EMPLOYMENT AGREEMENT
Exhibit 10.3
This
Employment Agreement (the
"Agreement") is made on or as of May 1, 2007 between AMERICA’S CAR-MART, INC.,
an Arkansas corporation (the "Company") and XXXXXXX X. XXXXXXXX (the
"Associate").
WITNESSETH:
WHEREAS,
the Company is engaged in the
business of the sale and financing of used vehicles (“Company Business”);
and
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;
WHEREAS,
in order to conduct its business, the Company owns and uses trade secrets
as
defined under applicable law, as well as confidential and propriety information;
and
WHEREAS,
Associate, during the term of
his employment with the Company and in order to carry out his duties with
the
Company, has or will have contact with the Company’s customers and employees and
has or will have access to and has or will become privy to or acquainted
with
certain confidential information and trade secrets, which are owned by the
Company and which are regularly used in the business of the Company and which
are generally not known to its competitors;
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 8, 9, 10 or 11, the Employment
Term shall be for a term ending April 30, 2010. 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) Base
Salary and Benefits. The basic annual salary of the Associate for his
employment services hereunder shall be $180,000 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) Bonus. In
addition to the Base Salary and fringe benefits described above, the Associate
shall be eligible to earn an annual cash bonus (the "Bonus") during the term
hereof beginning May 1, 2007 and ending April 30, 2010. The Bonus
range shall be $20,000 to $30,000 per fiscal year, and shall be based upon
“Parent Company’s Economic Profit Per Share” as defined and described below. The
Bonus will depend on the Parent Company attaining a minimum of 85% of its
projected economic profit (in which case a $20,000 bonus would be paid) and
will
increase ratably up to 115% of its projected economic profit (in which case
a
$30,000 bonus would be paid), as set forth in Appendix A to
this Agreement.
"Parent
Company’s Economic Profit Per Share" shall be defined as net operating profit
after tax, less a capital charge (after tax) applied to the “Economic Capital”
required to generate said profits, divided by fully diluted shares
outstanding. “Economic Capital” is defined as net assets plus debt
plus cumulative after tax interest expense at the end of the fiscal year.
The
Parent Company Economic Profit Per Share shall exclude any and all compensation
associated with the Employment Agreements dated as of May 1, 2007 between
the
Company and its “named executive officers” (as listed in the Parent Company’s
annual definitive proxy statement filed with the Securities and Exchange
Commission). The Bonus, if any, shall be paid each fiscal year,
within fifteen (15) days following the Parent Company’s filing of its annual
report on Form 10-K for such fiscal year, based upon the Parent Company’s
Economic Profit Per Share for that fiscal year. 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 year in question. See
Appendix A to this Agreement for the calculation of projected
Parent Company Economic Profit Per Share; provided however, Associate expressly
acknowledges and agrees that the projected Parent Company Economic Profit
Per
Share for fiscal 2009 and fiscal 2010 shall be subject to adjustment by the
Compensation Committee of the Board of Directors of the Parent Company, in
its
sole discretion.
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(c) Non-Qualified
Stock Options. Subject to the last sentence of this subparagraph
4(c), the Parent Company will grant to the Associate, pursuant to the Parent
Company’s 2007 Stock Option Plan, a non-qualified stock option to purchase
72,000 shares of Parent Company Stock, with vesting of such option subject
to
the attainment of the projected Parent Company Economic Profit Per Share
(e.g.
60,000 shares if the Company attains 100% of its projected Parent Company
Economic Profit Per Share goal) over the three fiscal years ending April
30,
2010, as set forth in Appendix A to this Agreement and in
accordance with a Stock Option Agreement to be executed by and between the
Associate and the Parent Company. All terms used in this Section 4(c)
shall have the definitions set forth in this Agreement, the 2007 Stock Option
Plan or the Stock Option Agreement, as the case may be.
No
options will be vested unless the Parent Company attains 85% of the applicable
fiscal year’s Economic Profit Per Share goal as set forth in Appendix
A hereto (in which case 16,000 options would be vested for that year).
However, “Give-Backs and Claw-Backs” will apply during the full three year
period. For example, if the Parent Company attains 70% of its projected Parent
Company Economic Profit Per Share in year one, there would be no options
vested
for that year. If the Parent Company attains 120% of the projection
for year two, the Associate will receive 94% of the two year total (37,600
options). If in year one the Parent Company attains 90% of projected
results and 75% for year two, then the options vested in year one would be
forfeited after year two as the two year average is less than 85%. If
the third year is 130% of projection, the three year total would be 285%
or 95%
per year of projection; therefore 56,400 options will be vested in year
three. Maximum options that can be vested will be 72,000 if 115% of
the projections are met for the full three year period.
The
stock
option grant shall be made on October 16, 2007, the date of the Parent Company’s
annual meeting of shareholders, subject to and contingent upon the approval
by
such shareholders of the proposed 2007 Stock Option Plan.
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 practices and policies 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 practices and policies of
the
Company for other employees in the same or similar position as that held
by the
Associate hereunder.
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6. Non-Competition,
Non-Solicitation, Non-Disclosure, and Confidentiality Provisions
(a) Non-Solicitation: Customers. During
Associate’s employment and for one (1) year immediately following the cessation
of Associate’s employment with the Company for any reason, Associate shall not,
on his own behalf or on behalf of any person, firm, partnership, association,
corporation or business organization, entity or enterprise (except the Company),
solicit, call upon, or attempt to solicit or call upon, any customer of the
Company, or any representative of any customer of the Company with a view
to
selling or providing any product or service competitive with any product
or
service sold or provided by the Company in the Company Business, as defined
herein, during the twelve (12) month period immediately preceding cessation
of
Associate’s employment with the Company, provided that the restrictions set
forth in this section shall apply only to customers of the Company, or
representatives of customers of the Company with whom Associate had material
contact during such twelve (12) month period. “Material contact”
exists between Associate and each of the Company’s existing customers: (i) with
whom Associate actually dealt for a business purpose while employed by the
Company or to further a business relationship between the customer and the
Company; or (ii) whose business dealings with the Company were handled,
coordinated or supervised by Associate or performed by Associate in whole
or in
part.
(b) Non-Solicitation:
Employees. During Associate’s employment and for one (1) year
immediately following the cessation of Associate’s employment with the Company
for any reason, Associate will not solicit or in any manner encourage employees
of the Company to leave the employ of the Company. The foregoing
prohibition applies only to employees with whom Associate had material contact
pursuant to Associate’s duties during the twelve (12) month period immediately
preceding cessation of Associate’s employment with the
Company. “Material contact” means interaction between Associate and
another employee of the Company: (i) with whom Associate actually
dealt or worked with; or (ii) whose employment or dealings with the Company
or
services for the Company were handled, coordinated or supervised by Associate
.
(c) Non-Disclosure.
(i) TRADE
SECRETS. Associate acknowledges that the Company owns and uses trade
secrets as defined under applicable law. “Trade secret(s)” means information,
without regard to form, including, but not limited to, technical or
non-technical data, a formula, a pattern, a compilation, a program, a device,
a
method, a technique, a drawing, a process, financial data, financial plans,
product plans, or a list of actual or potential customers or suppliers which
is
not commonly known by or available to the public and which
information: (a) derives economic value, actual or potential, from
not being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its disclosure
or
use; and (b) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy. Associate further acknowledges
that in the course of Associate’s employment with the Company and in order to
carry out Associate’s duties thereunder, Associate has or will become privy to
the Trade Secrets of the Company. Accordingly, Associate shall not
disclose, divulge, publish to others, or use for any purpose, except as
necessary to perform Associate’s duties while employed by the Company, any Trade
Secret of the Company without the prior written consent of the Company, for
so
long as such information shall remain a Trade Secret under applicable
law.
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(ii) CONFIDENTIAL
INFORMATION. Associate acknowledges that in order to conduct its
business, the Company owns and uses written and unwritten confidential
information. "Confidential Information" means data and information
relating to the business of the Company (which may not rise to the level
of a
Trade Secret under applicable law) which is or has been disclosed to Associate
or of which Associate became aware as a consequence of or through Associate’s
relationship with the Company and which has value to the Company and is not
generally known to its competitors. Confidential Information shall
not include any data or information that has been voluntarily disclosed to
the
public by the Company (except where such public disclosure has been made
by
Associate without authorization) or that has been independently developed
and
disclosed by others, or that otherwise enters the public domain through lawful
means. Associate further acknowledges that in the course of his
employment with the Company and in order to carry out his duties thereunder,
Associate has or will become privy to Confidential Information of the
Company. Accordingly, Associate agrees that while employed by the
Company, and for a period of two (2) years from the conclusion of Associate’s
employment with the Company for any reason, Associate will not disclose,
divulge, publish to others or use for any purpose any Confidential Information
of the Company except to the extent necessary to perform his duties and
responsibilities as an Associate for the Company, without the prior written
consent of the Company.
(iii) NOTICE
OF TRADE SECRETS AND CONFIDENTIAL INFORMATION. Associate acknowledges
that the Company hereby designates Trade Secrets and Confidential Information
to
include, by way of illustration but not limitation, confidential customer
and
prospective customer lists; information provided to the Company by its customers
or clients or prospective customers or clients; customer preferences; client
contacts; marketing plans, presentations and strategies; products; processes;
designs; formulas; methods; clinical data; licenses; software; computer or
electronic data disks or tapes; processes; research and plans for research;
computer programs; methods of operations and costs data; contracts; personnel
information; credit terms; financial information (including without
limitation information regarding fee and pricing structures, assets, status
of
client accounts or credit); or any other information designated as a trade
secret, confidential or proprietary by the Company.
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(iv) TREATMENT
OF TRADE SECRETS AND CONFIDENTIAL INFORMATION. Associate understands
and agrees to treat whatever information the Company wants to protect from
disclosure as genuinely “confidential”, i.e., restricting access by pass
code, stamping hardcopies of customer lists “confidential,” and restricting
access to the customer list to designated and appropriate personnel, and
the
like. Associate further agrees, as an Associate, to use his best
efforts and the utmost diligence to guard and protect the Company’s Trade
Secrets and Confidential Information from disclosure to any competitor, customer
or supplier of the Company or any other person, firm, corporation or other
entity, unless such disclosure has been specifically authorized by the Company
in writing.
(d) Non-Competition. Associate
acknowledges that the Company is engaged in the Company Business as defined
herein. Associate further acknowledges that the Company Business is
primarily concentrated in and focused in Arkansas, Texas, Oklahoma, and
Missouri, (hereinafter “the
Territory”) and that Associate’s duties and responsibilities were not limited to
any particular area within that region but will be within and throughout
the
entire Territory, and rendered in connection with Company
Business. Associate further agrees and acknowledges that because of
his association with the Company and his access to Trade Secrets and
confidential, proprietary information of the Company which relate to the
Company
Business as herein defined, Associate’s competition with the Company as or with
a direct competitor in the same line of business as the Company would damage
and
impair the business of the Company. Therefore, during the term of his
employment and for a period of one (1) year from the conclusion of Associate’s
employment with the Company for any reason, Associate shall not, for himself
or
on behalf of any other person, firm, partnership, association, corporation,
business organization, entity or enterprise, perform duties which are
substantially similar to the duties performed by Associate on behalf of Company
within the Territory for any business engaged in the Company Business as
defined
herein.
(e) Ownership
of Work Product. For purposes of this Agreement, “Work Product” shall
mean the data, materials, documentation, computer programs, inventions (whether
or not patentable), and all works of authorship, including all worldwide
rights
therein under patent, copyright, trade secret, confidential information,
and
other property rights, created or developed in whole or in part by Associate,
relating to the Company Business whether prior to the date of this Agreement
or
in the future, either (i) while employed by the Company and that have been
or
will be paid for by the Company, or (ii) while employed by the Company (whether
developed during working hours or not) and not otherwise the subject of a
written agreement between the Company and Associate. All Work Product
shall be considered work made for hire by Associate and owned by the
Company. If any of the Work Product may not, by operation of law, be
considered work made for hire by Associate for the Company, or if ownership
of
all rights, title, and interest of the intellectual property rights therein
shall not otherwise vest exclusively in the Company, Associate hereby assigns
to
the Company, and upon the future creation thereof automatically assigns to
the
Company without further consideration, the ownership of all Work
Product. The Company shall have the right to obtain and hold in its
own name patents, copyrights, registrations and any other protection available
in the Work Product. Associate agrees to perform, during and after
his employment, such further acts as may be necessary or desirable to transfer,
perfect, and defend the Company’s ownership of the Work Product as reasonably
requested by the Company.
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(f) Return
of Company Property. All Company property, including, but not limited
to, equipment, devices, records, correspondence, documents, files, reports,
studies, manuals, compilations, drawings, blueprints, sketches, videos,
memoranda, computer software and programs, data or any other information,
including Trade Secrets and Confidential Information as set forth herein,
(whether originals, copies or extracts, stored in any medium), whether prepared
or developed by Associate or otherwise coming into Associate’s possession,
whether maintained by Associate in the facilities of the Company, at Associate’s
home, or at any other location, is, and shall remain, the exclusive property
of
the Company and shall be promptly delivered to the Company, with no copies
or
reproductions retained by Associate, in the event of Associate’s termination for
any reason, or at any other time or times the Company may
request. Upon termination of employment for any reason, Associate
agrees to sign and deliver the “Termination Certification” attached hereto
as Appendix B.
(g) Reasonable
Restrictions. Associate agrees and acknowledge that the restrictions
contained in this Agreement are reasonable and necessary in order to protect
the
valuable propriety assets, goodwill and business of the Company and that
the
restrictions will not prevent or unreasonably restrict his ability to earn
a
livelihood. Associate also agrees and acknowledges that if his
employment with the Company ends for any reason, Associate will be able to
earn
a livelihood without violating the restrictions contained in this Agreement
and
that Associate’s ability to earn a livelihood without violating said
restrictions is an important reason in Associate choosing to sign this
Agreement.
7. Remedies. The
Associate expressly agrees that the remedy at law for any breach of the
provisions of Section 6 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.
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8. 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 8, Section 9, Section
10, or Section 11.
(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 Section 6.
9. 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 other than as described in Section 8, then under
such
circumstances, (i) the Associate’s Base Salary then in effect hereunder
will continue to be payable in accordance with the Company's payroll policy
through the Employment Term, (ii) the Associate shall be paid within 60
days after termination the pro rata portion of the Bonus earned, if any,
through
the date of termination, and (iii) all unvested Restricted Stock (if any)
and
stock options shall immediately vest in full without regard to the achievement
of any applicable performance goals.
10. Death
of the Associate. If the Associate dies during the Employment
Term, the Employment Term shall terminate, and within 60 days after death,
or as
soon thereafter as administratively practicable, the Company will pay to
the
Associate’s estate (i) the Associate’s Base Salary then in effect through
the end of the calendar month in which such death occurs, and (ii) the pro
rata portion of the Bonus earned, if any, through the date of
death. In addition, as shall be more specifically set forth in the
Stock Option Agreement between the Parent Company and Associate, the
non-qualified stock option which is the subject of Section 4(c) herein, shall
vest, on a pro rata basis with respect to the fiscal year in which the date
of
death occurs, based upon the achievement of the economic profit per share
goal
for the applicable fiscal year, without regard to future Give-Back and Claw-Back
provisions.
8
11. Termination
Following Disability. 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 then in
effect, payable in accordance with the Company's payroll policy through the
end
of 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. Any disability, as defined herein, shall not constitute
"cause" for purposes of Section 8(b) hereof. In addition, as shall be
more specifically set forth in the Stock Option Agreement between the Parent
Company and Associate, the non-qualified stock option which is the subject
of
Section 4(c) herein, shall vest, on a pro rata basis with respect to the
fiscal
year in which the date of disability occurs, based upon the achievement of
the
economic profit per share goal for the applicable fiscal year, without regard
to
future Give-Back and Claw-Back provisions.
12. 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 12 as being employed on the date
the
change in control becomes effective.
(b) For
purposes of this Section 12,
“change
in control” of the Parent
Company shall mean:
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(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.
The
definition of change in control in
this Subsection 12(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).
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(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.
11
(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.
13. Definition
of 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 Code Section
409A.
14. 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.
12
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. Xxxxxxxx, ____________________________
________________________________________________;
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, Chief Legal Officer, 000 X. X. Xxxxx Xxxxxx, Xxxxx
000,
Xxxxxxxxxxx, Xxxxxxxx 00000, 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 and replaces any and all prior
employment agreements between the Company and the Associate, all of which
are
hereby terminated and declared null and void; provided, however, this Agreement
shall not affect, in any manner, previously awarded Restricted Stock or stock
options, which awards shall remain in full force and effect in accordance
with
the terms of such previous awards.
13
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 Section 6.
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. The
covenants and provisions contained herein are severable and are to be
interpreted as such to the extent permitted by applicable law. The
parties understand, acknowledge and agree that should any provision of this
Agreement be declared or determined by any court of competent jurisdiction
to be
unenforceable or invalid for any reason, the validity of the remaining parts,
terms or provisions of this Agreement shall not be affected thereby, and
that
the Agreement will be amended to delete or modify, as necessary, any invalid
or
unenforceable parts, terms or provisions to the extent necessary to allow
for
enforcement.
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 _____________,
2007, but this Agreement shall be effective as of the day and year first
above
written.
COMPANY:
AMERICA’S
CAR-MART,
INC., an
Arkansas
corporation
By: _______________________________________________
Name: _____________________________________________
Title: ______________________________________________
ASSOCIATE:
__________________________________________________
Xxxxxxx X. Xxxxxxxx
14
APPENDIX
A
Applicable
to the Cash Bonus and Non-Qualified Stock Options
pursuant
to Sections 4(b) and 4(c) of Employment Agreement
|
Projected
Economic Profits
Fiscal
2008-2010
|
|||||||||
|
Subject
to
Adjustment
|
Subject
to
Adjustment
|
||||||||
|
Projected
|
Projected
|
Projected
|
|||||||
|
2008
|
2009
|
2010
|
|||||||
|
Projected
GAAP Net Income
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Add:
Projected Provision for Income Taxes
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Add:
Projected Interest Expense
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Projected
Net Operating Profit before taxes
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Projected
Taxes @ 37%
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Projected
Net Operating Profit After Taxes
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Projected
Year-end Total Assets
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Projected
Year-end Total Liabilities
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Projected
Year-end Net Assets
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Projected
Debt
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Other-
Cumulative Net of Tax interest expense
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Projected
Year-End Economic Capital
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Projected
Net Operating Profit After Taxes
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Projected
Capital Charge- 5.7% after tax
|
$[XXXX]*
|
$[XXXX]*
|
$[XXXX]*
|
||||||
|
Year
1 adjustment
|
-$[XXX]*
|
||||||||
|
Projected
Economic Profit
|
$[XXX]*
|
$[XXX]*
|
$[XXX]*
|
||||||
|
Projected
Economic Profit per Share
|
$[XXX]*
|
$[XXX]*
|
$[XXX]*
|
||||||
|
Goal
set for 2008 @
|
$[XXX]*
|
||||||||
*Filed
under application for confidential treatment.
A-1
APPENDIX
A
Award
Percentages Earned- Rounded to
nearest whole percentage point
|
Percentage
of
|
Award
Percentage
|
|||||
|
Projection
|
Earned
|
|||||
| 85 | % | 80 | % | |||
| 86 | % | 81 | % | |||
| 87 | % | 83 | % | |||
| 88 | % | 84 | % | |||
| 89 | % | 85 | % | |||
| 90 | % | 87 | % | |||
| 91 | % | 88 | % | |||
| 92 | % | 89 | % | |||
| 93 | % | 91 | % | |||
| 94 | % | 92 | % | |||
| 95 | % | 94 | % | |||
| 96 | % | 95 | % | |||
| 97 | % | 96 | % | |||
| 98 | % | 98 | % | |||
| 99 | % | 99 | % | |||
| 100 | % | 100 | % | |||
| 101 | % | 102 | % | |||
| 102 | % | 103 | % | |||
| 103 | % | 104 | % | |||
| 104 | % | 106 | % | |||
| 105 | % | 107 | % | |||
| 106 | % | 108 | % | |||
| 107 | % | 110 | % | |||
| 108 | % | 111 | % | |||
| 109 | % | 112 | % | |||
| 110 | % | 114 | % | |||
| 111 | % | 115 | % | |||
| 112 | % | 116 | % | |||
| 113 | % | 118 | % | |||
| 114 | % | 119 | % | |||
| 115 | %+ | 120 | % | |||
X-0
XXXXXXXX
X
TERMINATION
CERTIFICATION
The
undersigned Associate certifies
that he/she does not possess and has not failed to return any property belonging
to AMERICA’S CAR-MART, INC. its parent, subsidiaries, affiliates, successors or
assigns (together, the “Company”) or its customers, including, but not limited
to, equipment, devices, records, correspondence, documents, files, reports,
studies, manuals, compilations, drawings, blueprints, sketches, videos,
memoranda, computer software and programs, data or any other information,
including Trade Secrets and Confidential Information as set forth herein,
(whether originals, copies or extracts, stored in any medium), whether prepared
or developed by Associate or otherwise coming into Associate’s possession,
whether maintained by Associate in the facilities of the Company, at Associate’s
home, or at any other location.
Associate
further certifies that he/she
will comply with all the terms of his/her Non-Competition, Non-Solicitation,
Non-Disclosure, and Confidentiality Agreement.
| Date: ____________________ | _______________________________________________________ | |
|
Associate
|
B-1
