Document:

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                    SETTLEMENT AGREEMENT AND MUTUAL RELEASES

         This Settlement Agreement and Mutual Releases (this "Agreement") is
made as of December 29, 2000 by and among Outlook Group Corp. ("OGC"), Outlook
Packaging Inc. ("OPI"), Joseph Baksha ("Baksha"), Barrier Films Ltd. - New York,
Inc. ("Barrier - NY"), Barrier Films Corporation ("BFC"), and Ronnie Shemesh
("Shemesh"). OGC, OPI, Baksha, Barrier - NY, BFC, and Shemesh are sometimes
referred to collectively in this Agreement as the "Parties."
         1.       BACKGROUND

                  1.1      Parties.  The Parties to this Agreement, and
additional relevant individuals, are identified as follows:

                           (a)     OGC is a publicly traded Wisconsin
corporation with a principal business address of 1180 American Drive, Neenah, WI
54956.

                           (b)     OPI is a Wisconsin corporation with a
principal business address of 1180 American Drive, Neenah, WI 54956; OPI also
has a facility in Oak Creek, WI. OPI is a wholly-owned subsidiary of OGC.

                           (c)     Baksha is a citizen of Illinois and the
President and Chief Operating Officer of OGC.

                           (d)     Barrier - NY is a New York corporation with a
principal business address of 33 Walt Whitman Road, Huntington Station, NY.

                           (e)     BFC is a Nevada corporation with a principal
business address of 555 Dermody Way, Sparks, NV 89431. BFC is a wholly-owned
subsidiary of Barrier - NY.

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                           (f)      Shemesh is a New York citizen and the
principal owner and chief executive of Barrier - NY and World Class Film Corp.
("World Class") of Yonkers, NY.

                           (g)      William Wright ("Wright") is citizen of
Nevada and a current officer and employee of BFC.

                           (h)      Becky Wright is a citizen of Nevada and a
former employee of BFC.

                           (i)      Bradley Abeson ("Abeson") is a citizen of
Nevada and a former officer and employee of BFC.

                  1.2      Contracts. On or about May 12, 1997, OGC and
Barrier - NY entered into a Stock Purchase Agreement (the "Stock Purchase
Agreement") to effectuate the sale of the entire capital stock of BFC by OGC to
Barrier - NY. Simultaneously with this Stock Purchase Agreement, and in partial
payment of the Stock Purchase Agreement's stated price for the stock of BFC,
Barrier - NY executed a Secured Promissory Note in favor of OGC in the amount of
$2,300,000 (the "Original Promissory Note"). At the same time, OGC, on behalf of
its subsidiary, OPI, entered into a Rebate and Supply Agreement (the "Rebate and
Supply Agreement") with Barrier - NY, BFC, and World Class, the purpose of which
was to permit Barrier - NY, BFC and World Class to supply certain packaging
films to OGC and OPI, with the price of said films serving in part to pay
amounts due under the Original Promissory Note.

                  1.3      Litigation.  The Parties are litigants in the
following civil actions:

                           (a)      OGC, Barrier - NY and Baksha are the parties
in Case No. 99-CV- 3057, a civil action pending in the United States District
Court for the Eastern District of New York (the "New York Action"). In the New
York Action, Barrier - NY alleges numerous claims

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against OGC and Baksha, including but not limited to breach of the Stock
Purchase and Rebate and Supply Agreements, tortious interference with
third-party contracts, and improper dissemination of trade secrets. Among the
claims for breach of contract asserted by Barrier - NY against OGC are claims
that OGC failed to obtain certain consents from Wright and Abeson to the Stock
Purchase Agreement and that OGC subsequently failed to indemnify Barrier - NY
for other claims brought by Wright and Abeson related to matters predating the
Stock Purchase Agreement. OGC has counterclaimed in the New York Action,
alleging that Barrier - NY defaulted on the Original Promissory Note and the
Stock Purchase Agreement.

                           (b)     OPI and BFC are the parties in Case No.
00-C-0202, a civil action originally filed in the United States District Court
for the Eastern District of Wisconsin (the "Wisconsin Action"), and subsequently
transferred to the Eastern District of New York for consolidation with the New
York Action. In the Wisconsin Action, OPI alleges that BFC tortiously interfered
with OPI's relationship with its customers, Vegetable Growers Supply and River
Ranch, misrepresented material facts, and breached implied warranties regarding
the composition of certain films BFC delivered to OPI. BFC alleges counterclaims
in the Wisconsin Action that mirror Barrier - NY's allegations in the New York
Action.

                  1.4.     Purpose. The Parties have now determined to resolve
voluntarily all of the disputes between them, including but not limited to the
claims and counterclaims stated in the New York Action and the Wisconsin Action.
The purpose of this Agreement is to effectuate the resolution of these disputes
fully and completely, and to release in full any and all claims and
counterclaims the Parties may have against each other relating to the subject
matters of the New York Action and the Wisconsin Action.

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                  1.5.     Consideration.  The Parties enter into this Agreement
in consideration of the mutual promises and covenants contained herein, the
receipt and sufficiency of which the Parties acknowledge.

         2.       TERMS OF SETTLEMENT

         In settlement of all claims and counterclaims which have been or could
have been brought in the New York Action and the Wisconsin Action, OGC, OPI,
Baksha, Barrier - NY, BFC and Shemesh hereby promise and covenant to do all of
the following:
                  2.1      BFC Payments. BFC will pay OGC principal sums equal
to $2,149,501 (plus or minus interest, credits and other payments provided in
this Settlement Agreement or the Notes) according to the payment schedule set
out in Exhibit A hereto (the "Settlement Payment Schedule"), which is
incorporated herein. This Settlement Payment Schedule calls for monthly payments
to be made beginning on January 15, 2001 and ending on February 15, 2004. A
portion of payments made pursuant to the Settlement Payment Schedule will be
evidenced by two new promissory notes as detailed below in paragraph 2.2 and
secured by the arrangements discussed in paragraph 2.6 (the "Security Details
Paragraph"). The $264,686.00 balance of the principal payment shall not bear
interest and shall be paid in cash or by wire transfer by BFC to OGC on February
15, 2004, subject to the credits provided herein.

                  2.2      BFC New Promissory Notes.  BFC will execute two new
promissory notes in favor of OGC as follows:

                           (a)    BFC will execute a Promissory Note in favor of
OGC securing the first three monthly payments due pursuant to the Settlement
Payment Schedule on January 15, 2001, February 15, 2001 and March 27, 2001 in
the amount of $550,000 (the "First New

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Promissory Note"), attached hereto as Exhibit B and incorporated herein. The
First New Promissory Note shall not bear interest and shall be secured as
detailed in the Security Details Paragraph.

                           (b)     BFC will execute a Promissory Note in favor
of OGC securing the remaining monthly payments due pursuant to the Settlement
Payment Schedule in the amount of $1,334,815 (the "Second New Promissory Note"),
attached hereto as Exhibit C and incorporated herein. The Second New Promissory
Note shall bear interest at the rate stated therein of 8.3% per annum, and shall
be secured as detailed below in the Security Details Paragraph.

                  2.3      BFC Prepayment Right. BFC shall have the right to
prepay the Second New Promissory Note at any time and, in the event of such
prepayment, no interest on the Second New Promissory Note after such prepayment
will be charged or due, except such interest at the rate of 8.3% per annum as
will have already accrued by the date of prepayment. The interest that shall
have accrued by the date of prepayment of the Second New Promissory Note shall
be discounted in the following manner:

                           (a)     If the Second New Promissory Note is prepaid
in full within 12 months of the date of this Agreement, the accrued interest
then due on the note shall be reduced by 25%.

                           (b)     If the Second New Promissory Note is prepaid
in full within 24 months of the date of this Agreement, the accrued interest
then due on the note shall be reduced by 10%.

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                  2.4      Third Party Releases.

                           (a)     Wright, Becky Wright and Abeson Releases.
Barrier - NY shall immediately obtain complete and full releases of all claims
by Wright, Becky Wright and Abeson against OGC, OPI, Baksha, or any other entity
or person affiliated in any way with OGC, including without limitation its and
their former and present joint venturers, predecessors, successors, insurers,
assigns, officers, directors, employees, attorneys and agents, including any and
all former employers of Baksha. The form for these releases shall be as stated
in the "Wright Release," "Becky Wright Release," and "Abeson Release," attached
hereto as Exhibits D, E and F and incorporated herein.

                           (b)      World Class Release.   Barrier - NY shall
immediately obtain a complete and full release of all claims by World Class
against OGC, OPI, Baksha or any other entity or person affiliated in any way
with OGC including without limitation its and their former present joint
venturers, predecessors, successors, insurers, assigns, officers, directors,
employees, attorneys and agents. The form for this release shall be as stated in
the "World Class Release," attached hereto as Exhibit G and incorporated herein.

                           (c)      Consideration of Third Party Releases.
OGC's execution of and performance under this Agreement shall be consideration
for Barrier - NY's obtaining the releases described above in subparagraphs (a)
and (b). As additional consideration for Barrier - NY's obtaining the Wright
Release and Becky Wright Release, OGC shall pay $40,000 to Wright within two (2)
business days after said release is presented to OGC by Barrier - NY. As
additional consideration for Barrier - NY obtaining the Abeson Release, OGC
shall pay $5,000 to Abeson within two (2) business days after said release is
presented by Barrier - NY to OGC.

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                           (d)     Indemnification for Failure to Obtain Third
Party Releases. In the event Barrier - NY is unable to obtain the aforementioned
third party releases by March 1, 2001, OGC shall not be liable for the payments
to Wright and Abeson defined above, and Barrier - NY shall indemnify and hold
harmless OGC, OPI or Baksha for any claims against them brought by Wright, Becky
Wright or Abeson, including reimbursing OGC, OPI or Baksha for the reasonable
costs, including actual attorneys fees, incurred in defending against said
claims. OGC shall have the power to select counsel and control the defense of
any claims against OGC, OPI or Baksha brought by Wright, Becky Wright or Abeson.
All amounts due to OGC, OPI or Baksha under this indemnification provision shall
be secured according to the terms of the Security Details Paragraph below.

                  2.5      OGC Payment to Barrier - NY. OGC will pay $200,000 to
Barrier - NY on or before February 15, 2004 conditioned upon BFC completing all
payments owing to OGC pursuant to the Settlement Payment Schedule. To qualify
for this payment, BFC must have completed all payments owing to OGC under the
First and Second New Promissory Note on time in their full amounts without
exception. However, BFC shall be allowed a 10-day grace period after written
notification to Shemesh and a copy thereof to Norman Paul Weiss, Esq. on
payments owing to OGC under the First or Second New Promissory Note, and
payments under the First or Second New Promissory Note made after their due
dates but within said grace period shall not disqualify Barrier - NY from
receiving the payment contemplated under this paragraph. The Parties agree that
this paragraph is to be strictly construed and that any failure on the part of
BFC to make payments to OGC within the allowed time periods stipulated in this
paragraph shall and will immediately discharge OGC's liability for the
aforementioned $200,000 payment,

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except that, in the event of a default by BFC, Barrier - NY will still qualify
for the $200,000 payment if, within sixty days of default, any guarantor pays
the entire remaining balance on the two new promissory notes in full with the
interest that has accrued through the time of payment.

                  2.6      Security Details.  As security for the two new
promissory notes described above in [P]2.2, BFC, Barrier - NY, and Shemesh will
do the following:

                           (a)      To secure its obligations to OGC created or
contemplated hereby, BFC hereby grants OGC a security interest in BFC's
inventory and accounts receivable, and will execute all documents necessary to
provide OGC with a perfected lien on said collateral including without
limitation appropriate UCC financing statements. As continuing evidence of the
value of this collateral, and so long as amounts due on the two new promissory
notes remain outstanding in excess of $500,000, BFC will provide no later than
the 25th day of each month a full and updated list of its inventory, a full and
updated list of its accounts receivable, and an aging report on those accounts
receivable. OGC shall keep the information provided by BFC under this
sub-paragraph confidential, shall disclose the information only to those of its
employees or agents who have a need to know the information in order to
effectuate the terms of this Agreement, and shall not disclose the information
to any third party except when required to do so by valid court order or
pursuant to a validly issued subpoena.

                           (b)      As further security for the two new
promissory notes, Barrier - NY, as the parent of BFC, will guarantee all
payments due under the two new promissory notes. This guarantee shall be in the
form given in Exhibit H hereto and incorporated herein.

                           (c)      As further security for the two new
promissory notes, Shemesh will execute two personal guarantees. The First
Shemesh Guarantee shall be a personal

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guarantee in the amount of $550,000 guaranteeing all payments and amounts due
under the First New Promissory Note. The Second Shemesh Guarantee shall be a
personal guarantee in the amount of $667,407.50 guaranteeing in part the
payments and amounts due under the Second New Promissory Note. Shemesh's
personal guarantees shall be in the form given in Exhibits I and J hereto and
incorporated herein.

                           (d)      Upon payment in full of all sums owed under
the two new promissory notes, OGC shall file all necessary UCC statements or
other documents required or requested to evidence payment in full and discharge
of any liens hereby created.

                  2.7      Exhibit K. OGC and Shemesh shall execute the
agreement attached hereto as Exhibit K and incorporated herein which shall be
considered by all Parties to be a material part of this Agreement, and the
execution of which by OGC and Shemesh shall be additional and necessary
consideration for the Parties performance under this Agreement.

                  2.8      Termination of Prior Contracts. It is expressly
agreed that all prior contracts between the Parties, including without
limitation the Stock Purchase Agreement, the Original Promissory Note and the
Rebate and Supply Agreement identified above in paragraph 1.2, and all
obligations thereunder, shall, if not previously terminated by operation of
their terms, terminate as of the date of the execution of this Agreement, and
that the parties thereafter shall have no obligations to each other than those
specified in this Agreement and the Exhibits hereto. However, this paragraph
shall not have any affect on the Standstill Agreement between OGC and American
Capital Resources.

                  2.9      Termination of Litigation.  By executing this
Agreement, the parties authorize their respective attorneys to execute and file
forthwith such stipulations of dismissal,

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with prejudice, and without costs to any party, as are necessary to terminate
the New York Action and the Wisconsin Action. Such stipulations will be in the
form attached hereto as Exhibit L and incorporated herein.

                  2.10     Confidentiality. The parties agree that the terms of
this Settlement Agreement shall be kept confidential. In that regard, the
Parties and their counsel may disclose terms of this Agreement only (a) to those
of their employees who have a need to know such terms, (b) to the attorneys,
accountants or tax advisors consulted by a Party on a professional basis and
having a need to know such terms and who have first agreed not to reveal the
terms to others, (c) as otherwise required by law, including in response to
valid subpoenas, pursuant to a court order, or as required by federal or state
securities laws or SEC or NASDAQ reporting rules; or (d) to effectuate the terms
of this Agreement. A Party shall not initiate contact with the press, the media
or others who are not employees of the Party regarding this Agreement or its
terms. In response to bona fide inquiries from the press, the media or others
regarding the status of the New York and Wisconsin Actions or in a general
statement about the New York and Wisconsin Actions or this Agreement to its
employees, a Party shall be limited to statements similar in substance to:

         The Parties have reached a mutually agreeable resolution of the cases.
         The terms are confidential. None of the parties in either case have
         admitted liability. The cases have been dismissed.

                  2.11     Additional Criteria for Default. In addition to
failure to perform any obligations created under this Agreement, it shall also
constitute a default under this Agreement if any Party declares bankruptcy or is
involuntarily forced into bankruptcy or receivership.

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         3.       RELEASES

                  3.1.     Outlook Release. OGC, for itself and its subsidiaries
and other affiliated entities, including OPI, and its and their joint venturers,
predecessors, successors, insurers, assigns, officers, directors, attorneys and
agents, including Baksha, (hereinafter referred to as the "Outlook Releasers"),
hereby releases and discharges Barrier - NY and World Class, and the parents,
subsidiaries and other affiliated entities of each of them, including BFC, and
its and their joint venturers, predecessors, successors, insurers, assigns,
officers, directors, employees, attorneys and agents, including Shemesh, from
any and all claims, obligations and liabilities the Outlook Releasers now have
or in the future may have relating to the subject matters of the New York Action
and the Wisconsin action, except that OGC's release will only operate to release
Wright, Becky Wright or Abeson if OGC has previously received their releases as
referenced above in paragraph 2.4(a).

                  3.2      Barrier Release. Barrier - NY and BFC for themselves
and their parents, subsidiaries and other affiliated entities, including World
Class, and its and their joint venturers, predecessors, successors, insurers,
assigns, officers, directors, shareholders, attorneys and agents, including
Shemesh (the "Barrier Releasers"), hereby release and discharge OGC and its
subsidiaries and other affiliated entities, including OPI, and its and their
joint venturers, predecessors, successors, insurers, assigns, officers,
directors, employees, attorneys and agents, including Baksha, from any and all
claims, obligations and liabilities the Barrier Releasers now have or in the
future may have relating to the subject matters of the New York Action and the
Wisconsin Action.

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                  3.3      Securities Law Compliance. Notwithstanding any other
provision of this Agreement, all Parties and their affiliates shall remain
responsible for all of their reporting, compliance and other requirements and
obligations under federal and state securities laws, including without
limitation those arising out of Sections 13 or 16 of the Securities Exchange Act
of 1934, which arise as a result of the acquisition or holding of shares of OGC,
or the execution or performance of this Agreement or of any of the Exhibits
attached hereto or the transactions contemplated herein. Nothing in these
agreements shall be a waiver or release by any Party of any such requirements or
obligations on the part of any other Party.

         4.       GENERAL PROVISIONS

                  4.1      Merger. This Agreement constitutes the entire
agreement of the parties and supersedes all prior oral and written
understandings, negotiations, representations and agreements between the Parties
hereto on the subject matter of this Agreement.

                  4.2      No Admissions of Liability. This Agreement is the
compromise of disputed claims and neither the promises exchanged between the
Parties nor any other statements herein are to be construed as an admission of
any fault or liability on the part of any Party with respect to any claim,
counterclaim, obligation or liability released, or any other form of admission
with respect to any matter, thing or dispute. Any such liability is expressly
denied by all Parties.

                  4.3      Parties Bound By Agreement. This Agreement, and the
rights, obligations and covenants contained hereunder, shall be binding upon the
Parties hereto and their respective parents, subsidiaries, officers, directors,
partners, employees, heirs, conservators, successors, devisees and assigns.

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                  4.4      Agreement Based Upon Advice of Counsel. Each of the
Parties represent and warrant that they have read this Agreement, understand it
fully, and agree to each and all of the terms and conditions set forth herein.
The parties further represent and warrant that they have received independent
legal advice concerning all tax, securities, and other ramifications of this
Agreement, that they have had full and fair opportunity to analyze and consult
with counsel regarding the terms of this Agreement, and that in executing it
they have not relied upon any statement or representation made by any of the
Parties or by anyone who has acted for or on behalf of any of the Parties.

                  4.5      Construction.

                           (a)     The language of this Agreement shall be
construed as a whole, according to its fair meaning, and not strictly for or
against any Party, regardless of who drafted or was principally responsible for
drafting the Agreement or any specific term or condition hereof. This Agreement
shall be deemed to have been drafted by all parties, and no party shall urge
otherwise.

                           (b)     Whenever possible, each paragraph of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision shall be held to be prohibited or invalid,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the other
remaining provisions of the Agreement.

                           (c)     The headings in this Agreement are for
convenience only. They in no way limit, alter or affect the meaning of this
Agreement.

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                  4.6      Amendment. This Agreement may not be altered,
amended, modified or otherwise changed in any respect whatsoever except by a
writing duly executed by an authorized representative of each of the parties.

                  4.7      Enforcement. The sole remedy for breach of all
obligations created by this Agreement shall be an action to enforce this
Agreement, and in no event shall a breach of any obligation created by this
Agreement entitle any party to reopen either the New York Action or the
Wisconsin Action or to litigate in any way the subject matters of those actions.
If any Party successfully enforces the obligations imposed on another Party
under this Agreement, or if any Party successfully defends against an action to
enforce this Agreement, the losing Party shall reimburse and indemnify the
successful Party for the actual costs incurred by that Party in said enforcement
or defense, including, but not limited to, attorney's fees at the actual hourly
rate customarily charged by that Party's counsel for the time reasonably spent
in the enforcement or defense activity.

                  4.8      Authority. Each corporate Party represents and
warrants for itself that it is validly organized and existing under the laws of
its place of incorporation; and that it has the full power and authority to
enter into this Settlement Agreement and to perform all transactions, duties and
obligations set forth herein. Each signatory to this Settlement Agreement who
signs on behalf of a corporate Party represents and warrants that he or she has
the actual authority to sign on behalf of that Party.

                  4.9      Cooperation. The Parties agree to cooperate fully and
execute any and all supplementary documents and to take all additional actions
which may be necessary or appropriate to give full force and effect to the basic
terms and intent of this Agreement.

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                  4.10     Notice. Written notice under this Agreement shall be
effective if sent by certified mail, return receipt requested, to the following
addresses:
                           (a)      Notice to Barrier - NY, BFC or Shemesh:

                                    Ronnie Shemesh
                                    World Class Film Corp.
                                    78 Fernbrook St.
                                    Yonkers, NY 10705

                                    With a copy to:

                                    Norman Paul Weiss, Esq.
                                    Norman Paul Weiss, P.C.
                                    Suite 307
                                    33 Walt Whitman Road
                                    Huntington Station, NY  11746

                           (b)      Notice to OGC, OPI or Baksha:

                                    Joseph J. Baksha
                                    Outlook Group Corp.
                                    1180 American Drive
                                    P.O. Box 748
                                    Neenah WI  54957-0748

                                    With a copy to:

                                    Kenneth V. Hallett, Esq.
                                    Quarles & Brady LLP
                                    411 E. Wisconsin Ave.
                                    Milwaukee, WI 53202

                  4.11     Signing.  This Settlement Agreement may be signed in
counterparts. Facsimiles of signatures shall be accepted as original signatures.

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 FOR THE OUTLOOK RELEASERS:

                                             OUTLOOK GROUP CORP.

                                             By /s/
                                               ---------------------------------
                                             Its Chairman
                                                --------------------------------
                                             Dated: 12-29-00
                                                   -----------------------------

                                             OUTLOOK PACKAGING, INC.

                                             By /s/
                                               ---------------------------------
                                             Its Chairman
                                                --------------------------------

                                             Dated: 12-29-00
                                                   -----------------------------

                                             JOSEPH BAKSHA
                                             /s/
                                             ----------------------------------

                                             Dated: 12-29-00
                                                   ----------------------------

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  FOR THE BARRIER RELEASERS:

                                           BARRIER FILMS LTD. - NEW YORK, INC.

                                           By /s/
                                             -----------------------------------
                                           Its President
                                              ----------------------------------
                                           Dated: 12-29-00
                                                 -------------------------------

                                           BARRIER FILMS CORPORATION

                                           By /s/
                                             -----------------------------------
                                           Its V. President
                                              ----------------------------------
                                           Dated: 12-29-00
                                                 -------------------------------

                                           RONNIE SHEMESH
                                           /s/
                                           ---------------------------------

                                           Dated: 12-29-00
                                                 -------------------------------

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                                    EXHIBITS

A.       Settlement Payment Schedule

B.       First New Promissory Note

C.       Second New Promissory Note

D.       Release of William Wright

E.       Release of Becky Wright

F.       Release of Bradley Abeson

G.       Release of World Class Film Corp.

H.       Barrier - NY Guaranty

I.       First Shemesh Guaranty

J.       Second Shemesh Guaranty

K.       Agreement Between OGC and Shemesh

L.       Stipulation and Proposed Order of Dismissal

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                                                                       EXHIBIT K

                           STOCK REPURCHASE AGREEMENT

         This Stock Repurchase Agreement is made as of December 29, 2000 by and
among Outlook Group Corp. ("OGC") and Ronnie Shemesh ("Shemesh"). OGC and
Shemesh enter into this Stock Repurchase Agreement based upon the following
understandings:

         WHEREAS OGC is a publicly traded Wisconsin corporation with a principal
business address of 1180 American Drive, Neenah, WI 54956; and

         WHEREAS Shemesh is a New York citizen and the principal owner and chief
executive of Barrier Films Ltd. - New York, Inc. ("Barrier - NY") and World
Class Film Corp. ("World Class"); and

         WHEREAS Barrier - NY is the parent corporation to Barrier Films
Corporation ("BFC"); and.

         WHEREAS OGC, Barrier - NY, BFC and Shemesh are parties to the
Settlement Agreement and Mutual Releases to which this Stock Repurchase
Agreement is attached as Exhibit L; and

         WHEREAS Shemesh, as President and principal owner of Barrier - NY is
materially affected by and interested in the execution and enforcement of the
Settlement Agreement and Mutual Releases; and

         WHEREAS Shemesh is the owner of certain shares of OGC common stock; and

         WHEREAS Shemesh believes that the book value of OGC common stock
exceeds the current market value and that the true value of his concentrated
stock ownership position exceeds the market value; and

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         WHEREAS, OGC is willing to pay the amounts set forth below for
Shemesh's OGC stock as a means of settling the legal disputes involving OGC,
Barrier - NY and BFC; and

         WHEREAS Shemesh and OGC further agree that their mutual execution of
the following Stock Repurchase Agreement is a necessary and important condition
to the Settlement Agreement and Mutual Releases, and a material and integral
part thereto;

         NOW, THEREFORE, Shemesh and OGC agree as follows:

         1.       Stock Repurchase Provision. If BFC has made all payments due
under the New Promissory Notes described in paragraph 2.2 of the Settlement
Agreement and Mutual Releases, and complied with all other material terms of
that agreement, Shemesh may require OGC to purchase up to 450,000 shares of OGC
Common Stock now held by Shemesh, and OGC agrees to purchase such shares, all in
accordance the provisions of this paragraph as follows:

                  (a)      Shemesh may require the purchase of such OGC shares
now held by him on the dates (the "Purchase Dates"), and in amounts up to the
amounts set forth below:

<TABLE>
<CAPTION>
PURCHASE DATE                         NUMBER OF SHARES
-------------                         ----------------
<S>                                   <C>
January 15, 2001                           50,000
February 9, 2001                           75,000
March 27, 2001                             75,000
April 15, 2001                             75,000
May 3, 2001                                75,000
July 20, 2001                              100,000
</TABLE>

                  (b)      Shemesh may exercise such right by giving written
notice to OGC by certified mail, specifying the number of shares to be tendered
and sold to OGC, said notice to be served on OGC not fewer that five business
days prior to any such Purchase Date.

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<PAGE>   21

                  (c)      Upon delivery to OGC of a certificate or certificates
representing such shares to be purchased by OGC, duly endorsed by Shemesh or
accompanied by a stock power duly endorsed by Shemesh and sufficient to transfer
such shares to OGC, or upon delivery to OGC of appropriate documents authorizing
an electronic DTC brokerage transfer, on each such Purchase Date for which
notice is given and on which shares are tendered, OGC shall pay for such shares
as are tendered by wire transfer to an account designated by Shemesh or, if no
such account is designated, by a certified or bank cashier's check, in an amount
equal to $7.00 times the number of shares duly tendered, which the parties agree
represents the fair value of said shares. In addition, the tender by Shemesh of
OGC stock pursuant to this Stock Repurchase Agreement shall entitle Barrier - NY
to the credit described below in paragraph 3. If delivery is via DTC transfer,
OGC shall deposit with its broker prior to each such transfer sufficient funds
to effectuate the simultaneous wire transfer of funds and stock.

                  (d)      In the event, and to the extent, that Shemesh does
not provide the required notice prior to, or duly tender shares on, any Purchase
Date in accordance with this agreement, Shemesh's right to require OGC to
purchase the shares relating to that Purchase Date, and OGC's obligation to
purchase such shares, shall terminate.

                  (e)      In the event of tender by Shemesh pursuant to this
paragraph, all share and per share amounts set forth herein shall be adjusted
equitably in the case of stock split, reverse stock split, recapitalization or
similar change in the outstanding common stock of OGC. In any event, the net
effect of any change shall not be detrimental to, or, alternatively, increase
the value of the OGC shares held by Shemesh as of the date of this Agreement.

                                        3

<PAGE>   22

         2.       Agreement to Not Purchase.

                  (a)      From and after the date of the Settlement Agreement
and Mutual Releases, and until the final date for tender of shares hereunder,
none of Shemesh, Barrier - NY, World Class or BFC, or any of their affiliates,
officer or directors, shall purchase any shares of OGC common stock except as
described below in subparagraphs 2(b) and 2(c) unless, prior to the purchase by
OGC of any shares pursuant to paragraph 1 hereof, they shall have provided
notice that Shemesh waives in writing all of his rights under paragraph 1
hereof, such notice to include a copy of said written waiver, in which event the
provisions of this Stock Repurchase Agreement shall be of no further force and
effect. If Shemesh waives his rights under this Stock Repurchase Agreement
pursuant to this sub-paragraph, any right to purchase additional OGC stock
thereby created shall be contingent upon payments due under the two new
promissory notes remaining current in compliance with the terms of the
Settlement Payment Schedule attached to the Settlement Agreement and Mutual
Releases as Exhibit A.

                  (b)      Notwithstanding the stipulations in subparagraph (a)
above, Shemesh may purchase an additional 50,000 shares of OGC common stock from
the date of the Settlement Agreement and Mutual Releases until January 15, 2001,
based on Shemesh's representation that he has already contracted to make such
purchases, to the extent that prior contracts require him to make such
purchases. Shemesh further represents and warrants that any such purchases by
Shemesh will be in compliance with federal and state securities laws.

                  (c)      From the date of the final tender of shares by
Shemesh pursuant to paragraph 1(a) above until the later of: (a) the final
payment due under the two new promissory notes or (b) three years from the final
tender of shares by Shemesh, none of Shemesh, Barrier -

                                        4

<PAGE>   23

NY, World Class, or BFC or any of their affiliates, officers, or directors shall
under any circumstances individually or collectively purchase a total amount of
OGC common stock greater than 5% of the total stock of OGC then outstanding.
However, (i) this restriction shall not apply if Shemesh waives his right to
tender shares pursuant to paragraph 2(a) hereof prior to the tender of any such
shares, including compliance with the payment schedule for the two new
promissory notes; and (ii) no person or entity restricted by this section may
make any purchases in the event BFC is not then current under either the First
or the Second New Promissory Notes.

         3.       Barrier - NY Right to Credit. Barrier - NY shall be entitled
to a credit against interest due under the Second New Promissory Note referenced
in paragraph 2.2(b) of the Settlement Agreement and Mutual Releases in the
amount of $ 0.275 (27 and 1/2 cents) for each share of OGC stock tendered by
Shemesh in conformity with this Stock Repurchase Agreement provided that Shemesh
shall have complied with this agreement in all material respects. Barrier- NY
shall not be entitled to any additional payment or consideration in the event
the amount of the credit exceeds the interest due on the Second New Promissory
Note. Instead, if the amount of the credit exceeds the amount of the interest
due on the Second New Promissory Note, the excess credit shall be payable to
Shemesh individually.

         4.       Securities Law Compliance. Notwithstanding any other provision
of this Stock Repurchase Agreement, all Parties hereto and their affiliates
shall remain responsible for all of their reporting, compliance and other
requirements and obligations under federal and state securities laws, including
without limitation those arising out of Sections 13 or 16 of the Securities
Exchange Act of 1934, which arise as a result of the acquisition or holding of
shares of OGC, or the execution or performance of the Settlement Agreement and
Mutual Releases and

                                        5

<PAGE>   24

this Stock Repurchase Agreement or the transactions contemplated therein.
Nothing in these agreements shall be a waiver or release by any Party of any
such requirements or obligations on the part of any other Party.

         5.       General Provisions.   The general provisions contained in the
Settlement Agreement and Mutual Releases at [P][P] 4.1- 4.11 are expressly
incorporated herein. All terms found in this Stock Repurchase Agreement are to
be construed according to the meaning ascribed to them in the Settlement
Agreement and Mutual Releases, unless otherwise indicated.

                                             OUTLOOK GROUP CORP.

                                             By /s/
                                               ---------------------------------
                                             Its Chairman
                                                --------------------------------
                                             Dated: 12-29-00
                                                   -----------------------------

                                             RONNIE SHEMESH
                                             /s/
                                             -----------------------------------

                                             Dated: 12-29-00
                                                   -----------------------------

                                        6<PAGE>   1

    EIGHTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT AND WAIVER OF DEFAULTS

        This Amendment, dated as of December 26, 2000, is made by and among
SHELDAHL, INC., a Minnesota corporation (the "Borrower"), WELLS FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION f/k/a Norwest Bank Minnesota, National
Association, a national banking association ("Wells Fargo"; 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, a Second Amendment
to Credit and Security Agreement dated as of March 31, 1999, a Third Amendment
to Credit and Security Agreement dated as of April 5, 1999, a Fourth Amendment
to Credit and Security Agreement dated as of November 9, 1999, a Fifth Amendment
to Credit and Security Agreement dated as of June 16, 2000, a Sixth Amendment to
Credit and Security Agreement dated as of June 27, 2000, and a Seventh Amendment
to Credit and Security Agreement dated as of November 7, 2000 (as so amended,
the "Credit Agreement"). Capitalized terms used in these recitals have the
meanings given to them in the Credit Agreement unless otherwise specified.

        The Borrower has requested that the Lenders and the Agent consent to
certain transactions, waive certain Events of Default and that certain
amendments be made to the Credit Agreement. The Agent and the Lenders are
willing to grant the Borrower's requests pursuant to the terms and conditions
set forth herein.

        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 Amendment which are
defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein. In addition, Section 1.1 of the Credit
Agreement is amended by adding or amending, as the case may be, the following
definitions:

                "`Accounts', of any Person, means all accounts owned by that
        Person, as such term is defined in the UCC, including without limitation
        the aggregate unpaid obligations of customers and other account debtors
        to that Person arising out of the sale or lease of goods or rendition of
        services by that Person on an open account or deferred payment basis."

<PAGE>   2

                "`Cash Flow Available for Debt Service' as of a given date means
        the sum of (i) Pre-tax Net Income, (ii) Interest Expense, (iii)
        depreciation and amortization, (iv) operating lease payments, and (v)
        Net Equity Proceeds, less (v) Capital Expenditures not financed with
        long-term debt, determined on a consolidated basis, for the fiscal
        year-to-date period ending on such date."

                "`Debt Service' as of a given date means the sum of (i) all
        payments of principal on Debt of the Borrower, whether scheduled or
        unscheduled, (ii) Interest Expense, (iii) operating lease payments, (iv)
        cash paid for restructuring charges or against restructuring reserves,
        and (v) all installments of rent under capitalized lease obligations of
        the Borrower (determined in accordance with GAAP on consolidated basis)
        incurred during the fiscal year-to-date period ending on such date."

                "`Debt Service Coverage Ratio' means the ratio of (i) Cash Flow
        Available for Debt Service to (ii) Debt Service determined on a
        consolidated basis."

                "`Eligible Accounts' means all unpaid Accounts owed to the
        Borrower or IFT, net of any credits, except the following shall not in
        any event be deemed Eligible Accounts:

                        (i) that portion of Accounts (other than dated Accounts)
                unpaid 60 days or more after the due date, and that portion of
                dated Accounts unpaid 30 days or more after the stated due date
                or 120 days or more after the shipping date;

                        (ii) that portion of Accounts that is disputed or
                subject to a claim of offset or a contra account;

                        (iii) that portion of Accounts not yet earned by the
                final delivery of goods or rendition of services, as applicable,
                by the Borrower or IFT to the customer;

                        (iv) Accounts owed by any unit of government, whether
                foreign or domestic (provided, however, that there shall be
                included in Eligible Accounts that portion of Accounts owed by
                such units of government for which the Borrower or IFT (as
                applicable) has provided evidence satisfactory to the Agent that
                (A) the Agent has a first priority perfected security interest
                and (B) such Accounts may be enforced by the Agent directly
                against such unit of government under all applicable laws);

                        (v) Accounts owed by an account debtor located outside
                the United States which are not backed by a bank letter of
                credit assigned to the Agent (if such assignment is required by
                the Agent), in the possession of the Agent and acceptable to the
                Agent in all respects, in its sole discretion; provided,

                                      -2-
<PAGE>   3

                however, that, Accounts due and owing from Siemens, Bosch,
                Delco, Ford, Texas Instruments, Polaroid, 3M, Hewlett Packard
                and Motorola which satisfy all other requirements of this
                definition (including without limitation clause (xiii)), shall
                not be deemed ineligible because of this clause;

                        (vi) Accounts owed by an account debtor that is
                insolvent, the subject of bankruptcy proceedings or has gone out
                of business;

                        (vii) Accounts owed by a shareholder, Subsidiary,
                Affiliate, officer or employee of the Borrower or IFT;

                        (viii) Accounts not subject to a duly perfected security
                interest in the Agent's favor or which are subject to any lien,
                security interest or claim in favor of any Person other than the
                Agent including without limitation any payment or performance
                bond;

                        (ix) Accounts owned by IFT until the Agent has received
                evidence satisfactory to it of the perfection and priority of
                its security interest in such Accounts;

                        (x) that portion of Accounts that has been restructured,
                extended, amended or modified;

                        (xi) that portion of Accounts that constitutes
                advertising, finance charges, service charges or sales or excise
                taxes;

                        (xii) Accounts owed by an account debtor, regardless of
                whether otherwise eligible, if 10% or more of the total amount
                due under Accounts from such debtor is ineligible under clauses
                (i), (ii) or (x) above, provided, however, that the Agent may
                from time to time in its sole discretion exclude from the
                operation of this clause (xii) those Accounts that the Agent
                designates; and;

                        (xiii) Accounts, or portions thereof, otherwise deemed
                ineligible by the Agent in its sole discretion."

                "`Eligible Equipment' means all Equipment owned by the Borrower
        or IFT for which the Agent has evidence satisfactory to it that such
        Equipment is free and clear of any other lien, security interest or
        encumbrance other than the Security Interest in favor of the Agent and
        the security interest granted by IFT."

                "`Eligible Inventory' means all Inventory of the Borrower or
        IFT, at the lower of cost or market value as determined in accordance
        with GAAP; provided, however, that the following shall not in any event
        be deemed Eligible Inventory:

                                      -3-
<PAGE>   4

                        (i) Inventory that is: in-transit (provided that goods
                in transit in the ordinary course of business between the
                Borrower's facilities in Brown and Marshall Counties, South
                Dakota, its facilities in Rice and Dakota Counties, Minnesota
                and Boulder County, Colorado shall not be excluded by this
                clause); located at any warehouse, job site or other premises
                not approved by the Agent in writing; located outside of the
                states, or localities, as applicable, in which the Agent has
                filed financing statements to perfect a first priority security
                interest in such Inventory; covered by any negotiable or
                non-negotiable warehouse receipt, bill of lading or other
                document of title not in the Agent's possession; on consignment
                from or to any Person or subject to any bailment;

                        (ii) Supplies, packaging, maintenance parts or sample
                Inventory;

                        (iii) Inventory that is damaged, obsolete, slow moving
                or not currently saleable in the normal course of the Borrower's
                or IFT's operations;

                        (iv) Inventory that the Borrower or IFT has returned,
                has attempted to return, is in the process of returning or
                intends to return to the vendor thereof;

                        (v) Inventory that is perishable or live;

                        (vi) Inventory manufactured by the Borrower or IFT
                pursuant to a license unless the applicable licensor has agreed
                in writing to permit the Agent to exercise its rights and
                remedies against such Inventory; provided, however, that all
                Inventory manufactured using Sidrabe Technology shall not be
                deemed ineligible under this clause (vi) until the 91st day
                after the date of this Agreement or such later date as the Agent
                may agree to in its sole discretion;

                        (vii) Inventory that is subject to a security interest
                in favor of any Person other than the Agent;

                        (viii) Inventory owned by IFT until the Agent has
                received evidence satisfactory to it of the perfection and
                priority of its security interest in such Inventory; and

                        (ix) Inventory otherwise deemed ineligible by the Agent
                in its sole discretion."

                "`Equipment', of any Person, means all of that Person's
        equipment, as such term is defined in the UCC, whether now owned or
        hereafter acquired, including but not limited to all present and future
        machinery, vehicles, furniture, fixtures, manufacturing equipment, shop
        equipment, office and recordkeeping equipment, parts, tools, supplies,
        and including specifically (without limitation) the goods

                                      -4-
<PAGE>   5

        described in any equipment schedule or list herewith or hereafter
        furnished to the Agent by that Person."

                "`IFT' means International Flex Technologies, Inc. a
        [_Delaware_] corporation."

                "`Income Tax Expense' means the Borrower's consolidated state
        and federal income tax liability."

                "`Inventory', of any Person, means all inventory owned by that
        Person, as such term is defined in the UCC, whether now owned or
        hereafter acquired, whether consisting of whole goods, spare parts or
        components, supplies or materials, whether acquired, held or furnished
        for sale, for lease or under service contracts or for manufacture or
        processing, and wherever located."

                "`Liquidity Reserve' means $5,000,000."

                "`Margin' means two percent (2.0%) unless the Borrower's audited
        financial statements show that the Borrower has achieved Pre-Tax Net
        Income of $5,000,000 for the fiscal year ended December 31, 2001, in
        which case, effective as of the first day of first month following
        acceptance of such financing statements by the Agent, "Margin" means one
        percent (1.0%)."

                "`Maturity Date' means June 1, 2002."

                "`Merger' has the meaning given in Paragraph 2(a)(i) of the
        Eighth Amendment."

                "`Note Purchase Agreement' has the meaning given in Paragraph
        2(a)(iv) of the Eighth Amendment."

                "Pre-tax Net Income" as of a given date means consolidated
        fiscal year-to-date net income from operations inclusive of charges
        incurred for restructuring and before Income Tax Expenses.

                "`Revolving Floating Rate' means an annual rate equal to the
        Prime Rate plus the Margin, which rate shall change when and as the
        Prime Rate changes."

                "`Term Floating Rate' means an annual rate equal to the Prime
        Rate plus the Margin, which rate shall change when and as the Prime Rate
        changes."

                "`UCC' means the Uniform Commercial Code as in effect from time
        to time (including after July 1, 2001) in the state designated in
        Section 10.17 of the Credit

                                      -5-
<PAGE>   6

        Agreement as the state whose laws shall govern this Agreement, or in any
        other state whose laws are held to govern this Agreement or any portion
        hereof."

                2. Consent to Transaction.

                (a) The Borrower has requested that the Lenders and the Agent
        amend their consent given in the Seventh Amendment and consent to:

                        (i) the merger of Holdings and Merger Sub with Holdings
                being the survivor, pursuant to the Acquisition Agreement (the
                "Merger");

                        (ii) the issuance by the Borrower of approximately
                9,691,978 million shares of its common stock in connection with
                the Merger;

                        (iii) the issuance by the Borrower of approximately
                8,073,571 shares of its Series G preferred stock and
                approximately 9,783,571 of its common stock for $25,000,000
                pursuant to a Stock Purchase Agreement (the "Series G
                Agreement") by and among the Borrower, Ampersand, Ampersand
                Companion and Morgenthaler (the "Series G Issuance"); and

                        (iv) the issuance by the Borrower of $6,500,000 of
                promissory notes (the "Morgenthaler Notes") and warrants to
                purchase up to approximately 1,526,814 shares of its common
                stock, pursuant to an Amended and Restated Subordinated Notes
                and Warrant Purchase Agreement (the "Note Purchase Agreement")
                by and among, the Borrower, Morgenthaler, Ampersand and
                Ampersand Companion;

                (b) The Lenders and the Agent hereby consent to the events
        described in Subparagraph (a) on the following conditions:

                        (i) Unless the Agent and the Required Lenders otherwise
                consent, the documents finally executed and delivered by the
                Borrower and its Subsidiaries in connection with the
                transactions described in Subparagraph (a) shall not be
                materially different from the drafts of such documents delivered
                to the Agent before the date of this Amendment. The Agent shall
                receive copies of all fully executed documents promptly after
                their execution and delivery.

                        (ii) Not later than simultaneously with the occurrence
                of the Merger, Holdings and each of its Subsidiaries shall
                execute and deliver to the Agent for the benefit of the Lenders,
                an unlimited guaranty of the Obligations, a security agreement
                granting the Agent a security interest over all of its personal
                property assets and such financing statements as the Agent may
                reasonably request to perfect such security interest.

                                      -6-
<PAGE>   7

                        (iii) Unless the Agent and the Required Lenders
                otherwise so consent in advance and in writing, the Morgenthaler
                Notes shall at all times be unsecured.

                        (iv) Not later than simultaneously with the first
                issuance of any Morgenthaler Notes, the holders of such notes
                (the "Holders") and the Agent shall execute and deliver a
                subordination agreement pursuant to which, among other things,
                the Holders agree:

                                (A) that the Morgenthaler Notes shall at all
                        times remain unsecured;

                                (B) that any financial covenants imposed by the
                        Holders on the Borrower shall be no more restrictive
                        than those imposed by the Credit Agreement;

                                (C) that the Holders will notify the Agent of
                        the occurrence of any Event of Default (as defined in
                        the Note Purchase Agreement) not later than
                        simultaneously with notice given to the Borrower;

                                (D) that the Holders will notify the Agent of
                        their intent to exercise any rights or remedies under
                        the Note Purchase Agreement at least ten (10) days
                        before any such exercise;

                                (E) that upon receipt of notice from the Agent,
                        the Holders will not exercise any right or remedy they
                        may otherwise be able to exercise for a period of 180
                        days including any right to accelerate, provided that
                        only one such notice may be delivered in any period of
                        365 days;

                                (F) that, except as provided in clause (E), if
                        the Lenders accelerate the Obligations, the Holders may
                        accelerate the Morgenthaler Notes;

                                (G) that the Holders shall have the ability to
                        vote their interests in a bankruptcy of the Borrower;

                                (H) that the Holders shall not be obligated to
                        pay over to the Lenders any amounts received on account
                        of the Morgenthaler Notes in a bankruptcy of the
                        Borrower; and

                                (I) that such subordination agreement shall run
                        in favor of the Agent, the Lenders and any other lender
                        or group of lenders providing a senior secured credit
                        facility to the Borrower.

                                      -7-
<PAGE>   8

                        (v) That the sources and uses of cash in connection with
                the transactions described in Subparagraph (a) are as set forth
                on Exhibit B to this Amendment.

        3. Consent to Change of Fiscal Year End. The Lenders and the Agent
consent to the Borrower's changing its fiscal year end to December 31st.

        4. Payment of Term Notes. Section 2.10 of the Credit Agreement is
amended to read as follows:

                Section 2.10 Payment of Term Notes. The principal of the Term
        Notes will be payable in aggregate equal monthly installments of
        $205,130 beginning January 1, 1999 and on the first day of each month
        thereafter until the Termination Date at which time the outstanding
        principal balance of the Term Notes and all interest accrued thereon
        shall be due and payable in full. In addition, the Agent shall obtain,
        at the Borrower's expense, an appraisal of the Eligible Equipment and
        all equipment owned by all Subsidiaries of the Borrower following the
        Merger (the "Combined Equipment"). If the aggregate outstanding
        principal balance of the Term Notes exceeds 75% of the orderly
        liquidation value of the Combined Equipment as shown on such appraisal,
        upon demand by the Agent, the Borrower shall immediately prepay the Term
        Notes in the amount of such excess together with any prepayment fee owed
        pursuant to Section 2.16.

        5. Prepayment Fees. Section 2.16 of the Credit Agreement is amended to
read as follows:

                Section 2.16 Termination, Facility Amount Reduction and
        Prepayment Fees; Waiver of Termination, Prepayment and Facility Amount
        Reduction Fees.

                        (a) TERMINATION AND REVOLVING FACILITY AMOUNT REDUCTION
                FEES. If the Borrower or the Lenders (during a Default Period)
                terminates the Credit Facility as of a date other than the
                Maturity Date, or the Borrower reduces the Revolving Facility
                Amount of any Lender, the Borrower shall pay the affected
                Lender(s) a fee in an amount equal to one percent of the
                Revolving Facility Amounts (or the reduction, as the case may
                be).

                        (b) PREPAYMENT FEES - TERM FACILITY. If the Term Notes
                are prepaid, the Borrower shall pay to the Lenders a fee in an
                amount equal to one percent of the amount so prepaid.

                                      -8-
<PAGE>   9

        6. Financial Covenants. Sections 6.18 through 6.21 and 7.12 of the
Credit Agreement are amended to read as set forth below.

                "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              Minimum Cash Flow
                    or about                  Available for Debt Service
             ------------------------         --------------------------
                 March 31, 2001                      $12,600,000
                 June 30, 2001                       $12,900,000
               September 30, 2001                    $13,900,000
               December 31, 2001                     $17,000,000

                "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            Minimum Debt Service
                    or about                        Coverage Ratio
             ------------------------            --------------------
                 March 31, 2001                       1.5 to 1.00
                 June 30, 2001                        1.5 to 1.00
               September 30, 2001                     1.1 to 1.00
               December 31, 2001                      1.1 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 the fiscal
        quarter described below, of not less than the amount set forth opposite
        such fiscal quarter:

             Fiscal Quarter Ending on               Minimum Pre-tax
                    or about                          Net Income
             ------------------------               ---------------
                 March 31, 2001                       $(4,000,000)
                 June 30, 2001                        $(8,225,000)
               September 30, 2001                    $(11,675,000)
               December 31, 2001                     $(12,400,000)

                "Section 6.21 - Deleted"

                "Section 7.12 Capital Expenditures. The Borrower will not, and
        will not permit any Subsidiary to, expend or contract to expend, in the
        aggregate, for Capital Expenditures during the fiscal quarters described
        below, amounts in excess of the

                                      -9-
<PAGE>   10

        amount set forth opposite such quarter in the table below. This
        limitation will not apply to the conversion of any existing operating
        leases to capital leases."

             Fiscal Quarter Ending on               Maximum Capital
                    or about                         Expenditures
             ------------------------               ---------------
                 March 31, 2001                        $5,000,000
                 June 30, 2001                        $10,000,000
               September 30, 2001                     $16,000,000
               December 31, 2001                      $16,000,000

        7. New Compliance Certificate. Exhibit F to the Credit Agreement is
hereby amended in its entirety and replaced by Exhibit A to this Amendment.

        8. 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.

        9. Defaults. The following Events of Default exist (the "Existing
Defaults"):

--------------------------------------------------------------------------------
 CREDIT AGREEMENT                     REQUIRED AS OF             ACTUAL AS OF
 SECTION/COVENANT                      11/30/2000                 11/30/2000
--------------------------------------------------------------------------------
ss.6.18 Minimum Cash Flow         Not less than $716,000          $(187,000)
Available for Debt Service
--------------------------------------------------------------------------------
ss.6.19 Minimum Debt Service      Not less than 0.23 to 1.00      (0.6) to 1.00
Coverage Ratio
--------------------------------------------------------------------------------
ss.6.20 Pre-Tax Net Income        Not less than $(2,938,000)      $(5,413,000)
--------------------------------------------------------------------------------
ss.6.21 Minimum Net Worth         Not less than $52,000,000       $49,082,000
--------------------------------------------------------------------------------

Upon the terms and subject to the conditions set forth in this Amendment, the
Lenders hereby waives the Existing Defaults. This waiver shall be effective only
in this specific instance and for the specific purpose for which it is given,
and this waiver shall not entitle the Borrower to any other or further waiver in
any similar or other circumstances.

        10. Amendment Fee. The Borrower shall pay the Agent as of the date
hereof a fully earned, non-refundable fee in the amount of $200,000 in
consideration of the Lenders' execution of this Amendment.

        11. Conditions Precedent. This Amendment, and the waiver set forth in
Paragraph 9 hereof, shall be effective when the Agent shall have received an
executed original hereof and payment of the fee described in Paragraph 10.

                                      -10-
<PAGE>   11

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

                (a) The Borrower has all requisite corporate 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 constitutes 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.

        13. 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.

        14. No Other Waiver. Except as set forth in Paragraph 9, 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.

        15. 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

                                      -11-
<PAGE>   12

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.

        16. 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, including
without limitation the fee owed under Paragraph 10.

        17. 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.

                                      -12-

<PAGE>   13

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

WELLS FARGO BANK MINNESOTA,                    SHELDAHL, INC.
NATIONAL ASSOCIATION, as Agent

By /s/ Perry T. Larson                         By /s/ Jill Burchill
  -------------------------------                -------------------------------
  Perry T. Larson                                Jill Burchill
  Its Vice President                             Its Chief Financial Officer

WELLS FARGO BANK MINNESOTA,                    THE CIT GROUP/EQUIPMENT
NATIONAL ASSOCIATION                           FINANCING, INC.

By /s/ Perry T. Larson                         By /s/ Danny Nichols
  -------------------------------                -------------------------------
  Perry T. Larson                                Danny Nichols
  Its Vice President                             Its Assistant Vice President

                                      -13-

<PAGE>   14

                                                                           DRAFT
                                                                         1/15/01

                                                Exhibit A to Eighth Amendment to
                                                Amended and Restated Credit and
                                                Security Agreement

                             COMPLIANCE CERTIFICATE

TO:               Perry T. Larson
                  Wells Fargo Bank Minnesota, National Association

DATE:                     ,
     --------------------- -------

SUBJECT: Financial Statements

Dear Mr. Larson:

        I am the duly qualified and acting Chief Financial Officer of Sheldahl,
Inc. (the "Borrower") and I am familiar with the financial statements and
financial affairs of the Borrower. I am authorized to execute this Compliance
Certificate on behalf of the Borrower.

        Pursuant to Section 6.1 of the Credit and Security Agreement dated as of
June 19, 1998, by and among the Borrower, Wells Fargo Bank Minnesota, National
Association, as agent ("Wells Fargo"; herein in such capacity, together with any
party which may become the successor Agent under such Credit and Security
Agreement, the "Agent"), and each of the financial institutions which are now or
may hereafter become parties to such Credit and Security Agreement, as amended
to date and as the same may be further amended, supplemented or restated from
time to time, the "Credit Agreement"), enclosed are an unaudited balance sheet
and statements of income and retained earnings of the Borrower, as of
___________, ____ (the "Reporting Date"), and for the year-to-date period ending
on the Reporting Date. All terms used in this Compliance Certificate shall have
the meanings given in the Credit Agreement.

        The balance sheet and statements of income and retained earnings fairly
present the financial condition of the Borrower as of the date thereof. They
have been prepared in accordance with GAAP.

        I hereby certify to the Lenders as follows:

        [ ]     The undersigned does not have knowledge of the occurrence of a
                Default or Event of Default under the Credit Agreement.

<PAGE>   15

        [ ]     The undersigned has knowledge of the occurrence of a Default or
                Event of Default under the Credit Agreement and attached hereto
                is a statement of the facts with respect thereto.

        I further certify to the Lenders as follows:

        1. Minimum Cash Flow Available for Debt Service. Pursuant to Section
6.18 of the Credit Agreement, as of the Reporting Date, the Borrower's Cash Flow
Available for Debt Service was $_____________, which [ ] satisfies [ ] does not
satisfy the requirement that such amount be no less than $_____________________
as set forth in the table below:

             Fiscal Quarter Ending on               Minimum Cash Flow
                    or about                    Available for Debt Service
             ------------------------           --------------------------
                 March 31, 2001                        $12,600,000
                 June 30, 2001                         $12,900,000
               September 30, 2001                      $13,900,000
               December 31, 2001                       $17,000,000

        2. Minimum Debt Service Coverage Ratio. Pursuant to Section 6.19 of the
Credit Agreement, as of the Reporting Date, the Borrower's Debt Service Coverage
Ratio was _____ to 1.00 which [ ] satisfies [ ] does not satisfy the requirement
that such ratio be no less than ______ to 1.00 on the Reporting Date as set
forth in table below:

             Fiscal Quarter Ending on              Minimum Debt Service
                    or about                          Coverage Ratio
             ------------------------              --------------------
                 March 31, 2001                         1.5 to 1.00
                 June 30, 2001                          1.5 to 1.00
               September 30, 2001                       1.1 to 1.00
               December 31, 2001                        1.1 to 1.00

        3. Minimum Pre-tax Net Income. Pursuant to Section 6.20 of the Credit
Agreement, the Borrower's Pre-tax Net Income as of the Reporting Date, was
$____________, which [ ] satisfies [ ] does not satisfy the requirement that
such amount be not less than $_____________ during such period as set forth in
table below:

                                      -2-
<PAGE>   16

             Fiscal Quarter Ending on                 Minimum Pre-tax
                    or about                            Net Income
             ------------------------                 ---------------
                 March 31, 2001                         $(4,000,000)
                 June 30, 2001                          $(8,225,000)
               September 30, 2001                      $(11,675,000)
               December 31, 2001                       $(12,400,000)

        4. Capital Expenditures. Pursuant to Section 7.12 of the Credit
Agreement, for the fiscal quarter ending on the Reporting Date, the Borrower and
its Subsidiaries have expended or contracted to expend for Capital Expenditures,
$__________________ in the aggregate, excluding the conversion of any existing
operating leases to capital leases, which [ ] satisfies [ ] does not satisfy the
requirement that such expenditures not exceed in the aggregate the amount set
forth below for such fiscal quarter:

             Fiscal Quarter Ending on                 Maximum Capital
                    or about                           Expenditures
             ------------------------                 ---------------
                 March 31, 2001                          $5,000,000
                 June 30, 2001                          $10,000,000
               September 30, 2001                       $16,000,000
               December 31, 2001                        $16,000,000

Attached hereto are all relevant facts in reasonable detail to evidence, and the
computations of the financial covenants referred to above. These computations
were made in accordance with GAAP.

                                        SHELDAHL, INC.

                                        By
                                          --------------------------------------
                                          Its Chief Financial Officer

                                      -3-

<PAGE>   17

                                                Exhibit B to Eighth Amendment to
                                                Amended and Restated Credit and
                                                Security Agreement

                            SOURCES AND USES OF CASH

The table below sets out the sources and uses of cash in connection with the
transaction described in Paragraph 2(a) of the Eighth Amendment to the Credit
Agreement.

---------------------------------------|----------------------------------------
                 SOURCES               |                  USES
--------------------|------------------|--------------------|-------------------
                    |                  |                    |
--------------------|------------------|--------------------|-------------------
                    |                  |                    |
--------------------|------------------|--------------------|-------------------
                    |                  |                    |
--------------------|------------------|--------------------|-------------------

                          [to be completed by Borrower]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}]]