Sent FED-X 6-9-96 EMPLOYMENT AGREEMENT This Employment Agreement (hereinafter referred to as the "Agreement") is made as of the ___ day of June 1996, between DYNECO CORPORATION, a Minnesota corporation (hereinafter referred to as the "Company") and THOMAS R. REINARTS, Ph.D., an individual resident of the State of Florida (hereinafter referred to as the "Employee"). W I T N E S S E T H : WHEREAS, the Company is in the business of designing, developing, manufacturing, marketing and licensing air compressors and related technology; and WHEREAS, the Company believes that Employee's employment with the Company under the terms of this Agreement will be beneficial to the success of the Company's business; and WHEREAS, the Company and Employee are entering into this Agreement to set forth the terms and conditions relating to Employee's employment with the Company. NOW, THEREFORE, for and in consideration of the premises, the mutual promises and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Employee hereby agree as follows: Section 1. EMPLOYMENT. Subject to the terms hereof, the Company hereby employs Employee, and the Employee hereby accepts such employment for the term of this Agreement. Section 2. TERM. The term of this Agreement shall commence on the date hereof and continue for a period of three (3) years, unless sooner terminated as provided in this Agreement. Section 3. DUTIES AND RESPONSIBILITIES OF EMPLOYEE. Employee is being employed in a management capacity for the development of the Company's products, and for such other assignments as the Board of Directors of the Company may, from time to time, assign to Employee. Employee shall serve as Manager of Product Development and shall be responsible for overall development of the Company's products. Employee shall work in cooperation with the Company's Chief Technical Officer and provide technical advice and assistance reasonably requested from time to time by such officer. Section 4. CASH COMPENSATION. For all services to be rendered by the Employee under this Agreement, the Company shall pay Employee an annual gross salary in the amount of Forty Four Thousand and No/100 Dollars ($44,000) payable in accordance with the payroll payment practices from time to time adopted by the Company. Employee's cash compensation shall be increased by Two Thousand and No/100 Dollars ($2,000) after completing six (6) months of employment with the Company and an additional Two Thousand and No/100 Dollars ($2,000) after completing twelve (12) months of employment with the Company. Thereafter, Employee's cash compensation shall be increased on the second and third anniversary date of this Agreement in an amount not less than six percent (6%) of Employees current annual cash compensation. Section 5. NONCASH COMPENSATION. In addition to the cash compensation payable to Employee under Section 4 above, Employee shall be entitled to purchase 10,000 shares of the Company's $.01 par value common stock at a purchase price of $2.00 per share. Employee may exercise his right to purchase said shares at any time and from time to time after the ratification and adoption by the Board of Directors of the terms of this Agreement which is expected to occur at the next Board of Directors meeting scheduled to be held on July 12, 1996. Section 6. WORKING FACILITIES. Employee shall be furnished with such office space, office equipment, secretarial help and such other facilities, equipment and services as may be reasonably needed or beneficial for the performance by Employee of the duties contemplated hereunder. All costs of same shall be borne by the Company. Section 7. EXPENSES. The Company recognizes that in the performance of duties by Employee in the furtherance of the business of the Company, Employee will incur expenses. Employee shall be reimbursed for such reasonable and necessary expenditures when so incurred. Section 8. VACATION AND EMPLOYEE BENEFITS. Employee shall be entitled to such Employee health and disability insurance and other employee fringe benefits as the Board of Directors deems appropriate. Employee shall also be entitled to paid vacations as follows: 6 months of full time service - 1 week of vacation; 1 year or more of full time service - 2 weeks of vacation. Section 9. TERMINATION. This Agreement shall be terminated prior to the end of the term provided in Section 2 above, upon the occurrence of any one of the following events: (a) Company shall have the right to immediately terminate Employee's employment under this Agreement if: (i) Employee shall continue to violate any of the provisions of this Agreement after thirty (30) days immediately following his receipt of a written notice from Company setting forth the violations; (ii) Employee is convicted of (from which no appeal may be taken) or pleads guilty or nolo contendre to or confesses to any act of fraud, misappropriation or embezzlement or to any felony or to any misdemeanor involving moral turpitude; (iii) Employee, in the judgment of Company, has engaged in a dishonest act to the damage or prejudice of Company or any affiliate of Company or in conduct or activities materially damaging to the business or reputation of Company or any affiliate of Company; or (iv) Employee has failed without reasonable cause to devote adequate business time and best efforts to its duties hereunder. (b) Employee and Company each shall have the right to terminate his employment on sixty (60) days written notice to the other. 2 Section 10. EFFECT OF TERMINATION. Upon termination of this Agreement, Employee shall be entitled to receive only that compensation accrued but unpaid pursuant to Section 4 above as of the date of termination and his rights to purchase the Company's common stock as provided in Section 5 above. The Company shall not have any further liability to Employee. Section 11. CONFIDENTIAL INFORMATION. Employee agrees that he will not directly or indirectly use, publish, disclose or divulge any confidential information or trade secrets or anything relating thereto to any person or entity not in the employ of Company, except in the course of performing his duties and (a) with respect to confidential information for a period of two (2) years immediately following any termination of his employment and (b) with respect to trade secrets for so long as the trade secret remains a trade secret. For purposes of this Agreement, the term "trade secret" means trade secrets as defined by Florida law and "confidential information" means data and information relating to the business of the Company (which does not rise to the status of a trade secret) which will be disclosed to Employee or of which Employee becomes aware as a consequence of or through his relationship to the Company and which has value to the Company and is not generally known to its competitors. The provisions in this Agreement restricting the use of confidential information shall survive for a period of two (2) years following termination of employment and those restricting the use of trade secrets shall survive for so long as is permitted by law. Upon termination of employment, Employee immediately shall surrender to the Company, in good condition, any and all material containing confidential information and trade secrets provided to or obtained directly or indirectly by Employee, and Employee shall not keep any copies, summaries or photocopies thereof. Section 12. NON-COMPETITION. Employee agrees that during the term of his employment with the Company and for a period of two (2) years immediately thereafter, he will not engage in any "Competitive Business Activity" within the "Non-Compete Territory." (a) For purposes of this Agreement, the term "Competitive Business Activity" shall mean any activity which Employee directly or indirectly owns, manages, operates, controls, is employed by (either as an employee or independent contractor) or participates in the ownership, management, operation or control of any business that is engaged in the sale of products or services that are the same as or similar to the products or services of the type offered or provided by the Company. (b) For purposes of this Agreement, the term "Non-Compete Territory" shall mean the States of Florida and Minnesota and each of the other states located in the continental United States in which the Company is engaged in business, it being agreed and stipulated that the Company has customers and substantial services and marketing efforts in each of these states and has conducted substantial business therein. Section 13. SOLICITATION OF CUSTOMERS. Employee agrees that during the term of his employment with the Company, and for a period of two (2) years immediately thereafter, he shall not, directly or indirectly, through one or more intermediaries or otherwise, solicit, direct or appropriate, or attempt to solicit, direct or appropriate any person or entity which is at the time a customer of the Company with which the Company or any affiliate thereof has an existing 3 relationship for the sale of products or services that are the same or similar to the products or services of the type offered by the Company. Section 14. SOLICITATION OF EMPLOYEES. Employee agrees that during the period of this Agreement and for a period of two (2) years immediately thereafter, Employee shall not, directly or indirectly, through one or more intermediaries or otherwise, employ, induce, solicit for employment, or assist others in employing, inducing or soliciting for employment any person who is at the time an agent or employee of Company or any affiliate thereof. Section 15. SPECIFIC PERFORMANCE. Employee agrees that the nature of Company's business is unique and that, therefore, Employee's knowledge in and with respect to Company's business will be special and not generally known by many companies or individuals in any industry in which compressor or vacuum pump technology is applicable. In addition, Employee agrees that it will be difficult to measure damages to Company from any breach of Employee's promises in paragraphs 11, 12, 13 and 14 hereof and that money damages alone will therefore be an inadequate remedy for such breach. Accordingly and without limiting the right of Company to pursue other legal and equitable rights available to it for violation of said paragraphs and because Company has relied on the undertakings of Employee in giving Employee this Agreement, Employee hereby agrees that Company shall be entitled to specific performance of this Agreement and that Employee shall not urge in any action at law or in equity that Company has an adequate remedy at law. Section 16. AGREEMENT TO INDEMNIFY. In addition to, and not in lieu of, any other rights or remedies which Company may possess at law, in equity or otherwise by virtue of this Agreement, Employee agrees to indemnify, defend and hold harmless Company, from and against any and all claims, actions or causes of action, assessments, investigations, arbitrations, proceedings of an administrative nature, suits, awards, judgments, decrees, settlements, court costs at both trial and appellate levels, losses, damages, liabilities, costs and expenses of any nature whatsoever, including, without limitation, interest, taxes, penalties, and attorneys' fees and expenses, asserted against, resulting to, imposed upon or incurred by Company or any member thereof, directly or indirectly, by reason of or resulting from a breach by Employee of any term or condition of this Agreement. Section 17. MISCELLANEOUS. (a) All questions with respect to the construction of this Agreement and the rights, duties, obligations and liabilities of the parties under said documents shall be determined in accordance with the applicable provisions of the laws of the State of Florida. (b) This Agreement shall be binding upon all parties hereto, their heirs, successors, guardians and personal and legal representatives. (c) This Agreement sets forth all of the promises, agreements, conditions and understandings among the parties hereto with respect to Employee's employment and there are no promises, agreements, conditions, or understandings, oral or written, expressed or implied, other than as set forth in this Agreement. 4 (d) In the event there is any conflict between any provision of this Agreement and any statute, law, ordinance or regulation, the latter shall prevail, but in such event the provisions of this Agreement thus affected shall be curtailed and limited only to the extent necessary to conform with said requirement of law. In the event that any part of this Agreement shall be held to be indefinite, invalid or otherwise unenforceable, the entire Agreement shall not fail on account thereof, and the balance of the Agreement shall continue in full force and effect. (e) Should either party be required to engage legal counsel for the purpose of enforcing or preventing the breach of any of the provisions of this Agreement, then the prevailing party to such action shall be entitled to be reimbursed by the losing party for all costs and expenses incurred thereby, including, but not limited to, reasonable attorneys' fees, expenses and all other costs incurred as a result of the losing party's conduct. IN WITNESS WHEREOF, the corporate party hereto has caused this Agreement to be executed by its duly authorized officer, and the individual party has hereunto affixed his hand, as of the day and year first above written. COMPANY: DYNECO CORPORATION By: _______________________________________ Richard D. Besser Chief Executive Officer EMPLOYEE: ______________________________________ (Seal) Thomas R. Reinarts, Ph.D. 5