Document:

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                                                                    Exhibit 10.2

                       REDLINE PERFORMANCE PRODUCTS, INC.
                  2001 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

       1.) Definitions. As used in this Plan, the following terms have the
following meanings:

       (a) "Administrator" means the Board of Directors.

       (b) "Affiliate" means a "parent" or "subsidiary" corporation, as defined
       in Sections 425(e) and 425(f), respectively, of the Code.

       (c) "Board" means the Board of Directors of the Company.

       (d) "Code" means the Internal Revenue Code of 1986, as amended from time
       to time.

       (e) "Common Stock" means the common stock, $0.01 par value per share, of
       the Company, or any successor class or series of voting Common Stock of
       the Company.

       (f) "Company" means Redline Performance Products, Inc., a Minnesota
       corporation.

       (g) "Director" means a member of the Board.

       (h) "Effective Date" means the date on which the Plan was adopted by the
       Board.

       (i) "Eligible Director" means a Director who is not also an employee of
       the Company or of an Affiliate. A person shall not be an Eligible
       Director if the Company is contractually obligated to include such person
       on the Board of Directors.

       (j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

       (k) "Grant Date" means the date on which an Option is granted.

       (l) "Option" means an option to purchase Common Stock under the Plan. All
       Options granted under this Plan are Non-Qualified Options to purchase
       Common Stock and are not intended to qualify under Section 422 of the
       Internal Review Code of 1986, as amended.

       (m) "Option Agreement" means a written agreement evidencing an Option, in
       a form satisfactory to the Company, duly executed on behalf of the
       Company and delivered to and executed by an Optionee.

       (n) "Option Stock" means shares of Common Stock issued or issuable upon
       exercise of an Option.

       (o) "Optionee" means an Eligible Director who has been granted an Option.

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       (p) "Optionee Termination Date" means the date on which an Optionee
       ceases to be a Director of the Company.

       (q) "Plan" means the Redline Performance Products, Inc. Non-Employee
       Director Stock Option Plan.

       (r) "Securities Act" means the Securities Act of 1933, as amended.

       2.) Purposes of the Plan. The purposes of the Plan are to attract and
retain highly qualified Directors and to provide equity-based incentive to
Eligible Directors by aligning their interests with those of the shareholders of
the Company.

       3.) Common Stock Subject to the Plan. The maximum number of shares of
Common Stock available for issuance under the Plan is Two Hundred Thousand
(200,000). The shares of Common Stock covered by the portion of any Option that
expires or otherwise terminates unexercised under this Plan shall become
available again for grant. The number of shares of Common Stock covered by
Options is subject to adjustment in accordance with Section 5(a) of the Plan.

       4.) Administration. The Administrator shall have the authority to grant
Options under this Plan, and to determine all other matters relating to this
Plan. The Administrator may delegate ministerial duties to such employees of the
Company as it deems proper. All questions of interpretations, implementation and
application of this Plan shall be determined by the Administrator, and such
determinations shall be final and binding on all persons.

       5.) Adjustments.

       (a) Adjustments. In the event that the Common Stock is changed into or
       exchanged for a different number or kind of shares or other securities of
       the Company or of another corporation by reason of any reorganization,
       merger, consolidation, recapitalization, reclassification, Common Stock
       split-up, combination of shares or dividends payable in capital Common
       Stock, appropriate adjustments shall be made in the number and kind of
       shares as to which Options may be granted under the Plan and as to which
       outstanding Options or portions thereof then unexercised shall be
       exercisable, to the end that the proportionate interest of the
       participant shall be maintained as before the occurrence of such event.
       Such adjustment in outstanding Options shall be made without change in
       the total price applicable to the unexercised portion of such Options and
       with a corresponding adjustment in the Option price per share and number
       of shares of Option Stock. No such adjustment shall be made which shall,
       within the meaning of any applicable sections of the Code, constitute a
       modification, extension or renewal of an Option or a grant of additional
       benefits to an Optionee.

       (b) Replacement Securities. If the Company is a party to a merger,
       consolidation, reorganization or similar corporate transaction and if, as
       a result of that transaction, the Company's Common Stock is exchanged
       for: (i) other securities of the Company or (ii) securities of another
       corporation which has assumed the outstanding Options under the

                                       2.
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       Plan or has substituted for such Options its own options, then each
       Optionee shall be entitled (subject to the conditions stated herein or in
       such substituted Options, if any), in respect of that Optionee's Options,
       to purchase that amount of such other securities of the Company or of
       such other corporation as is sufficient to ensure that the value of the
       Optionee's Options immediately before the corporate transaction is
       equivalent to the value of such Options immediately after the
       transaction, taking into account the price of the Option before such
       transaction, the Fair Market Value per Share, as hereinafter defined, of
       the Common Stock immediately before such transaction and the Fair Market
       Value immediately after the transaction, of the securities then subject
       to that Option (or to the option substituted for that Option, if any).
       Upon the happening of any such corporate transaction, the class and
       aggregate number of shares subject to the Plan which have been heretofore
       or may be hereafter granted under the Plan shall be appropriately
       adjusted to reflect the events specified in this Subsection.

       6.) Change in Control.

       (a) Change in Control. For purposes of this Section 6, a "Change in
       Control" of the Company will mean (i) the sale, lease, exchange or other
       transfer of substantially all of the assets of the Company (in one
       transaction or in a series of related transactions) to a person or entity
       that is not controlled, directly or indirectly, by the Company, (ii) a
       merger or consolidation to which the Company is a party if the
       shareholders of the Company immediately prior to effective date of such
       merger or consolidation do not have "beneficial ownership" (as defined in
       Rule 13d-3 under the Exchange Act) immediately following the effective
       date of such merger or consolidation of more than 50% of the combined
       voting power of the surviving corporation's outstanding securities
       ordinarily having the right to vote at elections of directors, or (iii) a
       change in control of the Company of a nature that would be required to be
       reported pursuant to Section 13 or 15(d) of the Exchange Act, whether or
       not the Company is then subject to such reporting requirements.

       (b) Acceleration of Vesting. Without limiting the authority of the
       Administrator under the Plan, if a Change in Control of the Company
       occurs, then, if approved by the Administrator in its sole discretion
       either in an agreement evidencing an Option grant at the time of grant or
       at any time after the grant of an Option, all such Options will become
       immediately exercisable in full and will remain exercisable in accordance
       with the terms of the Plan.

       (c) Cash Payment for Options. If a Change in Control of the Company
       occurs, then the Administrator in its sole discretion either in an
       agreement evidencing an Option grant at the time of grant or any time
       after the grant of an Option, and without the consent of any Option
       recipient effected thereby, may determine that some or all recipients
       holding outstanding Options will receive, with respect to and in lieu of
       some or all of the Option Stock, as of the effective date of any such
       Change in Control of the Company, cash in an amount equal to the excess
       of the Fair Market Value of the Common Stock, as defined in Section 9
       hereof, either immediately prior to the effective date of such Change in
       Control of the Company or, if greater, determined on the basis of the
       amount paid as

                                       3.
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       consideration by the other party(ies) to the Change in Control
       transaction, over the exercise price per share of such Options.

       (d) Limitation on Change in Control Payments. Notwithstanding anything in
       Sections 6(b) or (c) of the Plan to the contrary, if the Company is then
       subject to the provisions of Section 280G of the Code, and if the
       acceleration of the vesting of an Option as provided in Section 6(b) or
       the payment of cash in exchange for all or part of an Option as provided
       in Section 6(c) (which acceleration or payment could be deemed a
       "payment" within the meaning of Section 28OG(b)(2) of the Code), together
       with any other payments which such Optionee has the right to receive from
       the Company would constitute a "parachute payment" (as defined in Section
       28OG(b)(2) of the Code), then the payments to such Optionee pursuant to
       Sections 6(b) or (c) will be reduced to the largest amount as will result
       in no portion of such payments being subject to the excise tax imposed by
       Section 4999 of the Code; provided, however, that if such Optionee is
       subject to a separate agreement with the Company which specifically
       provides that payments attributable to one or more forms of employee
       stock incentives or to payments made in lieu of employee stock incentives
       will not reduce any other payments under such agreement, even if it would
       constitute an excess parachute payment, then the limitations of this
       Subsection (d) will, to that extent, not apply.

       7.) Terms and Conditions of Options.

       (a) Grant of Option. Options shall be granted to Eligible Directors
       pursuant to this Plan as follows:

              (1)    Each Eligible Director shall be automatically granted an
                     Option to purchase 25,000 shares of Option Stock (the
                     "Initial Grant") on the date on which such person first
                     becomes a Director, whether through election by the
                     shareholders of the Company or appointment by the Board of
                     Directors. With respect to Directors who are Eligible
                     Directors as of the Effective Date, an Initial Grant to
                     each such Eligible Director shall be effective as of the
                     Effective Date. The Administrator may, at its sole
                     discretion, increase or decrease the number of shares of
                     Option Stock granted in an Initial Grant.

              (2)    Each Eligible Director shall be automatically granted, on
                     the date of each annual meeting of the Company's
                     shareholders, an Option to purchase 5,000 shares of Option
                     Stock (the "Annual Grant"), provided that an Eligible
                     Director who has not been an Eligible Director since the
                     previous annual meeting of the Company's shareholders shall
                     not be granted an Option under this Subsection. The
                     Administrator may, at its sole discretion, increase or
                     decrease the number of shares of Option Stock granted in an
                     Annual Grant.

       (b) Exercise Price. The exercise price of an Option shall be 100% of the
       Fair Market Value of the Common Stock, as defined in Section 9 hereof, on
       the Grant Date.

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       (c) Option Term. Each Option granted under this Plan shall expire seven
       (7) years from the Grant Date. If an Eligible Director ceases to serve as
       a Director other than as the result of removal by the Board, such person
       may, but only within five (5) years of such person's Optionee Termination
       Date, exercise such person's Option to the extent that such Option had
       vested and become exercisable on the Optionee Termination Date, provided,
       that in no event may an Option be exercised more than seven (7) years
       from the Grant Date. If an Eligible Director ceases to serve as a
       Director as the result of removal or termination by or resignation from
       the Board, all Options held by such person, whether or not such Options
       have vested and become exercisable, shall immediately terminate on the
       Optionee Termination Date.

       (d) Vesting. Except as otherwise provided in this paragraph, Options
       granted under the Plan shall vest and become exercisable with respect to
       20% of such Option Stock on the Grant Date, with respect to an additional
       20% on the date twelve (12) months after the Grant Date, with respect to
       an additional 20% on the date twenty-four (24) months after the Grant
       Date, with respect to an additional 20% on the date thirty-six (36)
       months after the Grant Date, and with respect to the final 20% on the
       date forty-eight (48) months after the Grant Date. Options granted under
       the Plan pursuant to an Annual Grant shall vest and become exercisable
       with respect to 50% of such Option Stock on the Grant Date and with
       respect to the balance of 50% on the date twelve (12) months after the
       Grant Date.

       (e) An Option shall vest and become exercisable only if the Optionee is a
       Director on the vesting date.

       (f) Exercise

              (1)    At the time written notice of exercise of an Option is
                     given to the Company, the Optionee shall make payment in
                     full, in cash or check or by one of the methods specified
                     below, for all Common Stock purchased pursuant to the
                     exercise of such Option. An Option may be exercised by
                     delivery by the Optionee of Common Stock already owned by
                     the Optionee for all or part of the aggregate exercise
                     price of the Common Stock as to which the Option is being
                     exercised, so long as (i) the value of such Common Stock
                     (determined as provided in Section 9) is equal on the date
                     of exercise to the aggregate exercise price of the shares
                     of Common Stock as to which the Option is being exercised,
                     or such portion thereof as the Optionee is authorized to
                     pay by delivery of Common Stock and (ii) such previously
                     owned shares have been held by the Optionee for at least
                     six (6) months.

              (2)    An Optionee wishing to exercise an Option shall give
                     written notice to the Company at its principal executive
                     office, to the attention of the Chief Financial Officer of
                     the Company, accompanied by payment of the Option exercise
                     price or the Common Stock equivalent

                                       5.
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                     thereof. The date the Company receives written notice of an
                     exercise hereunder accompanied by payment of the Option
                     exercise price or the Common Stock equivalent thereof will
                     be considered the date such Option was exercised. Promptly
                     after receipt of such written notice and payment or Common
                     Stock equivalent thereof, the Company shall deliver to the
                     Optionee or such other person permitted to exercise such
                     Option under Section 8, a certificate or certificates for
                     the requisite number of shares of Common Stock.
                     Certificates representing such shares shall be affixed with
                     appropriate legends restricting transfer as provided in the
                     Plan.

       8.) Transferability of Options. Each Option granted hereunder may be
transferred by the Optionee to a member of the Optionee's immediate family, to a
trust established for the benefit of the Optionee or a member of the Optionee's
immediate family, or to a charitable non-profit organization. Except as
permitted by the preceding sentence, each Option granted under the Plan and the
rights and privileges thereby conferred shall not be transferred, assigned or
pledged in any way (whether by operation of law or otherwise), and shall not be
subject to execution, attachment or similar process. Upon any attempt to so
transfer, assign, pledge or otherwise dispose of the Option, or of any right or
privilege conferred thereby, contrary to the provisions of the Option or the
Plan, or upon levy of any attachment or similar process upon such rights and
privileges, the Option, and such rights and privileges, shall immediately become
null and void. A transfer of Options under the terms of the Plan may result in
the termination of the Company's or the Optionee's eligibility to register
Option Stock under the Securities Act and Optionees should make inquiry as to
eligibility for registration prior to exercising any Option.

       9.) Determination of Value. Any determination of the value of Common
Stock required by the Plan shall be determined in accordance with the following
provisions, as applicable (which value or closing price shall be referred to
herein as the "Fair Market Value per Share," or for a group of Shares, a total
"Fair Market Value"):

       (a) if, on the relevant date, the Common Stock is listed on a national or
       regional securities exchange or quoted on the NASDAQ National Market, on
       the basis of the closing sale price on the principal securities exchange
       on which the Common Stock may then be traded or, if there is no sale on
       the relevant date, then on the last previous day on which a sale was
       reported; or

       (b) if, on the relevant date, the Common Stock is not listed on any
       securities exchange or quoted on the NASDAQ National Market, but
       otherwise is publicly-traded and reported on NASDAQ, on the basis of the
       mean between the closing bid and asked quotations in the over-the-counter
       market as reported by NASDAQ; but if there are no bid and asked
       quotations in the over-the-counter market as reported by NASDAQ, then on
       the last previous day any bid and asked prices were quoted; or

       (c) if, on the relevant date, the Common Stock is not publicly-traded as
       described in (a) or (b), in good faith by the Board.

       10.) Restriction on Transfer of Option Stock.

                                       6.
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       (a) Compliance with Securities Laws. Common Stock shall not be issued
       pursuant to the exercise of an Option unless the exercise of the Option
       and the issuance and delivery of Common Stock pursuant thereto shall
       comply with all relevant provisions of law, including, without
       limitation, the Securities Act, the Exchange Act, applicable state
       securities laws, the rules and regulations promulgated under each of the
       foregoing, the requirements of the New York Stock Exchange (if the
       Company's securities are listed thereon) and the requirements of NASDAQ
       pertaining to the National Market or SmallCap Market (if the Company's
       securities are quoted thereon), and shall be further subject to the
       approval of counsel for the Company with respect to such compliance.

       (b) 180-Day Restriction on Transfer After a Public Offering. The Company
       may at a future date file a registration or offering statement (the
       "Registration Statement") with the Securities and Exchange Commission to
       facilitate a public offering of its securities. Should such an initial
       public offering be made and should the managing underwriter of such
       offering require it, the Common Stock issued pursuant to exercise of any
       Option will, without the prior written consent of the Company and such
       underwriter, be restricted from sale, transfer or other disposition
       during the "Lockup Period." The foregoing does not prohibit gifts to
       donees or transfers by will or the laws of descent to heirs or
       beneficiaries provided that such donees, heirs and beneficiaries shall be
       bound by the restrictions set forth herein. The term "Lockup Period"
       shall mean the lesser of (i) 180 days and (ii) the period during which
       Company officers and directors are restricted by the managing underwriter
       from effecting any sales or transfers of the Company's Common Stock. The
       Lockup Period shall commence on the effective date of the Registration
       Statement.

       (c) Restrictive Legend. The Company may place one or more restrictive
       legends on any certificates evidencing Option Stock containing
       substantially the following language:

              The securities represented by this certificate have not been
              registered under the Securities Act of 1933, as amended, have not
              been registered under any state securities law, and are subject to
              a subscription and investment representation agreement. They may
              not be sold, offered for sale, or transferred in the absence of
              either an effective registration under the Securities Act of 1933,
              as amended, and under the applicable state securities laws, or an
              opinion of counsel for the Company that such transaction is exempt
              from registration under the Securities Act of 1933, as amended,
              and under the applicable state securities laws.

              Sale or other transfer of these securities is further restricted
              for up to 180 days following an initial public offering of
              securities of the Company by the terms of the Non-Employee
              Director Stock Option Plan, a copy of which is available for
              inspection at the offices of the Company.

                                       7.
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       (d) Registration and Resale. If, at the time of exercise of an Option,
       the Common Stock subject to this Plan is not registered under the
       Securities Act and under applicable state securities laws, the
       Administrator may require that the Optionee deliver to the Company such
       documents as counsel for the Company may determine are necessary or
       advisable in order to substantiate compliance with applicable securities
       laws and the rules and regulations promulgated thereunder.

       11.) Rights.

       (a) Rights as Optionee. No Eligible Director shall acquire any rights as
       an Optionee unless and until an Option Agreement has been delivered to
       and executed by the Optionee, and duly executed on behalf of the Company.

       (b) Rights as Common Stockholder. No person shall have any rights as a
       shareholder of the Company with respect to any Common Stock subject to an
       Option until the date that a Common Stock certificate has been issued and
       delivered to the Optionee.

       (c) No Right to Re-Election. Nothing contained in the Plan or any Option
       Agreement shall be deemed to create any obligation on the part of the
       Board to nominate any Director for re-election by the Company's
       shareholders, or confer upon any Director the right to remain a member of
       the Board for any period of time, or at any particular rate of
       compensation.

       (d) No Limitations on Company Rights. The grant of an Option pursuant to
       the Plan shall not affect in any way the right or power of the Company to
       make adjustment, reclassifications, reorganizations, or changes of its
       capital business structure, or to merge or to consolidate or to dissolve,
       liquidate or sell, or transfer all or any part of its business or assets.

       12.) Registration and Resale. The Board may, but shall not be required
to, cause the Plan, the Options, and Common Stock subject to the Plan to be
registered under the Securities Act and under the securities laws of any state.
No Option may be exercised, and the Company shall not be obliged to grant Common
Stock upon exercise of an Option, unless, in the opinion of counsel for the
Company, such exercise and grant is in compliance with all applicable federal
and state securities laws and the rules and regulations promulgated thereunder.
As a condition to the grant of an Option for the issuance of Common Stock upon
the exercise of an Option, the Administrator may require that the Optionee agree
to comply with such provisions and federal and state securities laws as may be
applicable to such grant or the issuance of Common Stock, and the Optionee
delivers to the Company such documents as counsel for the Company may determine
are necessary or advisable in order to substantiate compliance with applicable
securities laws and the rules and regulations promulgated thereunder.

       13.) Amendment, Suspension or Termination of the Plan. The Board may at
any time amend, alter, suspend, or discontinue this Plan, except to the extent
that shareholder approval is required for any amendment or alteration (a) by
applicable law in order to exempt from Section 16(b) of the Exchange Act any
transaction contemplated by this Plan, or (b) by the rules of the

                                       8.
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New York Stock Exchange, if the Company's securities are listed thereon, or (c)
by the rules of NASDAQ, if the Company's securities are quoted thereon;
provided, however, no amendment, alteration, suspension or discontinuation shall
be made that would impair the rights of any Optionee under an Option without
such Optionee's consent; and provided further, that any provision in this Plan
relating to the eligibility of Directors to participate in this Plan, the timing
of Option grants made under this Plan or the number of shares issuable upon
exercise of Options granted to a Director under this Plan shall not be amended
more than once every six months, other than to comply with the changes in the
Code or the rules thereunder. Subject to the foregoing, the Administrator shall
have the power to make such changes in the regulations and administrative
provisions hereunder, or in any Option (with the Optionee's consent), as in the
opinion of the Administrator may be appropriate from time to time.

       14.) Indemnification of Administrator. Members of the group constituting
the Administrator shall be indemnified for actions with respect to the Plan to
the fullest extent permitted by the Articles of Incorporation and the Bylaws of
the Company and by the terms of any indemnification agreement that has been or
shall be entered into from time to time between the Company and any such person.

       15.) Plan Binding on Successors. Except as provided herein, the Plan
shall be binding on the successors of the Company.

       16.) Interpretation and Governing Law. This Plan shall be construed under
the laws of the State of Minnesota.

       17.) Headings. The headings used in this Plan are for convenience only,
and shall not be used to construe the terms and conditions of the Plan.

       IN WITNESS WHEREOF, the undersigned hereby acknowledges that the Company
has caused this document to be finalized and approved as the Redline Performance
Products, Inc. Non-Employee Director Stock Option Plan as of the 12th day of
March, 2001.

                                       REDLINE PERFORMANCE PRODUCTS, INC.

                                       By:  /s/ Chris Rodewald
                                            ------------------------------------
                                       Its:  Secretary

                                       9.<PAGE>

                                                                    Exhibit 10.3

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT is between REDLINE PERFORMANCE PRODUCTS,
INC., a Minnesota corporation having its principal place of business in Vista,
California (the "COMPANY"), and MARK A. PAYNE, an individual resident of the
State of Minnesota ("EMPLOYEE").

                                    RECITALS

         WHEREAS, Employee has been employed by the Company as President and
Chief Financial Officer, pursuant to the terms of a Letter Agreement dated
September 12, 2002 and supplemented October 15, 2002;

         WHEREAS, agreement to the terms of the Letter Agreement was predicated
upon the parties agreeing to a "definitive employment agreement" incorporating
and expanding upon the terms agreed upon and set forth in the Letter Agreement;
and

         WHEREAS, the parties have now reached agreement upon the terms and
language of this "definitive employment agreement" to incorporate, clarify,
expand upon and merge terms of the Letter Agreement; and

         WHEREAS, the parties are willing to enter into this employment
agreement (the "AGREEMENT"), all on the terms and subject to the conditions
herein contained;

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements hereinafter set forth, the parties agree as follows:

         1.)      Duties of Employee. During the term of Employee's employment
with the Company hereunder, Employee shall:

         (a)      Act as President and Chief Financial Officer for the Company
         and perform services and assume duties and responsibilities which
         include strategic and operational planning, marketing, sales, business
         development, strategic alliances, administration, finance, operations,
         and additional duties and responsibilities as may be assigned to
         Employee by the Company's Board of Directors, consistent with such
         office, all in accordance with the terms of this Agreement, the
         Articles of Incorporation and Bylaws of the Company, unless the Board
         of Directors elects or appoints another person to assume any one or
         more of such duties and responsibilities; and

         (b)      Devote substantially all of Employee's business time and
         attention necessary to carry out the duties of Employee's employment
         hereunder, applying Employee's best effort and skill for the benefit of
         the Company; and

<PAGE>

         (c)      Employee shall not, without prior written consent of the
         Company, render to others services of any kind for compensation, or
         engage in any other business activity that would materially interfere
         with the performance of Employee's duties under this Agreement; and

         (d)      Report directly to the Board of Directors of the Company or to
         an individual designated by the Board of Directors on a regular basis
         and as further requested by such directors or designated individual.

         2.)      Compensation. As compensation and in consideration for the
performance of services by Employee and Employee's observance of all of the
provisions of this Agreement, the Company agrees to pay or provide, and Employee
agrees to accept, the following:

         (a)      Salary. During the term of this Agreement, the Company shall
         pay Employee for all services rendered for and on behalf of the Company
         an annual base salary of One Hundred Seventy Thousand Dollars
         ($170,000), payable in twenty-six (26) equal installments during each
         year. Salary payments shall be subject to all appropriate withholdings
         for state, federal and local taxes, and such other deductions as
         Employee expressly authorizes in writing or are otherwise required by
         law.

         (b)      Cash Bonus. In addition to the foregoing, the Company shall
         pay to Employee a cash bonus in the aggregate amount of One Hundred
         Thousand Dollars ($100,000) upon the Company's achievement of the
         milestones (each a "MILESTONE") set forth in this paragraph, payable as
         follows: (i) Fifty Thousand Dollars ($50,000) shall be paid if, and at
         such time as, the Company ships an aggregate of five (5) snowmobiles
         produced with production tooling to one or more of the Company's
         dealers for purchase and display by such dealers, and (ii) Fifty
         Thousand Dollars ($50,000) shall be paid upon the later of September
         15, 2003 and the date on which the Company ships production snowmobiles
         for the 2003/2004 model year produced with production tooling to the
         Company's dealers for purchase and resale by such dealers. No payment
         will be made pursuant to this paragraph if Employee is not an employee
         of the Company on the date the Company achieves the Milestone for which
         payment would otherwise be due under this paragraph, unless: (i)
         Employee was involuntarily terminated by the Company before such
         payment for other than for Good Cause (as defined in this Agreement);
         (ii) Employee's employment was terminated as a result of death or
         disability; or 3) Employee terminated his employment for Good Reason
         (as defined in Subsection 4(d) of this Agreement).

         (c)      Performance Bonus. In addition to the foregoing, for the
         Company's fiscal year ending March 31, 2004 and for each subsequent
         fiscal year during the term of this Agreement, Employee shall be
         eligible to receive a bonus of up to one-half of Employee's then
         current salary based upon criteria to be determined by the Compensation
         Committee of the Company's Board of Directors.

         (d)      Grant of Stock Options. The Company shall grant to Employee an
         option to purchase two hundred forty thousand (240,000) shares of the
         Company's common stock (the "OPTION") having an exercise price of Three
         and 75/100 Dollars ($3.75) per share.

<PAGE>

         Notwithstanding the foregoing and as may be set forth in the Option, in
         the event Employee's employment is terminated for any reason, then
         Employee will be required to forfeit all shares which have not vested
         as of the date of termination and shall have a period of one hundred
         eighty (180) days from the date of termination to exercise the Option
         with respect to shares which had vested as of the date of Employee's
         termination. The Options shall be granted, issued and held pursuant to
         the terms of a Stock Option Agreement to be entered into between
         Employee and the Company simultaneously with the execution of this
         Agreement, which is attached to this Agreement as Attachment A and
         incorporated herein by reference. The Option described in this
         Subsection 2(d) are specifically provided in consideration for
         Employee's agreement to be bound by the restrictions described in this
         Agreement. Employee expressly agrees that he was not and is not
         entitled to receive these Option without agreeing to the restrictions
         set forth in this Agreement.

         (e)      Benefits. During the term of Employee's employment, Employee
         shall be entitled to four (4) weeks of paid vacation per annum to be
         accrued monthly, seven (7) paid holidays annually and three (3) paid
         sick days annually. The Company will not pay any insurance or other
         benefits to Employee prior to January 1, 2003. Beginning January 1,
         2003, the Company will provide medical and other benefits provided to
         other management-level employees at the Company pursuant to the terms
         of the Company's benefit plan. If the Company does not have a benefit
         plan in effect at such time, the Company will reimburse Employee for
         seventy-five percent (75%) of Employee's monthly payments for
         reasonable benefits until such time as a benefit plan is established
         for management-level employees of the Company.

         (f)      Business Expenses. The Company shall reimburse Employee for
         business expenses reasonably incurred by Employee in connection with
         the performance of Employee's duties hereunder, upon the presentation
         by Employee of receipts and itemized accounts of such expenditures in
         accordance with the rules and regulations of the Internal Revenue Code.
         Any single expense in an amount greater than $20,000 shall be subject
         at all times to the prior approval of the Board of Directors or its
         designee. Except for expenses previously approved by the Board of
         Directors or its designee, the Board of Directors of the Company may
         take such action as may be necessary to enforce the repayment to the
         Company by Employee of any amounts reimbursed upon finding that such
         reimbursement was not made primarily for the purpose of advancing the
         legitimate interests of the Company.

         3.)      Appointment to Board of Directors. In consideration for
Employee's performance of services under this Agreement and observance and
compliance with the terms and provisions hereof, the Company hereby agrees, as
soon as reasonably practicable following the effective date of this Agreement,
to appoint Employee as a member of the Company's Board of Directors, and to take
any steps reasonably necessary to continue to nominate Employee to be a member
of the Company's Board of Directors for so long as Employee remains an executive
officer of the Company.

<PAGE>

         4.)      Termination of Agreement.

         (a)      Termination With Cause. The Company may terminate Employee's
         employment and this Agreement for Good Cause (as defined below) upon
         notice of such termination to Employee. For purposes of this Agreement,
         "GOOD CAUSE" shall mean Employee's (i) failure or refusal to observe or
         perform any of the material provisions of this Agreement or any other
         written agreement with the Company, or to substantially perform any of
         the material duties required of Employee under this Agreement, any
         other written agreement with the Company, or as otherwise directed or
         requested by the Board of Directors, or (ii) commission of fraud,
         misappropriation, embezzlement or other acts of dishonesty or
         conviction for any crime punishable as a felony or as a gross
         misdemeanor involving moral turpitude, which actions, in the judgment
         of the Company, have a material adverse effect upon Employee's ability
         to perform the duties which are assumed or assigned under Section 1
         hereof, or which actions or occurrences are materially adverse to the
         interests of the Company. Termination of Employee's employment for Good
         Cause under Subsection 4(a)(ii) above shall be effective upon notice.
         Termination of Employee's employment for Good Cause under Subsection
         4(a)(i) shall be effective upon thirty (30) days' prior written notice,
         which notice shall state the factual basis for the termination for Good
         Cause, and such factual basis is not corrected to the reasonable
         satisfaction of the Company's Board of Directors, in its sole
         discretion.

         (b)      Termination With Notice. Employee's employment and this
         Agreement may be terminated by either party for any reason or for no
         reason, without cause upon not less than thirty (30) days' prior
         written notice.

         (c)      Termination upon Death or Disability of Employee. Employee's
         employment and this Agreement shall automatically terminate in the
         event of Employee's death or disability. "DISABILITY" means the
         unwillingness or inability of Employee to perform Employee's duties
         under this Agreement for a period of six (6) continuous months because
         of incapacity due to physical or mental illness, bodily injury or
         disease.

         (d)      Termination by Employee for Good Reason. Employee may
         terminate his employment and this Agreement for Good Reason (as defined
         below) upon thirty (30) days prior written notice and the Company's
         failure to remedy the problem within such period. Notice of Good Reason
         shall describe the event which is the basis for the Good Reason. For
         purposes of this Section 4(d), "GOOD REASON" means the Company, without
         the consent of Employee: (i) moves its principal business offices or
         the location of Employee's primary business office and requires
         Employee to relocate to a location other than the Minneapolis/St. Paul,
         Minnesota metropolitan area; (ii) changes Employee's title as the
         President and Chief Financial Officer of the Company or materially
         alters or reduces Employee's principal duties or responsibilities;
         (iii) reduces Employee's annual base compensation as described in
         Section 2 above, other than as a percentage reduction which is
         applicable to all of the Company's employees; or (iv) refuses to pay
         for Employee's benefits under any fringe benefit plan, unless such
         reduction in compensation or benefits applies equally to all of the
         Company's employees, or refuses to reimburse Employee in

<PAGE>

         lieu of paying for such benefits. The occurrence of an event described
         in this Subsection 4(d) will not constitute Good Reason if the
         circumstances or facts which form the basis of the Good Reason are the
         responsibility of Employee. Employee waives his rights under this
         Subsection 4(d) to terminate his employment and this Agreement,
         including his rights to severance, if Employee fails to notify the
         Company of the occurrence of the event which constitutes Good Reason
         within sixty (60) days of the occurrence of the event.

         (e)      Termination Obligations. In the event of a termination of
         Employee's employment in accordance with this Section 4, the Company
         shall have no further obligation to Employee under this Agreement, and
         Employee shall only be entitled to payment by the Company for
         compensation accrued under this Agreement as of the date of such
         termination. Specifically, but without limitation, in the event of a
         termination of Employee's employment in accordance with this Section 4,
         Employee will have no rights to the severance allowance described in
         Subsection 4(f) below, except as specifically provided thereunder, or
         to bonuses described in Subsections 2(b) or (c), except as specifically
         provided under Subsection 2(b). In addition, any termination of
         Employee's employment shall not terminate or extinguish Employee's
         post-termination obligations (unless otherwise provided herein) or
         Employee's obligation or liability to pay to the Company any amounts
         owed to the Company by Employee, including, but not limited to, any
         amounts misappropriated or obtained by Employee, without prejudice to
         any other rights or remedies of the Company at law or in equity. Except
         as provided in Subsection 2(b) of this Agreement, Employee and the
         Company acknowledge and agree that no part of any incentive
         compensation or bonus that is based on the Company's performance and
         achievement of the Milestones, if any, is payable if Employee's
         employment is terminated for any reason prior to the Company's
         achievement of such Milestones.

         (f)      Severance Allowance. If Employee's employment is terminated by
         the Company for reasons other than Good Cause under Subsection 4(a), or
         if Employee terminates this Agreement for Good Reason under Section
         4(d), Employee will be entitled to receive a severance allowance. If
         Employee voluntarily terminates his employment he will not receive
         severance. The amount of the severance allowance shall be three (3)
         months of Employee's then-current base salary if Employee is terminated
         prior to completion of the Company's Initial Public Offering (an
         "IPO"). The amount of the severance will be equal to six (6) months of
         Employee's then-current base salary if Employee is terminated during
         the period beginning upon completion of an IPO and ending on the date
         twelve (12) months from the effective date of this Agreement. After
         one-year of employment, the amount of the severance will increase from
         the amount of six (6) months of Employee's then-current base salary by
         the amount of one (1) month of Employee's then-current base salary for
         every period of six (6) months Employee remains employed by the Company
         after Employee's first year of employment; provided, however, that the
         amount of the severance will be capped at an amount which is equal to
         one-year of Employee's then-current base salary. Any payment under this
         paragraph shall be made in twelve (12) equal

<PAGE>

         monthly installment payments in accordance with the Company's customary
         payroll practices and procedures.

         5.)      Disclosure of Confidential Information.

         (a)      Definition of Confidential Information. For purposes of this
         Agreement, "CONFIDENTIAL INFORMATION" means any information that is not
         generally known to the public that relates to the existing or
         reasonably foreseeable business of the Company which has been expressly
         or implicitly protected by the Company or which, from all of the
         circumstances, Employee knows or has reason to know that the Company
         intends or expects the secrecy of such information to be maintained.
         Confidential Information includes, but is not limited to, information
         contained in or relating to the development plans or proposals,
         marketing plans or proposals, strategies, financial statements,
         budgets, trade secrets, test data, other data, software licenses,
         pricing formulas, customer and supplier information, employee
         information, research and development information, designs, products,
         processes, manufacturing techniques, know-how, and other proprietary
         information of the Company, whether written, oral or communicated in
         another type of medium, whether disclosed directly or indirectly,
         whether originals or copies, whether disclosed before or after the date
         of this Agreement, and whether or not legal protection has been
         obtained or sought under applicable law. Employee shall treat all such
         information as Confidential Information regardless of its source and
         whether or not marked as confidential.

         (b)      Employee Shall Not Disclose Confidential Information. Employee
         will not, during the term of Employee's employment or following the
         termination of Employee's employment with the Company, use, show,
         display, release, discuss, communicate, divulge, use for his or
         another's benefit or to the Company's detriment, or otherwise disclose
         Confidential Information to any person, firm, corporation, association,
         or other entity for any reason or purpose whatsoever, without the prior
         written consent or authorization of the Company, except as may be
         reasonably necessary under the circumstances and consistent with
         Employee's good faith pursuit of the Company's business and Employee's
         obligations hereunder.

         (c)      Scope. Employee's covenant in Subsection 5(b) to not disclose
         Confidential Information shall not apply to information which, at the
         time of such disclosure, may be obtained from sources outside of the
         Company, its agents, lawyers or accountants, so long as those sources
         did not receive the information directly or indirectly as the result of
         Employee's action.

         (d)      Title. All documents or other tangible or intangible property
         relating in any way to the business of the Company which are conceived
         or generated by Employee or come into Employee's possession during the
         employment period shall be and remain the exclusive property of the
         Company, and Employee agrees to return all such documents, and tangible
         and intangible property, including, but not limited to, all records,
         manuals, books, blank forms, documents, letters, memoranda, notes,
         notebooks, reports, data, tables, magnetic tapes, computer disks,
         calculations and all copies thereof, which are the property of the

<PAGE>

         Company or which relate in any way to the business, customers,
         products, practices or techniques of the Company, and all other
         property of the Company, including, but not limited to, all documents
         which in whole or in part contain any Confidential Information of the
         Company which in any of these cases are in Employee's possession or
         under Employee's control, to the Company upon the termination of
         Employee's employment with the Company, or at such earlier time as the
         Company may request him to do so. Employee agrees to sign a Warranty
         and Representation upon his termination certifying that he has returned
         and not retained any Company property.

         (e)      Compelled Disclosure. In the event a third party seeks to
         compel disclosure of Confidential Information by Employee by judicial
         or administrative process, Employee shall promptly notify the Board of
         Directors of the Company of such occurrence and furnish to the Board of
         Directors a copy of the demand, summons, subpoena or other process
         served upon Employee to compel such disclosure, and will permit the
         Company to assume, at its expense, but with Employee's cooperation,
         defense of such disclosure demand. In the event that the Company
         refuses to contest such a third party disclosure demand under judicial
         or administrative process, or a final judicial order is issued
         compelling disclosure of Confidential Information by Employee, Employee
         shall be entitled to disclose such information in compliance with the
         terms of such administrative or judicial process or order.

         6.)      Employee Acknowledgments.

         (a)      Employee recognizes that the Company is continually engaged in
         the design and development of high performance vehicles and other
         related technologies (hereinafter the "TECHNOLOGY"), and that such
         Technology is kept in strict confidence by the Company. Employee is
         aware that the Technology is vital to the Company's success.

         (b)      Employee further understands that the success of the Company
         depends, to a great extent, on its ability to protect its Confidential
         Information, including that comprising the Technology, from
         unauthorized disclosure, use or publication. Inasmuch as Employee will
         gain knowledge of, or have access to, the Confidential Information
         about the Technology, in whole or in part, in the course of employment,
         Employee acknowledges that the Company is and will be entrusting
         Employee with this valuable information.

         (c)      Employee understands that the Company is engaged in a
         continuous program of research, development, production and marketing
         of its present and future products, and the enhancement of its
         Technology.

         7.)      Employee Representations and Warranties.

         (a)      Employee represents and warrants that performance of the terms
         of this Agreement as an employee of the Company does not and will not
         cause Employee to breach any agreement, commitment or understanding
         Employee has with any other party, whether formal or informal, to
         assign to such other party inventions Employee may hereafter make, or
         to keep in confidence confidential or proprietary information of such

<PAGE>

         other party which Employee acquired or learned prior to Employee's
         employment by the Company.

         (b)      Employee represents and warrants that Employee has not brought
         and will not bring to the Company, or use for the benefit of the
         Company, any materials and/or documents of a former employer (which,
         for purposes of this Section 7, shall also include persons, firms,
         corporations and other entities for which Employee has acted as an
         independent contractor or consultant) that are not generally available
         to the public or to the trade, unless Employee has obtained written
         authorization from any such former employer permitting Employee to
         retain and use said materials and/or documents. With respect to any
         materials and/or documents that Employee may bring to the Company for
         use in the course of Employee's employment, Employee hereby further
         represents and warrants that Employee's use (or the Company's use) of
         such materials and/or documents will not violate the intellectual
         property rights of any former employer of Employee, or any other party.

         8.)      Company Ownership of Intellectual Property.

         (a)      Employee hereby agrees to disclose promptly to the Company (or
         any persons designated by it) all developments, designs, creations,
         improvements, original works of authorship, formulas, processes,
         know-how, techniques and/or inventions (hereinafter referred to
         collectively as "INVENTIONS"), which (i) are made or conceived or
         reduced to practice by Employee, either alone or jointly with others,
         during the period of Employee's employment by the Company, or which are
         reduced to practice during the period of twelve (12) months following
         the termination of Employee's employment, that relate to or are useful
         in the present or future business of the Company, or (ii) result from
         tasks assigned to Employee by the Company, or from Employee's use of
         the premises or other resources owned, leased or contracted by the
         Company.

         (b)      Employee agrees that all such Inventions which the Company in
         its sole discretion determines to be related to, or useful in, its
         business or its research or development, or which result from work
         performed by Employee for the Company, shall be the sole and exclusive
         property of the Company and its assigns, and the Company and its
         assigns shall have the right to use and/or to apply for patents,
         copyrights or other statutory or common law protections for such
         Inventions in any and all countries. Employee further agrees to assist
         the Company in every proper way (but at the Company's expense) to
         obtain and from time to time enforce patents, copyrights and other
         statutory or common law protections for such Inventions in any and all
         countries. To that end, Employee will execute all documents for use in
         applying for and obtaining such patents, copyrights and other statutory
         or common law protections therefor and enforcing the same, as the
         Company may desire, together with any assignments thereof to the
         Company or to persons or entities designated by the Company. Employee's
         obligations under this Subsection 8(b) shall continue beyond the
         termination of Employee's employment with the Company, but the Company
         shall compensate Employee at a reasonable rate after such termination
         for time actually spent by Employee at the Company's request in
         providing such assistance.

<PAGE>

         (c)      Employee has identified on Exhibit B attached hereto a
         complete list of all inventions or improvements which have been made or
         conceived or first reduced to practice by Employee alone or jointly
         with others prior to Employee's employment by the Company and which
         Employee desires to exclude from the operation of this Agreement. If
         there is no such list on Exhibit B, Employee represents that Employee
         has made no such inventions or improvements at the time of signing of
         this Agreement.

         (d)      Employee hereby acknowledges that all original works of
         authorship which are made by Employee (solely or jointly with others)
         within the scope of Employee's employment which are protectable by
         copyright are "WORKS FOR HIRE," as that term is defined in the United
         States Copyright Act (17 USCA, Section 101).

         9.)      Assignment of Inventions. Any provision in this Agreement
requiring Employee to assign Employee's rights in any Invention to the Company
shall not apply to any invention that is exempt under the provisions of Section
181.78 of the Minnesota Statutes. The statute states that such assignment
agreements do not apply:

                  To an invention for which no equipment, supplies, facility or
                  trade secret information of the employer was used and which
                  was developed entirely on the employee's own time, and (1)
                  which does not relate (a) directly to the business of the
                  employer or (b) to the employer's actual or demonstrably
                  anticipated research or development, or (2) which does not
                  result from any work performed by the employee for the
                  employer.

         Employee shall execute the Invention Assignment Notice attached here to
as Exhibit C and incorporated herein by reference.

         10.)     Power of Attorney. In the event the Company is unable, after
reasonable effort, to secure Employee's signature on any document needed to
apply for, obtain or enforce any intellectual property rights relating to any
Invention with respect to which Employee has made an inventive contribution,
whether because of Employee's unavailability, or Employee's physical or mental
incapacity, or for any other reason whatsoever, Employee hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as Employee's agents and attorneys-in-fact to act for and in Employee's behalf
and stead solely for and in connection with the execution and filing of any such
document with the same legal force and effect as if such acts were performed by
Employee.

         11.)     Covenants Not to Solicit, Divert or Compete. Employee and the
Company agree that the Company would be substantially harmed if Employee
competes with the Company during or after termination of employment with the
Company.

         (a)      Employee agrees that during Employee's employment with the
         Company and for a period of one (1) year after the termination of
         Employee's employment with the Company for any reason, Employee will
         not on behalf of himself or on behalf of, or in conjunction

<PAGE>

         with, any other person, association, firm, partnership, or corporation
         (except on behalf of the Company):

                  (1)      Own, manage, operate, join, control, be employed by,
                           consult with or render services to or for any person,
                           firm, corporation or other organization which
                           competes with the business or other interests of the
                           Company (a "COMPETING BUSINESS");

                  (2)      Directly or indirectly induce or attempt to induce
                           for his benefit or that or any third party any of the
                           Company's employees, officers, suppliers,
                           consultants, independent contractors or vendors who
                           have held any such position or provided any goods or
                           services to the Company at any time during the twelve
                           (12) months immediately preceding the date of
                           termination of Employee's employment, to terminate,
                           breach, refrain from entering or otherwise alter such
                           person's or organization's relationship with, or
                           obligations to, the Company.

                  (3)      Hire, nor contract with, any employee, officer,
                           supplier, consultant, independent contractor or
                           vendor who held any such position or provided any
                           goods or services to the Company at any time during
                           the twelve (12) months immediately preceding the date
                           of termination of Employee's employment.

                  (4)      Directly or indirectly, either alone or in concert
                           with others, solicit or entice or in any way divert
                           any customer, dealer or supplier to do business with
                           any business entity in competition with the Company,
                           including, without limitation, a Competing Business.

         (b)      During Employee's employment by the Company, Employee agrees
         not to plan or otherwise take any preliminary steps, either alone or in
         concert with others, to set up or engage in any Competing Business.
         Employee, during his employment with the Company, shall at all times
         keep the Company informed of any business activity or employment which
         may be in conflict with the Company's interests.

         (c)      Employee agrees that no geographic area limitation to his
         covenant not to compete would be possible because the Company buys and
         sells internationally. He expressly agrees that the covenants are
         acceptable without imposition of a geographic limitation.

         (d)      Nothing contained in this Agreement shall be construed to
         prevent Employee from engaging in a lawful profession, trade or
         business after the termination of Employee's employment with the
         Company. This Agreement shall be construed only as one which prohibits
         Employee from engaging in acts which are unfair to the Company, and
         which are in violation of the confidence and trust reposed in Employee
         by the Company.

<PAGE>

         12.)     Breach of Restrictive Covenants.

         (a)      Irreparable Harm; Remedies. It is agreed that it would be
         difficult or impossible to ascertain the measure of damages to the
         Company resulting from any breach of Employee's obligations under this
         Agreement, and that injury to the Company from any such breach may be
         irremediable, and that money damages therefor may be an inadequate
         remedy. In the event of a breach or threatened breach by Employee of
         the restrictive covenant provisions of this Agreement, the Company
         shall be entitled to seek and obtain, in addition to any other rights
         or remedies that the Company may have available under applicable law
         for such breach or threatened breach, including the recovery of
         damages, available equitable remedies, including, without limitation,
         specific performance of this Agreement and the provision herein and a
         temporary or permanent injunction to enjoin Employee from breaching
         such provisions without the necessity of proof of actual damages.

         (b)      Survival of Restrictive Covenants. Employee's post-employment
         obligations and restrictions, including, without limitation, the
         confidentiality obligations set forth in Section 5, the intellectual
         property ownership obligations set forth in Section 8, the restrictive
         covenants not to solicit, divert or compete set forth in Section 11 and
         all other provisions the natural application of which continues after
         the termination of Employee's employment and this Agreement, shall
         continue to be binding upon Employee, notwithstanding the termination
         of Employee's employment with the Company or this Agreement for any
         reason whatsoever. Such covenants shall be deemed and construed as
         separate agreements independent of any other provisions of this
         Agreement. The existence of any claim or cause of action by Employee
         against the Company, whether predicated on this Agreement or otherwise,
         shall not constitute a defense to the enforcement by the Company of any
         or all such Sections.

         13.)     Communication with Subsequent Employer. Upon the termination
of Employee's employment, Employee agrees to inform Company of his subsequent
employment or professional association with any other individual, company, or
other entity or organization.

         14.)     Definitions. The term "COMPANY" when used in this Agreement
shall mean in addition to the Company, any affiliate of the Company. The terms
"AFFILIATE" or "AFFILIATES" when used in this Agreement shall mean any person
that controls the Company, or is controlled by the Company, or is under common
control with the Company.

         15.)     Miscellaneous Provisions.

         (a)      Entire Agreement; Modification. This Agreement constitutes the
         full and complete understanding and agreement of the parties with
         respect to the employment of Employee by the Company, and supersedes
         any prior understanding or agreement (whether oral or written) between
         the parties relating thereto. The Letter Agreement dated September 12,
         2002, and supplemented October 15, 2002, between the Company and
         Employee is merged into this Agreement. No amendment, waiver or
         modification of any provision of this Agreement shall be binding unless
         made in writing and signed by the parties hereto.

<PAGE>

         (b)      Assignment. The rights and benefits of the Company and its
         permitted assigns under this Agreement shall be fully assignable and
         transferable to any other entity (subject to such assumption by such
         assignee/transferee of the obligations hereunder) which: (i) is an
         affiliate of the Company; or (ii) if not an affiliate of the Company,
         has merged or consolidated with the Company, or to which the Company
         has sold substantially all of its assets in a transaction in which such
         entity has assumed the liabilities of the Company under this Agreement.
         In the event of any such assignment or transfer, all covenants and
         agreements hereunder shall inure to the benefit of, and be enforceable
         by or against, the successors and assigns of the Company. This
         Agreement is a personal service contract and shall not be assignable by
         Employee, but all obligations and agreements of Employee hereunder
         shall be binding upon and enforceable against Employee and Employee's
         personal representatives, heirs, legatees and devisees.

         (c)      Notices. To be effective, all notices, consents or other
         communications required or permitted hereunder shall be in writing. A
         written notice or other communication shall be deemed to have been
         given hereunder (i) if delivered by hand, when the notifying party
         delivers such notice or other communication to all other parties to
         this Agreement, (ii) if delivered by facsimile or overnight delivery
         service, on the first business day following the date such notice or
         other communication is transmitted by facsimile or timely delivered to
         the overnight courier, or (iii) if delivered by mail, on the third
         business day following the date such notice or other communication is
         deposited in the U.S. mail by certified or registered mail addressed to
         the other party. Mailed or telecopied communications shall be directed
         as follows unless written notice of a change of address or facsimile
         number has been given in writing in accordance with this Subsection
         15(c):

                  If to Company:          Redline Performance Products, Inc.
                                          2510 Commerce Way
                                          Vista, CA 92083
                                          Facsimile No. (760) 598-0167
                                          ATTN: CEO

                  With a copy to:         Larkin, Hoffman, Daly & Lindgren, Ltd.
                                          1500 Wells Fargo Plaza
                                          7900 Xerxes Avenue South
                                          Minneapolis, MN 55431
                                          Facsimile No. (952) 896-3333
                                          ATTN: Douglas M. Ramler, Esq.

                  If to Employee:         Mark A. Payne
                                          8860 Flesher Circle
                                          Eden Prairie, MN 55347
                                          Facsimile No. (952) 949-2178

                  With a Copy To:         Maslon, Edelman, Borman and Brand, LLP
                                          3300 Wells Fargo Center

<PAGE>

                                          90 So. 7th Street
                                          Minneapolis, MN  55402
                                          Facsimile No. (612) 672-8397
                                          ATTN: William Mower, Esq.

         (d)      Waiver. No waiver of any term, condition or covenant of this
         Agreement by a party shall be deemed to be a waiver of any subsequent
         breaches of the same or other terms, covenants or conditions hereof by
         such party.

         (e)      Counterparts. This Agreement may be executed in separate and
         several counterparts, each of which shall be deemed to be an original,
         and all such counterparts shall constitute one and the same instrument.

         (f)      Construction. Whenever possible, each provision of this
         Agreement shall be interpreted in such manner as to be effective or
         valid under applicable law, but if any provision of this Agreement
         shall be prohibited by or invalid under applicable law, such provision
         shall be ineffective only to the extent of such prohibition or
         invalidity without invalidating the remainder of such provision or the
         remaining provisions of this Agreement.

         (g)      Governing Law. The parties acknowledge that this Agreement has
         been entered into in the State of Minnesota and that they wish legal
         certainty and predictability as to the terms of their undertaking.
         Accordingly, the parties hereby agree that this Agreement shall be
         governed by, and construed and enforced in accordance with, the laws of
         the State of Minnesota.

         (h)      Arbitration. Any controversy or claim arising out of or
         relating to this Agreement, or its breach, other than a claim for
         injunctive relief, shall be settled by final and binding arbitration in
         Minneapolis, Minnesota, upon the request of either party. Such
         arbitration shall proceed in accordance with the then-governing rules
         of the American Arbitration Association ("AAA") for Employment Dispute
         Resolutions or Commercial Arbitration, at the option of the petitioner.
         Judgment upon the award rendered may be entered and enforced in any
         court of competent jurisdiction. It is agreed that the parties shall
         choose a single, neutral arbitration from among a panel of not less
         then seven (7) proposed arbitrators and that the parties may have no
         more than two (2) panels of arbitrators presented to them by the AAA.
         The parties agree that they will share equally the fees of the
         arbitrator, and they shall each be responsible for their own attorneys'
         fees and costs and any filing fee paid by them unless the arbitrator
         determines that one party shall pay a greater portion of such costs and
         fees and states the justification therefor.

         (i)      Jurisdiction/Venue. The Company and Employee consent to the
         exclusive jurisdiction of the courts of the State of Minnesota and/or
         the Federal District Courts, Fourth Division, State of Minnesota, for
         the purpose of resolving all issues of law, equity, or fact arising out
         of, or in connection with, this Agreement or any other instrument or
         document executed or delivered in connection herewith that are not
         subject to arbitration

<PAGE>

         or resolved by arbitration pursuant to Subsection 15(h), and that
         venue, for the purpose of all such suits, shall be exclusively in
         Hennepin County, State of Minnesota.

         (j)      Attorneys' Fees. In the event a judgment is entered against
         any party hereto in a court of competent jurisdiction based upon a
         breach of the terms of this Agreement, the prevailing party shall be
         entitled to receive, as part of any award, the amount of reasonable
         attorneys' fees and expenses incurred by the prevailing party in such
         action. A party shall be deemed to have prevailed if (i) the judgment
         entered (without including attorneys' fees and expenses) is more
         favorable to that party than any offer of settlement made to that party
         within twenty (20) days after the service of the complaint in such
         action, or (ii) the party obtains the injunctive relief it sought.

         (k)      Representation by Counsel; Interpretation. The Company and
         Employee each acknowledge that each party to this Agreement has been,
         or has had the opportunity to be, represented by counsel in connection
         with this Agreement and the matters contemplated by this Agreement.
         Accordingly, any rule of law or any legal decision that would require
         interpretation of any claimed ambiguities in this Agreement against the
         party that drafted it has no application and is expressly waived. The
         provisions of this Agreement shall be interpreted in a reasonable
         manner to effect the intent of the parties.

         (l)      Effective Date. The parties agree that the effective date of
         this Agreement shall be October 15, 2002.

         IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the date first above written.

                                    EMPLOYEE:

                                     /s/ Mark A. Payne
                                    --------------------------------------------
                                    Mark A Payne, An Individual

                                    COMPANY:

                                    Redline Performance Products, Inc.

                                    ____________________________________________
                                    Kent Harle, CEO

<PAGE>

         (i)      Jurisdiction/Venue. The Company and Employee consent to the
         exclusive jurisdiction of the courts of the State of Minnesota and/or
         the Federal District Courts, Fourth Division, State of Minnesota, for
         the purpose of resolving all issues of law, equity, or fact arising out
         of, or in connection with, this Agreement or any other instrument or
         document executed or delivered in connection herewith that are not
         subject to arbitration or resolved by arbitration pursuant to
         Subsection 15(h), and that venue, for the purpose of all such suits,
         shall be exclusively in Hennepin County, State of Minnesota.

         (j)      Attorneys' Fees. In the event a judgment is entered against
         any party hereto in a court of competent jurisdiction based upon a
         breach of the terms of this Agreement, the prevailing party shall be
         entitled to receive, as part of any award, the amount of reasonable
         attorneys' fees and expenses incurred by the prevailing party in such
         action. A party shall be deemed to have prevailed if (i) the judgment
         entered (without including attorneys' fees and expenses) is more
         favorable to that party than any offer of settlement made to that party
         within twenty (20) days after the service of the complaint in such
         action, or (ii) the party obtains the injunctive relief it sought.

         (k)      Representation by Counsel; Interpretation. The Company and
         Employee each acknowledge that each party to this Agreement has been,
         or has had the opportunity to be, represented by counsel in connection
         with this Agreement and the matters contemplated by this Agreement.
         Accordingly, any rule of law or any legal decision that would require
         interpretation of any claimed ambiguities in this Agreement against the
         party that drafted it has no application and is expressly waived. The
         provisions of this Agreement shall be interpreted in a reasonable
         manner to effect the intent of the parties.

         (l)      Effective Date. The parties agree that the effective date of
         this Agreement shall be October 15, 2002.

         IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the date first above written.

                                    EMPLOYEE:

                                    ____________________________________________
                                    Mark A Payne, An Individual

                                    COMPANY:

                                    Redline Performance Products, Inc.

                                     /s/ Kent H. Harle
                                    --------------------------------------------
                                    Kent Harle, CEO

<PAGE>

                                    Exhibit A

                             STOCK OPTION AGREEMENT

<PAGE>

                                    Exhibit B

                       PRE-EXISTING PROPRIETARY INVENTIONS

Please provide a list of all of Employee's pre-existing proprietary inventions.
If no such inventions are listed, Employee represents and warrants that there
exist no such pre-existing proprietary inventions.

None.

<PAGE>

                                    Exhibit C

                           INVENTION ASSIGNMENT NOTICE

Mr. Payne

         You are notified that the employment agreement between you and Redline
Performance Products, Inc., dated effective as September 12, 2002 and
supplemented October 15, 2002, does not apply to any invention that qualifies
fully under the provisions of Section 181.78 of the Minnesota Statutes.

                                    ________________________________

                                    By:  /s/ Kent H. Harle
                                        ----------------------------
                                        Its: CEO
                                            ------------------------

I acknowledge receiving a copy of this notice

Date: __________, 2002

                                    ________________________________
                                    Mark A. Payne

<PAGE>

                                    Exhibit C

                           INVENTION ASSIGNMENT NOTICE

Mr. Payne

         You are notified that the employment agreement between you and Redline
Performance Products, Inc., dated effective as September 12, 2002 and
supplemented October 15, 2002, does not apply to any invention that qualifies
fully under the provisions of Section 181.78 of the Minnesota Statutes.

                                    ________________________________

                                    By: ____________________________
                                        Its:________________________

I acknowledge receiving a copy of this notice

Date: October 15, 2002

                                    /s/ Mark A. Payne
                                    --------------------------------
                                    Mark A. Payne

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