DEFINITIVE NOTICE AND PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Cycle Country Accessories Corp.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] Fee not required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
Cycle Country Accessories Corp.
June 1, 20072,
2008
Dear Stockholder:
I am pleased to invite you to Cycle Country Accessories Corp.'s
20072008 annual meeting of stockholders (the "Annual Meeting"). This
year's meeting will be held on Tuesday, June 26, 2007,24, 2008, at Village
West Resort & Conference Center, Spirit Lake, Iowa, beginning at
5:30 p.m., local time. Details of the business to be conducted at
the annual meeting are given in the attached Notice of Annual
Meeting and Proxy Statement. A copy of our 20062007 Annual Report on
Form 10-KSB is also enclosed.
Whether or not you plan to attend the annual meeting, we hope
you will have your shares represented by marking, signing, dating
and returning your proxy card in the enclosed envelope as soon as
possible. Your stock will be voted in accordance with the
instructions you have given in your proxy card. If you return your
signed proxy but no voting instructions are given, your shares will
be voted For"For" each of the nominated Directors, Forand "For" the
ratification of our independent accountant, and For approval of the incentive
compensation plan.accountant. If you attend the annual
meeting, you may vote your shares in person even though you have
previously signed and returned your proxy card. Even if you plan to
attend the annual meeting, we recommend that you also submit your
proxy and voting instructions so that your vote will be counted if
you later decide not to attend the meeting.
Sincerely,
/s/ Randy J. Kempf
-------------------
Randy J. Kempf
Chief Executive OfficerJeffrey M. Tetzlaff
Jeffrey M. Tetzlaff
President
The accompanying Proxy Statement is dated June 1, 20072, 2008 and is
first being mailed to stockholders on or about June 1, 2007.2, 2008.
Cycle Country Accessories Corp.
NOTICE OF THE 20072008 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 26, 200724, 2008
NOTICE IS HEREBY GIVEN that the 20072008 Annual Meeting of Stockholders
(the "Annual Meeting") of Cycle Country Accessories Corp., a Nevada
corporation, will be held on Tuesday, June 26, 2007,24, 2008, at 5:30 p.m., local
time, at Village West Resort & Conference Center, Spirit Lake, Iowa , for
the following purposes:
1. to elect threetwo directors for a term expiring at the 20102011 annual
meeting;
2. to ratify the appointment of Henjes, Conner, & Williams, P.C. as
the independent registered public accounting firm for our fiscal
year ending September 30, 2007;2008; and
3. to approve our 2007 Incentive Compensation Plan; and
4. to transact such other business as may properly come before the
annual meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the
proxy statement accompanying this notice and incorporated by reference
herein.
The board of directors has fixed the close of business on May
7, 20072008 as the record date for the determination of holders of our
common stock entitled to notice of, and to vote at, the annual
meeting and any adjournment or postponement thereof. A list of
stockholders entitled to vote at the annual meeting shall be open
for the examination of any stockholder, for any purpose relevant to
the annual meeting, during ordinary business hours, for a period of
at least ten days prior to the annual meeting at our principal
executive offices at 1701 38th Ave. West, Spencer, Iowa 51301.
A copy of the Company's annual report on Form 10-KSB for its fiscal
year ended September 30, 20062007 accompanies this notice.
By Order of the Board of Directors
of Cycle Country Accessories Corp.
Spencer, Iowa
June 1, 2007May 28, 2008
Your vote is important. Whether or not you expect to attend the annual
meeting, please read the attached proxy statement and then promptly
complete, date, sign and return the enclosed proxy card in order to ensure
your representation at the annual meeting. A return envelope (which is
postage prepaid if mailed in the United States) is enclosed for your
convenience. Even if you have given your proxy, you may still vote in
person if you attend the annual meeting. Please note, however, that if
your shares are held of record by a broker, bank or other nominee and you
wish to vote at the annual meeting, you must obtain from such broker, bank
or other nominee a proxy card issued in your name. Contact your broker,
bank or other nominee for instructions.
PROXY STATEMENT
FOR THE 20072008 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 26, 200724, 2008
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Cycle
Country Accessories Corp. (the "Company") to be voted at the 20072008 Annual
Meeting of Shareholders (the "Annual Meeting") of the Company to be held
at the Village West Resort & Conference Center, 20785 170th Street (Hwy
86), Spirit Lake, Iowa, beginning at 5:30 p.m. local time on June 26,
2007,24,
2008, or at any adjournment thereof. The accompanying Notice of Annual
Meeting, this Proxy Statement and the enclosed form of proxy are first
being mailed or given to shareholders on or about May 31, 2007.June 2, 2008. Whether or
not you expect to attend the meeting in person, please return your
executed proxy in the enclosed envelope, and the shares represented
thereby will be voted in accordance with your wishes.
Solicitation of proxies is being made by the Company and will be
made primarily by mail. In addition to solicitation by mail, officers,
directors and employees of the Company may solicit personally, by mail or
telephone if proxies are not promptly received. The cost of solicitation
will be borne by the Company and will include reimbursement paid to banks,
brokers and other custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses of forwarding solicitation materials to
the beneficial owners of the Company's common stock.
The Company's principal office is located at 1701 38th Ave. West, PO
Box 257, Spencer, Iowa 51301.
REVOCATION OF PROXY
If, after sending in your proxy, you decide to vote in person or
desire to revoke your proxy for any other reason, you may do so by
notifying the Secretary of the Company, David Davis, in writing at the
principal office of the Company of such revocation at any time prior to
the voting of the proxy. A properly executed proxy with a later date will
also revoke a previously furnished proxy.
RECORD DATE
Only shareholders of record at the close of business on May 7, 20072008
will be entitled to vote at the Annual Meeting or any adjournment thereof.
ACTIONS TO BE TAKEN UNDER PROXY
Unless otherwise directed by the giver of the proxy, the persons
named in the enclosed form of proxy, that is, Mr. Randy J. Kempf,Jeffrey M. Tetzlaff, or,
if unable or unwilling to serve, Mr. David Davis, will vote:
1) For the election of each of the persons named herein as a nominee
for Class IIIII Director of the Company, for a term expiring at the 20102011
Annual Meeting of Shareholders or until his successor has been duly
elected and qualified;
2) For the ratification of the engagement of Henjes, Conner, &
Williams, P.C. as the Company's independent registered public accounting
firm; 3) For our 2007 Incentive Compensation Plan; and
4)3) According to such person's judgment on the transaction of such
other business as may properly come before the meeting or any adjournment
thereof.
Should the nominees named herein for election as directors become
unavailable for any reason, it is intended that the persons named in the
proxy will vote for the election of such other person in his stead as may
be designated by the Board of Directors. The Board of Directors is not
aware of any reason that might cause a nominee to be unavailable to serve.
VOTING SECURITIES AND VOTING RIGHTS
On May 7, 2007,2008, there were outstanding 7,350,0086,006,415 shares of Common
Stock, par value $0.0001 per share, each of which is entitled to one vote
on all matters submitted, including the election of directors. There are
no cumulative voting rights.
A majority of the outstanding shares present or represented by proxy
will constitute a quorum at the meeting. The affirmative vote of a
majority of the shares present in person or represented by proxy at the
Annual Meeting and entitled to vote is required to elect a person
nominated for director. Shares present at the meeting but which abstain or
are represented by proxies which are marked "WITHHOLD AUTHORITY'' with
respect to the election of a person to serve on the Board of Directors
will be considered in determining whether the requisite number of
affirmative votes are cast on such matter. Accordingly, such proxies will
have the same effect as a vote against the nominee as to which such
abstention or direction applies. Shares not present at the meeting will
not affect the election of a director.
The vote required for the approval of Proposal 2-Ratification of
Appointment of Independent Registered Public Accounting Firm Proposal 3 -
Approval of 2007 Incentive Compensation Plan and for any
other matter properly brought before the meeting, will be the affirmative
vote of the majority of the shares of Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote on the
proposal. Shares present at the meeting that abstain (including proxies
which deny discretionary authority on any matters properly brought before
the meeting) will be counted as shares present and entitled to vote and
will have the same effect as a vote against any such matter. Shares not
present at the meeting will not affect the outcome as to any such matter.
While counted for quorum purposes, shares represented by a proxy as
to which there is a "broker non-vote" (for example, where a broker does
not have discretionary authority to vote the shares) as to one or more
matters to be voted on shall not be deemed represented at the meeting as
to such matter or matters and, therefore, will have no effect thereon.
Votes will be counted by duly appointed inspectors of election,
whose responsibilities are to ascertain the number of shares outstanding
and the voting power of each, determine the number of shares represented
at the meeting and the validity of proxies and ballots, count all votes
and report the results to the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the beneficial
ownership of our Common Stock as of May 7, 20072008 by each stockholder known
by us to own beneficially more than 5% of our Common Stock.
As of May 7, 2007,2008, we had 7,350,0086,006,415 shares of Common Stock outstanding
and 607436 stockholders of record. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission. In
computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of Common Stock subject to
options or warrants held by that person that are currently exercisable or
will become exercisable within 60 days after May 7, 20072008 are deemed
outstanding, while such shares are not deemed outstanding for purposes of
computing the ownership percentage of any other person. Unless otherwise
indicated in the footnotes below, the persons and entities named in the
table have sole voting and investment power with respect to all shares
beneficially owned, subject to community property laws where applicable.
Amount and
Name and Address of Nature of Percentage of
Beneficial Owner Beneficial Ownership Class
- -----------------------------------------------------------------------------
Commerce Street Venture Group 365,000 (direct) 4.97%6.08%
17322 Westfield Park Road
Westfield, IN 46074
David Bailey 529,296456,296 (direct) 7.20%7.60%
1209 Country Club Lane
Spencer, IA 51301
Joan Bailey 599,296 (direct) 8.15%9.98%
1209 Country Club Lane
Spencer, IA 51301
- --------
* Less than 1%
SECURITY OWNERSHIP OF MANAGEMENT
Under regulations of the Securities and Exchange Commission,
persons who have power to vote or to dispose of our shares, either
alone or jointly with others, are deemed to be beneficial owners of
those shares. The following table sets forth, as of May 7, 2007,2008, the
beneficial ownership of the outstanding Common Stock of each current
director (including the nominees for election as directors), each of
the Named Executive Officers named in the Summary Compensation Table
set forth herein and the executive officers and directors as a
group.
Amount and
Name and Address of Nature of Percentage of
Beneficial Owner Beneficial Ownership Class
- -----------------------------------------------------------------------------
Randy J. Kempf 12,500Jeffrey M. Tetzlaff 100 (direct) 0.17%0.00%
c/o Cycle Country Accessories Corp.
1701 38th Ave West
Spencer, IA 51301
Jim Danbom 725,865 (direct) 9.88%
858 W Elkcam Circle
Marco Island, FL 34145
Jan Danbom 684,865 (direct) 9.32%
858 W Elkcam Circle
Marco Island, FL 34145
Rod Simonson 36,84938,176 (direct) 0.50%0.64%
1007 Okoboji Avenue
Milford, IA 51351
David Davis 8,500 (direct) 0.12%
c/o Cycle Country Accessories Corp.
1701 38th Ave West
Spencer, IA 51301
Bradley Danbom 17,080 (direct) 0.23%0.14%
c/o Cycle Country Accessories Corp.
1701 38th Ave West
Spencer, IA 51301
F.L. Miller 35,80037,779 (direct) 0.49%0.63%
2500 Manhattan Blvd.
Spirit Lake, IA 51360
L.G. Hancher, Jr. 165,000 (indirect) 2.24%2.75%
17322 Westfield Park Rd.
Westfield, IN 46074
Alan Bailey 583,779510,779 (direct) 7.94%8.50%
c/o Cycle Country Accessories Corp.
1701 38th Ave West
Spencer, IA 51301
Lisa Bailey 326,889 (direct) 4.45%5.44%
c/o Cycle Country Accessories Corp.
1701 38th Ave West
Spencer, IA 51301
All Officers and
Directors as a
Group (10(7 persons) 2,597,127 35.3%1,087,223 18.1%
PROPOSAL 1 - ELECTION OF DIRECTORS
INFORMATION ABOUT THE NOMINEES AND CURRENT DIRECTORS
The Company's Articles of Incorporation, as amended and By-laws
provide for a division of the Board of Directors into three classes.
One of the classes is elected each year to serve a three-year term.
The termsterm of the current Class II Directors, Jim Danbom, L.G. (Bob)
Hancher, Jr. and Jan Danbom, expireIII Director, Alan Bailey, expires at
the Annual Meeting.
Mr. Jeffrey M. Tetzlaff currently is serving as the Company's
President and has not served on the Board of Directors previously.
The Company's By-Laws currently specify that the number of
directors shall be not less than three nor more than nine, subject
to amendment by the Board of Directors.
The number of directors currently authorized is seven.five. The
Company's By-laws provide that vacancies on the Board of Directors
may be filled by the remaining members of the Board of Directors.
Proxies solicited by the Company for the election of directors
cannot be voted for a greater number of persons than the number of
nominees named in the proxy.
The full board of directors has nominated, as recommended and
approved by all of the independent board members, each of Mr. Danbom,Bailey
and Mr. Hancher, Jr. and Mrs. DanbomTetzlaff for election as Class IIIII directors for a term
expiring at the 20102011 annual meeting of stockholders and until their
successors have been qualified, or until their earlier death,
resignation or removal. Each of the nominees has agreed to serve if
elected, and the board of directors has no reason to believe they
will be unable to serve. If any nominee for director is unable to
serve, the persons named in the proxy may vote for a substitute
nominee.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
THE ELECTION OF MR. DANBOM,BAILEY AND MR. HANCHER AND MRS. DANBOMTETZLAFF AS DIRECTORS TO HOLD
OFFICE UNTIL THE 20102011 ANNUAL MEETING OF STOCKHOLDERS.
The following table sets forth for each director nominee and
for the incumbent directors, such director's age, principal
occupation for at least the last five years, present position with
the Company, the year in which such director was first elected or
appointed a director (each serving continuously since first elected
or appointed), directorships with other companies whose securities
are registered with the Securities and Exchange Commission, and the
class of such director.
Class II:III: To be elected to serve as Director until 20102011
Name Age Principal Occupation Service as
Director
Since
- ----------------------------------------------------------------------------
Jim Danbom 63 Jim Danbom was our founder and 2001
served as our president from 1981
to 2001. Mr. Danbom will lead the
Operations and Planning committees
of the board. He has successfully
created numerous businesses in his
27 year career. Having successfully
created our products at Cycle
Country, Mr. Danbom will now focus
on acquisitions and new product
development while serving on the
Operations and Planning committees.
Mr. Danbom is currently serving a
three-year term, which will end in
2007. Jim Danbom is the spouse of
Jan Danbom and the father of
Bradley Danbom, our Vice President
of Sales and Marketing.
L.G. Hancher, Jr. 53 L.G. "Bob" Hancher Jr. has served 2001
as Chief Financial Officer of
Commerce Street Venture Group since
2000 and in 2005 assumed the
position of CEO as well. Mr.
Hancher served as the Director of
Marketing of Raynor Garage from
1978 to 1988. In 1993, Mr. Hancher
co-founded, and is now a past
President of International Sports
Management, leaving in 2000 to co-
found Commerce Street Venture
Group. Mr. Hancher participates on
the Planning and Audit committees
of the board. Mr. Hancher is
currently serving a three-year
term, which will end in 2007.
Jan Danbom 58 Mrs. Danbom, the spouse of our 2006
founder Jim Danbom, worked along
side Jim as they grew the company
from a small startup business over
25 years ago to what it is today.
Mrs. Danbom was appointed to the
board to serve out the remaining
term of the seat vacated by Mr.
Hickman when he resigned from the
board in late March of 2006. Mrs.
Danbom is also the mother of
Bradley Danbom, our Vice President
of Sales and Marketing.. Mrs.
Danbom is currently serving a term,
which will end in 2007.
Class III: To continue to serve as Director until 2008
Name Age Principal Occupation Service as
Director
Since
- -----------------------------------------------------------------------------------------------------------------------------------------------------------
Alan Bailey 4850 Alan Bailey joined Cycle Country as 2005
as
a Vice President with the acquisition
of Simonsen Iron Works, Inc. on April
29, 2005. Prior to the acquisition,
Mr. Bailey served as President of
Simonsen Iron Works, a family owned
business started in 1906, for the
last 6 years. He was also part
owner of Simonsen's. Under Mr.
Bailey's leadership, Simonsen Iron
Works experienced 8% average annual
growth. Before joining the family
business in 1995, he was a
mechanical engineer for International
Paper. Mr. Bailey is currently serving
a three-year term, which will end in 2008.
Alan is the spouse of Lisa Bailey and
the son of David and Joan Bailey, also
owners of the former Simonsen Iron Works.
Jeffrey M. Tetzlaff 52 Jeff Tetzlaff joined Cycle Country na
in April, 2008, as the Company's
President. Mr. Tetzlaff had served
as Vice President of Business
Development for Commerce Street
Venture Group for 4 years prior to
joining Cycle Country. As Vice
President of Business Development,
Mr. Tetzlaff would evaluate
businesses for their strengths,
weaknesses, the market they were
in, and their potential for growth.
From 1995 to 2001 Mr. Tetzlaff co-
founded and participated in
numerous start-up companies in a
variety of roles and
responsibilities. From 2001 to
2003 Mr. Tetzlaff was Vice
President of Sales, Marketing and
Business Development for I-TECH
Corp., a Computer Peripheral
Equipment, Fiber Optic Test
Equipment, Testers, Test and
Measurement Equipment provider.
Class I: To continue to serve as Director until 2009
Name Age Principal Occupation Service as
Director
Since
- ----------------------------------------------------------------------------
F.L. Miller 6566 F.L. "Skip" Miller was President of 2001
Armstrong Wheels from 1970 until
1998. Then in 1998 from his Chief
Executive Officer position, Mr.
Miller consummated the company's
highly lucrative buy-out from the
international conglomerate GKN
Wheels. The selling of Armstrong
Wheels for an impressive premium
price was largely based on his
ability to build the company with
consistent double-digit annual
growth. In 1998 Mr. Miller
purchased AERO Race Wheels, Inc.,
which started as a division of
Armstrong Wheels in 1997. AERO
Race Wheels today has become the
largest manufacturer of steel
racing wheels in the United States
under his leadership.
Rod Simonson 5051 Rod Simonson became a franchisee 2001
for Piccadilly Circus Pizza, Inc.
in 1980 by owning and operating 1
of the 5 restaurants under the
company's umbrella. Shortly
thereafter, Mr. Simonson purchased
the parent company and became
President of Piccadilly. By 1987,
the company became Land Mark
Products, Inc., the licensing
company for Piccadilly Circus
Pizza. Under his leadership, the
company evolved from several sit-
down pizzerias to a complete
turnkey operational partner in
convenience stores, malls, hotels,
amusement parks and video stores.
Today, there are over 800 locations
primarily in convenience stores
throughout 42 states in the
Continental United States.
Class II: To continue to serve as Director until 2010
Name Age Principal Occupation Service as
Director
Since
- ----------------------------------------------------------------------------
L.G. Hancher, Jr. 54 L.G. "Bob" Hancher Jr. has served 2001
as Chief Financial Officer of
Commerce Street Venture Group since
2000 and in 2005 assumed the
position of CEO as well. Mr.
Hancher served as the Director of
Marketing of Raynor Garage from
1978 to 1988. In 1993, Mr. Hancher
co-founded, and is now a past
President of International Sports
Management, leaving in 2000 to co-
found Commerce Street Venture
Group.
Family Relationships
Jim Danbom and Jan Danbom are husband and wife. Bradley Danbom
is the son of Jim Danbom and Jan Danbom.
Al Bailey and Lisa Bailey are husband and wife. Alan Bailey is
the son of David Bailey and Joan Bailey. No family relationships
exist among any of our other directors or executive officers.
Agreements to Elect Directors
No agreements exist to elect any of our directors.
CORPORATE GOVERNANCE
Determination of Director Independence
Rules of The American Stock Exchange require that a majority of
the Board of Directors be "independent," as defined in American
Stock Exchange Company Guide Section 121(f). Under the Amex rules,
the Board of Directors must make an affirmative determination that a
director is independent by determining that the director has no
relationships that, in the opinion of the Board of Directors, would
interfere with the exercise of independent judgment in carrying out
the responsibilities of a director. The Board of Directors has
reviewed the independence of its directors under the Amex rules.
During this review, the Board of Directors considered transactions
and relationships between each director or any member of his family
and the Company. The Board of Directors has determined that Messrs.
L.G. Hancher, Jr., F.L. Miller and Rod Simonson are independent
under Amex Rule Section 121(f).
Board of Directors' Committees and Meetings
The board of directors conducts its business through meetings
and actions by unanimous written consent of the full board and
through an Audit Committee of the board. The board of directors has
adopted a charter for the Audit Committee that has been attached to
this Proxy Statement as Attachment A.
During the fiscal year ended September 30, 2006,2007, the board of
directors held fourtwo regular meetings and the Audit Committee held fourtwo
regular meetings. During the fiscal year ended September 30, 2006,2007,
each member of our board of directors attended at least 75% of the
meetings of the board of directors and of the committees on which he
or she served that were held during the period for which he or she
was a director or committee member.
We have not adopted a formal policy regarding board member
attendance at our annual meetings; however, we strongly encourage
all board members to attend the annual meeting.
The Audit Committee. The audit committee of our board of
directors is comprised of three directors, L.G. Hancher, Jr., F.L.
Miller, and Rod Simonson. Each member of the committee is an
independent director as defined by the American Stock Exchange
rules. In addition, our board of directors has determined that L.G.
Hancher, Jr., as defined by the SEC rules, is both independent and
an audit committee financial expert. Mr. Hancher has extensive
experience reading, analyzing, and preparing GAAP financial
statements and SEC reports and filings. Mr. Hancher is the Chair of
the Audit Committee. The Audit Committee is responsible for, among
other things:
* directly appointing our independent registered public
accountants;
* discussing with our independent registered public
accountants their independence from management;
* reviewing with our independent registered public accountants
the scope and results of their audit;
* approving all audit services and pre-approving all
permissible non-audit services to be performed by the
independent registered public accountants;
* overseeing the financial reporting process and discussing
with management and our independent registered public
accountants the interim and annual financial statements that
we file with the SEC; and
* reviewing and monitoring our accounting principles, policies
and financial and accounting controls.
All committee members are independent as defined in applicable
SEC and American Stock Exchange, or AMEX, rules. The board of
directors has determined that Mr. Hancher qualifies as an audit
committee financial expert within the meaning of SEC rules and
regulations.
Selection of Director Nominees
The Board of Directors does not currently have a standing
Nominating Committee or a charter regarding the nominating process.
The Board of Directors believes that it is appropriate for it to not
have such a committee because it has delegated to the independent
members of the Board of Directors the authority to identify,
evaluate and recommend qualified nominees for election or
appointment to the Company's Board of Directors. The vote of a
majority of the independent directors of the Board of Directors is
required to approve a nominee for recommendation to the Board of
Directors.
Stockholder Nominations. Stockholders who wish to recommend
nominees for consideration by the independent members of the Board
of Directors must submit their nominations in writing to our
Corporate Secretary. Submissions must include sufficient
biographical information concerning the recommended individual for
the committee to consider, including age, five-year employment
history with employer names and a description of the employer's
business, whether such individual can read and comprehend basic
financial statements, and other board memberships (if any) held by
the recommended individual. The submission must be accompanied by a
written consent of the individual to stand for election if nominated
by the board of directors and to serve if elected by the
stockholders. The independent members of the Board of Directors may
consider such stockholder recommendations when it evaluates and
recommends nominees to the board of directors for submission to the
stockholders at each annual meeting. Stockholder nominations made in
accordance with these procedures and requirements must be addressed
to our Corporate Secretary, at 1701 38th Ave. W., Spencer, Iowa
51301.
In addition, stockholders may nominate directors for election
without consideration by the Board of Directors. Any stockholder of
record may nominate an individual by following the procedures and
deadlines set forth in the "Stockholders' Proposals for 2008 Annual
Meeting" section of this proxy statement and by complying with the
eligibility, advance notice and other provisions of our bylaws.
Under our bylaws, a stockholder is eligible to submit a stockholder
proposal if the stockholder is of record and entitled to vote at the
annual meeting. The stockholder also must provide timely notice of
the proposal to us. To be timely, the stockholder must provide
advance notice not less than 90 nor more than 120 calendar days
prior to the anniversary date of the preceding year's annual
meeting, regardless of any postponements, deferrals or adjournments
of that meeting to a later date.
The Board of Directors did not receive any recommended nominee
from any stockholder or group of stockholders that beneficially
owned more than 5% of our common stock for at least one year as of
the date of the recommendation.
Compensation Committee
The Board of Directors does not currently have a standing
Compensation Committee. The Board of Directors believes it is
appropriate for the Company to not have such a committee because it
has delegated to the independent members of the Board of Directors
the authority to establish executive officer compensation.
Compensation Committee Interlocks and Insider Participation
As stated above, the independent members of the Board of Directors
have been delegated the authority which would typically be given to
a Compensation Committee. Each of these directors qualifies as an
independent non-employee director, and no member has served as an
officer or employee of the Company. During fiscal 2006,2007, none of the
Company's executive officers served as a member of a compensation
committee or board of directors of any other entity, which has an
executive officer serving as a member of our Board of Directors.
Compensation Committee Report
The independent members of the Board of Directors are, among other
things, responsible for:
* making recommendations to the Board and to the boards of
subsidiaries on all matters of policy and procedures relating to
executive compensation;
* reviewing and approving corporate goals and objectives relevant to
the chief executive officer's compensation, and determining and
approving the chief executive officer's compensation level based on
the Board's performance evaluation of the chief executive officer;
* determining and approving the compensation of the other executive
officers;
* reviewing, recommending, and discussing with management the
compensation discussion and analysis section included in the
Company's annual proxy statement; and
* evaluating its performance on an annual basis.
The independent members of the Board of Directors seek input from
the CEO on compensation decisions and performance appraisals for all
other officers. However, all officer compensation matters are
approved by the independent members of the Board of Directors.
The independent members of the Board of Directors are given the
opportunity to meet in executive session at each meeting of the
Board of Directors. When possible, the independent members of the
Board of Directors preview and discuss significant compensation
decisions at one meeting before giving formal approval at a
subsequent meeting.
Code of Business Conduct and Ethics
The Company has adopted a code of business conduct and ethics
applicable to the Company's directors, officers (including the
Company's principal executive officer, principal financial officer
and principal accounting officer), and employees, known as the Code
of Ethics and Standards of Conduct. The Code of Ethics and
Standards of Conduct is available on the Company's website. In the
event that we amend or waive any of the provisions of the Code of
Ethics and Standards of Conduct applicable to our principal
executive officer, principal financial officer, or principal
accounting officer, we intend to disclose the same on the Company
website at www.cyclecountry.com .
Director's Compensation
Effective October 1, 2004, our outside, non-management
directors are compensated for serving on the board of directors.
Outside, non-management directors receive $500 in common shares as
compensation for each board meeting that they attend. IfPursuant to
our 2007 Incentive Compensation Plan, is approved, for the fiscal year ended
September 30, 2006,2007, the non-management directors will bewere issued a total
of 3,1041,533 shares of common stock under such Plan in late JulyNovember, 2007.
Directors who are employees of the Company receive no compensation
for their service on the Board.
EXECUTIVE OFFICERS
In addition to Mr. Kempf,Tetzlaff, our Chief Executive Officer,President, and Mr. Bailey, our Vice
President, whose biographical information appears under "Proposal 1
- - Election of Directors," set forth below are each of our executive
officers and their ages as of September 30, 2006.June 2, 2008.
Current
Position
Name Age Position Held Since
- --------------------------------------------------------------------------
Randy J. Kempf 53 Chief Executive Officer and 2006Jeffrey M. Tetzlaff 52 President 2008
David Davis 4142 Chief Financial Officer and 2001
Vice President of Finance
Bradley Danbom 30 Vice President of Sales and 2004
Marketing
Alan Bailey 4950 Vice President of Engineering 2005
and Director
Lisa Bailey 4749 Vice President of OperationsSystems and 2005
Randy Kempf was hired as our President and Chief Executive Officer
in September, 2006. Prior to joining Cycle Country, Mr. Kempf
served as Senior Vice President of Operations for Wessels Company of
Greenwood, Indiana, which manufactures HVAC pressure vessels, for
about a year. Mr. Kempf served as President and Chief Operating
Officer for Contacts, Metals & Welding, Inc. (CMW) of Indianapolis,
Indiana from 2001 to 2005. As President of CMW, Randy turned the
company around and led the company to successive years of
profitability and growth after just two years at the helm. He
achieved 10% revenue growth during the 2000-2004 recession and
implemented many cost reducing manufacturing processes, such as 5S,
Lean, and Kaizen. Mr. Kempf also provided leadership as CMW became
ISO 9001:2000 certified.
David Davis, who became our Chief Financial Officer on October 1,
2001, has been a CPA for 16 years. Prior to joining Cycle Country,
Mr. Davis served as Controller for a Midwest lawn and garden power
equipment distributor from 1997-2001 and worked for several years
prior to that as a CPA at a Midwest regional public accounting firm.
Bradley Danbom has been a member of our sales department since 1997.
Mr. Danbom was appointed Vice President of Sales and Marketing in
2004. Bradley Danbom is the son of Jim Danbom and Jan Danbom, two
of our Directors.
Lisa Bailey became a Vice President for Cycle Country with the
purchase of Simonsen Iron Works, Inc. on April 29, 2005. Ms. Bailey
was a Vice President at Simonsen Iron Works for the 6 years prior to
the acquisition. She was also part owner of the business. As Vice
President, Ms. Bailey was in charge of personnel and operations.
Prior to joining Simonsen Iron Works in 1995, She worked for The
Gazette Company, a regional daily newspaper, with circulation of
approximately 66,000, and commercial printer, for 14 years where she
attained the position of pre-press manager. Lisa Bailey is the
spouse of Alan Bailey.
Chairman of the Board
F.L. Miller was unanimously elected by all Directors at the May 20,
2008, Board of Directors Meeting to the position of Chairman of the
Board. As Chairman, F.L. Miller will carry out the various duties
and responsibilities of that position.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the total compensation paid to
or accrued for the fiscal years ended September 30, 2007, 2006, 2005, and
20042005 to our Chief Executive Officer. The Company did not haveOfficer and any other officers whose
total compensation exceeded $100,000, as defined in Item 402 of
Regulation S-B, who were serving as executive officers at the end of
our last fiscal year.
Annual Compensation
Non-Equity Nonqualified
Name and Incentive DeferredOther Restricted Securities All
Principal Fiscal Annual Stock Option Plan CompensationUnderlying LTIP Other
Position Year Salary Bonus Compensation Awards AwardsOptions Payouts Compensation Earnings Compensation Total
- ---------------------------------------------------------------------------------------------------------------
Ronald Hickman,
President 2006 155,523 12,6032007 0 0 0 0 12,889(1) 181,0150 0 698 (2)
2006 155,523 12,603 500 (1) 0 0 0 12,889(3)
2005 150,000 41,125 500 (1) 0 0 0 0 10,287(2) 201,412
2004 150,000 69,370 0 0 0 0 9,636(3) 229,00610,287 (4)
John Gault,
Interim President 2006 101,000 0 0 0 0 0 0
101,000
Randy Kempf,
President 2007 187,000 0 25 (1) 25,000 (6) 0 0 6,979 (5)
2006 3,596 0 25,000(4)0 25,000 (6) 0 0 0
Lisa Bailey,
Vice President 2007 100,000 0 500 (1) 0 0 0 0
28,596
Alan Bailey,
Vice President 2007 100,000 9,272 500 (1) 0 0 0 17,097 (7)
2006 113,462 13,748 500 (1) 0 0 0 0 11,533(5) 138,743
11,033 (8)
(1) Comprised of $500 Christmas bonus, $1,805 value of personal use
of company auto and $10,584 paid for health insurance.
(2) Comprised of $500 Christmas bonus, of $1,771 value of personal
use of company auto and $8,016 paid for health insurance.
(3) Comprised of $500 Christmas bonus, of $1,705 value of personal
use of company auto and $7,431 paid for health insurance.
(4) Comprised of the first of four issuances for a total
of$100,000 in restricted company common stock provided in the
employment agreement as an inducement to employment incentive.
(5) Comprised of $500 Christmas bonus,.
(2) Comprised of $698 value of personal use of company auto.
(3) Comprised of $1,805 value of personal use of company auto and
$10,584 paid for health insurance.
(4) Comprised of $1,771 value of personal use of company auto and
$8,016 paid for health insurance.
(5) Comprised of $6,979 paid for health insurance.
(6) Comprised of the first and second of four issuances for a
total of$100,000 in restricted company common stock provided in the
employment agreement as an inducement to employment incentive.
(7) Comprised of $6,513 value of personal use of company auto and
$10,584 paid for health insurance.
(8) Comprised of $449 value of personal use of company auto and
$10,584 paid for health insurance.
Stock Option Grants in the past fiscal year
We have not issued any grants of stock or stock options in the past
fiscal year.
Employment Agreements
We have entered into employment agreements with certain of our
key executives as follows:
We entered into anare currently negotiating a formal employment agreement
with Ron Hickman,Jeffrey Tetzlaff, our President, effective August 1, 2001who started employment with
the company on April 7, 2008. The items anticipated to be in the
agreement are; that it will be for a period of five years under
which we had hired him to continue as our President. The agreement
called for Mr. Hickman to receive an annual income of $150,000 per
year plus a bonus equal to three percent (3%) of our net income
before taxes and bonus. The agreement also provided for Mr. Hickman
to receive standard benefits such as health insurance coverage,
401(k) retirement savings plan, sick and vacation time, cafeteria
plan, and use of an automobile. Mr. Hickman was relieved of his
duties as President and CEO at the end of March, 2006 but was paid
according to his employment agreement through the end of his
agreement which was August 22, 2006.
We entered into an employment agreement with Jim Danbom, our
former President, effective August 1, 2001 for ainitial period of three years,
under which we hired him to continue asannual income will be $150,000 per year, options for 500,000 common
shares set at the April 7th closing price of $1.68, a consultant on an "as
needed" basis. This agreement was renewed by action of the board of
directors in fiscal 2004 for an additional$25,000 signing
bonus, and 50,000 common shares vesting over a three years.year period.
The agreement callswill also provide for Mr. Danbom to receive an annual income of
$75,000 per year andTetzlaff to receive standard
benefits such as health insurance coverage, 401(k) retirement
savings plan, sick and vacation time, and use ofcafeteria plan. Mr.
Tetzlaff currently is working for the company under an automobile.oral
agreement based on the items anticipated to be in the formal
employment agreement listed above.
We entered into an employment agreement with Alan Bailey, our
Vice President of Engineering, effective May 1, 2005 for a period of
five years under which we have hired him to serve as our Vice
President. The agreement calls for Mr. Bailey to receive an annual
income of $125,000 per year plus a bonus equal to one and one-half
percent (1.5%) of our net income before taxes and bonus. The
agreement also provides for Mr. Bailey to receive standard benefits
such as health insurance coverage, 401(k) retirement savings plan,
sick and vacation time, cafeteria plan, and use of an automobile.
Mr. Bailey's agreement was amended in the third quarter of fiscal
2006 to change his base salary to $100,000 per year.
We entered into an employment agreement with Lisa Bailey, our
Vice President of Operations, effective May 1, 2005 on a month to
month basis under which we have hired her to serve as our Vice
President. The agreement calls for Ms. Bailey to receive an annual
income of $75,000 per year. The agreement also provides for Ms.
Bailey to receive standard benefits such as health insurance
coverage, 401(k) retirement savings plan, sick and vacation time,
and cafeteria plan. Ms. Bailey's agreement was amended in the third
quarter of fiscal 2006 to change her base salary to $100,000 per
year.
We entered into an employment agreement with Randy Kempf, our
President, effective September 11, 2006 for a period of three years
under which we have hired him to be our President. The agreement
contains automatic three year extensions as long as there is no
action by the Board to remove Mr. Kempf and Mr. Kempf remains fully
capable to carry out the duties of President and CEO. The agreement
calls for Mr. Kempf to receive an annual income of $187,500 per year
plus a bonus equal to three percent (3%) of our pre-tax net income
growth over the average pre-tax net income of a three year base
(fiscal 2004, 2005, and 2006) beginning in fiscal 2007. The
agreement provides for a total of $100,000 in restricted Company
common stock with 25% issued upon the first day of employment and
25% issued each anniversary date for the next three years as an
employment bonus. The value of the entire restricted stock award
was determined by the closing price on Mr. Kempf's first day of
employment. The agreement also provides for Mr. Kempf to receive
standard benefits such as health insurance coverage, 401(k)
retirement savings plan, sick and vacation time, and cafeteria plan.
AUDIT COMMITTEE REPORT
The responsibilities of the Audit Committee are provided in its
Charter, which has been approved by the Board of Directors of the
Company. The Audit Committee Charter was most recently revised and
approved by the Board of Directors on December 18, 2002.May 20, 2008. A copy of the
Charter is attached to this Proxy Statement as Attachment A.
In fulfilling its oversight responsibilities with respect to
the September 30, 20062007 financial statements, the Audit Committee,
among other things, has:
* reviewed and discussed with management the Company's audited
financial statements as of and for the fiscal year ended
September 30, 2006,2007, including a discussion of the quality
and acceptability of our financial reporting and internal
controls;
* discussed with the Company's independent registered public
accounting firm, who is responsible for expressing an
opinion on the conformity of those audited financial
statements with generally accepted accounting principles,
its judgment as to the quality, not just the acceptability,
of the accounting principles utilized, the reasonableness of
significant accounting judgments and estimates and such
other matters as are required to be discussed with the Audit
Committee under generally accepted auditing standards,
including Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, by the
Auditing Standards Board of American Institute of Certified
Public Accountants;
* discussed with the Company's independent registered public
accounting firm its independence from management and the
Company, received and reviewed the written disclosures and
the letter from the Company's independent registered public
accounting firm required by Independence Standard No. 1,
Independence Discussions with Audit Committees, as amended,
by the Independence Standards Board, and considered the
compatibility of non-audit services with the Company's
independent registered public accounting firm's
independence; and
* discussed with the Company's independent registered public
accounting firm the overall scope and plans for its audit.
Based on the reviews and discussions referred to above, the
Audit Committee has recommended to the Board of Directors that the
audited financial statements referred to above be included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 2006.2007.
Respectfully submitted,
AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS OF
CYCLE COUNTRY ACCESSORIES CORP.
L.G. Hancher, Jr., Chairman of the
Audit Committee
F.L. Miller, Member
Rod Simonson, Member
Notwithstanding anything set forth in any of our previous
filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934 that might incorporate future filings, including this
proxy statement, in whole or in part, the preceding report shall not
be deemed incorporated by reference in any such filings.
COMPARISON OF CYCLE COUNTRY ACCESSORIES CORP. CUMULATIVE TOTAL RETURN
Set forth below is a line graph presentation comparing the
yearly percentage change in cumulative total shareholder returns
since June 8, 2002 on an indexed basis with the Russell 2000 Index
and our SIC Code Index, which is a nationally recognized industry
standard index.
The following graph assumes the investment of $100 in Cycle
Country Accessories Corp.. Common Stock, the Russell 2000 Index and
our SIC Code Index as well as the reinvestment of all dividends.
There can be no assurance that the performance of the Company's
stock will continue into the future with the same or similar trend
depicted in the graph below.
CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
From time to time, the Company has engaged in various
transactions with certain of its directors, executive officers and
other affiliated parties. The following paragraphs summarize certain
information concerning certain transactions and relationships that
have occurred during the past fiscal year or are currently proposed.
PriorIn fiscal 2007, we provided contract manufacturing services to
becoming an officer or director, management of the
company engaged John GaultAERO Race Wheels, Inc. which generated approximately $77,700 in
October 2004 to consult with
management on cost reduction initiatives and projects. The
consulting agreement calls for fees to be paid to Mr. Gault based on
cost savings achieved over a one year period. Half of the fee is
paid upon implementation of the cost saving project and the other
half is payablerevenue. There was approximately $19,700 in 4 to 6 months from the implementation date.
Consulting fees paid to Mr. Gault throughaccounts receivable at
September 30, 2006 were
$71,570.2007. AERO Race Wheels is owned by F.L. Miller who is
one of our directors.
All future transactions between the Company and its officers,
directors, principal shareholders and affiliates must be approved by
a majority of the independent and disinterested outside directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's executive officers, the Company's
directors and persons who own more than 10% of a registered class of
the Company's equity securities to file reports of ownership and
changes in ownership with the SEC. Such individuals are required by
SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its review of the copies of
such forms furnished to the Company or written representations that
no reports were required to be filed, the Company believes that all
such persons complied with all Section 16(a) filing requirements
applicable to them with respect to transactions during the 20062007
fiscal year except as set forth below.
The Company is aware of the following individual directors,
officers or beneficial owners of more than ten percent of the
Company's Common Stock that, during the fiscal year 20062007 or for the
fiscal year 2006,2007, failed to file on a timely basis reports required
by Section 16(a) of the Securities Exchange Act of 1934.
F. L. Miller Form 5
L.G. Hancher Jr. Form 5None
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointed
Henjes, Conner, & Williams, P.C. ("Henjes"), as the Company's
independent registered public accounting firm to audit the
consolidated financial statements of the Company for the current
fiscal year ending September 30, 2007.2008.
Henjes' reports on the financial statements of the Company for
the past twothree fiscal years contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope, or accounting principles.
In connection with the Company's audit for each of the twothree
most recent fiscal years, there were no disagreements with Henjes on
any matter of accounting principles or practices, financial
statement disclosures or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Henjes, would
have caused Henjes to make reference thereto in their report in the
financial statements for such years.
During the Company's twothree most recent fiscal years, there were
no reportable events as defined in Registration S-B Item
304(a)(1)(v).
A proposal will be presented at the Annual Meeting to ratify
the appointment of Henjes as the Company's independent registered
public accounting firm. One or more of the representatives of that
firm are expectedencouraged to be present at the Annual Meeting to respond
to appropriate questions and to make a statement if they desire to
do so. Neither the Company's By-laws nor its other governing
documents or law require shareholder ratification of the selection
of Henjes as the Company's independent registered public accounting
firm. However, the Audit Committee is submitting the selection of
Henjes to the shareholders for ratification as a matter of good
corporate practice. If the shareholders fail to ratify the
selection, the Audit Committee will reconsider whether or not to
retain that firm. Even if the selection is ratified, the Audit
Committee in its discretion may direct the appointment of different
independent auditors at any time during the year if the Audit
Committee determines that such a change would be in the best
interests of the Company and its shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF HENJES, CONNER, & WILLIAMS, P.C. AS THE COMPANY'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
AUDIT AND NON-AUDIT FEES
BILLED BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FeesThe following table sets forth the fees billed to the Company for
the fiscal years ended September 30, 2007 and 2006 and 2005 were as
follows:by Henjes,
Conner, & Williams, P.C.:
Fiscal 2007 Fiscal 2006
Fiscal 2005
Audit Fees $ 52,292 $ 42,790$49,811 $52,292
Audit-Related Fees 2,358 1,803 7,267
Tax Fees 5,630 10,180 10,865
All Other Fees 2,538 --
7,308------- -------
Total Fees $ 64,274 $ 68,230$60,337 $64,274
A description of the types of services provided in each category is
as follows:
Audit Fees-Includes audit of the Company's annual financial
statements, review of the Company's quarterly reports on Form 10-
QSB, and consents and assistance with and review of registration
statements filed with the SEC.
Audit-Related Fees-Includes agreed upon procedures related to the
acquisition and merger of Simonsen Iron Works, testing key balances
and subsidiary ledgers due to conversion from old ERP software to
new ERP software, and accounting consultations related to GAAP and
the application of GAAP to proposed transactions.
Tax Fees-Includes tax compliance, tax advice and planning.
All Other Fees-Includes time and research related to pre- and post-
acquisition issues of Simonsen Iron Works, business segment and
property valuations, and other miscellaneous research and assistance
provided to the Company.
Audit Committee Pre-Approval Policy
-----------------------------------
To ensure the independence of the Company's independent auditor and
to comply with applicable securities laws, listing standards, and
the Audit Committee charter, the Audit Committee is responsible for
reviewing, deliberating and, if appropriate, pre-approving all
audit, audit-related, and non-audit services to be performed by the
Company's independent auditors. For that purpose, the Audit
Committee has established a policy and related procedures regarding
the pre-approval of all audit, audit-related, and non-audit services
to be performed by the Company's independent auditor (the "Policy").
The Policy provides that the Company's independent auditor may not
perform any audit, audit-related, or non-audit service for the
Company, subject to those exceptions that may be permitted by
applicable law, unless: (1) the service has been pre-approved by the
Audit Committee, or (2) the Company engaged the independent auditor
to perform the service pursuant to the pre-approval provisions of
the Policy. In addition, the Policy prohibits the Audit Committee
from pre-approving certain non-audit services that are prohibited
from being performed by the Company's independent auditor by
applicable securities laws. The Policy also provides that the Chief
Financial Officer will periodically update the Audit Committee as to
services provided by the independent auditor. With respect to each
such service, the independent auditor provides detailed back-up
documentation to the Audit Committee and the Chief Financial
Officer.
The Audit Committee appointed Henjes, Conner, & Williams, P.C. as
the Company's independent accountants to audit the consolidated
financial statements of the Company for the fiscal years ending
September 30, 20062007 and 2005.2006. Henjes, Conner, & Williams, P.C. have
been Cycle Country's independent accountants since January 16, 2004.
PROPOSAL 3 - APPROVAL OF 2007 INCENTIVE COMPENSATION PLAN
On May 7, 2007, our Board approved the 2007 Incentive Compensation
Plan (the "Plan") and its submission to the stockholders for their
approval. The Plan is intended to reward participants by providing
opportunities to acquire our common stock. The Plan is designed to
attract and retain non-employee directors, to strengthen the
alignment of their interests with stockholder interests, and to
reward outstanding contributions to our development and financial
success.
The Plan authorizes the granting of awards, including shares of our
common stock, in any combination of the following:
* stock options, including incentive stock options and nonqualified
stock options;
* stock appreciation rights ("SARs");
* stock awards, restricted stock awards and other awards
denominated or paid in common stock;
* restricted stock units (which may include dividend equivalents);
* cash awards; and
* performance awards
The following summary of our 2007 Incentive Compensation Plan is
qualified by reference to the full text of the Plan, which is
attached as Appendix I to this proxy statement. The Plan is not tax-
qualified under Section 401(a) of the Internal Revenue Code and is
not subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended.
Eligibility
- -----------
Employees eligible for awards under the Plan are employees of our
Company and subsidiaries who are selected by the committee appointed
by our Board to administer the Plan. All of our non-employee
directors are also eligible for awards under the Plan.
Authorized Shares and Limits
- ----------------------------
Subject to stockholder approval, we have reserved a total of
500,000 shares of our common stock for issuance in connection
with the Plan. The number of shares authorized to be issued under
the Plan, as well as individual limits and exercise prices, are
subject to adjustment for stock dividends, stock splits,
recapitalizations, mergers, or similar corporate events.
The following limitations apply to any awards made under the Plan:
* no employee may be granted, during any calendar year, stock
options or SARs that are exercisable for or relate to more than
20,000 shares of common stock;
* no director may be granted, during any calendar year, stock
options or SARs that are exercisable for or relate to more than
20,000 shares of common stock;
* no director may be granted, during any calendar year, stock
awards or restricted stock unit awards covering or relating to
more than 20,000 shares of common stock; and
Potential Dilution
- ------------------
The maximum number of shares that may be issued under the Plan
represents approximately 6.8 percent of the total number of shares
of our common stock outstanding on May 7, 2007, excluding treasury
shares. The closing price per share of our common stock on May 7,
2007 as reported on the AMEX was $2.15.
Administration of the Plan
- --------------------------
Our Board will designate an independent committee to determine the
types of employee awards made under the Plan and to designate the
employees who are to be the recipients of the awards. The committee
will administer the Plan with respect to employee awards. The
committee has full and exclusive power to administer and interpret
the Plan. The committee may adopt guidelines for administering the
Plan as it deems necessary or proper.
The committee may also correct any defect, supply any omission or
reconcile any inconsistency in the Plan or in any award. Any
decision of the committee in the interpretation and administration
of the Plan is within its sole and absolute discretion and is final,
conclusive, and binding on all parties concerned.
The committee may, in its discretion, extend or accelerate the
exercisability of, accelerate the vesting of, or eliminate or make
less restrictive any restrictions contained in any award, waive any
restriction or other provision of the Plan or in any award, or
otherwise amend or modify any award in a manner that either is not
adverse to the participant or is consented to by the participant.
With respect to director awards, our Board determines the types of
director awards made under the Plan, and has the same powers, duties
and authority as the committee has with respect to employee awards.
The committee and our Board may delegate to our chief executive
officer and other senior officers their authority under the Plan.
Either may engage third-party administrators to carry out
administrative functions under the Plan.
Awards that are stock options or SARs may not be repriced, replaced,
or regranted through cancellation or modified without stockholder
approval (except if in connection with a change in our
capitalization) if the effect would be to reduce the underlying
grant price.
Employee Award Terms
- --------------------
All awards to employees under the Plan are subject to the terms,
conditions, and limitations as determined by the committee. Awards
may be made in combination with, in replacement of, or as
alternatives to, grants under the Plan or other plans established by
our Company or subsidiaries, including plans of an acquired entity.
A stock option granted to an employee under the Plan may consist of
either an incentive stock option that complies with the requirements
of Section 422 of the Internal Revenue Code or a nonqualified stock
option that does not comply with those requirements. Incentive stock
options and nonqualified stock options must have an exercise price
per share that is not less than the fair market value of the common
stock on the date of grant and, subject to certain adjustment
provisions of the Plan that apply only on specified corporate
events, the exercise price of an option granted under the Plan may
not be decreased. The term of a stock option may not extend more
than ten years after the date of grant.
A stock appreciation right may be granted under the Plan with
respect to all or a portion of the shares of common stock subject to
a stock option or may be granted separately. The exercise price of
an SAR may not be less than the fair market value of the common
stock on the date of grant and its term shall extend no more than
ten years from the date of grant.
Stock awards consist of restricted and non-restricted grants of
common stock. Rights to dividends may be extended to and made part
of any stock award at the discretion of the committee. The committee
may also establish rules and procedures for the crediting of
interest or other earnings on deferred cash payments. Subject to
earlier vesting upon death, disability, retirement or change in
control, stock awards settled in stock that are not performance-
based will vest over a minimum period of three years, and stock
awards settled in stock that are performance-based will vest over a
minimum period of one year.
Restricted stock unit awards consist of awards of units denominated
in common stock. Rights to dividend equivalents may be extended to
and made part of any restricted stock unit award at the discretion
of the committee. The committee may also establish rules and
procedures for the crediting of interest or other earnings on
deferred cash payments. Subject to earlier vesting upon death,
disability, retirement or change in control, restricted stock unit
awards settled in stock that are not performance-based will vest
over a minimum period of three years, and restricted stock unit
awards settled in stock that are performance-based will vest over a
minimum period of one year.
Cash awards, which consist of grants denominated in cash, may also
be granted to employees under the Plan.
Performance awards consist of grants made subject to the attainment
of one or more performance goals and may be intended to meet the
requirements of qualified performance-based compensation under
Section 162(m) of the Internal Revenue Code. The goals intended to
satisfy Section 162(m) of the Internal Revenue Code must be
established by the committee prior to the earlier of:
* 90 days after the commencement of the period of service to which
the performance goals relate, and
* the lapse of 25% of the period of service.
A performance goal intended to meet the requirements of Section
162(m) of the Internal Revenue Code may be based upon one or more
business criteria that apply to the employee, one or more business
units of the Company, or the Company as a whole, and may include any
of the following: stock price measures (including but not limited to
growth measures and total stockholder return); earnings per share
(actual or targeted growth); earnings before interest, taxes,
depreciation, and amortization ("EBITDA"); economic value added
("EVA"); net income measures (including but not limited to income
after capital costs and income before or after taxes); operating
income; cash flow measures; return measures (including but not
limited to return on capital employed); operating measures
(including but not limited to refinery throughput, oil and gas
reserves, and production); expense targets (including but not
limited to finding and development costs and general and
administrative expenses); margins; reserve replacement ratio,
reserve additions, or other reserve level measures; refined product
measures; and corporate values measures (including but not limited
to diversity commitment, ethics compliance, environmental, and
safety). Prior to the payment of any performance award based on the
achievement of performance goals pursuant to Section 162(m) of the
Internal Revenue Code, the committee must certify in writing that
the applicable performance goals and any material terms were, in
fact, satisfied.
Non-Employee Director Award Terms
- ---------------------------------
All awards to our non-employee directors under the Plan are subject
to the terms, conditions, and limitations as determined by our
Board. Awards may be made in combination with, in replacement of, or
as alternatives to, grants under the Plan or other plans of our
Company or subsidiaries, including plans of an acquired entity.
A stock option granted to a director under the Plan may consist of a
nonqualified stock option that does not comply with the requirements
of Section 422 of the Internal Revenue Code. Nonqualified stock
options must have an exercise price per share that is not less than
the fair market value of the common stock on the date of grant and,
subject to certain adjustment provisions of the Plan that apply only
on specified corporate events, the exercise price of an option
granted under the Plan may not be decreased. The term of a stock
option may not extend more than ten years after the date of grant.
A stock appreciation right may be granted under the Plan with
respect to all or a portion of the shares of common stock subject to
a stock option or may be granted separately. The exercise price of
an SAR may not be less the fair market value of the common stock on
the date of grant and its term shall extend no more than ten years
from the date of grant.
Stock awards consist of restricted and non-restricted grants of
common stock. Rights to dividends may be extended to and made part
of any stock award at the discretion of our Board. Our Board may
also establish rules and procedures for the crediting of interest or
other earnings on deferred cash payments.
Restricted stock unit awards consist of awards of units denominated
in common stock. Rights to dividend equivalents may be extended to
and made part of any restricted stock unit award at the discretion
of our Board. Our Board may also establish rules and procedures for
the crediting of interest or other earnings on deferred cash
payments.
Performance awards consist of grants made subject to the attainment
of one or more performance goals. Performance awards to non-employee
directors are not required to meet the requirements of qualified
performance-based compensation under Section 162(m) of the Internal
Revenue Code. Our Board determines the terms, conditions,
limitations and performance goals with respect to performance awards
to our non-employee directors.
Amendment of the Plan
- ---------------------
The Board may amend or terminate the Plan in response to any legal
requirements or for any other purpose permitted by law; provided,
however, that our Board must approve such Board action, no
amendment that would adversely affect the rights of a participant
may be made without the consent of the participant, and no amendment
may be effective prior to its approval by the stockholders of the
Company if legally required. Notwithstanding the foregoing, an award
may be modified to meet the requirements of Section 409A of the
Internal Revenue Code, and a participant is deemed to have consented
to any such modification. We intend to make awards under the Plan
that comply with the requirements of Section 409A of the Internal
Revenue Code.
Federal Income Tax Consequences of the Plan
- -------------------------------------------
The following is a discussion of material U.S. federal income tax
consequences to participants in the Plan, based on the law as in
effect on the date of this proxy statement. This discussion is
limited, and does not cover state, local, or foreign tax treatment
of participation in the Plan. Differences in participants' financial
situations may cause tax consequences of participation in the Plan
to vary.
Participants will not realize taxable income upon the grant of a
nonqualified stock option or SAR. Upon the exercise of a
nonqualified stock option or SAR, the participant will recognize
ordinary income. In the case of employees, the ordinary income is
subject to tax withholding by the Company, in an amount equal to the
excess of the amount of cash and the fair market value of the common
stock received on the date of exercise over the exercise price, if
any, paid. The participant will generally have a tax basis in any
shares of common stock received pursuant to the exercise of an SAR,
or pursuant to the cash exercise of a nonqualified stock option,
that equals the fair market value of the shares on the date of
exercise. Generally, we will be entitled to a deduction for U.S.
federal income tax purposes that corresponds as to timing and amount
with the compensation income recognized by the participant.
Participants will not have taxable income upon the grant of an
incentive stock option. Upon the exercise of an incentive stock
option, the participant will not have taxable income, although the
excess of the fair market value of the shares of common stock
received upon exercise of the incentive stock option over the
exercise price will increase the alternative minimum taxable income
of the participant, which may cause the participant to incur
alternative minimum tax. The payment of any alternative minimum tax
due to the exercise of an incentive stock option is allowed as a
credit against the participant's regular tax liability in a later
year to the extent the participant's regular tax liability is in
excess of the alternative minimum tax for that year.
Upon the disposition of stock received upon exercise of an incentive
stock option that has been held for the requisite holding period
(generally one year from the date of exercise and two years from the
date of grant), the participant will generally recognize capital
gain or loss equal to the difference between the amount received in
the disposition and the exercise price paid. However, if a
participant disposes of stock that has not been held for the
requisite holding period, the participant will recognize ordinary
income in the year of the disqualifying disposition to the extent
that the fair market value of the stock at the time of exercise of
the incentive stock option, or, if less, the amount realized in the
case of an arm's-length disqualifying disposition to an unrelated
party, exceeds the exercise price paid by the participant for the
stock. The participant will also recognize capital gain, or,
depending on the holding period, additional ordinary income, to the
extent the amount realized in the disqualifying disposition exceeds
the fair market value of the stock on the exercise date. If the
exercise price paid for the stock exceeds the amount realized in the
disqualifying disposition, in the case of an arm's-length
disposition to an unrelated party, the excess would ordinarily be a
capital loss.
We are generally not entitled to any federal income tax deduction
upon the grant or exercise of an incentive stock option, unless the
participant makes a disqualifying disposition of the stock. If a
participant makes a disqualifying disposition, we will generally be
entitled to a tax deduction that corresponds as to timing and amount
with the compensation income recognized by the participant.
A participant will recognize ordinary compensation income upon
receipt of cash pursuant to a cash award or performance award or, if
earlier, at the time the cash is otherwise made available for the
employee to draw upon it.
A participant will not have taxable income upon the grant of a stock
award in the form of units denominated in common stock but rather
will generally recognize ordinary compensation income at the time
the participant receives common stock or cash in satisfaction of a
stock unit award in an amount equal to the fair market value of the
common stock or cash received. In general, a participant will
recognize ordinary compensation income as a result of the receipt of
common stock pursuant to a stock award or performance award in an
amount equal to the fair market value of the common stock when the
stock is received; provided, however, that if the stock is not
transferable and is subject to a substantial risk of forfeiture when
received, the participant will recognize ordinary compensation
income in an amount equal to the fair market value of the common
stock when it first becomes transferable or is no longer subject to
a substantial risk of forfeiture, unless the participant makes an
election to be taxed on the fair market value of the common stock
when the stock is received.
An employee will be subject to tax withholding for federal, and
generally for state and local, income taxes at the time the employee
recognizes income with respect to common stock or cash received
pursuant to a cash award, performance award, stock award, or stock
unit award. Dividends that are received by a participant prior to
the time that the common stock is taxed to the participant are taxed
as additional compensation, not as dividend income. A participant's
tax basis in the common stock received will equal the amount
recognized by the participant as compensation income, and the
participant's holding period in the shares will commence on the date
income is recognized.
Generally, we will be entitled to a deduction for U.S. federal
income tax purposes that corresponds as to timing and amount with
the compensation income recognized by the participant. Section
162(m) of the Internal Revenue Code provides that certain
compensation received in any year by a "covered employee" in excess
of $1,000,000 is non-deductible by the Company for federal income
tax purposes. Section 162(m) provides an exception, however, for
"performance-based compensation." The Plan permits the committee to
structure grants and awards made under the Plan to "covered
employees" as performance-based compensation that is exempt from the
limitations of Section 162(m). However, the committee may award
compensation that is or may become non-deductible, and expects to
consider whether it believes the grants are in the best interest of
the Company, balancing tax efficiency with long-term strategic
objectives.
Awards Under the Plan
- ---------------------
Subject to and commencing upon stockholder approval of the Plan,
each non-employee director will receive a quarterly non-retainer
grant of common stock valued at $500 under the Plan for each board
meeting attended.
All other awards under the Plan will be granted at the discretion of
the Board. Therefore, the total benefits that will be received by
any particular person or group under the Plan are not determinable
at this time.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
APPROVAL OF THE 2007 INCENTIVE COMPENSATION PLAN.
ANNUAL REPORT
The Annual Report of the Company for the 20062007 fiscal year
accompanies this Notice of Annual Meeting and Proxy Statement.
STOCKHOLDER PROPOSALS FOR 20082009 ANNUAL MEETING
Shareholder proposals intended to be presented at the 20082009
Annual Meeting of Shareholders must be received by the Company not
later than January 25, 200823, 2009, for inclusion in the Company's proxy
statement and proxy relating to that meeting. Upon receipt of any
such proposal, the Company will determine whether or not to include
such proposal in the proxy statement and proxy in accordance with
regulations governing the solicitation of proxies.
Shareholder proposals and nominations for directors made
outside of Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, may be considered at the 20082009 Annual Meeting of
Shareholders only if timely notice is given to the Company by
January 31, 2008.2009. Such notice must include a description of the
proposed business and the reasons therefore. The Board of Directors
or the presiding officer at the Annual Meeting may reject any such
proposals that are not made in accordance with these procedures or
that are not a proper subject for shareholder action in accordance
with applicable law. These requirements are separate from the
procedural requirements a shareholder must meet to have a proposal
included in the Company's proxy statement.
COMMUNICATION WITH THE BOARD OF DIRECTORS
A shareholder who wishes to communicate with our Board of
Directors, specific individual directors or the non-employee
directors as a group, may do so by directing a written request
addressed to such director(s) in care of the Corporate Secretary at
the address appearing on the first page of this proxy statement.
Such communication will be directed to the intended director, group
of directors or the entire Board of Directors, as the case may be.
HOUSEHOLDING OF MATERIALS
In some instances, only one copy of this proxy statement or annual
report is being delivered to multiple shareholders sharing an
address, unless the Company has received instructions from one or
more of the shareholders to continue to deliver multiple copies. We
will deliver promptly upon oral or written request a separate copy
of the proxy statement or annual report, as applicable, to any
shareholder at your address. If you wish to receive a separate copy
of the proxy statement or annual report, you may call us at (712)
262-4191 or send a written request to Cycle Country Accessories
Corp., 1701 38th Ave. West, PO Box 257, Spencer, Iowa 51301,
Attention: Secretary. Alternatively, shareholders sharing an address
who now receive multiple copies of the proxy statement or annual
report may request delivery of a single copy also by calling us at
the number or writing to us at the address listed above.
OTHER BUSINESS
The Board of Directors knows of no other business that will be
presented for consideration at the Annual Meeting other than as set
forth in the Notice that accompanies this Proxy Statement. However,
if any other matters properly come before the meeting, it is the
intention of the persons named in the accompanying proxy to vote on
such matters in accordance with their best judgment.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR FISCAL
YEAR 20062007 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
AVAILABLE TO SHAREHOLDERS, WITHOUT CHARGE, UPON WRITTEN REQUEST TO
CYCLE COUNTRY ACCESSORIES CORP., 1701 38TH AVE. W., PO BOX 257,
SPENCER, IOWA, 51301, ATTENTION: SECRETARY. SHAREHOLDERS MAY ALSO
ACCESS THE FORMS 10-KSB AND THE COMPANY'S OTHER FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION THROUGH THE COMPANY'S WEBSITE AT
WWW.CYCLECOUNTRY.COM.
By Order of the Board of Directors,
/s/ David Davis
---------------
Secretary
Spencer, Iowa
June 1, 20072, 2008
PROXY
CYCLE COUNTRY ACCESSORIES CORP.
ANNUAL MEETING OF SHAREHOLDERS
JUNE 26, 200724, 2008
The undersigned hereby appoints Mr. Randy J. Kempf,Jeffrey M. Tetzlaff, with full
power of substitution, or if Mr. KempfTetzlaff is unable or declines to
exercise such rights hereunder, the undersigned appoints Mr. David
Davis, with full power of substitution, the true and lawful attorney
and proxy of the undersigned to vote all the shares of Common Stock,
$0.001 par value per share, of Cycle Country Accessories Corp. owned
by the undersigned at the Annual Meeting of Shareholders to be held
at the Village West Resort & Conference Center, Spirit Lake, Iowa
51360, beginning at 5:30 p.m. local time, June 26, 2007,24, 2008, and at any
adjournment thereof, on the following items of business as set forth
in the Notice of Annual Meeting and Proxy Statement:
1. ELECTION OF DIRECTORS:
Nominees: Jim Danbom L.G. (Bob) Hancher Jan DanbomAlan Bailey and Jeffrey Tetzlaff
[ ] FOR allthe nominees (or such other person designated by the
Board of Directors to replace any unavailable nominee)
[ ] WITHHOLD AUTHORITY to vote for allthe nominees
[ ] FOR ALL EXCEPT ______________________ (Instruction: To
withhold authority to vote for any individual nominee,
mark the "FOR ALL EXCEPT" box and write that nominee's
name in the space provided.)
2. RATIFICATION OF THE ENGAGEMENT OF HENJES, CONNER, &
WILLIAMS, P.C. AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM:
[ ] FOR [ ] AGAINST [ ] ABSTENTION
3. APPROVAL OF 2007 INCENTIVE COMPENSATION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTENTION
4. OTHER MATTERS
In his discretion with respect to the transaction of such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO CHOICE
IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE DIRECTORS NOMINATED
BY THE BOARD OF DIRECTORS, FOR THE RATIFICATION OF HENJES CONNER, &
WILLIAMS, P.C., FOR APPROVAL OF THE INCENTIVE COMPENSATION PLAN, AND IN THE DISCRETION OF THE PROXIES ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF.
Number of shares of Common Stock owned DATE _______________ __, 2007___________________ , 2008
On May 7, 20072008 and voted hereunder:
__________________________________________ _____________________________
Please date and sign exactly as your name appears on the envelope.
In the case of joint holders, each should sign. When signing as
attorney, executor, etc., give full title. If signer is a
corporation, execute in full corporate name by authorized officer.
Appendix 1
CYCLE COUNTRY ACCESSORIES CORP.
2007 INCENTIVE COMPENSATION PLAN
1. Plan. The Cycle Country Accessories Corp. 2007
Incentive Compensation Plan (the "Plan") was adopted by the Board
of Directors of Cycle Country Accessories Corp. (the
"Corporation"), to reward certain officers and senior management
level employees of the Corporation and its Subsidiaries and Non-
employee Directors of the Corporation by providing for certain
cash benefits and by enabling them to acquire shares of Common
Stock of the Corporation.
2. Objectives. The Plan is designed to attract and
retain officers and senior management employees of the
Corporation and its Subsidiaries, to attract and retain qualified
directors of the Corporation, to encourage the sense of
proprietorship of such officers, employees and directors and to
stimulate the active interest of such persons in the development
and financial success of the Corporation and its Subsidiaries.
These objectives are to be accomplished by making Awards under
this Plan and thereby providing Participants with a proprietary
interest in the growth and performance of the Corporation and its
Subsidiaries.
3. Definitions. As used herein, the terms set forth
below shall have the following respective meanings:
"Administrator" means (i) with respect to Employee
Awards, the Committee, and (ii) with respect to Director Awards,
the Board.
"Authorized Officer" means the Chief Executive Officer
of the Corporation (or any other senior officer of the
Corporation to whom he or she shall delegate the authority to
execute any Award Agreement, where applicable).
"Award" means an Employee Award or a Director Award.
"Award Agreement" means any Employee Award Agreement
or Director Award Agreement.
"Board" means the Board of Directors of the
Corporation.
"Cash Award" means an award denominated in cash.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" means the independent Committee of the
Board as is designated by the Board to administer the Plan.
"Common Stock" means Cycle Country Accessories Corp.
common stock, par value $0.0001 per share.
"Corporation" has the meaning set forth in paragraph 1
hereof.
"Director Award" means any Nonqualified Stock Option,
SAR, Stock Award, Restricted Stock Unit Award, Cash Award or
Performance Award granted, whether singly, in combination or in
tandem, to a Participant who is a Non-employee Director pursuant
to such applicable terms, conditions and limitations (including
treatment as a Performance Award) as the Board may establish in
order to fulfill the objectives of the Plan.
"Director Award Agreement" means a written agreement
setting forth the terms, conditions and limitations applicable to
a Director Award, to the extent the Board determines such
agreement is necessary.
"Dividend Equivalents" means, with respect to
Restricted Stock Units, an amount equal to all dividends and
other distributions (or the economic equivalent thereof) that are
payable to stockholders of record during the Restriction Period
on a like number of shares of Common Stock granted in the Award.
"Employee" means an officer or senior management level
employee of the Corporation or any of its Subsidiaries.
"Employee Award" means any Option, SAR, Stock Award,
Restricted Stock Unit Award, Cash Award or Performance Award
granted, whether singly, in combination or in tandem, to a
Participant who is an Employee pursuant to such applicable terms,
conditions and limitations (including treatment as a Performance
Award) as the Committee may establish in order to fulfill the
objectives of the Plan.
"Employee Award Agreement" means a written agreement
setting forth the terms, conditions and limitations applicable to
an Employee Award, to the extent the Committee determines such
agreement is necessary.
"Equity Award" means any Option, SAR, Stock Award, or
Performance Award (other than a Performance Award denominated in
cash) granted to a Participant under the Plan.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Fair Market Value" of a share of Common Stock means,
as of a particular date, (i) if Common Stock is listed on a
national securities exchange, the closing sales price per share
of such Common Stock on the consolidated transaction reporting
system for the principal national securities exchange on which
shares of Common Stock are listed on that date, or, if there
shall have been no such sale so reported on that date, on the
next succeeding date on which such a sale is so reported, or, at
the discretion of the Committee, the price prevailing on the
exchange at the time of exercise, (ii) if Common Stock is not so
listed but is quoted on the NASDAQ Stock Market, Inc., the
closing sales price per share of Common Stock reported by the
NASDAQ Stock Market, Inc. on that date, or, if there shall have
been no such sale so reported on that date, on the next
succeeding date on which such a sale is so reported or, at the
discretion of the Committee, the price prevailing on the NASDAQ
Stock Market, Inc. at the time of exercise, (iii) if Common Stock
is not so listed or quoted, the closing bid price on that date,
or, if there are no quotations available for such date, on the
next succeeding date on which such quotations shall be available,
as reported by the NASDAQ Stock Market, Inc. or, if not reported
by the NASDAQ Stock Market, Inc., by the National Quotation
Bureau Incorporated or (iv) if Common Stock is not publicly
traded, the most recent value determined by an independent
appraiser appointed by the Corporation for such purpose.
"Grant Date" means the date an Award is granted to a
Participant pursuant to the Plan.
"Grant Price" means the price at which a Participant
may exercise his or her right to receive cash or Common Stock, as
applicable, under the terms of an Award.
"Incentive Stock Option" means an Option that is
intended to comply with the requirements set forth in Section 422
of the Code.
"Non-employee Director" means an individual serving as
a member of the Board who is not an Employee of the Corporation
or any of its Subsidiaries.
"Nonqualified Stock Option" means an Option that is
not an Incentive Stock Option.
"Option" means a right to purchase a specified number
of shares of Common Stock at a specified Grant Price, which may
be an Incentive Stock Option or a Nonqualified Stock Option.
"Participant" means an Employee or a Non-employee
Director to whom an Award has been granted under this Plan.
"Performance Award" means an Award made pursuant to
this Plan that is subject to the attainment of one or more
performance goals.
"Performance Goal" means a standard established by the
Committee to determine in whole or in part whether a Qualified
Performance Award shall be earned.
"Plan" has the meaning set forth in paragraph 1
hereof.
"Qualified Performance Award" means a Performance
Award made to a Participant who is an Employee that is intended
to qualify as qualified performance-based compensation under
Section 162(m) of the Code, as described in Section 8(vi)(B) of
the Plan.
"Restricted Stock" means Common Stock that is
restricted or subject to forfeiture provisions.
"Restricted Stock Unit" means a unit evidencing the
right to receive in specified circumstances one share of Common
Stock or equivalent value in cash that is restricted or subject
to forfeiture provisions.
"Restricted Stock Unit Award" means an Award in the
form of Restricted Stock Units.
"Restriction Period" means a period of time beginning
as of the Grant Date of an Award of Restricted Stock or
Restricted Stock Units and ending as of the date upon which the
Common Stock subject to such Award is issued (if not previously
issued) or is no longer restricted or subject to forfeiture
provisions.
"Retirement" means termination on or after the time at
which the Employee is eligible for retirement under from Cycle
Country Accessories Corp. However, the term Retirement does not
include an event immediately following which the Participant
remains an Employee.
"Stock Appreciation Right" or "SAR" means a right to
receive a payment, in cash or Common Stock, equal to the excess
of the Fair Market Value or other specified valuation of a
specified number of shares of Common Stock on the date the right
is exercised over a specified Grant Price.
"Stock Award" means an Award in the form of, or
denominated in, or by reference to, shares of Common Stock,
including an award of Restricted Stock.
"Subsidiary" means (i) in the case of a corporation,
any corporation of which the Corporation directly or indirectly
owns shares representing 50% or more of the combined voting power
of the shares of all classes or series of capital stock of such
corporation which have the right to vote generally on matters
submitted to a vote of the stockholders of such corporation and
(ii) in the case of a partnership or other business entity not
organized as a corporation, any such business entity of which the
Corporation directly or indirectly owns 50% or more of the
voting, capital or profits interests (whether in the form of
partnership interests, membership interests or otherwise).
4. Eligibility.
(a) Employees. Employees eligible for the grant of
Employee Awards under this Plan are those selected by the
Committee and approved by the Board.
(b) Directors. Members of the Board eligible for the
grant of Director Awards under this Plan are those who are
Non-employee Directors.
5. Common Stock Available for Awards. Subject to the
provisions of paragraph 16 hereof, no Award shall be granted if
it shall result in the aggregate number of shares of Common Stock
issued under the Plan plus the number of shares of Common Stock
covered by or subject to Awards then outstanding (after giving
effect to the grant of the Award in question) to exceed 500,000
shares. No more than 500,000 shares of Common Stock shall be
available for Awards other than Options or SARs. The number of
shares of Common Stock that are the subject of Awards under this
Plan that are forfeited, terminated or expire unexercised shall
again immediately become available for Awards hereunder.
Notwithstanding the foregoing, in the case of any SAR settled
upon exercise by delivery of shares of Common Stock, the full
number of shares with respect to which the SAR was exercised
shall count against the number of shares of Common Stock reserved
for issuance and shall not again become available under this
Plan. The number of shares of Common Stock reserved for issuance
under the Plan shall not be increased by (i) any shares tendered
or Award surrendered in connection with the purchase of shares of
Common Stock upon the exercise of an Option as described in
paragraph 12, or (ii) any shares of Common Stock deducted from an
Award payment in connection with the Corporation's tax
withholding obligations as described in paragraph 13 or (iii) any
shares of Common Stock purchased by the Corporation with proceeds
collected in connection with the exercise of an Option. The
Board or the Committee may from time to time adopt and observe
such procedures concerning the counting of shares against the
Plan maximum as it may deem appropriate. The Board and the
appropriate officers of the Corporation shall from time to time
take whatever actions are necessary to file any required
documents with governmental authorities, stock exchanges and
transaction reporting systems to ensure that shares of Common
Stock are available for issuance pursuant to Awards.
6. Administration.
(a) Authority of the Committee. This Plan shall be
administered by the Committee except as otherwise provided
herein. Subject to the provisions hereof, the Committee
shall have full and exclusive power and authority to
administer this Plan and to take all actions that are
specifically contemplated hereby or are necessary or
appropriate in connection with the administration hereof.
The Committee shall also have full and exclusive power to
interpret this Plan and to adopt such rules, regulations
and guidelines for carrying out this Plan as it may deem
necessary or proper, all of which powers shall be exercised
in the best interests of the Corporation and in keeping
with the objectives of this Plan. Subject to paragraph 6(d)
hereof, the Committee may, in its discretion, provide for
the extension of the exercisability of an Employee Award,
accelerate the vesting or exercisability of an Employee
Award or otherwise amend or modify an Employee Award in any
manner that is (i) not adverse to the Participant to whom
such Employee Award was granted, (ii) consented to by such
Participant or (iii) authorized by paragraph 16(c) hereof;
provided, however, that no such action shall permit the
term of any Option to be greater than 10 years from the
applicable Grant Date, and receives Board approval. The
Committee may correct any defect or supply any omission or
reconcile any inconsistency in this Plan or in any Award in
the manner and to the extent the Committee deems necessary
or desirable to further the Plan purposes, with Board
approval. Any decision of the Committee with respect to
Employee Awards in the interpretation and administration of
this Plan shall lie within its sole and absolute discretion
and shall be final, conclusive and binding on all parties
concerned.
(b) Indemnification. No member of the Committee or
officer of the Corporation to whom the Committee has
delegated authority in accordance with the provisions of
paragraph 7 of this Plan shall be liable for anything done
or omitted to be done by him or her, by any member of the
Committee or by any officer of the Corporation in
connection with the performance of any duties under this
Plan, except for his or her own willful misconduct or as
expressly provided by statute.
(c) Authority of the Board. The Board shall have the
same powers, duties, and authority to administer the Plan
with respect to Director Awards as the Committee retains
with respect to Employee Awards as described above.
(d) Prohibition on Repricing of Awards. No Option or
SAR may be repriced, replaced, regranted through
cancellation or modified without stockholder approval
(except in connection with a change in the Corporation's
capitalization or a transaction as contemplated in
paragraph 14 hereof), if the effect would be to reduce the
Grant Price for the shares underlying such Award.
7. Delegation of Authority. The Committee may delegate
to the Chief Executive Officer and to other senior officers of
the Corporation its authority under this Plan pursuant to such
conditions or limitations as the Committee may establish with
respect to Employee Awards. The Board may delegate to the Chief
Executive Officer and to other senior officers of the Corporation
its administrative functions under this Plan with respect to
Director Awards. The Committee and Board, as applicable may
engage or authorize the engagement of a third party administrator
to carry out administrative functions under the Plan.
8. Employee Awards. (a) The Committee shall
determine, and the Board must approve, the type or types of
Employee Awards to be made under this Plan and shall designate
from time to time the Employees who are to be the recipients of
such Awards. Each Employee Award shall be evidenced in such
communications as the Committee deems appropriate, including in
an Employee Award Agreement, shall contain such terms, conditions
and limitations as shall be determined by the Committee in its
sole discretion, and may be signed by an Authorized Officer for
and on behalf of the Corporation. Employee Awards may consist of
those listed in this paragraph 8(a) and may be granted singly, in
combination or in tandem. Employee Awards may also be granted in
combination or in tandem with, in replacement of, or as
alternatives to, grants or rights under this Plan or any other
employee plan of the Corporation or any of its Subsidiaries,
including the plan of any acquired entity. All or part of an
Award may be subject to conditions established by the Committee.
Upon the termination of employment by a Participant who is an
Employee, any unexercised, deferred, unvested or unpaid Awards
shall be treated as provided in the terms and conditions of the
applicable Award.
(i) Option. An Employee Award may be
in the form of an Option. An Option awarded to an
Employee pursuant to this Plan may consist of either
an Incentive Stock Option or a Nonqualified Stock
Option. On the Grant Date, the Grant Price of an
Option shall be not less than the Fair Market Value of
the Common Stock subject to such Option. The term of
the Option shall extend no more than 10 years after
the Grant Date. Options may not include provisions
that "reload" the option upon exercise. Subject to
the foregoing provisions, the terms, conditions and
limitations applicable to any Options awarded to
Employees pursuant to this Plan, including the Grant
Price, the term of the Options, the number of shares
subject to the Option and the date or dates upon which
they become exercisable, shall be determined by the
Committee.
(ii) Stock Appreciation Rights. An
Employee Award may be in the form of an SAR. On the
Grant Date, the Grant Price of an SAR shall be not
less than the Fair Market Value of the Common Stock
subject to such SAR. The holder of a tandem SAR may
elect to exercise either the option or the SAR, but
not both. The exercise period for an SAR shall extend
no more than 10 years after the Grant Date. SARs may
not include provisions that "reload" the SAR upon
exercise. Subject to the foregoing provisions, the
terms, conditions and limitations applicable to any
SARs awarded to Employees pursuant to this Plan,
including the Grant Price, the term of any SARs and
the date or dates upon which they become exercisable,
shall be determined by the Committee.
(iii) Stock Award. An Employee Award may
be in the form of a Stock Award. The terms,
conditions and limitations applicable to any Stock
Award, including, but not limited to, vesting or other
restrictions, shall be determined by the Committee.
Any Stock Award settled in Common Stock that (a) is
not a Performance Award shall have a minimum
Restriction Period of three years from the date of
grant or (b) is a Performance Award shall have a
minimum Restriction Period of one year from the date
of grant; provided, however, that (1) the Committee
may provide for earlier vesting upon a change in
control or upon an Employee's termination of
employment by reason of death, disability or
Retirement, (2) such three-year or one-year minimum
Restriction Period, as applicable, shall not apply to
a Stock Award that is granted in lieu of salary or
bonus, and (3) vesting of a Stock Award may occur
incrementally over the three-year or one-year minimum
Restriction Period, as applicable.
(iv) Restricted Stock Unit Awards. An
Employee Award may be in the form of a Restricted
Stock Unit Award. The terms, conditions and
limitations applicable to a Restricted Stock Unit
Award, including, but not limited to, the Restriction
Period and the right to Dividend Equivalents, shall be
determined by the Committee. Any Restricted Stock Unit
Award settled in Common Stock that (a) is not a
Performance Award shall have a minimum Restriction
Period of three years from the date of grant or (b) is
a Performance Award shall have a minimum Restriction
Period of one year from the date of grant; provided,
however, that (1) the Committee may provide for
earlier vesting upon a change in control or upon an
Employee's termination of employment by reason of
death, disability or Retirement, (2) such three-year
or one-year minimum Restriction Period, as applicable,
shall not apply to a Restricted Stock Unit Award that
is granted in lieu of salary or bonus, and (3) vesting
of a Restricted Stock Unit Award may occur
incrementally over the three-year or one-year minimum
Restriction Period, as applicable.
(v) Cash Award. An Employee Award may
be in the form of a Cash Award. The terms, conditions
and limitations applicable to any Cash Awards granted
to Employees pursuant to this Plan, including, but not
limited to, vesting or other restrictions, shall be
determined by the Committee.
(vi) Performance Award. Without limiting
the type or number of Employee Awards that may be made
under the other provisions of this Plan, an Employee
Award may be in the form of a Performance Award. The
terms, conditions and limitations applicable to an
Employee Award that is a Performance Award shall be
determined by the Committee. The Committee shall set
performance goals in its discretion which, depending
on the extent to which they are met, will determine
the value and/or amount of Performance Awards that
will be paid out to the Employee and/or the portion
that may be exercised.
(A) Nonqualified Performance
Awards. Performance Awards granted to Employees
that are not intended to qualify as qualified
performance-based compensation under Section
162(m) of the Code shall be based on achievement
of such goals and be subject to such terms,
conditions and restrictions as the Committee or
its delegate shall determine.
(B) Qualified Performance
Awards. Performance Awards granted to Employees
under the Plan that are intended to qualify as
qualified performance-based compensation under
Section 162(m) of the Code shall be paid, vested
or otherwise deliverable solely on account of the
attainment of one or more pre-established,
objective Performance Goals established by the
Committee prior to the earlier to occur of (x) 90
days after the commencement of the period of
service to which the Performance Goal relates or
(y) the lapse of 25% of the period of service (as
scheduled in good faith at the time the goal is
established), and in any event while the outcome
is substantially uncertain. A Performance Goal
is objective if a third party having knowledge of
the relevant facts could determine whether the
goal is met. Such a Performance Goal may be based
on one or more business criteria that apply to
the Employee, one or more business segments,
units, or divisions of the Corporation, or the
Corporation as a whole, and if so desired by the
Committee, by comparison with a peer group of
companies. A Performance Goal may include one or
more of the following:
* Stock price measures
(including but not limited to growth
measures and total stockholder return);
* Earnings per share
(actual or targeted growth);
* Earnings before interest,
taxes, depreciation, and amortization
("EBITDA");
* Economic value added ("EVA");
* Net income measures
(including but not limited to income after
capital costs and income before or after taxes);
* Operating income;
* Cash flow measures;
* Return measures
(including but not limited to return on
capital employed);
* Operating measures
(including but not limited to production
efficiency, production, scrap, and
shipments)
* Expense targets
(including but not limited to direct and
indirect costs and general and
administrative expenses);
* Margins;Financial ratios;
* Quality measures; and
* Corporate values measures
(including but not limited to ethics
compliance, environmental, and safety).
Unless otherwise stated, such a Performance Goal
need not be based upon an increase or positive
result under a particular business criterion and
could include, for example, maintaining the
status quo or limiting economic losses (measured,
in each case, by reference to specific business
criteria). In interpreting Plan provisions
applicable to Performance Goals and Qualified
Performance Awards, it is the intent of the Plan
to conform with the standards of Section 162(m)
of the Code and Treasury Regulation Section 1.162-
27(e)(2)(i), as to grants to those Employees
whose compensation is, or is likely to be,
subject to Section 162(m) of the Code, and the
Committee in establishing such goals and
interpreting the Plan shall be guided by such
provisions. Prior to the payment of any
compensation based on the achievement of
Performance Goals, the Committee must certify in
writing that applicable Performance Goals and any
of the material terms thereof were, in fact,
satisfied. Subject to the foregoing provisions,
the terms, conditions and limitations applicable
to any Qualified Performance Awards made pursuant
to this Plan shall be determined by the
Committee.
(b) Notwithstanding anything to the contrary
contained in this Plan, the following limitations shall
apply to any Employee Awards made hereunder:
(i) no Employee may be granted, during
any calendar year, Employee Awards consisting of
Options or SARs that are exercisable for more than
20,000 shares of Common Stock;
(ii) no Employee may be granted, during
any calendar year, Employee Awards consisting of Stock
Awards or Restricted Stock Units covering or relating
to more than 20,000 shares of Common Stock (the
limitation set forth in this clause (ii) and the
limitation set forth in clause (i) above being
hereinafter collectively referred to as "Stock Based
Awards Limitations"); and
(iii) no Employee may be granted
Qualified Performance Awards consisting of cash in
respect of any calendar year having a maximum payment
value determined on the Grant Date in excess of
$50,000.
9. Director Awards. The Board may grant Director
Awards to the Non-employee Directors of the Corporation from time
to time in accordance with this paragraph 9. Director Awards may
consist of those listed in this paragraph 9 and may be granted
singly, in combination or in tandem. The Board may grant Director
Awards to the Non-employee Directors of the Corporation from time
to time in accordance with this paragraph 9. Director Awards may
consist of those listed in this paragraph 9 and may be granted
singly, in combination or in tandem. Each Director Award may, in
the discretion of the Board, be embodied in a Director Award
Agreement, which shall contain such terms, conditions and
limitations as shall be determined by the Board in its sole
discretion.
(a) Option. A Director Award may be in the form of an
Option. An Option awarded to a Non-employee Director
pursuant to this Plan may consist of a Nonqualified Stock
Option. On the Grant Date, the Grant Price of an Option
shall be not less than the Fair Market Value of the Common
Stock subject to such Option. The term of the Option shall
extend no more than 10 years after the Grant Date. Options
may not include provisions that "reload" the option upon
exercise. Subject to the foregoing provisions, the terms,
conditions and limitations applicable to any Options
awarded to Non-employee Directors pursuant to this Plan,
including the Grant Price, the term of the Options, the
number of shares subject to the Option and the date or
dates upon which they become exercisable, shall be
determined by the Board.
(b) Stock Appreciation Rights. A Director Award may
be in the form of an SAR. On the Grant Date, the Grant
Price of an SAR shall be not less than the Fair Market
Value of the Common Stock subject to such SAR. The holder
of a tandem SAR may elect to exercise either the option or
the SAR, but not both. The exercise period for an SAR
shall extend no more than 10 years after the Grant Date.
SARs may not include provisions that "reload" the SAR upon
exercise. Subject to the foregoing provisions, the terms,
conditions and limitations applicable to any SARs awarded
to Non-employee Directors pursuant to this Plan, including
the Grant Price, the term of any SARs and the date or dates
upon which they become exercisable, shall be determined by
the Board.
(c) Stock Awards. A Director Award may be in the
form of a Stock Award. Terms, conditions and limitations
applicable to any Stock Awards granted to a Non-employee
Director pursuant to this Plan shall be determined by the
Board.
(d) Restricted Stock Unit Awards. A Director Award
may be in the form of a Restricted Stock Unit Award. The
terms, conditions and limitations applicable to a
Restricted Stock Unit Award, including, but not limited to,
the Restriction Period and the right to Dividend
Equivalents, shall be determined by the Board.
(e) Performance Awards. Without limiting the type
or number of Director Awards that may be made under the
other provisions of this Plan, a Director Award may be in
the form of a Performance Award. Terms, conditions and
limitations applicable to any Performance Awards granted to
a Non-employee Director pursuant to this Plan shall be
determined by the Board. The Board shall set performance
goals in its discretion which, depending on the extent to
which they are met, will determine the value and/or amount
of Performance Awards that will be paid out to the Non-
employee Director.
10. Non-United States Participants. The Committee may
grant awards to persons outside the United States under such
terms and conditions as may, in the judgment of the Committee, be
necessary or advisable to comply with the laws of the applicable
foreign jurisdictions and, to that end, may establish sub-plans,
modified option exercise procedures and other terms and
procedures. Notwithstanding the above, the Committee may not
take any actions hereunder, and no Awards shall be granted, that
would violate the Exchange Act, the Code, any securities law, any
governing statute, or any other applicable law.
11. Payment of Awards.
(a) General. Payment of Awards may be made in the
form of cash or Common Stock, or a combination thereof, and
may include such restrictions as the Administrator shall
determine, including, but not limited to, in the case of
Common Stock, restrictions on transfer and forfeiture
provisions. For an Award of Restricted Stock, the
certificates evidencing the shares of such Restricted Stock
(to the extent that such shares are so evidenced) shall
contain appropriate legends and restrictions that describe
the terms and conditions of the restrictions applicable
thereto. For an Award of Restricted Stock Units, the
shares of Common Stock that may be issued at the end of the
Restriction Period shall be evidenced by book entry
registration or in such other manner as the Administrator
may determine.
(b) Deferral. With the approval of the Administrator,
amounts payable in respect of Awards may be deferred and
paid either in the form of installments or as a lump-sum
payment; provided, however, that if deferral is permitted,
each provision of the Award shall be interpreted to permit
the deferral only as allowed in compliance with the
requirements of Section 409A of the Code, and any provision
that would conflict with such requirements shall not be
valid or enforceable. The Administrator may permit
selected Participants to elect to defer payments of some or
all types of Awards in accordance with procedures
established by the Administrator. Any deferred payment
pursuant to an Award, whether elected by the Participant or
specified by the Award Agreement or the terms of the Award
or by the Administrator, may be forfeited if and to the
extent that the Award Agreement or the terms of the Award
so provide.
(c) Dividends and Interest. Rights to (i) dividends
will be extended to and made part of any Stock Award and
(ii) Dividend Equivalents may be extended to and made part
of any Restricted Stock Unit, subject in each case to such
terms, conditions and restrictions as the Administrator may
establish. The Administrator may also establish rules and
procedures for the crediting of interest on deferred cash
payments for Awards.
12. Option Exercise. The Grant Price shall be paid in full
at the time of exercise in cash or, if elected by the
Participant, the Participant may purchase such shares by means of
tendering Common Stock or surrendering another Award, including
Restricted Stock, valued at Fair Market Value on the date of
exercise, or any combination thereof. The Committee shall
determine acceptable methods for Participants to tender Common
Stock or other Awards; provided that any Common Stock that is or
was the subject of an Award may be so tendered only if it has
been held by the Participant for at least six months. The
Committee may provide for procedures to permit the exercise or
purchase of such Awards by use of the proceeds to be received
from the sale of Common Stock issuable pursuant to an Award
(including "cashless exercise"). Unless otherwise provided in
the applicable Award Agreement, in the event shares of Restricted
Stock are tendered as consideration for the exercise of an
Option, a number of the shares issued upon the exercise of the
Option, equal to the number of shares of Restricted Stock used as
consideration thereof, shall be subject to the same restrictions
as the Restricted Stock so submitted as well as any additional
restrictions that may be imposed by the Committee. The Committee
may adopt additional rules and procedures regarding the exercise
of Options from time to time, provided that such rules and
procedures are approved by the Board and not inconsistent with
the provisions of this paragraph.
13. Taxes. The Corporation or its designated third party
administrator shall have the right to deduct applicable taxes
from any Employee Award payment and withhold, at the time of
delivery or vesting of cash or shares of Common Stock under this
Plan, an appropriate amount of cash or number of shares of Common
Stock or a combination thereof for payment of taxes or other
amounts required by law or to take such other action as may be
necessary in the opinion of the Corporation to satisfy all
obligations for withholding of such taxes. The Committee may also
permit withholding to be satisfied by the transfer to the
Corporation of shares of Common Stock theretofore owned by the
holder of the Employee Award with respect to which withholding is
required. If shares of Common Stock are used to satisfy tax
withholding, such shares shall be valued based on the Fair Market
Value when the tax withholding is required to be made.
14. Amendment, Modification, Suspension or Termination of
the Plan. The Committee may, with Board approval, amend, modify,
suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other
purpose permitted by law, except that (i) any amendment,
modification, suspension, or termination of paragraph 9 of this
Plan shall be approved by the Board, (ii) no amendment or
alteration that would adversely affect the rights of any
Participant under any Award previously granted to such
Participant shall be made without the consent of such Participant
and (ii) no amendment or alteration shall be effective prior to
its approval by the stockholders of the Corporation to the extent
such approval is required by applicable legal requirements or the
requirements of the securities exchange on which the
Corporation's stock is listed.
15. Assignability. Unless otherwise determined by the
Administrator and expressly provided in the Award Agreement, no
Award or any other benefit under this Plan shall be assignable or
otherwise transferable except by will or the laws of descent and
distribution. The Administrator may, in its sole discretion,
permit a Participant to designate a beneficiary with respect to
an Award, and in the event that a beneficiary designation
conflicts with an assignment by will, the beneficiary designation
will prevail. The Administrator may prescribe and include in
applicable Award Agreements or the terms of the Award other
restrictions on transfer. In no event may an Option or SAR be
transferred for consideration. Any attempted assignment of an
Award or any other benefit under this Plan in violation of this
paragraph 13 shall be null and void.
16. Adjustments.
(a) The existence of outstanding Awards shall not
affect in any manner the right or power of the Corporation
or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other
changes in the capital stock of the Corporation or its
business or any merger or consolidation of the Corporation,
or any issue of bonds, debentures, preferred or prior
preference stock (whether or not such issue is prior to, on
a parity with or junior to the existing Common Stock) or
the dissolution or liquidation of the Corporation, or any
sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding of any
kind, whether or not of a character similar to that of the
acts or proceedings enumerated above.
(b) In the event of any subdivision or consolidation
of outstanding shares of Common Stock, declaration of a
dividend payable in shares of Common Stock or other stock
split, then (i) the number of shares of Common Stock
reserved under this Plan, (ii) the number of shares of
Common Stock covered by outstanding Awards, including,
without limitation, Options, in the form of Common Stock or
units denominated in Common Stock, (iii) the Grant Price or
other price in respect of such Awards, (iv) the appropriate
Fair Market Value and other price determinations for such
Awards, and (v) the Stock Based Awards Limitations shall
each be proportionately adjusted by the Board as
appropriate to reflect such transaction. In the event of
any other recapitalization or capital reorganization of the
Corporation, any consolidation or merger of the Corporation
with another corporation or entity, the adoption by the
Corporation of any plan of exchange affecting Common Stock
or any distribution to holders of Common Stock of
securities or property (other than normal cash dividends or
dividends payable in Common Stock), the Board shall make
appropriate adjustments to (i) the number of shares of
Common Stock covered by Awards, including, without
limitation, Options, in the form of Common Stock or units
denominated in Common Stock, (ii) the Grant Price or other
price in respect of such Awards, (iii) the appropriate Fair
Market Value and other price determinations for such
Awards, and (iv) the Stock Based Awards Limitations to
reflect such transaction; provided that such adjustments
shall only be such as are necessary to maintain the
proportionate interest of the holders of the Awards and
preserve, without increasing, the value of such Awards.
(c) In the event of a corporate merger,
consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Board may
make such adjustments to Awards or other provisions for the
disposition of Awards as it deems equitable, and shall be
authorized, in its discretion, (1) to provide for the
substitution of a new Award or other arrangement (which, if
applicable, may be exercisable for such property or stock
as the Board determines) for an Award or the assumption of
the Award, regardless of whether in a transaction to which
Section 424(a) of the Code applies, (2) to provide, prior
to the transaction, for the acceleration of the vesting and
exercisability of, or lapse of restrictions with respect
to, the Award and, if the transaction is a cash merger,
provide for the termination of any portion of the Award
that remains unexercised at the time of such transaction,
or (3) to cancel any such Awards and to deliver to the
Participants cash in an amount that the Board shall
determine in its sole discretion is equal to the fair
market value of such Awards on the date of such event,
which in the case of Options or SARs shall be the excess of
the Fair Market Value of Common Stock on such date over the
Grant Price of such Award.
17. Restrictions. No Common Stock or other form of payment
shall be issued with respect to any Award unless the Corporation
shall be satisfied based on the advice of its counsel that such
issuance will be in compliance with applicable federal and state
securities laws. Certificates evidencing shares of Common Stock
delivered under this Plan (to the extent that such shares are so
evidenced) may be subject to such stop transfer orders and other
restrictions as the Administrator may deem advisable under the
rules, regulations and other requirements of the Securities and
Exchange Commission, any securities exchange or transaction
reporting system upon which the Common Stock is then listed or to
which it is admitted for quotation and any applicable federal or
state securities law. The Administrator may cause a legend or
legends to be placed upon such certificates (if any) to make
appropriate reference to such restrictions.
18. Unfunded Plan. Insofar as it provides for Awards of
cash, Common Stock or rights thereto, this Plan shall be
unfunded. Although bookkeeping accounts may be established with
respect to Participants who are entitled to cash, Common Stock or
rights thereto under this Plan, any such accounts shall be used
merely as a bookkeeping convenience. The Corporation shall not
be required to segregate any assets that may at any time be
represented by cash, Common Stock or rights thereto, nor shall
this Plan be construed as providing for such segregation, nor
shall the Corporation, the Board or the Committee be deemed to be
a trustee of any cash, Common Stock or rights thereto to be
granted under this Plan. Any liability or obligation of the
Corporation to any Participant with respect to an Award of cash,
Common Stock or rights thereto under this Plan shall be based
solely upon any contractual obligations that may be created by
this Plan and any Award Agreement, and no such liability or
obligation of the Corporation shall be deemed to be secured by
any pledge or other encumbrance on any property of the
Corporation. Neither the Corporation nor the Board nor the
Committee shall be required to give any security or bond for the
performance of any obligation that may be created by this Plan.
19. Section 409A of the Code. It is intended that any
Awards under the Plan satisfy the requirements of Section 409A of
the Code to avoid imposition of applicable taxes thereunder.
Thus, notwithstanding anything in this Plan to the contrary, if
any Plan provision or Award under the Plan would result in the
imposition of an applicable tax under Section 409A of the Code
and related regulations and Treasury pronouncements, that Plan
provision or Award will be reformed to avoid imposition of the
applicable tax and no action taken to comply with Section 409A
shall be deemed to adversely affect the Participant's rights to
an Award.
20. Right to Employment. Nothing in the Plan or an Award
Agreement shall interfere with or limit in any way the right of
the Corporation to terminate any Participant's employment or
other service relationship at any time, nor confer upon any
Participant any right to continue in the capacity in which he or
she is employed or otherwise serves the Corporation.
21. Successors. All obligations of the Corporation under
the Plan with respect to Awards granted hereunder shall be
binding on any successor to the Corporation, whether the
existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the
Corporation.
22. Governing Law. This Plan and all determinations made
and actions taken pursuant hereto, to the extent not otherwise
governed by mandatory provisions of the Code or the securities
laws of the United States, shall be governed by and construed in
accordance with the laws of the State of Nevada.
23. Effectiveness. The Plan was approved by the Board on
May 7, 2007. The Plan will be submitted to the stockholders of
the Corporation for approval at the 2007 annual meeting of
stockholders and, if approved, will become effective as of July
1, 2007. If the stockholders of the Corporation should fail to
so approve this Plan at such meeting, this Plan shall terminate
and cease to be of any further force or effect, and all grants of
Awards hereunder, if any, shall be null and void.