AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT BETWEEN AMERICA’S CAR-MART, INC. AND T.J. FALGOUT, III Effective as of August 27, 2007
Exhibit
10.4
AMENDMENT
NO. 1 TO EMPLOYMENT
AGREEMENT
BETWEEN
AMERICA’S
CAR-MART, INC. AND X.X. XXXXXXX,
III
Effective
as of August 27,
2007
This
Amendment No. 1 to the Employment
Agreement (the “Agreement”) between America’s
Car-Mart, Inc., an Arkansas
Corporation (the “Company”) and X.X. Xxxxxxx, III (the “Associate”) is
made on or as of August 27,
2007.
W
I T N E S S E T H:
Whereas,
the Company and the Associate have
agreed to certain amendments to the Employment Agreement between the Company
and
the Associate dated on and as of May 1, 2006, as set forth
below;
NOW,
THEREFORE, in
consideration of the mutual covenants and promises contained herein, the
parties
hereto, each intending to be legally bound hereby, agree as
follows:
1. Original
Agreement. The original
Employment
Agreement between the Company and the Associate dated May 1, 2006 (the “Original
Agreement”) shall continue in full force and effect, except as otherwise amended
herein, and all defined terms contained in the Original Agreement shall continue
in full force and effect and shall apply to this Agreement, unless such terms
are otherwise specifically modified by this Agreement.
2. Termination
Without
Compensation. Section 10(a)
of the
Original Agreement is hereby deleted in its entirety and the following new
Section 10(a) is substituted therefor:
“10. Termination
Without
Compensation.
(a) The
Employment Term will
terminate as of the end of the term of this Agreement unless terminated earlier
in accordance with this Section 10, Section 11, Section 12, Section 13 or
Section 14.”
3. Termination
Without
Cause. Section 11,
“Termination
Without
Cause,” of the Original
Agreement is amended as follows:
The
last sentence of Section 11 of the
Original Agreement is deleted in its entirety and the following new sentence
is
substituted therefor:
“If
the termination is effected by the
Company other than as described in Section 10 or Section 14, then under such
circumstances, the Associate’s Base Salary (but not any Bonus) then in effect
hereunder will continue to be payable in accordance with the Company’s payroll
policy throughout the Employment Term.”
4. Death
of the
Associate. Section 12,
“Death
of the
Associate,” of the
Original Agreement is hereby deleted in its entirety and the following new
Section 12 is substituted therefor:
“12. Death
of the
Associate. If the Associate
dies
during the Employment Term, (a) the Employment Term shall terminate, and
(b) within 60 days thereafter (or as soon thereafter as administratively
practicable), the Company will pay to the Associate’s estate the Associate’s
Base Salary (but not any Bonus unless earned prior to the date of death)
then in
effect through the end of the calendar month in which such death
occurs.”
5. Disability
of the
Associate. Section 13,
“Disability
of the
Associate,” of the
Original Agreement is hereby deleted in its entirety and the following new
Section 13 is substituted therefor:
“13. Disability
of the
Associate. If the Associate
becomes
disabled during the Employment Term, the Company may terminate the Employment
Term, in which event the Company will pay to the Associate the Associate’s Base
Salary (but not any Bonus) then in effect, payable in accordance with the
Company’s payroll policy through the Employment Term; provided, however, any
amounts payable to the Associate under the Company’s disability insurance policy
shall be deducted from the amounts payable to the Associate
hereunder. For the purposes of this Agreement, the Associate shall be
deemed to be disabled when he is deemed to be disabled under the Company’s
disability insurance policy or, if the Company does not have a disability
insurance policy for the Associate, the Associate shall be deemed disabled
if he
is unable to perform his services or discharge his duties as an Associate
of the
Company for 90 or more consecutive days or 120 days in the aggregate in any
12
month period. Any disability, as defined herein, shall not constitute
“cause” for purposes of Section 10(b) hereof.”
6. Change
in Control of the Parent
Company. Section 14,
“Change
in Control of the Parent
Company,” of the
Original Agreement shall be deleted in its entirety and the following new
Section 14 is substituted therefor:
“14. Change
in Control of the Parent
Company.
(a) In
the event of a change in control of the Parent Company while the Associate
is
still employed under this Agreement, on the date the change in control becomes
effective, (i) the Company shall pay to the Associate a lump sum cash payment
equal to 2.99 times the "base amount" with respect to the Associate’s
compensation, as such term is defined in Section 280G of the Internal Revenue
Code of 1986, as amended, and regulations and guidance issued thereunder
(the
"Code"); and (ii) all unvested Restricted Stock and stock options previously
granted by the Parent Company to the Associate shall vest in full, without
regard to the achievement of any applicable performance goals (collectively,
(i)
and (ii) are referred to as the "Change in Control Payments"). If,
prior to the change in control, the Company terminates the Employment Term
without Cause in connection with the change in control, then the Associate
shall
be treated for purposes of this Section 14 as being employed on the date
the
change in control becomes effective.
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(b) For
purposes of this Section 14,
“change
in control” of the Parent
Company shall mean:
(i) Change
in Ownership. The
acquisition by an individual, entity or group (within the meaning of Code
Section 409A) (a "Person") of ownership of stock of the Parent Company that,
together with stock held by such Person, constitutes more than 50% of the
total
fair market value or total voting power of the stock of the Parent
Company. However, if any Person is considered to own more than 50% of
the total fair market value of total voting power of the stock of the Parent
Company, the acquisition of additional stock by the same Person is not
considered to cause a change in ownership of the Parent Company (or to cause
a
change in the effective control of the Parent Company). An increase
in the percentage of stock owned by any one Person as a result of a transaction
in which the Parent Company acquires its stock in exchange for property will
be
treated as an acquisition of stock for purposes of this
paragraph. This paragraph applies only when there is a transfer of
stock of the Parent Company (or issuance of stock of the Parent Company)
and
stock in the Parent Company remains outstanding after the transaction;
or
(ii) Change
in Effective
Control. (A) the acquisition by an individual, entity or group
(within the meaning of Code Section 409A) (a "Person") during the 12-month
period ending on the date of the most recent acquisition by such Person,
of
ownership of stock of the Parent Company possessing 35% or more of the total
voting power of the stock of the Parent Company; or (B) the replacement of
a
majority of members of the Parent Company's Board of Directors during any
12-month period by directors whose appointment or election is not endorsed
by a
majority of the members of the Parent Company's Board of Directors prior
to the
date of the appointment or election.
A
change in effective control also may
occur in any transaction in which either of the two corporations involved
in the
transaction has a "Change in Ownership" under paragraph (i) or "Change in
Ownership of a Substantial Portion of the Company's Assets" under paragraph
(iii). If any one Person is considered to effectively control the
Parent Company, the acquisition of additional control of the Parent Company
by
the same Person is not considered to cause a change in the effective control
of
the Parent Company (or to cause a "Change in Ownership" of the Parent Company
within the meaning of paragraph (i) above); or
(iii) Change
in Ownership of a Substantial
Portion of Assets. The acquisition by an individual, entity or group
(within the meaning of Code Section 409A) (a "Person") during the 12-month
period ending on the date of the most recent acquisition by such Person,
of
assets from the Parent Company that have a total gross fair market value
equal
to or more than 40% of the total gross fair market value of all of the assets
of
the Parent Company immediately prior to such acquisition(s). For this
purpose, gross fair market value means the value of the assets of the Parent
Company, or the value of the assets being disposed of, determined without
regard
to any liabilities associated with such assets. No change in control
shall be deemed to have occurred in the event of a transfer to a related
person
or as described in Code Section 409A.
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The
definition of change in control in
this Subsection 14(b), and all other terms and provisions of this Agreement,
shall be interpreted at all times in such a manner as to comply with Code
Section 409A, meaning that no additional income tax is imposed on the Associate
pursuant to Code Section 409A(1)(a).
(c) The
Change in Control Payments shall be in addition to any other rights and benefits
for which the Associate is eligible, either by way of contract or with respect
to rights and benefits generally available to other executive officers or
Associates of the Company.
(d) If
it is determined that any payment, benefit or distribution of any type that
is
made by the Company, the Parent Company, any of their affiliates, or any
person,
in connection with a change in control or a termination of the Associate’s
employment thereafter, to or for the benefit of the Associate, whether paid
or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (the “Total Payments”), would be subject to excise taxes imposed by
Code Section 4999, or any interest or penalties with respect to such excise
tax
(such excise tax and any such interest or penalties are collectively referred
to
as the “Excise Tax”), then the Associate shall be entitled to receive a one-time
additional payment (a “Gross-Up Payment”) in an amount reasonably determined by
the Accounting Firm (as defined below) to be equal to such Excise
Tax. Payments under this Section are payable to the Associate even if
the Associate is not eligible for termination benefits under this Agreement,
and
are subject to the following rules:
(i) Determination
by Accountant. All determinations and calculations required to be
made under this Section shall be made by the Company's regular accounting
firm
(the “Accounting Firm”), which shall provide its determination (the
“Determination”), together with detailed supporting calculations regarding the
amount of any Gross-Up Payment and any other relevant matter, both to the
Company and the Associate within five days of the termination of the Associate’s
employment, if applicable, or such earlier time as is requested by the Company
or the Associate (if the Associate reasonably believes that any of the Total
Payments may be subject to the Excise Tax). If the Accounting Firm
determines that no Excise Tax is payable by the Associate, it shall furnish
the
Associate with a written statement that such Accounting Firm has concluded
that
no Excise Tax is payable (including the reasons therefor) and that the Associate
has substantial authority not to report any Excise Tax on the Associate’s
federal income tax return. If a Gross-Up Payment is determined to be
payable, it shall be paid to the Associate within five days after the
Determination is delivered to the Company or the Associate. Any
determination by the Accounting Firm shall be binding upon the Company and
the
Associate. In all events, gross-up payments shall be made by the end
of the calendar year following the calendar year in which the Associate remits
the excise taxes.
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(ii) Over-
and Underpayments. As a result of uncertainty in the application of
one or more Code provisions at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments not made
by the
Company should have been made (“Underpayment”), or that Gross-Up Payments will
have been made by the Company which should not have been made
(“Overpayments”). In either such event, the Accounting Firm shall
determine the amount of the Underpayment or Overpayment that has
occurred. In the case of an Underpayment, the amount of such
Underpayment shall be promptly paid by the Company to or for the benefit
of the
Associate. In the case of an Overpayment, the Associate shall, at the
direction and expense of the Company, take such steps as are reasonably
necessary (including the filing of returns and claims for refund), follow
reasonable instructions from, and procedures established by, the Company,
and
otherwise reasonably cooperate with the Company to correct such Overpayment,
provided, however, that (i) the Associate shall in no event be obligated
to
return to the Company an amount greater than the net after-tax portion of
the
Overpayment that the Associate has retained or has recovered as a refund
from
the applicable taxing authorities and (ii) this provision shall be interpreted
in a manner consistent with the intent of Subsection (a) above, which is
to make
the Associate whole, on an after-tax basis, from the application of the Excise
Tax, it being understood that the correction of an Overpayment may result
in the
Associate’s repaying to the Company an amount which is less than the
Overpayment.”
7. Compliance
with Code Section
409A. The following
new Section
14A, “Compliance with
Code Section 409A,” is
hereby added as a new Section to the Employment Agreement between the Company
and the Associate:
“Section
14A. Compliance with Code Section 409A.
(a) Termination
of Employment. “Termination of Employment” as used in this Agreement
to determine the date of any payment, shall mean the date of the Associate’s
“separation from service” as defined by Section 409A of the Code.
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(b) Specified
Employee Delay. If the Associate is a "specified employee" within the
meaning of Code Section 409A, any benefits or payments (including installments
and insurance premiums and contributions) which (a) constitute a "deferral
of
compensation" under Code Section 409A, (b) become payable as a result of
the
Associate's termination of employment for reasons other than death, and (c)
become due under this Agreement during the first six (6) months (or such
longer
period as required by Code Section 409A) after termination of employment
shall
be delayed and all such delayed payments (or delayed installments, premiums
or
contributions) shall be paid to the Associate in full in the seventh (7th)
month
after the date of termination and all subsequent payments (or installments)
shall be paid in accordance with their original payment schedule. To
the extent that any insurance premiums or other benefit contributions
constituting a "deferral of compensation" become subject to the above
delay, the Associate shall be responsible for paying such amounts directly
to
the insurer or other third party and shall receive reimbursement from Company
for such amounts in the seventh (7th) month as described
above. This paragraph shall not apply to payments made as a
result of a termination of employment that is the result of the Associate's
death.”
IN
WITNESS WHEREOF, the parties have
executed this Agreement on August ____, 2007, but this Agreement shall be
effective as of the date first written above.
COMPANY:
AMERICA’S
CAR-MART,
INC., an
Arkansas
corporation
By: _________________________________________________
Name: _______________________________________________
Title:
________________________________________________
ASSOCIATE:
____________________________________________________
X.X.
Xxxxxxx,
III
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