THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT

		This Amendment, dated as of April  5, 1999, is made by and among 
Sheldahl, Inc., a Minnesota corporation (the "Borrower"), NORWEST BANK 
MINNESOTA, NATIONAL ASSOCIATION, a national banking association ("Norwest"; 
in its separate capacity as administrative agent for the Lenders, the 
"Agent"), and each of the financial institutions appearing on the signature 
pages hereof.

Recitals

		The Borrower, the Agent and the Lenders are parties to a Credit 
and Security Agreement dated as of June 19, 1998, as amended by a First 
Amendment to Credit and Security Agreement dated as of November 25, 1998 and 
as amended by a Second Amendment to Credit and Security Agreement dated as of 
March 4, 1999 (the "Credit Agreement"). Capitalized terms used in these 
recitals and in the preamble have the meanings given to them in the Credit 
Agreement unless otherwise specified.

		The Borrower is presently in default of various financial 
covenants and has requested that the Lenders waive such defaults and reset the 
financial covenants in the Credit Agreement. The Agent is willing to grant the 
Borrower's requests pursuant to the terms and conditions set forth herein.

		Accordingly, in consideration of the premises and of the mutual 
covenants and agreements herein contained, it is agreed as follows:

1.	Default Fee.  Section 2.22 of the Credit Agreement is hereby 
amended by adding the following new subsection (g):

"(g)	Default Fee.  If a default occurs under Section 6.18, 6,19, 
6.20, 6.21 or 7.12 during the Borrower's fiscal year-ending on or about August 
31, 1999, the Borrower shall pay one default fee of $50,000, due and payable 
on the date that the Borrower's financial statement under Section 6.1(a) or 
6.1(b), as applicable, is due.  Such default fee will not cure such default or 
affect the Lenders' ability to impose the Default Rate under Section 
2.13(e)."

2.	Financial Covenants. Sections 6.18 through 6.21 of the Credit 
Agreement are amended to read as follows:

"Section 6.18 Minimum Cash Flow Available for Debt Service. The Borrower 
will achieve Cash Flow Available for Debt Service, determined as at the end 
of each fiscal quarter, at not less than the amount set forth opposite such 
quarter: 

       Fiscal Quarter Ending on or about	  	Minimum Cash Flow
                                     							Available for Debt
                                         								Service

                   		5/28/99               				$10,300,000
                   		8/27/99               				$15,000,000 

"Section 6.19 Minimum Debt Service Coverage Ratio. The Borrower will 
maintain its Debt Service Coverage Ratio, determined as at the end of each 
quarter, at not less than the ratio set forth opposite such quarter: 

        Fiscal Quarter Ending on or about		  Minimum Debt Service 
                                      							   Coverage Ratio

                   		8/27/99	             			    0.90 to 1.00

"Section 6.20 Minimum Pre-tax Net Income. The Borrower will achieve Pre-tax 
Net Income, determined as of the end of each fiscal quarter described 
below, of not less than the amount set forth opposite such fiscal quarter: 

         Fiscal Quarter Ending on or about		  Minimum Pre-tax Net 
                                             								Income

                   		5/28/99                   				$(9,500,000)
                   		8/27/99                  		 		$(9,400,000)

"Section 6.21 Minimum Net Worth. The Borrower will maintain its Net Worth, 
determined as at the end of each fiscal quarter described below, of not 
less than the amount set forth opposite such fiscal quarter: 

          Fiscal Quarter Ending on or about		  Minimum Net Worth

                   		5/28/99                 				$75,500,000
                   		8/27/99                 				$76,500,000

3.	No Other Changes. Except as explicitly amended by this 
Amendment, all of the terms and conditions of the Credit Agreement shall 
remain in full force and effect and shall apply to any advance or letter of 
credit thereunder.

4.	Waiver of Defaults. For the Borrower's second fiscal quarter 
ending on or about February 28, 1999, the Borrower is in default of the 
following provisions of the Credit Agreement (collectively, the "Defaults"):

        Covenant                         Required           Actual

Section 6.18 Cash Flow Available      Not less than       $4,224,000
for Debt Service                       $5,500,000

Section 6.19 Minimum Debt Service     Not less than       0.53 to 1.00
Coverage Ratio                        0.70 to 1.00

Section 6.20 Minimum Pre-tax Net      Not less than       $(8,030,000)
Income                                $(5,050,000)

Section 6.21 Minimum Net Worth        Not less than       $74,962,000
                                      $76,400,000

Upon the terms and subject to the conditions set forth in this Amendment, the 
Agent hereby waives the Defaults. 

In addition, Section 6.1(a) of the Credit Agreement requires the Borrower to 
"within 90 days after the end of each fiscal year of the Borrower" deliver 
its audited financial statements to each Lender.  The Borrower is in default 
of this Section as no audited financial statements have been delivered.  So 
long as the audited financial statements are delivered to each Lender on or 
before April 30, 1999, the Agent waives this default. 

These waivers shall be effective only in this specific instance and for the 
specific purpose for which they are given, and these waivers shall not entitle 
the Borrower to any other or further waiver in any similar or other 
circumstances.

5.	Amendment Fee. The Borrower shall pay the Lenders as of the 
date hereof a fully earned, non-refundable fee in the amount of $20,000 in 
consideration of the Lenders' execution of this Amendment.

6.	Conditions Precedent. This Amendment, and the waiver set 
forth in Paragraph 4 hereof, shall be effective when the Agent shall have 
received an executed original hereof, together with each of the following, 
each in substance and form acceptable to the Agent in its sole discretion:

(a)	Payment of the fee described in Paragraph 5. 

(b)	Such other matters as the Lender may require. 

7.	Representations and Warranties. The Borrower hereby represents and 
warrants to the Lenders as follows:

(a)	The Borrower has all requisite power and authority to 
execute this Amendment and to perform all of its obligations hereunder, 
and this Amendment has been duly executed and delivered by the Borrower 
and constitute the legal, valid and binding obligation of the Borrower, 
enforceable in accordance with its terms. 

(b)	The execution, delivery and performance by the Borrower of 
this Amendment have been duly authorized by all necessary corporate 
action and do not (i) require any authorization, consent or approval by 
any governmental department, commission, board, bureau, agency or 
instrumentality, domestic or foreign, (ii) violate any provision of any 
law, rule or regulation or of any order, writ, injunction or decree 
presently in effect, having applicability to the Borrower, or the 
articles of incorporation or by-laws of the Borrower, or (iii) result in 
a breach of or constitute a default under any indenture or loan or 
credit agreement or any other agreement, lease or instrument to which 
the Borrower is a party or by which it or its properties may be bound or 
affected. 

(c)	All of the representations and warranties contained in 
Article V of the Credit Agreement are correct on and as of the date 
hereof as though made on and as of such date, except to the extent that 
such representations and warranties relate solely to an earlier date. 

8.	References. All references in the Credit Agreement to "this 
Agreement" shall be deemed to refer to the Credit Agreement as amended 
hereby; and any and all references in the Security Documents to the Credit 
Agreement shall be deemed to refer to the Credit Agreement as amended hereby.

9.	No Other Waiver. Except as set forth in Paragraph 4 above, 
the execution of this Amendment and acceptance of any documents related hereto 
shall not be deemed to be a waiver of any Default or Event of Default under 
the Credit Agreement or breach, default or event of default under any Security 
Document or other document held by the Lenders, whether or not known to the 
Lenders and whether or not existing on the date of this Amendment.

10.	Release. The Borrower hereby absolutely and unconditionally 
releases and forever discharges the Lenders, and any and all participants, 
parent corporations, subsidiary corporations, affiliated corporations, 
insurers, indemnitors, successors and assigns thereof, together with all of 
the present and former directors, officers, agents and employees of any of the 
foregoing, from any and all claims, demands or causes of action of any kind, 
nature or description, whether arising in law or equity or upon contract or 
tort or under any state or federal law or otherwise, which the Borrower has 
had, now has or has made claim to have against any such person for or by 
reason of any act, omission, matter, cause or thing whatsoever arising from 
the beginning of time to and including the date of this Amendment, whether 
such claims, demands and causes of action are matured or unmatured or known or 
unknown.

11.	Costs and Expenses. The Borrower hereby reaffirms its 
agreement under the Credit Agreement to pay or reimburse the Lenders on demand 
for all costs and expenses incurred by the Lenders in connection with the 
Credit Agreement, the Security Documents and all other documents contemplated 
thereby, including without limitation all reasonable fees and disbursements of 
legal counsel. Without limiting the generality of the foregoing, the Borrower 
specifically agrees to pay all fees and disbursements of counsel to the 
Lenders for the services performed by such counsel in connection with the 
preparation of this Amendment and the documents and instruments incidental 
hereto. The Borrower hereby agrees that the Lenders may, at any time or from 
time to time in its sole discretion and without further authorization by the 
Borrower, make a loan to the Borrower under the Credit Agreement, or apply the 
proceeds of any loan, for the purpose of paying any such fees, disbursements, 
costs and expenses and the fee required under paragraph 5 hereof.

12.	Miscellaneous. This 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 and the same instrument.

		IN WITNESS WHEREOF, the parties hereto have caused 
this Amendment to be duly executed as of the date first written above.

NORWEST BANK MINNESOTA, NATIONAL 
ASSOCIATION, as Agent

By /s/ Terry S. Jackson
Terry S. Jackson
Its Vice President

SHELDAHL, INC.

By /s/ John V. McManus
John V. McManus
Its Vice President of Finance

NORWEST BANK MINNESOTA, NATIONAL 
ASSOCIATION

By /s/ Terry S. Jackson____________
Terry S. Jackson
Its Vice President

HARRIS TRUST AND SAVINGS BANK

By /s/ Cathy Ciolek
Cathy Ciolek
Its Vice President

NBD BANK

By /s/ Dennis Saletta
Dennis Saletta
Its First Vice President

THE CIT GROUP/EQUIPMENT 
FINANCING, INC.

By /s/ William Hickey
William Hickey
Its Assistant Vice President
<PAGE>