EMPLOYMENT AGREEMENT
Exhibit
10.6
This
Employment Agreement (the "Agreement") is made on or as of May 1, 2006 between
AMERICA’S CAR-MART, INC., an Arkansas corporation (the "Company") and X. X.
XXXXXXX, III (the "Associate").
W I T N E S S E T H:
WHEREAS,
the Associate is a Senior Executive Officer of the Company, and the Company
desires to continue the employment of the Associate, and the Associate desires
to provide his services to the Company upon the terms and conditions hereinafter
set forth;
WHEREAS,
the Company periodically sells its finance receivables to Colonial Auto Finance,
Inc., an Arkansas corporation ("Colonial") and services those loans on
Colonial’s behalf (collectively, the Company and Colonial are referred to herein
as "Car-Mart"); and
WHEREAS,
America’s Car-Mart, Inc., a Texas corporation (the "Parent Company") owns 100%
of the outstanding common stock of the Company;
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. Employment.
The
Company hereby continues the employment of the Associate as a Senior Executive
Officer of the Company, and the Associate accepts such employment. During the
term of employment under this Agreement (the "Employment Term"), the Associate
shall perform such duties as shall reasonably be required of a Senior Executive
Officer of the Company. The Associate further agrees to perform, without
additional compensation, such other work for the Company and for any subsidiary
or affiliate of the Company in which the Company has an interest, including,
without limitation, Colonial and the Parent Company, as the Board of Directors
of the Company or the Parent Company shall from time to time reasonably specify.
It is expressly agreed and understood between the Company and the Associate
that
the term of this Agreement is in no way dependent upon the
Associate’s
holding
or being elected to any office of the
Company. The Associate may be deemed an employee of, and paid by the Company,
Colonial, or the Parent Company, as reasonably determined by the
Company.
2. Performance.
The
Associate agrees to devote his entire business efforts to the performance of
his
duties hereunder, provided, however, that the Associate may engage in personal
investment activities not involving the Company so long as they do not interfere
with the performance of his duties hereunder.
3. Term.
Unless
otherwise terminated in accordance with Sections 10, 11, 12 or 13, the
Employment Term shall be for a term ending April 30, 2009. This Agreement shall
be automatically renewed for successive additional Employment Terms of one
(1)
year each unless notice of termination is given in writing by either party
to
the other party at least thirty (30) days prior to the expiration of the initial
Employment Term or any renewal Employment Term.
4. Compensation.
(a) The
basic
annual salary of the Associate for his employment services hereunder shall
be
$330,000 or such higher annual salary, if any, as shall be approved by the
Board
of Directors of the Parent Company from time to time (the "Base Salary"), which
shall be payable in accordance with the Company’s payroll policy. Nothing
contained herein shall affect or in any way limit the Associate’s rights as an
Associate of the Company to participate in any Company 401(k) profit sharing
plan or medical and life insurance programs offered by the Company to its
employees, all of which shall be available to the Associate to the same extent
as if this Agreement had not existed, and compensation received by the Associate
hereunder shall be in addition to the foregoing.
(b) In
addition to the Base Salary and fringe benefits described above, the Associate
shall be eligible to earn a bonus (the "Bonus") each fiscal quarter during
the
term hereof beginning with the fiscal quarter starting May 1, 2006 and ending
July 31, 2009. The Bonus shall be equal to one-half percent (½%) of the Parent
Company’s Net Income during such period.
"Parent
Company’s Net Income" shall be defined as the consolidated net income of the
Parent Company and its subsidiaries, calculated in accordance with generally
accepted accounting principles ("GAAP") in the United States of America as
determined by the Company and reviewed, or attested to, by the Company’s
independent certified public accountants. Provided, however, Parent Company’s
Net Income shall not include any gain or loss which may occur as a result of
the
sale of all or substantially all of (i) the assets of Car-Mart, or (ii) the
capital stock of the Company and/or Colonial, to a party unrelated to the
Company, Colonial or the Parent Company. The Bonus shall be paid each fiscal
quarter, within fifteen (15) days of the Parent Company’s filing of the related
Form 10Q or 10K for such fiscal quarter, based upon the Parent Company’s Net
Income for that fiscal quarter. Any Parent Company net loss in one fiscal
quarter shall be carried forward to the next fiscal quarter to reduce any net
income in the subsequent fiscal quarter or quarters until such net loss is
fully
absorbed. Any Bonus shall be deemed to be earned by the Associate if the
Associate was an employee of the Company as of the last day of the fiscal
quarter in question. At least fifty percent (50%) of the Bonus, net of
applicable taxes, shall be paid in shares of the Parent Company’s common stock
(the “Parent Company Stock”), and, at the Associate’s option, up to one hundred
percent (100%) of the Bonus, net of applicable taxes, may be paid in shares
of
Parent Company Stock. All of such shares of Parent Company Stock shall vest
immediately upon issuance.
(c) The
Parent Company will grant to the Associate, pursuant to the Parent Company’s
2005 Restricted Stock Plan (the “Restricted Stock Plan”) 15,000 shares
Restricted Stock, which shares of Restricted Stock shall vest in equal
proportions each year during the term of this Agreement, as more fully set
forth
in the Restricted Stock Agreement dated of even date herewith by and between
the
Associate and the Parent Company. All terms used in this Section 4(c) shall
have
the definitions set forth in the Restricted Stock Plan or the Restricted Stock
Agreement, as the case may be.
5. Expense
Account and Vacations.
Matters
relating to expense accounts for the Associate, vacations and the like shall
be
mutually agreed upon from time to time. However, the Company agrees to reimburse
the Associate for all expenses reasonably incurred by him on behalf of the
Company in accordance with the prevailing practice and policy of the Company.
In
addition, the Associate shall be entitled to that number of days of paid
vacation and paid sick leave as is consistent with the prevailing practice
and
policy of the Company for other employees in the same or similar position as
that held by the Associate hereunder.
6. Agreement
Not to Compete.
As an
inducement for the Company to enter into this Agreement, the Associate agrees
that for so long as he is employed by the Company, and for a period of one
(1)
year thereafter, he will not, within the States of Arkansas, Texas, Oklahoma,
Kentucky, Indiana, Missouri, Kansas, Tennessee, Mississippi, and Alabama,
directly or indirectly, in any capacity, render his services, engage or have
a
financial interest in any business which is competitive with any of those
business activities in which the Company was engaged during his employment
by
the Company, including, without limitation, the sale and financing of used
vehicles or any business which is substantially similar thereto. However, the
Associate may have a financial interest in a competitor of the Company if that
interest is in the form of ownership of less than one percent (1%) of the
outstanding stock of a company whose securities are listed on a national
exchange or quoted on the NASDAQ National Market System. If a court determines
the foregoing restrictions are too broad or otherwise unreasonable under
applicable law, including with respect to time or space, the court is hereby
requested and authorized by the parties hereto to revise the foregoing
restriction to include the maximum restrictions allowable under the applicable
law. For the purposes of this Agreement, the term "Company" refers to the
Company and any incorporated or unincorporated subsidiaries or affiliates of
the
Company.
7. Covenant
Against Solicitation of Employees and Customers.
As an
inducement for the Company to enter into this Agreement, the Associate covenants
and agrees that during the term of his employment, and for a period of one
(1)
year thereafter, he will not:
(a) Solicit
business from, or accept business of, any of Car-Mart’s customers, either
directly or indirectly, except in the furtherance of the Company’s business; nor
will he work for, work with, or accept employment with any person or entity
that
does or attempts to solicit business from, or does or intends to use the
Associate’s knowledge and relationship with Car-Mart’s customers to obtain
business from Car-Mart’s customers; or
(b) Directly
or indirectly solicit any of Car-Mart’s employees to work for the Associate or
any third party.
The
term
"customers" shall include any and all persons, partnerships, corporations,
firms, or other entities (a) that are customers of Car-Mart within the
twenty-four (24) month period immediately preceding the Associate’s termination
of employment, and (b) any prospective customers that have been solicited by
the
Associate while employed hereunder.
8. Secret
Processes and Confidential Information.
(a) The
Associate has had and will have possession of or access to confidential
information relating to the business of the Company, including, but not limited
to, writings, equipment, processes, drawings, reports, manuals, invention
records, financial information, business plans, customer and mailing lists,
the
identity of or other facts relating to prospective customers, inventory lists,
arrangements with suppliers and customers, computer programs or other material
embodying trade secrets, customer, or product information or technical or
business information of the Company. All such confidential information, other
than any information which is in the public domain through no act or omission
of
the Associate or which he is authorized to disclose, is referred to collectively
as the "Company Information". The Associate agrees that so long as he is
employed by the Company and for an indefinite period thereafter, he shall not
(i) use or exploit in any manner the Company Information for himself or any
other person, partnership, association, corporation, or other entity other
than
the Company, (ii) remove
any
Company Information, or any reproduction thereof, from the possession or control
of the Company, and (iii) treat Company Information otherwise than in a
confidential manner.
(b) All
Company Information developed, created, or maintained by the Associate, alone
or
with others while employed by the Company or thereafter, shall remain at all
times the exclusive property of the Company. The Associate agrees to return
to
the Company all Company Information, and reproductions thereof, whether prepared
by him or others, which are in his possession immediately upon request and,
in
any event, upon the completion of his employment by the Company.
9. Remedies.
The
Associate expressly agrees that the remedy at law for any breach of Sections
6,
7 or 8 will be inadequate and that upon any such breach or threatened breach,
the Company shall be entitled, as a matter of right, to injunctive relief in
any
court of competent jurisdiction, in equity or otherwise, to enforce the specific
performance of the Associate’s obligations under these provisions without the
necessity of proving the actual damage to the Company or the inadequacy of
a
legal remedy.
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, or Section 13.
(b) The
Employment Term may also be terminated by the Company for cause ("Cause") with
written notice to the Associate upon the occurrence of any of the
following:
(i) the
commission by the Associate of any deliberate and premeditated act involving
moral turpitude detrimental to the economic interests of the
Company;
(ii) the
conviction of the Associate of a felony;
(iii)
the
willful failure or refusal of the Associate to perform his duties hereunder
(which failure or refusal persists after written notice from the Company to
the
Associate complaining of such failure or refusal) or the Associate’s gross
negligence of a material nature in connection with the performance of such
duties; or
(iv)
the
breach by the Associate of any provision of this Agreement which is not cured
within thirty (30) days subsequent to written notice from the Company to the
Associate of the breach.
(c) Upon
termination of the Employment Term under subsections (a) or (b) above, the
parties hereto will be relieved of any further obligations hereunder except
for
any obligations set forth in Sections 6, 7, or 8.
11. Termination
Without Cause.
The
Company shall have the right to terminate the Employment Term without Cause
at
any time. If the termination is effected by the Company in connection with
a
change in control of the Parent Company as described in Section 14, then the
Severance Payment as described in Section 14 shall be applicable. 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 through the Employment
Term.
12. Death
of the Associate.
If the
Associate dies during the Employment Term, (a) the Employment Term shall
terminate, and (b) 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.
13. Disability
of the Associate.
If the
Associate becomes disabled during the Employment Term, the Company may terminate
the Associate’s position as an officer, but this Agreement shall otherwise
remain in full force and effect, and the Associate’s Base Salary (but not any
Bonus) then in effect will continue 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
ninety (90) or more consecutive days or one hundred twenty (120) days in the
aggregate in any twelve (12) month period.
14. Change
in Control of the Parent Company
(a) In
the
event of a change in control of the Parent Company, (i) the Associate shall
be
entitled, for a period beginning on the date of closing (the "Closing Date")
and
ending one (1) year after the Closing Date of the transaction effecting such
change in control and at his election, to give written notice to the Parent
Company of termination of his employment, or (ii) if the Associate’s employment
with the Company is terminated without Cause by the Parent Company or the
Company, as the case may be, during the period beginning on the Closing Date
and
ending one (1) year after the Closing Date, the Company shall pay to the
Associate a lump sum cash payment (the "Severance Payment"). The Severance
Payment shall be equal to one (1) times the lesser of (a) the Associate’s
then-current Base Salary (but not any Bonus) or $330,000, whichever is greater,
or (b) 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
(the "Code") (the "Severance Salary") with respect to termination pursuant
to
Section 14(a)(i) hereof, and 2.99 times the Severance Salary with respect to
termination pursuant to Section 14(a)(ii) hereof.
(b) The
Severance Payment shall be paid by the Company not later than five (5) days
after the date of termination of employment. Upon the payment to the Associate
of the Severance Payment in accordance with this Section 14, the Employment
Term
shall terminate, and the Associate’s right to compensation pursuant to Section 4
shall terminate as of the date of payment of the Severance Payment.
(c) In
the
event of a change in control of the Parent Company, all unvested stock options
and restricted stock previously granted by the Parent Company to the Associate
shall vest on the Closing Date. If the Associate elects to terminate his
employment or if his employment is terminated as set forth in Section 14(a)
hereof, and to the extent that the acceleration of the vesting of any of the
Associate’s stock options or restricted stock will reduce the
Severance
Payment
payable in accordance with the limitations set forth in Section 280G of the
Code, the Associate, at his option, may notify the Parent Company not to
accelerate the vesting of all or a portion of the Associate’s stock options or
restricted stock. In addition, to the extent any of the Associate’s vested stock
options or restricted stock will reduce the Severance Payment in accordance
with
the limitation set forth in Section 280G of the Code, the Associate, at his
option, may notify the Parent Company of his rescission and nonacceptance of
all
or a portion of such vested stock options or restricted stock.
(d) For
purposes of this Paragraph 14, “change in control” of the Parent Company shall
mean:
(i) any
transaction, whether by merger, consolidation, asset sale, tender offer, reverse
stock split or otherwise, which results in the acquisition or beneficial
ownership (as that term is defined under rules and regulations promulgated
under
the Securities Exchange Act of 1934, as amended) by any person or entity or
any
group or entities acting in concert, of 50.1% or more of the outstanding shares
of the Common Stock of the Parent Company; or
(ii) the
replacement of a majority of the members of the Parent Company’s Board of
Directors during any twenty-four (24) consecutive month period and whose
appointment or election is not endorsed by a majority of the members of the
Company’s Board of Directors prior to the date of such appointment or election;
or
(iii) the
sale
of all or substantially all of the assets of Car-Mart, including, without
limitation, the sale of all of the outstanding capital stock of the Company
and
Colonial.
(e) The
Severance Payment 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.
15. Notices.
All
notices, demands and requests which may be given or which are required to be
given by either party to the other, and any exercise of a right of termination
provided by this Agreement, shall be in writing and shall be deemed effective
when either: (a) personally delivered to the intended recipient; (b) sent by
certified or registered mail, return receipt requested, addressed to the
intended recipient at the address specified below; (c) delivered in person
to
the address set forth below
for
the
party to which the notice was given; (d) deposited into the custody of a
nationally recognized overnight delivery service such as Federal Express
Corporation, Xxxxx or Purolator, addressed to such party at the address
specified below; or (e) sent by facsimile, telegram or telex, provided that
receipt for such facsimile, telegram or telex is verified by the sender and
followed by a notice sent in accordance with one of the other provisions set
forth above. Notices shall be effective on the date of delivery, or receipt
of,
if delivery is not accepted, on the earlier of the date that delivery is refused
or three (3) days after the date the notice is mailed. For purposes of this
paragraph, the addresses of the parties for all notices are as follows (unless
changes by similar notice in writing are given by the particular person whose
address is to be changed):
If
to the
Associate, to Xxxxxxx X. Xxxxxxxxx, 00000 Xxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxx
00000;
If
to the
Company, to America’s Car-Mart, Inc., 000 X. X. Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxxx 00000, Fax #000-000-0000.
With
a
copy to Xxxx X. Xxxxxx, 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxx 00000,
Fax
# 000-000-0000;
And
a
copy to America’s Car-Mart, Inc., 251 O’Xxxxxx Xxxxx Xxxx., Xxxxx 000, Xxxxxx,
Xxxxx 00000, Attention: X. X. Xxxxxxx, III, Chairman and Chief Executive
Officer, Fax #000-000-0000;
And
a
copy to Xxxxxxx X. Xxxxxxxx, Chief Financial Officer, 000 X. X. Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxx 00000, Fax #000-000-0000.
Any
party
hereto may designate a different address by written notice given to the other
parties.
16. Governing
Law.
THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE
STATE OF ARKANSAS.
17. Assignability.
The
Associate may not assign his interest in or delegate his duties under this
Agreement. The rights and obligations of the Company hereunder may be assigned
only by
operation of law in connection
with a
merger in which the Company is not the surviving corporation or in connection
with the sale of substantially all of the assets of the Company; and in the
latter event, such assignment shall not relieve the Company of its obligations
hereunder.
18. Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the Company, its
successors and assigns.
19. Entire
Agreement; Modification.
This
Agreement constitutes the entire agreement of the parties hereto with respect
to
the subject matter hereof and may not be modified or amended in any way except
in writing by the parties hereto. This Agreement supersedes any and all prior
employment agreements or the like between the Company and the Associate
(including the Employment Agreement dated May 1, 2003, between the Company
and
the Associate), all of which are hereby terminated.
20. Duration.
Notwithstanding the termination of the Employment Term and of the Associate’s
employment by the Company, this Agreement shall continue to bind the parties
for
so long as any obligations remain under this Agreement, and, in particular,
the
Associate shall continue to be bound by the terms of Sections 6, 7 and
8.
21. Waiver.
No
waiver by the Company of any breach by the Associate of this Agreement shall
be
construed to be a waiver as to succeeding breaches.
22. Enforceability.
In the
event any portion or portions of this Agreement are declared to be void for
illegality, then the remaining portions of this Agreement shall remain valid
and
binding.
23. Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
agreement.
IN
WITNESS WHEREOF, the parties have executed this Agreement on or as of the day
and year first above written.
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COMPANY:
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AMERICA’S
CAR-MART, INC., an
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Arkansas
corporation
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By:_______________________________________
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Xxxxxxx X. Xxxxxxxxx, President
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ASSOCIATE:
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__________________________________________
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X.
X. Xxxxxxx, III
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