Exhibit 10.27
ZAREBA SYSTEMS, INC.
EXECUTIVE SEVERANCE AGREEMENT
     THIS AGREEMENT is made effective September 25, 2009, by and between Zareba
Systems, Inc. (the “Company”), a Minnesota corporation, and Dale Nordquist (the
“Executive”), an individual;
WITNESSETH:
     WHEREAS, the Company (“Company” means and includes any successor or assign
of Zareba Systems, Inc.) believes the Executive is valuable to the future growth
of the Company and its businesses and, accordingly, the Company and the
Executive mutually want to document their agreement concerning the compensation,
if any, the Executive will be entitled to if the Executive’s Employment by the
Company (defined below) is terminated after a Change of Control (defined below).
     NOW, THEREFORE, the Company and the Executive agree as follows:
     1. Termination After Change of Control; Compensation Upon Termination.
     (a) Notwithstanding any other agreement between the Company and the
Executive, after a Change of Control (defined below) the Executive’s employment
by the Company may be terminated only as follows:
     (i) Upon the Executive’s death;
     (ii) Upon the Executive’s resignation; or
     (iii) Upon notice by the Company to the Executive of termination.
     (b) If the Executive’s Employment by the Company terminates upon the
Executive’s death, then the Executive will be entitled to receive only such
compensation that has been earned but not paid to the Executive (including
without limitation, PTO (defined below)), any unpaid reimbursements of the
Executive’s out-of-pocket business expenses incurred by the Executive during the
regular performance of the Executive’s duties, and such other payments or
benefits that are provided under the terms and conditions of any benefit plans
or programs adopted by the Company in which the Executive participates.
     (c) If the Executive’s Employment by the Company terminates upon the
Executive’s resignation any time after a Change of Control other than for Good
Reason, the Executive will be entitled to receive only such compensation that
has been earned but not paid to the Executive (including without limitation,
PTO), any unpaid reimbursements of the Executive’s out-of-pocket business
expenses incurred by the Executive during the regular performance of the
Executive’s duties, and such other payments or benefits that are provided under
the terms and conditions of any benefit

-1-

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

 

plans or programs adopted by the Company in which the Executive participates. If
the Executive desires to resign the Executive’s Employment by the Company, the
Executive will give the Company thirty (30) days prior written notice of the
Date of Termination.
     Notwithstanding the foregoing, if Executive’s Employment by the Company
terminates upon the Executive’s written resignation within twelve (12) months
after a Change of Control for Good Reason (defined below), the Executive will be
entitled to receive the Termination Payments, the Health Benefits, such
compensation that has been earned but not paid to the Executive (including
without limitation, PTO) and any unpaid reimbursements of the Executive’s
out-of-pocket business expenses incurred by the Executive during the regular
performance of the Executive’s duties.
     The Executive’s Employment by the Company will not be deemed to have been
duly terminated for Good Reason unless and until the Executive provides the
Company with a written notice that describes in detail the conduct allegedly
supporting such termination for Good Reason and grants the Company a period of
at least thirty (30) days from the date of such notice to take whatever steps
are necessary to correct or discontinue the conduct described in such notice to
the reasonable satisfaction of the Executive. If the Company fails to correct or
discontinue the conduct described in such written notice within such period, the
Executive’s Employment by the Company will immediately terminate for Good Reason
upon the expiration of such period.
     (d) If the Executive’s Employment by the Company terminates within twelve
(12) months after a Change of Control because of notice by the Company to the
Executive for no stated reason or a stated reason other than For Cause (defined
below) or the Executive’s Disability (defined below), the Executive will be
entitled to receive the Termination Payments, the Health Benefits, such
compensation that has been earned but not paid to the Executive (including
without limitation, PTO) and any unpaid reimbursements of the Executive’s
out-of-pocket business expenses incurred by the Executive during the regular
performance of the Executive’s duties.
     (e) If the Executive’s Employment by the Company terminates after a Change
of Control because of notice by the Company to the Executive For Cause, the
Executive will not be entitled to receive any Termination Payments, Base Salary,
bonuses or other employee benefit payments following such termination, except
the Executive will be entitled to receive such compensation that has been earned
but not paid to the Executive (including without limitation, PTO), any unpaid
reimbursements of the Executive’s out-of-pocket business expenses incurred by
the Executive during the regular performance of the Executive’s duties, and such
other payments or benefits that are provided under the terms and conditions of
any benefit plans or programs adopted by the Company in which the Executive
participates.
     The Company may terminate the Executive’s employment immediately For Cause,
however, with respect to the matters listed in Section 7(k)(ii),
Section 7(k)(iii) or Section 7(k)(iv), the Executive’s Employment by the Company
will not be deemed to have been duly terminated For Cause unless and until the
Company provides the

-2-

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

 

Executive with a written notice that describes in detail the conduct allegedly
supporting such termination For Cause and grants the Executive a period of at
least thirty (30) days from the date of such notice to take whatever steps are
necessary to correct or discontinue the conduct described in such notice to the
reasonable satisfaction of the Company. If the Executive fails to correct or
discontinue the conduct described in such written notice within such period, the
Executive’s Employment by the Company will immediately terminate For Cause upon
the expiration of such period.
     If the Company duly terminates the Executive’s Employment by the Company
For Cause during any period after the date of any written notice of termination
for no reason or a reason other than For Cause but prior to the Date of
Termination specified in such earlier notice or the Executive’s death, then the
notice of termination “For Cause” will control.
     (f) If the Executive’s Employment by the Company terminates after a Change
of Control because of notice by the Company to the Executive For Cause involving
the Executive’s Disability, the Executive will not be entitled to receive any
Termination Payments, Health Benefits, Base Salary, bonuses or other employee
benefit payments following such termination, except the Executive will be
entitled to receive compensation that has been earned but not paid to the
Executive, the continuation of Base Salary payable bi-weekly for a period of
twelve (12) months after the Date of Termination of the Executive’s Employment
by the Company because of the Executive’s Disability, any unpaid reimbursements
of the Executive’s out-of-pocket business expenses incurred by the Executive
during the regular performance of the Executive’s duties, and such other
payments or benefits that are provided under the terms and conditions of any
benefit plans or programs adopted by the Company in which the Executive
participates as of the Date of Termination.
     2. Certain Other Conditions to Termination Payments. Notwithstanding
anything in this Agreement to the contrary, the Company will not be obligated to
make any Termination Payments unless: (a) the Executive has signed a release of
all claims, other than rights arising under this Agreement, in favor of the
Company and Affiliated Organizations, and their directors, officers, insurers,
employees and agents, in a form reasonably prescribed by the Company; (b) all
applicable rescission periods provided by law for the effective releases of such
claims have expired and the Executive has not rescinded the release of any such
claims; and (c) the Executive is in compliance with this Agreement as of the
dates the Company makes any such Termination Payments.
     The Company may withhold from any amounts payable under this Agreement such
federal, state and local income and employment taxes as the Company reasonably
determines are required or authorized to be withheld pursuant to any applicable
law or regulation.
     3. Section 409A. This Agreement is intended to provide for severance
benefits that are not deferred compensation subject to the requirements of Code
Sections 409A(a)(2), (3) or (4). To the extent any severance benefits under this
Agreement are made in accordance with this Agreement and are subject to the
requirements of Code Sections 409A(a)(2), (3), or (4), this

-3-

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

 

Agreement is intended to satisfy such requirements, including current and future
guidance and regulations interpreting such provisions, and should be interpreted
accordingly.
     4. Certain Obligations Upon Termination.
     (a) Immediately after the Date of Termination, the Executive will resign
all positions then held as a director or officer of the Company and of any
Affiliated Organization.
     (b) Upon termination of the Executive’s employment by the Company for any
reason, the Executive will promptly deliver to the Company any and all Company
records and any and all Company property in the Executive’s possession or under
the Executive’s control, including without limitation manuals, books, blank
forms, documents, letters, memoranda, notes, notebooks, reports, printouts,
computer disks, flash drives or other digital storage media, source codes, data,
tables or calculations and all copies thereof, documents that in whole or in
part contain any trade secrets or confidential, proprietary or other secret
information of the Company and all copies of them, and keys, access cards,
access codes, passwords, credit cards, personal computers, handheld personal
computers or other digital devices, cell phones and other electronic equipment
belonging to the Company.
     (c) The Executive will not malign, defame or disparage the reputation,
character, image, products or services of the Company, or the reputation or
character of the Company’s or any Affiliated Organization’s directors, officers,
employees or agents, provided that nothing in this Section will be construed to
limit or restrict the Executive from taking any action that the Executive in
good faith reasonably believes is necessary to fulfill the Executive’s fiduciary
obligations to the Company or any Affiliated Organization, or from providing
truthful information in connection with any legal proceeding, government
investigation or other legal matter.
     5. Protection Of The Company’s Business.
     (a) The Executive will not disclose or use at any time, either during or
after the Executive’s employment by the Company, any Confidential Information
except for the exclusive benefit of the Company, as required by the Executive’s
duties for the Company, or as the Company may consent to in writing. The
Executive will cooperate with the Company to implement reasonable measures to
maintain the secrecy of, and will use the Executive’s best efforts to prevent
the unauthorized disclosure, use or reproduction of, all Confidential
Information. In addition to the foregoing, the Executive will, at all times
during or after the Executive’s employment by the Company, comply with such
policies and procedures of the Company as may be adopted from time to time in
accordance with applicable laws and regulations regarding the maintenance,
protection, use and disclosure of Customer Information and will not take any
action in violation of any such laws or regulations. The Executive will also
comply with such additional requirements regarding Customer Information
contained in any customer agreement to which the Company is a party, to the
extent employee is notified of or otherwise aware of such additional
requirements.

-4-

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

 

     (b) The Executive will not during the Executive’s employment by the Company
and for a period of twelve (12) consecutive months from the Date of Termination,
whether such termination is at the initiative of the Executive or the Company
(whether or not For Cause), directly or indirectly, in any manner or capacity,
including without limitation as a proprietor, principal, agent, partner,
officer, director, stockholder, employee, member of any association, consultant
or otherwise, hire, engage or solicit any person who is then an employee of the
Company or any Affiliated Organization or who was an employee of the Company or
any Affiliated Organization at the time of the Date of Termination. General
advertising, by newspaper or other medium, of an open employment or consulting
position will not constitute solicitation for purposes of this Section as long
as any person whom the Executive is otherwise precluded from hiring, engaging or
soliciting under this Section is not hired to fill such open position.
     (c) The Executive will not during the Executive’s employment by the Company
and for a period of twelve (12) consecutive months from the Date of Termination,
whether such termination is at the initiative of the Executive or the Company
(whether or not For Cause), directly or indirectly, in any manner or capacity,
including without limitation as a proprietor, principal, agent, partner,
officer, director, stockholder, employee, member of any association, consultant
or otherwise, (i) solicit any then current or potential customer of the Company
or any Affiliated Organization for the sale of any product or service that is
similar to or competitive with any product or service of the Company or any
Affiliated Organization, or (ii) solicit, request, advise or induce any then
current or potential customer, supplier or other business contact of the Company
to cancel, curtail or otherwise adversely change its relationship with the
Company or any Affiliated Organization.
     (d) The Executive will not during the Executive’s employment by the Company
and for a period of twelve (12) consecutive months from the Date of Termination,
whether such termination is at the initiative of the Executive or the Company
(whether or not For Cause), except on behalf of the Company, directly or
indirectly, in any manner or capacity, including without limitation as a
proprietor, principal, agent, partner, officer, director, stockholder, employee,
member of any association, consultant or otherwise, perform services for or have
any interest in any business, in the United States or in any other country where
the Company or any Affiliated Organization is then materially engaged in
business, that is engaged in the design, manufacture, marketing, distribution or
sale of electronic fencing or other perimeter, containment or security systems,
or otherwise competes with any product or service of the Company or any
Affiliated Organization. Ownership by the Executive, as a passive investment, of
less than two percent (2%) of the outstanding shares of capital stock of any
corporation listed on NASDAQ or traded on a national securities exchange or
publicly traded in the over-the-counter market will not constitute a breach of
this Section.
     (e) The covenants contained in this Section will be considered as a series
of separate covenants, one for each entity or individual with respect to whom
solicitation or competition is prohibited. Except as provided in the previous
sentence, each such

-5-

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

 

separate covenant will be deemed identical in terms to the covenants contained
in this Section. If in any judicial proceeding a court refuses to enforce any of
such separate covenants or any part thereof, then such unenforceable covenant or
such part will be eliminated from this Agreement to the extent necessary to
permit the remaining separate covenants or portions thereof to be enforced. In
the event that a provision of this Section, or any such separate covenant or
portion thereof, is judicially determined to exceed the time or scope
limitations permitted by applicable law, then such provision will be judicially
modified to the maximum time or scope limitations, as the case may be, permitted
by applicable law. The Executive consents, to the extent the Executive may
lawfully do so, to the judicial modification of this Agreement referred to in
the preceding sentence.
     6. Interest on Over Due Amounts. If the Company does not make timely
payment in full when due of amounts payable under this Agreement, the Executive
will be entitled to receive interest on any unpaid amount at the prime interest
rate announced from time to time by Wells Fargo Bank, N. A., or the maximum rate
permitted under Code Section 280G(d)(4), or any successor provision, whichever
rate is lower.
     7. Definitions. The following capitalized terms have the indicated
meanings:
     (a) “Affiliated Organization” means a business entity that is treated as a
single employer with the Company under the rules of Section 414(b) and (c) of
the Code, including the eighty percent (80%) standard in such Section.
     (b) “Base Salary” means the annual salary of the Executive at the time of
termination of the Executive’s Employment by the Company determined by reference
to the Executive’s most recently received, regular, periodic payroll check,
provided however, if Base Salary has been reduced as described in
Section 7(l)(i), then Base Salary will mean the annual salary of the Executive
prior to any such reduction.
     (c) “Business Information” means any and all proprietary information of the
Company that exists during the Executive’s employment by the Company pertaining
to the Company’s and Affiliated Organizations’ (i) then current or proposed
products, services and related policies, processes and procedures; (ii) then
current or proposed technologies; (iii) then current or proposed product tests;
(iv) then current or proposed costs, marketing plans, or product or service
pricing; and (v) financial projections in any way relating to the foregoing.
     (d) “Change of Control” means any of the following events:
     (i) Any exchange, reorganization, reclassification, extraordinary dividend,
divestiture (including a spin-off), merger or similar transaction (collectively
referred to as the “transaction”) to which the Company is a party, whether or
not such transaction is approved by the Company’s Board of Directors, if the
individuals and entities who were shareholders of the Company immediately prior
to the effective date of such transaction have, immediately following the
effective date of such transaction, beneficial ownership (as defined

-6-

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

 

in Rule 13d-3 under the Securities Exchange Act of 1934) of less than fifty
percent (50%) of the total combined voting power (with respect to the election
of directors) of all classes of securities issued by the surviving corporation;
     (ii) The acquisition of direct or indirect beneficial ownership (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934) of securities of the
Company representing, in the aggregate, fifteen percent (15%) or more of the
total combined voting power of all classes of the Company’s then issued and
outstanding securities by any person or entity or by a group of associated
persons or entities acting in concert where such person or entity and/or group
of associated persons is an “Acquiring Person” under that certain Rights
Agreement dated as of March 15, 2005, between the Zareba Systems, Inc. and Wells
Fargo Bank, N.A.;
     (iii) The sale of substantially all of the properties and assets of the
Company to any person or entity which is not a wholly-owned subsidiary of the
Company; or
     (iv) The approval of any plan or proposal for the liquidation of the
Company by the shareholders of the Company.
“Change of Control” will not mean any reorganization, recapitalization or
similar restructuring of the Company initiated by the Company and approved by
the Board of Directors of the Company which involves a change in the Company’s
organizational form and not a substantive change in the ownership of the Company
as it existed prior to such reorganization, restructuring or recapitalization.
     (e) “Confidential Information” means Trade Secrets, Business Information,
Personnel Information, and Customer Information, but does not include any such
information that is or becomes generally available to the public or that is or
becomes available to the Executive on a non-confidential basis through means
other than in the course of the Executive’s employment by the Company, provided
that the source of such information is not bound by a confidentiality agreement
with the Company or any other party and that such information has not become
available, directly or indirectly, as a result of a breach of any
confidentiality obligation to the Company.
     (f) “Customer Information” means the names, addresses and other information
relating to any current or proposed customer of the Company and any Affiliated
Organization that exists during the Executive’s employment by the Company,
including the format and content of any database developed or prepared based on
or containing such information and the results of any compilations or analysis
of such information; and the contractual terms and conditions, including prices,
that the Company or any Affiliated Organization has established with any of
their customers.

-7-

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

 

     (g) “Code” means the Internal Revenue Code of 1986, as amended. Any
reference to a specific provision of the Code will include a reference to such
provision as it may be amended from time to time and to any successor provision.
     (h) “Date of Termination” means the date of the Executive’s “separation
from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of
the Code.
     (i) “Disability” means the inability of the Executive to perform on a
full-time basis the material duties of the position in which the Executive is
employed by the Company because of the Executive’s illness or other physical or
mental impairment or condition, if such inability continues for an uninterrupted
period of one hundred twenty (120) days or more during any one hundred eight
(180) day period. A period of inability is “uninterrupted” unless and until the
Executive returns to full-time work for a continuous period of at least thirty
(30) days.
     (j) “Employment by the Company” means employment directly by the Company or
by any Affiliated Organization.
     (k) “For Cause” means:
     (i) Executive’s commission of any act constituting a felony, or other
criminal act involving moral turpitude;
     (ii) the Executive’s material breach of the Company’s policies or the
Executive’s material failure, neglect or refusal to perform any of the material
duties of the position in which the Executive is employed by the Company, other
than because of Disability or breaches that are the subjects of Section 7(k)iii,
Section 7(k)(iv);
     (iii) the Executive’s material breach of this Agreement;
     (iv) the Executive’s Willful, intentional or gross misconduct that:
materially and adversely affects the reputation of the Company or is contrary to
the best interests of the Company; or
     (v) the Executive’s Disability.
     (l) “Good Reason” means a good faith determination by the Executive, in the
Executive’s sole and absolute judgment, that any one or more of the following
events has occurred without the Executive’s express written consent:
     (i) a material reduction by the Company in the Executive’s Base Salary as
in effect immediately prior to the Change of Control or as the same may be
increased from time to time thereafter;
     (ii) a material diminution in the Executive’s authority, duties or
responsibilities as in effect immediately prior to the Change of Control;

-8-

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

 

     (iii) a material diminution in the authority, duties or responsibilities of
the supervisor to whom the Executive is required to report, including a
requirement that the Executive report to a corporate officer or employee instead
of reporting directly to the Board of Directors of the Company, if that is the
case immediately prior to the Change of Control;
     (iv) a material diminution in the budget over which the Executive has
authority by comparison to the Executive’s budget authority immediately prior to
the Change of Control; or
     (v) a material change imposed by the Company on the geographic location at
which the Executive must perform services for the Company or any Affiliated
Organization that results in the Executive being based at a location that is
outside of a twenty-five (25) mile radius of the Executive’s job location at the
time of the Change of Control.
     (m) “Health Benefits” means if the Executive (and/or the Executive’s
covered dependents) is eligible for and properly elects to continue group
medical and/or dental insurance coverage, as in place immediately prior to the
Date of Termination, the Company’s continued payment of the Company’s portion of
any premiums or costs of such coverage until the earlier of (i) eighteen
(18) months after the Date of Termination, or (ii) the date the Executive and
the Executive’s covered dependents is provided group medical and/or dental
insurance coverage by a subsequent employer; provided, the Executive remains
eligible for continuation coverage and timely pays the Executive’s portion, if
any, of such coverage. All such Company-provided medical and/or dental insurance
premiums, or costs of coverage, will be paid directly to the insurance carrier
or other provider by the Company and the Executive will make arrangements with
the Company to pay the Executive’s portion of such coverage in an amount equal
to such portion that the Executive would pay if the Executive was actively
employed by the Company after the Date of Termination.
     (n) “Personnel Information” means information about the names, addresses,
compensation, skills, duties or other personal characteristics of employees of
the Company and any Affiliated Organization.
     (o) “PTO” means the Executive’s accrued but unused paid time off with
respect to, without limitation, vacation, illness or permitted personal uses.
     (p) “Termination Payments” means the Company’s payment to the Executive of
the Base Salary, payable bi-weekly, for a period of eighteen (18) months after
the Date of the Termination.
     (q) “Trade Secrets” means any information (including without limitation
compilations, devices, techniques, software, technologies, business methods,
processes and procedures, customer or prospect lists, and economic or financial
models, projections or analyses) that: (i) derives independent economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other

-9-

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

 

persons who can obtain economic value from its disclosure or use, and (ii) is
the subject of efforts that are reasonable under the circumstances to maintain
its secrecy. Trade Secret information may include the information of the Company
and any Affiliated Organization, along with their customers, suppliers, joint
ventures, licensors, licensees, distributors and other entities with which they
do business.
     (r) “Willful” means an act or failure to act by the Executive that is done,
or omitted to be done, in bad faith and without any reasonable belief that the
Executive’s action or omission was in the best interests of the Company.
     8. Arbitration. All disputes or claims arising out of this Agreement,
including the making of this Agreement, will be submitted to and determined by
final and binding arbitration under the rules of the American Arbitration
Association. Arbitration proceedings may be initiated by the Company or the
Executive upon notice to the other and to the American Arbitration Association,
and will be conducted by three arbitrators under the rules of the American
Arbitration Association in Minneapolis, Minnesota; provided, however, that the
Company and the Executive may agree, following the giving of such notice, to
have the arbitration proceedings conducted with a single arbitrator. The notice
must specify, in general, the issues to be resolved in any such arbitration
proceeding. The arbitrators will be selected by agreement of the Company and the
Executive from a list of twelve (12) or more arbitrators proposed to the Company
and the Executive by the American Arbitration Association, or may be persons not
on such list as agreed to by the Company and the Executive. If the Company and
the Executive fail to agree on one or more of the persons to serve as
arbitrators within thirty (30) days of delivery of the list of proposed
arbitrators by the American Arbitration Association, then at the request of the
Company or the Executive such arbitrators will be selected at the discretion of
the American Arbitration Association.
     In addition to any other procedures provided for under the rules of the
American Arbitration Association, upon written request, each party will, at
least fourteen (14) days prior to the date of any hearing, provide to the
opposite party a copy of all documents relevant to the issues raised by any
claim or counterclaim and a list of all witnesses to be called by that party at
the hearing and each party will be permitted to take at least one (1) deposition
at least fourteen (14) days prior to any hearing.
     9. If Non-Prevailing Party Company to Pay Fees and Expenses. If either
party initiates or becomes a party to an arbitration or a formal proceeding in
law or equity involving this Agreement, and if the Executive obtains a
substantial portion of the relief requested by the Executive, then the Company
will pay all of the Company’s and the Executive’s reasonable costs and expenses,
including reasonable attorneys’ fees and expenses, incurred with respect to such
proceeding. If the Executive does not obtain a substantial portion of the relief
requested, both parties will bear their respective own expenses.
     10. Limitation on Actions. Neither the Company or the Executive may
commence any action to enforce any rights arising under this Agreement more than
one (1) year after the transaction or occurrence which gave rise to the cause of
action.
     11. Notices. All notices required or permitted under this Agreement must be
in writing and will be deemed to have been duly given upon receipt and will be
delivered by hand

-10-

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

 

or sent by registered or certified mail, return receipt requested, postage and
fees prepaid and addressed to the Company at its principal business office and
with respect to the Executive to such address as appears on the books and
records of the Company. The Company and the Executive may change their addresses
by a notice in writing which will be effective when actually received by the
addressee.
     12. Waiver. A party’s rights under this Agreement may be waived only in a
writing executed by the waiving party and such waiver will be effective only
with respect to the matters identified in such writing. The waiver by the
Company of the breach or nonperformance of any provision of this Agreement by
the Executive will not operate or be construed as a waiver of any future breach
or nonperformance under any provision of this Agreement or any similar Agreement
with any other employee.
     13. Entire Understanding. This Agreement constitutes the entire
understanding and agreement between the Company and the Executive with regard to
the subject matter of this Agreement and there are no other agreements,
conditions or representations, oral or written, express or implied, with regard
to such subject. This Agreement may be amended only in writing executed by both
the Company and the Executive.
     Notwithstanding the foregoing, the Company and the Executive are parties to
a certain Employment Agreement dated effective June 30, 2008 (the “Employment
Agreement”). Section 5 of the Employment Agreement provides for certain payments
in the event of the Executive’s involuntary termination of employment by the
Company whether or not a Change of Control has occurred. If a Change of Control
occurs prior to the termination of the Executive’s Employment by the Company,
this Agreement will apply in lieu of Sections 4, 5, 6, 7, 9, 11(a), 11(b),
11(d), 13(b), 13(c), 13(f) and 13(i) of the Employment Agreement. The Employment
Agreement is amended as necessary to give effect to the agreements in this
paragraph.
     14. Binding Effect. Executive may not assign Executive’s rights or
obligations under this Agreement. The provisions of this Agreement are binding
upon and inure to the benefit of the Company’s successors and assigns and the
Executive’s heirs, legal representatives or administrators.
     15. Governing Law. This Agreement will be construed and enforced in
accordance with the laws of the State of Minnesota.
[Signatures follow]

-11-

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

 

     16. Counterparts. This Agreement may be executed in counterparts each of
which, when executed and delivered, will be original, but all such counterparts
will constitute one and the same document. Facsimile or other copies of
signatures will be deemed originals until originals replace such copies.

            Zareba Systems, Inc.
      By   /s/ William R. Franta         Its Chairman of the Board             
        /s/ Dale A. Nordquist         Dale Nordquist           

-12-