Document:

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                                                                    EXHIBIT 4.3

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.

         THIS CERTIFIES that, for value received____________________, 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
_______________(_____) 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 $.01 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 Subordinated Notes and Warrant Purchase Agreement dated
as of August __, 2001 between the Company, and the Holder and other parties
named therein (the "Purchase Agreement").

         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)

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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 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.

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         (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 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,

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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 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;

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         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.

         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

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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;

         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.

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         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) 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 (ii) 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 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

<PAGE>   8

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 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

<PAGE>   9

         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. 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
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

<PAGE>   10

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 ___ day of
August, 2001.

                                       SHELDAHL, INC.

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:

<PAGE>   11

                                  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.

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

<PAGE>   12

                                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.

                                       -----------------------------------------<PAGE>   1

                                                                    EXHIBIT 4.4

                TENTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT

                  This Amendment, dated as of August 13, 2001, 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, a
Seventh Amendment to Credit and Security Agreement dated as of November 7, 2000,
an Eighth Amendment to Credit and Security Agreement and Waiver of Defaults
dated as of December 26, 2000, and a Ninth Amendment to Credit and Security
Agreement and Waiver of Defaults dated as of May 23, 2001 (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 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:

                  "`Tenth Amendment' means the Tenth Amendment to Credit and
         Security Agreement by and among the Borrower, the Lenders and the Agent
         dated as of August 13, 2001."

<PAGE>   2

                  "`Tenth Amendment Effective Date' means the date all
         conditions set forth in Paragraph 10 of the Tenth Amendment are
         satisfied."

                  2. Term Note Payments. Section 2.10 is amended by deleting and
replacing such section in its entirety 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. The Agent has obtained, 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") which has established that 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 the earlier of: (i) the occurrence of an Event of
         Default, (ii) the occurrence of a Materials Business Sale, (iii) the
         date of any refinancing of the Obligations by any lender other than the
         Lenders or (iv) August 31, 2001, 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.

                  3. Financial Covenants. Section 6.21 of the Credit Agreement
is amended to read as follows:

                  "Section 6.21 Minimum EBITDA. The Borrower will achieve during
         the period described below, EBITDA, of not less than the amount set
         forth opposite such period:

<TABLE>
<S>                                           <C>
April 1, 2001 through July 31, 2001           $(5,000,000)

April 1, 2001 through August 31, 2001         $(6,000,000)
</TABLE>

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

                  5. New Subordinated Debt. Section 7.2 of the Credit Agreement
is amended to add the following new subsection (b-2) immediately following
subsection (b-1):

                  "(b-2) indebtedness to be used for general corporate purposes
         and working capital only not exceeding an aggregate principal amount of
         $5,000,000 and subordinated to the Obligations pursuant to
         subordination agreements satisfactory to the Agent in its sole
         discretion, with the Borrower's obligation to pay such indebtedness
         being evidenced by instruments (which may be assigned) notifying any
         holder thereof of such subordination."

                                      -2-

<PAGE>   3

                  6. Events of Default. Subsection 8.1(w) of the Credit
Agreement is amended by replacing the final period with ";" and inserting the
following new subsections (x) and (y):

                  "(x) By August 31, 2001, the Agent, the Lenders and the
         Borrower shall fail to establish, for the period from September 1, 2001
         through December 31, 2001: (i) a new definition for Borrowing Base in
         Section 1.1 and (ii) new financial covenants in Article 6; or

                  (y) Notwithstanding the letter of July 12, 2001 from
         Morgenthaler and Ampersand, Morgenthaler indicates an unwillingness or
         inability to consummate a Materials Business Sale and the Borrower has
         not provided the Agent with a written offer proposing a Materials
         Business Sale from another bona fide purchaser."

                  7. 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.

                  8. Expressed Consent to New Subordinated Debt. Notwithstanding
any language in the Credit Agreement, including but not limited to Sections 7.2
and 7.9, the Agent and the Lenders hereby consent to the Borrower's incurring
indebtedness in the aggregate principal amount of $3,000,000, which indebtedness
shall be incurred on the Tenth Amendment Effective Date and which shall be owed
to Morgenthaler and Molex, and which indebtedness shall be fully subordinated to
the Obligations pursuant to a subordination agreement of even date herewith by
Morgenthaler and Molex for the benefit of the Agent on behalf of the Lenders.

                  9. Amendment Fee. In consideration of the Lenders' execution
of this Amendment, the Borrower shall pay the Agent a fully earned,
non-refundable fee in the amount of $75,000, which fee shall be immediately due
and payable.

                  10. Conditions Precedent. This Amendment shall be effective
when the following conditions have been met to the satisfaction of the Agent:

                  (a) the Agent shall have received an executed original hereof;

                  (b) the Agent shall have received, in form and content
         satisfactory to the Agent, a subordination agreement from Morgenthaler
         and Molex with respect to a $3,000,000 loan to the Borrower, including
         but not limited to a subordination and deferral of any fees to be
         charged by Morgenthaler and Molex.

                                      -3-

<PAGE>   4

                  11. 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.

                  12. 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.

                  13. No Other Waiver. 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.

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

                                      -4-

<PAGE>   5

                  15. 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 9.

                  16. Miscellaneous. This Amendment may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original and all of which counterparts, taken together, shall
constitute one and the same instrument.

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

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

By /s/ Perry T. Larson                        By /s/ Peter Duff
   -------------------------------               -------------------------------
   Perry T. Larson                               Peter Duff
   Its Vice President                            Its Vice President - Finance

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

By /s/ Perry T. Larson                        By /s/  Benjamin W. Boesch
   -------------------------------               -------------------------------
   Perry T. Larson                               Benjamin W. Boesch
   Its Vice President                            Its Assistant Vice President

                                      -5-

<PAGE>   6

                                                 Exhibit A to Tenth Amendment to
                                                   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>   7

         [ ]      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 EBITDA. Pursuant to Section 6.21 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 $(6,000,000).

                  2. 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:

<TABLE>
<CAPTION>
  Fiscal Quarter Ending on or about        Maximum Capital Expenditures
  ---------------------------------        ----------------------------
<S>                                        <C>
            March 31, 2001                             $5,000,000
            June 30, 2001                             $10,000,000
          September 30, 2001                          $16,000,000
          December 31, 2001                           $16,000,000
</TABLE>

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 Vice President - Finance

                                      -7-

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