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                                                                   Exhibit 10.34
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August 1, 2001

Mr. Benoit Y. Pouliquen              CONFIDENTIAL

Dear Benoit:

I am writing with a formal offer of employment that documents and confirms our
agreement regarding your employment with Sheldahl, Inc. You will be employed as
President and Chief Executive Officer of Sheldahl. This position will report to
the Board of Directors of the Company. The compensation for this position is as
follows:

..    Base salary of $27,500 per month ($330,000 annually).

..    You will be eligible to receive an annual performance bonus of 50% of base
     salary received during the relevant period if you meet target financial
     and/or other objectives. The target objectives that govern your bonus and
     the equations that determine the bonus amount actually earned will be
     established jointly by you and the Board for FY2001 on or before September
     30, 2001 and within 30 days of approving the Company's annual plan in each
     subsequent year by the Board, on or before April 15 of each year. Any bonus
     earned by you will be paid (minus applicable withholding) within two pay
     dates after the audited year-end results are complete. You will be
     guaranteed a minimum performance bonus of $100,000 for FY2001 provided you
     are employed by the Company on December 31, 2001.*

..    You will receive non-qualified stock option grants aggregating 2,287,000
     shares. The stock options will be granted as of the date of the
     commencement of your employment and will be exercisable at the average of
     the high and low sales price on that date. Approximately 787,000 of such
     options will be granted subject to shareholder approval of an increase in
     the number of shares available under the Plan and an increase in the annual
     grant limit provided thereunder, which approval shall be sought at the next
     meeting of shareholders. These options will vest and be exercisable on the
     following schedule:

          20% on the date of grant; and

          20% on each of the first, second, third and fourth anniversaries of
          the date of grant.

     The options are subject to immediate vesting upon a change of control as
     provided in the 1994 Stock Plan.

     After your employment begins, we will present you with stock option
     agreements for your signature, the terms of which will be consistent with
     this letter.
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* Mr. Pouliquen accepted a seven-year incentive stock option to purchase 198,000
  shares and a seven year non-qualified stock option to purchase 52,000 shares
  of the Company's common stock at an exercise price of $0.505 per share in lieu
  of a cash payment. The options are subject to shareholder approval of an
  increase in the number of shares available under the 1994 Stock Plan.

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..    Upon the commencement of your employment as the President and Chief
     Executive Officer, the Company will nominate you for a position on the
     Board of Directors of the Company.

The following additional benefits will be provided to you:

..    You will be provided a $1,000 per month car allowance.

..    Business travel and commuting costs on behalf of Sheldahl and housing costs
     will be governed by Company policy.

..    You shall be eligible to participate in the Company's 401(k), life
     insurance, disability, flexible benefits and health care plans.

..    If your employment is terminated without cause, in lieu of severance under
     the Company's severance policy, you will receive 52 weeks of pay at your
     base salary (minus applicable withholding) and for 52 weeks the Company
     will pay the employer's share of the cost of your family health care
     insurance and long-term disability insurance as if you had continued as an
     employee. For the purpose of this paragraph, "cause" means (a) a felony
     conviction or the failure to contest prosecution for a felony, or willful
     misconduct or dishonesty, any of which is directly and materially harmful
     to the business or reputation of the Company; or (b) any material failure
     to discharge your duties and responsibilities in your position which is not
     cured within 30 days after written notice is given to you.

..    If you voluntarily terminate your employment based upon a good reason at
     any time on or before December 3, 2001, for a period of 52 weeks or until
     you obtain substitute employment, whichever is earlier, you will receive
     your base salary (minus applicable withholding) and the Company will pay
     the employer's share of the cost of your family health care insurance and
     long-term disability insurance as if you had continued as an employee. For
     the purpose of this paragraph, "good reason" means (a) any divestiture of
     the Company's Interconnect Division or IFT Division on or before December
     3, 2001, including any Board action specifically authorizing management to
     proceed with any such divestiture; or (b) the Company's failure to divest
     the Materials Business by November 15, 2001; or (c) the Company is unable
     to establish by November 15, 2001, a new banking relationship that is
     satisfactory to the Board and is reasonably expected to fund the Company's
     existing revenue projections through June 2002.

Your starting date will be September 4, 2001. This offer and your continued
employment remains contingent on your signing a technical Employee Agreement, a
copy of which is enclosed. The Company's payment of severance to you pursuant to
the above two paragraphs will be considered an offset against payments the
Company may be obligated to make to you pursuant to paragraph IV(B) of the
Employment Agreement. The offer is also contingent upon completion of
referencing to the Company's satisfaction.

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You will be provided a brochure describing our Flexible Benefits Program and
a Salaried Employee's Handbook.  Please let me know if you have any questions
regarding benefits.

Please signify your acceptance of our offer by signing and returning one copy of
this letter and the Employee Agreement to me. Please feel free to contact me
with any questions you may have. I am confident that you will find Sheldahl to
be a challenging and rewarding career opportunity. I am delighted by the
prospect of working with you to make a positive and lasting impact on this
Company and to provide value to all of our stockholders.

Sincerely,


  /s/ John D. Lutsi
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John D. Lutsi
Chairman
Sheldahl, Inc.

I agree to and accept employment with Sheldahl, Inc. on the terms and conditions
set forth in this Agreement.


  /s/ Benoit Y. Pouliquen                              8/2/01
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Benoit Y. Pouliquen                          Date

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