Document:

<PAGE>   1

                                                                    EXHIBIT 4.13

                              GOVERNANCE AGREEMENT

     This Governance Agreement (this "Agreement"), dated as of December 28, 2000
among Sheldahl, Inc., a Minnesota corporation (the "Company"), and the
individuals and entities listed on the signature page of this Agreement under
the caption "Stockholders" (the "Stockholders").

     WHEREAS, (i) certain of the Stockholders have acquired from the Company
pursuant to the Stock Purchase Agreement 9,783,571 shares of Common Stock and
11,303 shares of Series G Preferred Stock convertible into 8,073,571 shares of
Common Stock, (ii) certain Stockholders and Molex have acquired from the Company
pursuant to the Subordinated Notes and Warrant Purchase Agreement $6,500,000
principal amount of the Company's 12% subordinated debt due on the fifth
anniversary of the Closing Date and Warrants to purchase 1,526,814 shares of
Common Stock, and (iii) certain Stockholders have acquired from the Company
pursuant to the Merger Agreement 8,736,890 shares of Common Stock; and

     WHEREAS, certain Stockholders have sought Board approval of their
acquisition of shares of Common Stock, Series G Preferred Stock and/or Warrants
(i) pursuant to the Merger Agreement, the Stock Purchase Agreement or the
Subordinated Notes and Warrant Purchase Agreement, (ii) upon conversion of
shares of Series G Preferred Stock, (iii) upon exercise of the Warrants and (iv)
as dividends on the Series G Preferred Stock, in all cases as adjusted for stock
splits, dividends, recapitalization and the like and any other events requiring
adjustment under the anti-dilution provisions of applicable governing
instruments (collectively, the "Shares") for purposes of Section 302A.673 of the
Minnesota Business Corporation Act and under the Rights Agreement dated June 16,
1996, as amended, by and between the Company and Norwest Bank Minnesota, N.A.
(the "Rights Agreement") and have requested that the Company amend the Rights
Agreement so that neither IFT nor any of the Stockholders shall become an
Acquiring Person (as such term is defined in the Rights Agreement) and so that
none of a Distribution Date, a Stock Acquisition Date or an Acquisition Event
(as such terms are defined in the Rights Agreement) shall occur as a result of
the transactions contemplated by the Merger Agreement, the Subordinated Notes
and Warrant Purchase Agreement and the Stock Purchase Agreement; and

     WHEREAS, as a condition to such approval, a special committee formed by the
Board and the Board (i) have required that certain arrangements be put in place
relating to the acquisition and disposition of Securities by the Stockholders
and related provisions concerning the Stockholders' relationship with the
Company, (ii) have negotiated the terms of this Agreement, (iii) have concluded
that, subject to execution and delivery of this Agreement, giving its approval
under Section 302A.673 of the

<PAGE>   2

Minnesota Business Corporation Act, amending the Rights Agreement as provided
above and implementing the arrangements contemplated by this Agreement are in
the best interests of the Company and its stockholders and (iv) subject to
execution and delivery of this Agreement, have given such approval and put such
amendment into effect; and

     WHEREAS, in consideration of such approvals, the Stockholders desire to
establish in this Agreement certain terms and conditions concerning the
acquisition and disposition of Securities by the Stockholders and their
Affiliates and Associates, and related provisions concerning the Stockholders'
relationship with the Company; and

     WHEREAS, the Stockholders required as a condition to their willingness to
enter into and consummate the transactions contemplated by the Merger Agreement,
the Stock Purchase Agreement and the Subordinated Notes and Warrant Purchase
Agreement that the Company agree to the provisions of sections 2 and 4 hereof;

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
Company and the Stockholders hereby agree as follows:

1.   STANDSTILL AND VOTING

     a. Acquisition of Securities.

          i.   Each Stockholder covenants and agrees that, until the Standstill
               Termination Date, it will not, and will not permit its Affiliates
               or Associates (other than its partners or members) to,
               Beneficially Own any Securities in excess of the Number of
               Permitted Shares applicable to such Stockholder; provided that:

               (1)  this Agreement shall not restrict any acquisition of
                    Securities in a transaction directly with the Company and
                    approved in accordance with the provisions of Section 2(c)
                    hereof (including, without limitation, the acquisition of
                    Securities by any director serving at the direction or
                    request of a Stockholder by reason of the grant of stock
                    options by the Company); and

               (2)  if a Business Combination Proposal is made by any Person
                    (other than the Company, a Stockholder or an Affiliate of a
                    Stockholder, or any Person acting in concert with a

                                       2

<PAGE>   3

                    Stockholder or any Affiliate thereof), then any Stockholder
                    may make a Business Combination Proposal and this Agreement
                    shall not prohibit the making of such Business Combination
                    Proposal, the acquisition of Securities pursuant to such
                    Business Combination Proposal or any other action reasonably
                    connected therewith; provided, however, that, if a Person
                    who has not theretofore communicated a Business Combination
                    Proposal to the Company makes a Business Combination
                    Proposal to the to the Board, however communicated, and the
                    Board unconditionally rejects such Business Combination
                    Proposal by written notice delivered to the proposing party
                    (with a copy to each Stockholder) within five business days
                    of the date on which the Business Combination Proposal was
                    first communicated to the Board, the restrictions of this
                    section 1(a)(i) shall again apply to the Stockholders and
                    provided, further, that the preceding proviso will cease to
                    apply if such Person delivers to the Board any further
                    Business Combination Proposal or modification of any earlier
                    Business Combination Proposal. If any Business Combination
                    Proposal made by any Stockholder in accordance with this
                    section 1(a)(i)(2) is not consummated prior to nine months
                    after the Business Combination Proposal made by such other
                    Person has been effectively withdrawn, the restrictions of
                    this section 1(a)(i) shall again be applicable to the
                    Stockholders, subject to any further Business Combination
                    Proposal being made by any Person.

          ii.  Subject to the proviso in Section 1(a)(i) hereof and any waiver
               or approval in accordance with the provisions of Section 2(c)
               hereof, if at any time on or prior to the Standstill Termination
               Date any Stockholder, alone or as part of any group acting
               together, Beneficially Owns more than the Number of Permitted
               Shares applicable to such Stockholder, inadvertently or
               otherwise, then such Stockholder shall promptly take action not
               inconsistent with applicable law to reduce the amount of
               Securities Beneficially Owned by such Persons to an amount not
               greater than the Number of Permitted Shares applicable to such
               Stockholder.

          iii. No Stockholder shall, on or prior to the Standstill Termination
               Date, permit any Affiliate thereof to Beneficially Own any
               Securities

                                       3

<PAGE>   4

                    unless such Affiliate becomes a Stockholder party to this
                    Agreement, which any such Affiliate may unilaterally do by
                    delivering to the Company an instrument executed by or on
                    behalf of such Affiliate pursuant to which such Affiliate
                    assumes the obligations of a Stockholder hereunder; provided
                    that any partner or member of a Stockholder who becomes a
                    Beneficial Owner of Securities after the date that is one
                    year from the date of this Agreement shall not be obligated
                    to become a party to this Agreement.

     b.   Restrictions on Transfer. For a period of one year from the date of
          this Agreement, each Stockholder agrees not to Transfer any of the
          Shares, unless such Transfer is to an Affiliate or Associate and is in
          compliance with the terms of this Agreement, or is to be effected for
          the Stockholder's personal estate planning purposes and is in
          compliance with the terms of this Agreement. After the one-year
          period, any Stockholder may distribute its Shares to its partners or
          members. In addition, except as allowed under the immediately
          preceding sentence, prior to the Standstill Termination Date, the
          Stockholders, and each Affiliate thereof which acquires Securities in
          accordance with the terms of this Agreement, will not Transfer
          Beneficial Ownership of any Securities to any of their Affiliates
          (other than a partner or member of such Stockholder) unless each such
          Person becomes a signatory to this Agreement as a "Stockholder"
          hereunder as provided in section 1(a)(iii) hereof. Each Stockholder
          agrees to inclusion of the following legend on certificates
          representing its Shares:

               The shares represented by this certificate and any transfer
               thereof are subject to a restriction on transfer as set forth in
               a Governance Agreement between the holder and the Company dated
               as of December , 2000, a copy of which is on file at the
               principal executive office of the Company.

          Such legend shall be placed on all certificates held by a Stockholder
          during the continuance of this Agreement.

     c.   Further Restrictions on Conduct. Unless waived or approved in advance
          in accordance with Section 2(c) hereof, and except for a Business
          Combination Proposal made by a Stockholder in conformity with the
          requirements of Section 1(a)(i)(2) hereof and any action taken by such

                                       4

<PAGE>   5

          Stockholder that is reasonably connected therewith, each Stockholder
          covenants and agrees that, until the Standstill Termination Date,
          neither the Stockholder nor any Affiliate or Associate thereof shall:

          i.   initiate, propose, make, or in any way participate in, directly
               or indirectly, any "solicitation" of "proxies" to vote, or seek
               to influence any Person with respect to the voting of, any Voting
               Securities, or become a "participant" in a "solicitation" or
               "election contest" (as such terms are defined or used in
               Regulation 14A under the Exchange Act, as in effect on the date
               hereof), in any election contest with respect to the election or
               removal of any director whose name appears in Exhibit 2 hereof or
               any replacement thereof, any director of the Board proposed by
               the specified committee in accordance with Section 2 (other than
               any individual whose name appears on exhibit 1 hereof or any
               replacement thereof) or the Molex Director;

          ii.  solicit, offer, seek or propose to any other Person (including
               without limitation the Company) any form of merger with, tender
               or exchange offer for securities of, sale or liquidation of
               assets of, or similar business combination transaction with or
               involving the Company or its Affiliates or Associates; provided,
               however, that the foregoing shall not restrict any such action
               relating to a merger or similar business combination with the
               purpose and effect of the Company or its Affiliates and
               Associates acquiring the business, voting securities or assets of
               another Person; or

          iii. take any other action inconsistent with the foregoing or this
               Agreement;

          provided, however, that nothing in this Section 1(c) shall inhibit the
          free exercise of judgment by any member of the Board in his capacity
          as such.

     d.   Reports. Until the Standstill Termination Date, each Stockholder shall
          deliver to the Company, promptly after any acquisition or Transfer of
          Securities, an accurate written report specifying the amount and class
          of Securities acquired or Transferred in such transaction and the
          amount of each class of Securities owned by the Stockholder or any
          Affiliate or Associate thereof after giving effect to such
          transaction; provided, however, that no such report need be delivered
          with respect to any such acquisition or Transfer of Securities by the
          Stockholder that is reported in

                                       5

<PAGE>   6

          a statement on Schedule 13D filed with the Commission and delivered to
          the Company by the Stockholder or any Affiliate or Associate thereof
          in accordance with Section 13(d) of the Exchange Act and the rules
          thereunder. The Company shall be entitled to rely on such reports and
          statements on Schedule 13D for all purposes of this Agreement.

2.   BOARD OF DIRECTORS.

     a. Initial Composition of Board of Directors.

          i.   The number of directors comprising the Board of Directors,
               effective upon Closing, shall be seven.

          ii.  The Company shall use its best efforts to cause the by-laws of
               the Company to be amended at the next meeting of stockholders of
               the Company so as to set the size of the board of directors of
               the Company at seven.

          iii. Concurrently with the Closing, the Board shall take such action
               as is required under applicable law to cause to be elected to the
               Board, effective upon the Closing, the individuals whose names
               are set forth on Exhibit 1 hereto.

          iv.  The remaining directors comprising the Board, effective upon the
               Closing, shall consist of the Molex Director and the individuals
               whose names are listed on Exhibit 2 hereto.

          v.   The Company shall use its best efforts to cause the individuals
               serving as directors of the Company prior to the effective date
               of the Merger whose names are not listed on Exhibit 2 hereto to
               resign as of the effective date of the Merger.

     b.   Board Representation; Nominating Committee of the Board. Sections
          2(b)(i) and (ii) shall apply until the Applicable Number is zero.

          i.   Board Representation. At least fifteen (15) days prior to each
               meeting of the Board at which the Board intends to take action to
               approve nominees for election to the Board at the next annual
               meeting of shareholders of the Company, the Company shall provide
               each of the Stockholders with a notice of such meeting, which
               notice shall indicate that the Board will take such action at

                                       6

<PAGE>   7

               such meeting . Prior to the date of each such Board meeting, the
               Stockholders shall give the nominating committee of the Board, in
               writing, the names of the Applicable Number of director
               candidates. The Company will cause such individual or individuals
               to be nominated for election as directors at the next annual
               meeting of the shareholders of the Company, will include such
               individual or individual's names as nominees in the proxy or
               consent statement prepared by the Company in connection with such
               annual meeting, indicating that the election as directors of such
               individual or individuals has been recommended by the Board, and
               will solicit proxies for the election of such individual or
               individuals as members of the Board at such annual meeting of
               shareholders. At the first meeting of the Board after the date of
               this Agreement, three designees of the Stockholders shall be
               appointed by the Board as Board members. If, at any time that the
               Applicable Number is greater than zero, any individual so
               designated by the Stockholders is unable to serve or ceases to
               serve as a director for any reason, the Company will cause
               another individual designated by the Stockholders to be appointed
               to fill the resulting vacancy. Anything herein to the contrary
               notwithstanding, after termination of this Agreement pursuant to
               Section 4, the Company shall no longer be obligated to nominate
               and solicit proxies for the election of such designees of the
               Stockholders as directors of the Company and such nominees shall,
               if requested by the Board, resign from the Board.

          ii.  Nominating Committee of the Board. Subject to the rights of Molex
               and the Stockholders to designate individuals to serve as
               directors, the identity of directors to stand for election to the
               Board at each annual meeting of stockholders following the
               Closing and until the Standstill Termination Date or to fill a
               vacancy on the Board, as the case may be, shall be determined by
               the actions of a nominating committee of the Board. The
               nominating committee shall have three members and, for purposes
               of the first annual meeting of the Company's stockholders held
               after Closing, shall be initially comprised of one director whose
               name appears on Exhibit 1 hereto, one director whose name appears
               on Exhibit 2 hereto and the Molex Director.

     c.   Voting. Until the Applicable Number is zero:

                                       7

<PAGE>   8

          i.   the Company shall not enter into any Stockholder Interested
               Transaction unless such Stockholder Interested Transaction has
               been approved by the affirmative vote of a majority of the
               members of the Board other than any director or directors who is
               or are employed by or a partner or a member of the Stockholder or
               Affiliate or Associate of the Stockholder who is a party to such
               Stockholder Interested Transaction, in addition to any other
               approvals required by applicable law or the Company's articles of
               incorporation or by-laws.

          ii.  each Stockholder agrees that such Stockholder shall not, and
               shall not take any action which would cause the Company or its
               Board to, enter into or participate in any Stockholder Interested
               Transaction which has not been so approved.

3.   REPRESENTATIONS AND WARRANTIES.

     a. Representations and Warranties of the Company. The Company represents
and warrants to the Stockholders that:

          i.   the Company is a corporation duly incorporated, validly existing
               and in good standing under the laws of the state of Minnesota and
               has the corporate power and authority to enter into this
               Agreement and to carry out its obligations hereunder;

          ii.  the execution and delivery of this Agreement by the Company and
               the consummation by the Company of the transactions contemplated
               hereby have been duly authorized by all necessary corporate
               action on the part of the Company and no other corporate
               proceedings on the part of the Company are necessary to authorize
               this Agreement or any of the transactions contemplated hereby;
               and

          iii. this Agreement has been duly executed and delivered by the
               Company and constitutes a valid and binding obligation of the
               Company, and, assuming this Agreement constitutes a valid and
               binding obligation of the Stockholders, is enforceable against
               the Company in accordance with its terms.

     b.   Representations and Warranties of the Stockholders. Each of the
          Stockholders represents and warrants to the Company that:

                                       8

<PAGE>   9

          i.   it is an individual and has the power and authority to enter into
               this Agreement and to carry out its obligations hereunder, or it
               is an entity and is duly organized, validly existing and in good
               standing under the laws of the state of its organization and
               incorporation, and has the corporate power and authority to enter
               into this Agreement and to carry out its obligations hereunder;

          ii.  the execution and delivery of this Agreement by such Stockholder
               and the consummation by such Stockholder of the transactions
               contemplated hereby have been duly authorized by all necessary
               action on the part of such Stockholder and no other proceedings
               on the part of such Stockholder are necessary to authorize this
               Agreement or any of the transactions contemplated hereby; and

          iii. this Agreement has been duly executed and delivered by such
               Stockholder and constitutes a valid and binding obligation of
               such Stockholder, and, assuming this Agreement constitutes a
               valid and binding obligation of the Company, is enforceable
               against such Stockholder in accordance with its terms.

4.   NEGATIVE COVENANTS. So long as Morgenthaler, Ampersand, Ampersand Companion
and Sound Beach and all Affiliates, Associates, partners and members thereof
hold, in aggregate, at least 15% of the Common Stock Equivalents acquired on the
Closing Date by Morgenthaler, Ampersand, Ampersand Companion and Sound Beach
pursuant to the Merger Agreement, the Stock Purchase Agreement and the
Subordinated Notes and Warrant Purchase Agreement, the Company shall not and
shall cause its Subsidiaries not to, without the consent of whichever of
Morgenthaler, Ampersand and Ampersand Companion (the two Ampersand entities
being considered for this purpose as a single entity), and any Affiliates,
Associates, partners or members thereof, respectively, holds more than 15% of
the number of Common Stock Equivalents acquired by it, on the Closing Date,
pursuant to the Merger Agreement, Stock Purchase Agreement and Subordinated
Notes and Warrant Purchase Agreement:

     a.   authorize any reclassification of the Common Stock, any merger,
          consolidation, recapitalization or reorganization of the Company or
          approve or effect any plan of liquidation or dissolution whether
          statutory or otherwise;

                                       9

<PAGE>   10

     b.   authorize, agree to or consummate any sale, lease, exchange or
          disposition of all or substantially all of the property or assets of
          the Company or the effectuation by the Company of a transaction or
          series of related transactions in which more that 50% of the voting
          power of the Company is disposed of;

     c.   increase the number of directors constituting the Board or, after such
          time as the Company's shareholders take such action as is required to
          reduce the size of the Board from nine to seven, set the number of
          directors constituting the Board at a number other than seven;

     d.   repurchase or redeem any equity securities or retire any other equity
          capital of the Company or of any of its direct of indirect
          Subsidiaries (except for the repurchases of Common Stock under
          restricted stock agreements between employees and the Company
          previously approved by the Board); or

     e.   enter into any agreement with respect to the foregoing.

5.   DEFINITIONS. For purposes of this Agreement, the following terms shall have
the following meanings:

     a.   "Affiliate" or "Associate" shall mean an affiliate or associate of a
          person, as such terms are defined in Section 302A.011, subdivisions 43
          and 45, respectively, of the Minnesota Business Corporation Act.

     b.   "Agreement" shall have the meaning set forth in the preamble to this
          Agreement.

     c.   "Ampersand" shall mean Ampersand IV Limited Partnership, a Delaware
          limited partnership.

     d.   "Ampersand Companion" shall mean Ampersand IV Companion Fund Limited
          Partnership, a Delaware limited partnership.

     e.   "Applicable Number" shall mean the following:

          i.   three, so long as Morgenthaler, Ampersand, Ampersand Companion
               and Sound Beach and any Affiliate, Associate, partner or member
               thereof own, in aggregate, at least 69% of the Common Stock
               Equivalents acquired by them on the Closing Date pursuant

                                       10

<PAGE>   11

               to the Merger Agreement, Stock Purchase Agreement and
               Subordinated Notes and Warrant Purchase Agreement.

          ii.  two, so long as Morgenthaler, Ampersand, Ampersand Companion and
               Sound Beach and any Affiliate, Associate, partner or member
               thereof own, in aggregate, at least 50% but less than 69% of the
               Common Stock Equivalents acquired by them on the Closing Date
               pursuant to the Merger Agreement, Stock Purchase Agreement and
               Subordinated Notes and Warrant Purchase Agreement.

          iii. one, so long as Morgenthaler, Ampersand, Ampersand Companion and
               Sound Beach and any Affiliate, Associate, partner or member
               thereof own, in aggregate, at least 15% but less than 50% of the
               Common Stock Equivalents acquired by them on the Closing Date
               pursuant to the Merger Agreement, Stock Purchase Agreement and
               Subordinated Notes and Warrant Purchase Agreement.

          iv.  zero, so long as Morgenthaler, Ampersand, Ampersand Companion and
               Sound Beach and any Affiliate, Associate, partner or member
               thereof own, in aggregate, less than 15% of the Common Stock
               Equivalents acquired by them on the Closing Date pursuant to the
               Merger Agreement, Stock Purchase Agreement and Subordinated Notes
               and Warrant Purchase Agreement.

     f.   "Beneficially Own" or "Beneficial Ownership" with respect to any
          securities shall mean having "beneficial ownership" of such securities
          (as determined pursuant to Rule 13d-3 under the Exchange Act),
          including pursuant to any agreement, arrangement or understanding,
          whether or not in writing; but shall not include any securities that
          would otherwise be Beneficially Owned pursuant to this definition
          solely by virtue of the existence of this Agreement and/or any voting
          agreement solely among the Stockholders with respect to the election
          of directors of the Company.

     g.   "Board" shall mean the board of directors of the Company.

     h.   "Business Combination Proposal" shall mean:

          i.   any bona fide business combination proposal however communicated,
               including without limitation a "bear hug" letter or other similar
               communication directed to the Board or any member of the Board,
               any merger proposal involving the Company or any

                                       11

<PAGE>   12

               Subsidiary, any purchase of all or a material portion of the
               assets of the Company or any Subsidiary, or any tender or
               exchange offer directed to security holders of the Company, and

          ii.  any proposal to purchase more than 25% of the Total Voting Power;

          but shall not include any proposal that intentionally has been
          induced, in whole or in part and directly or indirectly, by one or
          more Stockholders in order to cause the termination of the
          restrictions set forth in section 1(a)(i) hereof.

     i.   "Closing" shall mean the closing of the transactions contemplated by
          the Merger Agreement.

     j.   "Closing Date" shall mean the Closing Date as defined in the Merger
          Agreement.

     k.   "Commission" shall mean the Securities and Exchange Commission.

     l.   "Common Stock" shall mean the Common Stock, par value $0.25 per share,
          of the Company.

     m.   "Common Stock Equivalent" shall mean the following:

          i.   with respect to shares of Common Stock, each share of Common
               Stock shall be one Common Stock Equivalent.

          ii.  with respect to Series G Preferred Stock, each share of Series G
               Preferred Stock shall be a number of Common Stock Equivalents
               equal to the number of shares of Common Stock issuable on
               conversion of such share of Series G Preferred Stock as of the
               date of determination.

          iii. with respect to Warrants, each Warrant shall be a number of
               Common Stock Equivalents equal to the number of shares of Common
               Stock issuable on exercise of such Warrant as of the date of
               determination.

     n.   "Company" shall have the meaning set forth in the preamble of this
          Agreement.

                                       12

<PAGE>   13

     o.   "Exchange Act" shall mean the Securities Exchange Act of 1934, as
          amended.

     p.   "IFH" shall mean International Flex Holdings, Inc., a Delaware
          corporation.

     q.   "Merger Agreement" shall mean the agreement and plan of merger, dated
          as of November 10, 2000, as amended, supplemented or modified from
          time to time, among the Company, IFT West Acquisition Company, a
          wholly owned Subsidiary of the Company, IFH and all of the
          stockholders of IFH.

     r.   "Merger" shall mean the merger effected pursuant to the Merger
          Agreement.

     s.   "Molex" shall mean Molex Incorporated, a Delaware corporation.

     t.   "Molex Director" shall mean the individual nominated by Molex under
          the terms of the Agreement Relating to Sheldahl, dated as of November
          18, 1998, between the Company and Molex, as amended as of November 10,
          2000.

     u.   "Morgenthaler" shall mean Morgenthaler Venture Partners V, L.P., a
          Delaware limited partnership.

     v.   "Number of Permitted Shares" applicable to any Stockholder shall mean
          the number of shares of Common Stock, shares of Series G Preferred
          Stock and/or Warrants (i) received by such Stockholder pursuant to the
          Merger Agreement, the Stock Purchase Agreement or the Subordinated
          Notes and Warrant Purchase Agreement, (ii) issuable upon conversion of
          the shares of Series G Preferred Stock acquired by such Stockholder on
          the Closing Date, (iii) issuable on exercise of the Warrants acquired
          by such Stockholder on the Closing Date and (iv) received as dividends
          on the Series G Preferred Stock held by such Stockholder, in all cases
          as adjusted for stock splits, dividends, recapitalization and the like
          and any other events requiring adjustment under the anti-dilution
          provisions of applicable governing instruments.

     w.   "Person" shall mean any individual, partnership, joint venture,
          corporation, trust, unincorporated organization, government or
          department or agency of a government.

                                       13

<PAGE>   14

     x.   "Rights Agreement" shall have the meaning set forth in the recitals of
          this Agreement.

     y.   "Securities" shall mean at any time shares of any class of capital
          stock of the Company, including, without limitation, securities
          convertible into such shares.

     z.   "Series G Preferred Stock" shall mean the shares of Series G Preferred
          Stock, par value $1.00 per share, of the Company.

     aa.  "Shares" shall have the meaning set forth in the recitals of this
          Agreement.

     bb.  "Sound Beach" shall mean Sound Beach Technology Partners, LLC, a
          Delaware limited liability company.

     cc.  "Standstill Termination Date" shall mean the third anniversary of the
          Closing.

     dd.  "Stockholders" shall have the meaning set forth in the preamble of
          this Agreement.

     ee.  "Stockholder Interested Transaction" shall mean:

          i.   any transaction between the Company or any of its Subsidiaries
               and any Stockholder or any Affiliates or Associates of a
               Stockholder, or

          ii.  any amendment, modification, consent or waiver to, of or under,
               or the enforcement of the terms of this Agreement, the Stock
               Purchase Agreement, the Subordinated Notes and Warrant Purchase
               Agreement or the Merger Agreement, other than any amendment or
               modification to the Merger Agreement to affect adjustments to the
               conversion ratios set forth therein.

     ff.  "Stock Purchase Agreement" shall mean the stock purchase agreement,
          dated as of November 10, 2000, as amended, supplemented or modified
          from time to time, among the Company and certain Stockholders.

     gg.  "Subordinated Notes and Warrant Purchase Agreement" shall mean the
          Subordinated Notes and Warrant Purchase Agreement, dated as of

                                       14

<PAGE>   15

          November 10, 2000, as amended, supplemented or modified from time to
          time, among the Company, certain Stockholders and Molex.

     hh.  "Subsidiary" shall mean, as to any Person, any corporation at least a
          majority of the shares of stock of which having general voting power
          under ordinary circumstances to elect a majority of the Board of such
          corporation (irrespective of whether or not at the time stock of any
          other class or classes shall have or might have voting power by reason
          of the happening of any contingency) is, at the time as of which the
          determination is being made, owned by such Person, or one or more of
          its Subsidiaries or by such Person and one or more of its
          Subsidiaries.

     ii.  "Total Voting Power" at any time shall mean the total combined voting
          power in the general election of directors of all the Voting
          Securities then outstanding.

     jj.  "Transfer" shall mean any sale, transfer, pledge, encumbrance or other
          disposition, and to "Transfer" shall mean to sell, transfer, pledge,
          encumber or otherwise dispose of.

     kk.  "Voting Securities" shall mean at any time any Securities (other than
          the shares of Series G Preferred Stock) which are entitled to vote
          generally in the election of directors of the Company.

     ll.  "Warrants" shall mean the warrants issued to certain Stockholders
          under the Subordinated Notes and Warrant Purchase Agreement.

6.   MISCELLANEOUS.

     a. Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including telecopy) and shall be given, if to the
Company, to:

                                       15

<PAGE>   16

              If to the Company:        Sheldahl, Inc.
                                        1150 Sheldahl Road
                                        Northfield, MN 55057-9444
                                        Attn:    Edward L. Lundstrom, President
                                        Fax:     (507) 663-8326 or
                                                 (507) 663-8435

              With copies to:           Lindquist & Vennum P.L.L.P.
                                        4200 IDS Center
                                        80 South Eighth Street
                                        Minneapolis MN 55402
                                        Attn:    Charles P. Moorse, Esq.
                                        Fax:     (612) 371-3207

               or such address or telecopy number as such party may hereafter
               specify for the purpose by notice to the other parties hereto.
               Each such notice, request or other communication shall be
               effective when delivered personally, telegraphed or telecopied,
               or, if mailed, five business days after the date of the mailing.

     b.   Amendments; No Waivers.

          i.   Any provision of this Agreement may be amended or waived if, and
               only if, such amendment or waiver is in writing and signed, in
               the case of an amendment, by the Stockholders and the Company, or
               in the case of a waiver, by the party against whom the waiver is
               to be effective.

          ii.  No failure or delay by any party in exercising any right, power
               or privilege hereunder shall operate as a waiver thereof nor
               shall any single or partial exercise thereof preclude any other
               or further exercise thereof or the exercise of any other right,
               power or privilege. The rights and remedies herein provided shall
               be cumulative and not exclusive of any rights or remedies
               provided by law.

     c.   Successors and Assigns. The provisions of this Agreement shall be
          binding upon and inure to the benefit of the parties hereto and their
          respective successors and permitted assigns; provided, however, that
          no party may assign this Agreement without the other party's prior
          written

                                       16

<PAGE>   17

          consent; and provided further that the rights of the Stockholders
          under sections 2 and 4 hereof shall not be assignable other than to
          Affiliates and Associates of the assigning Person.

     d.   Governing Law. This Agreement shall he construed in accordance with
          and governed by the internal laws of the State of Minnesota.

     e.   Counterparts; Effectiveness. This Agreement may be signed in any
          number of counterparts, each of which shall be an original, with the
          same effect as if the signatures thereto and hereto were upon the same
          instrument. This Agreement shall become effective when each party
          hereto shall have received counterparts thereof signed by the other
          party hereto.

     f.   Specific Performance. The Company and the Stockholders each
          acknowledge and agree that the parties' respective remedies at law for
          a breach or threatened breach of any of the provisions of this
          Agreement would be inadequate and, in recognition of that fact, agrees
          that, in the event of a breach or threatened breach by the Company or
          the Stockholders of the provisions of this Agreement, in addition to
          any remedies at law, the Stockholders and the Company, respectively,
          without posting any bond shall be entitled to obtain equitable relief
          in the form of specific performance, a temporary restraining order, a
          temporary or permanent injunction or any other equitable remedy which
          may then be available.

     g.   Severability. If any term, provision, covenant or restriction of this
          Agreement is held by a court of competent jurisdiction to be invalid,
          void or unenforceable, the remainder of the terms, provisions,
          covenants and restrictions of this Agreement shall remain in full
          force and effect and shall in no way be affected, impaired or
          invalidated, provided that the parties hereto shall negotiate in good
          faith to attempt to place the parties in the same position as they
          would have been in had such provision not been held to be invalid,
          void or unenforceable.

     h.   Termination. This Agreement shall terminate on the later of:

          i. the first date as of which the Applicable Number is zero, and

          ii. the Standstill Termination Date.

                                       17

<PAGE>   18

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.

                                            SHELDAHL, INC.

                                            By: /s/ Edward L. Lundstrom
                                               ---------------------------------
                                                Name: Edward L. Lundstrom
                                                Title: President

                                           STOCKHOLDERS:

                                           MORGENTHALER VENTURE PARTNERS V, L.P.

                                            By: /s/ John D. Lutsi
                                               ---------------------------------
                                                Name: John D. Lutsi
                                                Title: General Partner

                                            AMPERSAND IV LIMITED PARTNERSHIP

                                            By:  AMP-IV MANAGEMENT COMPANY
                                                 LIMITED LIABILITY COMPANY,
                                                 its General Partner

                                            By: /s/ Richard A. Charpie
                                               ---------------------------------
                                                Name: Richard A. Charpie
                                                Title: Principal Managing Member

                                            AMPERSAND IV COMPANION FUND LIMITED
                                            PARTNERSHIP

                                            By: AMP-IV MANAGEMENT COMPANY
                                                LIMITED LIABILITY COMPANY, its
                                                General Partner

                                            By: /s/ Richard A. Charpie
                                               ---------------------------------
                                                Name: Richard A. Charpie
                                                Title: Principal Managing Member

                                       18

<PAGE>   19

                                            SOUND BEACH TECHNOLOGY PARTNERS, LLC

                                            By:  /s/ Donald R. Friedman
                                                --------------------------------
                                                Name: Donald R. Friedman
                                                Title: General Partner

                                       19

<PAGE>   20

                                                                       EXHIBIT 1

         NAMES OF INDIVIDUALS DESIGNATED BY THE HOLDERS OF THE SERIES G
        PREFERRED STOCK TO BE ELECTED TO THE COMPANY'S BOARD OF DIRECTORS

Stuart A. Auerbach
Donald R. Friedman
John D. Lutsi

                                       20

<PAGE>   21

                                                                       EXHIBIT 2

 NAMES OF INDIVIDUALS WHO HAVE SERVED ON THE COMPANY'S BOARD OF DIRECTORS PRIOR
   TO THE EFFECTIVE DATE OF THE MERGER AND WHO ARE TO CONTINUE TO SERVE ON THE
     COMPANY'S BOARD OF DIRECTORS FOLLOWING THE EFFECTIVE DATE OF THE MERGER

Kenneth J. Roering
William B. Miller
John G. Kassakian

                                       21<PAGE>   1

                                                                    EXHIBIT 4.14

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.

                                     WARRANT

                               FOR COMMON STOCK OF

                                 SHELDAHL, INC.

WARRANT NO.   5

                  THIS CERTIFIES that, for value received, U.S. Bancorp Piper
Jaffray, or its permitted assigns (collectively, the "Holder"), is entitled to
purchase from Sheldahl, Inc., a Minnesota corporation (the "Company"), at any
time, and from time to time, during the exercise period referred to in Section 1
hereof 175,000 fully paid, validly issued and nonassessable shares (the "Warrant
Shares") of common stock of the Company, par value $0.25 (the "Common Stock"),
at the exercise price of $2.770559 per share (the "Warrant Price"). Securities
issuable upon exercise of this Warrant and the exercise price payable therefor
are subject to adjustment from time to time as hereinafter set forth. As used
herein, the term "Warrant" shall include any warrant or warrants hereafter
issued in consequence of the exercise of this Warrant in part or transfer of
this Warrant in whole or in part. This Warrant is being issued pursuant to that
certain Engagement Letter, dated as of November 22, 1999, as amended on October
20, 2000, between the Company, and U.S. Bancorp Piper Jaffray (the "Engagement
Letter").

1.   Exercise; Payment for Ownership Interest.

     (a) Upon the terms and subject to the conditions set forth herein, this
Warrant may be exercised in whole or in part by the Holder hereof at any time,
or from time to time, on or after the Closing (as defined in the Purchase
Agreement) and prior to 5 p.m. Minneapolis time on the seventh anniversary of
the date of the Closing, by presentation and surrender of this Warrant to the
principal offices of the Company, or at the office of its Transfer Agent (as
hereinafter defined), if any, together with the Purchase Form annexed hereto,
duly executed, and accompanied by payment to the Company of an

                                       1

<PAGE>   2

amount equal to the Warrant Price multiplied by the number of Warrant Shares as
to which this Warrant is then being exercised. The Holder of this Warrant shall
be deemed to be a shareholder of the Warrant Shares as to which this Warrant is
exercised in accordance herewith effective immediately after the close of
business on the date on which the Holder shall have delivered to the Company
this Warrant in proper form for exercise and payment of the Warrant Price for
the number of Warrant Shares as to which the exercise is being made,
notwithstanding that the stock transfer books of the Company shall be then
closed or that certificates representing such Warrant Shares shall not then be
physically delivered to the Holder.

     (b) All or any portion of the Warrant Price may be paid by surrendering
Warrants effected by presentation and surrender of this Warrant to the Company,
or at the office of its Transfer Agent, if any, with a Cashless Exercise Form
annexed hereto duly executed (a "Cashless Exercise"). Such presentation and
surrender shall be deemed a waiver by the Company of the Holder's obligation to
pay all or any portion of the aggregate Warrant Price. Except as provided in
Section 3(b) below, in the event of a Cashless Exercise, the Holder shall
exchange its Warrant for that number of shares of Common Stock determined by
multiplying the number of Warrant Shares for which the Holder desires to
exercise this Warrant by a fraction, the numerator of which shall be the
difference between the then current market price per share of the Common Stock
and the Warrant Price, and the denominator of which shall be the then current
market price per share of Common Stock. For purposes of any computation under
this Section 1(b), the then current market price per share of Common Stock at
any date shall be deemed to be the average for the ten consecutive business days
immediately prior to the Cashless Exercise of the daily closing prices of the
Common Stock on the principal national securities exchange on which the Common
Stock is admitted to trading or listed, or if not listed or admitted to trading
on any such exchange, the closing prices as reported by the Nasdaq National
Market or, if applicable, the Nasdaq SmallCap Market, or if not then included
for quotation on the Nasdaq National Market or the Nasdaq SmallCap Market, the
average of the highest reported bid and lowest reported asked prices as reported
by the OTC Bulletin Board or the National Quotations Bureau, as the case may be,
or if not then publicly traded, the fair market price, not less than book value
thereof, of the Common Stock as determined in good faith by the independent
members of the Board of Directors of the Company.

     (c) If this Warrant shall be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the rights of the Holder thereof to purchase the balance of
the Warrant Shares purchasable hereunder as to which the Warrant has not been
exercised. If this Warrant is exercised in part, such exercise shall be for a
whole number of Warrant Shares. Upon any exercise and surrender of this Warrant,
the Company (i) will issue and deliver to the Holder a certificate or
certificates in the name of the Holder for the largest whole number of Warrant
Shares to which the Holder shall be entitled and, if this Warrant is exercised
in whole, in lieu of any fractional Warrant Share to which the Holder otherwise
might be entitled, cash in an amount equal to the fair value of such

                                       2

<PAGE>   3

fractional Warrant Share (determined in such reasonable and equitable manner as
the Board of Directors of the Company shall in good faith determine), and (ii)
will deliver to the Holder such other securities, properties and cash which the
Holder may be entitled to receive upon such exercise, or the proportionate part
thereof if this Warrant is exercised in part, pursuant to the provisions of this
Warrant.

2.   Anti-Dilution Provisions. The Warrant Price in effect at any time and the
number and kind of securities issuable upon exercise of this Warrant shall be
subject to adjustment from time to time upon happening of certain events as
follows:

     2.1 Reorganization, Reclassification, Consolidation, Merger or Sale. If any
capital reorganization, reclassification or any other change of capital stock of
the Company, or any consolidation or merger of the Company with another person,
or the sale or transfer of all or substantially all of its assets to another
person shall be effected in such a way that holders of shares of Common Stock
shall be entitled to receive stock, securities or assets with respect to or in
exchange for their shares of Common Stock, then provision shall be made by the
Company, in accordance with this Section 2.1, whereby the Holder hereof shall
thereafter have the right to purchase and receive, upon the basis and upon the
terms and conditions specified in this Warrant and in addition to or in exchange
for, as applicable, the Warrant Shares subject to this Warrant immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, such securities or assets as would have been issued or
payable with respect to or in exchange for the aggregate Warrant Shares
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby if exercise of the Warrant had occurred immediately
prior to such reorganization, reclassification, consolidation, merger or sale.
The Company will not effect any such consolidation, merger, sale, transfer or
lease unless prior to the consummation thereof the successor entity (if other
than the Company) resulting from such consolidation or merger or the entity
purchasing such assets shall assume by written instrument (i) the obligation to
deliver to the Holder such securities or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to purchase, and (ii) all other
obligations of the Company under this Warrant; provided, however, that the
failure to comply with the foregoing shall not affect the validity or legality
of such consolidation, merger, sale, transfer or lease. The provisions of this
Section 2.1 shall similarly apply to successive consolidations, mergers,
exchanges, sales, transfers or leases. In the event that in connection with any
such capital reorganization or reclassification, consolidation, merger, sale or
transfer, additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for a security of the
Company other than Common Stock, any such issue shall be treated as an issue of
Common Stock covered by the provisions of Section 2.2 hereof.

     2.2 Stock Dividends and Securities Distributions. If, at any time or from
time to time after the date of this Warrant, the Company shall distribute to the
holders of shares of Common Stock (i) securities (including rights, warrants,
options or another form of convertible securities), (ii) property, other than
cash, or (iii) cash, without fair payment

                                       3

<PAGE>   4

therefor, then, and in each such case, the Holder, upon the exercise of this
Warrant, shall be entitled to receive such securities, property and cash which
the Holder would hold on the date of such exercise if, on the date of the
distribution, the Holder had been the holder of record of the shares of Common
Stock issued upon such exercise and, during the period from the date of this
Warrant to and including the date of such exercise, had retained such shares of
Common Stock and the securities, property and cash receivable by the Holder
during such period, subject, however, to the Holder agreeing to any conditions
to such distribution as were required of all other holders of shares of Common
Stock in connection with such distribution.

     2.3 Other Adjustments. In addition to those adjustments set forth in
Sections 2.1 and 2.2, but without duplication of the adjustments to be made
under such Sections, if the Company:

          (i) declares or pays a dividend or makes a distribution on its Common
     Stock in shares of its Common Stock;

          (ii) subdivides or reclassifies its outstanding shares of Common Stock
     into a greater number of shares;

          (iii) combines or reclassifies its outstanding shares of Common Stock
     into a smaller number of shares;

          (iv) makes a distribution on its Common Stock in shares of its capital
     stock other than Common Stock; and/or

          (v) issues, by reclassification of its Common Stock, any shares of its
     capital stock;

then the number and kind of Warrant Shares purchasable upon exercise of this
Warrant shall be adjusted so that the Holder upon exercise hereof shall be
entitled to receive the kind and number of Warrant Shares or other securities of
the Company that the Holder would have owned or have been entitled to receive
after the happening of any of the events described above had this Warrant been
exercised immediately prior to the happening of such event or any record date
with respect thereto. An adjustment made pursuant to this Section 2.3 shall
become effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or issuance. If, as a result of an
adjustment made pursuant to this Section 2.3, the Holder of this Warrant
thereafter surrendered for exercise shall become entitled to receive shares of
two or more classes of capital stock or shares of Common Stock and any other
class of capital stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be described in a written notice to
all holders of Warrants promptly after such adjustment) shall determine the
allocation of the adjusted Warrant Price between or among shares of such classes
of capital stock or shares of Common Stock and such other class of capital
stock.

                                       4

<PAGE>   5

     The adjustment to the number of Warrant Shares purchasable upon the
exercise of this Warrant described in this Section 2.3 shall be made each time
any event listed in paragraphs (i) through (v) of this Section 2.3 occurs.

     Simultaneously with all adjustments to the number and/or kind of
securities, property and cash under this Section 2.3 to be issued in connection
with the exercise of this Warrant, the Warrant Price will also be appropriately
and proportionately adjusted.

     In the event that at any time, as a result of an adjustment made pursuant
to this Section 2.3, the Holder of this Warrant thereafter shall become entitled
to receive any shares of the Company, other than Common Stock, thereafter the
number of such other shares so receivable upon exercise of this Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in Sections 2.1 and 2.2 above.

     2.4 Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Warrant Price pursuant to this Section 2, the Company at its
expense will promptly compute such adjustment or readjustment in accordance with
the terms of this Warrant and prepare a certificate setting forth such
adjustment or readjustment, including a statement of the adjusted Warrant Price
or adjusted number of Warrant Shares, if any, issuable upon exercise of each
Warrant, describing the transaction giving rise to such adjustments and showing
in detail the facts upon which such adjustment or readjustment is based. The
Company will forthwith mail, by first class mail, postage prepaid, a copy of
each such certificate to the Holder of this Warrant at the address of such
Holder as shown on the books of the Company, and to its Transfer Agent.

     2.5 Other Notices. If at any time:

     (a) the Company shall (i) offer for subscription pro rata to the holders of
shares of the Common Stock any additional equity in the Company or other rights;
(ii) pay a dividend in additional shares of the Common Stock or distribute
securities or other property to the holders of shares of the Common Stock
(including, without limitation, evidences of indebtedness and equity and debt
securities) (other than dividends payable in the form of the Company's Common
Stock to holders of the Company's Series D, E, F and G Convertible Preferred
Stock or other series of preferred stock); or (iii) issue securities convertible
into, or rights or warrants to purchase, securities of the Company;

     (b) there shall be any capital reorganization or reclassification or
consolidation or merger of the Company with, or sale, transfer or lease of all
or substantially all of its assets to, another entity; or

     (c) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;

                                       5

<PAGE>   6

then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, to the Holder of this Warrant at the address of such
Holder as shown on the books of the Company, (a) at least 15 days' prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for such subscription rights, dividend, distribution or issuance,
and (b) in the case of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, at least 15 days' prior
written notice of the date when the same shall take place if no stockholder vote
is required and at least 15 days' prior written notice of the record date for
stockholders entitled to vote upon such matter if a stockholder vote is
required. Such notice in accordance with the foregoing clause (a) shall also
specify, in the case of any such subscription rights, the date on which the
holders of shares of Common Stock shall be entitled to exercise their rights
with respect thereto, and such notice in accordance with the foregoing clause
(b) shall also specify the date on which the holders of shares of Common Stock
shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, as the case
may be. Failure to give the notice referred to herein shall not affect the
validity or legality of the action which should have been the subject of the
notice.

     2.6 No adjustment in the Warrant Price shall be required unless such
adjustment would require an increase or decrease of at least one cent ($0.01) in
such price; provided, however, that any adjustments which by reason of this
Section 2.6 are not required to be made shall be carried forward and taken into
account in any subsequent adjustment required to be made hereunder. All
calculations under this Section 2 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.

3.   No Voting Rights. This Warrant shall not be deemed to confer upon the
Holder any right to vote or to consent to or receive notice as a stockholder of
the Company, as such, in respect of any matters whatsoever, or any other rights
or liabilities as a stockholder, prior to the exercise hereof.

4.   Warrants Transferable. This Warrant and all rights hereunder are
transferable, in whole or in part, at the principal offices of the Company by
the Holder hereof, upon surrender of this Warrant properly endorsed; provided,
that this Warrant and all rights hereunder may be transferred only (i) to
affiliates, officers or empoyees of the Holder, (ii) in a transaction exempt
from registration under the 1933 Act, provided that the Company receives an
opinion of counsel that such transfer may be effected without registration under
the 1933 Act; or (iii) pursuant to the registration of this Warrant or the
Warrant Shares under the 1933 Act or subsequent to one year from the date hereof
pursuant to an available exemption from such registration. It shall be a
condition to transfer of this Warrant that the transferee agrees to be bound by
the restrictions on transfer contained in this Section 4.

5.   Warrants Exchangeable; Assignment; Loss, Theft, Destruction, Etc. This
Warrant is

                                       6

<PAGE>   7

exchangeable, without expense, upon surrender hereof by the Holder hereof at the
principal offices of the Company, or at the office of its Transfer Agent, if
any, for new Warrants of like tenor representing in the aggregate the right to
subscribe for and purchase the Warrant Shares which may be subscribed for and
purchased hereunder, each such new Warrant to represent the right to subscribe
for and purchase such Warrant Shares as shall be designated by such Holder
hereof at the time of such surrender. Upon surrender of this Warrant to the
Company at its principal office, or at the office of its Transfer Agent, if any,
with an instrument of assignment duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant in the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be cancelled. This Warrant may be divided or
combined with other warrants which carry the same rights upon presentation
hereof at the principal office of the Company, or at the office of its Transfer
Agent, if any, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the Holder
hereof. The term "Warrant" as used herein includes any Warrants into which this
Warrant may be divided or exchanged. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of any such loss, theft or destruction, upon delivery of a bond or
indemnity satisfactory to the Company, or, in the case of any such mutilation,
upon surrender or cancellation of this Warrant, the Company will issue to the
Holder hereof a new Warrant of like tenor, in lieu of this Warrant, representing
the right to subscribe for and purchase the Warrant Shares which may be
subscribed for and purchased hereunder. Any such new Warrant executed and
delivered shall constitute an additional contractual obligation of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.

6.   Legend. Any certificate evidencing the securities issued upon exercise of
this Warrant shall bear a legend in substantially the following form:

                  THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
         AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
         RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
         BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
         STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
         EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
         REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
         STATE SECURITIES LAWS.

                  THE CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST
         AND WITHOUT CHARGE, A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES,
         LIMITATIONS AND RELATIVE RIGHTS OF THE SHARES OF EACH CLASS OR SERIES
         OF CAPITAL STOCK

                                       7

<PAGE>   8

         AUTHORIZED TO BE ISSUED, SO FAR AS THEY HAVE BEEN DETERMINED, AND
         THE AUTHORITY OF THE BOARD TO DETERMINE THE RELATIVE RIGHTS AND
         PREFERENCES OF THE SUBSEQUENT CLASSES OR SERIES.

                  THE SHARES OF COMMON STOCK OF SHELDAHL, INC. INTO WHICH THE
         SECURITIES REPRESENTED BY THIS CERTIFICATE ARE CONVERTIBLE ENTITLE THE
         HOLDER THEREOF TO CERTAIN RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT
         BETWEEN SHELDAHL, INC. AND WELLS FARGO BANK, N.A., DATED AS OF JUNE 16,
         1996 AND AMENDED ON JULY 25, 1998 AND NOVEMBER 10, 2000 (THE "RIGHTS
         AGREEMENT"), A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF
         SHELDAHL, INC. UNDER CERTAIN CIRCUMSTANCES, SUCH RIGHTS ISSUED TO OR
         HELD BY AN ACQUIRING PERSON, OR AFFILIATE OR ASSOCIATE THEREOF (AS
         DEFINED IN THE RIGHTS AGREEMENT), AND ANY SUBSEQUENT HOLDER OF SUCH
         RIGHTS, MAY BECOME NULL AND VOID.

7.   Modifications and Waivers. The terms of the Warrants may be amended,
modified or waived only by the written agreement of the Company and the Holder.

8.   Miscellaneous. The Company shall pay all expenses and other charges payable
in connection with the preparation, issuance and delivery of this Warrant and
all substitute Warrants. The Holder shall pay all taxes (other than any issuance
taxes, including, without limitation, documentary stamp taxes, transfer taxes
and other governmental charges, which shall be paid by the Company) in
connection with such issuance and delivery of this Warrant and the Warrant
Shares.

     The Company shall maintain, at the office or agency of the Company
maintained by the Company, books for the registration and transfer of the
Warrant.

9.   Reservation of Warrant Shares. Subject to an affirmative vote of the
holders of a majority of the outstanding shares of Common Stock of the Company
to amend the Company's Amended and Restated Articles of Incorporation to
increase the authorized shares of Common Stock in sufficient amount to cover
such reservation, the Company will at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized but unissued
Common Stock or its authorized and issued Common Stock held in its treasury,
solely for the purpose of enabling it to satisfy any obligation to issue Warrant
Shares upon exercise of this Warrant, the maximum number of shares of Common
Stock which may then be deliverable upon the exercise of this Warrant.

     The Company or, if appointed, the Transfer Agent for the Common Stock (the
"Transfer Agent") and every subsequent transfer agent for any shares of the

                                       8

<PAGE>   9

Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Warrant on file with the Transfer Agent and
with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by this
Warrant. The Company will furnish such Transfer Agent a copy of all notices of
adjustments and certificates related thereto transmitted to the Holder pursuant
to Section 2.5 hereof.

     The Company covenants that all Warrant Shares which may be issued upon
exercise of this Warrant will, upon issue, assuming the availability of
sufficient authorized shares of Common Stock of the Company at the time of such
issuance, be fully paid, nonassessable, free of preemptive rights and free from
all taxes, liens, charges and security interests with respect to the issue
thereof.

10.   Descriptive Headings and Governing Law. The descriptive headings of the
several paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. This Warrant shall be construed and enforced
in accordance with the laws of the State of Minnesota, and the rights of the
parties shall be governed by, the law of such State.

     IN WITNESS WHEREOF, this Warrant has been executed as of the 28 day of
December, 2000.

                                            SHELDAHL, INC.

                                             By: /s/ Jill D. Burchill
                                                --------------------------------
                                                 Name: Jill D. Burchill
                                                 Title: Vice President and Chief
                                                        Financial Officer

                                       9

<PAGE>   10

                                  PURCHASE FORM

                                                          Dated:__________, ____

                  The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing _____ Warrant Shares and hereby makes
payment of $_____________ in payment of the exercise price thereof.

                                            ------------------------------------

                                       10

<PAGE>   11

                                CASHLESS EXERCISE

                                                          Dated:__________, ____

                  The undersigned irrevocably elects to exercise the within
Warrant for Warrant Shares and hereby makes payment pursuant to the Cashless
Exercise provision of the within Warrant, and directs that the payment of the
Warrant Price be made by cancellation as of the date of exercise of a portion of
the within Warrant in accordance with the terms and provisions of Section 1(b)
of the within Warrant.

                                            ------------------------------------

                                       11

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"}]]