unless either the Board or the Executive gives written notice to the other at least 90 days prior to such anniversary that the term of the Agreement shall not be extended.  The Executive’s employment by the Company shall be subject to termination at any time during the Employment Term as provided in subsection (e) of this Section 1.  As used herein, the term “Employment Term” shall mean the actual period of time during which the Executive is employed by the Company under the terms and conditions of this Agreement.

(d)            Compensation and Benefits .  During the Employment Term, the Company shall pay and provide the following compensation and other benefits to the Executive as full compensation for all services rendered by the Executive as an employee of the Company under the terms and conditions of this Agreement.  All payments made to the Executive hereunder shall be subject to appropriate payroll deductions and other withholdings required by law.

(i)             Annual Salary .  During the Employment Term, the Company shall pay to the Executive, in accordance with the then prevailing payroll practices of the Company, a base salary at the annual rate of $425,000.00 per year, such salary, together with any subsequent increases as directed by the Board from time to time, being hereinafter referred to as the “Annual Salary.”

(ii)            Bonuses/Incentives .

(A)           One-Time Transition Bonus .  In order to make the Executive whole for the value of benefits that he will forfeit from his prior employer, the Company will provide a one-time transition bonus in the amount of $340,000.00 in cash, payable within 15 days of the Effective Date.

(B)            Annual Bonus .  During the Employment Term and beginning with the first fiscal year of the Company commencing on or after the Effective Date, the Executive shall be eligible to receive an annual bonus based upon the achievement by the Company of specific performance requirements measured over the Company’s fiscal year (currently the twelve-month period ending September 30) (e.g., earnings per share, EBITDA benchmarks and working capital targets) which shall be determined by the Compensation Committee of the Board (the “Committee”) in its sole and absolute discretion (the “Bonus”).  The target amount for the Bonus shall be 80% of the Annual Salary, as in effect as of the last day of the Company’s fiscal year to which the Bonus relates, (the “Target Bonus”); provided, however, the Executive shall be eligible to receive a minimum Bonus in an amount equal to 40% of the Annual Salary, as in effect as of the last day of the Company’s fiscal year to which the Bonus relates, if threshold performance requirements are achieved and a maximum Bonus in an amount equal to 120% of the Annual Salary, as in effect as of the last day of the Company’s fiscal year to which the Bonus relates, if maximum performance requirements are achieved.  The Bonus, if any, for each year during the Employment Term shall be paid to the Executive by the Company in a single sum payment no later than the 15 ^th day of the third month following the end of the Company’s fiscal year.

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(C)            Equity Incentive .  As of the Effective Date, the Company shall grant the Executive a non-qualified stock option to acquire 20,000 shares of common stock of the Company.  The Board will review and consider additional equity incentives annually during the Employment Term, and the Executive may be granted additional stock options (in addition to the initial grant) to acquire shares of common stock in the sole and absolute discretion of the Board.  Each such grant of options under this Section 1(d)(ii)(D) shall vest at the rate of one-third (1/3) of the options granted on each anniversary of the applicable grant date, and shall be subject to the terms and conditions of the applicable option plan and related option agreements.

(iii)           Benefits .  During the Employment Term, the Executive shall be eligible to participate in all employee health and welfare benefit plans in which senior executives of the Company are entitled to participate, but participation shall be subject to all of the terms and conditions of such plans applicable to all such senior executives, including all waiting periods, eligibility requirements, contributions, exclusions and other similar conditions or limitations.  The Company shall use reasonable efforts to secure term life insurance coverage for the Executive in an amount not less than four times Annual Salary, subject to the Executive’s submission to and satisfaction of any required medical exams or disclosures required by the applicable insurer and the terms and conditions of the applicable insurance policy.

(iv)           Expenses .  During the Employment Term, the Company shall reimburse the Executive, in accordance with the then prevailing reimbursement practices of the Company, for all reasonable and customary business expenses incurred by the Executive in connection with his employment by the Company, provided, that the Executive complies with the standard reporting and reimbursement policies as may be established by the Company from time to time.

(v)            Vacation .  During the Employment Term, the Executive shall be entitled to four weeks of vacation, measured on a calendar year basis.  The weeks of vacation entitlement in the preceding sentence shall be pro-rated for any partial calendar years during the Employment Term.  The Executive shall schedule vacation periods at reasonable times in accordance with the Company’s vacation policy for senior executives.  The Executive shall accrue and receive full compensation and benefits during his vacation periods.  Unused vacation leave time shall be forfeited and shall not entitle the Executive to any additional compensation and may not be carried over to a subsequent calendar year.

(vi)           Company Car Allowance .  During the Employment Term, the Company shall provide the Executive with an automobile allowance of $800.00 per month.  The Executive shall be responsible for any and all taxes imposed on such allowance.

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(vii)          Country Club Membership .  During the Employment Term, the Company shall reimburse the Executive for the initiation fee and all regular monthly membership dues and business-related charges incurred by the Executive in connection with his membership at the Kokomo Country Club.  The Executive agrees that he shall be responsible for any and all taxes imposed on the reimbursements made pursuant to the preceding sentence.

(viii)         Relocation Expenses .  The Company shall reimburse the Executive for the following costs, to the extent incurred by the Executive, resulting from his relocation from Avon Lake, Ohio to the Kokomo, Indiana area: (i) actual and reasonable costs incurred in moving personal belongings, and (ii) real estate commissions incurred in both the sale of his current primary residence (“Current Residence”) and the acquisition of a primary residence in or around Kokomo, Indiana (“New Residence”) (collectively, the “Relocation Reimbursement”).

(ix)            Annual Physical .  The Executive shall be entitled to receive an annual executive physical examination to be provided by the Company at no cost to the Executive.

(e)            Termination of Employment .  Subject to the terms of Section 1(f) below, the Executive’s employment by the Company may be terminated as follows:

(i)             Termination upon the Expiration of the Employment Term .  Provided that the written notice of non-renewal is timely provided pursuant to Section 1(c), the Executive’s employment shall terminate upon the expiration of the Employment Term unless terminated earlier pursuant to this Section 1(e).  In the event that the Executive’s employment terminates upon the expiration of the Employment Term, then the Executive shall be entitled to receive the compensation and benefits set forth in Section 1(f)(i).

(ii)            Termination for Cause .  The Company may immediately terminate, at any time, the Executive’s employment by the Company for “Cause”.  A termination for “Cause” means a termination by reason of the Board’s good faith determination that the Executive (i) continually failed to substantially perform his duties with the Company (other than a failure resulting from the Executive’s medically documented incapacity due to physical or mental illness) including, without limitation, repeated refusal to follow the reasonable directions of the Board, knowing violation of the law in the course of performance of the Executive’s duties with the Company, repeated absences from work without a reasonable excuse, or intoxication with alcohol or illegal drugs while on the Company’s premises during regular business hours, (ii) engaged in conduct which constituted a material breach of Section 2 or Section 3 of this Agreement, (iii) was indicted (or equivalent under applicable law), convicted of, or entered a plea of nolo contendere to the commission of a felony or crime involving dishonesty or moral turpitude, (iv) engaged in conduct which is demonstrably and materially injurious to the financial condition, business reputation, or otherwise of the Company or its subsidiaries or affiliates, or (v) perpetuated a fraud or

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embezzlement against the Company or its subsidiaries or affiliates, and in each case the particular act or omission was not cured, if curable, in all material respects by the Executive within 15 days after receipt of written notice from the Board which shall set forth in reasonable detail the nature of the facts and circumstances which constitute Cause.  Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless there shall have been delivered to the Executive a copy of a resolution duly adopted by the Board.  If the Company has reasonable belief that the Executive has committed any of the acts described above, it may suspend the Executive (with or without pay) while it investigates whether it has or could have Cause to terminate the Executive.  The Company may terminate the Executive for Cause prior to the completion of its investigation; provided, that, if it is ultimately determined that the Executive has not committed an act which would constitute Cause, the Executive shall be treated as if he were terminated without Cause.

(iii)           Termination Without Cause .  The Company, may, at any time, terminate the Executive’s employment by Company without Cause by providing prior written notice thereof to the Executive.

(iv)           Resignation for Good Reason .  The Executive may terminate his employment by the Company for Good Reason (as defined below) by providing written notice thereof to the Company (the “Resignation Notice”) at least 45 days prior to the effective date of the resignation, which notice shall set forth in reasonable detail the nature of the facts and circumstances which constitute Good Reason and the Company shall have 30 days after receipt of the Resignation Notice to cure in all material respects the facts and circumstances which constitute Good Reason.  For purposes of this Agreement, “Good Reason” shall mean the occurrence, during the Employment Term, of any of the following actions or failures to act, but in each case only if it is not consented to by the Executive in writing: (a) a material adverse change in the Executive’s duties, reporting responsibilities, titles or elected or appointed offices as in effect immediately prior to the effective date of such change; (b) a material reduction by the Company in the Executive’s Annual Salary or annual bonus opportunity in effect immediately prior to the effective date of such reduction, not including any reduction resulting from changes in the market value of securities or other instruments paid or payable to the Executive; or (c) any change of more than 50 miles in the location of the principal place of employment of the Executive immediately prior to the effective date of such change.  For purposes of this definition, none of the actions described in clauses (a) and (b) above shall constitute “Good Reason” with respect to the Executive if it was an isolated and inadvertent action not taken in bad faith by the Company and if it is remedied by the Company within 30 days after receipt of written notice thereof given by the Executive (or, if the matter is not capable of remedy within 30 days, then within a reasonable period of time following such 30-day period, provided that the Company has commenced such remedy within said 30-day period); provided that “Good Reason” shall cease to exist for any action described in clauses (a) and (b) above on the 60th day following the later of

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the occurrence of such action or the Executive’s knowledge thereof, unless the Executive has given the Company written notice thereof prior to such date.

(v)            Resignation Without Good Reason .  The Executive may, at any time, terminate the Executive’s employment by the Company without Good Reason by providing 30 days’ prior written notice thereof to the Company.

(vi)           Death or Disability .  The Executive’s employment shall terminate immediately upon the Executive’s death or Disability (each as defined below).  For purposes of this Agreement, “Disability” means the Executive is totally and permanently disabled within the meaning of the Company’s long-term disability plan or policy under which the Executive is a participant.

(vii)          Notwithstanding any provision herein to the contrary, no termination of employment with the Company shall be deemed to occur unless and until the Executive has incurred separation from service from the Company within the meaning of Code Section 409A(a)(2)(A)(i).

(f)             Effect of Termination .  The following provisions shall apply in the event of the Executive’s termination of employment.

(i)             Termination upon the Expiration of the Employment Term .  Upon the termination of the Executive’s employment pursuant to Section 1(e)(i), the Executive will be entitled to (A) payment of that portion of the Executive’s then effective Annual Salary which has been earned but not yet paid through and including the last day of the Executive’s employment (the “Termination Date”); (B) payment of any Bonus earned by the Executive under the terms and conditions of this Agreement prior to the Termination Date that remains unpaid; (C) reimbursement of any reimbursable business expenses under Section 1(d)(iv), which were incurred by the Executive through and including the Termination Date; and (D) continuation of benefits to which the Executive is entitled under Section 1(d)(iii) through and including the Termination Date (collectively, the “Accrued Benefits”).

(ii)            Termination for Cause or Resignation Without Good Reason .  Upon the Company’s termination of the Executive’s employment for Cause pursuant to Section 1(e)(ii) or the Executive’s resignation without Good Reason pursuant to Section 1(e)(v), Executive will be entitled to the Accrued Benefits.

(iii)           Termination Without Cause or Resignation for Good Reason Prior to or More Than 24 Months After a Change in Control .

(A)           Except as provided in Section 1(f)(iv), below, upon the termination of the Executive’s employment prior to or more than 24 months after a Change in Control (as defined below) (i) by the Company without Cause pursuant to Section 1(e)(iii) or (ii) resulting from the Executive’s resignation for Good Reason pursuant to Section 1(e)(iv), the Executive shall be entitled to receive (x) the Accrued Benefits, (y) the continuation

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of the Executive’s Annual Salary as in effect immediately prior to such Termination Date through the end of the then current Employment Term (without any further extensions) (“Severance Benefit”), payable in accordance with the then prevailing payroll practices of the Company, commencing no later than the fifth business day following the Release Effective Date, and ending on last day of the then current Employment Term (without any further extensions), and (z) provided that the Executive is not entitled to a Bonus for the same period or fiscal year as part of his Accrued Benefits, a pro-rated portion (equal to a fraction, the numerator of which being the number of whole months in which the Executive actually performed services for the Company during such fiscal year, and the denominator being twelve months) of the Executive’s Target Bonus that would have otherwise been payable for the Company’s fiscal year in which the effective date of Executive’s termination of employment occurs.  For example, and provided that he otherwise satisfies the terms and conditions of this Agreement, upon the termination of the Executive’s employment by the Company without Cause twelve months prior to the expiration of the Initial Employment Term, the Executive shall be entitled to (I) the Accrued Benefits, (II) a Severance Benefit equal to twelve months of Annual Salary continuation through the last day of the Initial Employment Term and (III) a pro-rated Target Bonus (to the extent that his is not otherwise entitled to a Bonus for the same period as of the effective date of his termination).

(B)            All outstanding Company stock options as of the effective date of such termination of employment, to the extent then vested and exercisable, shall remain exercisable after such termination for a period equal to the lesser of (i) six months following the Release Effective Date, or (ii) the expiration of the original exercise period of such options (not to exceed ten years).

(iv)           Termination Without Cause or Resignation for Good Reason Within 24 Months After a Change in Control .

(A)           Upon the termination of the Executive’s employment (i) either by the Company without Cause pursuant to Section 1(e)(iii) or resulting from the Executive’s resignation for Good Reason pursuant to Section 1(e)(iv), and (ii) within the 24 month period following a Change in Control, the Executive shall be entitled to receive the Accrued Benefits and a cash payment equal to three times the Executive’s Annual Salary as in effect immediately prior to such Termination Date (“CIC Severance Benefit”), payable in equal monthly installments of one-twelfth (1/12) of the CIC Severance Benefit, commencing following the Termination Date and no later than the fifth business day following the Release Effective Date, and ending with the twelfth payment of such amount.

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(B)            All outstanding Company stock options as of the effective date of such termination of employment, to the extent not previously vested and exercisable, shall become vested and exercisable upon the Executive’s Release Effective Date and shall remain exercisable after such termination for a period equal to the lesser of (i) six months following the Release Effective Date, or (ii) the expiration of the original exercise period of such options (not to exceed ten years).

(v)            Definition of Change in Control .  “Change in Control” shall mean the first to occur of the following: (i) any Person becomes the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company representing a majority of the combined voting power of the Company’s then outstanding securities (assuming conversion of all outstanding non-voting securities into voting securities and the exercise of all outstanding options or other convertible securities); (ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the Effective Date, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended; (iii) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation other than (x) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent, either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof, a majority of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (y) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person, is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing a majority of the combined voting power of the Company’s then outstanding securities; or (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended); (iv) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, or to an entity a majority of the combined voting power of the voting securities of which is owned by substantially all of the stockholders of the Company immediately prior to such sale in substantially the same proportions as their ownership of the Company immediately prior to such sale.  For purposes of this definition, “Person” shall have the meaning given in Section 3(a)(9) of the Securities Exchange Act of 1934, as modified and used in Sections 13(d) and

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14(d) thereof, except that such term shall not include (1) the Company o