EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 11th day of
September, 2006, by and between Cycle Country Accessories Corporation,
an Iowa Corporation, (hereinafter referred to as the "Corporation")
and Xxxxx Xxxxx, of Greenwood, Indiana, (hereinafter referred to as
the "Executive").
WHEREAS the Corporation has been actively pursuing a replacement
for its previous President and Chief Executive Officer and as such has
met with and interviewed the Executive, and is desirous of employing
the Executive in an executive and managerial capacity for the
Corporation; and
WHEREAS the Executive is agreeable to becoming employed by the
Corporation in an executive and managerial capacity for a period of 36
(thirty-six) months and is willing to accept and undertake such
employment.
NOW, THEREFORE, IN CONSIDERATION OF THE PROMISES AND MUTUAL
COVENANTS HEREIN SET FORTH, THE CORPORATION AND THE EXECUTIVE AGREE AS
FOLLOWS:
1. EMPLOYMENT. The Corporation agrees to and does hereby
employ the Executive and the Executive agrees to and does hereby
accept employment by the Corporation, in the capacity of President and
Chief Executive Officer for a period of 36 (thirty-six) months
commencing the 18th day of September, 2006 to the 18th day of
September, 2009. This agreement will automatically be extended for
incremental thirty-six (36) month periods upon the conclusion of the
existing period, unless the Executive is unable, as provided in
sections 6 and 7 hereof, or discharged for cause, as provided in
section 8 hereof.
2. SCOPE OF SERVICES. The Executive shall serve as President
and Chief Executive Officer of the Corporation. As such, the Executive
shall be in full charge of the operations of the Corporation or
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Corporation's business affairs, subject to the directions of the
chairman of the Board of Directors and also subject at all times to
the control of the Board of Directors.
3. FULL-TIME SERVICES. The Executive agrees that during the
term of his employment he will (subject to the provisions of Section 6
hereof), devote substantially all of his time and energies, during
business hours, to the supervision, management, and conduct of the
business affairs of the Corporation. The Executive will faithfully and
to the best of his ability, discharge his duties hereunder to the
furtherance of the interests of the Corporation. The Executive will
not accept other gainful employment, become or remain an officer or
director in any other Corporation, except with the consent of the
Board of Directors of the Corporation.
4. PLACE OF EMPLOYMENT. The Executive will perform his
services hereunder at the principal office of the Corporation, which
is presently located at 0000 Xxxxxxx 00, Xxxxxxx, Xxxx, or at such
other locations as directed by the Corporation.
5. COMPENSATION. For all services to be rendered hereunder by
the Executive, the Corporation will pay the Executive (1) basic
current compensation; (2) bonus Compensation; and (3) fringe benefits,
as hereinafter set forth.
A. Basic Current Compensation The Executive shall
(except as otherwise provided in Section 6 hereof) receive,
during the term of his employment, basic current compensation at
the rate of $187,500.00 per annum. Said amount shall be payable
in equal weekly installments. In the event the Executive's
employment is terminated by death, as provided in Section 7
hereof, the Corporation will continue to pay the Executive or his
designee, or the executor of his estate, the basic current
compensation for a period of three (3) months from the end of the
month in which such death occurs. Said amounts shall be payable
weekly.
B. Bonus Compensation.
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1) Signing Bonus Compensation. The Executive shall
receive a signing bonus equivalent to $100,000.00 to be
paid in stock in the Corporation. This stock shall be
valued at the average per share price on the day of
commencement of employment, with 25 percent issued on the
first day of employment and the remaining 75% issued in
equal increments of 25% on the anniversary date of the
commencement of employment during the next three years of
employment.
2) Annual Bonus Compensation. In addition to the
basic current compensation and signing bonus, the Executive
shall receive bonus compensation, which will be three
percent (3%) of the pre-tax net income in excess of the
average of pre-tax net income for the prior three years
(Fiscal 2004, 2005, and 2006). This annual bonus
compensation shall be for fiscal year 2007 and beyond and
shall be paid in stock, cash, or a combination of stock and
cash at the discretion of the Executive. Any portion which
is taken in stock will be valued at the average price on
the last trading day of the fiscal year. The prior three-
year average is estimated to be approximately $1.667
million dollars and will be adjusted based on the actual
fiscal 2006 pre-tax net income.
3) Moving and Relocation Reimbursement. The
Corporation hereby agrees to reimburse the Executive for
realtor's fees, attorney's fees, and other normal closing
costs associated with the sale of his existing residence,
which will be paid within 10 days of submittal of proof of
the expenses. The Corporation will also reimburse the
Executive for actual moving costs (rental of moving van,
packing, loading and unloading - but not unpacking). There
will be no reimbursement for the moving of RVs or similar
vehicles, with the exception of the Executive's boat and
boat trailer, which will be paid for by the Corporation, or
the Executive may choose a payment of $200.00 for excess
costs of relocation, should he elect to tow the boat and
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it's trailer by himself. Normal mileage reimbursements
(.40 cents per mile) associated with the relocation, will
be paid for by the Corporation. The Corporation will be
responsible for contracting with the moving company
directly and the payment of the moving company's invoice.
The Corporation will further reimburse the Executive
for normal closing costs associated with the purchase of a
residence near your place of employment within 10 days of
submittal of proof of the expenses. The Corporation will
not reimburse the Executive for any "points" or costs
associated with acquiring a lower mortgage interest rate.
The Corporation agrees to reimburse the Executive for
temporary living costs for a place of residence approved by
the Corporation for a period not to exceed 16 weeks after
the date of commencement of employment, including mileage
and/or airfare between the Executive's existing residence
and the new or temporary residence every other weekend. It
is understood between the parties that the Executive, upon
the acquisition of a new residence, will immediately occupy
that residence after closing and use that residence, even
though Executive's family may not relocate until near the
end of said 16 week period. During the period of time
between occupancy of a newly acquired residence and the
actual relocation of the Executive's family to this area,
the Corporation will continue to pay mileage or airfare
back and forth every other weekend and, in addition, will
pay airfare or mileage to allow for Executive's spouse to
make 2 trips to this area during that 16 week period. In
addition, the Corporation will gross-up on a one-time basis
and reimburse the Executive for any taxes, which become due
as a result of the moving cost reimbursement.
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The Corporation agrees to pay the Executive a mortgage
interest rate differential in the event that the mortgage
on his new residence is higher than his existing mortgage
interest rate. The Corporation will pay to the Executive
that differential based on the difference between those
rates for the first 5 years of ownership. This interest
differential will apply to the sum of your current mortgage
(estimated to be approximately $200,000.00), plus up to an
additional $200,000.00 on the Executive's new residence in
this area. An example: If your current mortgage is
$200,000.00, and becomes a mortgage of $400,000.00 on a
residence purchased here, and the difference in the
mortgage rates between your current rate and new rate is
2.5%, the Corporation will pay the differential of
$10,000.00 per year, for the first 5 years, conditioned
only on your being an employee of the Corporation at the
end of each of those 5 years.
C. Fringe Benefits.
1) Health/Life/401K. The Executive shall receive
health insurance coverage for himself and all family
members, life insurance, and 401K benefits identical to
those supplied to other employees of the Corporation as
provided for in the Employee's Manual.
2) Sick Pay and Holidays. The Executive shall
receive sick pay and holidays as are in effect for all
other employees with a waiver of any eligibility
requirements.
3) Vacation. The Executive shall receive paid
vacation based on that provided for in the Employee Manual
for an employee with 14 years of service. This rate is
currently 13.33 hours per month.
6. DISABILITY. In the event that the Executive should become
disabled or incapacitated by illness or otherwise, for a continuous
period of not less than six (6) months, during which time he shall be
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unable to perform the duties required of him under this Agreement, the
Board of Directors of the Corporation, acting in good faith, may
terminate the employment of the Executive hereunder. Said termination
shall be delivered to Executive and shall specify the effective
termination of employment date, which date shall be thirty (30) days
or more from the date of such notice. No such right of termination may
be exercised, in the absence of written consent of the Executive until
after the initial six (6) months disability, unless a qualified
independent physician shall have certified that the Executive is (1)
permanently disabled or (2) incapable of resuming substantially full-
time performance of his duties, under the Agreement, for a period of
at least six (6) months after the end of his initial disability. Said
independent physician shall be selected by the Corporation and
approved by the Executive. If the Executive is unable to give such
approval, such physician shall be approved by an adult member of his
family. In the event of termination of the Executive's employment
pursuant to this Section, the Executive shall be entitled to receive
the basic current compensation for a period of six (6) months from the
effective termination of his employment date, which date is specified
in the notice of termination contemplated by this paragraph of this
Agreement. In addition, the Executive shall be entitled to receive any
bonuses declared under the provisions of Section 5B2 hereof for the
year in which the termination occurs. The bonuses shall be prorated
to reflect the percentage of the year that the Executive was employed.
The effective termination of employment date shall be used in
calculation of such percentage.
EXAMPLE:
Executive's bonus (based on calculation in Section 5B2)
Effective date of termination of employment is April 1st.
Executive's Bonus reduced by 50 percent
7. DEATH. In the event of the death of the Executive, all
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compensation shall terminate at the expiration of the month of his
death, except as provided in Section 5A and except Executive's estate
will be entitled to receive bonus compensation payable pursuant to
Section 5Bb reduced to reflect the percentage of the year following
the date of death. Said bonus compensation shall be calculated as
provided in Section 6 hereof, except the date of death shall be
substituted for the effective date of termination of employment.
8. TERMINATION OF EMPLOYMENT AGREEMENT. In the event that the
Executive shall wish to voluntarily terminate this Agreement, he shall
give 180 days written notice of the Corporation of his intent to
terminate this Agreement At the time of said termination, all
compensation which the Executive is receiving pursuant to this
Agreement shall cease, except for any bonuses to be paid under the
provisions of Section 5B2 hereof for the year the year in which the
termination occurs. The bonuses shall be prorated to reflect the
percentage of the year that the Executive was employed. Should the
Executive terminate during the first year of his employment under this
Agreement, he shall forfeit any bonus compensation which he was
entitled under Section 5B.
9. DISCHARGE FOR CAUSE. The Board of Directors of the
Corporation may discharge the Executive, before the expiration of a
contractual term of employment, for such negligence or misconduct,
either by omission or commission by the Executive, as shall constitute
as a matter of law a breach of the Executive's obligations hereunder
and would be grounds for the denial of unemployment benefits under the
laws of the State of Iowa.
10. INVENTIONS. The Executive agrees, that so long as he is
employed hereunder, any and all inventions, whether patentable or not,
developed by him during the period of employment and pertaining to the
general lines of the products of the Corporation, or any of the other
involved corporations, shall be the sole property of said Corporation.
The Executive shall not be entitled to any additional compensation on
account of such inventions.
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11. COVENANT NOT TO COMPETE. Executive agrees that he will not
compete with the Corporation, directly or indirectly, as an officer,
principal, stockholder, agent, employee or otherwise, either alone or
in association with other persons, firms or corporations, in any place
within or without the United States of America, regarding the
production, manufacture, sale or distribution of any products similar
to those produced, manufactured, sold or distributed by the
Corporation, except with the prior written consent of the Corporation.
This Agreement shall cover any period of time during which he is
receiving or is entitled to receive compensation hereunder, and also a
period of two (2) years thereafter. The Executive further agrees, that
during such periods, he will not disclose to any other person or
business entity any trade secrets or other confidential information as
to the Corporation.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the personal representatives and
successors in interest of the Executive, the personal representatives
and successors in interest of the Corporation.
"Corporation": Cycle Country Accessories, Corp.
By: /s/ Xxxx Xxxxx
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Title: Interim CEO
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx, "Executive"
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