Exhibit 10.2
HEI, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of July 10, 2006, and
effective as of July 7, 2006 (the “Effective Date”), by and among HEI, Inc., a
Minnesota corporation (the “Corporation”), and Scott M. Stole (“Employee”).
RECITALS
A. Employee is currently employed by the Corporation as its Vice
President/General Manager of RFID, and Employee is a party to a Non-Disclosure,
Non-Compete and Inventions Assignment Agreement between Employee and the
Corporation dated October 1, 2003 (the “Non-Compete Agreement”) and that certain
Employment Agreement by and between the Corporation and the Employee dated
October 1, 2003 (the “Prior Employment Agreement.”)
B. Corporation desires to continue to employ Employee in accordance with the
terms of this Agreement and this Agreement shall incorporate, amend and replace
the terms of the Non-Compete Agreement and the Prior Employment Agreement.
C. Employee recognizes that the Corporation operates in a highly competitive
environment and the importance to the Corporation of ensuring Employee’s loyalty
and protecting the Corporation’s customers, employees, business information and
inventions, and goodwill. Accordingly, Employee has entered into and agrees to
be bound by this Agreement in consideration of Employee’s employment with the
Corporation and being given access to the Corporation’s confidential
information.
D. The Employee acknowledges he is receiving good and valuable consideration for
entering into this Employment Agreement (the “Agreement”), including the
Non-Competition/Non-Solicitation provisions contained in Section 6 of this
Agreement, and Employee acknowledges that this Agreement was negotiated between
the parties hereto, that Employee was not previously entitled to the benefits
conferred to Employee under this Agreement as part of his Employment with the
Corporation and that Employee received bargained for consideration including,
without limitation, the increased severance provisions contained in this
Agreement in relation to the Previous Employment Agreement, in exchange for
agreeing to the Non-Competition/Non-Solicitation provisions of this Agreement
set forth in Section 6 of this Agreement; and
E. The Corporation and Employee desire to enter into this Agreement.
AGREEMENT
In consideration of the above recitals and the mutual promises set forth in this
Agreement the parties agree as follows:

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       1. Nature and Capacity of Employment. The Corporation hereby agrees to
employ Employee as its Vice President/General Manager of RFID, subject to the
direction of the President/Chief Executive Officer and the Board of Directors of
the Corporation and pursuant to the terms and conditions set forth in this
Agreement. Employee hereby accepts employment under the terms and conditions set
forth in this Agreement.
Employee agrees to perform or be available to perform, on a full-time basis, the
functions of this position, pursuant to the terms of this Agreement. In
addition, Employee will not, during the course of employment by the Corporation,
without prior written approval of the Board of Directors of the Corporation,
become an employee, director, officer, agent, partner of or consultant to, or a
stockholder of (except a stockholder of a public company in which Employee owns
less than five percent (5%) of the issued and outstanding capital stock of such
company) any company or other business entity which is, as determined by the
Board of Directors in its discretion, a significant competitor, supplier, or
customer of the Corporation.
       2. Term of Employment. Employee’s employment hereunder shall commence as
of the Effective Date and shall continue for period of one year thereafter until
July 6, 2007 (the “Term”) unless Employee’s employment is earlier terminated
pursuant to the terms of Paragraph 5 of this Agreement.
Unless Employee’s employment has earlier terminated pursuant to the terms of
Paragraph 5 of this Agreement, this Agreement shall automatically renew
following the Term for successive terms of one year each (each called a “Renewal
Term”) unless the Corporation provides Employee thirty (30) days advance written
notice prior to the expiration of the Term or Renewal Term that this Agreement
shall not be renewed. During any Renewal Term, this Agreement may be terminated
pursuant to the terms of Paragraph 5 of this Agreement.
       3. Compensation.
     3.1 Base Salary. As of the Effective Date, the Corporation agrees to pay
Employee an annual base salary of $120,000 (the “Base Salary”), which amount
shall be earned by Employee on a pro rata basis as Employee performs services
and which shall be paid according to the Corporation’s normal payroll practices.
The Corporation may, in its discretion, adjust Employee’s Base Salary from time
to time based on Employee’s performance and the Corporation’s business and
financial situation.
     3.2 Incentive or Bonus Compensation. In addition to the Base Salary, the
Corporation may, in its sole discretion, pay bonuses or other incentive
compensation to Employee in accordance with the terms and conditions set forth
annually in writing by the Corporation (the “Incentive Compensation.”)
       4. Employee Benefits. During Employee’s employment with Corporation,
Employee shall be entitled to participate in the retirement plans, health plans,
and all other employee benefits made available by the Corporation, and as they
may be changed from time to time. Employee acknowledges and agrees that the
Corporation is under no obligation to Employee to establish and maintain any
employee benefit plan in which Employee may participate, and that the terms and
provisions of any employee benefit plan of the Corporation are

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matters within the exclusive province of the Corporation’s Board of Directors,
subject to applicable law. Upon the termination of Employee’s employment,
Employee shall be entitled to continue those benefits as may be required by
state or federal law.
       5. Termination of Employment Prior to the End of the Term or Renewal
Term. Employee’s employment may be terminated prior to the expiration of the
Term or a Renewal Term as follows:
     5.1. For Cause Termination, Without Severance. Notwithstanding anything
contained herein to the contrary, the Corporation may discharge Employee and
terminate this Agreement immediately upon written notice to Employee. For the
purposes of this Agreement, “Cause” shall mean the occurrence of any of the
following:
     (i) mismanagement or neglect of Employee’s duties which the Corporation’s
Board of Directors determines is (or will be if continued) materially and
adversely affecting the business or affairs of the Corporation; or
     (ii) conduct by Employee which the Corporation’s Board of Directors
determines is (or will be if continued) demonstrably and materially injurious to
the Corporation, monetarily or otherwise; or
     (iii) fraud, misappropriation or embezzlement by the Employee; or
     (iv) conviction of a felony crime or a crime of moral turpitude; or
     (v) conduct in the course of employment that the Corporation’s Board of
Directors determines is unethical; or
     (vi) the material breach of this Agreement by Employee.
If the Corporation terminates Employee’s employment for Cause pursuant to this
Paragraph 5.1, Employee shall not be entitled to severance pay under
Paragraph 5.6 or to any bonus or incentive compensation of any kind.
     5.2. Without Cause, With Severance. The Corporation may terminate
Employee’s employment immediately at any time and for any reason without Cause
upon providing notice to Employee. However, in such event the Corporation shall
pay Employee any earned and unpaid bonus or incentive compensation, if any, on a
pro rata basis for the period through the Employee’s termination date. In
addition, provided that Employee meets all of the Severance Pay Conditions (as
hereinafter set forth in this Paragraph 5.2), the Corporation shall pay Employee
severance pay in bi-weekly installments equal to the total of 1/26th of
Employee’s Base Salary at the time of termination, less applicable withholdings,
for three (3) months from the date of Employee’s date of termination (the
“Severance Period”) (collectively, the “Severance Base Pay”), plus the pro rata
amount of the Employee’s Incentive Compensation which could have been earned
during the Severance Period, which amount shall be calculated by annualizing the
amount of Incentive Compensation paid to Employee from January 1st of each year
through the date of termination of employment and then multiplying said

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amount by the ratio of the number of days in the Severance Period to 365, less
applicable withholdings (the “Severance Incentive Compensation”) (for purposes
of this Agreement, the Severance Base Pay and the Severance Incentive
Compensation shall hereinafter be referred to as the “Severance Pay”). For
example, without limitation, assume the Employee was terminated on June 30, the
Incentive Compensation earned by the Employee from January 1 through June 30 was
$30,000 and that the Severance Period was 90 days. The Employee would receive
Severance Incentive Compensation of $14,794 [($30,000 x 2) x 90/365.]
Employee shall only be entitled to receive the Severance Pay described herein if
Employee signs a Separation Agreement at the time of termination in a form
prepared by the Corporation that includes adequate provisions for the following:
(i) Employee’s general release of any and all legal claims; (ii) Employee’s
return of all of the Corporation’s property in Employee’s possession;
(iii) nondisparagement of the Corporation and its representatives;
(iv) confidentiality of terms; and (v) acknowledgement of Employee’s continuing
contractual obligations to the Corporation, including Employee’s continuing
noncompetition, confidentiality, return of property, and invention obligations
under Paragraphs 6, 7, 8, and 9 of this Agreement (collectively, all of the
conditions set forth in this paragraph shall hereinafter be referred to as the
“Severance Pay Conditions.”)
     5.3. Resignation by Employee Due to Change of Control, With Severance. For
purposes of this Agreement, “Change of Control” means either (A) a change in
ownership or control of the Corporation effected through any of the following
transactions: (i) a merger, consolidation or reorganization approved by the
Corporation’s stockholders, unless securities representing more than fifty
percent (50%) of the total combined voting power of the voting securities of the
successor corporation are immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportion, by the persons who
beneficially owned the Corporation’s outstanding voting securities immediately
prior to such transaction; (ii) any stockholder-approved transfer or other
disposition of all or substantially all of the Corporation’s assets; (iii) the
acquisition, directly or indirectly by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation), of beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Corporation’s outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation’s stockholders which the Board recommends such
stockholders accept; or (iv) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (a) have been Board
members continuously since the beginning of such period or (b) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (a) who were still in office
at the time the Board approved such election or nomination or (B) a sale of all
or substantially all of the assets of RFID, a division of the Corporation, for
which the Employee performs his duties in accordance with the terms of this
Agreement.

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Employee shall have the right to terminate Employee’s employment for any reason
within six (6) months following a Change of Control in the Corporation upon
providing thirty (30) days advance written notice to the Corporation. The
Corporation may then elect either (a) to have Employee continue performing work
for the Corporation throughout the 30 day notice period; or (b) to accept
Employee’s resignation effective immediately.
In the event of Employee’s termination of employment with the Corporation within
six (6) months following a Change of Control under this Paragraph 5.3,
Corporation shall pay Employee any earned and unpaid bonus or incentive
compensation, if any, on a pro rata basis for the period through the Employee’s
termination date. In addition, provided that Employee meets all of the Severance
Pay Conditions, the Corporation shall pay Employee severance pay in bi-weekly
installments equal to 1/26th of Employee’s Base Salary at the time of
termination, less applicable withholdings, for twelve (12) months from the date
of Employee’s date of termination, plus the Severance Incentive Compensation.
     5.4 Other Resignation by Employee, Without Severance. The Employee may
resign Employee’s position upon providing 30 days advance, written notice to the
Corporation. The Corporation may then elect either (a) to have Employee continue
performing work for the Corporation throughout the 30 day notice period; or
(b) to accept Employee’s resignation effective immediately. In the event of
Employee’s termination of employment with the Corporation under this
Paragraph 5.4, Employee shall receive payment for Base Pay, Incentive
Compensation and benefits as provided in Paragraph 5.6.
     5.5 Because of Death, Disability or Incapacity of Employee, Without
Severance. In the event of Employee’s death, or if the Employee is unable to
perform Employee’s duties and responsibilities for more than 90 days in any
consecutive 12-month period, by reason of physical or mental disability or
incapacity, the Corporation may terminate Employee’s employment upon thirty
(30) days advance written notice to Employee, during which 30-day period the
Employee shall receive his pro rata portion of Employee’s Base Pay. This
paragraph does not relieve the Corporation of any duty to reasonably accommodate
a qualifying disability under the Americans with Disabilities Act, any legal
duty under the Family Medical Leave Act, or any of its other duties pursuant to
applicable law. If Employee’s employment is terminated pursuant to this
Paragraph 5.5, Employee shall receive payment for Base Pay, Incentive
Compensation and benefits as provided in Paragraph 5.6, plus Employee’s
Severance Incentive Compensation.
     5.6 No Other Payments. Unless otherwise provided in this Agreement,
Employee shall only be entitled to the following in the event of Employee’s
termination of employment: (i) Base Salary and Incentive Compensation earned and
unpaid through the date of termination; (ii) benefits under any employee benefit
plan or program to the extent provided therein; and (iii) continued coverage
under Corporation’s health and

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group term life insurance programs to the extent required under state or federal
continuation coverage laws.
       6. Noncompetition/Non-Solicitation.
     6.1. Acknowledgement by Employee. Employee acknowledges that (a) Employee’s
services to be performed for Corporation are of a special and unique nature;
(b) Corporation operates in a highly competitive environment and would be
substantially harmed if Employee were to compete with Corporation or divulge its
confidential information; (c) Employee has received valuable and sufficient
consideration for entering into this Agreement, including but not limited to the
increased benefits provided under Section 5 of this Agreement and the receipt of
Confidential Information, and (d) the provisions of this Section 6, including
all of its subparts, are reasonable and necessary to protect Corporation’s
business.
     6.2. “Corporate Product” Defined. For purposes of this Agreement,
“Corporate Product” means any product or service (including any component
thereof and any research to develop information useful in connection with a
product or service) that has been or is being designed, developed, manufactured,
marketed or sold by the Corporation or with respect to which Employee has
acquired Confidential Information.
Employee understands and acknowledges that, at the present time, Corporate
Products include microelectronics, subsystems, systems, connectivity and
software solutions (including, but not limited to, hardware, software,
technology, patents, concepts, ideas, inventions, discoveries, MMIC chip
carriers and packages, high linearity power amplifiers, front end RF modules,
micro-circuit design, production and value-added assembly services,
ultra-miniature multi-chip packaging including chip on flex, ceramic and PWB
substrates, and high end flex and rigid flex fabrication). Employee understands
and acknowledges that the foregoing description of Corporate Products may
change, and the provisions of this Section 6 and all of its subparts shall apply
to the Corporate Products of the Corporation in effect upon the termination of
Employee’ s employment with the Corporation.
     6.3 “Competitive Product” Defined. For purposes hereof, “Competitive
Product” means any product or service (including any components thereof and any
research to develop information useful in connection with the product or
service) that is being designed, developed, manufactured, marketed or sold by
any person or entity other than the Corporation that is of the same general
type, performs similar functions, or is used for the same purpose as a Corporate
Product on which Employee worked or assisted the Corporation during Employee’s
employment with the Corporation or about which Employee has acquired
Confidential Information.
     6.4 Noncompete Obligations. Employee agrees that, during Employee’s
employment with the Corporation and for a period of eighteen (18) months
following Employee’s termination of employment with the Corporation, regardless
of the reason for termination, Employee will not, directly or indirectly, render
services to any person or entity that designs, develops, manufactures, markets
or sells a Competitive Product in any

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geographic area where the Corporation designs, develops, manufactures, markets
or sells a Corporate Product.
Employee understands and acknowledges that, at the present time, the geographic
market of the Corporation includes the entire United States. Employee
understands and acknowledges that the foregoing description of the Corporation’s
geographic market may change, and the provisions of this section 6 and all of
its subparts shall apply to the geographic market of the Corporation in effect
upon the termination of Employee’s employment with the Corporation.
     6.5 No Solicitation of Customers. During Employee’s employment with
Corporation and for a period of eighteen (18) months after Employee’s
termination of employment with Corporation, regardless of the reason for such
termination, Employee agrees that Employee shall not, directly or indirectly,
solicit business from, work for, or otherwise interfere with or attempt to
interfere with Corporation’s relationship with any customer or prospective
customer of Corporation.
     6.6 No Solicitation of Employees or Business Contacts. During Employee’s
employment with Corporation and for a period of eighteen (18) months after
Employee’s termination of employment with Corporation, regardless of the reason
for such termination, Employee agrees that Employee shall not, directly or
indirectly, take any action to encourage, solicit or recruit any current or
former employee, consultant, independent contractor, subcontractor, supplier,
vendor, or other business relation of Corporation to terminate their
relationship with Corporation.
     6.7 Disclosure of Obligations. Employee agrees that, during Employee’s
employment with Corporation and for a period of eighteen (18) months after
Employee’s termination of employment with Corporation, regardless of the reason
for such termination, Employee shall, prior to accepting employment or any other
business relationship with any other person or entity, inform that person or
entity of Employee’s obligations under this Section 6, including all of its
subparts.
       7. Protection of Confidential Information.
     7.1 Definition of Confidential Information. As used in this Agreement, the
term “Confidential Information” shall mean any information which Employee learns
or develops during Employee’s employment with Corporation that derives
independent economic value from being not generally known or readily
ascertainable by other persons who could obtain economic value from its
disclosure or use, and includes, but is not limited to, trade secrets,
Inventions as defined in Paragraph 9 below, financial information, personnel
information, and information relating to such matters as existing or
contemplated products, services, profit margins, fee schedules, pricing, design,
processes, formulae, business plans, sales techniques, marketing techniques,
training manuals and materials, policies or practices related to Corporation’s
business, personnel or other matters, computer databases, computer programs,
software and other technology, customer lists and requirements, vendor lists, or
supply information. Confidential

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Information includes such information of Corporation, its customers, vendors,
and other third parties or entities with whom Corporation does business. Any
information disclosed to Employee or to which Employee has access during the
time of Employee’s employment that Employee reasonably considers to be
Confidential Information, or which the Corporation treats as Confidential
Information, will be presumed Confidential Information.
     7.2 Restrictions on Use or Disclosure of Confidential Information. Employee
shall keep the Confidential Information in absolute confidence both during
Employee’s employment with Corporation and after the termination of Employee’s
employment, regardless of the reason for such termination. Employee agrees that
Employee will not, at any time, disclose to others, use for the benefit of any
entity or person other than Corporation, or otherwise take or copy any such
Confidential Information, whether or not developed by Employee, except as
required in Employee’s duties to Corporation.
       8. Return of Confidential Information and Corporation’s Property. When
Employee’s employment terminates with Corporation, regardless of the reason for
such termination, Employee will promptly turn over to Corporation in good
condition all Corporation property in Employee’s possession or control,
including but not limited to all originals, copies of, or electronically stored
documents or other materials containing Confidential Information, regardless of
who prepared them. In the case of electronically stored information retained by
Employee outside of Corporation’s electronic systems, Employee will promptly
make a hard copy of such information in paper, audio recording, disc format, or
other format as appropriate, turn that hard copy over to Corporation, and then
destroy Employee’s electronically stored information. Further, Employee agrees
to execute written confirmation that all Confidential Information in the
Employee’s possession, or to which the Employee has access, has been turned over
to Corporation or destroyed.
       9. Inventions.
     9.1 Definition of Inventions. As used in this Agreement, “Inventions” means
any inventions, improvements, trade names or trademarks, trade secrets,
discoveries, designs, formulae, ideas or original works of authorship (whether
or not reduced to writing, other media or practice and whether or not patentable
or copyrightable), or work product originated, conceived, developed, discovered
or made in whole or in part solely by Employee or jointly with others that
relate, directly or indirectly, (a) to Corporation’s business; (b) to
Corporation’s actual or demonstrably anticipated research or development;
(c) that are made through the use of any of Corporation’s equipment, facilities,
supplies, trade secrets; (d) that result from any work Employee performs for
Corporation; or (e) that are developed on Corporation time.
     9.2 Ownership of Inventions. With respect to Inventions originated,
conceived, developed, discovered or made in whole or in part solely or jointly
by Employee at any time during Employee’s employment with Corporation, Employee
understands and agrees that Corporation will own all right, title, and interest,
including patent rights, copyrights, trade secret rights and all other
intellectual property rights of

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any sort, throughout the world related to all Inventions without further payment
beyond Employee’s agreed-upon salary or wage. To the maximum extent permitted by
law, all Inventions are deemed “works made for hire” under the United States
Copyright Act and Corporation is deemed the sole author of any Inventions. To
the extent any Inventions are determined not to constitute “works made for
hire,” Employee hereby assigns and transfers to Corporation all right, title and
interest in the Inventions.
Employee further agrees to (a) promptly and fully disclose all such Inventions
to Corporation; (b) keep accurate, complete, and timely records of all
Inventions, which records shall be Corporation’s property and shall be
maintained on Corporation’s premises; (c) at Corporation’s expense, assist
Corporation to perfect, protect, and use its rights to Inventions, including
without limitation, transferring Employee’s entire right, title and interest in
Inventions and enabling Corporation to obtain patent, copyright or trademark
protection for Inventions anywhere in the world; and (c) give affidavits and
testimony as to facts within Employee’s knowledge in connection with any
Inventions in any administrative proceedings, arbitration, litigation or
controversy relating thereto. In addition, the Employee agrees to promptly
disclose: (i) any patents, pending patents, inventions, trade secrets or
copyrighted works (“Employee Intellectual Property”) that Employee creates or
acquires prior to Employee’s employment with Corporation that Employee believes
should not be subject to this Agreement; and (ii) any Employee Intellectual
Property that Employee creates or acquires during Employee’s employment with the
Corporation that Employee believes should not be subject to this Agreement. If
Employee does not promptly disclose any Employee Intellectual Property that
Employee believes should not be subject to this Agreement, Employee acknowledges
that such non-disclosure will be considered a material representation under this
Agreement that, prior to and during the course of Employee’s employment with the
Corporation, Employee has no claim of ownership or other rights to any Employee
Intellectual Property.
     9.3 Notice Regarding Exception to Inventions Assignment. Employee
understands that the assignment of Inventions set forth herein does not apply to
any Invention for which no equipment, supplies, facility, or trade secret
information of Corporation was used and which was developed entirely on
Employee’s own time, and which does not relate directly to the business of the
Corporation or to its actual or demonstrably anticipated research or
development, or which does not result from any work performed by Employee for
the Corporation.
       10. Compliance and Remedies. Employee recognizes that if Employee
violates this Agreement, including but not limited to Paragraphs 6, 7, 8, or 9
of this Agreement, irreparable damage will result to Corporation that could not
adequately be remedied by monetary damages. As a result, Employee hereby agrees
that notwithstanding any other dispute resolution provisions of this Agreement,
in the event of any breach by Employee of this Agreement, including but not
limited to Paragraphs 6, 7, 8, or 9 of this Agreement or in the event of
apparent danger of such breach, Corporation shall be entitled, in addition to
any other legal or equitable remedies available to it, to an injunction to
restrain Employee’s violation of any portion of this Agreement, as well as
Corporation’s attorney’s fees and costs incurred in enforcing this Agreement.

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     11. Informal Dispute Resolution. Employee and the Corporation agree to make
good faith efforts to resolve internally and without resort to formal dispute
resolution any dispute, which may arise out of or relate to Employee’s
recruitment, employment or the termination of Employee’s employment with the
Corporation, or any dispute regarding any of the provisions of this Agreement.
     12. Arbitration Clause. In the event that informal efforts to resolve
disputes pursuant to Paragraph 11 are unsuccessful, any dispute between Employee
and the Corporation arising out of or related to Employee’s recruitment,
employment or the termination of Employee’s employment with the Corporation, and
any dispute between Employee and the Corporation regarding any of the provisions
of this Agreement (other than an action for injunctive relief to enforce
Employee’s obligations under Paragraphs 6, 7, 8, or 9 of this Agreement), shall
be determined not in a court of law, but instead by arbitration in the United
States, in the State of Minnesota and the County of Hennepin. Such disputes
shall be referred in writing to the American Arbitration Association for
selection of an arbitrator. Selection of the arbitrator shall be made in
accordance with the Rules of the American Arbitration Association, and the
arbitrator’s decision shall be final and binding in all respects.
Except as otherwise provided in this section, arbitration proceedings initiated
pursuant to this Agreement shall be conducted in accordance with the Rules of
the American Arbitration Association. Prior to the arbitration hearing, the
parties may use the following discovery methods: interrogatories in a form
consistent with Rule 33 of the Federal Rules of Civil Procedure; requests for
production of documents in a form consistent with Rule 34 of the Federal Rules
of Civil Procedure; admissions; depositions of witnesses in accordance with
Rule 30 of the Federal Rules of Civil Procedure. The arbitrator shall have the
right to determine the extent of discovery permitted. The arbitrator shall
consider the matter in controversy and may hold hearings regarding the same. The
arbitrator may grant any remedy or relief that he or she deems just and
equitable, including, but not limited to, any remedy or relief that would have
been available to the parties under any applicable statutes or common law. The
arbitrator also has the authority to issue an award or partial award on the
grounds that there is no claim stated on which relief can be granted or that
there is no genuine issue as to any material fact and one party is entitled to
judgment as a matter of law consistent with Federal Rules of Civil Procedure 12
or 56. The arbitrator shall enter an award in writing detailing Employee’s
consideration of the relevant facts, the basis and reason for the decision, and
Employee’s adherence to the applicable law. This written decision shall be
entered within thirty days after the matter is finally submitted to the
arbitrator, and a copy thereof shall be delivered to each party by certified
mail. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof.
The Corporation shall pay the expense of the arbitrator; each party will bear
its own attorneys’ fees and expenses. All proceedings under this paragraph are
private and confidential.
Notwithstanding the foregoing, the Corporation may bring a court action for
injunctive relief to enforce this Agreement. The parties agree that the
Corporation may elect to venue such action in the federal or state courts of the
State of Minnesota, whether or not such venue is then convenient to Employee,
and that such courts shall have personal jurisdiction over Corporation and
Employee and Employee shall not object to the venue or personal jurisdiction of
such courts.

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Employee understands that by signing this Agreement, Employee is forever giving
up Employee’s right to litigate in a court of law any controversy arising out of
Employee’s employment relationship with the Corporation, and any controversy
regarding any of the provisions of this Agreement, and that he is agreeing
instead to arbitrate any claims he may choose to pursue against the Corporation.
Nothing in this Agreement, however, prohibits either party from going to a court
of law to enforce an award of an arbitrator.
     13. Miscellaneous.
     13.1. Integration. This Agreement embodies the entire agreement and
understanding among the parties relative to subject matter hereof and supersedes
and replaces all prior agreements and understandings relating to such subject
matter, including but not limited to the Non-Compete Agreement and/or the Prior
Employment Agreement.
     13.2. Applicable Law. This Agreement and the rights of the parties shall be
governed by and construed and enforced in accordance with the laws of the state
of Minnesota.
     13.3. Payments. All amounts paid under this Agreement shall be subject to
normal withholdings or such other treatment as required by law.
     13.4. Counterparts. This Agreement may be executed in several counterparts
and as so executed shall constitute one agreement binding on the parties hereto.
     13.5. Binding Effect. Except as herein or otherwise provided to the
contrary, this Agreement shall be binding upon and inure to the benefit of the
Corporation and its successors, assigns and personal representatives without any
requirement of the consent of the employee for assignment of its rights or
obligations hereunder.
     13.6. Notices. All notices, requests and other communications hereunder
shall be given in writing and deemed to have been duly given or served if
personally delivered, or sent by first class, certified mail, return receipt
requested, postage prepaid, to the party at the address as provided below, or,
to such other address as such party may hereafter designate by written notice to
the other party:
     (a) If to the Corporation, to the address of its then principal office.
     (b) If to Employee, to the address last shown in the records of the
Corporation.
     13.7. Modification. This Agreement shall not be modified or amended except
by a written instrument signed by the parties.
     13.8. Severability. The invalidity or partial invalidity of any portion of
this Agreement shall not invalidate the remainder thereof, and said remainder
shall remain in fully force and effect.

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     13.9. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
     13.10. Survival. Employee acknowledges and agrees that Employee’s
noncompetition, confidentiality, return of property, and invention obligations
under Paragraphs 6, 7, 8, and 9 of this Agreement shall survive the Term or any
Renewal Term, the non-renewal of this Agreement, and the termination of
Employee’s employment with the Corporation, regardless of the reason for
termination.
     13.11. Opportunity to Obtain Advice of Counsel. Employee acknowledges that
Employee has been advised by the Corporation to obtain legal advice prior to
executing this Agreement, and that Employee had sufficient opportunity to do so
prior to signing this Agreement.
THIS AGREEMENT was voluntarily and knowingly executed by the parties as of date
and year first set forth above.

            HEI, INC.
      By:   /s/ Mack Traynor         Mack Traynor, President/CEO               
EMPLOYEE:
      /s/ Scott Stole       Scott M. Stole           

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