000 or 64.2% from $776,000 for the three months ended February 25, 1994, to $1,274,000 for the three months ended March 3, 1995. Industrial market sales increased $868,000 or 69.2% from $1,254,000 for the three months ended February 25, 1994, to $2,122,000 for the three months ended March 3, 1995. Increased customer demand contributed to the rise in consumer and industrial sales. Gross profit decreased $666,000 or 14.2% from $4,704,000 for the three months ended February 25, 1994, to $4,038,000 for the three months ended March 3, 1995. Gross profit, as a percentage of net sales, decreased to 18.4% from 21.6% for the same period of fiscal year 1994. Start-up costs, associated with a record level of new automotive products, along with increased material and labor costs, contributed to the decrease. Total operating expenses increased $52,000 or 1.4% from $3,808,000 for the three months ended February 25, 1994, to $3,860,000 for the three months ended March 3, 1995. As a percentage of net sales, expenses were 17.5% for both periods. Sales and marketing expense increased $378,000 or 19.9% from $1,903,000 for the three months ended February 25, 1994, to $2,281,000 for the three months ended March 3, 1995. Higher labor costs, product advertising, shows and exhibits and travel costs contributed to the increase. Net general and administrative expenses decreased $230,000 or 20.9% from $1,103,000 for the three months ended February 25, 1994, to $873,000 for the three months ended March 3, 1995. Gross general and administrative expenses decreased $57,000 or 5.0% from $1,152,000 for the three months ended February 25, 1994, to $1,095,000 for the three months ended March 3, 1995. Lower consulting and professional fees contributed to the decline. For the three months ended March 3, 1995, $222,000 of ARPA credits were applied to general and administrative costs. See Note 5 of the accompanying financial statements for additional information regarding ARPA. Net research and development expense increased $10,000 or 1.8% from $568,000 for the three months ended February 25, 1994, to $578,000 for the three months March 3, 1995. Gross research and development costs decreased to $86,000 or 11.5% from $746,000 for the three months ended February 25, 1994, to $660,000 for the six months ended March 3, 1995. The decrease in research and development costs relating to the Novaflex process development contributed to the decline in research and development expenses. For the three months ended March 3, 1995, $82,000 of ARPA credits were applied to research and development costs. See Note 5 of the accompanying financial statements for additional information regarding ARPA. Net interest expense decreased $106,000 or 45.3% from $234,000 for the three months ended February 25, 1994, to $128,000 for the three months ended March 3, 1995, while interest on borrowings increased $79,000 or 24.8% from $319,000 for the three months ended February 25, 1994 to $398,000 for the three months ended March 3, 1995. Capitalized interest increased $185,000 or 217.6% from $85,000 for the three months ended February 25, 1994, to $270,000 for the three months ended March 3, 1995, because of the $16,000,000 increase in capital projects in progress. Income before taxes decreased $718,000 or 80.1% from $896,000 for the three months ended February 25, 1994, to $178,000 for the three months ended March 3, 1995. For the current quarter, income taxes have been provided at an estimated annual rate of 27%. Net income from continuing operations for the three months ended March 3, 1995, was $135,000, a decrease of $537,000 or 80% as compared to $672,000 for the three months ended February 25, 1994. Earnings per share for the three months ended March 3, 1995, was $0.02 per share and $0.13 per share for the three months ended February 25, 1994. The decline in EPS was a result of lower quarterly earnings and increased shares outstanding. FINANCIAL CONDITION The Company's amended credit agreement with Norwest, Harris and NBD banks, as described in Note 4 to the accompanying financial statements, increased the Company's borrowing capability to $35,000,000. The funds will be used to support the Company's $50 million capital investment program that begun in June of 1994. As of March 31, 1995, the Company, as part of its investment plan, obtained a $5,000,000 construction loan for the construction of the Longmont, Colorado, facility. The capital investment program includes the purchase of land and construction of the Novaclad manufacturing facility in Longmont, Colorado, as well as significant upgrades at the circuit and material fabrication facilities in Northfield, Minnesota. At March 3, 1995, working capital decreased, reflecting a 2.0 to 1 current ratio compared to 2.2 to 1 at September 2, 1994. For the six months ended March 3, 1995, the Company has invested $13,232,000 in capital expenditures and expects to continue capital investment at a similar rate during the last half of fiscal 1995. Capital expenditures will principally be funded from cash flows from operations plus existing debt capacity. PART II - OTHER INFORMATION SHELDAHL, INC. AND SUBSIDIARY FORM 10-Q Item 4. Submission of Matters to a Vote of Security Holders On January 11, 1995, Sheldahl, Inc. Held its Annual Meeting of Shareholders. Of the 6,623,854 shares of common stock eligible to vote, 5,287,165 shares were represented at the meeting and votes were taken on the following matters. 1. The votes cast for the eight (8) directors to serve until the next annual meeting of shareholders were: Votes Votes Votes Broker For Against Abstained Non-Votes 5,171,285 302,589 0 0 2. The votes cast to approve an amendment to the Company's Articles of Incorporation to increase the total number of authorized shares of common stock, par value $0.25 per share, by 12,500,000 shares to a total of 20,000,000 shares were: Votes Votes Votes Broker For Against Abstained Non-Votes 4,838,571 559,214 25,924 50,166 3. The votes cast to approve the 1994 Stock Option Plan were: Votes Votes Votes Broker For Against Abstained Non-Votes 3,594,802 300,875 55,502 1,522,695 4. The votes cast to approve the appointment of Arthur Andersen & Co. LLP as independent auditors for the current fiscal year were: Votes Votes Votes Broker For Against Abstained Non-Votes 5,433,508 11,397 28,468 500 Item 6. Exhibits and Reports on Form 8-K A) Exhibits 10.1 Second Amendment to Amended and Restated Credit and Security Agreement dated May 12, 1994 among Norwest and Harris Banks and Sheldahl, Inc. 10.2 Third Amendment to Amended and Restated Credit and Security Agreement dated May 12, 1994 among Norwest, Harris and NBD Banks and Sheldahl, Inc. 10.3 Construction Loan Agreement dated March 31, 1995 between Mountain Parks Bank East and Sheldahl, Inc. 11 Statement Regarding Computation of Earnings Per Share. 27 Financial Data Schedule. B) Reports on Form 8-K No reports on Form 8-K were filed by the Registrant during the quarter ended March 3, 1995. 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 10, 1995 By: /S/James E. Donaghy Its: President and Chief Executive Officer Dated: April 10, 1995 By: /S/John V. McManus Its: Vice President, Finance EX-10 2 SECOND AMENDMENT Exhibit 10.1 SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT This Second Amendment is made as of the 12th day of May, 1994, by and among SHELDAHL, INC., a Minnesota Corporation (the "Borrower"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association ("Norwest") and HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation ("Harris"). RECITALS A. The Borrower, Norwest and Harris have entered into an Amended and Restated Credit and Security Agreement by and among amended by a First Amendment dated December 2, 1993 (the "Credit Agreement"), pursuant to which Norwest and Harris agree to make certain advances to the Borrower pursuant to the terms and conditions thereof. B. The Borrower has requested that certain amendments be made to the Credit Agreement, and Norwest and Harris are willing to agree to such amendments, pursuant to the terms and conditions set forth below. ACCORDINGLY, in consideration o the premises and the mutual covenants and agreements herein contained, it is hereby agreed as follows: 1. Section 8.1(r) of the Credit Agreement is hereby deleted in its entirety and Norwest and Harris hereby waive any Default or Event of Default which has occurred as a result of the Borrower's not consummating its purchase of the issued and outstanding common stock of Data Key, Inc. 2. Section 6.14 of the Credit Agreement is hereby amended by changing the required ratio for the Borrower's maximum debt to tangible net worth for the period 2/26/94 - 9/2/94 as it appears in the table therein contained to read as follows: "2/26/94 - 9/2/94 1.80 to 1.00". 3. Except as explicitly amended by this Second Amendment, all of the terms and conditions of the Credit Agreement shall remain in full force and effect. 4. The execution of this Second Amendment shall not constitute a waiver of any Default or Event of Default under the Credit Agreement, except as expressly provided in paragraph 1 hereof, whether or not known to Norwest or Harris and whether or not existing on the dat of this Second Amendment. 5. This Second Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original and all of which counterparts, taken together, shall constitute one in the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as of the day and year first above written. SHELDAHL, INC. By /S/JOHN V. MCMANUS Its Vice President, Finance NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION By /S/RONALD E. GOCKOWSKI Its Vice President HARRIS TRUST AND SAVINGS BANK By /S/CATHERINE C. CIOLEK Its Vice President EX-10 3 THIRD AMENDMENT THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT This Third Amendment is made as of the 24th day of January, 1995, by and among SHELDAHL, INC., a Minnesota corporation (the "Borrower") and 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, together with Norwest, the "Assigning Lenders") 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 A. 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 and a Second Amendment dated May 12, 1994 (as amended, the "Credit Agreement") under which Norwest and Harris have agreed to make certain revolving credit and term loans available to the Borrower. B. Norwest and Harris each wishes to sell a portion of its respective revolving credit and term loans to NBD and NBD will become an additional Lender under the Credit Agreement. C. In addition to making NBD an additional Lender, the Borrower and the Lenders have agreed to amend the Credit Agreement, among other things, to (i) increase and extend the aggregate revolving credit commitment of the Lenders to the Borrower, (ii) revise the financial covenants and reporting requirements, (iii) increase and extend the term loan commitment of the Lenders to the Borrower, and (iv) clarify certain definitions and make certain other technical corrections and amendments. 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 Third Amendment which are defined in the Credit Agreement shall have the same meanings as defined therein, unless otherwise defined herein. 2. Credit Agreement. The Credit Agreement is hereby amended as follows: (a) Section 1.1 of the Credit Agreement is hereby amended to substitute or add, as the case may be, the following definitions: " Capital Expenditure' means an expenditure by the Borrower for the lease, purchase or other acquisition of any capital asset; provided that with respect to the lease of any capital asset (whether pursuant to a capitalized lease or an operating lease), the principal amount thereof shall be the fair market value of the capital asset so leased." "'Capital Expenditure Annual Limit' means $20,000,000 for the fiscal year ending September 2, 1994, $41,000,000 for the fiscal year ending September 1, 1995, $19,000,000 for the fiscal year ending August 30, 1996, $20,000,000 for the fiscal year ending August 29, 1997 and $10,000,000 for each fiscal year thereafter." "'Capital Expenditure Cumulative Limit' means, during the period commencing on August 28, 1993 and ending on the date of determination, the Borrower's cumulative (A) Net Income (or loss), plus (B) Non-Cash Charges, plus (C) Term Debt Proceeds, plus (D) Net Equity Proceeds, less (E) scheduled principal payments on Funded Debt, less (F) non-scheduled prepayments on Funded Debt." "Cash Flow Available for Fixed Charges' means, with respect to the applicable period of computation, the Borrower's (i) Net Income, plus (ii) Interest Expense, plus (iii) Non-Cash Charges, plus (iv) Term Debt Proceeds, plus (v) Net Equity Proceeds, less (vi) cash expenditures by the Borrower for the purchase of capital assets and less (vii) cash expenditures by the Borrower with respect to the principal portion of any capitalized lease obligation ." "`Cash Flow Available for Rent and Interest' of any Person means, with respect to the applicable period of computation, such Person's Pre-Tax Earnings, plus Interest Expense, plus Rent Expense." "`Debt Service' means, with respect to the applicable period of computation, the aggregate of (i) all scheduled payments of principal on Funded Debt of the Borrower, (ii) Interest Expense, and (iii) all scheduled payments of rent under capitalized lease obligations of the Borrower (determined in accordance with GAAP)." "`Interest and Rent Coverage Ratio' means, with respect to the applicable period of computation, the ratio of the Borrower's Cash Flow Available for Interest and Rent to the sum of the Borrower's Interest Expense and the Borrower's Rent Expense." "`Maturity Date' means December 31, 1997, unless extended by the Lenders in their sole discretion upon request of the Borrower, in no event, however, to be extended beyond December 31, 1999. The Borrower may request a one-year extension in writing to the Agent on or before the first and the second anniversary of the execution date of the Third Amendment." "`Net Equity Proceeds' means the net cash proceeds actually received by the Borrower from the sale of additional common or preferred stock of the Borrower on or after August 28, 1993, including cash received from the exercise of stock options." "`Rent Expense' means, with respect to the applicable period of computation, all scheduled payments of rent under operating leases of the Borrower." "`Required Lenders' means any two of the three Lenders." "`Term Debt Proceeds' means all proceeds obtained by the Borrower from (i) Term Advances or (ii) other term indebtedness permitted pursuant to Section 7.2." "`Termination Date' means the Maturity Date, or the earlier date of termination in whole of the Commitment pursuant to Sections 2.11(a) or 8.2 hereof; but in the case of Term Advances, the Termination Date means December 31, 1995." "`Third Amendment' means that certain Third Amendment to Amended and Restated Credit and Security Agreement by and among the Lenders, the Agent and the Borrower, dated January 24, 1995." (b) Section 2.7 of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in its place the following: `Section 2.7 Amortization of Term Advances. The principal of all Term Advances made by each Lender to the Borrower will be payable in substantially equal quarterly installments in amounts, and on the dates, as set forth in each Term Note.' (c) Section 2.10(a) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in its place the following: "(a) Basic Increments. 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 Revolving Term Tangible Basic Basic Net Worth Increment Increment __________ __________ _________ 1.50:1 and above 1.50% 2.00% 1.00:1 - 1.49:1 1.00% 1.50% 0.50:1 - 0.99:1 0.50% 1.00% below 0.50:1 0.00% 0.50%" (d) Section 2.11(b)(3) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in its place the following: "(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 as follows: (i) two percent (2.0%), if the reduction occurs on or before the first anniversary of the Third Amendment; (ii) one percent (1.0%), if the reduction occurs after the first anniversary of the Third Amendment and on or before the second anniversary of the Third Amendment; and (iii) one half of one percent (1/2%), if the reduction occurs after the second anniversary of the Third Amendment. (e) Section 2.11(c)(3) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in its place the following: "If such prepayment 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 such prepayment as follows: (i) two percent (2.0%), if the prepayment occurs on or before the first anniversary of the Third Amendment; (ii) one percent (1.0%), if the prepayment occurs after the first anniversary of the Third Amendment and on or before the second anniversary of the Third Amendment; and (iii) one half of one percent (1/2%), if the prepayment occurs after the second anniversary of the Third Amendment. (f) Section 2.11(d) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in its place the following: "(d) Waiver of Reduction and Prepayment Fees. The Borrower will not be required to pay the reduction or prepayment fees otherwise due under Sections 2.11(b) or 2.11(c) if such reduction is requested or such prepayment is made (i) solely and exclusively from funds obtained by the Borrower from (1) a refinancing provided by the Agent, (2) the Borrower's cash flow generated from operations or (3) the sale of capital stock of the Borrower, or (ii) as a result of a Lender imposing additional charges on the Borrower pursuant to Section 2.17 hereof." (g) Section 2.16(f) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in its place the following: "(f) Audit Fees. The Borrower hereby agrees to pay the Agent, on demand, audit fees in connection with any audits or inspections conducted by the Agent of any Collateral or the operations or business of the Borrower at the standard rate or rates established from time to time by the Agent as its audit fees (which fees are currently $400 per day per auditor), together with all actual out-of-pocket costs and expenses incurred in conducting any such audit or inspection. So long as Net Availability exceeds $2,500,000, the Agent will be entitled to conduct such audits no more often than twice in any calendar year. If Net Availability at any time during a calendar year is less than $2,500,000, the Agent will be entitled to conduct such audits quarterly for the next four calendar quarters. After an Event of Default occurs and so long as it continues, the Agent may conduct such audits at such times and from time to time as the Agent may determine in its sole discretion." (h) Section 6.1(g) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in its place the following: "(g) to the Agent, weekly, a Weekly Report, or such other forms as the Agent may from time to time reasonably request, duly completed and certified on behalf of the Borrower by the chief financial officer of the Borrower; provided that no such Weekly Report shall be required during such weeks that the Borrower's Net Availability is greater than $2,500,000 and no Default or Event of Default has occurred and is continuing hereunder;" (i) Section 6.11(b) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in its place the following: "(b) All payments received in the Lockbox shall be processed to the Collateral Account and held therein pursuant to the terms and conditions of the Collateral Account Agreement; provided, however, that so long as the Borrower's Net Availability exceeds $2,500,000 and no Event of Default has occurred and is continuing hereunder, the Agent, upon request of the Borrower, will transfer all proceeds received in the Lockbox to the Borrower's operating account for the Borrower's general use." (j) Section 6.13 of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in its place the following: "Section 6.13 Minimum Tangible Net Worth. The Borrower and its Subsidiaries will maintain during each period designated below their consolidated Tangible Net Worth, calculated as at the end of each fiscal month of the Borrower, at or above the level set forth opposite each such period: Minimum Tangible Fiscal Year Net Worth ___________ _________ 1995 35,500,000 1996 39,500,000 1997 44,500,000 1998 and thereafter 50,500,000; provided, however, that each amount specified in the "Minimum Tangible Net Worth" column above shall be increased by the aggregate of all increases in the Borrower's Tangible Net Worth resulting from receipt by the Borrower from time to time of Net Equity Proceeds." (k) Section 6.14 of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in its place the following: "Section 6.14 Maximum Debt to Tangible Net Worth Ratio. The Borrower and its Subsidiaries will maintain during each period designated below their consolidated Debt to Tangible Net Worth, calculated as at the end of each fiscal month of the Borrower, at not more than the ratio set forth opposite each such period: Maximum Debt to Tangible Fiscal Year Net Worth ____________ ____________ 1995 1.75 to 1.00 1996 1.70 to 1.00 1997 1.50 to 1.00 1998 and thereafter 1.25 to 1.00" (l) Section 6.15 of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in its place the following: "Section 6.15 Minimum Interest and Rent Coverage Ratio. The Borrower and its Subsidiaries will maintain at all times their consolidated Interest and Rent Coverage Ratio, calculated as at the end of each fiscal quarter of the Borrower and based upon the previous four fiscal quarters (including such fiscal quarter), at not less than 1.50 to 1.00 in fiscal year 1995 and 2.00 to 1.00 in each fiscal year thereafter." (m) Section 6.16 of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in its place the following: "Section 6.16 Minimum Fixed Charge Coverage Ratio. The Borrower and its Subsidiaries will maintain at all times their consolidated Fixed Charge Coverage Ratio, calculated as at the end of each fiscal quarter of the Borrower and based upon the cumulative Cash Flow Available for Fixed Charges and cumulative Debt Service (including such fiscal quarter) from and after August 28, 1993, at not less than 1.00 to 1.00." (n) Section 7.1 of the Credit Agreement is hereby amended by adding a new subsection "(f)" thereto which reads as follows: "(f) mortgages, deeds of trust and related security interests and assignments securing indebtedness incurred by the Borrower in connection with its Longmont, Colorado manufacturing facility, and its Britton, South Dakota facility, as set forth and described in Schedule I to the Third Amendment." (o) Section 7.2 of the Credit Agreement is hereby amended by adding a new subsection "(d)" thereto which reads as follows: "(d) indebtedness incurred by the Borrower for the purchase of capital assets in the amounts, and subject to the terms and conditions, described in Schedule II to the Third Amendment." (p) Section 8.2 of the Credit Agreement is hereby amended by deleting the preamble in its entirety and substituting in its place the following: "Section 8.2 Rights and Remedies. Upon the occurrence of an Event of Default or at any time thereafter until such Event of Default is cured to the written satisfaction of the Required Lenders, the Agent, with the concurrence of the Required Lenders, may (and upon written request of the Required Lenders shall) exercise any or all of the following rights and remedies:" (q) Section 9.3(b) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in its place the following: "(b) The Agent may, in its sole discretion, elect to apply payments received from the Borrower and proceeds of Collateral, and to fund Advances requested by the Borrower, for Norwest's account only, and the other Lenders shall not participate therein, provided that not less often than weekly the Agent shall determine the net amount either due from the other Lenders to Norwest or from Norwest to the other Lenders, as the case may be, or shall adjust the application of subsequent payments and/or collections or the making of Advances, so as to reconcile each Lender's actual outstanding Advances with such Lender's Percentage as of such settlement date." (r) Section 10.2 of the Credit Agreement is hereby amended by deleting it its entirety and substituting in its place the following: "Section 10.2 Consent of Required Lenders; Amendments, Requested Waivers, Etc. (a) Except as provided in Section 10.2(b) below, the Lenders' consent as required by any provision of this Agreement shall be deemed given by the consent of the Required Lenders. (b) No amendment, modification, termination or waiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom or any release of a Security Interest shall be effective unless the same shall be in writing and signed by the Required Lenders and, if the rights or duties of the Agent is affected thereby, by the Agent; provided, however, that unless in writing and signed by each Lender affected thereby, no amendment, modification, termination, waiver or consent shall, do any of the following: (i) increase the amount of any Lender's Commitment (all Lenders shall be deemed affected by any change to a Lender's Commitment), (ii) reduce the amount of any payment of principal of or interest on a Lender's Advances or the fees payable to such Lender hereunder, (iii) postpone any date fixed for any payment of principal of or interest on such Lenders' Advances or the fees payable to such Lender hereunder, (iv) change the definitions of "Borrowing Base" or "Required Lenders," or any other definitions referred to therein or necessary to the understanding thereof, or (v) amend this Section 10.2 or any other provision of this Agreement requiring the consent or other action of all of the Lenders. Any waiver or consent given hereunder shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances." (s) 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: $5,000,000 Percentage of Revolving Commitment Amount: 33 1/3% Term Commitment Amount: $6,666,666.67 Percentage of Term Commitment Amount: 33 1/3% Harris: Revolving Commitment Amount: $5,000,000 Percentage of Revolving Commitment Amount: 33 1/3% Term Commitment Amount: $6,666,666.67 Percentage of Term Commitment Amount: 33 1/3% NBD: Revolving Commitment Amount: $5,000,000 Percentage of Revolving Commitment Amount: 33 1/3% Term Commitment Amount: $6,666,666.66 Percentage of Term Commitment Amount: 33 1/3% (t) Each and every reference in the Credit Agreement to "both Lenders" shall be deleted and replaced with "all Lenders" or "each Lender", as the context may require. 3. Addition of NBD as Lender. (a) The Borrower, Norwest and Harris hereby consent to NBD becoming an additional Lender under the Credit Agreement as of the date hereof. Commencing as of the date hereof, NBD is hereby accorded all rights, privileges and benefits of a Lender under and pursuant to the Credit Agreement and NBD hereby assumes all liabilities and obligations of a Lender under the Credit Agreement. NBD shall be deemed a party to the Credit Agreement and a Lender thereunder and (i) shall be entitled to all rights, benefits and privileges accorded to a Lender in the Credit Agreement (including obtaining the benefit of all collateral securing payment of the Notes), (ii) shall be subject to all obligations of a Lender thereunder and (iii) shall be deemed to have specifically ratified and confirmed, and by executing this Third Amendment NBD hereby specifically ratifies and confirms, all of the provisions of the Credit Agreement. From and after the date hereof, Norwest and Harris are hereby relieved of all obligations under the Credit Agreement to the extent of the reduction of their respective Percentages as contemplated hereby. (b) NBD acknowledges and confirms that it has received a copy of the Credit Agreement and this Third Amendment, together with the exhibits related thereto, and of all Loan Documents (as defined in the Credit Agreement), and has reviewed and approved each and every such document. NBD further confirms and agrees that in becoming a Lender and in making its Commitments and Advances under the Credit Agreement, such actions have and will be made without recourse to, or representation or warranty by, the Assigning Lenders, Agent or any other Lender and that the Assigning Lenders, Agent and other Lenders have made no representations or warranties, express or implied, with respect to any aspect of the Loan Documents, including, without limitation (i) the existing or future solvency or financial condition or responsibility of the Borrower, its partners or any guarantors, (ii) the payment or collectibility of the Advances, (iii) the validity, enforceability or legal effect of the Loan Documents, or any other instrument or document furnished by the Borrower under the Credit Agreement, or (d) the validity or effectiveness of the lien created by any of the Loan Documents. NBD has made or caused to be made such independent investigation of the Borrower and its creditworthiness and all the matters affecting NBD's judgment in becoming an additional Lender as NBD has deemed necessary. NBD has not relied in any manner upon any judgment, determination, or statement of the Assigning Lenders, the Agent or any other Lender, whether contained in any materials delivered by any such Lender or Agent to NBD, or otherwise, in becoming an additional Lender hereunder. (c) NBD acknowledges and confirms that its notice address for purposes of Section 10.3 of the Credit Agreement shall be, unless and until it shall designate in accordance with such Section 10.3 another address for such purposes, the following: NBD Bank 611 Woodward Avenue Second Floor Detroit, MI 48226 Attn: Thomas Gordy (d) As of the date hereof, each Assigning Lender will assign to NBD a portion of such Assigning Lender's outstanding Advances and liability for the L/C Amount in an amount equal to the product of (i) NBD's Percentage and (ii) the outstanding balance of each such Advance and the L/C Amount, and NBD shall purchase such Advances and L/C Amount from each such Assigning Lender. All such purchases by NBD shall be deemed without recourse or warranty of any kind. The Agent shall collect and apply all accrued interest and fees under the Credit Agreement for all periods prior to the date of this Third Amendment for the sole benefit of and to the sole account of the Assigning Lenders. NBD shall be entitled to receive interest and fees with respect to its Commitments from and after the date of funding of its purchase of outstanding Advances as contemplated in this Section 3(d). 4. 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 and Term Notes held by Norwest and Harris, respectively, the Borrower agrees to issue and deliver to the Lenders the following Notes (the "New Notes"): (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 A attached hereto. (b) A Term Note of the Borrower payable to the order of Norwest in an amount corresponding to the Term Commitment Amount of Norwest, in substantially the form of Exhibit B attached hereto. (c) A Revolving Note of the Borrower payable to the order of Harris in an amount corresponding to the Revolving Commitment Amount of Harris, in substantially the form of Exhibit C attached hereto. (d) A Term Note of the Borrower payable to the order of Harris in an amount corresponding to the Term Commitment Amount of Harris, in substantially the form of Exhibit D attached hereto. (e) A Revolving Note of the Borrower payable to the order of NBD in an amount corresponding to the Revolving Commitment Amount by NBD, in substantially the form of Exhibit E attached hereto. (f) A Term Note of the Borrower payable to the order of NBD in an amount corresponding to the Term Commitment Amount of NBD, in substantially the form of Exhibit F attached hereto. The New Notes shall be issued in replacement for the Revolving Credit Notes and Term Notes previously held by Norwest and Harris, respectively, and all references in the Credit Agreement and each other Loan Document to the Notes, the Revolving Notes and/or the Term Notes shall be deemed references to the New Notes issued in accordance with this Third Amendment. 5. Representations and Warranties. To induce the Lenders to enter into this Third 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 respective outstanding principal balances of the Revolving Notes and the Term Notes as of _____________, 1995 are set forth below: Norwest Revolving Note: $______________ Norwest Term Note: $______________ Harris Revolving Note: $______________ Harris Term Note: $______________ (c) 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. (d) Subject to the modifications set forth in Schedule III hereto, 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. 6. Fees. The Borrower hereby agrees to pay to the Lenders a non-refundable fee to induce the Lenders to enter into this Third Amendment, payable upon execution and delivery hereof, in an amount equal to $56,600, of which $18,666.67 shall be paid to Harris, $18,666.67 shall be paid to Norwest and $18,666.66 shall be paid to NBD. The Borrower hereby agrees to pay to the Agent a non-refundable fee in consideration of the Agent's arrangement of the increased credit facilities contemplated hereby in an amount equal to $29,166.67. 7. Conditions Precedent to Effectiveness of this Third Amendment. This Third 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 February 1, 1995: (a) This Third Amendment, duly executed on behalf of the Borrower and each Lender. (b) The New Notes, duly executed on behalf of the Borrower. (c) A Third 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. (d) A UCC-1 financing statement to be filed with the Colorado Secretary of State, duly executed by the Borrower as debtor, in favor of the Agent, covering the Collateral, together with amendments to all outstanding UCC-1 financing statements naming the Assigning Lenders as second parties. (e) A certified copy of the resolutions adopted by the Board of Directors of the Borrower approving the execution and delivery of this Third Amendment, the New Notes, the Mortgage Amendment and such other documents as are contemplated hereby. (f) An opinion of the Borrower's counsel as to such matters as the Agent may reasonably request. (g) Evidence satisfactory to the Agent of payment by the Borrower of the fees described in paragraph 6 above, together with the costs and expenses incurred by the Agent, including attorneys' fees and expenses, in connection with the preparation or negotiation of this Third Amendment and other matters as contemplated hereby. 8. Miscellaneous. (a) 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 inequity) 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 Third Amendment. (b) 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 to the Agent. (c) 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 in 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. In addition, from and after the effective date hereof, each reference in any Loan Document to the Notes, the Revolving Notes or the Term Notes, shall be deemed references to New Notes in the form attached hereto. (d) This Third 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. (e) The execution of this Third Amendment and acceptance of any documents related hereto shall not be deemed a waiver of any Default or Event of Default under any Loan Document, whether or not existing on the date of this Third Amendment. (f) This Third Amendment shall be governed by, and construed in accordance with, the internal laws of the State of Minnesota. [SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Third 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 Ronald E. Gockowski Its Vice President HARRIS TRUST AND SAVINGS BANK By /S/STEVEN S. GRAY Its Vice President NBD BANK By /S/ARTHUR S. LITTLEFIELD Its First Vice President EX-10 4 CONST LOAN CONSTRUCTION LOAN AGREEMENT This Construction Loan Agreement ("Agreement") is dated March 31, 1995, and is between MOUNTAIN PARKS BANK - EAST, a Colorado state bank, whose mailing address is Post Office Box 3779, Evergreen, Colorado 80439 ("Lender"), and SHELDAHL, INC., a Minnesota corporation, whose principal place of business is 1150 Sheldahl Road, Post Office Box 170, Northfield, Minnesota 55057 (the "Borrower"). RECITALS: A. Borrower owns certain Land upon which borrower is constructing a Project, all as hereinafter described in this Agreement. B. Lender has agreed to finance the construction of the Projects on the terms and conditions provided in this Agreement, including the Standard Terms and Conditions of Loan attached hereto as Exhibit A and incorporated herein by this reference (the "Standard Terms and Conditions"). NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, Borrower and Lender hereby agree as follows: 1. Parties: The following terms as used in this Agreement identify the following parties who are or may be referred to in this Agreement: (a) Architect: The Neenan Company, a Colorado corporation, with its principal place of business at 2290 East Prospect, Fort Collins, Colorado 80525. (b) Contractor: The Neenan Company, a Colorado corporation, with its principal place of business at 2290 East Prospect, Fort Collins, Colorado 80525. (c) Engineer: Park Engineering, Inc., a Colorado corporation, with its principal place of business at 1240 Main Street, Longmont, Colorado 80501. (d) Lender's Inspector: Klebold Consulting Group, Inc., a Colorado corporation with its principal place of business as 26 Garden Center, Suite 3B, Broomfield, Colorado 80020. (e) Title Company: Lane Title Guarantee Company, 3033 East 1st Avenue, Suite 600, Denver, Colorado 80206. 2. Representations and Warranties. In order to induce Lender to execute this Agreement and to make the Loan (as hereinafter defined) Borrower represents and warrants as follows: 2.1 Title to Development Site. Borrower owns good and marketable fee simple title to Lot 1, Block 1, Clover Creek Industrial, First Filing, County of boulder, State of Colorado (collectively, the "Land"). The Land is owned free and clear of all liens, claims and encumbrances, except those listed on Exhibit B attached hereto and made a part hereof (collectively, the "Permitted Exceptions"). 2.2 Description of Project. Subject to the provisions of this Agreement, Borrower has begun to (a) improve the Land with the construction of a production facility/office building (the "Building") and (b) construct certain on-site and off-site improvements (the "Improvements") on the Land. The Land, the Building and the Improvements are herein collectively referred to as the "Project". All work to be performed and materials to be supplied in connection with the Building and the Improvements (collectively, the "Work") shall be in accordance with this Agreement and the detailed budget (the "Budget") attached hereto as Exhibit C. 2.3 Development Contracts. Borrower, as owner, has executed or caused to be executed the following contracts (the "Contracts") for the performance of the Work: (a) Agreement with the Contractor for the construction of the Project (the "Construction Contract"). (b) Agreement with the Architect for architectural and design services for the Project. (c) Agreement with the Engineer for engineering services. (d) Disbursement Agreement with the Title Company. Borrower has delivered to Lender a true, complete and correct copy of each of the Contracts; each Contract is full force and effect, unamended; and no default exists thereunder by either party thereto. All representations and warranties contained in this Agreement and in the Standard Terms and conditions which have been made by Borrower shall be true at the time of each disbursement of the Loan and in the event of any material breach, misrepresentation or omission, Lender shall have the absolute right to terminate its obligations under this Agreement (without any obligation to refund any commitment fees previously paid), and, upon demand by Lender, Borrower shall reimburse Lender for the Loan Expensed (as defined in the Standard Terms and Conditions), and Lender shall be entitled to recover from Borrower all losses and damages resulting therefrom. 3. Agreement for Construction Loan. Lender agrees to lend to Borrower, and Borrower agrees to borrow from Lender an amount not to exceed Five Million U.S. dollars ($5,000,000), (the "Loan") for the purposes and upon the terms and subject to the conditions contained in this Agreement and the Standard Terms and Conditions. Borrower acknowledges that whether or not all or any portion of the Loan shall be disbursed, any commitment fee to be paid by Borrower to Lender concurrently with the first disbursement shall be fully earned. 4. Interest Rate and Terms of Repayment. 4.1 Loan Rate. The principal balance of the Loan from time to time outstanding shall bear interest (the "Loan Rate") during each calendar month (whether full or partial) prior to the Maturity Date (as hereinafter defined), at an annual rate equal to one percent (1%) over the Prime Rate. The Prime Rate shall mean the "base rate on corporate loans at large U.S. money center commercial banks," as published in the "Money Rates" section of the Wall Street Journal on each day prior to the Maturity Date. In the event The Wall Street Journal publishes a range of "base rates", the Prime Rate shall be the average of the highest and lowest "base rates". In the event The Wall Street Journal discontinues publication of the aforesaid "base rate", the Prime Rate shall mean the "corporate base rate" announced by Norwest Bank of Colorado, N.A., to be in effect each day prior to the Maturity Date. The Loan Rate shall: (a) be computed on the basis of a year consisting of 360 days; (b) change each day the Prime Rate changes prior to the Maturity Date, Lender not being required to give Borrower notice of such changes; and (c) be charged for the actual number of days within the period for which interest is being charged. 4.2 Default Rate. At any time after the Maturity Date or otherwise when the Loan is in default and until such default is cured, the principal amount of the Loan shall bear interest at an annual rate (the "Default Rate") equal to four percent (4%) plus the Loan Rate then in effect under the Note. 4.3 Usury. Notwithstanding anything to the contrary contained herein or in the Note, the total amount of interest and other charges payable by Borrower on the Loan shall not exceed the maximum rate of interest which may be charged by Lender under the laws of Colorado. 4.4 Payments. Commencing on the first day of the month following the month in which the initial disbursement of the Loan shall occur, and continuing on the first day of each month thereafter through and including the month in which the Maturity Date occurs, interest only at the Loan Rate on the principal balance of the Loan from time to time outstanding shall be payable monthly in arrears. Borrower hereby unconditionally and irrevocably authorizes Lender, at Lender's option, to disburse the amounts of such monthly interest payments from the undisbursed proceeds of the loan and to apply such amounts to said interest payments. Any amounts disbursed from the loan amount to pay interest shall become part of the outstanding principal balance and interest thereon shall accrue and be payable as provided herein. The unpaid principal balance of the Loan and all accrued and unpaid interest thereon, if not sooner declared to be due in accordance with the terms hereof, shall be due and payable on March 31, 1996, or, if applicable, on any extension of said date pursuant to Paragraph 4.5 of this Agreement "the "Maturity Date"). All payment on account of the Loan shall be applied first against any accrued and unpaid interest then outstanding, with he balance applied against the unpaid principal balance thereof. 4.5 Extension Right. Notwithstanding anything to the contrary contained in this Agreement, Borrower shall have the right (the "Extension Right") to extend the term of the Loan for an additional seven (7) year period with a final payment of the unpaid principal balance of the Loan and all accrued and unpaid interest thereon, if not sooner declared to be due in accordance with the terms hereof, due and payable on March 31, 2003, upon the following terms and conditions (the "New Loan"): (a) Borrower gives Lender written notice of its election to exercise the Extension Right on or before May 15, 1995; (b) No default or event which with the passage of time, the giving of notice, or both, would constitute a default, exists under the Note or any of the Loan Documents, either on the date Borrower delivers the notice described in (a) above or on the original Maturity Date: and (c) Except as expressly provided to the contrary in this Paragraph 4.5, all of the other terms and provisions of the Note, this Agreement and the other Loan Documents shall remain in full force and effect in accordance with their terms, including the obligation to make monthly payments of interest at the then applicable Loan Rate. (d) The New Loan shall have the following terms and conditions: (i) The total principal amount of the New Loan shall not exceed Five Million U.S. dollars ($5,000,000); (ii) The principal owed under the New Loan shall bear interest during each calendar month (whether full or partial) prior to the Maturity Date (as hereinafter defined), at an annual fixed rate equal to two percent (2%) over the then current seven (7) year U.S. Treasury Note rate; (iii) Principal and interest shall be payable monthly based on a twenty (20) year amortization schedule. (e) To document the New Loan, Borrower shall enter into a new promissory note and amendments to the other Loan Documents as necessary to document the revised loan terms as expressed above. In addition, Borrower shall provide Lender with an updated Lender's title insurance policy on the Property confirming that Borrower's lien on the Property maintains its first priority position. 4.6 Prepayment. The Loan may be prepaid in full or in part without cost or penalty upon fourteen (14) days' prior written notice to Lender from Borrower. All prepayments of the indebtedness evidenced by the Note shall be applied first against any accrued and unpaid interest then outstanding, with the balance applied against the unpaid principal balance of the Loan. 5. Construction: Application of Loan Proceeds. 5.1 Commencement and Completion Dates. Borrower shall not cause or permit the continuance of construction of the Building (including without limitation any grading or excavation) or any Improvements unless the conditions described in Article 7 of this Agreement with respect to such Building or the Improvements, respectively, have been satisfied. Borrower shall cause the construction of the Improvements and the Building to be diligently and expeditiously carried out, in a good and workmanlike manner, in accordance with the Building and Engineering Plans and Specifications (as defined in the Standard Terms and Conditions). Without limiting the generality of the foregoing, Borrower shall cause construction of the Improvements and the Building to continue without interruption until completion, weather conditions permitting, and to be completed in accordance with the Building and Engineering Plans and Specifications (as defined in the Standard Terms and Conditions) within twelve (12) months from the date of initial disbursement of the Loan. Construction of the Building shall not be deemed to be complete until Lender's Inspector is prepared to certify that all space located within such Building can be used and occupied in accordance with all applicable laws, ordinances and regulations and that such Building will qualify for a final, unconditional certificate of occupancy. 5.2 Improvement Loan, Soft Costs Loan, and Building Loan. The proceeds of the Loan disbursed to Borrower shall be used by Borrower for the purpose of paying Project Cost actually incurred by Borrower. For purposes of this Agreement, "Project Cost" shall mean: (a) The cost of Work required to complete construction of the Improvements and the Building in accordance with the Engineering and Building Plans and Specifications; (b) Taxes, insurance premiums, professional fees and other expenses to be approved by Lender which are incurred by Borrower in connection with the operation of the Project prior to repayment of the Loan; (c) Interest on the Loan; (d) The cost of fixtures, furnishings, furniture, equipment and personal property owned or to be acquired by Borrower and to be used in the construction of the Building and the operation of the Project; and (e) All Loan Expenses. 6. Loan Documents. Prior to the first disbursement of the Loan, Borrower shall cause to be executed and delivered to Lender a promissory note (the "Note") executed by each Borrower, jointly and severally, and payable to the order of Lender in the principal amount of Five Million U.S. dollars ($5,000,000) bearing interest and repayable on the terms set forth in Article 4 of this Agreement, together with a Deed of Trust on the Project and the other loan documents described in Article 3 of the Standard Terms and Conditions, all of which documents shall contain such provisions as shall be required to conform to this Agreement and otherwise shall be satisfactory in form and substance to Lender. All such documents are hereinafter collectively referred to as the "Loan Documents". 7. Cash Equity and Restrictions on Loan Disbursements. Subject to the restrictions and limitations contained in this Article, Lender shall make disbursements of the Loan in accordance with Article 4 of the Standard Terms and Conditions; provided, however, that notwithstanding anything contained in this Agreement or in the Standard Terms and Conditions, (i) prior to and as a condition of any disbursement of the proceeds of the Loan, Borrower shall have a minimum of $2,000,000 of cash equity invested in the Project; and (ii) Lender shall not be required to make disbursements of any proceeds of the Loan allocable to the "hard costs" of constructing the Building after January 31, 1996. 8. Borrower's Covenants. Borrower covenants and agrees as follows: Borrower will not, without the prior written consent of Lender, (i) amend or modify its articles of incorporation or by-laws which consent shall not be unreasonably withheld, or (ii) permit itself to be dissolved or its existence terminated, cause or permit its corporate resolutions relating to this transaction to be amended in any respect. 9. Recordation of Documents: Partial Releases. Borrower hereby covenants and agrees that it will not record any document pertaining to, affecting, or running with all or any portion of the Project or execute any other document affecting the ownership of the Project, unless concurrently or prior thereto: (a) lender has approved the form and substance of all such documents which consent will not be unreasonably withheld; and (b) no default beyond any applicable cure period or event which with the giving of notice or the passage of time, or both, would constitute a default then exists under the Note, the Deed of Trust, this Agreement or any of the other Loan Documents. 10. Miscellaneous. 10.1 Notices. Any notice which any party hereto gives to any other party hereunder shall be in writing and shall be deemed given when delivered in person to a representative of the party, or two (2) business days after deposited in the United States certified or registered mail, return receipt requested, addressed to the party, at the address of such party set forth below, or at such other address as the party to whom notice is to be given has specified by notice hereunder to the party seeking to give such notice: Borrower: Sheldahl, Inc. 1150 Sheldahl Road Post Office Box 170 Northfield, Minnesota 55057 Attn: John V. McManus, Vice President - Finance Copy to: Lindquist & Vennum P.L.L.P. 4200 IDS Center Minneapolis, Minnesota 55402 Attn: Debra Page, Esq. Lender: Mountain Parks Bank - East Post Office Box 3779 Evergreen, Colorado 80439 Attn: James M. Mason, President Copy to: Freeborn and Peters 950 17th Street, Suite 2600 Denver, Colorado 80202 Attn: Marc J. Musyl, Esq. 10.2 Successors and Assigns. The rights, powers and remedies of Lender under this Agreement shall inure to the benefit of Lender, its successors and assigns. The rights and obligations of Borrower under this Agreement may not be assigned and any purported assignment by Borrower shall be null and void. 10.3 Indemnification of Lender. Borrower agrees to indemnify, defend and hold Lender harmless from and against any and all liabilities, obligations, losses, damages, claims, costs and expenses (including attorneys' fees and court costs) of whatever kind or nature which may be imposed on, incurred by or asserted against Lender at any time which relate to or arise from the performance of the Work and/or the ownership, use, operation or maintenance of the Project, including without limitation, any brokerage commissions or finder's fees asserted against Lender with respect to the making of the Loan and any damages incurred by Lender by reason of the construction of the Project, or any claims that Borrower and Lender have a relationship of joint ventures or partners or Borrower or Lender being deemed to have acted as agent for the other except for any of the foregoing which result from the negligent or international acts of Lender. 10.4 Joint and Several Obligations. The covenants, warranties, agreements, obligations, liabilities and responsibilities of the Borrower under this Agreement shall be binding upon and enforceable against its agents, legal representatives, administrators, successors and permitted assigns. 10.5 Counterparts. This Agreement may be executed in counterparts, and all said counterparts when taken together shall constitute one and the same Agreement. 10.6 Materiality. For purposes of this Agreement an event or happening will be deemed "material" if: (a) it has an adverse financial effect upon the business, operations, properties, prospects, assets or condition (financial or otherwise) of the Borrower taken as a whole; (b) it impairs the ability of the Borrower to fulfill and satisfy its obligations under this Agreement or any Loan Document to which it is a party; or (c) it impairs the ability of the Lender to enforce its rights under this Agreement or any Loan Document. 11. Schedule of Exhibits. The following Exhibits are attached hereto and incorporated herein: A. Standard Terms and Conditions B. Permitted Exceptions C. Budget 12. Mutual Waiver of Right to Trial by Jury: Choice of Law and Forum. THIS AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF BORROWER AND LENDER DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF COLORADO. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT WITH JURISDICTION OVER THE COUNTY OF JEFFERSON, STATE OF COLORADO. BORROWER AND LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS. BORROWER WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO ANY SUIT OR PROCEEDINGS INSTITUTED BY LENDER UNDER THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS IN ANY STATE OR FEDERAL COURT WITH JURISDICTION OVER THE COUNTY OF JEFFERSON, STATE OF COLORADO AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO INTER INTO THE AGREEMENT AND THE OTHER LOAN DOCUMENTS, MAKE THE LOANS AND EXTEND THE OTHER FINANCIAL ACCOMMODATIONS CONTEMPLATED HEREUNDER AND THEREUNDER. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. BORROWER: LENDER: By /S/JOHN V. MCMANUS By _______________________ Its Vice President, Finance Its _______________________ Attest: _________________________ Secretary By /S/SHARI L. MAYER Its Notary Public - Minnesota - Rice County EX-11 5 COMP EPS 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 3, February 25, 1995 1994 _____________________________ Primary Earnings Per Share Weighted average number of issued shares outstanding 6,626 4,838 Effect of exercise of stock options under the treasury stock method 253 258 ______ ______ Weighted average shares outstanding used to compute primary earnings per share 6,879 5,096 ==== ==== Net income $ 654 $ 1,388 ==== ==== Net income per share $ 0.10 $ 0.27 ==== ==== Fully diluted earnings per share Weighted average number of issued shares outstanding 6,626 4,838 Effect of exercise of stock options under the treasury stock method 274 292 ____ ____ Weighted average shares outstanding used to compute fully diluted earnings per share 6,900 5,130 ==== ==== Net income $ 654 $ 1,388 ==== ==== Net income per share $ 0.10 $ 0.27 ==== ==== SHELDAHL, INC. AND SUBSIDIARY STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE (in thousands, except per share data) For The Three Months Ended March 3, February 25, 1995 1994 _____________________________ Primary Earnings Per Share Weighted average number of issued shares outstanding 6,650 4,838 Effect of exercise of stock options under the treasury stock method 269 278 ______ ______ Weighted average shares outstanding used to compute primary earnings per share 6,919 5,116 ==== ==== Net income $ 135 $ 672 ==== ==== Net income per share $ 0.02 $ 0.13 ==== ==== Fully diluted earnings per share Weighted average number of issued shares outstanding 6,650 4,838 Effect of exercise of stock options under the treasury stock method 274 292 ______ ______ Weighted average shares outstanding used to compute fully diluted earnings per share 6,924 5,130 ==== ==== Net income $ 135 $ 672 ==== ==== Net income per share $ 0.02 $ 0.13 ==== ==== EX-27 6 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH 3, 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 6-MOS 3-MOS SEP-02-1995 SEP-02-1995 MAR-03-1995 MAR-03-1995 653 653 0 0 15396 15396 0 0 12322 12322 30894 30894 84181 84181 39942 39942 76682 76682 15112 15112 0 0 1672 1672 0 0 0 0 21672 21672 76682 76682 43048 21960 43048 21960 34611 17922 7402 3732 0 0 0 0 146 128 889 178 235 43 654 135 0 0 0 0 0 0 654 135 0.10 0.02 0.10 0.02
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