Document:

Exhibit
10.1

 

EXECUTIVE
EMPLOYMENT AGREEMENT

 

THIS
EXECUTIVE EMPLOYMENT AGREEMENT, effective as of the first
day of July, 2010, is by and between Cycle Country Accessories Corp., a Nevada
corporation (the “Company”), and Robert Davis, a Minnesota resident (“Executive”).

 

R E C I T A L S

 

A.            The Company desires to
employ Executive as the Chief Operating Officer, Chief Financial Officer,
Treasurer and Secretary of the Company and Executive desires to accept
employment as the Chief Operating Officer, Chief Financial Officer, Treasurer
and Secretary of the Company on the terms and conditions set forth below.

 

In consideration of the
foregoing premises and the parties’ mutual covenants and undertakings contained
in this Agreement, the Company and Executive agree as follows:

 

ARTICLE I. 
DEFINITIONS

 

Capitalized terms used in
this Agreement shall have their defined meaning throughout the Agreement.  The following terms shall have the meanings
set forth below, unless the context clearly requires otherwise.

 

1.1           “Agreement”
means this Executive Employment Agreement, as from time to time amended.

 

1.2           “Base Salary”
means the total annual cash compensation payable on a regular periodic basis,
without regard to voluntary or mandatory deferrals, as set forth at Section 3.1
of this Agreement.

 

1.3           “Board”
means the Board of Directors of the Company.

 

1.4           “Cause”
has the meaning set forth at Section 4.2 of this Agreement.

 

1.5           “Change in Control” means (i) the
sale, lease, exchange or other transfer of all or substantially all of the
stock or assets of either the Company or
Operating Company to a corporation, person or other entity that is not
controlled by either the Company or
Operating Company; (ii) the approval by the Company’s shareholders of any plan or proposal for the
liquidation or dissolution of either the
Company; (iii) a merger or consolidation to which the Company is a party if the shareholders
of the Company immediately prior to
the effective date of such merger or consolidation have “beneficial ownership”
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)), immediately following the effective date of such
merger or consolidation, of securities of the surviving entity representing
50%  or less of the combined voting power
of the surviving entity’s then outstanding securities ordinarily having the
right to vote at elections of directors; (iv) any person becomes, after
the date hereof, the “beneficial owner” (as 

 

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defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of more than 50% of the
combined voting power of the Company’s
outstanding securities ordinarily having the right to vote at elections of
directors, unless the transaction resulting in such ownership has been approved
in advance by the Board, or (B) more than 50% of the combined voting power
of the Company’s outstanding
securities ordinarily having the right to vote at elections of directors
(regardless of any approval by the Board); or (v) 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.

 

1.6           “Code” means the Internal Revenue Code of 1986, as amended.

 

1.7           “Commencement Date” means July 1,
2010.

 

1.8           “Company” means Cycle Country Accessories Corp., a Nevada
corporation, or Operating Company, as the context may require.

 

1.9           “Confidential Information” means information that is proprietary
to the Company or proprietary to others and entrusted to the Company, whether
or not trade secrets.  Confidential
Information includes, but is not limited to, information relating to business
plans and to business as conducted or anticipated to be conducted, and to past
or current or anticipated products. 
Confidential Information also includes, without limitation, information
concerning research, development, purchasing, accounting, marketing, selling
and services.  All information that
Executive has a reasonable basis to consider confidential is Confidential
Information, whether or not originated by Executive and without regard to the
manner in which Executive obtains access to this and any other proprietary
information.

 

1.10         “Date of
Termination” has the meaning set forth at Section 4.6(b) of
this Agreement.

 

1.11         “Disability” means the unwillingness or inability of Executive
to perform Executive’s duties under this Agreement because of incapacity due to
physical or mental illness, bodily injury or disease for a period of six (6) months.

 

1.12         “Executive” means Robert Davis.

 

1.13         “Good Reason” has the meaning set forth at Section 4.3 of
this Agreement.

 

1.14         “Notice of Termination” has the meaning set forth at Section 4.6(a) of
this Agreement.

 

1.15         “Operating Company” means Cycle
Country Accessories Corp., an Iowa corporation.

 

1.16         “Plan” means any bonus or incentive compensation agreement,
plan, program, policy or arrangement sponsored, maintained or contributed to by
the Company, to which the Company is a 

 

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party or under which
employees of the Company are covered, including, without limitation, any stock
option, restricted stock or any other equity-based compensation plan,
restricted stock units plan, annual or long-term incentive (bonus) plan, and
any employee benefit plan, such as a thrift, pension, profit sharing, deferred
compensation, medical, dental, disability, accident, life insurance, automobile
allowance, perquisite, fringe benefit, vacation, sick or parental leave,
severance or relocation plan or policy or any other agreement, plan, program,
policy or arrangement intended to benefit employees or executive officers of
the Company.

 

1.17         “Restricted Stock” means the
common stock of the Company granted to the Executive pursuant to Section 3.2.

 

1.18         “Successor” has the
meaning ascribed to it in Section 8.2 of this Agreement.

 

1.19         “Vesting Schedule” means the
dates on which shares of Restricted Stock shall vest and no longer be subject
to forfeiture, determined as follows:

 

	
  Vesting Date

  	
   

  	
  Number
  of Shares

  	
   

  
	
  October 1,
  2010

  	
   

  	
  395,126

  	
   

  
	
  July 1,
  2011

  	
   

  	
  197,563

  	
   

  
	
  July 1,
  2012

  	
   

  	
  197,563

  	
   

  
	
  June 30,
  2013

  	
   

  	
  197,563

  	
   

  

 

Notwithstanding the
foregoing, in the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or extraordinary dividend,
or any other change in the corporate structure or shares of the Company, in
order to prevent dilution or enlargement of the rights of Executive, an
appropriate adjustment will be made by the Company (which determination will be
conclusive) as to the number of shares of Restricted Stock which will vest in
favor of Executive at any vesting date after the date of such event.

 

ARTICLE II. 
EMPLOYMENT, DUTIES AND TERM

 

2.1           Employment.  Upon the terms and conditions set forth in
this Agreement, the Company hereby employs Executive, and Executive accepts
such employment, as Chief Operating Officer, Chief Financial Officer, Treasurer
and Secretary of the Company, and such affiliates of the Company as directed by
the President or Board of Directors of the Company.  Termination of this Agreement by either party
or by mutual agreement of the parties shall also terminate Executive’s
employment with any affiliate of the Company.

 

2.2           Full Time Position.  Executive
shall devote substantially all of his time and energies, during normal business
hours, to the performance of the duties and obligations of his position with the Company.

 

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2.3           Duties.  Subject to the Section 2.2 above, during
the term of this Agreement, and excluding any periods of vacation, sick,
disability or other leave to which Executive is entitled, Executive agrees to
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to Executive hereunder and under the Company’s
bylaws, as amended from time to time to use Executive’s reasonable best efforts
to perform faithfully and efficiently such responsibilities.  Executive shall comply with the Company’s
policies and procedures; provided, that to the extent such policies and
procedures are inconsistent with this Agreement, the provisions of this
Agreement shall control.

 

2.4           Location.  Executive
will primarily, but not exclusively, perform his duties at the Company’s
Minnesota office located at 5929 Baker Road, Minnetonka, MN 55345, or at such
other location in the western Minneapolis suburbs as the Company may establish
as its offices during the term of this Agreement.  Executive shall not be required to relocate
in the event the Company moves its place of business.

 

2.5           Certain
Proprietary Information.  If
Executive possesses any proprietary information of another person or entity as
a result of prior employment or relationship, Executive shall honor any legal
obligation that Executive has with that person or entity with respect to such
proprietary information.

 

2.6           Term.  Subject to the provisions of Article IV,
the term of employment of Executive under this Agreement shall be for a period
of three years, commencing on the Commencement Date and continuing through June 30,
2013, (the “Initial Term”).  Upon and
following the Initial Term, this Agreement shall automatically renew for
successive one (1) year terms (each, a “Renewal Term”), unless written
notice of non-renewal is given by the Company to the Executive no later than
one hundred twenty (120) days prior to the end of the Initial Term or the then
current Renewal Term, as the case may be.

 

2.7           Return of
Proprietary Property.  Executive
agrees that all property in Executive’s possession belonging to Company,
including without limitation, all documents, reports, manuals, memoranda,
computer print-outs, customer lists, credit cards, keys, identification,
products, access cards, automobiles and all other property relating in any way
to the business of the Company are the exclusive property of the Company, even
if Executive authored, created or assisted in authoring or creating, such
property.  Executive shall return to the
Company all such documents and property immediately upon termination of employment
or at such earlier time as the Company may reasonably request.

 

ARTICLE III. 
COMPENSATION, BENEFITS AND EXPENSES

 

3.1           Base Salary.  Subject to Section 4.7(a), during the
term of Executive’s employment under this Agreement and for as long thereafter
as required pursuant to Article IV, the Company shall pay Executive a Base
Salary at an annual rate that is not less than Two Hundred Fifty Thousand
Dollars ($250,000.00) or such higher annual rate as may from time to time be
approved by the Board, such Base Salary to be paid in substantially equal
regular periodic payments in accordance with the 

 

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Company’s regular payroll
practices.  If Executive’s Base Salary is
increased from time to time during the term of Executive’s employment under
this Agreement, the increased amount shall become the Base Salary for the
remainder of the term and any extensions of Executive’s term of employment
under this Agreement and for as long thereafter as required pursuant to Article IV,
subject to any subsequent increases.

 

3.2           Grant of Restricted Stock;
Forfeiture; Loan to Executive.  Subject to shareholder approval at the annual
meeting of shareholders of the Company to
be held in 2010, the Company grants to Executive such shares of common stock in
the Company such that as of the date of the annual meeting of shareholders,
Executive will own, after giving effect to the issuance of shares to Executive
and such other shares issuable under option agreements or warrants issued by
the Company as of the date of this Agreement, twelve and one half (12.5%)
percent, on a fully-diluted basis of the common stock, but not less than
987,815 shares of common stock of the Company (the “Restricted Stock”).  If the shareholders do not approve the grant
of Restricted Stock to Executive as provided herein, the Company shall pay
Executive an amount equal to the value of the Restricted Stock, calculated and
payable in the manner described in Section 3.3. below.  If the shareholders approve the grant of
Restricted Stock to Executive, the Company shall issue the shares of Restricted
Stock to Executive as soon as practicable following such shareholder approval,
but such shares of Restricted Stock will be subject to forfeiture as provided
herein.

 

The
shares of Restricted Stock shall vest and no longer be subject to forfeiture on
the earlier of either (i) a Change in Control or (ii) the date the
Company terminates Executive’s employment without Good Cause; (iii) the
date Executive terminates employment with the Company for Good Reason; or (iv) at
the date specified in the Vesting Schedule for the corresponding number of
shares, if (a) Executive is an employee of the Company on such date, or (b) the
Company terminated Executive’s employment without Good Cause prior to such
date, or (c) Executive has terminated his employment with the Company for
Good Reason prior to such date.  Any
shares of Restricted Stock which have not vested shall be deemed forfeited.

 

3.3           Grant of Restricted Stock Units in Event of
Non-Approval of Grant of Restricted Stock; Valuation.

 

(a)           In the event the
shareholders of the Company do not approve the grant of Restricted Stock as
contemplated by Section 3.2, the Company shall establish a restricted
stock units plan and 

 

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grant Executive restricted
stock units such that Executive shall receive the same number and percentage of
restrictive stock units as the number of shares of Restricted Stock as would be
issued to Executive pursuant to Section 3.2 had the shareholders approved
the issuance.  The restricted stock units
shall vest as of the dates that the shares of Restricted Stock would have
vested for Executive, had the Company’s shareholders approved the grant of
Restrictive Stock as contemplated in Section 3.2.  The restricted stock units plan shall
establish triggering events for sale and purchase of restricted stock units on
terms customary for plans of this nature, shall have a value equal to the
number of shares of Restricted Stock as Executive would have received had the
shareholders approved such issuance and shall provide for valuation of the fair
market value of the Company in connection with the purchase of restricted stock
units pursuant to one or more appraisals as contemplated by Section 3.3(b).

 

(b) 
In determining the value of the Company in connection with a purchase of
restricted stock units, the Company and Executive shall attempt to mutually
agree upon the value of the Company.  If
the Executive and the Company are not able to agree upon a value within thirty
days of a triggering event under the restricted stock unit plan, the Company
shall engage the services of one or more qualified business appraisers to
determine the fair market value of the Corporation (the “First Appraisal”).  Such appraisal (and any Second and Third
Appraisals) shall be completed within thirty (30) days after the appointment of
an appraiser.  The fair market value of
the Company shall be calculated without any discount for liquidity, minority
interest or marketability.

 

If the Executive does not
accept the results of the First Appraisal, the Executive may, within fifteen
(15) days after the date of delivery of the First Appraisal, notify the Company
in writing of that fact.  If such notice
has been timely given, the Executive may then select a qualified independent
appraiser to conduct a separate appraisal of the fair market value of the
Company (the “Second Appraisal”) and submit that appraisal to the Board of
Directors of the Company within forty-five (45) days after the delivery to the
Executive of the First Appraisal.  If the
Executive does not cause a Second Appraisal to be timely made, the First Appraisal
shall conclusively determine the value of the Company.

 

If the Second Appraisal is
timely made and submitted and if, as between the First Appraisal and the Second
Appraisal, the lower appraisal is not less than eighty percent (80%) of the
higher appraisal, the fair market value of the Company shall be the value
determined in the First Appraisal.  If
the lower appraisal is less than eighty percent (80%) of the higher appraisal,
the appraisers who submitted the First and Second Appraisals shall then mutually
select a third qualified independent appraiser to make an appraisal of the fair
market value of the Company as of the date of the Triggering Event (the “Third
Appraisal”).  In the event a Third
Appraisal is required and the first and second appraisers cannot mutually agree
on a selection of a qualified third appraiser within ten (10) days after
the submission of the Second Appraisal, a third appraiser shall be chosen by a
single arbitrator in Minneapolis, Minnesota, in accordance with the rules of,
and pursuant to appointment by, the American Arbitration Association.

 

The Third Appraisal shall be
completed within thirty (30) days after the selection of the third appraiser,
and the fair market value set forth in the Third Appraisal shall be averaged with
either of the First or Second Appraisals, whichever of those two appraisal’s
value is closest to the appraised 

 

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value set forth in the Third
Appraisal.  The value so determined shall
be the fair market value of the Company for the purposes hereof and shall be
binding on the parties

 

3.4           Bonuses.  For and with respect to each calendar year
during the term of this Agreement, Executive shall be eligible to receive
bonuses from time to time as awarded by the Board or as may be determined in
accordance with such bonus programs as may be employed by the Company for its
executives.  In addition, the Company
shall pay to Executive a signing bonus of $60,000.00 on or before December 31,
2010.

 

3.5           Vacation.  For each
contract year during the term of Executive’s employment under this Agreement
and for each contract year thereafter, Executive shall be entitled to twenty
(20) paid vacation days or such greater amount as is afforded to other Company
executives under policies in effect from time to time.  The time or times at which such vacation days
are to be taken shall be reasonably determined by Executive consistent with
Executive’s duties and obligations under this Agreement.  Any such vacation days with respect to a
calendar year that are unused as of the last day of such calendar year shall be
rolled over and become cumulative with the subsequent years’ vacation days.

 

3.6           Fringe Benefits.  Executive
shall participate in such Plans and receive health insurance coverage for
himself and all family members, life insurance, disability insurance, sick
days, 401(k) benefits as are provided to other Executives of the Company
as the same may change from time to time. 
In the case of health insurance, the Executive shall have the option to
maintain insurance outside of the Company Plan, in which case the Executive
shall be paid a monthly reimbursement equal to the portion of the health
insurance premium that the Company would have paid for a family policy.

 

In
addition, on or before June 30, 2010, the Company will provide Executive
with a new motor vehicle suitable for use as an Executive vehicle acceptable to
Executive, for business and personal use, throughout the term of this
Agreement.  The Executive shall pay for
all reasonable operating expenses, including all fuel, tires, and routine
maintenance.  The Company shall provide
the insurance.  At the end of the term of
this Agreement, Executive will have the option to return the vehicle to the
Company or purchase the vehicle for its then-fair market value. At the
Executive’s discretion, the Company shall pay to Executive a cash monthly
vehicle allowance of $1,000 per month in lieu of providing a vehicle.

 

3.7           Business Expenses. 
During the term of Executive’s employment under this Agreement and as
for as long thereafter as required pursuant to Article IV, the Company
shall, in accordance with, and to the extent of, its uniform policies in effect
from time to time, bear all ordinary and necessary business expenses incurred
by Executive in performing Executive’s duties as an executive officer of the
Company, including, without duplication or limitation, all travel and living
expenses while away from home on business in the service of the Company and
entertainment expenses, provided that Executive accounts promptly for such
expenses to the Company in the manner reasonably prescribed from time to time
by the Company.

 

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ARTICLE IV.  EARLY
TERMINATION

 

4.1           Early Termination.  Subject to the respective continuing
obligations of the parties pursuant to Article V, this Article IV
sets forth the terms for early termination of Executive’s employment under this
Agreement.

 

4.2           Termination by the Company for
Cause.  The Company may terminate this
Agreement for Cause.  For purposes of
this Agreement, “Cause” means (a) an act or acts of personal dishonesty
taken by Executive and intended to result in substantial personal enrichment of
Executive at the expense of the Company, (b) repeated violations by
Executive of his obligations under Section 2.3 which are demonstrably
willful and deliberate on Executive’s part and which are not remedied within a
reasonable period after Executive’s receipt of notice of such violations from
the Company, or (c) the willful engaging by Executive in illegal conduct
that is materially and demonstrably injurious to the Company.  For purposes of this Section 4.2, no
act, or failure to act, on Executive’s part shall be considered “dishonest”, “willful”
or “deliberate” unless done, or omitted to be done, by Executive in bad faith
and without reasonable belief that Executive’s action or omission was in, or
not opposed to, the best interest of the Company.  Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or based
upon the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by Executive in good faith and in the best
interests of the Company.

 

Notwithstanding the
foregoing, Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of not less than two-thirds of
the entire membership of the Board, exclusive of Executive, at a meeting of the
Board called and held for the purpose (after reasonable notice to Executive and
an opportunity for Executive, together with Executive’s counsel, to be heard
before the Board), finding that in the good faith opinion of the Board,
Executive was guilty of the conduct set forth above in this Section 4.2
and specifying the particulars thereof in detail.

 

4.3           Termination by Executive for Good
Reason.  Executive may terminate
Executive’s employment under this Agreement for Good Reason in accordance with
the ensuing provisions of this Section 4.3.  Termination by Executive for “Good Reason”
shall mean termination of employment based on any one or more of the following:

 

(a)           An adverse change in Executive’s status or position
as an executive officer of the Company, including, without limitation, any
adverse change in Executive’s status or position as a result of a material
diminution in Executive’s duties, responsibilities or authority as of the date
of this Agreement (or any status or position to which Executive may be promoted
after the date hereof) or the assignment to Executive of any duties or
responsibilities which, in Executive’s reasonable judgment, are inconsistent
with Executive’s status or position, or any removal of Executive from or any
failure to reappoint or reelect Executive to such positions (except in
connection with the termination of Executive’s employment for Cause in
accordance with Section 4.2 hereof or Disability or death in accordance
with Section 4.4 hereof);

 

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(b)           A reduction by the Company in Executive’s Base
Salary as in effect as of the date of this Agreement or as the same may be
increased from time to time;

 

(c)           The Company’s requiring
Executive to be based anywhere other than where Executive’s office is located
as of the date of this Agreement, except for required travel on the Company’s
business to an extent substantially consistent with the business travel
obligations which Executive undertook on behalf of the Company prior to the
date of this Agreement;

 

(d)           The occurrence of a Change
In Control and a failure of a Successor to acknowledge and assume this
Agreement as contemplated by Section 8.2; or

 

(e)           The failure by the Company
to comply with any material provision of this Agreement which has not been
cured within ten (10) calendar days after notice of such noncompliance has
been given by Executive to the Company.

 

Notwithstanding any other
provision of this Agreement to the contrary, any termination of Executive’s
employment with the Company or the Successor during the one (1) year
period immediately following a Change of Control of the Company, other than a
termination due to death, disability or for Cause shall be a termination for
Good Reason.

 

4.4           Termination in the Event of Death
or Disability.  The term of
Executive’s employment under this Agreement shall terminate in the event of
Executive’s death or Disability.

 

4.5           Termination by Mutual Agreement.  The parties may terminate Executive’s employment
under this Agreement at any time by mutual written agreement.

 

4.6           Notice of Termination; Date of
Termination; Offer of Continued Employment.  The provisions of this Section 4.6 shall
apply in connection with any early termination of Executive’s employment under
this Agreement pursuant to this Article IV.

 

(a)           For purposes of this Agreement, a “Notice of
Termination” shall mean a notice which shall indicate the specific termination
provisions in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide the basis for such
termination.  Any purported termination
by the Company or by Executive pursuant to this Article IV (other than a
termination by mutual agreement pursuant to Section 4.5 or death) shall be
communicated by written Notice of Termination to the other party hereto.

 

(b)           For purposes of this Agreement, “Date of Termination”
shall mean:  (1) if Executive’s
employment is terminated due to death, the last day of the month first following
the month during which Executive’s death occurs; (2) if Executive’s
employment is to be terminated for Disability, thirty (30) calendar days after
Notice of Termination is given; (3) if Executive’s employment is
terminated by the Company for Cause or by Executive for Good Reason, the date
specified in the Notice of Termination; (4) if Executive’s employment is 

 

9

 

terminated by mutual
agreement of the parties, the date specified in such agreement; or (5) if
Executive’s employment is terminated for any other reason, the date specified
in the Notice of Termination, which in no event shall be a date earlier than
ninety (90) calendar days after the date on which a Notice of Termination is
given, unless an earlier date has been expressly agreed to by Executive in
writing either in advance of, or after, receiving such Notice of Termination;
provided, however, if within thirty (30) calendar days after giving of a Notice
of Termination the recipient of the Notice of Termination notifies the other
party that a dispute exists concerning the termination, then the Date of
Termination shall be the date on which the dispute is finally determined,
whether by mutual written agreement of the parties, by final and binding arbitration
or by final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired or no appeal having been
perfected).  During the pendency of any
such dispute and until the dispute is resolved in the manner provided in the
immediately preceding sentence, the Company will continue to pay Executive all
compensation and benefits to which he was entitled pursuant to Article III
immediately prior to the time the Notice of Termination is given.

 

(c)           If this Agreement is terminated other than by reason
of (1) the expiration of the term hereof as described at Section 2.3,
(2) Executive’s Disability or death, (3) Executive’s termination for
Cause pursuant to Section 4.2 which termination for Cause has been agreed
to by Executive or has been determined in a proceeding as provided in Section 7.3
to have been proper, or (4) by mutual agreement of the parties pursuant to
Section 4.5, Executive may, but shall not be required to, not later than
ten (10) days after the Date of Termination, provide a written offer of
continued employment with the Company in accordance with the terms of this
Agreement which terms shall, in the case of a termination by Executive for Good
Reason pursuant to Section 4.3, include the Company taking any such steps
as may be necessary to eliminate in a manner reasonably satisfactory to
Executive any conditions which created such good reason for such
termination.  Within ten (10) days
of its receipt of such offer, the Company shall provide Executive with a
written acceptance or rejection of such offer. 
Failure of the Company to so accept or reject such offer within such
period shall be deemed to be a rejection of such offer.  The parties hereby acknowledge that Executive’s
failure to provide such offer to the Company shall in no way impair, affect or
constitute a waiver of Executive’s right to enforce the Company’s obligations
under this Agreement and the Company shall not assert such failure as a defense
in any action or proceeding by Executive to enforce the Company’s obligation
under this Agreement.

 

4.7           Compensation upon Termination,
Death or During Disability.

 

(a)           If Executive’s employment under this Agreement is
terminated on account of Disability or death, the Company shall, within ten (10) calendar
days following the Date of Termination, pay any amounts due to Executive for
Base Salary through the Date of Termination, together with any other unpaid and
pro rata amounts to which Executive is entitled as of the Date of Termination
pursuant to Article III hereof, including, without limitation, amounts
which Executive is entitled under any Plan in accordance with the terms of such
Plan, and further, including, without limitation, a pro rata portion (prorated
through the Date of Termination) of any annual or long-term bonus or incentive
payments (for

 

10

 

performance periods in
effect at the Date of Termination) to which Executive would have been entitled
had Executive remained continuously employed through the end of such
performance periods and continued to perform Executive’s duties in the same
manner as performed immediately prior to the Executive’s death or disability.

 

(b)                                 If Executive’s
employment under this Agreement is terminated by the Company for Cause or by
Executive for other than Good Reason, the Company shall pay Executive the Base
Salary through the Date of Termination and any amounts to which the Executive
is entitled under any Plan in accordance with the terms of such Plan.

 

(c)                                  If Executive’s
employment under this Agreement is terminated by the mutual agreement of the
parties under Section 4.5, the Company shall provide Executive with the
payments and benefits specified in the agreement.

 

(d)                                 If, in breach
of this Agreement, the Company terminates Executive’s employment hereunder (it
being understood that a purported termination for Disability or for Cause which
is disputed and finally determined not to have been proper shall be a
termination by the Company in breach of this Agreement) or if Executive
terminates his employment hereunder for Good Reason for the unexpired term of
this Agreement as determined in accordance with Section 2.6, unless
earlier terminated pursuant to Section 4.4 or Section 4.5, the
Company shall, as damages for such breach:

 

(1)                                  continue to pay
any amounts due to Executive for Base Salary in accordance with Sections 3.1 at
the annual rate in effect thereunder immediately prior to the Date of
Termination (but determined without regard to any purported reduction in Base
Salary which gave rise to such termination of employment) in the same manner as
if Executive had remained continuously employed throughout the period described
above;

 

(2)                                  cause Executive’s
continued participation in all Plans in accordance with Sections 3.6 of this
Agreement as if Executive remained continuously employed with the Company
throughout the period described above for all purposes, including without
limitation grants, awards, accruals and vesting thereunder; provided, that, if
such continued participation is not permissible under applicable law, the
Company shall provide Executive with benefits substantially similar to those to
which Executive would have been entitled under those Plans in which Executive’s
continued participation is not permissible;

 

(3)                                  continue to (i) provide
Executive with paid vacation in accordance with Section 3.5 of this Agreement,
and (ii) bear business expenses of Executive in accordance with Section 3.7
with respect to matters reasonably undertaken by Executive on behalf of the Company.

 

Notwithstanding the
foregoing, if any payment or benefit received or to be received by Executive
under this Agreement or any Plan would be (in whole or part) subject to the
excise 

 

11

 

tax imposed by Section 4999
of the Code, or any successor provision thereto, or any similar tax imposed by
state or local law, or any interest or penalties with respect to such excise
tax (such tax or taxes, together with any such interest and penalties, are
hereafter collectively referred to as the “Excise Tax”), then, the salary
continuation payments provided for in this Section 4.7 shall first be
reduced to the extent necessary to make such payments and benefits not subject
to the Excise Tax, but only if such reduction results in higher after tax
payments to Executive after taking into account the Excise Tax and any
additional taxes that Executive would pay if such payments and benefits were
not reduced.

 

(e)                                  Intentionally
Omitted.

 

(f)                                    Executive shall
not be required to mitigate the Company’s payment obligations pursuant to Section 4.7(d) by
making any efforts to secure other employment for which Executive is reasonably
qualified by education, experience or background, and Executive’s commencement
of employment with another employer shall not reduce the obligations of the
Company pursuant to Section 4.7(d) hereof.

 

(g)                                 The first seven
monthly payments due to Executive pursuant to this Section 4.7 shall be
paid in cash equivalent on the first day of the seventh calendar month
following the month in which the Executive’s employment is terminated, and
shall continue thereafter on the first day of each calendar month thereafter
until all payments due hereunder have been paid; provided, however, if (i) any
such payment is on account of an event not subject to the six month delay rule under
Section 409A of the Code (e.g. Disability), or (ii) on the date of
the Executive’s termination of employment, neither the Company nor any other
entity that is considered a “service recipient” with respect to the Executive
within the meaning of Section 409A of the Code has any stock which is
publicly traded on an established securities market (within the meaning of
Treasury Regulation Section 1.897-1(m)) or otherwise, then the monthly
payments shall continue or commence to be paid no later than the first day of
the calendar month after the date Executive’s employment is terminated.

 

ARTICLE V. 
CONFIDENTIAL INFORMATION

 

5.1                                 Prohibitions
Against Use.  Executive
will not during or subsequent to the termination of Executive’s employment
under this Agreement use or disclose, other than in connection with Executive’s
employment with the Company, any Confidential Information to any person not
employed by the Company or not authorized by the Company to receive such
Confidential Information, without the prior written consent of the Company.  Executive will use reasonable and prudent
care to safeguard and protect and prevent the unauthorized use and disclosure
of Confidential Information.  The
obligations contained in this Section 5.1 will survive for as long as the
Company in its sole judgment considers the information to be Confidential
Information.  The obligations under this Section 5.1
will not apply to any Confidential Information that is now or becomes generally
available to the public through no fault of Executive or to Executive’s disclosure
of any Confidential Information required by law or judicial or administrative
process.

 

12

 

ARTICLE VI. 
NON-COMPETITION

 

6.1                                 Non-Competition.  Subject to Sections 6.2 and 6.3, Executive
agrees that during the term of this Agreement and for a period of one (1) year
following termination of employment for any reason, Executive will not directly
or indirectly, alone or as a partner, officer, director, shareholder or
employee of any other firm or entity, engage in any commercial activity in
competition with any part of the Company’s business as conducted during the
term of the Agreement or as of the date of such termination of employment or
with any part of the Company’s contemplated business with respect to which
Executive has Confidential Information as governed by Article V.  For purposes of this clause (a), “shareholder”
shall not include beneficial ownership of less than five percent (5%) of the
combined voting power of all issued and outstanding voting securities of a
publicly held corporation whose stock is traded on a major stock exchange or
quoted on NASDAQ.

 

6.2                                 Early
Termination. 
Notwithstanding Section 6.1, if Executive’s employment terminates
under circumstances which entitle him to receive damages for breach of this
Agreement pursuant to Section 4.7(d) and the Company fails to provide
Executive with any compensation or benefits due him pursuant to Section 4.7(d) and
does not remedy such failure within ten (10) days after receipt of notice
of such failure from Executive, the restrictions set forth in Section 6.1
shall cease to apply to Executive for the remainder of the period to which such
restrictions would otherwise apply notwithstanding any subsequent remedy of
such failure by the Company.

 

ARTICLE VII. 
INDEMNIFICATION

 

7.1                                 Indemnification.  The Company shall defend,
indemnify and hold Executive harmless from and against any and all claims,
liabilities, damages, costs and expenses (including reasonable attorneys fees)
(the “Claims”) which may be asserted against Executive arising out of or
related to the performance of Executive’s duties under this Agreement.

 

ARTICLE VIII. 
GENERAL PROVISIONS

 

8.1                                 No Adequate Remedy. 
Notwithstanding Section 4.7, the parties declare that it is
impossible to accurately measure in money the damages which will accrue to
either party by reason of a failure to perform any of the obligations under
this Agreement.  Therefore, if either
party shall institute any action or proceeding to enforce the provisions
hereof, other than a claim by Executive for a payment pursuant to Section 4.7,
the party against whom such action or proceeding is brought hereby waives the
claim or defense that such party has an adequate remedy at law, and such party
shall not assert in any such action or proceeding the claim or defense that
such party has an adequate remedy at law.

 

8.2                                 Successors and Assigns.

 

(a)                                  This Agreement
shall be binding upon and inure to the benefit of any Successor of the Company
and each affiliate, and any such Successor shall absolutely and unconditionally
assume all of the Company’s and any affiliate’s obligations hereunder.  Upon Executive’s written request, the Company
will seek to have any Successor, by agreement in form and substance
satisfactory to Executive, acknowledge and agree to assume the 

 

13

 

Company’s obligations under
this Agreement.  Failure to obtain such
assent at least three (3) business days prior to the time a person or
entity becomes a Successor (or where the Company does not have at least three (3) business
days’ advance notice that a person or entity may become a Successor, within one
(1) business day after having notice that such person or entity may become
or has become a Successor) shall constitute Good Reason for termination by
Executive of employment within the meaning of Section 4.3.  For purposes of this Agreement, “Successor”
shall mean any corporation, individual, group, association, partnership, firm,
venture or other entity or person that, subsequent to the date hereof, succeeds
to the actual or practical ability to control (either immediately or with the
passage of time), all or substantially all of the Company’s or Operating
Company’s business and/or assets, directly or indirectly, through a Change in
Control.

 

(b)                                 This Agreement
and all rights of Executive hereunder shall inure to the benefit of and be
enforceable by Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.  If Executive should die while any amounts
would still be payable to Executive hereunder if Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive’s devisee, legatee, or
other designee or, if there be no such designee, to Executive’s estate.  Executive may not assign this Agreement, in
whole or in any part, without the prior written consent of the Company.

 

8.3                                 Disputes.  Any
dispute, controversy or claim for damages arising under or in connection with
this Agreement shall, in Executive’s sole discretion, be settled exclusively by
such judicial remedies as Executive may seek to pursue or by arbitration in
Minneapolis, Minnesota by a single arbitrator in accordance with the rules of
the American Arbitration Association then in effect.  Judgment may be entitled on the arbitrators’
award in any court having jurisdiction; provided, however, that Executive shall
be entitled to seek specific performance of Executive’s right to be paid until
the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.  The Company shall bear all costs and
expenses, including attorney’s fees, arising in connection with any arbitration
proceeding pursuant to this Section 7.3. 
The Company shall be entitled to seek an injunction or restraining order
in a court of competent jurisdiction to enforce the provisions of
Article V and VI.

 

8.4                                 No Offsets.  In no event
shall any amount payable to Executive pursuant to this Agreement be reduced for
purposes of offsetting, either directly or indirectly, any indebtedness or
liability of Executive to the Company.

 

8.5                                 Notices.  All
notices, requests and demands given to or made pursuant hereto shall, except as
otherwise specified herein, be in writing and be personally delivered or mailed
postage prepaid, registered or certified U.S. mail, to any party at its address
set forth on the last page of this Agreement.  Either party may, by notice hereunder,
designate a changed address.  Any notice
hereunder shall be deemed effectively given and received:  (a) if personally delivered, upon
delivery; or (b) if mailed, on the registered date or the date stamped on
the certified mail receipt.

 

14

 

8.6                                 Withholding.  To the
extent required by any applicable law, including, without limitation, any
federal or state income tax or excise tax law or laws, the Federal Insurance
Contributions Act, the Federal Unemployment Tax Act or any comparable federal,
state or local laws, the Company retains the right to withhold such portion of
any amount or amounts payable to Executive under this Agreement as the Company
(on the written advice of outside counsel) deems necessary.

 

8.7                                 Captions.  The various
headings or captions in this Agreement are for convenience only and shall not
affect the meaning or interpretation of this Agreement.

 

8.8                                 Governing Law.  The
validity, interpretation, construction, performance, enforcement and remedies
of or relating to this Agreement, and the rights and obligations of the parties
hereunder, shall be governed by the substantive laws of the State of Iowa
(without regard to the conflict of laws rules or statutes of any jurisdiction).

 

8.9                                 Construction.  Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and 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.

 

8.10                           Waivers.  No failure
on the part of either party to exercise, and no delay in exercising, any right
or remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right or remedy granted hereby or
by any related document or by law.

 

8.11                           Modification.  This
Agreement may not be modified or amended except by written instrument signed by
the parties hereto.

 

8.12                           Entire Agreement.  This
Agreement constitutes the entire agreement and understanding between the
parties hereto in reference to all the matters herein agreed upon.  This Agreement replaces in full all prior
employment or consulting agreements or understandings of the parties hereto,
and any and all such prior agreements or understandings are hereby rescinded by
mutual agreement, provided, however, that this Agreement shall not be deemed to
rescind, or supercede or modify in any respect any prior employment or
consulting agreements between the Executive and the Company specifically
relating to proprietary or confidential information.

 

8.13                           Counterparts.  This
Agreement may be executed in one (1) or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.

 

8.14                           Survival.  The parties
expressly acknowledge and agree that the provisions of this Agreement which by
their express or implied terms extend beyond the termination of Executive’s
employment hereunder (including, without limitation, the provisions of Section 4.7
(relating to compensation) or beyond the termination of this Agreement
(including, without limitation, the 

 

15

 

provisions of Section 5.1
(relating to confidential information) and Article VI (relating to
non-competition)), shall continue in full force and effect notwithstanding
Executive’s termination of employment hereunder or the termination of this
Agreement, respectively.

 

IN WITNESS
WHEREOF, the parties hereto have caused this Executive Employment Agreement to
be duly executed and delivered as of the day and year first above written.

 

 

	
  EXECUTIVE

  	
   

  	
  CYCLE
  COUNTRY ACCESSORIES CORP.

  
	
   

  	
   

  	
   

  
	
  /s/ Robert Davis

  	
   

  	
  /s/ Paul DeShaw

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  
	
   

  	
   

  	
  Its:
  Outside Director

  

 

16Exhibit
10.2

 

EXECUTIVE
EMPLOYMENT AGREEMENT

 

THIS
EXECUTIVE EMPLOYMENT AGREEMENT, effective as of the first
day of July, 2010, is by and between Cycle Country Accessories Corp., a Nevada
corporation (the “Company”), and Jeffrey M. Tetzlaff, a Minnesota resident (“Executive”).

 

R E C I T A L S

 

A.                                   The Company
desires to employ Executive as the President and Chief Executive Officer of the
Company and Executive desires to accept employment as the President and Chief
Executive Officer of the Company on the terms and conditions set forth below.

 

In consideration of the
foregoing premises and the parties’ mutual covenants and undertakings contained
in this Agreement, the Company and Executive agree as follows:

 

ARTICLE I. 
DEFINITIONS

 

Capitalized terms used in this
Agreement shall have their defined meaning throughout the Agreement.  The following terms shall have the meanings
set forth below, unless the context clearly requires otherwise.

 

1.1                                 “Agreement” means this Executive Employment Agreement, as from
time to time amended.

 

1.2                                 “Base Salary” means the total annual cash compensation payable
on a regular periodic basis, without regard to voluntary or mandatory
deferrals, as set forth at Section 3.1 of this Agreement.

 

1.3                                 “Board” means the Board of Directors of the Company.

 

1.4                                 “Cause” has the meaning set forth at Section 4.2 of this
Agreement.

 

1.5                                 “Change in Control” means (i) the
sale, lease, exchange or other transfer of all or substantially all of the
stock or assets of either the Company or
Operating Company to a corporation, person or other entity that is not
controlled by either the Company or
Operating Company; (ii) the approval by the Company’s shareholders of any plan or proposal for the
liquidation or dissolution of either the
Company; (iii) a merger or consolidation to which the Company is a party if the shareholders
of the Company immediately prior to
the effective date of such merger or consolidation have “beneficial ownership”
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)), immediately following the effective date of such
merger or consolidation, of securities of the surviving entity representing
50%  or less of the combined voting power
of the surviving entity’s then outstanding securities ordinarily having the
right to vote at elections of directors; (iv) any person becomes, after
the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of more than 50% of the 

 

1

 

combined voting power of the Company’s outstanding securities
ordinarily having the right to vote at elections of directors, unless the
transaction resulting in such ownership has been approved in advance by the
Board, or (B) more than 50% of the combined voting power of the Company’s outstanding securities
ordinarily having the right to vote at elections of directors (regardless of
any approval by the Board); or (v) 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.

 

1.6                                 “Code” means the Internal Revenue
Code of 1986, as amended.

 

1.7                                 “Commencement Date” means July 1,
2010.

 

1.8                                 “Company” means Cycle Country Accessories Corp., a Nevada
corporation, or Operating Company, as the context may require.

 

1.9                                 “Confidential Information” means information
that is proprietary to the Company or proprietary to others and entrusted to the
Company, whether or not trade secrets. 
Confidential Information includes, but is not limited to, information
relating to business plans and to business as conducted or anticipated to be
conducted, and to past or current or anticipated products.  Confidential Information also includes,
without limitation, information concerning research, development, purchasing,
accounting, marketing, selling and services. 
All information that Executive has a reasonable basis to consider
confidential is Confidential Information, whether or not originated by
Executive and without regard to the manner in which Executive obtains access to
this and any other proprietary information.

 

1.10                           “Date of Termination” has the meaning set forth
at Section 4.6(b) of this Agreement.

 

1.11                           “Disability” means the unwillingness or
inability of Executive to perform Executive’s duties under this Agreement
because of incapacity due to physical or mental illness, bodily injury or
disease for a period of six (6) months.

 

1.12                           “Executive” means Jeffrey M. Tetzlaff.

 

1.13                           “Good Reason” has the meaning set forth at Section 4.3
of this Agreement.

 

1.14                           “Notice of Termination” has the meaning set
forth at Section 4.6(a) of this Agreement.

 

1.15                           “Operating
Company” means Cycle Country Accessories Corp., an Iowa
corporation.

 

1.16                           “Plan” means any bonus or incentive
compensation agreement, plan, program, policy or arrangement sponsored,
maintained or contributed to by the Company, to which the Company is a party or
under which employees of the Company are covered, including, without
limitation, any 

 

2

 

stock option, restricted
stock or any other equity-based compensation plan, restricted stock units plan,
annual or long-term incentive (bonus) plan, and any employee benefit plan, such
as a thrift, pension, profit sharing, deferred compensation, medical, dental,
disability, accident, life insurance, automobile allowance, perquisite, fringe
benefit, vacation, sick or parental leave, severance or relocation plan or
policy or any other agreement, plan, program, policy or arrangement intended to
benefit employees or executive officers of the Company.

 

1.17                           “Restricted
Stock” means the common stock of the Company granted to the Executive
pursuant to Section 3.2.

 

1.18                           “Successor” has the
meaning ascribed to it in Section 8.2 of this Agreement.

 

1.19                           “Vesting
Schedule” means the dates on which shares of Restricted Stock
shall vest and no longer be subject to forfeiture, determined as follows:

 

	
  Vesting Date

  	
   

  	
  Number
  of Shares

  	
   

  
	
  October 1,
  2010

  	
   

  	
  395,126

  	
   

  
	
  July 1,
  2011

  	
   

  	
  197,563

  	
   

  
	
  July 1,
  2012

  	
   

  	
  197,563

  	
   

  
	
  June 30,
  2013

  	
   

  	
  197,563

  	
   

  

 

Notwithstanding the
foregoing, in the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or extraordinary dividend,
or any other change in the corporate structure or shares of the Company, in
order to prevent dilution or enlargement of the rights of Executive, an appropriate
adjustment will be made by the Company (which determination will be conclusive)
as to the number of shares of Restricted Stock which will vest in favor of
Executive at any vesting date after the date of such event.

 

ARTICLE II. 
EMPLOYMENT, DUTIES AND TERM

 

2.1                                 Employment.  Upon the terms and conditions set forth in
this Agreement, the Company hereby employs Executive, and Executive accepts
such employment, as the President and Chief Executive Officer of the Company,
and such affiliates of the Company as directed by the Board of Directors of the
Company.  Termination of this Agreement
by either party or by mutual agreement of the parties shall also terminate
Executive’s employment with any affiliate of the Company.

 

2.2                                 Full Time Position.  Executive
shall devote substantially all of his time and energies, during normal business
hours, to the performance of the duties and obligations of his position with the Company.

 

2.3                                 Duties.  Subject to
the Section 2.2 above, during the term of this Agreement, and excluding
any periods of vacation, sick, disability or other leave to which Executive is
entitled, 

 

3

 

Executive agrees to devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to Executive hereunder and under the Company’s
bylaws, as amended from time to time to use Executive’s reasonable best efforts
to perform faithfully and efficiently such responsibilities.  Executive shall comply with the Company’s
policies and procedures; provided, that to the extent such policies and
procedures are inconsistent with this Agreement, the provisions of this
Agreement shall control.

 

2.4                                 Location.  Executive
will primarily, but not exclusively, perform his duties at the Company’s
Minnesota office located at 5929 Baker Road, Minnetonka, MN 55345, or at such
other location in the western Minneapolis suburbs as the Company may establish
as its offices during the term of this Agreement.   Executive shall not be required to relocate
in the event the Company moves its place of business.

 

2.5                                 Certain Proprietary Information.  If Executive possesses any proprietary
information of another person or entity as a result of prior employment or
relationship, Executive shall honor any legal obligation that Executive has
with that person or entity with respect to such proprietary information.

 

2.6                                 Term.  Subject to
the provisions of Article IV, the term of employment of Executive under
this Agreement shall be for a period of three years, commencing on the
Commencement Date and continuing through June 30, 2013, (the “Initial Term”).   Upon and following the Initial Term, this
Agreement shall automatically renew for successive one (1) year terms
(each, a “Renewal Term”), unless written notice of non-renewal is given by the
Company to the Executive no later than one hundred twenty (120) days prior to
the end of the Initial Term or the then current Renewal Term, as the case may
be.

 

2.7                                 Return of Proprietary Property.  Executive agrees that all property in
Executive’s possession belonging to Company, including without limitation, all
documents, reports, manuals, memoranda, computer print-outs, customer lists,
credit cards, keys, identification, products, access cards, automobiles and all
other property relating in any way to the business of the Company are the
exclusive property of the Company, even if Executive authored, created or
assisted in authoring or creating, such property.  Executive shall return to the Company all
such documents and property immediately upon termination of employment or at
such earlier time as the Company may reasonably request.

 

ARTICLE III. 
COMPENSATION, BENEFITS AND EXPENSES

 

3.1                                 Base Salary.  Subject to Section 4.7(a), during the
term of Executive’s employment under this Agreement and for as long thereafter
as required pursuant to Article IV, the Company shall pay Executive a Base
Salary at an annual rate that is not less than Two Hundred Fifty Thousand
Dollars ($250,000.00) or such higher annual rate as may from time to time be
approved by the Board, such Base Salary to be paid in substantially equal
regular periodic payments in accordance with the Company’s regular payroll
practices.  If Executive’s Base Salary is
increased from time to time during the term of Executive’s employment under
this Agreement, the increased amount shall 

 

4

 

become the Base Salary for
the remainder of the term and any extensions of Executive’s term of employment
under this Agreement and for as long thereafter as required pursuant to Article IV,
subject to any subsequent increases.

 

3.2                                 Grant of
Restricted Stock; Forfeiture; Loan to Executive.  Subject to shareholder approval at the annual
meeting of shareholders of the Company to
be held in 2010, the Company grants to Executive such shares of common stock in
the Company such that as of the date of the annual meeting of shareholders,
Executive will own, after giving effect to the issuance of shares to Executive
and such other shares issuable under option agreements or warrants issued by
the Company as of the date of this Agreement, twelve and one half (12.5%)
percent, on a fully-diluted basis of the common stock, but not less than
987,815 shares of common stock of the Company (the “Restricted Stock”).  If the shareholders do not approve the grant
of Restricted Stock to Executive as provided herein, the Company shall pay
Executive an amount equal to the value of the Restricted Stock, calculated and
payable in the manner described in Section 3.3. below.  If the shareholders approve the grant of
Restricted Stock to Executive, the Company shall issue the shares of Restricted
Stock to Executive as soon as practicable following such shareholder approval,
but such shares of Restricted Stock will be subject to forfeiture as provided
herein.

 

The
shares of Restricted Stock shall vest and no longer be subject to forfeiture on
the earlier of either (i) a Change in Control or (ii) the date the
Company terminates Executive’s employment without Good Cause; (iii) the
date Executive terminates employment with the Company for Good Reason; or (iv) at
the date specified in the Vesting Schedule for the corresponding number of
shares, if (a) Executive is an employee of the Company on such date, or (b) the
Company terminated Executive’s employment without Good Cause prior to such
date, or (c) Executive has terminated his employment with the Company for
Good Reason prior to such date.  Any
shares of Restricted Stock which have not vested shall be deemed forfeited.

 

In
addition, the Company shall loan Executive an amount equal to the amount
of federal and state income taxes payable by Executive in connection with the
granting, or vesting, as the case may be, of Restricted Stock to Executive
pursuant to this Section 3.2.  The
amount of tax payable by Executive each year shall be calculated using the
closing price of the Company’s stock as of the date that the shares of
Restricted Stock vest (or each date which Executive makes a Code Section 83(b) election
with respect to such shares), and a combined tax rate of 34% (28% federal; 6%
Minnesota).  Such loans shall be made to
Executive by an advance used to timely pay tax withholdings on the amount so
taxable.  The loans shall bear interest
at 5% per annum and shall be payable upon the earlier of (i) the sale for
cash of 34% or more of the shares of Restricted Stock granted to Executive or (ii) June 30,
2014.

 

3.3                                 Grant of Restricted Stock Units
in Event of Non-Approval of Grant of Restricted Stock; Valuation.

 

(a)                                  In the event
the shareholders of the Company do not approve the grant of Restricted Stock as
contemplated by Section 3.2, the Company shall establish a restricted
stock units plan and grant Executive restricted stock units such that Executive
shall receive the same number and percentage of restrictive stock units as the
number of shares of Restricted Stock as would be issued 

 

5

 

to Executive pursuant to Section 3.2
had the shareholders approved the issuance. 
The restricted stock units shall vest as of the dates that the shares of
Restricted Stock would have vested for Executive, had the Company’s
shareholders approved the grant of Restrictive Stock as contemplated in Section 3.2.  The restricted stock units plan shall
establish triggering events for sale and purchase of restricted stock units on
terms customary for plans of this nature, shall have a value equal to the
number of shares of Restricted Stock as Executive would have received had the
shareholders approved such issuance and shall provide for valuation of the fair
market value of the Company in connection with the purchase of restricted stock
units pursuant to one or more appraisals as contemplated by Section 3.3(b).

 

(b) 
In determining the value of the Company in connection with a purchase of
restricted stock units, the Company and Executive shall attempt to mutually
agree upon the value of the Company.  If
the Executive and the Company are not able to agree upon a value within thirty
days of a triggering event under the restricted stock unit plan, the Company
shall engage the services of one or more qualified business appraisers to
determine the fair market value of the Corporation (the “First Appraisal”).  Such appraisal (and any Second and Third
Appraisals) shall be completed within thirty (30) days after the appointment of
an appraiser.  The fair market value of
the Company shall be calculated without any discount for liquidity, minority
interest or marketability.

 

If the Executive does not
accept the results of the First Appraisal, the Executive may, within fifteen
(15) days after the date of delivery of the First Appraisal, notify the Company
in writing of that fact.  If such notice
has been timely given, the Executive may then select a qualified independent
appraiser to conduct a separate appraisal of the fair market value of the
Company (the “Second Appraisal”) and submit that appraisal to the Board of
Directors of the Company within forty-five (45) days after the delivery to the
Executive of the First Appraisal.  If the
Executive does not cause a Second Appraisal to be timely made, the First
Appraisal shall conclusively determine the value of the Company.

 

If the Second Appraisal is
timely made and submitted and if, as between the First Appraisal and the Second
Appraisal, the lower appraisal is not less than eighty percent (80%) of the
higher appraisal, the fair market value of the Company shall be the value
determined in the First Appraisal.  If
the lower appraisal is less than eighty percent (80%) of the higher appraisal,
the appraisers who submitted the First and Second Appraisals shall then
mutually select a third qualified independent appraiser to make an appraisal of
the fair market value of the Company as of the date of the Triggering Event
(the “Third Appraisal”).  In the event a
Third Appraisal is required and the first and second appraisers cannot mutually
agree on a selection of a qualified third appraiser within ten (10) days
after the submission of the Second Appraisal, a third appraiser shall be chosen
by a single arbitrator in Minneapolis, Minnesota, in accordance with the rules of,
and pursuant to appointment by, the American Arbitration Association.

 

The Third Appraisal shall be
completed within thirty (30) days after the selection of the third appraiser,
and the fair market value set forth in the Third Appraisal shall be averaged
with either of the First or Second Appraisals, whichever of those two appraisal’s
value is closest to the appraised value set forth in the Third Appraisal.  The value so determined shall be the fair
market value of the Company for the purposes hereof and shall be binding on the
parties

 

6

 

3.4                                 Bonuses.  For and with respect to each calendar year
during the term of this Agreement, Executive shall be eligible to receive
bonuses from time to time as awarded by the Board or as may be determined in
accordance with such bonus programs as may be employed by the Company for its
executives.  In addition, the Company
shall pay to Executive a signing bonus of $60,000.00 on or before December 31,
2010.

 

3.5                                 Vacation.  For each
contract year during the term of Executive’s employment under this Agreement
and for each contract year thereafter, Executive shall be entitled to twenty
(20) paid vacation days or such greater amount as is afforded to other Company
executives under policies in effect from time to time.  The time or times at which such vacation days
are to be taken shall be reasonably determined by Executive consistent with
Executive’s duties and obligations under this Agreement.  Any such vacation days with respect to a
calendar year that are unused as of the last day of such calendar year shall be
rolled over and become cumulative with the subsequent years’ vacation days.

 

3.6                                 Fringe
Benefits.  Executive shall participate in such Plans and
receive health insurance coverage for himself and all family members, life
insurance, disability insurance, sick days, 401(k) benefits as are
provided to other Executives of the Company as the same may change from time to
time.  In the case of health insurance,
the Executive shall have the option to maintain insurance outside of the
Company Plan, in which case the Executive shall be paid a monthly reimbursement
equal to the portion of the health insurance premium that the Company would
have paid for a family policy.

 

3.7                                 Business Expenses. 
During the term of Executive’s employment under this Agreement and as
for as long thereafter as required pursuant to Article IV, the Company
shall, in accordance with, and to the extent of, its uniform policies in effect
from time to time, bear all ordinary and necessary business expenses incurred
by Executive in performing Executive’s duties as an executive officer of the
Company, including, without duplication or limitation, all travel and living
expenses while away from home on business in the service of the Company and
entertainment expenses, provided that Executive accounts promptly for such expenses
to the Company in the manner reasonably prescribed from time to time by the
Company.

 

ARTICLE IV.  EARLY
TERMINATION

 

4.1                                 Early
Termination.  Subject to
the respective continuing obligations of the parties pursuant to Article V,
this Article IV sets forth the terms for early termination of Executive’s
employment under this Agreement.

 

4.2                                 Termination
by the Company for Cause.  The
Company may terminate this Agreement for Cause. 
For purposes of this Agreement, “Cause” means (a) an act or acts of
personal dishonesty taken by Executive and intended to result in substantial
personal enrichment of Executive at the expense of the Company,
(b) repeated violations by Executive of his obligations under
Section 2.3 which are demonstrably willful and deliberate on Executive’s
part and which are not remedied within a reasonable period after Executive’s
receipt of notice of such violations from the 

 

7

 

Company, or (c) the
willful engaging by Executive in illegal conduct that is materially and
demonstrably injurious to the Company. 
For purposes of this Section 4.2, no act, or failure to act, on
Executive’s part shall be considered “dishonest”, “willful” or “deliberate”
unless done, or omitted to be done, by Executive in bad faith and without
reasonable belief that Executive’s action or omission was in, or not opposed
to, the best interest of the Company. 
Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted to be done,
by Executive in good faith and in the best interests of the Company.

 

Notwithstanding the
foregoing, Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of not less than two-thirds of
the entire membership of the Board, exclusive of Executive, at a meeting of the
Board called and held for the purpose (after reasonable notice to Executive and
an opportunity for Executive, together with Executive’s counsel, to be heard
before the Board), finding that in the good faith opinion of the Board,
Executive was guilty of the conduct set forth above in this Section 4.2
and specifying the particulars thereof in detail.

 

4.3                                 Termination
by Executive for Good Reason.  Executive may terminate Executive’s
employment under this Agreement for Good Reason in accordance with the ensuing
provisions of this Section 4.3. 
Termination by Executive for “Good Reason” shall mean termination of
employment based on any one or more of the following:

 

(a)                                  An adverse change in
Executive’s status or position as an executive officer of the Company, including,
without limitation, any adverse change in Executive’s status or position as a
result of a material diminution in Executive’s duties, responsibilities or
authority as of the date of this Agreement (or any status or position to which
Executive may be promoted after the date hereof) or the assignment to Executive
of any duties or responsibilities which, in Executive’s reasonable judgment,
are inconsistent with Executive’s status or position, or any removal of
Executive from or any failure to reappoint or reelect Executive to such
positions (except in connection with the termination of Executive’s employment
for Cause in accordance with Section 4.2 hereof or Disability or death in
accordance with Section 4.4 hereof);

 

(b)                                 A reduction by the Company
in Executive’s Base Salary as in effect as of the date of this Agreement or as
the same may be increased from time to time;

 

(c)                                  The Company’s
requiring Executive to be based anywhere other than where Executive’s office is
located as of the date of this Agreement, except for required travel on the
Company’s business to an extent substantially consistent with the business
travel obligations which Executive undertook on behalf of the Company prior to
the date of this Agreement;

 

(d)                                 The occurrence
of a Change In Control and a failure of a Successor to acknowledge and assume
this Agreement as contemplated by Section 8.2; or

 

8

 

(e)                                  The failure by
the Company to comply with any material provision of this Agreement which has
not been cured within ten (10) calendar days after notice of such
noncompliance has been given by Executive to the Company.

 

Notwithstanding any other
provision of this Agreement to the contrary, any termination of Executive’s
employment with the Company or the Successor during the one (1) year
period immediately following a Change of Control of the Company, other than a
termination due to death, disability or for Cause shall be a termination for
Good Reason.

 

4.4                                 Termination
in the Event of Death or Disability.  The term of Executive’s employment under this
Agreement shall terminate in the event of Executive’s death or Disability.

 

4.5                                 Termination
by Mutual Agreement.  The parties
may terminate Executive’s employment under this Agreement at any time by mutual
written agreement.

 

4.6                                 Notice of
Termination; Date of Termination; Offer of Continued Employment.  The provisions of this Section 4.6 shall
apply in connection with any early termination of Executive’s employment under
this Agreement pursuant to this Article IV.

 

(a)                                  For purposes of this
Agreement, a “Notice of Termination” shall mean a notice which shall indicate
the specific termination provisions in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide the
basis for such termination.  Any
purported termination by the Company or by Executive pursuant to this Article IV
(other than a termination by mutual agreement pursuant to Section 4.5 or
death) shall be communicated by written Notice of Termination to the other
party hereto.

 

(b)                                 For purposes of this
Agreement, “Date of Termination” shall mean: 
(1) if Executive’s employment is terminated due to death, the last
day of the month first following the month during which Executive’s death occurs;
(2) if Executive’s employment is to be terminated for Disability, thirty
(30) calendar days after Notice of Termination is given; (3) if Executive’s
employment is terminated by the Company for Cause or by Executive for Good
Reason, the date specified in the Notice of Termination; (4) if Executive’s
employment is terminated by mutual agreement of the parties, the date specified
in such agreement; or (5) if Executive’s employment is terminated for any
other reason, the date specified in the Notice of Termination, which in no
event shall be a date earlier than ninety (90) calendar days after the date on
which a Notice of Termination is given, unless an earlier date has been
expressly agreed to by Executive in writing either in advance of, or after,
receiving such Notice of Termination; provided, however, if within thirty (30)
calendar days after giving of a Notice of Termination the recipient of the
Notice of Termination notifies the other party that a dispute exists concerning
the termination, then the Date of Termination shall be the date on which the
dispute is finally determined, whether by mutual written agreement of the
parties, by final and binding arbitration or by final judgment, order or decree
of a court of competent jurisdiction (the time for appeal therefrom having
expired or no appeal having been perfected). 
During the pendency of any such dispute and until the dispute is
resolved in the 

 

9

 

manner provided in the
immediately preceding sentence, the Company will continue to pay Executive all
compensation and benefits to which he was entitled pursuant to Article III
immediately prior to the time the Notice of Termination is given.

 

(c)                                  If this Agreement is
terminated other than by reason of (1) the expiration of the term hereof
as described at Section 2.3, (2) Executive’s Disability or death,
(3) Executive’s termination for Cause pursuant to Section 4.2 which
termination for Cause has been agreed to by Executive or has been determined in
a proceeding as provided in Section 7.3 to have been proper, or
(4) by mutual agreement of the parties pursuant to Section 4.5,
Executive may, but shall not be required to, not later than ten (10) days
after the Date of Termination, provide a written offer of continued employment
with the Company in accordance with the terms of this Agreement which terms
shall, in the case of a termination by Executive for Good Reason pursuant to Section 4.3,
include the Company taking any such steps as may be necessary to eliminate in a
manner reasonably satisfactory to Executive any conditions which created such
good reason for such termination.  Within
ten (10) days of its receipt of such offer, the Company shall provide
Executive with a written acceptance or rejection of such offer.  Failure of the Company to so accept or reject
such offer within such period shall be deemed to be a rejection of such
offer.  The parties hereby acknowledge
that Executive’s failure to provide such offer to the Company shall in no way
impair, affect or constitute a waiver of Executive’s right to enforce the
Company’s obligations under this Agreement and the Company shall not assert
such failure as a defense in any action or proceeding by Executive to enforce
the Company’s obligation under this Agreement.

 

4.7                                 Compensation
upon Termination, Death or During Disability.

 

(a)                                  If Executive’s employment
under this Agreement is terminated on account of Disability or death, the
Company shall, within ten (10) calendar days following the Date of
Termination, pay any amounts due to Executive for Base Salary through the Date
of Termination, together with any other unpaid and pro rata amounts to which
Executive is entitled as of the Date of Termination pursuant to Article III
hereof, including, without limitation, amounts which Executive is entitled
under any Plan in accordance with the terms of such Plan, and further,
including, without limitation, a pro rata portion (prorated through the Date of
Termination) of any annual or long-term bonus or incentive payments (for performance
periods in effect at the Date of Termination) to which Executive would have
been entitled had Executive remained continuously employed through the end of
such performance periods and continued to perform Executive’s duties in the
same manner as performed immediately prior to the Executive’s death or
disability.

 

(b)                                 If Executive’s
employment under this Agreement is terminated by the Company for Cause or by
Executive for other than Good Reason, the Company shall pay Executive the Base
Salary through the Date of Termination and any amounts to which the Executive
is entitled under any Plan in accordance with the terms of such Plan.

 

10

 

(c)           If Executive’s employment
under this Agreement is terminated by the mutual agreement of the parties under
Section 4.5, the Company shall provide Executive with the payments and
benefits specified in the agreement.

 

(d)           If, in breach of this
Agreement, the Company terminates Executive’s employment hereunder (it being
understood that a purported termination for Disability or for Cause which is
disputed and finally determined not to have been proper shall be a termination
by the Company in breach of this Agreement) or if Executive terminates his
employment hereunder for Good Reason for the unexpired term of this Agreement
as determined in accordance with Section 2.6, unless earlier terminated
pursuant to Section 4.4 or Section 4.5, the Company shall, as damages
for such breach:

 

(1)           continue to pay any amounts
due to Executive for Base Salary in accordance with Sections 3.1 at the annual
rate in effect thereunder immediately prior to the Date of Termination (but
determined without regard to any purported reduction in Base Salary which gave
rise to such termination of employment) in the same manner as if Executive had
remained continuously employed throughout the period described above;

 

(2)           cause Executive’s continued
participation in all Plans in accordance with Sections 3.6 of this Agreement as
if Executive remained continuously employed with the Company throughout the
period described above for all purposes, including without limitation grants,
awards, accruals and vesting thereunder; provided, that, if such continued
participation is not permissible under applicable law, the Company shall
provide Executive with benefits substantially similar to those to which
Executive would have been entitled under those Plans in which Executive’s
continued participation is not permissible;

 

(3)           continue to (i) provide
Executive with paid vacation in accordance with Section 3.5 of this
Agreement, and (ii) bear business expenses of Executive in accordance with
Section 3.7 with respect to matters reasonably undertaken by Executive on
behalf of the Company.

 

Notwithstanding the
foregoing, if any payment or benefit received or to be received by Executive
under this Agreement or any Plan would be (in whole or part) subject to the
excise tax imposed by Section 4999 of the Code, or any successor provision
thereto, or any similar tax imposed by state or local law, or any interest or
penalties with respect to such excise tax (such tax or taxes, together with any
such interest and penalties, are hereafter collectively referred to as the “Excise
Tax”), then, the salary continuation payments provided for in this Section 4.7
shall first be reduced to the extent necessary to make such payments and
benefits not subject to the Excise Tax, but only if such reduction results in
higher after tax payments to Executive after taking into account the Excise Tax
and any additional taxes that Executive would pay if such payments and benefits
were not reduced.

 

(e)           Intentionally Omitted.

 

11

 

(f)            Executive shall not be
required to mitigate the Company’s payment obligations pursuant to Section 4.7(d) by
making any efforts to secure other employment for which Executive is reasonably
qualified by education, experience or background, and Executive’s commencement
of employment with another employer shall not reduce the obligations of the
Company pursuant to Section 4.7(d) hereof.

 

(g)           The first seven monthly
payments due to Executive pursuant to this Section 4.7 shall be paid in
cash equivalent on the first day of the seventh calendar month following the
month in which the Executive’s employment is terminated, and shall continue
thereafter on the first day of each calendar month thereafter until all
payments due hereunder have been paid; provided, however, if (i) any such
payment is on account of an event not subject to the six month delay rule under
Section 409A of the Code (e.g. Disability), or (ii) on the date of
the Executive’s termination of employment, neither the Company nor any other
entity that is considered a “service recipient” with respect to the Executive
within the meaning of Section 409A of the Code has any stock which is
publicly traded on an established securities market (within the meaning of
Treasury Regulation Section 1.897-1(m)) or otherwise, then the monthly
payments shall continue or commence to be paid no later than the first day of
the calendar month after the date Executive’s employment is terminated.

 

ARTICLE V. 
CONFIDENTIAL INFORMATION

 

5.1           Prohibitions Against Use.  Executive will not during or subsequent to
the termination of Executive’s employment under this Agreement use or disclose,
other than in connection with Executive’s employment with the Company, any
Confidential Information to any person not employed by the Company or not authorized
by the Company to receive such Confidential Information, without the prior
written consent of the Company. 
Executive will use reasonable and prudent care to safeguard and protect
and prevent the unauthorized use and disclosure of Confidential Information.  The obligations contained in this Section 5.1
will survive for as long as the Company in its sole judgment considers the
information to be Confidential Information. 
The obligations under this Section 5.1 will not apply to any
Confidential Information that is now or becomes generally available to the
public through no fault of Executive or to Executive’s disclosure of any
Confidential Information required by law or judicial or administrative process.

 

ARTICLE VI. 
NON-COMPETITION

 

6.1           Non-Competition.  Subject to Sections 6.2 and 6.3, Executive
agrees that during the term of this Agreement and for a period of one (1) year
following termination of employment for any reason, Executive will not directly
or indirectly, alone or as a partner, officer, director, shareholder or
employee of any other firm or entity, engage in any commercial activity in
competition with any part of the Company’s business as conducted during the
term of the Agreement or as of the date of such termination of employment or with
any part of the Company’s contemplated business with respect to which Executive
has Confidential Information as governed by Article V.  For purposes of this clause (a), “shareholder”
shall not include beneficial ownership of less than five percent (5%) of the 

 

12

 

combined voting power of all
issued and outstanding voting securities of a publicly held corporation whose
stock is traded on a major stock exchange or quoted on NASDAQ.

 

6.2           Early Termination.  Notwithstanding Section 6.1, if Executive’s
employment terminates under circumstances which entitle him to receive damages
for breach of this Agreement pursuant to Section 4.7(d) and the
Company fails to provide Executive with any compensation or benefits due him
pursuant to Section 4.7(d) and does not remedy such failure within
ten (10) days after receipt of notice of such failure from Executive, the
restrictions set forth in Section 6.1 shall cease to apply to Executive
for the remainder of the period to which such restrictions would otherwise
apply notwithstanding any subsequent remedy of such failure by the Company.

 

ARTICLE VII. 
INDEMNIFICATION

 

7.1           Indemnification.  The Company shall defend,
indemnify and hold Executive harmless from and against any and all claims,
liabilities, damages, costs and expenses (including reasonable attorneys fees)
(the “Claims”) which may be asserted against Executive arising out of or
related to the performance of Executive’s duties under this Agreement.

 

ARTICLE VIII.  GENERAL
PROVISIONS

 

8.1           No Adequate Remedy. 
Notwithstanding Section 4.7, the parties declare that it is
impossible to accurately measure in money the damages which will accrue to
either party by reason of a failure to perform any of the obligations under this
Agreement.  Therefore, if either party
shall institute any action or proceeding to enforce the provisions hereof,
other than a claim by Executive for a payment pursuant to Section 4.7, the
party against whom such action or proceeding is brought hereby waives the claim
or defense that such party has an adequate remedy at law, and such party shall
not assert in any such action or proceeding the claim or defense that such
party has an adequate remedy at law.

 

8.2           Successors and Assigns.

 

(a)           This Agreement shall be
binding upon and inure to the benefit of any Successor of the Company and each
affiliate, and any such Successor shall absolutely and unconditionally assume
all of the Company’s and any affiliate’s obligations hereunder.  Upon Executive’s written request, the Company
will seek to have any Successor, by agreement in form and substance
satisfactory to Executive, acknowledge and agree to assume the Company’s
obligations under this Agreement. 
Failure to obtain such assent at least three (3) business days
prior to the time a person or entity becomes a Successor (or where the Company
does not have at least three (3) business days’ advance notice that a
person or entity may become a Successor, within one (1) business day after
having notice that such person or entity may become or has become a Successor)
shall constitute Good Reason for termination by Executive of employment within
the meaning of Section 4.3.  For
purposes of this Agreement, “Successor” shall mean any corporation, individual,
group, association, partnership, firm, venture or other entity or person that,
subsequent to the date hereof, succeeds to the actual or practical ability to
control (either immediately or with the passage of 

 

13

 

time), all or substantially
all of the Company’s or Operating Company’s business and/or assets, directly or
indirectly, through a Change in Control.

 

(b)           This Agreement and all
rights of Executive hereunder shall inure to the benefit of and be enforceable
by Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.  If Executive should die while any amounts
would still be payable to Executive hereunder if Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive’s devisee, legatee, or
other designee or, if there be no such designee, to Executive’s estate.  Executive may not assign this Agreement, in
whole or in any part, without the prior written consent of the Company.

 

8.3           Disputes.  Any
dispute, controversy or claim for damages arising under or in connection with
this Agreement shall, in Executive’s sole discretion, be settled exclusively by
such judicial remedies as Executive may seek to pursue or by arbitration in
Minneapolis, Minnesota by a single arbitrator in accordance with the rules of
the American Arbitration Association then in effect.  Judgment may be entitled on the arbitrators’
award in any court having jurisdiction; provided, however, that Executive shall
be entitled to seek specific performance of Executive’s right to be paid until
the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.  The Company shall bear all costs and
expenses, including attorney’s fees, arising in connection with any arbitration
proceeding pursuant to this Section 7.3. 
The Company shall be entitled to seek an injunction or restraining order
in a court of competent jurisdiction to enforce the provisions of
Article V and VI.

 

8.4           No Offsets.  In no event
shall any amount payable to Executive pursuant to this Agreement be reduced for
purposes of offsetting, either directly or indirectly, any indebtedness or
liability of Executive to the Company.

 

8.5           Notices.  All
notices, requests and demands given to or made pursuant hereto shall, except as
otherwise specified herein, be in writing and be personally delivered or mailed
postage prepaid, registered or certified U.S. mail, to any party at its address
set forth on the last page of this Agreement.  Either party may, by notice hereunder,
designate a changed address.  Any notice
hereunder shall be deemed effectively given and received:  (a) if personally delivered, upon
delivery; or (b) if mailed, on the registered date or the date stamped on
the certified mail receipt.

 

8.6           Withholding.  To the extent required by any applicable law,
including, without limitation, any federal or state income tax or excise tax
law or laws, the Federal Insurance Contributions Act, the Federal Unemployment
Tax Act or any comparable federal, state or local laws, the Company retains the
right to withhold such portion of any amount or amounts payable to Executive
under this Agreement as the Company (on the written advice of outside counsel)
deems necessary.

 

8.7           Captions.  The various headings or captions in this
Agreement are for convenience only and shall not affect the meaning or
interpretation of this Agreement.

 

14

 

8.8           Governing
Law.  The validity, interpretation,
construction, performance, enforcement and remedies of or relating to this
Agreement, and the rights and obligations of the parties hereunder, shall be
governed by the substantive laws of the State of Iowa (without regard to the
conflict of laws rules or statutes of any jurisdiction).

 

8.9           Construction.  Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and 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.

 

8.10         Waivers.  No failure on the part of either party to
exercise, and no delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right or remedy granted hereby or by any related document
or by law.

 

8.11         Modification.  This Agreement may not be modified or amended
except by written instrument signed by the parties hereto.

 

8.12         Entire
Agreement.  This
Agreement constitutes the entire agreement and understanding between the
parties hereto in reference to all the matters herein agreed upon.  This Agreement replaces in full all prior
employment or consulting agreements or understandings of the parties hereto,
and any and all such prior agreements or understandings are hereby rescinded by
mutual agreement, provided, however, that this Agreement shall not be deemed to
rescind, or supercede or modify in any respect any prior employment or
consulting agreements between the Executive and the Company specifically
relating to proprietary or confidential information.

 

8.13         Counterparts.  This Agreement may be executed in one (1) or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.

 

8.14         Survival.  The parties expressly acknowledge and agree
that the provisions of this Agreement which by their express or implied terms
extend beyond the termination of Executive’s employment hereunder (including,
without limitation, the provisions of Section 4.7 (relating to
compensation) or beyond the termination of this Agreement (including, without
limitation, the provisions of Section 5.1 (relating to confidential
information) and Article VI (relating to non-competition)), shall continue
in full force and effect notwithstanding Executive’s termination of employment
hereunder or the termination of this Agreement, respectively.

 

15

 

IN WITNESS
WHEREOF, the parties hereto have caused this Executive Employment Agreement to
be duly executed and delivered as of the day and year first above written.

 

 

	
  EXECUTIVE

  	
   

  	
  CYCLE
  COUNTRY ACCESSORIES CORP.

  
	
   

  	
   

  	
   

  
	
  /s/ Jeffrey M. Tetzlaff

  	
   

  	
  /s/ Paul DeShaw

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  
	
   

  	
   

  	
   

  	
  Its: Outside Director

  

 

16

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