**Exhibit 10.54** **Severance    and Release Agreement dated October 20, 2006 between HEI,    Inc. and Mack V. Traynor III** **SEVERANCE    AND RELEASE AGREEMENT**     In exchange for the promises and covenants contained herein,    HEI, Inc. (“Company”) and Mack V. Traynor III    (“Employee”) hereby agree as follows:     1. *Definitions.*  We intend all    words used in this Severance Agreement (“Agreement”)    to have their plain meanings in ordinary English. Specific terms    we use in this Agreement have the following meanings:     A. *Employee*, as used herein, shall include    the undersigned Employee and anyone who has obtained any legal    rights or claims through the undersigned Employee.     B. *Company*, as used herein, shall at all    times mean HEI, Inc., its parent company, its subsidiaries,    successors and assigns, its affiliated and predecessor    companies, their successors and assigns, their affiliated and    predecessor companies and the present or former directors,    shareholders, officers, employees, representatives and agents    (including, without limitation, its accountants and attorneys)    of any of them, whether in their individual or official    capacities, and the current and former trustees or    administrators of any pension or other benefit plan applicable    to employees or former employees of Company, in their official    or individual capacities.     C. *Employee’s Claims*, as used herein,    means all of the rights Employee individually and on behalf of    his spouse, heirs, administrators, executors, assigns has now to    any relief of any kind from Company whether or not Employee now    knows about those rights, arising out of his employment with    Company and member of the Board of Directors, and his    resignation of employment and as a member of the Company’s    Board of Directors, including, but not limited to, claims    arising under the Age Discrimination in Employment Act, as    amended by the Older Worker Benefit Protection Act; the    Minnesota Human Rights Act; the Americans with    Disabilities Act; Title VII of the Civil Rights Act of    1964, as amended; claims under the Family Medical Leave Act; the    Fair Labor Standards Act of 1938, as amended; the Worker    Adjustment and Retraining Act, the Sarbanes Oxley Act; the    Minnesota Whistleblower Statute; or other federal, state or    local civil rights laws; claims for breach of contract; fraud or    misrepresentation; defamation, intentional or negligent    infliction of emotional distress; breach of covenant of good    faith and fair dealing; promissory estoppel; negligence;    wrongful termination of employment; claims pursuant to that    certain Employment Agreement dated April 19, 2004 between    Employee and Company; claims for any form of compensation,    including without limitation, claims for severance, salary,    bonus, and vacation pay; and any other claims for unlawful    employment practices.     2. *Resignation.*  Company and    Employee agree that Employee will voluntarily resign his    employment as Chief Executive Officer and President of the    Company and as a member of Company’s Board of Directors    effective Friday, October 20, 2006 and the Company has    accepted his resignation effective Friday, October 20, 2006.     3. *Company’s Obligations and Severance    Agreements.*  In consideration for    Employee’s promises contained herein, specifically    including, but not limited to the release of all claims by    Employee and Employee’s promises to refrain from:    (i) competing with the Company; (ii) soliciting the    Company’s clients and employees; and (iii) disclosing    confidential information and trade secrets of Company, Company    agrees as follows:     A. *Severance Payment.*  Company    agrees to pay to Employee a Severance payment of $145,000    (“Severance Payment”). This Severance Payment will be    payable in one lump sum after the expiration of the Rescission    Periods, as hereinafter defined. The Severance Payment shall be    subject to federal and state withholding taxes and FICA.     B. *Stock Options/Restricted    Shares.*  Company acknowledges and agrees that    Employee shall have a period of 90 days from the date of    this Agreement to exercise the following stock option agreements:     (i) Option agreement dated March 19, 2003.     (ii) Option agreement dated December 19, 2001.     (iii) Option agreement dated July 1, 2005.

 
    Company and Employee agree that all remaining stock options and    restricted shares have not vested and may be cancelled.     C. *Medical Insurance Benefits and    Benefits.*  Company, pursuant to federal and    state law, will provide, for a period of eighteen    (18) months following the effective date of Employee’s    termination (“COBRA Period”), a continuation of the    group medical insurance coverage previously provided to Employee    by Company. Through April 19, 2007, Company will pay that    portion of the premium for group medical insurance that it paid    during Employee’s employment. After April 19, 2007,    Employee will be required to pay for such benefits for the    remainder of the COBRA Period, should Employee elect to continue    COBRA coverage. Company shall also, through April 19, 2007,    maintain and pay for all the benefits provided under the    April 19, 2004 Employment Agreement between Employee and    Company, a copy of which is attached hereto as    Exhibit A to this Agreement, including dental    insurance and supplemental life insurance coverage.     D. *Computer, Blackberry and Cellular    Phone.*  Employee shall be allowed to retain    possession of the Company computer (once the Company has    securely erased all Company documentation), blackberry and    cellular phone assigned to him during his employment with the    Company. The Company will continue service on the Company    blackberry and cellular phone assigned to Employee until    October 31, 2006.     E. *Non-Disparagement.*  Company    agrees that its officers, directors and senior management shall    not disparage or defame Employee in any respect.     F. *Remedies.*  Company acknowledges    that any breach of any of the promises set forth in    Section 3.E. will cause Employee irreparable harm for which    there is no adequate remedy at law and Company therefore    consents to the issuance of any injunction in favor of Employee    enjoining the breach of any of those promises by any court of    competent jurisdiction. Company further agrees that the remedies    provided for herein are in addition to, and are not to be    construed as replacements for, or a limitation of, rights and    remedies otherwise available to Employee.     4. *Employee Obligations.*  As    material inducement to Company in entering into this Agreement    and providing the consideration described in Section 3,    Employee hereby agrees as follows:     A. *Release.*  Employee agrees to    release all Employee’s Claims. Employee acknowledges that    the money and promises received and to be received by Employee    are in exchange for the release of Employee’s Claims.    Employee is not releasing any rights    and/or    obligations he may have as holder of shares    and/or    options of the Company and Employee’s rights    and/or    obligations in any shares    and/or    options of the Company shall be controlled by the terms and    conditions of applicable stock and option agreements, if any,    entered into between Company and Employee.     B. *Covenant Not To Sue.*  Employee    agrees that he will not initiate any litigation to pursue claims    which Employee released in this Section 4.A. This covenant    does not apply to litigation challenging the validity of this    Section 4.A. Further, Employee agrees to pay Company’s    attorneys fees if Employee breaches the covenant not to sue    contained in this Section 4.B.     C. *Company Property.*  Unless    otherwise stated herein, Employee will return all property    belonging to Company to Company immediately upon the execution    of this Agreement, whether such property is currently on or off    the premises of Company, including, without limitation, any and    all Company documents on the computer hardware being retained by    Employee.     D. *Non-Competition, Non-Solicitation, Confidentiality    and Inventions.*  Employee acknowledges and    confirms his continuing obligations to the Company to    (1) refrain from competition and solicitations,    (2) maintain the confidentiality of the Company’s    Confidential Information and (3) disclose and transfer    ownership, if necessary, of all Inventions, all of which shall    survive Employee’s separation from employment with the    Company, as more fully set forth in Sections 6, 7, 8    and 9 of the Agreement attached as    Exhibit A.  Notwithstanding the foregoing,    the term of such obligations shall expire one year from the date    of this Agreement.     E. *Confidentiality of    Agreement.*  Employee agrees that he will keep    the terms and conditions of this Agreement strictly confidential    for a period of at least one year from the date of this    Agreement except that Employee may disclose the terms and    conditions of this Agreement to his spouse, if any, attorney,    tax preparer, government agencies, or as required by law.    Employee agrees that in the event that Employee discloses any of

 
    the terms of this Agreement, including the fact of payment other    than as set forth above, he shall be liable to Company as set    forth in Section 4. of this Agreement and for any and all    injuries or damages sustained by Company including costs,    disbursements and attorneys’ fees incurred by Company as a    direct result of Employee’s disclosure.     F. *Non-Disparagement.*  Employee    agrees that he shall not disparage or defame Company in any    respect.     G. *Remedies.*  Employee acknowledges    that any breach of any of the promises set forth in    Sections 4.C., 4.D., 4.E. and 4.F. will cause Company    irreparable harm for which there is no adequate remedy at law    and Employee therefore consents to the issuance of any    injunction in favor of Company enjoining the breach of any of    those promises by any court of competent jurisdiction. If any    promise made by Employee in this Section 4 should be held    to be unenforceable because of its scope or duration, or the    area or subject matter covered thereby, Employee agrees that the    court making such determination shall have the power to reduce    or modify the scope, duration, subject matter or area of that    promise to the extent that allows the maximum scope, duration,    subject matter or area permitted by applicable law. Employee    further agrees that the remedies provided for herein are in    addition to, and are not to be construed as replacements for, or    a limitation of, rights and remedies otherwise available to    Company.     5. *Employee’s    Understandings.*  Employee acknowledges and    represents that:     A. Employee understands that he has the right to consult    with an attorney regarding the meaning and effect of this    Agreement.     B. Employee also understands that he has a period of    twenty-one (21) calendar days from the date on which he    receives an unsigned copy of this Agreement in which to consider    whether or not to sign this Agreement and that, having been    advised of that entitlement, he may elect to sign this Agreement    at any time prior to the expiration of that time period.     C. Employee understands that he may rescind (that is,    cancel) within seven (7) calendar days of signing the    Agreement the provisions of Section 4.A. of this Agreement    with respect to claims arising under the Age Discrimination in    Employment Act (“ADEA Rescission Period”) and that he    may rescind within fifteen (15) calendar days of    signing the Agreement the provisions of Section 4.A. of    this Agreement with respect to claims arising under the    Minnesota Human Rights Act (“MHRA Rescission Period”)    (collectively, “Rescission Periods”). To be effective,    rescission must be in writing, delivered to Company at HEI,    Inc., PO Box 5000, 1495 Steiger Lake Lane, Victoria, MN    55386, Attn: Mark Thomas within the applicable rescission    period, or sent to Company, at such address, by certified mail,    return receipt requested, postmarked within the applicable    rescission period.     6. *Cancellation of Agreement By    Company.*  If Employee exercises his right of    rescission under Section 5.C. of this Agreement, Company    will have the right, exercisable by written notice delivered to    Employee, to terminate this Agreement in its entirety, in which    event Company will have no obligation whatsoever to Employee    hereunder. If Employee exercises his right of rescission under    Section 5.C. of this Agreement, and Company does not    exercise its right to terminate this Agreement hereunder, the    remaining provisions of this Agreement (including specifically    the remaining provisions of Section 4 of this Agreement)    shall remain valid and continue in full force and effect.     7. *Performance By    Employee.*  Nothing contained herein shall    operate as a waiver or an election of remedies by Company should    Employee fail to perform any duty or obligation imposed upon him    hereunder. Notwithstanding anything contained herein to the    contrary, this Agreement and the duties and obligations of    Employee hereunder shall continue in full force and effect    irrespective of any violation of any term or provision of this    Agreement by Employee.     8. *No Admission Of Liability.*  The    Parties agree that this Agreement shall not be considered an    admission of liability by Company. Company expressly denies that    it is in any way liable to Employee or that it has engaged in    any wrongdoing with respect to Employee.     9. *Employee    Acknowledgments.*  Employee acknowledges and    represents that: (a) he has read this Agreement and    understands its consequences; (b) he has received adequate    opportunity to read and consider this Agreement; (c) he has    determined to execute this Agreement of his own free will and    acknowledges that he has not relied upon any statements or    explanations made by Company regarding this Agreement; and    (d) the promises of

 
    Company made in this Agreement constitute fair and adequate    consideration for the promises, releases and agreements made by    Employee in this Agreement.     10. *Entire Agreement.*  This    Agreement, including any exhibits attached hereto or documents    expressly referred to herein, contains the entire agreement    between Company and Employee and supersedes and cancels any and    all other agreements, whether oral or in writing, between    Company and Employee with respect to the matters referred to    herein.     11. *Governing Law.*  This Agreement    shall be construed and enforced in accordance with the laws of    the State of Minnesota.     12. *Effective Date.*  This Agreement    was originally offered to Employee on or about October 20,    2006. Employee shall have until the close of business on    November 10, 2006 to accept this Agreement. If Employee    desires to accept this Agreement, Employee shall execute the    Agreement and return the same to Company at the address set    forth in Section 5.C. hereof. If Employee does not so    accept this Agreement, this Agreement, and the offer contained    herein, shall be null and void as of the close of business on    November 20, 2006. *(The remainder of the page is intentionally left blank.)*

 
    13. *Counterparts.*  This Agreement    may be executed in counterparts with an executed counterpart to    be delivered to the other party. Each such executed counterpart    shall be deemed an original but shall constitute one and the    same instrument.     HEI, Inc.      By: /s/  Mark    B. Thomas     Its: CFO     Dated: 10-20-06 /s/  Mack    V. Traynor III    Mack V. Traynor III     Dated: 10-20-06