Sample Business Contracts

Separation and Severance Agreement - RSI Systems Inc. and Donald C. Lies

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                                FEBRUARY 15, 2000

This Modified Separation and Severance Agreement (the "Modified Agreement") is
made and entered into this 15th day of February, 2000, by and between RSI
Systems, Inc., a Minnesota corporation ("Employer") and Donald C. Lies, a
Minnesota resident ("Employee").

Whereas, Employer has paid Employee a total of $67,692.32, in accordance with
the Separation and Severance Agreement dated September 7, 1999 (the
"Agreement"), the last such payment having been made on January 7, 2000, and

Whereas, Employer has experienced significant cash flow constraints over the
past several months, and has expressed to Employee its desire to change the
amount and timing of remaining payments due to Employee under the Agreement
dated September 7, 1999.

Now therefore, in consideration of the recitals and the mutual representations,
warranties, covenant, agreements and promises made herein, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree to the following modifications to the
Agreement as follows:


This modification supersedes Section 2 (b) of the Agreement - Severance payments
due Donald C. Lies ("Employee") by RSI Systems ("Employer") as originally agreed
upon by both parties on September 7, 1999.

NEW SEVERANCE PAYMENT TERMS. In satisfaction of all remaining severance amounts
due under the original Agreement, Employer agrees to pay Employee a total lump
sum of $50,000, less withholding taxes as required by law, in two (2) equal
payments of $25,000 each, to be paid on or before February 15, 2000, and March
15, 2000.

                                Payment Schedule

---------------------- ---------------- -----------------------------------
Payment due date       Amount           Time
---------------------- ---------------- -----------------------------------
February 15, 2000      $25,000          On or before 2 p.m. CST
---------------------- ---------------- -----------------------------------
March 15, 2000         $25,000          On or before 2 p.m. CST
---------------------- ---------------- -----------------------------------

For the payments to be recognized as "made", the check and/or cash must have
been delivered to Employee's place or residence (9425 Toledo Avenue S.,
Bloomington, Minnesota 55437) no later than 2 p.m. CST on said due date.


Upon remittance of both $25,000 payments on the dates as specified above by
Employer to Employee, the Employee agrees to waive his claim to any further
compensation, obligations or terms and conditions related to payment of said
compensation by Employer, and Employer is not obligated to pay any future
compensation. However, if said payments are not made in their entirety and/or on
or before the dates and times as specified in this Modified Agreement, Employer
will be considered in default of the terms and conditions of this Modified
Agreement and the terms and conditions in Section 2(b) of the original Agreement
shall stand as stipulated in the September 7, 1999 Agreement.

Except as amended herein, the Seperation and Severance Agreement shall remain in
full force and effect. No other agreements, be they written or verbal, exist as
it relates to the Separation and Severance Agreement other than in writing and
executed by both parties.

In witness thereof, the undersigned have executed this Modified Agreement
effective as of the date in the year first written above.

-------------------------------- -------------------------------
            Employer                       Employee
-------------------------------- -------------------------------
By: RSI Systems, Inc.            Name:
-------------------------------- -------------------------------
Name:                            Signature:
-------------------------------- -------------------------------
Title:                           Date:
-------------------------------- -------------------------------
-------------------------------- -------------------------------
-------------------------------- -------------------------------


Received from, RSI Systems, Inc. payment to Don Lies in the sum of $23,087.50.

Date: February 15, 2000


For: Donald C. Lies