ex10-4.htm


    
      

    

    Exhibit
      10.4

     

    
      AMENDMENT
        NO. 1 TO EMPLOYMENT
        AGREEMENT

      BETWEEN

      AMERICA’S
        CAR-MART, INC. AND T.J. FALGOUT,
        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 T.J. Falgout, 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:

      


      


      


                                              ____________________________________________________

      
                                                T.J.
          Falgout,
          III

         

         

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