EXECUTIVE SEVERANCE PAY AGREEMENT


         THIS AGREEMENT is made this 24th day of March, 1997, by and between
Recovery Engineering, Inc., a Minnesota corporation, (the "Company") and Charles
F. Karpinske (the "Executive").

                                    RECITALS

         A. The Executive is the Chief Financial Officer of the Company as of
the date of this Agreement, and has been an employee of the Company since
February 1996.

         B. The Board of Directors of the Company desires to retain the
Executive in the employ of the Company.

         C. The Board of Director believes that it is essential to preserve and
maintain the stability and continuity of management of the Company by providing
the Executive with economic and other security from the uncertainty of risks
inherent in a potential or threatened takeover of the Company which might
jeopardize his employment.

         NOW THEREFORE, in consideration of the foregoing and of the mutual
promises of the parties hereto, the Company and the Executive agree as follows:

         1. Eligibility for Severance Pay. The Executive shall be eligible to
receive severance pay, in the amounts and at the times described in paragraph 3,
if:

                  (a) his employment with the Company and all of its
         subsidiaries (if any) is terminated within 24 months after there has
         been a "change in control," as such term is hereinafter defined; and

                  (b) the Executive's termination of employment was not:

                           (i) on account of his death;

                           (ii) on account of a physical or mental condition
                  that entitles him to benefits under any long-term disability
                  plan maintained by the Company or any of its subsidiaries, as
                  then in effect;

                           (iii) for conduct involving serious willful
                  misconduct (such as commission by the Executive of a felony or
                  a common law fraud against the Company) which is detrimental
                  in a significant way to the business of the Company or any or
                  its subsidiaries; or

                           (iv) on account of the Executive's voluntary
                  resignation; provided, that a resignation shall not be
                  considered to be voluntary for the purposes of this Agreement
                  if it occurs under the circumstances described in paragraph
                  11(a), or if,


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                  subsequent to the change in control, there has been: (1) a
                  reduction in the Executive's compensation; or (2) a change in
                  the place in which he is required to perform his duties, if
                  the new place is more than 25 miles from his previous place of
                  employment, or in the place where the Company's principal
                  executive offices are located, if the new place is more than
                  25 miles from its previous location.

         2. Change in Control. For the purposes of this Agreement, a "change in
control" shall be deemed to have occurred if:

                  (a) the shareholders of the Company shall adopt a resolution
         providing for its dissolution or liquidation, or for a merger,
         consolidation, or other corporate reorganization of the Company under
         circumstances in which the Company will not be the surviving party; or

                  (b) any "person" (as such term is used in Sections 13(d) and
         14(d) of the Securities Exchange Act of 1934) (other than the Company
         or any of its subsidiaries or any employee benefit plan of the Company
         or any of its subsidiaries) becomes a beneficial owner, directly or
         indirectly, of securities of the Company representing 25% or more of
         the voting power of all of the Company's then outstanding securities;
         or

                  (c) during any period of two consecutive years, individuals
         who at the beginning of such period constituted the Board of Directors
         of the Company ceased for any reason to constitute at least a majority
         thereof (unless the nomination of each new director was approved by a
         vote of at least two thirds of the directors then still in office who
         were directors at the beginning of such period); or

                  (d) the Board of Directors of the Company shall approve the
         sale of all, or substantially all, of the business or assets of the
         Company.

         3. Amount and Payment of Severance Pay. The Executive shall receive:

                  (a) a lump sum cash payment, no later than 30 days after the
         date on which his employment terminates, in an amount equal to two
         times the Executive's average annual compensation (as defined below);

                  (b) continuation of coverage under the Company's group
         medical, group life, and group long-term disability plans, if any, and
         under any individual policy or policies of life insurance maintained by
         the Company, with the same rate of employer contributions as for active
         employees, until the earlier to occur of:

                           (i) the expiration of 24 months from the date on
                  which his employment terminates; or

                           (ii) the date on which he obtains comparable coverage
                  provided by a new employer.


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                  (c) a lump sum cash payment, payable no later than 30 days
         after the date on which his employment terminates, in an amount equal
         to the sum of:

                                    (i) the amount by which the fair market
                  value of that number of shares of stock subject to any stock
                  option which is forfeited or which otherwise becomes
                  nonexercisable by the Executive by reason of his termination
                  of employment (determined as of the date of such termination)
                  exceeds the option price for such shares;

                                    (ii) such additional amounts (or the fair
                  market value of such additional property) in excess of the
                  amount determined pursuant to subparagraph (i) that would have
                  been paid or distributed to the Executive upon his exercise of
                  any such forfeited stock options, had such options been
                  exercisable, and exercised, by the Executive as of the date
                  his employment terminated;

                                    (iii) an amount equal to the fair market
                  value of any shares of restricted stock forfeited by the
                  Executive by reason of his termination of employment,
                  determined as of the date of such termination; and

                                    (iv) an amount equal to the amount that the
                  Executive would have received if any stock appreciation right
                  which is forfeited or which otherwise becomes nonexercisable
                  by the Executive by reason of his termination of employment
                  had been exercisable, and exercised, by the Executive as of
                  the date of such termination.

         It is understood and agreed that this payment is to occur only to the
         extent the Executive is not entitled to exercise his options or stock
         appreciate rights, or to retain his restricted stock, after the
         termination of his employment under the provisions of the Executive's
         stock option, restricted stock, or stock appreciation rights
         agreements.

For purposes of this paragraph 3, the term "average annual compensation" shall
mean the average rate of annual salary payable to the Executive for the calendar
year in which his employment terminates and for the two immediately preceding
calendar years, plus the average annual bonus or incentive payments awarded to
the Executive for the same three calendar years; provided, that if bonus or
incentive compensation awards have not been determined for the calendar year in
which the Executive's employment terminates prior to the date of such
termination, such average shall be determined using the bonuses or incentive
payments awarded to the Executive for the three calendar years immediately
preceding the year in which his employment terminates; and provided further,
that if the Executive has not been employed by the Company for two full calendar
years preceding the year in which the Executive's employment terminates,
"average annual compensation" shall be based on the Executive's average annual
rate of salary plus the average annual bonus or incentive payments determined as
described above, for the entire period of the Executive's employment. The
Executive's average annual compensation shall be determined prior to any
reduction for deferred compensation, "401(k)" plan contributions, and similar
items, and any reduction in the Executive's rate of salary occurring within 24
months after a change in control shall be disregarded. In addition, the
insurance coverage provided under this paragraph shall be governed by the
insurance coverage provided to such


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the Executive immediately prior to any reduction in such coverage occurring
within 24 months after any change in control.

         4. Limitations. If any part of the amounts to be paid to or for the
benefit of the Executive pursuant to this Agreement constitute "parachute
payments" within the meaning of section 280G of the Internal Revenue Code of
1986, as from time to time amended (the "Code"), such amounts shall be reduced
as provided below so that the aggregate present value of the amounts payable
pursuant to this Agreement which constitute such parachute payments will be
equal to 299% of the Executive's "annualized includible compensation for the
base period," as such term is defined in section 280G(d)(1) of the Code. Such
reductions shall be made in the benefits provided pursuant to subparagraph 3(b),
in the inverse order of their anticipated payment, before any reductions are
made in the amounts payable pursuant to subparagraphs 3(a) or 3(c). For the
purpose of this subparagraph, present value shall be determined in accordance
with section 1274(b)(2) of the Code.

         5. No Funding of Severance Pay. Nothing herein contained shall require
or be deemed to require the Company or a subsidiary to segregate, earmark, or
otherwise set aside any funds or other assets to provide for any payments
required to be made hereunder, and the rights of the terminating Executive to
severance pay hereunder shall be solely those of a general, unsecured creditor
of the Company. However, the Company may, in its discretion, deposit cash or
property, or both, equal in value to all or a portion of the amounts anticipated
to be payable hereunder for the Executive into a trust, the assets of which are
to be distributed at such times as determined by the trustee of such trust;
provided, that such assets shall be subject at all times to the rights of the
Company's general creditors.

         6. Death. In the event of the Executive's death, any amount or benefit
payable or distributable to him pursuant to paragraph 3(a) or paragraph 3(c)
shall be paid to the beneficiary designated by the Executive for such purpose in
the last written instrument, if any, received by the Boards of Directors of the
Company prior to the Executive's death, or, if no beneficiary has been
designated, to the Executive's estate.

         7. Rights in the Event of Dispute. If a claim or dispute arises
concerning the rights of the Executive or a beneficiary to benefits under this
Agreement, regardless of the party by whom such claim or dispute is initiated,
the Company shall, upon presentation of appropriate vouchers, pay all legal
expenses, including reasonable attorneys' fees, court costs, and ordinary and
necessary out-of-pocket costs of attorneys, billed to and payable by the
Executive or by anyone claiming under or through the Executive (such person
being hereinafter referred to as the Executive's "claimant"), in connection with
the bringing, prosecuting, defending, litigating, negotiating, or settling such
claim or dispute; provided, that:

                  (a) the Executive or the Executive's claimant shall repay to
         the Company any such expenses theretofore paid or advanced by the
         Company if and to the extent that the party disputing the Executive's
         rights obtains a judgment in its favor from a court of competent
         jurisdiction from which no appeal may be taken, whether because the
         time to do so has expired or otherwise, and it is determined that such
         expenses were not incurred by the Executive or the Executive's claimant
         while acting in good faith; and provided further, that


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                  (b) in the case of any claim or dispute initiated by the
         Executive or the Executive's claimant, such claim shall be made, or
         notice of such dispute given, with specific reference to the provisions
         of this Agreement, to the Board of Directors of the Company within one
         year after the occurrence of the event giving rise to such claim or
         dispute.

         8. Amendment. This Agreement may not be amended or modified except by a
written instrument signed by both parties as of a date contemporaneous herewith
or subsequent hereto.

         9. No Obligation to Mitigate Damages. In the event the Executive
becomes eligible to receive benefits hereunder the Executive shall have no
obligation to seek other employment in an effort to mitigate damages. To the
extent the Executive shall accept other employment after his termination of
employment, the compensation and benefits received from such employment shall
not reduce any compensation and benefits due under this Agreement, except as
provided in paragraph 3(b).

         10. Other Benefits. The benefits provided under this Agreement shall,
except to the extent otherwise specifically provided herein, be in addition to,
and not in derogation or diminution of, any benefits that the Executive or his
beneficiary may be entitled to receive under any other plan or program now or
hereafter maintained by the Company or by any of its subsidiaries.

         11. Successors.

                  (a) The Company will require any successor (whether direct or
         indirect, by purchase, merger, consolidation, or otherwise) to all or
         substantially all of the business and/or assets of the Company, to
         expressly assume and agree to perform the Company's obligations under
         this Agreement in the same manner and to the same extent that the
         Company would be required to perform them if no such succession had
         taken place unless, in the opinion of legal counsel mutually acceptable
         to the Company and the Executive, such obligations have been assumed by
         the successor as a matter of law. Failure of the Company to obtain such
         agreement prior to the effectiveness of any such succession (unless the
         foregoing opinion is rendered to the Executive) shall entitle the
         Executive to terminate his employment and to receive the payments
         provided for in paragraph 3 above. As used in this Agreement, "Company"
         shall mean the Company, as presently constituted, and any successor to
         its business and/or assets which executes and delivers the agreement
         provided for in this paragraph 11 or which otherwise becomes bound by
         all the terms and provisions of this Agreement as a matter of law.

                  (b) The Executive's rights under this Agreement shall inure to
         the benefit of, and shall be enforceable by, the Executive's legal
         representative or other successors in interest, but shall not otherwise
         be assignable or transferable.

         12. Notices. Any notices referred to herein shall be in writing and
shall be sufficient if delivered in person or sent by U.S. registered or
certified mail to the Executive at his address on file with his employer (or to
such other address as the Executive shall specify by notice), or to the Company
at 9300 75th Avenue North, Minneapolis, Minnesota 55428, Attn: Board of
Directors.


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         13. Waiver. Any waiver of any breach of any of the provisions of this
Agreement shall not operate as a waiver of any other breach of such provisions
or any other provisions, nor shall any failure to enforce any provision of this
Agreement operate as a waiver of any party's right to enforce such provision or
any other provision.

         14. Severability. If any provision of this Agreement or the application
thereof is held invalid or unenforceable by a court of competent jurisdiction,
the invalidity or unenforceability thereof shall not affect any other provisions
or applications of this Agreement which can be given effect without the invalid
or unenforceable provision or application.

         15. Governing Law. The validity, interpretation, construction, and
performance of this Agreement shall be governed by the laws of the State of
Minnesota, except to the extent superseded by applicable federal law.

         16. Headings. The headings and paragraph designations of this Agreement
are included solely for convenience of reference and shall in no event be
construed to affect or modify any provisions of this Agreement.

         17. Gender and Number. In this Agreement where the context admits,
words in any gender shall include the other genders, words in the plural shall
include the singular, and words in the singular shall include the plural.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

         COMPANY:                    RECOVERY ENGINEERING, INC.


                                     By   /s/ Brian F. Sullivan
                                          Brian F. Sullivan
                                          President and Chief Executive Officer


         EXECUTIVE:


                                          /s/ Charles F. Karpinske
                                          Charles F. Karpinske