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Sheldahl Signs Merger Agreement With International Flex Technologies

13 November 2000

Sheldahl Signs Definitive Merger Agreement With International Flex Technologies; New Equity Infusion Will Provide Opportunity for Company Growth

    NORTHFIELD, Minn., Nov. 10 Sheldahl Inc.
and International Flex Technologies Inc. announced today that they have
entered into a definitive Merger Agreement under which Sheldahl will acquire
International Flex Technologies ("IFT") for approximately 7.6 million shares
of common stock.
    Concurrent with the closing of the acquisition, Morgenthaler Partners
("Morgenthaler"), IFT's majority shareholder, and Ampersand Ventures
("Ampersand") will invest $25.0 million in equity capital in exchange for
approximately 4.9 million shares of Sheldahl common stock and shares of a new
series of Sheldahl preferred stock that is convertible into approximately
4.1 million shares of Sheldahl common stock.  In addition, Molex Inc.
("Molex"), a Sheldahl customer and joint venture partner, has agreed to join
with Morgenthaler and Ampersand in committing to purchase up to an aggregate
of $15.0 million of Sheldahl subordinated debt and warrants.  If Sheldahl
issues the full $15.0 million of notes, it will issue warrants to the note
holders to purchase approximately 2.3 million shares of Sheldahl common stock.
    As a result of these transactions, Morgenthaler, other IFT stockholders
and Ampersand will collectively hold securities representing ownership of
approximately 49% of Sheldahl on a fully diluted basis (assuming conversion of
all Sheldahl convertible securities).  In addition, Molex will increase its
ownership of Sheldahl securities and, after participation in these
transactions, will own approximately 10% of Sheldahl on a fully diluted basis.
    "We are pleased that Molex, Sheldahl's largest shareholder, has decided to
participate in this transaction," said John Lutsi, general partner at
Morgenthaler.
    Upon completion of the merger, the combined company will operate under the
Sheldahl name as a publicly traded concern, with IFT operating as a wholly
owned subsidiary of Sheldahl.  The new Board of Directors will include three
of the current directors of Sheldahl, three designees of Morgenthaler,
Ampersand and IFT and one representative from Molex.
    "We are delighted that Sheldahl and IFT are joining forces.  This new
company will combine the mature product lines of Sheldahl's core business, the
newer packaging products of IFT, Sheldahl's Micro Products and Sheldahl's
emerging products in plastic displays and wireless communication devices,"
said Sheldahl President Edward L. Lundstrom.  "In particular, we have
preserved the upside potential from chip packaging and other new products for
our shareholders. Our employees and shareholders will also benefit from IFT's
highly competent organization with proven talent, technology and operating
strength.
    "The improved liquidity afforded by our investment partners clearly paves
the road for us to finish the development and commercialization of our new
products while we simultaneously grow the core business and improve
profitability," Lundstrom continued.  "Sheldahl's Board and I fully support
these transactions.  We believe this is in our shareholders' best interests
and provides for exciting opportunities for growth and advancement for our
employees."
    "The combined company will be a major force in the marketplace, offering
world-class technology," said Donald R. Friedman, President and Chief
Executive Officer of IFT.  "Further, we can better provide for all of our
customers with the expanded capacities that Longmont offers, which clearly
compliments our Endicott location.  We believe that customers, shareholders
and employees of IFT and Sheldahl will benefit from this combination."
    The transactions are subject to a number of customary closing conditions,
including regulatory approvals, as well as compliance with Nasdaq regulations
that require either shareholder approval or advance notice to shareholders.