EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 24th day of June,
2008, by and between Cycle Country Accessories Corporation, an Iowa
Corporation, (hereinafter referred to as the "Corporation") and Xxxx
Xxxxxxxx, of Shorewood, Minnesota,
(hereinafter referred to as the "Executive").
WHEREAS the Corporation has been actively pursuing a replacement
for its previous President 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 for
a period of 36 (thirty-six) months commencing the 8th day of April,
2008 to the 7th day of April, 2011.
2. SCOPE OF SERVICES. The Executive shall serve as President
of the Corporation. As such, the Executive shall be in full charge of
the operations of the Corporation or the Corporation's business
affairs, subject to the directions of the Chief Executive Officer and
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 - 00xx Xxx. X., 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) signing bonus; (3) stock option; and (4)
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 $150,000.00 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. Signing Bonus.
1) Cash. The Executive shall receive a signing
bonus equivalent to $25,000.00 cash to be paid in full upon
arrival at place of employment and commencement of the term
of this Agreement.
2) Stock. The Executive shall receive 50,000 shares
of stock in the Corporation, vesting over a three (3) year
period. At the end of the first full year of employment,
the Executive shall become vested in and receive 16,666
shares of the stock. At the end of the Executive's second
full year of employment, he shall become vested in and
receive another 16,666 shares of the stock. At the
completion of the Executive's third full year of
employment, he shall become vested in and receive the final
16,668 shares of the stock.
3) Stock Option. The Executive is further offered
stock options to acquire an additional 500,000 shares of
stock in the Corporation at the closing price on the date
he commenced employment, which is agreed to have been $1.68
(One Dollar and 68/100) per share, which option shall run
for a period of three (3) years. This option may be
exercised by the Executive paying to the Corporation the
exercise price multiplied by the number of shares he wishes
to exercise at that time. At any time during the first
three (3) years of employment, this option may be exercised
in full or in part at any time during this term. Any
portion of this option which has not been exercised on the
third anniversary of the commencement date of this contract
will lapse and no longer be an obligation of the
Corporation. Stock shall be restricted and contain the
appropriate legend noting its restriction.
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 Executives of the Corporation.
3) Vacation. The Executive shall receive four (4)
weeks of paid vacation.
4) Motor Vehicle Allowance. The Corporation shall
pay to the Executive a motor vehicle allowance of $450.00
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
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. Any stock options the Executive has not exercised on his
effective termination date will lapse and no longer be an obligation
of the Corporation.
7. DEATH. In the event of the death of the Executive, all
compensation shall terminate at the expiration of the month of his
death, except as provided in Section 5A. In addition the Executive's
estate will be entitled to receive any of the signing bonus stock
which has vested but not issued to the Executive. The stock options
issued to the Executive, which have not been exercised at the time of
his death shall lapse and no longer be an obligation of the
Corporation.
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 to the Corporation of his intent to
terminate this Agreement. As of the date the employment ceases, all
compensation which the Executive is receiving pursuant to this
Agreement shall cease and any stock bonus not vested or stock option
not exercised on that date shall lapse and no longer be an obligation
of the Corporation.
9. DISCHARGE WITHOUT CAUSE. In the event of the sale of the
Corporation, the Board of Directors shall have the option to discharge
the Executive without cause. If the Corporation does terminate the
Executive without cause, the Executive will be entitled to continue to
receive all benefits of this Agreement and terms of this Agreement as
follows:
1) Basic current compensation will continue throughout the
term of this Agreement.
2) Signing bonus stock, which has not vested or been delivered
to the Executive, will be priced at the closing price on the date of
termination without cause and that price multiplied by the remaining
signing bonus shares shall be paid to the Executive in lieu of shares
within 90 days of termination.
3) Any stock options, which have not been exercised, will be
valued by multiplying the number of unexercised shares by the closing
price of the stock on the date of the termination without cause, and
the difference in that price in excess of the exercise price shall be
calculated and paid to the Executive within 90 days of termination.
10. DISCHARGE FOR CAUSE. The Board of Directions of the
Corporation may discharge the Executive before the expiration of a
contractual term of employment for such gross negligence or gross
misconduct either by omission or commission by the Executive that
would constitute as a matter of law a breach of the Executive's
obligations hereunder. If the Executive is terminated for cause, all
compensation under Section 5A, B, C of this Agreement shall end on the
date of termination.
11. 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.
12. 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.
13. 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.
This Executive Employment Agreement is entered into the date
heretofore mentioned by and between the parties.
CYCLE COUNTRY ACCESSORIES CORPORATION
The "Corporation"
By: /s/ F. L. Xxxxxx
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Title: Chairman
The "Executive"
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
