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Exhibit 10.1

EMPLOYMENT AGREEMENT
 
THIS AGREEMENT is by and between Winland Electronics, Inc., a Minnesota
corporation (hereinafter called “Winland”), and Brian Lawrence (hereinafter
called “Executive”):
 
RECITALS
 
1.           The following recitals shall be considered a part of this Agreement
and explain the parties’ rights and obligations under this Agreement.  Any
interpretation or construction of this Agreement shall be considered in light of
these recitals.
 
2.           Executive desires to be employed by Winland as its Chief Financial
Officer and Senior Vice President of Operations, and Winland desires to employ
Executive as its Chief Financial Officer and Senior Vice President of Operations
on the terms stated in this Agreement.
 
3.           Executive recognizes, agrees and understands that execution of this
Agreement is an express condition of employment with Winland as its Chief
Financial Officer and Senior Vice President of Operations under the terms of
this Agreement, and Winland recognizes that its undertakings set forth in this
Agreement are a material inducement to Executive’s acceptance of employment with
Winland.
 
NOW, THEREFORE, in consideration of Winland employing Executive as its Chief
Financial Officer and Senior Vice President of Operations under this Agreement
and/or other benefits now or hereafter paid or made available to Executive by
Winland, Executive and Winland agree as follows:
 
ARTICLE 1
DEFINITIONS
 
1.01       Confidential Information.  For the purposes of this Agreement,
“Confidential Information” means any information not generally known to the
public and proprietary to Winland and includes, without limitation, trade
secrets, inventions, and information pertaining to research, development,
purchasing, marketing, selling, accounting, licensing, business systems,
business techniques, customer lists, prospective customer lists, price lists,
business strategies and plans, pending patentable materials and/or designs,
design documentation, documentation of meetings, tests and/or test standards, or
manuals whether in document, electronic, computer or other form.  For example,
Confidential Information may be contained in Winland’s customer lists,
prospective customer lists, the particular needs and requirements of customers,
the particular needs and requirements of prospective customers, and the identity
of customers or prospective customers.  Information shall be treated as
Confidential Information irrespective of its source and any information which is
labeled or marked as being “confidential” or “trade secret” shall be presumed to
be Confidential Information.
 
1.02       Invention.  For purposes of this Agreement, the term “Invention”
means ideas, discoveries, and improvements whether or not shown or described in
writing or reduced to practice and whether patentable or not, relating to any of
Winland’s present or future sales, research, or other business activities, or
reasonably foreseeable business interests of Winland.
 
 
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ARTICLE 2
EMPLOYMENT, COMPENSATION AND BENEFITS
 
2.01       Employment With Winland.  Upon execution of this Agreement by both
parties, Winland agrees to employ Executive in the position of Chief Financial
Officer and Senior Vice President of Operations of Winland and Executive accepts
such employment with Winland.
 
2.02       Term.  This Agreement shall commence on January 28, 2013 and
terminate when Executive’s employment with Winland is terminated pursuant to
Paragraph 3.01 hereof.
 
2.03       Duties.
 
(a)           Executive agrees, during his employment, to devote his full time
and best efforts to the business of Winland, including, without limitation, the
performance of those duties and responsibilities reasonably and customarily
associated with his position; provided, however, that Executive’s duties and
responsibilities shall be subject to determination by Winland’s Chief Executive
Officer and Board of Directors or his and its designee.  Executive shall be
granted such powers and authority as are reasonably and customarily associated
with his position.
 
(b)           Executive shall report to, and at all times shall be subject to
the direction of Winland’s Chief Executive Officer or his designee.
 
(c)           Executive, at all times during his employment with Winland, shall
comply with Winland’s reasonable standards, regulations and policies as
determined or set forth by Winland from time to time and as applicable to
executive employees of Winland.
 
(d)           Executive shall maintain and improve his managerial skills and
knowledge of Winland’s business by attending appropriate conventions and
seminars, and participating in other activities reasonably related
thereto.  Winland shall pay and/or reimburse those expenses of Executive,
approved by Winland, which are reasonably related to this subparagraph 2.03(d).
 
2.04       Outside Activities.  Winland acknowledges and agrees that from time
to time Executive may serve as a member of the Board of Directors of one or more
nonprofit entities or businesses other than Winland; provided, however, that
Executive provides Winland’s Board of Directors with information about each
proposed directorship, including time required by such directorship, whether
such directorship may involve conflicts of interest with Winland or their
businesses, the types of risks which such directorship may involve, and any
other factors Executive or Winland’s Board of Directors considers material
respecting such directorship.  Winland’s Board of Directors shall promptly
consider all submissions by Executive pursuant to this Paragraph
2.04.  Winland’s Board of Directors may request in good faith that Executive not
accept a particular directorship, or more than a specific number of
directorships, or that Executive resign from a particular directorship, and
Executive agrees to honor all reasonable requests.
 
 
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2.05      Base Salary.  Executive’s initial annualized base salary under this
Agreement shall be calculated on the gross amount of $130,000, less required and
authorized withholding and deductions.  Executive’s base salary will be paid to
him in accordance with Winland’s normal payroll practices.  Future adjustments,
if any, to annual base salary will be determined by Winland.  Winland’s Board of
Directors shall review Executive’s performance at least annually and consider
adjustment of his overall compensation, including base salary.
 
2.06       Incentive Compensation. During his employment hereunder, Executive
shall be eligible to earn incentive compensation on an annual basis as follows:
 
(a)            A cash incentive of up to 30% of Executive’s base salary, for
each year following the execution of this Agreement.  The earned amount and
other terms of this portion of the cash incentive will be governed by
performance objectives and thresholds adopted by Winland’s Board of Directors as
will be provided to Executive within a reasonable time period at the beginning
of each fiscal year (the “Board Objectives Bonus”). 

(b)           Executive will be eligible to earn the Board Objectives Bonus for
each full calendar year of employment hereunder.

2.07       Stock Option. On the date Executive’s employment commences
hereunder  Executive shall be granted an incentive stock option to purchase
50,000 shares of common stock (the “Stock Option”) pursuant to the Winland 2008
Equity Incentive Plan (the “Plan”).  The Stock Option shall vest 25% over the
next succeeding four years from the date of grant and shall have an exercise
price equal to the then-current fair market value of Winland’s common stock as
of the award date.  The Stock Option will be evidenced by a separate award
agreement that shall contain such terms and conditions as determined by Winland,
including but not limited to the manner in which the Stock Option shall become
vested and exercisable, and that shall otherwise comply with the terms and
conditions of the Plan.  Notwithstanding anything herein to the contrary, it is
the intent of the parties that the Stock Option shall become fully vested and
exercisable, if outstanding, in the event that Winland experiences a change of
control and Executive’s employment is terminated pursuant to Section 3.01(d) or
(e) of this Agreement within two (2) years after such change of control, and
that this intent will be reflected in any award agreement evidencing stock
option grants hereunder.

2.08       Educational Reimbursement.  Executive shall be eligible for
reimbursement related to continuing education expenses which are incurred by
Executive for the development of current and potential future roles of Executive
with Winland, so long as such continuing education expenses are approved by
Winland prior to such expenses being incurred and such reimbursement will not
exceed $5,250 per calendar year.
 

2.09       Fringe Benefits From Winland.  Executive shall be eligible to
participate in employee benefit plans and programs offered by Winland from time
to time, including, but not limited to, any medical, dental, short-term
disability and life insurance coverage, stock option, or retirement plans, in
accordance with the terms and conditions of those benefit plans and programs and
on a basis consistent with that customarily provided to Winland’s executive
employees.
 
 
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2.10       Paid Time Off.   In addition to the foregoing compensation and fringe
benefits, Executive shall be entitled to accrue up to five (5) weeks of paid
time off (PTO) per calendar year (prorated for partial calendar years of
service).  Such PTO shall be subject to Winland’s generally applicable PTO
policies as they may exist from time to time.
 
2.11       Expenses.  During the term of this Agreement, Executive shall be
entitled to prompt reimbursement by Winland for all reasonable, ordinary and
necessary travel, entertainment and other business-related expenses incurred by
Executive (in accordance with the policies and procedures established by Winland
for executive employees from time to time) in the performance of his duties and
responsibilities under this Agreement; provided, however, that Executive shall
properly account for such expenses in accordance with federal, state and local
tax requirements and Winland’s policies and procedures.  Requests for expense
reimbursement must be submitted to Winland within thirty (30) days of the
expense being incurred.
 
ARTICLE 3
TERMINATION
 
3.01       Events of Termination.  Executive’s employment with Winland:
 
(a)           May be terminated by mutual written agreement of Winland and
Executive.
 
(b)           Shall terminate immediately upon the death of Executive.
 
(c)           May be terminated upon written notice from Winland to Executive
for Cause, which shall mean the following:
 
(i)           Negligent or willful misconduct by Executive with respect to the
material duties, requirements and responsibilities of his employment as
contemplated by this Agreement or as reasonably assigned by Winland’s Chief
Executive Officer or Board of Directors or his or its designee, or Executive’s
material breach of any provision of this Agreement or of the written policies,
regulations and directives of Winland as in effect from time to time;

(ii)         Executive has negligently or intentionally engaged in any other
conduct that is materially injurious (or would be reasonably likely to be
materially injurious) to the reputation or business of Winland, including, but
not limited to, professional or personal conduct of Executive which is
dishonest, disloyal, or inconsistent with federal and state laws respecting
harassment of, or discrimination against, one or more of Winland’s employees; or
 
 
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(iii)        Commission by or conviction of Executive of, or a guilty or nolo
contendere plea by Executive with respect to, any crime punishable as a felony.

Before “Cause” has been deemed to have occurred, Winland must give Executive
written notice detailing why Winland believes a Cause event has occurred and
such notice must be provided to Executive within thirty (30) calendar days after
Winland’s actual knowledge of the initial occurrence of such alleged Cause
event.  Executive shall then have thirty (30) calendar days after receipt of
such written notice to cure the conditions cited in the written notice, and if
so cured, Cause will be deemed not to have occurred with respect to the
condition in question.  For these purposes a notice shall be sufficient if it is
transmitted by facsimile or email to Executive and if it provides a general
indication of the nature of the acts, omissions, breach or breaches.

(d)           May be terminated upon 30 days’ written notice from Winland to
Executive without Cause.
 
(e)           May be terminated upon 30 days’ written notice from Executive to
Winland for Good Reason, which shall mean any of the following events without
Executive’s written consent:
 
(i)           a material change in the status, authority or employment
responsibilities held by Executive, including but not limited to a requirement
that Executive report to a corporate officer or employee instead of reporting to
the Winland’s Chief Executive Officer; provided, that for purposes of the
foregoing, Executive shall not be considered to have been assigned employment of
lesser responsibility if Executive manages, has control over, or serves in a
similar position with a subsidiary, division or operating unit of an acquiring
entity that generates revenues of comparable amounts to the revenues generated
by Winland before such acquisition, and if Executive reports, in such position,
to a corporate officer at the parent entity rather than to the Chief Executive
Officer of the parent entity;
 
(ii)         a reduction of Executive’s annual base salary by more than 20%
unless such reduction is part of a general salary reduction for all employees of
similar rank to Executive;
 
(iii)         the failure by Winland to obtain an assumption of its obligations
under this Agreement by any successor to Winland;
 
(iv)        a material breach of this Agreement by Winland or its successor,
including but not limited to a material failure by Winland to pay Executive’s
base salary or the other compensation described in this Agreement;
 
 
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(v)         the relocation of Executive’s place of employment by more than fifty
(50) miles from Executive’s place of employment during the preceding fiscal
year.
 
Notwithstanding the foregoing, none of the forgoing events shall be considered
“Good Reason” if it occurs in connection with Executive’s death or disability,
provided that Winland has made diligent efforts to reasonably accommodate
Executive’s condition.

Before “Good Reason” has been deemed to have occurred, Executive must give
Winland written notice detailing why Executive believes a Good Reason event has
occurred and such notice must be provided to the Board of Directors of Winland
within thirty (30) calendar days after Executive’s actual knowledge of the
initial occurrence of such alleged Good Reason event.  Winland’s Board of
Directors shall then have thirty (30) calendar days after its receipt of written
notice to cure the condition cited in the written notice, and if so cured, “Good
Reason” will be deemed not to have occurred with respect to the condition in
question.  (For these purposes a notice shall be sufficient if it is transmitted
by facsimile or email on to the Board of Directors and if it provides a general
indication of the nature of the acts, omissions, breach or breaches.)
 
(f)            May be terminated upon 30 days’ written notice from Executive to
Winland.
 
3.02       Compensation Upon Termination of Executive’s Employment.  In the
event that Executive’s employment with Winland terminates the following
provisions shall govern as applicable:
 
(a)           If termination occurs pursuant to subparagraph 3.01(a), the
mutually written agreement of the parties shall control.
 
(b)           If termination occurs pursuant to subparagraph 3.01(b), all
benefits and compensation shall terminate as of the date of Executive’s death.
 
(c)           If the termination occurs pursuant to subparagraphs 3.01 (c) or
(f), all benefits and compensation shall terminate as of the termination date.
 
 
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(d)           If termination occurs pursuant to subparagraph 3.01(d) or (e) all
benefits and compensation shall terminate as of the termination date.  In
addition, Executive shall receive cash severance payments equal to nine (9)
months of Executive’s annual base salary in effect at the time of termination of
employment, the pro-rated value of any incentive compensation specified in
subparagraphs (a) and (b) earned through the date of termination, and if
Executive timely elects to continue any group health or dental insurance
coverage through Winland pursuant to applicable laws and plan terms, payment of
premiums on Executive’s behalf for the lesser of nine (9) months or until such
continuation of rights expire. Such payments shall be paid to Executive monthly
over the course of a nine month period, beginning after expiration of any
applicable rescission periods set forth in the required release agreement;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any of the payments described in this Paragraph 3.02 are subject to
the requirements of Section 409A of the Internal Revenue Code of 1986, as
amended (“Code Section 409A”) and Winland determines that Executive is a
“specified employee” as defined in Code Section 409A as of the date of
Executive’s termination of employment, such payments shall not be paid or
commence earlier than the first day of the seventh month following the date of
Executive’s termination of employment. As a condition to Executive’s receipt of
such payments, Executive shall be required to execute, return, comply with and
not rescind a full and final release of any and all claims in favor of Winland
in a form to be provided to Executive before he executes this Agreement. Such
release agreement shall be prepared by Winland.
 
(e)           All payments made to Executive under this Paragraph 3.02 shall be
reduced by amounts (i) required to be withheld in accordance with federal, state
and local laws and regulations in effect at the time of payment, or (ii) owed to
Winland by Executive for any amounts advanced, loaned or misappropriated. Such
offset shall be made in the manner permitted by and shall be subject to the
limitations of all applicable laws, including but not limited to Code Section
409A, and the regulations, notices and other guidance of general applicability
issued thereunder.

3.03       Return of Winland Property.  In the event of termination of
Executive’s employment, whether voluntary or involuntary, or at any time upon
Winland’s request, all corporate documents, records, files, credit cards,
computer disks and tapes, computer access cards, codes and keys, file access
codes and keys, building and office access cards, codes and keys, materials,
equipment and other property of Winland which is in Executive’s possession shall
be returned to Winland at its principal business office on the date of
termination of Executive’s employment, or within one business day thereafter if
such duty to return property is triggered by Winland’s request or termination of
employment without notice.  Executive may copy, at Executive’s expense,
documents, records, materials and information of Winland only with Winland’s
express, written permission.

ARTICLE 4
PROTECTION OF TRADE SECRETS AND
CONFIDENTIAL BUSINESS DATA
 
4.01       Confidential Information.  The definition of “Confidential
Information” as set forth in Paragraph 1.01 is not intended to be
complete.  From time to time during the term of his employment, Executive may
gain access to other information not generally known to the public and
proprietary to Winland concerning Winland’s business that is of commercial value
to Winland, which information shall be included in the definition under
Paragraph 1.01 above, even though not specifically listed in that
Paragraph.  The definition of Confidential Information and the provisions of
this Article IV apply to any form in which the subject information, trade
secrets, or data may appear, whether written, oral, or any other form of
recording or storage.
 
 
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4.02       Maintain in Confidence.  Executive shall hold the Confidential
Information, including trade secrets and/or data, in the strictest confidence
and will never, without prior written consent of Winland, directly or indirectly
disclose, assign, transfer or convey such information, or communicate such
information to others or use it for his own or another’s benefit. Without the
prior written consent of Winland, Executive shall not communicate Confidential
Information to a competitor of Winland or any other person or entity, including,
but not limited to, the press, other professionals, corporations, partnerships
or the public, at any time during his employment with Winland or at any time
after his termination of employment with Winland, regardless of the reason for
the Executive’s termination, whether voluntary or involuntary. Executive further
promises and agrees that he will faithfully abide by any rules, policies,
practices or procedures existing or which may be established by Winland for
insuring the confidentiality of the Confidential Information, including, but not
limited to, rules, policies, practices or procedures:
 
(a)           Limiting access to authorized personnel;
 
(b)           Limiting copying of any writing, data or recording;
 
(c)           Requiring storage of property, documents or data in secure
facilities provided by Winland and limiting safe or vault lock combinations or
keys to authorized personnel; and/or
 
(d)           Checkout and return or other procedures promulgated by Winland
from time to time.
 
4.03       Return of Information.  Upon termination of the employer-employee
relationship, whether voluntary or involuntary, or at any time upon Winland’s
request, Executive will return to Winland any and all written or otherwise
recorded form of all Confidential Information (and any copies thereof) in his
possession, custody or control, including, but not limited to, notebooks,
memoranda, specifications, customer lists, prospective or potential customer
lists, or price lists. Executive will not take with him, upon leaving Winland’s
place of business or employment with Winland, any such documents, data,
writings, recordings, or reproduction in any form which may have been entrusted
or obtained by him during the course of his employment or to which he had
access, possession, custody or control, except with Winland’s express, written
permission.  In the event of termination of Executive’s employment, whether
voluntary or involuntary, or at any time upon Winland’s request, Executive will
deliver to Winland all Confidential Information in recorded form in his
possession, custody or control and shall also deliver any and all property,
devices, parts, mock-ups, and finished or unfinished machinery or equipment in
his possession, custody or control which belongs to Winland.  Executive shall
also deliver, upon termination of his employment, whether voluntary or
involuntary, or at any time upon Winland’s request, all records, drawings,
blueprints, notes, notebooks, memoranda, specifications and documents or dates,
in any form, which contain Confidential Information.
 
 
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ARTICLE 5
COVENANT NOT TO COMPETE
 
5.01       Noncompete and Nonsolicitation.  In exchange for Winland’s covenants
under this Agreement, Executive expressly agrees that, during his employment
with Winland (except on behalf of Winland) and for a period of nine (9) months
following termination of his employment with Winland, regardless of the party
initiating termination and regardless of the reason for the termination,
Executive shall not, directly or indirectly, acting on behalf of himself,
another business or competitor, without the prior written consent of Winland:

(a)            anywhere within the United States (which Executive acknowledges
to be Winland’s trade area), own, manage, operate, control, be employed by,
consult for, participate in, or provide products or services of any kind to, any
business, entity or person that is in competition with Winland or markets,
sells, or provides products or services that are the same as or similar to, or
compete with, products or services offered by Winland at the time;

(b)          render any services, advice or counsel as an owner, employee,
representative, agent, independent contractor, consultant or in any other
capacity, for any third party, if the rendering of such services, advice or
counsel involves, may involve, requires or is likely to result in the use or
disclosure by Executive of any Confidential Information;

(c)            solicit, contact, take away or interfere with, or attempt to
solicit, contact, take away or interfere with, any of Winland’s customers or
potential customers with whom Executive (or other employees of Winland under his
supervision) had contact during the twelve month period immediately preceding
his termination date, for the purpose of offering to provide or providing them
with any products or services that are the same as or similar to, or compete
with, products or services offered by Winland at the time;

(d)          solicit, contact, take away or interfere with, or attempt to
solicit, contact, take away or interfere with, any of Winland’s employees
(working with Winland at that time or at any time in the twelve months prior to
Executive’s termination date) for the purpose of hiring them as an employee,
contractor or consultant or inducing them to leave their employment with
Winland; or

(e)           solicit, contact, take away or interfere with, or attempt to
solicit, contact, take away or interfere with, any of Winland’s suppliers or
vendors (at that time or at any time in the twelve months prior to Executive’s
termination date) for the purpose of inducing them to end or alter their
relationship with Winland.

5.02       Understandings.  Executive acknowledges and agrees that Winland
informed him that the restrictive covenants contained in this Agreement would be
required as part of the terms and conditions of his continued employment with
Winland and the execution of this Agreement, he has carefully considered the
restrictions contained in this Agreement and that they are reasonable and
necessary to protect Winland’s legitimate business interests, that the
restrictions in this Agreement will not unduly restrict him in securing other
employment in the event of his termination from Winland; and that employment
with Winland under the terms of this Agreement amounts to valuable
consideration, to which Executive would not otherwise be entitled, to support
enforcement of the restrictive covenants contained in this Agreement.
 
 
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ARTICLE 6
INVENTIONS

6.01       Disclosure.  Executive shall promptly and fully disclose to Winland
and will hold in trust for Winland’s sole right and benefit, any Invention which
Executive, during the period of his employment, makes, conceives, or reduces to
practice or causes to be made, conceived, or reduced to practice either alone or
in conjunction with others that:
 
(a)           Relates to any subject matter pertaining to Executive’s
employment;
 
(b)           Relates to or is directly or indirectly connected with the
business, products, projects, or Confidential Information of Winland; or
 
(c)           Involves the use of any time, material or facility of Winland.
 
6.02       Assignment of Ownership.  Executive hereby assigns to Winland all of
Executive’s right, title, and interest in and to all such Inventions as
described in Paragraph 6.01 and, upon Winland’s request, Executive shall
execute, verify, and deliver to Winland such documents including, without
limitation, assignments and applications for patents, and shall perform such
other acts, including, without limitation, appearing as a witness in any action
brought in connection with this Agreement that is necessary to enable Winland to
obtain the sole right, title, and benefit to all such Inventions.
 
6.03       Excluded Inventions.  It is further agreed, and Executive is hereby
so notified, that the above agreement to assign Inventions to Winland does not
apply to any invention for which no equipment, supplies, facility or
Confidential Information of Winland was used, which was developed entirely on
Executive’s own time, and
 
(a)           Which does not relate:
 
(i)           Directly to the business of Winland; or
 
(ii)         To Winland’s actual or demonstrably anticipated research or
development; or
 
(b)           Which does not result from any work performed by Executive for
Winland.
 
6.04       Specific Performance.  Executive expressly acknowledges and agrees
that any violation of any terms of Paragraphs 6.01 or 6.02 may result in the
issuance of a temporary restraining order and/or injunction against Executive to
effect specific performance of the terms of Paragraphs 6.01 or 6.02.
 
 
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ARTICLE 7
ARBITRATION
 
7.01       Agreement to Arbitrate.  With the exception of Winland’s rights to
seek injunctive relief and/or specific performance in a court of competent
jurisdiction in connection with breaches by Executive of Paragraphs 4.02, 4.03,
5.01 and/or 6.01 or 6.02 of this Agreement, all disputes or claims arising out
of or in any way relating to this Agreement, including the making of this
Agreement, shall be submitted to and determined by final and binding arbitration
before the American Arbitration Association (“AAA”) under the AAA’s National
Rules for the Resolution of Employment Disputes.  The award of the
arbitrator(s), or a majority of them, shall be final and judgment upon such
award may be entered in any court of competent jurisdiction.  This arbitration
provision shall continue in full force and effect after Executive’s termination
of employment under this Agreement.
 
7.02       Discovery.  In addition to any other procedures provided for under
the rules of the NASD or the AAA, upon written request, each party shall, at
least fourteen (14) days prior to the date of any hearing, provide to the
opposite party a copy of all documents relevant to the issues raised by any
claim or counterclaim and a list of all witnesses to be called by that party at
the hearing and each party shall be permitted to take one deposition at least
fourteen (14) days prior to any hearing.
 
7.03       Costs.  The costs of proceedings under Article VII shall be paid in
accordance with the provisions of Article VIII below.
 
ARTICLE 8
CERTAIN WINLAND REMEDIES; ATTORNEYS’ FEES AND COSTS
 
8.01       Certain Winland Remedies.  The parties acknowledge and agree that
Winland will suffer irreparable harm if Executive breaches Paragraphs 4.02,
4.03, 5.01 and/or 6.01 or 6.02 of this Agreement.  Accordingly, Winland shall be
entitled, in addition to any other right and remedy it may have, at law or
equity, to a temporary restraining order and/or injunction, without the posting
of a bond or other security, enjoining or restraining Executive from any
violation of such Paragraphs, and Executive hereby consents to Winland’s right
to seek the issuance of such injunction.
 
8.02       Payment of Fees and Expenses.  If any party initiates or becomes a
party to a formal proceeding in law or equity, or under Article VII, involving
this Agreement, and if either party obtains a substantial portion of the relief
requested by that party (the “prevailing party”), then the non-prevailing party
shall pay all of its and the prevailing party’s reasonable costs and expenses,
including reasonable attorneys’ fees and expenses, incurred with respect to such
proceeding.  If neither party obtains a substantial portion of the relief
requested each shall bear its/his own expenses.
 
 
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ARTICLE 9
INDEMNIFICATION
 
9.01       Indemnification.  As to acts or omissions of Executive which are
within the scope of Executive’s authority as an officer, director, or employee
of Winland and/or any affiliate of Winland, Winland shall indemnify Executive,
and his legal representatives and heirs, to the maximum extent permitted by
Section 521 of the Minnesota Business Corporation Act.
 
ARTICLE 10
MISCELLANEOUS
 
10.01     Survival of Provisions.  The parties agree that Articles I, IV – X of
this Agreement shall survive termination of this Agreement and termination of
Executive’s employment for any reason.
 
10.02     Notification of Restrictive Covenants.  Executive authorizes Winland
to notify third parties (including, but not limited, Winland’s customers and
competitors) of the terms of Articles I, IV-VI of this Agreement and the
Executive’s responsibilities hereunder.

10.03     No Conflicting Obligations/Others’ Confidential
Information.  Executive represents and warrants to Winland that he is not under,
or bound to be under in the future, any obligation to any person or entity that
is or would be inconsistent or in conflict with his employment with Winland,
including but not limited to any duties owed to any former employer not to
compete.  If Executive possesses any information that he knows or should know is
considered by any third party, such as a former employer of Executive’s, to be
confidential, trade secret, or otherwise proprietary, Executive shall not
disclose such information to Winland or use such information to benefit Winland
in any way.

10.04     Severability.   If a court or arbitrator(s) rules that any part of
this Agreement is not enforceable, that part may be modified by the court to
make it enforceable to the maximum extent possible.  If the part cannot be so
modified, that part may be severed and the other parts of the Agreement shall
remain enforceable.

10.05     Governing Law.  This Agreement shall be governed according to the laws
of the State of Minnesota.

10.06     Successors.  This Agreement is personal to Executive and Executive may
not assign or transfer any part of his rights or duties hereunder, or any
compensation due to him hereunder, to any other person.  This Agreement may be
assigned by Winland.  This Agreement is binding on any successors or assigns of
Winland.

10.07     Waiver.  The waiver by any party of the breach or nonperformance of
any provision of this Agreement by any other party will not operate or be
construed as a waiver of any future breach or nonperformance under any provision
of this Agreement or any similar agreement with any other employee.
 
 
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10.08     Notices.  Any and all notices referred to herein shall be deemed
properly given only if in writing and delivered personally or sent postage
prepaid, by certified mail, return receipt requested, as follows:

(a)           To Winland by notice to Winland’s Board of Directors; Attention:
Chairman of the Board of Directors.
 
(b)           To Executive at his home address as it then appears on the records
of Winland, it being the duty of the Executive to keep Winland informed of his
current home address at all times.
 
The date on which notice to Winland or Executive shall be deemed to have been
given if mailed as provided above shall be the date on the certified mail return
receipt.  Personal delivery to Executive shall be deemed to have occurred on the
date notice was delivered to Executive personally, or deposited in a mail box or
slot at Executive’s residence by a representative of Winland or any messenger or
delivery service.
 
10.09     Modification.  This Agreement sets forth the entire understandings and
agreements between the parties and is the complete and exclusive statement of
the terms and conditions thereof, that there are no other written or oral
agreements in regard to the subject matter of this Agreement other than those
agreements, plans, programs and policies expressly referred to herein.  This
Agreement shall not be changed or modified except by a written document signed
by the parties hereto.
 
10.10     Code Section 409A. Notwithstanding anything in this Agreement to the
contrary, Winland expressly reserves the right to amend this Agreement without
Executive’s consent to the extent necessary to comply with Code Section 409A, as
it may be amended from time to time, and the regulations, notices and other
guidance of general applicability issued thereunder.
 
10.11     Counterparts.  This Agreement may be executed by facsimile
transmission and in counterparts, each of which shall be deemed an original and
all of which shall constitute one instrument.

10.12     No Strict Construction.  The language used in this Agreement will be
deemed to be chosen by Winland and Executive to express their mutual intent.  No
rule of law or contract interpretation that provides that in the case of
ambiguity or uncertainty a provision should be construed against the draftsman
will be applied against any party hereto.
 
 
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IN WITNESS WHEREOF, the parties have duly executed and delivered this Employment
Agreement effective as of the date first above written.
 

 
EXECUTIVE
            /s/ Brian Lawrence    
Brian Lawrence
 

 

 
WINLAND ELECTRONICS, INC.
         
 
/s/ David A. Gagne     
David A. Gagne
    Chief Executive Officer  

 
 
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