image [a200999001.jpg]

 

 

 

June 29, 2020

 

Mr. Mark Gorder

c/o IntriCon Corporation

1260 Red Fox Road

Arden Hills, MN 55112

 

Re: Transition Agreement

Dear Mark:

This Transition Agreement (“Agreement”) is intended to set forth the terms of
your (“Mark,” “you” or “your”) retirement from employment with IntriCon
Corporation and its direct and indirect subsidiaries (collectively referred to
as “IntriCon”). The terms of the Agreement are as follows:

1. Transition

a. Phase 1. Beginning on the date hereof through July 31, 2020, you will
transfer your current CEO responsibilities pertaining to sales and marketing,
medical business development, regulatory and corporate development initiatives
to Scott Longval. During this time, you and Scott Longval will co-manage
investment allocation.

b. Phase 2. Beginning on August 1, 2020 through September 30, 2020, you will
transfer your remaining CEO responsibilities, including responsibilities
pertaining to Hearing Health business development initiatives and research and
development management, to Scott Longval. Your retirement and resignation as
President, CEO and an employee of IntriCon will be effective as of September 30,
2020 (“Separation Date”) at which time Scott Longval will become President and
CEO.

c. Phase 3. During the fourth quarter of 2020, you will serve as an independent
consultant to IntriCon with the title “Special Executive Advisor” and provide
consulting services to IntriCon’s executive management team pertaining to the
final transition and 2021 Strategic Planning Process. You will be paid a
consulting fee of $36,950 per month during this period. You will be responsible
for the payment of all taxes with respect to such fees.

d. Directorship. Nothing in this Agreement shall affect your current term as a
director of IntriCon Corporation. Effective as of January 1, 2021, you will be
deemed a “non-employee” director for the purpose of eligibility for director
retainer and meeting fees and restricted stock unit awards.

2. Transition Benefits. In consideration for the agreements and releases set
forth in this Agreement, and provided that you execute and comply with the terms
of and do not revoke this Agreement as provided in Paragraph 18 of this
Agreement, IntriCon agrees as follows:

 

a. Severance. You will receive a one-time severance payment of $443,400, less
applicable withholdings, provided that you comply with your post-employment
obligations and that, within thirty (30) days following the Separation Date, you
execute and do not revoke the Reaffirmation of the General Release and Waiver of
Claims attached hereto as Exhibit A (the “Reaffirmation”). The severance payment
equals one year’s base salary. The severance payment will be paid in a lump sum,
less applicable withholdings, on the first regularly scheduled payroll date in
2021.

b. Medical Benefits Continuation. Your current health and welfare benefits will
terminate on the Separation Date. If you timely elect to continue health
insurance coverage under the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”) after the Separation Date and provided that you comply with your
post-employment obligations and that, within thirty (30) days following the
Separation Date, you execute and do not revoke the Reaffirmation, IntriCon shall
pay you, on the first regularly scheduled payroll date of each month, an amount
equal to the percentage of your health care premium costs paid by IntriCon as of
the Separation Date (“COBRA Payments”) through the earlier of December 31, 2021,
or until you are eligible to receive health benefits from a new employer or a
spouse’s employer. If you become eligible to receive health benefits, you must
immediately notify Sara Hill, Vice President and Chief Human Resources Officer
of IntriCon. Further, you agree to indemnify IntriCon against any assessments
made against IntriCon resulting from your eligibility for benefits under the
Medicare program.

c. Restricted Stock Unit Grant. You will receive a grant of restricted stock
units under the 2015 Equity Incentive Plan equal to $400,000 divided by the
closing price of IntriCon’s common stock on the Grant Date (as defined below)
(the “New RSU Grant”), provided that you comply with your post-employment
obligations and that, within thirty (30) days following the Separation Date, you
executed and did not revoke the Reaffirmation. The New RSU Grant will be granted
on the first trading day following the expiration of the revocation period set
forth in the Reaffirmation (such day, the “Grant Date”). The New RSU Grant will
vest in equal one-third annual installments beginning on the first anniversary
of the Grant Date.

d. 2020 Annual Incentive Compensation. You will be eligible to receive the
amount payable to you, if any, under IntriCon’s 2020 annual incentive
compensation plan (assuming that you had remained as an employee through the
date of payment under such plan) as and when determined and payable in
accordance with such plan as adopted by the board of directors provided that you
comply with your post-employment obligations and that, within thirty (30) days
following the Separation Date, you executed and did not revoke the
Reaffirmation.

3. Value of Separation Benefits. You acknowledge that the consideration set
forth above in Paragraph 2 is satisfactory and adequate in exchange for your
agreements and release of claims contained herein and represents benefits which
you are not otherwise entitled to under IntriCon’s policies, practices and
plans. You understand that you will receive no payment or other consideration or
benefits from IntriCon except as specifically provided herein. You acknowledge
that you have been paid all compensation, bonuses, commissions, and/or benefits
which are due and payable to you as of the date you sign this Agreement.

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4. Other Compensation and Benefits.

a. Options and Restricted Stock Units. In accordance with IntriCon’s 2006 Equity
Incentive Plan and 2015 Equity Incentive Plan, each as amended (collectively,
the “Plans”), your separation from IntriCon on the Separation Date will
constitute your “Retirement” as defined in the Plans and, accordingly, (i) all
stock options held by you as of the Separation Date shall continue to be
exercisable by you or your heirs, executors, administrators or other legal
representatives for a period equal to the unexpired term of the stock option and
(ii) all unvested restricted stock units held by you as of the Separation Date
shall automatically become free of all restrictions and conditions, less
applicable withholdings; provided however, that in accordance with Treasury
Regulation § 1.409A-3(i)(2), the shares underlying such restricted stock units
will not be delivered to you until the date that is the six-month anniversary of
the date you have a separation from service (as defined in Treasury Regulation
1.409A-1(h)) with IntriCon.

b. PTO. IntriCon shall pay you for any accrued and unused PTO as of the
Separation Date, less applicable withholdings, in accordance with the Company’s
policy on the next regularly scheduled payroll date after the Separation Date.

c. Disability and Life Insurance. As soon as practicable after the Separation
Date, IntriCon will transfer to you: (i) disability insurance policies numbered
6380109 and 743820 with UNUM and (ii) to the extent transferable, any group life
insurance policy on you with UNUM (please contact UNUM for information). From
and after the Separation Date, you shall assume responsibility for payment of
premiums on such policies.

d. Other Benefits. IntriCon shall continue to pay you your current salary,
maintain your current employee benefits, and reimburse you for your automobile
and country club membership, as well as your reasonable business expenses, as
provided in your Employment Agreement (as defined below) for periods through the
Separation Date, after which such benefits shall terminate, except as otherwise
set forth herein.

5. General Release of Claims. You, for yourself and your heirs, executors,
representatives, administrators, agents, successors and assigns (collectively,
the “Releasors”) hereby generally release and discharge IntriCon and each of its
direct and indirect subsidiaries and divisions, their past, present and future
officers, directors, partners, attorneys, employees, owners, shareholders,
members, insurers and agents and their respective successors and assigns
(individually and collectively referred to as “IntriCon Released Parties”), from
any and all suits, causes of action, complaints, charges, obligations, demands,
or claims of any kind, whether in law or in equity, direct or indirect, known or
unknown (hereinafter “claims”), which Releasors ever had or now have against
IntriCon Released Parties arising out of or relating to any matter, thing or
event occurring up to and including the date of this Agreement. You also release
IntriCon Released Parties from any and all claims for wrongful discharge,
defamation, unfair treatment, violation of public policy, breach of express or
implied contract, intentional or negligent infliction of emotional distress, any
and all tort claims or any other claim related to your employment with IntriCon
or the termination of that employment for any and all reasons, up to and
including the date of execution of this Agreement. Without limiting the
generality of the foregoing, you specifically release IntriCon Released Parties
from any claim relating to or arising out of your employment with or termination
of employment from IntriCon; any claims for unpaid or withheld wages, severance,
benefits, vacation pay, bonuses and/or any other compensation of any kind; any
rights or claims you may have based upon Title VII of the Civil Rights Act of
1964, as amended, which prohibits discrimination in employment based on race,
color, creed, national origin or sex; the Age Discrimination in Employment Act
including the Older Workers Benefits Protection Act (“ADEA”), which prohibits
discrimination on the basis of age; the Equal Pay Act, which prohibits paying
men and women unequal pay for equal work; the Lilly Ledbetter Fair Pay Act,
which prohibits discrimination in pay on the basis of protected characteristics;
the Americans with Disabilities Act of 1990, as amended, which prohibits
discrimination against disabled persons; the Family Medical Leave Act, as
amended, which permits extended time away from work to handle certain family or
medical needs; the Executive Retirement Income Security Act, which regulates
employment benefits; the Minnesota Human Rights Act, the Minnesota Equal Pay for
Equal Work Law, the Minnesota Termination of Sales Representatives Act, the
Minnesota Whistleblower Act, the Minnesota Whistleblower Protection Laws, the
Minnesota Parental Leave Act; any local, state, or federal law arising from
and/or enacted to address the COVID-19 virus; and any and all other federal,
state or local laws or regulations prohibiting employment discrimination or
which otherwise regulate employment terms and conditions, except as such release
is limited by applicable law. To the extent permitted by law, you also waive any
right or ability to be a class or collective action representative or to
otherwise participate in any putative or certified class, collective or
multi-party action or proceeding based on such a claim in which any IntriCon
Released Party is a party.

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This is a general release and covers claims that you know about presently and
those that you may not know about up through the date of this Agreement. This
Agreement specifically includes any and all claims for attorney’s fees and costs
which are incurred by you for any reason, except as provided in Paragraph 18.
IntriCon is not waiving its right to any restitution, recoupment or setoff
against you which is permitted by law based on claims released herein. The
parties also agree that nothing in this release will affect your right to
enforce the terms of this Agreement.

Notwithstanding the broad scope of the general release of claims above, the
Agreement is not intended to bar any claims that, as a matter of law, whether by
statute or otherwise, may not be waived, such as claims for workers’
compensation benefits and unemployment insurance benefits, challenges to the
validity of the release under the ADEA, violations of SEC rules, and any rights
to vested benefits, such as pension or retirement benefits, the rights to which
are governed by the terms of the applicable plan documents and award agreements.
This Agreement also does not release any rights or bar any claims you have to
indemnification under IntriCon’s corporate articles, bylaws, or policies or
pursuant to applicable law. Although this Agreement will not prevent you from
filing a charge with the United States Equal Employment Opportunity Commission
(“EEOC”) or any other federal or state agency, or participating in any
investigation conducted by the EEOC (or other federal or state agency), any
claims by you (or on your behalf) for personal relief including, without
limitation, reinstatement or monetary damages, would be barred. Nothing in this
Agreement is intended to interfere with your right to file a charge or
participate in an administrative investigation or proceeding; provided, however,
that you expressly release and waive your right to recovery of any type,
including back pay, front pay, compensatory damages, liquidated or punitive
damages, attorney’s fees, reinstatement, or any other benefit, in any
administrative or court action, whether state or federal, and whether brought by
you or on their behalf, related in any way to the matters released herein.
Nothing in this Paragraph or this Agreement will waive or release any rights or
claims that you may have under the Dodd-Frank Wall Street Reform and Consumer
Protection Act. Nothing in this paragraph will prevent you from enforcing the
terms of this Agreement.

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In exchange for the terms of this Agreement, IntriCon, for itself and its direct
and indirect subsidiaries (collectively, “IntriCon Releasors”), hereby generally
release and discharge the Releasors from any and all known claims, which the
IntriCon Releasors ever had or now have against the Releasors arising out of or
relating to any matter, thing or event occurring up to and including the date of
this Agreement.

6. Promise Not to Sue. You promise never to file any claim, complaint, demand
for arbitration, or lawsuit against any of the IntriCon Released Parties or
allow any other party acting on your behalf to do so based on or asserting any
claims relating to your employment with IntriCon, your separation from
employment with IntriCon, or any of the claims released herein. You agree that
neither you nor any person acting by, through, under, or in concert with you
will initiate, encourage, assist or participate in any actions against any of
the IntriCon Released Parties, unless pursuant to a validly issued subpoena or
court order, and that upon receipt of such instrument, you will notify IntriCon
within 48 hours by providing notice to IntriCon’s Chief Human Resources Officer.
Similarly, the IntriCon Releasors promise never to file any claim, complaint,
demand for arbitration, or lawsuit against you or allow any other party acting
on their behalf to do so based on or asserting any of the claims released
herein.

7. IntriCon Property and Information. On or before the Separation Date, you will
return to IntriCon issued property in your possession, including any credit
cards, to an IntriCon representative, provided, however, that (i) you shall
return your IntriCon property access card on or before December 31, 2020 and
(ii) you may retain your IntriCon issued laptop and cell phone, subject to
IntriCon’s standard confidential information security procedures.

8. Restrictive Covenants and Non-Disparagement; Public Communications Related to
IntriCon. You specifically agree to the following:

a. IntriCon and you are parties to an Employment Agreement dated as of October
5, 2007 (the “Employment Agreement”), a copy of which is attached hereto as
Exhibit B. Effective as of the date hereof, the Employment Agreement shall
terminate and be of no further force or effect, provided however that you agree
and affirm that you will continue to be bound by the restrictive covenants and
other provisions included in Section 5 of the Employment Agreement in accordance
with their terms and that you will abide by those obligations. For the avoidance
of doubt, (i) the obligations in Section 5.1 (Confidentiality) of the Employment
Agreement shall continue indefinitely, (ii) the references in Section 5.2
(Inventions and Improvements) of the Employment Agreement to your “employment
with the Company” or similar terms shall include your service as a consultant
hereunder, and (iii) the obligations in Section 5.3 (Noncompetition ) of the
Employment Agreement shall continue through December 31, 2021.

b. You agree not to make, publicly or privately, any negative comments or
disparaging remarks, concerning or relating to IntriCon, in writing, orally, or
electronically, that would injure the business or reputation of IntriCon, or
their respective members, officers, managers, and directors. IntriCon agrees to
instruct its executive management team and senior leadership team not to make,
publicly or privately, any disparaging remarks about you in writing, orally, or
electronically that would injure your reputation.

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c. IntriCon will prepare a press release and other public communications
concerning your transition, all of which shall be subject to your reasonable
review and comment. You understand that IntriCon will be required to file a copy
of this Agreement with the SEC as a public document.

d. The obligations in this Paragraph 8 are in addition to any obligations you
have as a director of IntriCon.

e. Nothing in this Agreement prohibits you from reporting possible violations of
federal law or regulation to any governmental agency or entity, including but
not limited to the U.S. Department of Justice, the Securities and Exchange
Commission, Congress, the Occupational Safety and Health Administration, and any
agency Inspector General, or making other disclosures that are protected under
the whistleblower provisions of federal and state law or regulation, including
the Defend Trade Secrets Act, which gives you immunity from federal and state
civil and criminal liability for disclosures of trade secrets. Under the Defend
Trade Secrets Act, you have the right to (i) disclose in confidence trade
secrets to federal, state, and local government officials, or to an attorney,
for the sole purpose of reporting or investigating a suspected violation of law,
and (ii) disclose trade secrets in a document filed in a lawsuit or other
proceeding, but only if the filing is made under seal and protected from public
disclosure. You do not need prior authorization from IntriCon to make any such
reports or disclosures and are not required to notify IntriCon that he has made
such reports or disclosures.

f. You understand and agree that this Paragraph 8 is an essential term of the
Agreement and that your violation thereof would constitute a material breach of
the Agreement resulting in the forfeiture or repayment of amounts paid or due
under this Agreement.

9. Remedies; Severability. All remedies at law or in equity will be available
for the enforcement of this Agreement. This Agreement may be pleaded as a full
bar to the enforcement of any claim which you may have against IntriCon or any
member thereof. If any term or provision of this Agreement, other than
Paragraphs 5 and 6, is held to be invalid or unenforceable for any reason, the
validity or enforceability of the remaining terms or provisions will not be
affected, and such term or provision will be deemed modified to the extent
necessary to make it enforceable.

10. Entire Agreement. This Agreement, including the Exhibits attached hereto,
are the final, complete and exclusive agreement of the parties with respect to
the subject matter hereof, supersedes any prior written agreement or
understanding between IntriCon and you, including the Employment Agreement
(except as provided in Paragraph 8(a)), contains the entire agreement of the
parties with respect to the subject matter hereof, and will be binding upon the
parties’ respective heirs, executors, administrators, successors and assigns.

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11. No Admission. This Agreement represents a full, complete and binding
compromise of claims and will not be construed as an admission by any party of
any liability or of any contention or allegation made by any other party.

12. Cooperation with IntriCon and IntriCon’s Counsel. You will, upon reasonable
notice, cooperate fully with IntriCon and with any legal counsel, expert or
consultant it may retain to assist it in connection with any judicial
proceeding, arbitration, administrative proceeding, governmental investigation
or inquiry or internal audit in which IntriCon may be or become involved.

13. Governing Law; Submission to Jurisdiction; Waivers. This Agreement will be
governed by, and construed in accordance with, the laws of the State of
Minnesota, without regard to conflict or choice of law principles thereof.
Without limiting the generality of the foregoing, each of the parties
irrevocably and unconditionally (a) submits to the exclusive jurisdiction of the
Minnesota courts with respect to any action brought related to enforcement of
the Agreement; (b) consents that any such action may and will be brought in such
Minnesota courts and waives any objection that it may now or thereafter have to
the venue or jurisdiction of any such action in any such court or that such
action was brought in an inconvenient court and agrees not to plead or claim the
same; and (c) irrevocably waives a trial by jury as to any action to enforce the
Agreement or any transactions contemplated hereby or associated herewith
(whether based in contract, tort or otherwise).

14. Interpretation of Agreement. Any rule of law or legal decision that would
require interpretation of any ambiguities in this Agreement against the party
that has drafted it is not applicable and is waived. The provisions of this
Agreement will be interpreted in a reasonable manner to affect the intent of the
parties as set forth herein.

15. Parties Bound; Assignment. This Agreement shall apply to, be binding upon,
and inure to the benefit of the parties’ successors, assigns, heirs and other
representatives. This Agreement may be assigned by IntriCon without your
consent. This Agreement is not assignable by you.

16. Section 409A of the Internal Revenue Code. It is the intention of the
IntriCon and you that the payments, benefits and rights to which you could be
entitled pursuant to this Agreement comply with Section 409A of the Internal
Revenue Code of 1986, as amended (“Code”), the Treasury regulations and other
guidance promulgated or issued thereunder (“Section 409A”), to the extent that
the requirements of Section 409A are applicable thereto, and after application
of all available exemptions, including but not limited to, the “short-term
deferral rule” and “involuntary separation pay plan exception” and the
provisions of this Agreement shall be construed in a manner consistent with that
intention. IntriCon will not have any liability to you with respect to tax
obligations that result under any tax law and makes no representation with
respect to the tax treatment of the payments and/or benefits provided under this
Agreement. Any provision required for compliance with Section 409A that is
omitted from this Agreement shall be incorporated herein by reference and shall
apply retroactively, if necessary, and be deemed a part of this Agreement to the
same extent as though expressly set forth herein.

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17. Delivery by Facsimile or Electronic Means; Counterparts. This Agreement may
be executed in counterparts, each of which will be deemed an original.
Electronic or facsimile signatures on scanned, copied, or faxed duplicates of
this Agreement shall have the same force and effect as original signatures.

18. Advice of Counsel; Consideration Period; and Revocation Period. You are
hereby advised by IntriCon, and you acknowledge that you have been so advised in
writing, to consult independent legal counsel of your choice before signing this
Agreement. IntriCon agrees to reimburse you for the cost of consulting with
counsel in an amount not to exceed $5,000. You further acknowledge that you have
had the opportunity to consult independent legal counsel of your choosing and to
consider the terms of this Agreement for a period of twenty-one (21) days. You
further acknowledge that you have carefully read this Agreement in its entirety,
that you have had an adequate opportunity to consider it, and you have had
answered, to your satisfaction, all questions regarding this Agreement. You
further acknowledge that you understand all the terms of this Agreement and
their significance, that you knowingly and voluntarily assent to all the terms
and conditions contained herein, and that you are signing this Agreement
voluntarily and of your own free will. This Agreement will not become effective
until the sixteenth (16th) day following the date of your signing of this
Agreement (the “Effective Date”), and you may at any time prior to the Effective
Date revoke this Agreement by delivering to Sara Hill, IntriCon’s Chief Human
Resources Officer, at 1260 Red Fox Road, Arden Hills, MN 55112, written notice
of revocation before 5:00 p.m. Central Time on the fifteenth (15th) day
following your signing of this Agreement. In the event that you revoke this
Agreement prior to the fifteenth (15th) day after its execution, this Agreement,
and the promises contained in it, will automatically be null and void. If the
last day of the revocation period falls on a Saturday, Sunday, or holiday, the
last day of the revocation period will be deemed to be the next business day.

19. Signatures. The parties to this Agreement acknowledge that the terms of this
Agreement are contractual, that they are acting of their own free will, that
they have had sufficient opportunity to read and review the terms of this
Agreement, that they are voluntarily entering into this Agreement with full
knowledge of its respective provisions and effects, and that they have
voluntarily caused the execution of this Agreement as of the day and year set
forth below.

IN WITNESS WHEREOF, intending to be legally bound, the parties have executed
this Agreement as of the day and year set forth below:

 

MARK S. GORDER   INTRICON CORPORATION           /s/ Mark S. Gorder   By:  /s/
Scott Longval   Mark S. Gorder     Scott Longval, Executive Vice President, COO
and CFO             06/29/2020     06/29/2020   Date     Date  

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EXHIBIT A

REAFFIRMATION OF THE GENERAL RELEASE AND WAIVER OF CLAIMS

FOR SIGNATURE NO EARLIER THAN SEPTEMBER 30, 2020

I, Mark S. Gorder, hereby reaffirm the general release contained in Paragraph 5
of the Transition Agreement entered into between me and IntriCon Corporation
(“IntriCon”) on or about June 29, 2020 (“Agreement”), which is incorporated
herein by reference as if set forth fully.

The intent of this Reaffirmation is to effectuate a complete release of all
claims of whatever kind or nature, whether known or unknown, against IntriCon
Released Parties as described in Paragraph 5 of the Agreement, while extending
the timeframe of that release up to and including the date of my signature
below.

I am executing this Reaffirmation pursuant to my agreement to release claims in
Paragraph 5 of the Agreement and in exchange for the consideration described in
Paragraph 2 of the Agreement.

I acknowledge that I am acting of my own free will, that I have had sufficient
opportunity, up to twenty-one (21) days, to read and review the terms of this
Reaffirmation, that I have been advised by IntriCon to consult with an attorney
of my choice before signing this Reaffirmation, and that I am voluntarily
entering into this Reaffirmation as of the date set forth below.

I further acknowledge and understand that I will have fifteen (15) days after
signing this Reaffirmation in which to revoke it, and that this Reaffirmation
will not become effective or enforceable until that fifteen day revocation
period has expired without me exercising this right of revocation. If I choose
to revoke this Reaffirmation after signing it, I understand that to do so I must
deliver or arrange to have delivered a written notice of revocation signed by me
to IntriCon to the attention to Sara Hill, IntriCon’s Chief Human Resources
Officer, at 1260 Red Fox Road, Arden Hills, MN 55112, no later than 5:00 p.m.
Central Time on the fifteenth (15th) day following the day I sign this
Reaffirmation. I understand that if I revoke this Reaffirmation, then the
promises contained in Paragraph 2 of the Agreement will automatically be null
and void. If the last day of the revocation period falls on a weekend or
holiday, the last day of the revocation period will be deemed to be the next
business day.

Reviewed and agreed:           Mark S. Gorder           Dated  

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Exhibit B

Employment Agreement

This EMPLOYMENT AGREEMENT (“Agreement”) is made and dated as of October 5, 2007,
between INTRICON CORPORATION, a Pennsylvania corporation (the “Company”), and
MARK S. GORDER (“Executive”).

BACKGROUND

Executive has served as President and Chief Executive Officer of the Company
since 2001. Executive wishes to remain in the employ of the Company in those
capacities on the terms and conditions contained in this Agreement. Executive
has been and will continue to be substantially involved with the Company’s
operations and management and has and will continue to have trade secrets and
other confidential information relating to the Company and its customers;
accordingly, the noncompetition agreement and other restrictive covenants
contained in Section 5 of this Agreement constitute essential elements hereof.

NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:

SECTION 1. CAPACITY AND DUTIES

1.1          Employment; Acceptance of Employment. The Company hereby employs
Executive and Executive hereby agrees to continue employment by the Company for
the period and upon the terms and conditions hereinafter set forth.

1.2          Capacity and Duties.

(a)       Executive shall serve as President and Chief Executive Officer of the
Company. Executive shall continue to serve in all other offices and
directorships he now holds with the Company and its subsidiaries, subject to the
pleasure of the Boards of Directors of the Company and its subsidiaries.
Executive shall perform such other duties and shall have such authority
consistent with his position as may from time to time be specified by the Board
of Directors of the Company.

(b)       Executive shall devote his full working time, energy, skill and best
efforts to the performance of his duties hereunder, in a manner that will comply
with the Company’s rules and policies and will faithfully and diligently further
the business and interests of the Company. Executive shall not be employed by or
participate or engage in or in any manner be a part of the management or
operation of any business enterprise other than the Company and its subsidiaries
without the prior written consent, which consent may be granted or withheld in
the sole discretion, of the Board of Directors of the Company.

 

 

SECTION 2. TERM OF EMPLOYMENT

2.1          Term. Unless earlier terminated in accordance with the other
provisions hereof, the term of Executive’s employment hereunder shall continue
until April 30, 2008, provided that the employment term automatically shall be
extended for successive periods of one (1) year each unless written notice of
termination of the automatic renewal of the term (“Non-renewal Notice”) is given
by one party hereof to the other at least sixty (60) days prior to the end of
the then current employment term (as so extended or earlier terminated, the
“Term”).

SECTION 3. COMPENSATION

3.1          Basic Compensation. As compensation for Executive’s services, the
Company or a subsidiary of the Company shall pay to Executive a salary at an
annual rate as shall be established from time to time by the Board of Directors
of the Company or the Compensation Committee of the Board of Directors of the
Company. In no event shall Executive’s salary be less than $312,000, unless
Executive consents to a lesser amount. Executive’s annual salary, as determined
in accordance with this Section 3.1, is hereinafter referred to as his “Base
Salary,” and shall be payable in periodic installments in accordance with the
Company’s regular payroll practices in effect from time to time.

3.2          Performance Bonuses. Executive shall be entitled to receive
performance bonuses of up to such percentage of his Base Salary as the
Compensation Committee of the Board of Directors may determine from time to time
in accordance with the policies and plans of the Company in place from time to
time, if any, with respect to the payment of bonuses to executive officers.

3.3          Employee Benefits. During the Term, Executive shall be entitled to
participate in such of the Company’s employee benefit plans and benefit
programs, including medical benefit programs, stock options under the Company’s
stock option plans in effect from time to time or any additional plans or
programs, as may from time to time be provided by the Company for its executive
officers. Additionally, the Company agrees to maintain disability insurance
policies for Executive’s benefit (the “Disability Policies”) with coverage
amounts and terms at least equivalent to the Unum Disability Policy Number
743820 paid for by the Company for Executive’s benefit while he was Chief
Executive Officer of Resistance Technology, Inc.

3.4          Vacation. During the Term, Executive shall be entitled to a paid
vacation of 30 business days per year.

3.5          Expense Reimbursement. The Company shall reimburse Executive for
all reasonable expenses incurred by him in connection with the performance of
his duties hereunder in accordance with its regular reimbursement policies as in
effect from time to time.

3.6          Country Club Membership. The Company shall reimburse Executive for
Executive’s Country Club Membership fees at North Oaks Country Club in North
Oaks, Minnesota.

3.7          Automobile. During the Term, the Company shall provide Executive
with an automobile for use in connection with the performance of his duties
hereunder and shall reimburse him for all expenses reasonably incurred by him
for the maintenance and operation, including fuel, of such automobile in
connection with the performance of his duties hereunder in accordance with the
Company’s regular reimbursement policies as in effect from time to time.

 

2

 

SECTION 4. TERMINATION OF EMPLOYMENT

4.1          Death of Executive. If Executive dies during the Term, the Company
shall not thereafter be obligated to make any further payments hereunder to
Executive’s estate, personal representative or beneficiary who acquired the
right to such payments by bequest or inheritance, other than amounts (including
salary, bonuses, expense reimbursement, etc.) due and payable as of the date of
Executive’s death. Executive’s spouse (if any) shall be entitled to continue to
receive medical benefits coverage in accordance with the Company’s policies in
effect from time to time through the remainder of the then-current Term.

4.2          Disability of Executive. If Executive is or has been materially
unable to perform his duties hereunder for a period of 180 consecutive days or
for a period totaling 180 days in any period of 360 consecutive days due to
physical or mental illness, then the Board of Directors of the Company shall
have the right to terminate Executive’s employment upon 30 days’ prior written
notice to Executive at any time during the continuation of such inability, in
which event the Company shall not thereafter be obligated to make any further
payments hereunder other than amounts (including salary, bonuses, expense
reimbursement, etc.) due and payable under this Agreement as of the date of such
termination. Upon such termination, Executive shall be entitled to continue to
receive medical benefits coverage for Executive and Executive’s spouse (if any)
in accordance with the Company’s policies in effect from time to time through
the remainder of the then-current Term, and shall be entitled to benefits under
any Disability Policies to the extent provided therein. Executive’s disability
shall be determined in the reasonable judgment of the Board of Directors of the
Company. Nothing in this Agreement shall require Company to continue to pay any
compensation to Executive for any period in which he is unable to perform his
duties hereunder due to physical or mental illness in excess of the Company’s
paid sick leave policy period.

4.3          Termination for Cause. Executive’s employment hereunder shall
terminate immediately upon notice that the Board of Directors of the Company is
terminating Executive for Cause (as defined herein), in which event the Company
shall not thereafter be obligated to make any further payments hereunder other
than amounts (including salary, expense reimbursement, etc., but excluding
bonuses) due and payable under this Agreement as of the date of such
termination. “Cause” means the following, provided that, in the case of
circumstances described in clauses (iv) through (vi) below, the Company shall
have given written notice thereof to Executive, and Executive shall have failed
to remedy the circumstances as determined in the sole discretion of the Board of
Directors of the Company within 30 days thereafter:

(i)       fraud or dishonesty in connection with Executive’s employment or
theft, misappropriation or embezzlement of the Company’s funds;

(ii)       conviction of any felony, crime involving fraud or knowing
misrepresentation, or of any other crime (whether or not such felony or crime is
connected with his employment) the effect of which in the judgment of the Board
of Directors of the Company is likely to adversely affect the Company or its
affiliates;

(iii)       material breach of Executive’s obligations under this Agreement;

(iv)       repeated and consistent failure of Executive to be present at work
during normal business hours unless the absence is because of a disability as
described in Section 4.2 herein;

 

3

 

(v)       willful violation of any express direction or requirement established
by the Board of Directors of the Company, as determined by a majority of Board
of Directors of the Company;

(vi)       insubordination, gross incompetence or misconduct in the performance
of, or gross neglect of, Executive’s duties hereunder, as determined by a
majority of Board of Directors of the Company; or

(vii)       use of alcohol or other drugs which interfere with the performance
by Executive of his duties, or use of any illegal drugs or narcotics.

4.4          Termination without Cause.

(a)       If Executive’s employment is terminated by the Company prior to the
end of the Term for any reason other than Cause or the death or disability of
Executive:

(i)       the Company shall pay Executive amounts (including salary, bonuses,
expense reimbursement, etc.) due and payable as of the date of termination and
shall pay Executive an amount equal to the present value of Executive’s then
base salary for a period equal to the Severance Period (as defined below),
payable in a lump sum within two weeks of Executive’s termination using a
discount rate of 6 percent per year;

(ii)       in the sole and absolute discretion of the Board of Directors, the
Company may elect to pay Executive a prorated amount of the bonus that Executive
would have been entitled to receive under Section 3.2 for the year in which he
was terminated (which, if determined to be paid by the Board, shall be payable
as and when the bonus is paid to other similarly situated officers);

(iii)       Executive shall be entitled to receive medical benefits coverage in
accordance with the Company’s policies in effect from time to time through the
period ending 12 months after the date of the termination of Executive’s
employment pursuant to Section 4.4(a);

(iv)       Executive shall be entitled to have transferred to him any Company
paid disability policy on the Executive for Executive’s benefit (if the policy
so permits), and Executive shall assume responsibility for payment of premiums
on such disability policy; and

(v)       Executive shall be entitled to have transferred to him any Company
paid life insurance policies on the Executive for Executive’s benefit (if the
policies so permit) upon payment by the Executive to the Company of any cash
surrender value of such policies, and Executive shall assume responsibility for
payment of premiums on such life insurance policies.

(b)       Except for the provisions of this Section 4.4, the Company shall have
no further obligation to Executive hereunder.

 

4

 

(c)       “Severance Period” means a period equal to two years beginning on the
date of the termination of Executive’s employment pursuant to Section 4.4(a).

(d)       In the event that the Company gives a Non-Renewal Notice to Executive
pursuant to Section 2.1 and, within 12 months after the date of the Non-Renewal
Notice, Executive’s employment is terminated by Company for any reason other
than Cause or the death or disability of Executive, then the Executive shall be
entitled to the benefits described in Section 4.4(a) except that the Severance
Period shall be reduced by the number of days between the date of the
Non-Renewal Notice and the termination of Executive’s employment.

4.5          Voluntary Termination. In the event Executive’s employment is
voluntarily terminated by Executive, the Company shall not be obligated to make
any further payments to Executive under this Agreement other than amounts
(including salary, expense reimbursement, etc., but excluding bonuses) due and
payable as of the date of Executive’s termination. Additionally, the following
provisions shall apply in the event of a voluntary termination by Executive:

(a)       Executive shall be entitled to have transferred to him the Company’s
disability policy (if any) on the Executive for Executive’s benefit (if the
policy so permits), and Executive shall assume responsibility for payment of
premiums on such disability policy.

(b)       Executive shall be entitled to have transferred to him any Company
paid life insurance policies (if any) on the Executive for Executive’s benefit
(if the policies so permit) upon payment by the Executive to the Company of any
cash surrender value of such policies, and Executive shall assume responsibility
for payment of premiums on such life insurance policies.

4.6          Termination following a Change of Control

(a)       If a Change of Control (as hereinafter defined) of the Company occurs
during the Term, and if Executive’s employment by the Company is Involuntarily
Terminated (as hereinafter defined) within one year after such Change of
Control:

(i)       the Company shall pay or cause to be paid to Executive, two year’s
Base Salary at the rate being earned by Executive immediately prior to the
Change of Control or immediately prior to such Involuntary Termination,
whichever is greater (the “Change of Control Payment”), together with all unpaid
bonus and salary due and payable to Executive; provided, however, that the
Company need not make such Change of Control Payment if the Change of Control is
an Asset Sale ( as defined below) and the purchaser in such Asset Sale or an
affiliate of such purchaser offers to employ Executive commencing at the time of
closing of the Asset Sale at not less than the same rate of compensation
(including both base salary and good faith bonus potential) and level of
benefits as Executive was receiving immediately prior to the Asset Sale and
agrees to employ Executive for at least a one year period after the consummation
of the Asset Sale.

(ii)       in the sole and absolute discretion of the Board of Directors, the
Company may elect to pay Executive a prorated amount of the bonus that Executive
would have been entitled to receive under Section 3.2 for the year in which he
was terminated (which, if determined to be paid by the Board, shall be payable
as and when the bonus is paid to other similarly situated officers);

 

5

 

(iii)       Executive shall be entitled to receive medical benefits coverage in
accordance with the Company’s policies in effect from time to time through the
period ending 12 months after the Involuntary Termination;

(iv)       Executive shall be entitled to have transferred to him any Company
paid disability policy on the Executive for Executive’s benefit (if the policy
so permits), and Executive shall assume responsibility for payment of premiums
on such disability policy; and

(v)       Executive shall be entitled to have transferred to him any Company
paid life insurance policies on the Executive for Executive’s benefit (if the
policies so permit) upon payment by the Executive to the Company of any cash
surrender value of such policies, and Executive shall assume responsibility for
payment of premiums on such life insurance policies.

(b)       The Company agrees that any agreement concerning an Asset Sale shall
include a provision obligating the purchaser to fulfill any of the Company’s
obligations to Executive under this Agreement should the Company fail to fulfill
said obligations.

(c)       Any Change of Control Payment or other sums to be paid to Executive
under this Section shall be paid in a lump sum within two weeks of an
Involuntary Termination, except as otherwise provided in this Section.

(d)       Notwithstanding any other provision hereof, the obligations of the
Company hereunder shall arise, if at all, only in connection with the first
Change of Control to occur after the date hereof; any second Change of Control
which may occur following the first Change of Control shall neither diminish nor
trigger again the obligations set forth herein to the extent that such
obligations may be applicable.

(e)       The following terms used herein have the meanings set forth below:

(i)       “Asset Sale” means the sale of the assets of the Company (including
the stock or assets of subsidiaries of the Company) to which are attributable
90% or more of the consolidated sales volume of the Company.

(ii)       “Change of Control” of the Company means an “Asset Sale” or a “Change
in Majority Stock Ownership.”

(iii)       “Change in Majority Stock Ownership” means the acquisition by any
“person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”), including any affiliate or associate
as defined in Rule 12b-2 under the Exchange Act of such person, or any group of
persons acting in concert, other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any corporation or other entity owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportion as their
ownership of capital stock of the Company, of “beneficial ownership” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of
the combined voting power of the Company’s then outstanding securities.

(iv)       “Disability” of Executive means that after being provided with any
accommodation or leave required of the Company by law, the Executive still shall
be physically or mentally incapacitated and as a result thereof shall be unable
to continue substantially proper performance of his duties (reasonable absences
because of sickness for up to six consecutive months excepted). If Executive
shall not agree with a determination to terminate him because of Disability, the
question of Executive’s ability shall be submitted to an impartial and reputable
physician selected either by a mutual agreement of the parties or by the then
president of the Medical Society of the county in which Executive is employed,
and such physician’s determination of disability shall be binding on the
parties.

 

6

 

(v)       “Involuntary Termination” (or “Involuntarily Terminated”) means (a)
any termination of employment of the Executive by Executive following (i) a
material diminution in the Executive’s base compensation; (ii) a material
diminution in the Executive’s authority, duties, or responsibilities; (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 a Executive report to a corporate officer or employee instead of reporting
directly to the board of directors; (iv) a material diminution in the budget
over which the Executive retains authority; (v) a material change in the
geographic location at which the Executive must perform the services; or (vi)
any other action or inaction that constitutes a material breach by the Company
of this Agreement; or (b) any termination of the employment of Executive by the
Company other than for Cause, death or Disability; provided, however, that with
respect to any termination by Executive pursuant to clause (a) of this
paragraph, Executive shall have first provided notice to the Company of the
existence of the condition proposed to be relied upon within 90 days of the
initial existence of the condition, and shall have given the Company a period of
30 days during which it may remedy the condition and the Company shall have
failed to do so during such period. Anything in the Agreement to the contrary
notwithstanding, Executive’s employment with the Company shall not be deemed
terminated if he is transferred from one subsidiary of the Company to another
subsidiary of the Company.

(f)       Upon the occurrence of a Change of Control, the Company or its
assignee waives, and will not assert, any right to set off the amount of any
claims, liabilities, damages or losses the Company or its assignee may have
against any amounts payable by it to Executive hereunder, and any amounts
payable to or otherwise payable to Executive in respect of any period prior to
the termination of this Agreement shall be paid when due.

(g)       Nothing in this Section shall diminish the Company’s right to
terminate the employment of the Executive prior to a Change of Control or impose
any obligation to make any payment to the Executive in connection with any such
termination otherwise than as provided in the other Sections of this Agreement.

(h)       Nothing in this Section shall prejudice Executive’s or his
beneficiary’s right to receive any death, disability, pension, 401(k), qualified
benefit, or other benefits under any contract or plan otherwise due to Executive
upon or following termination.

4.7          No Duty to Mitigate. Executive’s benefits hereunder shall be
considered severance pay in consideration of his past service to the Company,
and pay in consideration of his continued service from the date hereof, and his
entitlement thereto shall not be governed by any duty to mitigate his damages by
seeking further employment, nor offset by any compensation which he may receive
from future employment.

4.8          Withholding; Other Tax Matters. Any payment required under this
Agreement shall be subject to all applicable requirements of law with regard to
withholding, filing, making of reports and the like.

 

7

 

4.9          Stock Options. If during the Term: (a) Executive’s employment is
terminated by the Company for any reason other than for Cause, (b) a Change of
Control occurs or (c) Executive terminates his employment under circumstances
that would constitute an Involuntary Termination (regardless that no Change of
Control has occurred), then any stock options granted to Executive by the
Company which have not been exercised by Executive prior to Executive’s
termination shall accelerate and be exercisable in full and may be exercised by
Executive or his legal representative, estate, personal representative or
beneficiary who acquired the right to exercise such options by bequest or
inheritance, as the case may be, to the extent provided by the terms of the
applicable stock option plan or any option agreement; provided, however, that
with respect to any acceleration of stock options as a result of the termination
of Executive’s employment under clause (a) or (c), it shall be a condition
precedent to such acceleration that Executive shall have complied with Section
4.10 of this Agreement.

4.10          Release. Notwithstanding the foregoing, in the event of the
termination of Executive’s employment for any reason, the Company shall not be
obligated to make any payments or provide any continuing benefits under this
Section 4 (other than with respect to payments and benefits earned and payable
with respect to period prior to the date of termination) unless Executive shall
have executed and delivered to the Company a further agreement (“Release”), to
be prepared at the time of Executive’s termination of employment in form
acceptable to the Company, that shall provide (i) an unconditional release of
all claims (other than claims for amounts due under this Agreement), charges,
complaints and grievances, whether known or unknown to Executive, against the
Company or any of its affiliates, through date of Executive’s termination of
employment; (ii) an undertaking to maintain the confidentiality of such
agreement; (iii) an undertaking to indemnify the Company if Executive breaches
such agreement; and (iv) a covenant not to sue the Company or any of its
affiliates with respect to the subject matter of such release; and any waiting
period or revocation period provided by law for the effectiveness of such
release shall have expired without Executive’s having revoked such Release.

SECTION 5. RESTRICTIVE COVENANTS.

5.1          Confidentiality. Executive acknowledges a duty of confidentiality
owed to the Company and shall not, at any time during or after his employment by
the Company, retain in writing, use, divulge, furnish, or make accessible to any
person or entity, without the express authorization of the Board of Directors of
the Company, any trade secret, private or confidential information or knowledge
of the Company obtained or acquired by him while so employed. All computer
software, address books, rolodexes, business cards, telephone lists, customer
lists, price lists, contract forms, catalogs, books, records, files and know-how
acquired while an employee of the Company are acknowledged to be the property of
the Company and shall not be duplicated, removed from the Company’s possession
or premises or used other than in pursuit of the Company’s business and, upon
termination of employment for any reason, Executive shall deliver to the
Company, without further demand, all copies and summaries thereof (whether in
written, electronic or other form) which are then in his possession or under his
control.

 

8

 

5.2          Inventions and Improvements. Executive shall promptly communicate
to the Company all ideas, discoveries, inventions and business opportunities
which are or may be useful to the Company or its business. Executive
acknowledges that all such ideas, discoveries, inventions, and improvements
which heretofore have been or are hereafter made, conceived, or reduced to
practice by him at any time during his employment with the Company and every
item of knowledge relating to the Company’s business interests (including
business opportunities) heretofore or hereafter gained by him at any time during
his employment with the Company are the property of the Company, and Executive
hereby irrevocably assigns all such ideas, discoveries, inventions,
improvements, and knowledge to the Company for its sole use and benefit, without
additional compensation. The provisions of this Section 5.2 shall apply whether
such ideas, discoveries, inventions, improvements or knowledge were or are
conceived, made or gained by him alone or with others, whether during or after
usual working hours, whether on or off the job, whether applicable to matters
directly or indirectly related to the Company’s business interests (including
potential business interests), and whether or not within the specific realm of
his duties. It shall be conclusively presumed that ideas, discoveries,
inventions, and improvements relating to the Company’s business interests or
potential business interests conceived by Executive during the six month period
following termination of his employment are, for the purposes of this Agreement,
conceived prior to termination of his employment hereunder. Executive shall,
upon request of the Company, but at no expense to Executive, at any time during
or after his employment with the Company, sign all instruments and documents
reasonably requested by the Company and otherwise cooperate with the Company to
protect its right to such ideas, discoveries, inventions, improvements, and
knowledge, including applying for, obtaining, and enforcing patents and
copyrights thereon in such countries as the Company shall determine.

5.3          Noncompetition. During the term of Executive’s employment and for
one year after any termination of employment, or, if longer, for so long as the
period with respect to which Executive is entitled to receive, or has received,
payment of amounts pursuant to Section 4.4(a) herein following a termination by
the Company without Cause or pursuant to Section 4.6 herein following a Change
of Control, Executive shall not directly or indirectly: (i) engage, anywhere in
any geographic market served by the Company or any of its subsidiaries in any
activity which competes in whole or in part with the products or activities of
the Company at the time of such termination; (ii) be or become a stockholder,
partner, owner, officer, director or employee or agent of, or a consultant to or
give financial or other assistance to, any person or entity engaged in any such
activities; (iii) seek in competition with the business of the Company to
procure orders from or do business with any customer of the Company; (iv)
solicit, or contact with a view to, the engagement or employment by any person
or entity of any person who is an employee of the Company; (v) seek to contract
with or engage (in such a way as to adversely affect or interfere with the
business of the Company) any person or entity which has been contracted with or
engaged to manufacture, assemble, supply or deliver products, goods, materials
or services to the Company; or (vi) engage in or participate in any effort or
act to induce any of the customers, associates, consultants, or employees of the
Company to take any action which might be disadvantageous to the Company;
provided, however, that nothing herein shall prohibit Executive and his
affiliates from owning, as passive investors, in the aggregate not more than 5%
of the outstanding publicly traded stock of any corporation so engaged. The
duration of Executive’s covenants set forth in this Section shall be extended by
a period of time equal to the number of days, if any, during which Executive is
in violation of the provisions hereof.

5.4          Injunctive and Other Relief.

(a)       Executive acknowledges and agrees that the covenants contained herein
are fair and reasonable in light of the consideration paid hereunder, and that
damages alone shall not be an adequate remedy for any breach by Executive of his
covenants contained herein and accordingly expressly agrees that, in addition to
any other remedies which the Company may have, the Company shall be entitled to
injunctive or other equitable relief in any court of competent jurisdiction for
any breach or threatened breach of any such covenants by Executive. Nothing
contained herein shall prevent or delay the Company from seeking, in any court
of competent jurisdiction, specific performance or other equitable remedies in
the event of any breach or intended breach by Executive of any of his
obligations hereunder.

 

9

 

(b)       Notwithstanding the equitable relief available to the Company,
Executive, in the event of a breach of his covenants contained in Section 5
herein, understands and agrees that the uncertainties and delay inherent in the
legal process would result in a continuing breach for some period of time, and
therefore, continuing injury to the Company until and unless the Company can
obtain such equitable relief. Therefore, in addition to such equitable relief,
the Company shall be entitled to monetary damages for any such period of breach
until the termination of such breach, in an amount deemed reasonable to cover
all actual and consequential losses, plus all monies received by Executive as a
result of said breach and all costs and attorneys’ fees incurred by the Company
in enforcing this Agreement. If Executive should use or reveal to any other
person or entity any confidential information, such use or revelation would be
considered a continuing violation on a daily basis, for as long as such
confidential information is made use of by Executive or any such other person or
entity.

(c)       If any provision of Section 5 herein is determined to be invalid or
unenforceable by reason of its duration or scope, such duration or scope, or
both, shall be deemed to be reduced to a duration or scope to the extent
necessary to render such provision valid and enforceable. In such event,
Executive shall negotiate in good faith to provide the Company with lawful and
enforceable protection that is most nearly equivalent to that found to be
invalid or unenforceable.

(d)       The existence of any claim or cause of action that Executive or any
other person or entity may have against the Company shall not constitute a
defense or bar to the enforcement of any of the provisions of this Section 5.

5.5          Definition of the “Company.” The “Company” as used in this Section
5

includes all affiliates and subsidiaries of the Company.

SECTION 6. MISCELLANEOUS

6.1          Litigation. At the request of the Company, Executive shall during
and after the Term render reasonable assistance to the Company in connection
with any litigation or other proceeding involving the Company or any of its
affiliates. The Company will pay Executive reasonable compensation as mutually
agreed for any such services performed after the Term. The Company agrees that
during the Term that at all times it shall carry appropriate amounts of officers
and directors liability insurance naming the Executive as an insured party.

6.2          Arbitration. All claims and disputes relating to this Agreement or
concerning Executive’s employment or termination shall be conclusively resolved
by arbitration in Philadelphia, Pennsylvania, under the then existing rules of
the American Arbitration Association. Judgment upon any award rendered may be
entered by either party in any court of competent jurisdiction. The cost of such
arbitration shall be borne equally by the parties or as otherwise directed by
the arbitrators. This Section 6.2 shall not limit the right of the Company to
seek judicial relief pursuant to Section 5.4 herein without prior arbitration.

 

10

 

6.3          Assignment; Benefit. This Agreement shall not be assignable by
Executive, and shall be assignable by the Company only to any affiliate or to
any person or entity which may become a successor in interest (by purchase of
assets or stock, or by merger, or otherwise) to the Company in the business or
substantially all of the business presently operated by it. Subject to the
foregoing, this Agreement and the rights and obligations set forth herein shall
inure to the benefit of, and be binding upon, the parties hereto and each of
their respective permitted successors, assigns, heirs, executors and
administrators.

6.4          Notices. All notices hereunder shall be in writing and shall be
sufficiently given if hand-delivered, sent by documented overnight delivery
service or registered or certified mail, postage prepaid, return receipt
requested or by telegram or telefax (confirmed by U.S. mail), receipt
acknowledged, addressed as set forth below or to such other person and/or at
such other address as may be furnished in writing by any party hereto to the
other. Any such notice shall be deemed to have been given as of the date
received, in the case of personal delivery, or on the date shown on the receipt
or confirmation therefor, in all other cases. Any and all service of process and
any other notice in any action, suit or proceeding-shall be effective against
any party if given as provided in this Agreement; provided that nothing herein
shall be deemed to affect the right of any party to serve process in any other
manner permitted by law.

(a)     If to the Company:

 

IntriCon Corporation

Arden Hills Office

1260 Red Fox Road

Arden Hills, MN 55112

Attention: Chief Financial Officer

Telecopy No.: 651-636-3682

 

(b)       If to Executive:

 

Mark S. Gorder

24 North Deep Lake Road

North Oaks, Minnesota 55127

Telecopy No.: 651-636-3682

 

6.5            Entire Agreement; Modification; Advice of Counsel.

(a)       This Agreement constitutes the entire agreement between the parties
hereto with respect to the matters contemplated herein and therein and
supersedes all prior agreements and understandings with respect thereto. Without
limiting the generality of the foregoing, this Agreement supersedes (i) the
Employment Agreement dated as of December 4, 2004, between Executive and the
Company and (ii) the Agreement Re: Termination Following Change of Control or
Asset Sale dated as of December 14, 2004 between Executive and the Company. No
amendment, modification, or waiver of this Agreement shall be effective unless
in writing. Neither the failure nor any delay on the part of any party to
exercise any right or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right or remedy preclude any other
or further exercise of the same or of any other right or remedy with respect to
such occurrence or with respect to any other occurrence.

 

11

 

(b)       Executive acknowledges that he has been afforded an opportunity to
consult with his counsel with respect to this Agreement. The Company agrees to
reimburse Executive for the cost of consulting with counsel in an amount not to
exceed $2,500. In view of the fact that each of the parties hereto have been
represented by their own counsel and this Agreement has been fully negotiated by
all parties, the legal principle that ambiguities in a document are construed
against the draftsperson of that document shall not apply to this Agreement.

6.6          Governing Law. This Agreement is made pursuant to, and shall be
construed and enforced in accordance with, the laws of the Commonwealth of
Pennsylvania and the federal laws of the United States of America, to the extent
applicable, without giving effect to otherwise applicable principles of
conflicts of law.

6.7          Headings; Counterparts. The headings of paragraphs in this
Agreement are for convenience only and shall not affect its interpretation. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an-original and all of which, when taken together, shall be deemed
to constitute the same Agreement.

6.8          Further Assurances. Each of the parties hereto shall execute such
further instruments and take such additional actions as the other party shall
reasonably request in order to effectuate the purposes of this Agreement.

6.9          Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and his heirs and
administrators and the Company and its, successors and assigns, except that
Executive may not assign Executive’s rights or delegate Executive’s obligations
hereunder without the prior written consent of the Company. Without limiting the
generality of the foregoing, the Company’s rights and obligations under this
Agreement may be assigned by the Company to the purchaser or its affiliate in
connection with an Asset Sale if the Executive becomes an employee of the
purchaser or an affiliate immediately after the Asset Sale, in which case the
assignee shall expressly assume and agree to perform the obligations set forth
in this Agreement in the same manner and to the same extent as if it were the
Company and the Company shall by virtue thereof and without further act be
released from its obligations hereunder.

 

[Signatures begin on the next page.]

 

12

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

 

  INTRICON CORPORATION               By

/s/ Scott Longval

    Name: Scott Longval     Title: Chief Financial Officer

 

 

  EXECUTIVE            

/s/ Mark S. Gorder

    Mark S. Gorder