Document:

<PAGE>
                                                                   EXHIBIT 10.07

[***] indicates the omission of confidential portions for which confidential
treatment has been requested. Such confidential information has been filed
separately with the Securities and Exchange Commission.

                               THIRD AMENDMENT TO
                             PRIME VENDOR AGREEMENT

          THIS THIRD AMENDMENT TO PRIME VENDOR AGREEMENT ("THIRD AMENDMENT") is
among Cardinal Health*, formerly known as Cardinal Distribution, ("CARDINAL"),
and Express Scripts, Inc. ("BUYER").

          WHEREAS, Cardinal and Buyer executed a Prime Vendor Agreement, dated
July 1, 2001, executed a First Amendment to Prime Vendor Agreement, dated
January 15, 2003 ("FIRST AMENDMENT"), and a Second Amendment to Prime Vendor
Agreement, dated November 19, 2003 ("SECOND AMENDMENT"), (collectively, the
"AGREEMENT").

          WHEREAS, the parties desire to further amend the Agreement as further
set forth herein.

          NOW THEREFORE, in consideration of the foregoing recitals, the parties
hereby agree as follows:

     1. SECTION 2, SALE OF MERCHANDISE. The following language shall be deleted
in its entirety from the definition of Primary Requirements as set forth in
Section 2, Sale of Merchandise, as amended by the First Amendment: "and
Monthly".

     2. SECTION 3, PURCHASE PRICE. The second paragraph of Section 3 shall be
amended to add "[***]" to the definition of [***].

     3. SECTION 5, PAYMENT TERMS. Section 5(a)(i), as amended by the First
Amendment, shall be deleted in its entirety and replaced with the following:

     "The payment terms applicable to Buyer for all DIRECT STORE DELIVERY
     PURCHASES shall be [***] calculated pursuant to either of the options set
     forth below. Buyer will notify Cardinal of its desire to switch from one
     option to the other no less than thirty (30) days prior to the effective
     date of such change, unless otherwise agreed to in writing by Buyer and
     Cardinal. In the event a payment due date falls on a Saturday, that payment
     due date will become the preceding Friday. In the event a payment due date
     falls on a Sunday, that payment due date will become the following Monday.
     In the event a due date falls on a Monday holiday, invoices due on Sunday
     and Monday will be due on Tuesday. In the event a due date falls on a
     Tuesday through Friday holiday, payment will be due the preceding day.

          OPTION 1

          The payment terms applicable to Buyer for all DIRECT STORE DELIVERY
          PURCHASES shall be [***] as follows: Buyer will cause Cardinal to
          receive payment in full: (1) by the [***] day of each calendar month
          of the amount due for all invoiced Merchandise delivered and services
          provided during the first (1st) [***] of such calendar month; (2)

<PAGE>

          by the [***] day of each calendar month, of the amount due for all
          invoiced Merchandise delivered and services provided during the [***]
          through the [***] day of such calendar month; and (3) by the [***] day
          of each calendar month, of the amount due for all invoiced Merchandise
          delivered and services provided during the period beginning on the
          [***] day of the preceding calendar month and ending on the last day
          of such preceding calendar month.

          OPTION 2

          The payment terms applicable to Buyer for all DIRECT STORE DELIVERY
          PURCHASES shall be [***] as follows: Buyer will cause Cardinal to
          receive payment in full: (1) by the [***] day of each calendar month
          of the amount due for all invoiced Merchandise delivered and services
          provided from and including the [***] calendar day of each calendar
          month through and including the[***] calendar day of each calendar
          month; (2) by the [***] day of each calendar month of the amount due
          for all invoiced Merchandise delivered and services provided from and
          including the [***] calendar day of each calendar month through and
          including the [***] calendar day of each calendar month; (3) by the
          last Business Day (as hereinafter defined) of each calendar month of
          the amount due for all invoiced Merchandise delivered and services
          provided from and including the [***] calendar day of each calendar
          month through and including the [***] calendar day of each calendar
          month; (4) by the [***] day of each calendar month of the amount due
          for all invoiced Merchandise delivered and services provided from and
          including the [***] calendar day of each preceding calendar month
          through and including the [***] calendar day of each preceding
          calendar month; (5) by the [***] day of each calendar month of the
          amount due for all invoiced Merchandise delivered and services
          provided from and including the [***] calendar day of each preceding
          calendar month through and including the [***] calendar day of the
          each calendar [***].

     For purposes of this Agreement, the term "Business Day" shall be defined as
     Monday through Friday, with the exception of the following holidays: New
     Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
     Christmas Day."

     4. SECTION 5, PAYMENT TERMS. The first sentence of the third paragraph of
Section 5(b) shall be deleted in its entirety and replaced with the following:

     "All payments for invoiced Merchandise delivered and services provided by
Cardinal will be made to the applicable servicing division specified in
Cardinal's invoice (or as otherwise specified by Cardinal) by electronic funds
transfer or other method acceptable to Cardinal so as to provide Cardinal with
good funds by the due date; provided, however, if Option 2 (as set forth in
Section 5(a)(i)) is chosen by Buyer, then Buyer will have the option to make the
payment due on the last Business Day of the month via check (instead of
ACH/electronic funds transfer) as long as the check is delivered to Cardinal on
the last Business Day of the month at the address designated by Cardinal for
these payments."

     5. SECTION 6, ORDERING AND DELIVERY. The third sentence of Section 6,
Ordering and Delivery, as amended by the First Amendment shall be deleted in its
entirety and replaced with the following:

                                        2

<PAGE>

     "Pharmacies having Qualified Monthly Purchases in excess of $[***] (except
     Pharmacies located outside of the contiguous United States or other
     Pharmacies mutually agreed upon by the parties from time to time) will have
     two delivery options:

     OPTION 1

     [***]. In addition, Pharmacies may receive [***] deliveries; provided,
     however, such deliveries will be at a charge equal to Cardinal's cost for
     such delivery.

     OPTION 2

     [***].

     All [***] deliveries will be subject to the order cut-off times at the
     applicable servicing distribution center."

     5. SECTION 12, SERVICE LEVEL. Section 12, Service Level, as amended by the
First Amendment, shall be further amended as follows: all references to the
average monthly service level on Rx Products (excluding Buyer's Top [***] Items
(as defined in the First Amendment)) shall be changed from [***] percent
([***]%) to [***] percent ([***]%), and all references to the average monthly
service level on Buyer's Top [***] Items shall be changed from [***] percent
([***]%) to [***] percent ([***]%).

     6. SECTION 13, RETURNED GOODS POLICY. The second paragraph and items 1-6 of
Section 13 related to the annual inventory clean-ups shall be deleted in their
entirety. The following paragraph shall be added to Section 13 of the Agreement,
as if fully rewritten therein:

     "Subject to the requirements of the Cardinal Returns Policy, Buyer may
     return Merchandise for up to twelve (12) months from the date of purchase
     for 100% of original invoice amount paid by Buyer (i.e., Buyer's contract
     or other "cost" plus the applicable mark-up or less the applicable mark
     down), provided: (i) the Merchandise was originally purchased from Cardinal
     and is in full (no partials), unopened packages in a unit of sale routinely
     sold by Cardinal; (ii) the Merchandise carries a minimum of nine (9)
     months' dating; (iii) no repackaged Merchandise may be returned; (iv)
     Merchandise must be returned to the respective Cardinal distribution center
     from which it was purchased; (v) andthe total returns in any [***] do not
     to exceed [***] percent ([***]%) of Buyer's Qualified Purchases during such
     [***]. After twelve (12) months from the date of purchase, Merchandise may
     not be returned; provided, however, this twelve (12) month limitation shall
     not apply for returns made during the period from April 1, 2004, through
     September 30, 2004."

     In addition, the following paragraph shall be added to Section 13, as if
     fully rewritten therein:

     "Unless otherwise notified by the servicing distribution center, returned
     goods will be processed within five (5) Business Days of receipt of the
     returned goods at the Cardinal

                                        3

<PAGE>

     distribution center, and credit for those returned goods will be issued
     within three (3) Business Days following processing."

     7. SECTION 14, TERM. The initial term of the Agreement shall be extended
through June 30, 2007.

     8. NEW SECTION 30, GENERIC PURCHASE REQUIREMENT. The following paragraph
shall be added to the Agreement as a new Section 30, titled "Generic Purchase
Requirement":

     "During calendar years 2004 and 2005, calculated on a quarterly basis,
     Buyer will use commercially reasonable efforts to cause not less than
     [***]% of Buyer's total Qualified Purchases from Cardinal to be generic Rx
     Products. During calendar year 2006 and the initial six (6) months of
     calendar year 2007, calculated on a quarterly basis, Buyer will use
     commercially reasonable efforts to cause not less than [***]% of Buyer's
     total Qualified Purchases from Cardinal to be generic Rx Products. The
     foregoing requirements shall be referred to as the "Generic Purchase
     Requirements." To support Buyer's achievement of the Generic Purchase
     Requirements, Cardinal will use commercially reasonable efforts to make
     generic Rx Products available to Buyer at prices that are equal to or
     better than those prices that Buyer can obtain directly from the generic Rx
     Product manufacturers. Pricing for Buyer's purchases of generic Rx Products
     shall be pursuant to Cardinal's Mail Order Preferred Source program.

     If Buyer does not achieve the Generic Purchase Requirements, Cardinal and
     Buyer will meet to review Buyer's purchases of generic Rx Products and
     develop a strategy to support Buyer's achievement of the Generic Purchase
     Requirements during the quarter following the quarter in which the Generic
     Purchase Requirements were not met. If, during such following quarter,
     Buyer does not achieve the Generic Purchase Requirements, Buyer shall be
     considered in breach of the then current agreement between Buyer and
     Cardinal, pursuant to Section 14 of this Agreement, and Buyer shall have
     ninety (90) days to cure such breach to the reasonable satisfaction of
     Cardinal. In the event that Buyer does not cure such breach within such
     ninety (90) day period, Cardinal may terminate this Agreement immediately
     in accordance with Section 14 hereof."

     9. NEW SECTION 31, EDI INITIATIVES. The following sentence shall be added
to the Agreement as a new Section 31, titled "EDI Initiatives":

     "Cardinal will support mutually agreed upon Buyer standards, policies and
     service level agreements for all existing business-to-business processes
     and new initiatives. These processes and initiatives include, but are not
     limited to, EDI, VAN, Direct Connect, Collaborative Commerce, and adding
     new transactions (e.g., 832). Buyer will work closely with Cardinal to
     ensure seamless connectivity and smooth processing of data between the two
     parties is achieved."

                                        4

<PAGE>

     10. EXHIBIT A, PHARMACIES. The following Pharmacies shall be deleted from
Exhibit A, as amended by the First Amendment:

               Express Access Pharmacy, Inc.
               dba Express Scripts, Inc.
               767 Electronic Drive
               Horsham, Pennsylvania 19020

               Central Fill, Inc.
               721 Ridgedale Avenue
               East Hanover, New Jersey 07936

     11. EXHIBIT B, PRICING MATRIX. Section 1 of Exhibit B, Pricing Matrix, as
amended by the First Amendment, shall be deleted in its entirety and replaced
with Section 1 of Exhibit A attached to this Amendment.

     12. EXHIBIT D, DEDICATED RESOURCES. The Dedicated Resource section of
Exhibit D shall be amended to provide [***] Cardinal employees who will be
dedicated to servicing Buyer's account and will act as a liaison between Buyer
and Cardinal in order to enhance Buyer-Cardinal relations. The Cardinal
employees will be based in the St. Louis, Bensalem and Tempe Pharmacies.

     13. MISCELLANEOUS. Capitalized terms not defined herein will have the same
meaning ascribed to them in the Agreement, it being the intent of the parties
that the Agreement and this Third Amendment will be applied and construed as a
single instrument. The Agreement, as modified by this Third Amendment,
constitutes the entire agreement between Cardinal and Buyer regarding the
subject matter of the Agreement and this Third Amendment and supersedes all
prior or contemporaneous writings and understandings between the parties
regarding the same. This Third Amendment will be binding upon the parties, their
heirs, legal representatives, successors and assigns. The terms and provisions
of this Third Amendment are severable. If any term or provision of this Third
Amendment is determined to be illegal or unenforceable by a court of competent
jurisdiction, the remaining terms and provisions of this Third Amendment and the
Agreement will remain in full force and effect. This Third Amendment may only be
amended in a writing signed by Cardinal and Buyer.

     14. EFFECTIVE DATE. This Third Amendment shall be effective as of January
1, 2004 ("EFFECTIVE DATE"). Except as otherwise amended herein, the terms and
conditions of the Agreement shall remain in full force and effect.

CARDINAL HEALTH*                        EXPRESS SCRIPTS, INC.

By: /s/ Mark W. Parrish                 By: /s/ Barrett Toan
    ---------------------------------       ------------------------------------
Name: Mark W. Parrish                   Name: Barrett Toan
Title: Group President                  Title: CEO
Date: 4/9/04                            Date: 3-30-04

*    The term "CARDINAL HEALTH" means the following pharmaceutical distribution
     companies including: Cardinal Health 106, Inc. (formerly known as James W.
     Daly, Inc.), a Massachusetts corporation (Peabody, Massachusetts); Cardinal
     Health 103, Inc. (formerly known as Cardinal Southeast, Inc.), a
     Mississippi corporation (Madison, Mississippi); Cardinal Health 110, Inc.
     (formerly known as Whitmire Distribution Corporation), a Delaware
     corporation (Folsom, California) and any other subsidiary of Cardinal
     Health, Inc., an Ohio corporation ("CHI"), as may be designated by CHI.

                                        5

<PAGE>

                                                                       EXHIBIT A

1. DIRECT STORE DELIVERY PURCHASES. The Direct Store Delivery Purchases Pricing
Matrix has been established based upon Buyer's representations that, following
completion of the conversion period (as hereinafter described):

(a) Buyer will purchase each Pharmacy's Primary Requirements (as defined in
Section 2 of this Agreement) and Generic Purchase Requirements (as defined in
Section 8 of the Third Amendment) from Cardinal;

(b) Buyer's Qualified Annual Purchases for Direct Store Delivery in the
aggregate during each Contract Year (as hereinafter defined) will meet or exceed
Three Billion Five Hundred Million Dollars ($3,500,000,000).

(collectively referred to herein as the "MINIMUM REQUIREMENTS"). If, for any
reason, some or all of the Minimum Requirements are not met by Buyer, then
Cardinal may modify this Direct Store Delivery Purchases Pricing Matrix as
follows: for each [***] Dollars ($[***]) below the minimum Qualified Annual
Purchases set forth above, Buyer's applicable price will be increased by [***]%.
The term "CONTRACT YEAR" means each consecutive twelve (12) month period,
beginning on the Commencement Date of this Agreement.

     Subject to the Minimum Requirements and Section 5 of this Agreement
regarding timely payment, Buyer will be entitled to purchase Merchandise from
Cardinal (that is [***] or subject to a Manufacturer Contract) for Direct Store
Deliveries pursuant to the pricing matrix set forth below:

<TABLE>
<CAPTION>
                                   DISCOUNT FROM CARDINAL'S COST
TOTAL QUALIFIED ANNUAL PURCHASES              @ [***]
--------------------------------   -----------------------------
<S>                                <C>
      3,500,000,000 - [***]                    [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - [***]                        [***]%
          [***] - greater                      [***]%
</TABLE>

                                        6

<PAGE>

     Buyer's pricing will be reviewed on a calendar quarter basis and any
adjustments required based on Buyer's average Qualified Monthly Purchases and
actual weighted average payment days during such calendar quarter will be loaded
into Cardinal's system on the [***] of the [***] following the end of the
applicable calendar quarter; provided, however, that such adjustment shall be
retroactive to the [***] of the [***] immediately following the end of the
applicable calendar quarter. Any amounts due to Buyer as a result of a
retroactive price decrease pursuant to the terms hereof shall be paid to Buyer
in the form of a check by the [***] day of the [***] immediately following the
end of the applicable calendar quarter. Any amounts due to Cardinal as a result
of a price increase pursuant to the terms hereof shall be paid to Cardinal in
the form of a check within [***] days of receipt of a statement from Cardinal
for any such amounts owed, such statement to be provided to Buyer within not
less than [***], but no more than [***] days of the end of the applicable
calendar quarter. In all instances, Buyer shall accurately report, as may be
required, under any state or federal program which provides cost or charge based
reimbursement for the products or services covered by this Agreement, the net
cost actually paid by Buyer. For example, any adjustments required based on
Buyer's average Qualified Monthly Purchases during [***] and [***], shall be
loaded into Cardinal's system on [***], and the adjusted pricing will be
retroactive to [***]. If pricing were decreased, Cardinal would provide a check
to Buyer by May 30 for the amount resulting from the price decrease during
[***]. If pricing was increased, Cardinal would provide a statement to Buyer for
the amount resulting from the price increase during [***], and such amount shall
be due to Cardinal within [***] days of the receipt of the statement from
Cardinal.

     The pricing set forth above is conditioned upon Cardinal's ability to make
[***] (as hereinafter defined) of Merchandise. "[***]" means [***] that include,
but are not limited to, [***] and [***]. In the event that any government
regulation, policy or other action becomes effective during the term of this
Agreement which materially adversely affects [***], or in the event the [***]
from any vendor are materially affected due to [***] or otherwise, then Cardinal
will provide notice to Buyer of such event, including a report and reasonable
supporting documentation illustrating such impact in reasonable detail. In such
event, the parties agree to meet in good faith and negotiate, for a period not
to exceed [***] from the date Buyer receives notice of the adverse event from
Cardinal, a mutually acceptable adjustment to the pricing under this Agreement,
such pricing adjustment to be retroactive to the date that Cardinal provided
notice to Buyer of such adverse event. Representatives of each party shall
include at least one senior-level executive. If the parties are unable to agree
upon a mutually acceptable adjustment to the pricing within such [***] period,
at Cardinal's election, Buyer shall continue to purchase Merchandise from
Cardinal pursuant to the terms and conditions of this Agreement or Cardinal may
terminate this Agreement upon providing [***] prior written notice thereof to
Buyer; provided, however, the pricing applicable to Buyer's purchases during
such [***]period shall be the pricing in effect as of the date of the notice to
Buyer hereunder.

ANNUAL DISCOUNT. Within seven (7) calendar days of January 1, 2004, 2005 and
2006, provided Buyer is in compliance with the terms and conditions of this
Agreement, Buyer will be eligible to receive a discount in an amount equal to
[***]Dollars ($[***]) to be applied to Buyer's purchases of Merchandise under
this Agreement during such month. The discount will be provided in the form of a
credit memo. This discount constitutes a "discount or other reduction in price,"
as such terms are defined under the Medicare/Medicaid Anti-Kickback Statute, on
the

                                        7

<PAGE>

Merchandise purchased by Buyer under the terms of this Agreement. Cardinal and
Buyer agree to use their best efforts to comply with any and all requirements
imposed on sellers and buyers, respectively, under 42 U.S.C. Section
1320a-7b(b)(3)(A) and the "safe harbor" regulations regarding discounts or other
reductions in price set forth in 42 C.F.R. Section 1001.952(h). In this regard,
Buyer may have an obligation to accurately report, as may be required, under any
state or federal program which provides cost or charge based reimbursement for
the products or services covered by this Agreement, or as otherwise requested or
required by any governmental agency, the net cost actually paid by Buyer.

                                        8exv10w6

 

Exhibit 10.6

EMPLOYMENT AGREEMENT

     This Agreement is made effective as of June 1, 2005 by and between Circuit Research
Labs, Inc., an Arizona Corporation (the “Corporation”), and Gary D. Clarkson (the
“Employee”).

     WHEREAS, the Corporation desires to retain the services of the Employee in the capacity of its
Secretary, Vice President and General Manager; and

     WHEREAS, the Corporation wishes to prevent Employee from pursuing other employment
opportunities, which is only possible if the Corporation commits to employ Employee for an extended
term.

NOW THEREFORE, IT IS AGREED AS FOLLOWS:

Section 1. Employment. The Corporation agrees to employ the Employee and the Employee
agrees to accept the employment described in this Agreement.

1.1 Successors of Employer. The provisions of this Agreement shall bind any successor or
assign of Employer, which shall be obligated to employ Employee and to pay the compensation
provided herein.

1.2 Obligations of Employer. If Employer is a party to a merger or consolidation or sells
those assets and business for which Employee is employed, Employer will cause the purchaser or
other successor to assume the obligations of Employer set forth herein. Employer shall remain
liable hereunder unless and until the obligations of the Employer are assumed by a solvent
successor to Employer that will carry on the business for which Employee is employed.

Section 2. Duties. The Employee shall serve, as Secretary, Vice President and General
Manager of the Corporation, with such duties as are customarily associated with such position.
The Employee shall have such additional duties, including performance of such duties and holding
such offices or positions with subsidiaries and affiliates of the Corporation, as shall be
reasonably requested of him from time to time by the President or Board of Directors of the
Corporation.

Section 3. Extent of Services. The Employee shall devote substantially all of his working
time, attention, and energies to the performance of his duties. The Employee shall at all times
faithfully and to the best of his ability perform his duties under this Agreement. The duties
shall be rendered at the Corporation’s offices in Tempe, Arizona and San Leandro, California and at
such temporary locations as assigned by the Board of Directors of the Corporation for the purpose
of conducting company business.

Section 4. Term. The term of this Agreement shall begin on June 1, 2005 and,
unless sooner terminated for cause as set forth elsewhere in the Agreement, shall continue

 

 

Employment Agreement

Circuit Research Labs, Inc.

GARY D. CLARKSON

until
May 31, 2010. It shall thereafter continue until either Corporation or Employee terminates
this Agreement on 90 days notice to the other. This Agreement shall not give the Employee any
enforceable right to employment beyond this term.

Section 5. Compensation.

5.1 Base Compensation. The Employee will receive a base salary of not less than $79,502.50
per year. The Employee’s base salary will be payable in accordance with the Corporation’s standard
payroll procedures. The Employee is eligible for bonuses, but there is no assurance or expectation
that bonuses will be paid. Bonuses will be paid, if at all, at the sole discretion of the Board of
Directors.

5.2 Benefits. The Employee shall receive medical, dental and vision and to the extent
provided to all employees of the Corporation, life and disability Insurance. The Employee shall
also receive all other fringe benefits provided to full-time employees of the Corporation. The
Employee shall receive six (6) weeks of paid vacation per year.

5.3 Expenses. The Corporation shall reimburse the Employee for reasonable out-of-pocket
expenses incurred by the Employee in fulfilling his duties, including a housing allowance if the
Corporation requires Employee to perform his duties more than 50 miles from his home and an auto
allowance if the Corporation requires Employee to use his vehicle in the conduct of his duties.
The Corporation shall provide the employee with office facilities, equipment, supplies, and staff.

Section 6. Termination. 

6.1 For Cause. The Corporation may terminate the Employee’s employment at any time “for
cause” with immediate effect upon delivering written notice to the Employee. For purposes of this
Agreement, “for cause” shall be limited to: (a) embezzlement, theft, larceny, material fraud, or
other acts of dishonesty; (b) material violation by employee of any of his obligations under this
Agreement; (c) conviction of or entrance of a plea of guilty or nolo contendere to a felony or
other crime which has or may have a material adverse effect on the Employee’s ability to carry out
his duties under this Agreement or upon the reputation of the Corporation; (d) repeated
insubordination after written warning by the Board; or (e) material continuing failure by the
Employee to perform the duties described in Section 2 above in a quality and professional manner
for at least sixty days after written warning by the Board of Directors. Upon termination for
cause, the Corporation’s sole and exclusive obligation will be to pay the Employee his compensation
earned through the date of termination, and the Employee shall not be entitled to any compensation
after the date of termination.

-2-

 

Employment Agreement

Circuit Research Labs, Inc.

GARY D. CLARKSON

6.2 Upon Death. In the event of the Employee’s death during the term of this Agreement,
the Corporation’s sole and exclusive obligation will be to pay to the Employee’s estate the
Employee’s compensation earned through the term of this agreement.

6.3 Upon Disability. The Corporation may terminate the Employee’s employment upon the
Employee’s total disability. The Employee shall be deemed to be totally disabled if he is unable
to perform his duties under this Agreement by reason of mental or physical illness or accident for
a period of three consecutive months (the date of finding of disability of Employee shall be three
months following the first day the Employee is unable to work). Upon termination by reason of the
Employee’s disability, the Corporation’s sole and exclusive obligation will be to pay the Employee
under the Corporation’s disability policy or his compensation for one year following such
termination, whichever is greater.

6.4 Without Cause. If the Corporation terminates Employee without cause, Employee shall
receive all compensation and benefits for the full term of this Agreement until May 31,
2010 as set forth in Section 4. Failure to pay such compensation and benefits shall relieve
Employee of his duties under section 7 of this Agreement, without limiting the rights of Employee
to recover all sums due under this section 6.4.

Section 7. Covenant Not to Compete.

7.1 Covenant. During the term of this Agreement, and for such period after the expiration
of the term as the Employee continues to be employed by the Corporation, and for a two year (2)
period after the Employee’s employment with the Corporation has been terminated by either party
(whichever constitutes the longer period), the Employee will not:

7.1.1 enter into or attempt to enter into the “Restricted Business” (as defined below)
worldwide:

7.1.2 use contracts, proprietary information, trade secrets, confidential information,
customer lists, mailing lists, goodwill, or other intangible property used or useful in connection
with the Corporation’s business.

7.2 Restricted Business. The term “Restricted Business” means the design and manufacture
of audio processing equipment and the design and manufacture of automation and PC based product and
equipment for the radio and television broadcast industry. Nevertheless, the Employee may own not
more than five percent of the outstanding equity securities of a corporation that is engaged in the
Restricted Business

-3-

 

Employment Agreement

Circuit Research Labs, Inc.

GARY D. CLARKSON

if the equity securities are listed for trading on a national stock exchange or are registered
under the Securities Exchange Act of 1934.

Section 8. Confidentiality. The Employee acknowledges that he will develop and be exposed
to information that is or will be confidential and proprietary to the Corporation. The information
includes customer lists, marketing plans, pricing data, product plans, software, and other
intangible information. Such information shall be deemed confidential to the extent not generally
known within the trade. The Employee agrees to make use of such information only in the
performance of his duties under this Agreement, to maintain such information only in the
performance of his duties under this Agreement, to maintain such information in confidence and to
disclose the information only to persons with a need to know.

Section 9. Waiver. The waiver by the Corporation of the breach of any provision of this
Agreement by the Employee shall not operate or be construed as a waiver of any subsequent breach by
the Employee.

Section 10. Notices. Any notices permitted or required under this Agreement shall be
deemed given upon the date of personal delivery or forty-eight (48) hours after deposit in the
United States mail, postage fully prepaid, return receipt requested, addressed to the Corporation
at:

1302 W. Drivers Way

Tempe, AZ 85284

     Addressed to the Employee at:

750 S. Klondyke

Pima, AZ 85543

or any other address as any party may, from time to time, designate by notice given in compliance
with this Section.

Section 11. Law Governing and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona, without the application of any law
of conflicts of laws that would require or permit the application of the laws of any other
jurisdiction. The parties hereto each hereby submit to the exclusive jurisdiction of the federal
and state courts for the state of Arizona and agree that venue shall be in such courts in Maricopa
County, Arizona.

-4-

 

Employment Agreement

Circuit Research Labs, Inc.

GARY D. CLARKSON

Section 12. Titles and Captions. All section titles or captions contained in this
Agreement are for convenience only and shall not be deemed part of the context nor effect the
interpretation of this Agreement.

Section 13. Entire Agreement. This Agreement contains the entire understanding between
and among the parties with respect to the subject matter hereof and supersedes any other prior
understandings and agreements among them respecting the subject matter of this Agreement.

Section 14. Attorney Fees. In the event an arbitration, suit or action is brought by any
party under this Agreement to enforce any of its terms, or in any appeal therefrom, it is agreed
that the prevailing party shall be entitled to reasonable attorneys fees to be fixed by the trial
court, and or appellate court.

Section 15. Pronouns and Plurals. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular, or plural as the identity of the person or
persons may require.

Section 16. Arbitration. If at any time during the term of this Agreement any dispute,
difference, or disagreement shall arise upon or in respect of the Agreement, and the meaning and
construction hereof, every such dispute, difference, and disagreement shall be referred to a single
arbiter agreed upon by the parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters shall be selected in accordance with the rules of the American Arbitration Association and
such dispute, difference, or disagreement shall be settled by arbitration in accordance with the
then prevailing commercial rules of the American Arbitration Association, and judgment upon the
award rendered by the arbiter may be entered in any court having jurisdiction thereof.

Section 17. Presumption. This Agreement or any section thereof shall not be construed
against any party due to the fact that said Agreement or any section thereof was drafted by such
party.

Section 18. Further Action. The parties hereto shall execute and deliver all documents,
provide all information and take or forbear from all such action as may be necessary or appropriate
to achieve the purposes of the Agreement.

Section 19. Parties in Interest. Nothing herein shall be construed to be to the benefit
of any third party, nor is it intended that any provision shall be for the benefit of any third
party.

Section 20. Separate Counsel. The parties acknowledge that the Corporation has been
represented in this transaction that any attorneys have not represented the

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Employment Agreement

Circuit Research Labs, Inc.

GARY D. CLARKSON

Employee in this transaction, and the Employee has been advised that it is important for the
Employee to seek separate legal advice and representation in this matter.

Section 21. Severability. In the event that any of the provisions of this Agreement or
the application of any such provisions to the parties hereto with respect to their obligations
hereunder shall be held by a court or other tribunal of competent jurisdiction to be unlawful or
unenforceable, the remaining provisions of this Agreement shall remain in full force and effect and
shall be construed so as to give the fullest effect to the intent of the parties expressed herein.

Circuit Research Labs, Inc.

An Arizona Corporation

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	Gary D. Clarkson, Employee
	Name:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 

-6-

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