Document:

ex_174245.htm

 Exhibit 10.28

 

The Middlefield Banking Company

Executive Deferred Compensation Agreement*

 

This Executive Deferred Compensation Agreement (this “Agreement”) is entered into as of this 18th day of June, 2016 by and between The Middlefield Banking Company, an Ohio-chartered bank (the “Bank”), and Charles O. Moore, an executive of the Bank (the “Executive”).

 

Whereas, the Executive has contributed substantially to the Bank’s success and the Bank desires that the Executive remain in its employ,

 

Whereas, to encourage the Executive to remain a Bank employee, the Bank desires to establish a noncontributory, defined contribution arrangement to provide a supplemental retirement income opportunity for the Executive, with contributions made solely by the Bank and benefits payable out of the Bank’s general assets,

 

Whereas, as of the date of this Agreement none of the conditions or events included in the definition of the term “golden parachute payment” that is set forth in section 18(k)(4)(A)(ii) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] exists or, to the best knowledge of the Bank, is contemplated insofar as the Bank is concerned, and

 

Whereas, the parties hereto intend this Agreement to be considered an unfunded and noncontributory arrangement maintained primarily to provide supplemental retirement benefits for the Executive, and to be considered a non-qualified benefit plan for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Executive is fully advised of the Bank’s financial status.

 

Now Therefore, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Executive and the Bank hereby agree as follows.

 

Article 1

Definitions

 

1.1     “Account Balance” means the Bank’s accounting of Annual Contributions made by the Bank, plus accrued interest.

 

1.2     “Annual Contribution” means the amount credited to the Account Balance after the end of each Plan Year for which the Performance Goals are achieved. The Annual Contribution is conditional on achievement of the Performance Goals, except that the Annual Contribution amount in any Plan Year will not be less than 5% or more than 15% of the Executive’s Base Annual Salary. In its discretion, the Bank’s board of directors may increase or decrease the amount of the Annual Contribution, but the Annual Contribution amount may be changed no more frequently than annually.

 

 

* Schedule A has been omitted pursuant to Item 601(a)(5) of Regulation S-K and will be provided on a supplemental basis to the Securities and Exchange Commission upon request.

 

 

 

1.3     “Base Annual Salary” means compensation of the type required to be reported as salary according to Securities and Exchange Commission Rule 229.402(c) (17 CFR 229.402(c)), specifically column (c) of that rule’s Summary Compensation Table (or any successor provision).

 

1.4     “Beneficiary” means each designated person, or the estate of the deceased Executive, entitled to benefits, if any, upon the death of the Executive, determined according to Article 5.

 

1.5     “Beneficiary Designation Form” means the form established from time to time by the Plan Administrator that the Executive completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.

 

1.6     “Change in Control” means a change in control as defined in Internal Revenue Code section 409A and rules, regulations, and guidance of general application thereunder issued by the Department of the Treasury, including –

 

(a)     Change in ownership: a change in ownership of Middlefield Banc Corp., an Ohio corporation of which the Bank is a wholly owned subsidiary, occurs on the date any one person or group accumulates ownership of Middlefield Banc Corp. stock constituting more than 50% of the total fair market value or total voting power of Middlefield Banc Corp. stock,

 

(b)     Change in effective control: (x) any one person or more than one person acting as a group acquires within a 12-month period ownership of Middlefield Banc Corp. stock possessing 30% or more of the total voting power of Middlefield Banc Corp., or (y) a majority of Middlefield Banc Corp.’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed in advance by a majority of Middlefield Banc Corp.’s board of directors, or

 

(c)     Change in ownership of a substantial portion of assets: a change in ownership of a substantial portion of Middlefield Banc Corp.’s assets occurs if in a 12-month period any one person or more than one person acting as a group acquires from Middlefield Banc Corp. assets having a total gross fair market value equal to or exceeding 40% of the total gross fair market value of all of Middlefield Banc Corp.’s assets immediately before the acquisition or acquisitions. For this purpose, gross fair market value means the value of Middlefield Banc Corp.’s assets, or the value of the assets being disposed of, determined without regard to any liabilities associated with the assets.

 

1.7     “Code” means the Internal Revenue Code of 1986, as amended, and rules, regulations, and guidance of general application issued thereunder by the Department of the Treasury.

 

1.8     “Effective Date” means January 1, 2016.

 

1.9     “Normal Retirement Age” means age 65.

 

1.10     “Performance Goals” means the performance criteria set forth in Schedule A attached to this Agreement and incorporated herein by this reference, which criteria have been established by the Bank’s board of directors. The Performance Goals may be changed by the board of directors no more frequently than annually. If the performance criteria are changed, a new Schedule A will be substituted for and supersede the old Schedule A, and the new Schedule A will be deemed to be incorporated by reference herein and to be a part of this Agreement. A change in Performance Goals is not effective for the Plan Year in which the change is made unless the change is made on or before March 31 of the Plan Year. The Plan Administrator has sole authority to determine whether the Performance Goals are achieved for any Plan Year. The Plan Administrator’s determination that the Performance Goals for a Plan Year have or have not been achieved is conclusive and binding.

 

 

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1.11     “Plan Administrator” or “Administrator” means the plan administrator described in Article 8.

 

1.12     “Plan Year” means the calendar year. The first Plan Year begins on the Effective Date and ends on December 31, 2016.

 

1.13     “Separation from Service” means the Executive’s service as an executive or independent contractor to the Bank and any member of a controlled group, as defined in Code section 414, terminates for any reason, other than because of a leave of absence approved by the Bank or the Executive’s death. If there is a dispute about the Executive’s status or the date of the Executive’s Separation from Service, the Bank has the sole and absolute right to decide the dispute unless a Change in Control has occurred.

 

1.14     “Termination with Cause” and “Cause” have the same definition specified in any effective severance or employment agreement existing on the date hereof or hereafter entered into between the Executive and the Bank or between the Executive and Middlefield Banc Corp. If the Executive is not a party to a severance or employment agreement containing a definition, Termination with Cause means the Bank terminates the Executive’s employment because of –

 

(a)       gross negligence or gross neglect of duties or intentional and material failure to perform stated duties after written notice, or

 

(b)       disloyalty or dishonesty in the performance of duties or breach of fiduciary duties for personal profit, in any case whether in the Executive’s capacity as a director or officer, or

 

(c)       intentional wrongful damage to the business or property of the Bank or its affiliates, including without limitation the reputation of the Bank, which in the judgement of the Bank causes material harm to the Bank or affiliates, or

 

(d)       a willful violation of any applicable law or significant policy of the Bank or an affiliate that, in the Bank’s judgement, results in an adverse effect on the Bank or the affiliate, regardless of whether the violation leads to criminal prosecution or conviction. For purposes of this Agreement applicable laws include any statute, rule, regulatory order, statement of policy, or final cease-and-desist order of any governmental agency or body having regulatory authority over the Bank, or

 

(e)       the occurrence of any event that results in the Executive being excluded from coverage, or having coverage limited for the Executive as compared to other executives of the Bank, under the Bank’s blanket bond or other fidelity or insurance policy covering its directors, officers, or employees, or

 

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(f)       removal from office or permanent prohibition from participating in the Bank’s affairs by an order issued under section 8(e)(4) or section 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), or

 

(g)     conviction of or plea of no contest to a felony or conviction of or plea of no contest to a misdemeanor involving moral turpitude, or actual incarceration for 45 consecutive days or more.

 

Article 2

Deferral Account

 

2.1     Annual Contribution. The Bank will establish an Account Balance on its books. Within three months after the end of each Plan Year the Bank will credit the Annual Contribution to the Account Balance provided the Performance Goals were achieved for the Plan Year. Contributions to the Account Balance by the Executive are prohibited. Discretionary contributions by the Bank are likewise prohibited. The Annual Contribution will not be made by the Bank for the Plan Year in which the Executive attains Normal Retirement Age or for any year thereafter. However, if the Performance Goals are achieved for the Plan Year in which the Executive attains Normal Retirement Age (and if Separation from Service does not occur before Normal Retirement Age), the Bank will make a final contribution in an amount equal to the Annual Contribution multiplied by a percentage. The percentage is equal the number of days in the Plan Year before the Executive attained Normal Retirement Age, divided by 365. No Annual Contribution will be made by the Bank for the Plan Year in which the Executive’s death or Separation from Service occurs or for any year thereafter (except for a final contribution for the year in which the Executive attains Normal Retirement Age, unless Separation from Service occurs before Normal Retirement Age).

 

2.2     Interest. At the end of each Plan Year and until the first to occur of (x) Normal Retirement Age, (y) the Executive’s death, or (z) the Executive’s Separation from Service, interest is to be credited on the Account Balance at an annual rate of interest for that Plan Year, compounded monthly on the first day of the month, equal to the prime interest rate as published in The Wall Street Journal (the “Index”). After the first to occur of (x) Normal Retirement Age, (y) the Executive’s death, or (z) the Executive’s Separation from Service, interest will be credited on the Account Balance at an annual rate selected by the Plan Administrator in its sole discretion, except that the rate may not equal or exceed the rate for which expense accruals for the post-retirement period would during the Executive’s pre-retirement service period be necessary under generally accepted accounting principles. The rate may but need not be the composite corporate bond rate published by the Internal Revenue Service from time to time, the Bloomberg 20-year Investment Grade Financial Institutions Index rate published from time to time, or a comparable rate or index.

 

2.3     Statement of Account. Within 120 days after the end of each Plan Year the Bank will provide to the Executive a statement of the Account Balance at the end of the Plan Year. Each annual statement of the Account Balance supersedes the previous year’s statement of the Account Balance.

 

2.4     Accounting Device Only. The Account Balance is solely a device for measuring amounts to be paid under this Agreement. The Account Balance is not a trust fund of any kind. The Executive is a general unsecured creditor of the Bank for the payment of benefits. The benefits represent the mere promise by the Bank to pay benefits. The Executive’s rights are not subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by the Executive’s creditors.

 

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Article 3

Benefits During Lifetime

 

3.1     Normal Retirement Age. Unless Separation from Service or a Change in Control occurs before Normal Retirement Age, when the Executive attains Normal Retirement Age the Bank will pay to the Executive the Account Balance as of the end of the month in which the Executive attains Normal Retirement Age, instead of any other benefit under this Agreement. Beginning on the first day of the month after the month in which the Executive attains Normal Retirement Age, the Account Balance will be paid to the Executive in 180 substantially equal monthly installments. The Bank will credit interest according to the formula of section 2.2, compounded monthly, until the Account Balance is paid in full. If the Executive’s Separation from Service is a Termination with Cause, no further benefits will be paid under this Agreement and this Agreement will terminate.

 

3.2     Separation from Service. If Separation from Service occurs before Normal Retirement Age for reasons other than death or Termination with Cause, instead of any other benefit under this Agreement the Bank will pay to the Executive the Account Balance as of the end of the month immediately before the month in which payments commence, unless the Change-in-Control benefit has been paid under section 3.3. Beginning on the first day of the later of (x) the seventh month after the month in which Separation from Service occurs or (y) the month after the month in which the Executive attains Normal Retirement Age, the Bank will pay the Account Balance in 180 substantially equal monthly installments. The Bank will credit interest according to the formula of section 2.2, compounded monthly, until the Account Balance is paid in full.

 

3.3     Change in Control. If a Change in Control occurs both before the Executive attains Normal Retirement Age and before the Executive’s Separation from Service, instead of any other benefit payable under this Agreement the Bank will pay to the Executive the entire Account Balance in a single lump sum on the day of the Change in Control. Payment of the Change-in-Control benefit fully discharges the Bank from all obligations under this Agreement, except the legal fee reimbursement obligation under section 9.11.

 

3.4     Payout of Normal Retirement Benefit or Separation from Service Benefit after a Change in Control. If when a Change in Control occurs the Executive is receiving the benefit under section 3.1, the Bank will pay the remaining benefits to the Executive in a single lump sum on the day of the Change in Control. If when a Change in Control occurs the Executive is receiving or is entitled at Normal Retirement Age to receive the benefit under section 3.2, the Bank will pay the remaining benefits to the Executive in a single lump sum three business days after the later of (x) the date of the Change in Control or (y) the first day of the seventh month after the month in which the Executive’s Separation from Service occurs. The lump-sum payment due to the Executive as a result of a Change in Control is the amount equal to the Account Balance remaining unpaid.

 

3.5     One Benefit Only. Despite anything to the contrary in this Agreement, the Executive and Beneficiary are entitled to one benefit only under this Agreement, which is determined by the first event to occur that is dealt with by this Agreement. Except as provided in section 3.4, later occurrence of events dealt with by this Agreement do not entitle the Executive or Beneficiary to other or additional benefits under this Agreement.

 

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3.6     Savings Clause Relating to Compliance with Code Section 409A. Despite any contrary provision of this Agreement, if when the Executive’s employment terminates the Executive is a specified employee, as defined in Code section 409A, and if any payments under Article 3 of this Agreement will result in additional tax or interest to the Executive because of section 409A, the Executive is not entitled to the payments under Article 3 until the earliest of (x) the date that is at least six months after termination of the Executive’s employment for reasons other than the Executive’s death, (y) the date of the Executive’s death, or (z) any earlier date that does not result in additional tax or interest to the Executive under section 409A. If any provision of this Agreement would subject the Executive to additional tax or interest under section 409A, the Bank will reform the provision. However, the Bank will maintain to the maximum extent practicable the original intent of the applicable provision without subjecting the Executive to additional tax or interest, and the Bank is not required to incur any additional compensation expense as a result of the reformed provision.

 

Article 4

Death Benefits

 

After the Executive’s death, the Bank will pay to the Executive’s Beneficiary the Account Balance as of the date of the Executive’s death. The Account Balance will be paid to the Executive’s Beneficiary in a single lump sum 90 days after the date of the Executive’s death. However, if the Executive dies after termination of this Agreement under Article 6, the Executive’s Beneficiary is entitled to no benefits under this Agreement.

 

Article 5

Beneficiaries

 

5.1     Beneficiary Designations. The Executive may designate at any time a Beneficiary to receive any benefits payable under this Agreement after the Executive’s death. The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designation under any other benefit plan of the Bank in which the Executive participates.

 

5.2     Beneficiary Designation Change. The Executive designates a Beneficiary by completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator or its designated agent. The Executive’s Beneficiary designation is automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved. The Executive may change a Beneficiary by completing, signing, and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures, as in effect from time to time. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed are cancelled. The Plan Administrator is entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator before the Executive’s death.

 

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5.3     Acknowledgment. No designation or change in designation of a Beneficiary is effective until received, accepted, and acknowledged in writing by the Plan Administrator or its designated agent.

 

5.4     No Beneficiary Designation. If the Executive dies without a valid beneficiary designation or if all designated Beneficiaries predecease the Executive, the Executive’s spouse is the designated Beneficiary. If the Executive has no surviving spouse, the benefits will be paid to the Executive’s estate.

 

5.5     Facility of Payment. If a benefit is payable to a minor, to a person declared incapacitated, or to a person incapable of handling the disposition of his or her property, the Bank may pay the benefit to the guardian, legal representative, or person having the care or custody of the minor, incapacitated person, or incapable person. The Bank may require proof of incapacity, minority, or guardianship as it may deem appropriate before distribution of the benefit. Distribution completely discharges the Bank from all liability for the benefit.

 

Article 6

General Limitations

 

6.1     Termination with Cause. Despite any contrary provision of this Agreement, the Bank will not pay any benefit under this Agreement and this Agreement terminates if Separation from Service is a Termination with Cause.

 

6.2     Misstatement. No benefit will be paid under this Agreement if the Executive makes any material misstatement of fact on any application or resume provided to the Bank, on any application for life insurance purchased by the Bank, or on any application for benefits provided by the Bank.

 

6.3     Removal. Despite any contrary provision of this Agreement, if the Executive is removed from office or permanently prohibited from participating in the Bank’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement terminate as of the effective date of the order.

 

6.4     Default. Despite any contrary provision of this Agreement, if the Bank is in “default” or “in danger of default”, as those terms are defined in of section 3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations under this Agreement terminate.

 

Article 7

Claims and Review Procedures

 

7.1     Claims Procedure. Any person who has not received benefits under this Agreement that he or she believes should be paid (the “claimant”) may make a claim for benefits as follows.

 

7.1.1     Initiation – written claim. The claimant initiates a claim by submitting to the Administrator a written claim for the benefits. If the claim relates to the contents of a notice received by the claimant, the claim must be made within 60 days after the notice was received by the claimant. All other claims must be made within 180 days after the date of the event that caused the claim to arise. The claim must state with particularity the determination desired by the claimant.

 

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7.1.2     Timing of Administrator response. The Administrator will respond to the claimant within 90 days after receiving the claim. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator may extend the response period by an additional 90 days by notifying the claimant in writing, before the end of the initial 90-day period, that an additional period is required. The notice of extension must state the special circumstances and the date by which the Administrator expects to render its decision.

 

7.1.3     Notice of decision. If the Administrator denies part or all of the claim, the Administrator will notify the claimant in writing of the denial. The Administrator will write the notification in a manner calculated to be understood by the claimant. The notification must state:

 

	 	
			(a)

				
			the specific reasons for the denial,

			

	 	
			(b)

				
			a reference to the specific provisions of this Agreement on which the denial is based,

			

	 	
			(c)

				
			a description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

			

	 	
			(d)

				
			an explanation of the Agreement’s review procedures and the time limits applicable to the procedures, and

			

	 	
			(e)

				
			a statement of the claimant’s right to bring a civil action under ERISA section 502(a) after an adverse benefit determination on review.

			

 

7.2     Review Procedure. If the Administrator denies part or all of the claim, the claimant has the opportunity for a full and fair review by the Administrator of the denial, as follows.

 

7.2.1     Initiation – written request. To initiate the review, the claimant must file with the Administrator a written request for review within 60 days after receiving the Administrator’s notice of denial.

 

7.2.2     Additional submissions – information access. The claimant then has the opportunity to submit written comments, documents, records, and other information relating to the claim. Upon request and free of charge, the Administrator will also provide the claimant reasonable access to and copies of all documents, records, and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.

 

7.2.3     Considerations on review. In considering the review, the Administrator will take into account all materials and information the claimant submits relating to the claim, without regard to whether the information was submitted or considered in the initial benefit determination.

 

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7.2.4     Timing of Administrator response. The Administrator will respond in writing to the claimant within 60 days after receiving the request for review. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator may extend the response period by an additional 60 days by notifying the claimant in writing before the end of the initial 60-day period that an additional period is required. The notice of extension must state the special circumstances and the date by which the Administrator expects to render its decision.

 

7.2.5     Notice of decision. The Administrator will notify the claimant in writing of its decision on review. The Administrator will write the notification in a manner calculated to be understood by the claimant. The notification must state:

 

	 	
			(a)

				
			the specific reasons for the denial,

			

	 	
			(b)

				
			a reference to the specific provisions of the Agreement on which the denial is based,

			

	 	
			(c)

				
			a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits, and

			

	 	
			(d)

				
			a statement of the claimant’s right to bring a civil action under ERISA section 502(a).

			

 

Article 8

Administration of Agreement

 

8.1     Plan Administrator Duties. This Agreement will be administered by a Plan Administrator consisting of the board or such committee or persons as the board appoints. The Executive may not be a member of the Plan Administrator. The Plan Administrator has the discretion and authority to (x) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and (y) decide or resolve any and all questions that may arise, including interpretations of this Agreement.

 

8.2     Agents. In the administration of this Agreement the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel, who may be counsel to the Bank.

 

8.3     Binding Effect of Decisions. The decision or action of the Plan Administrator concerning any question arising out of the administration, interpretation, and application of the Agreement and the rules and regulations promulgated hereunder is final and conclusive and binding upon all persons having any interest in the Agreement. Neither the Executive nor any Beneficiary has any right, vested or unvested, regarding the continuing effect of any decision or action of the Plan Administrator.

 

8.4     Indemnity of Plan Administrator. The Bank will indemnify and hold harmless the members of the Plan Administrator against any and all claims, losses, damages, expenses, or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator or any of its members.

 

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8.5     Bank Information. To enable the Plan Administrator to perform its functions, the Bank will supply full and timely information to the Plan Administrator on all matters relating to the date and circumstances of the retirement, death, or Separation from Service of the Executive and such other pertinent information as the Plan Administrator reasonably requires.

 

 

Article 9

Miscellaneous

 

9.1     Amendments and Termination. This Agreement may be amended solely by a written agreement signed by the Bank and by the Executive. Except for the case of Termination with Cause, this Agreement may not be terminated unless the Account Balance is first paid to the Executive or the Executive’s Beneficiary.

 

9.2     Binding Effect. This Agreement binds the Executive and the Bank and their beneficiaries, survivors, executors, successors, administrators, and transferees.

 

9.3     Successors; Binding Agreement. By an assumption agreement in form and substance satisfactory to the Executive, the Bank will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the Bank’s business or assets to expressly assume and agree to perform this Agreement in the same manner and to the same extent the Bank would be required to perform this Agreement had no succession occurred.

 

9.4     No Guarantee of Employment. This Agreement is not an employment policy or contract. It does not give the Executive the right to remain an employee of the Bank, nor does it interfere with the Bank’s right to discharge the Executive. It also does not require the Executive to remain an employee or interfere with the Executive’s right to terminate employment at any time.

 

9.5     Non-Transferability. Benefits under this Agreement may not be sold, transferred, assigned, pledged, attached, or encumbered.

 

9.6     Tax Withholding. The Bank will withhold any taxes that are required to be withheld from the benefits provided under this Agreement.

 

9.7     Applicable Law. This Agreement and all rights hereunder are governed by the laws of the State of Ohio, except to the extent the laws of the United States of America otherwise require.

 

9.8     Unfunded Arrangement. The Executive and the Beneficiary are general unsecured creditors of the Bank for the payment of benefits under this Agreement. The benefits represent the mere promise by the Bank to pay benefits. The rights to benefits are not subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive’s life is a general asset of the Bank to which the Executive and the Beneficiary have no preferred or secured claim.

 

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9.9     Entire Agreement. This Agreement constitutes the entire agreement between the Bank and the Executive concerning the subject matter. No rights are granted to the Executive under this Agreement other than those specifically set forth.

 

9.10     Tax Consequences. The Bank does not insure or guarantee the tax consequences of payments provided hereunder for matters beyond its control. The Executive certifies that the Executive’s decision to defer receipt of compensation is not due to reliance on financial, tax, or legal advice given by the Bank or any of its employees, agents, accountants, or legal advisors.

 

9.11     Payment of Legal Fees. The Bank is aware that after a Change in Control management could cause or attempt to cause the Bank to refuse to comply with its obligations under this Agreement, or could institute or cause or attempt to cause the Bank to institute litigation seeking to have this Agreement declared unenforceable, or could take or attempt to take other action to deny the Executive benefits intended under this Agreement. In these circumstances the purpose of this Agreement would be frustrated. The Bank desires that the Executive not be required to incur the expenses associated with the enforcement of rights under this Agreement, whether by litigation or other legal action, because the cost and expense thereof would substantially detract from the benefits intended to be granted to the Executive hereunder. The Bank desires that the Executive not be forced to negotiate settlement of rights under this Agreement under threat of incurring expenses. Accordingly, if after a Change in Control it appears to the Executive that (x) the Bank has failed to comply with any of its obligations under this Agreement, or (y) the Bank or any other person has taken any action to declare this Agreement void or unenforceable, or instituted any litigation or other legal action designed to deny, diminish, or recover from the Executive the benefits intended to be provided hereunder, the Bank irrevocably authorizes the Executive to retain counsel of the Executive’s choice, at the Bank’s expense as provided in this section 9.11, to represent the Executive in the initiation or defense of any litigation or other legal action, whether by or against the Bank or any director, officer, stockholder, or other person affiliated with the Bank, in any jurisdiction. Despite any existing or previous attorney-client relationship between the Bank and any counsel chosen under this section 9.11, the Bank irrevocably consents to the Executive entering into an attorney-client relationship with that counsel and the Bank and the Executive agree that a confidential relationship exists between the Executive and that counsel. The fees and expenses of counsel selected by the Executive will be paid or reimbursed to the Executive by the Bank on a regular, periodic basis upon presentation by the Executive of a statement or statements prepared by counsel in accordance with counsel’s customary practices, regardless of whether suit is brought and regardless of whether incurred in trial, bankruptcy, or appellate proceedings, but the Bank’s payment or reimbursement of the Executive’s counsel’s fees and expenses must occur on or before the last day of the Executive’s tax year immediately after the Executive’s tax year in which the expense is incurred. If the Executive is a specified employee, as defined in Code section 409A, on the date of termination, payment under this section 9.11 will be made on the first day of the seventh month after the month in which the Executive’s termination occurs. Interest will accrue on the payment from the date of termination through the date of payment at the Prime Rate of Interest in effect on the date of termination and as reported in the Wall Street Journal. The six-month delay applies if and only if an exemption from the six-month delay requirement of Code section 409A is not available. The Executive’s right to payment or reimbursement under this section 9.11 is not subject to liquidation or exchange for another benefit. The Bank’s obligation to make reimbursement payments will not apply later than the Executive’s remaining lifetime (or, if longer, through the 20th anniversary of the effective date of this Agreement). The legal fee reimbursements are intended to satisfy the requirements for “reimbursement or in-kind benefit plans” described in Treasury Regulation section 1.409A-3(i)(1)(iv)(A) and will be administered to satisfy those requirements. The Bank’s obligation to pay the Executive’s legal fees under this section 9.11 operates separately from and in addition to any legal fee reimbursement obligation the Bank may have under any separate employment, severance, or other agreement. Despite any contrary provision in this Agreement however, the Bank is not required to pay or reimburse legal expenses if doing so violates section 18(k) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)] and Rule 359.3 of the Federal Deposit Insurance Corporation [12 C.F.R. 359.3].

 

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9.12     Severability. If any provision of this Agreement is held invalid, invalidity does not affect any other provision of this Agreement not held invalid, and each such other provision continues in full force and effect to the full extent consistent with law. If any provision of this Agreement is held invalid in part, invalidity does not affect the remainder of the provision not held invalid, and together with all other provisions of this Agreement the remainder of the provision continues in full force and effect to the full extent consistent with law.

 

9.13     Waiver. A waiver by either party of any of the terms or conditions of this Agreement in any one instance is not a waiver of the terms or conditions for the future or a waiver of any subsequent breach. All remedies, rights, undertakings, obligations, and agreements contained in this Agreement are cumulative, and none of them limits any other remedy, right, undertaking, obligation or agreement of either party.

 

9.14     Captions and Counterparts. Captions in this Agreement are included for convenience only and do not affect the interpretation or construction of the Agreement or any of its provisions. This Agreement may be executed in two or more counterparts, each of which is an original and all of which taken together constitute a single agreement.

 

9.15     Notice. All notices, requests, demands, and other communications hereunder must be in writing and will be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, return receipt requested, with postage prepaid. Unless otherwise changed by notice, notice is properly addressed to the Executive if addressed to the address of the Executive on the books and records of the Bank at the time of the delivery of such notice, and properly addressed to the Bank if addressed to the Board of Directors, The Middlefield Banking Company, 15985 East High Street, Middlefield, Ohio 44062-0035.

 

9.16     Termination or Modification of Agreement Because of Changes in Law, Rules or Regulations. The Bank is entering into this Agreement on the assumption that certain existing tax laws, rules, and regulations will continue in effect in their current form. If that assumption materially changes and the change has a material detrimental effect on this Agreement, the Bank reserves the right to terminate or modify this Agreement accordingly, subject to the written consent of the Executive, which will not be unreasonably withheld. This section 9.16 is null and void effective immediately after a Change in Control.

 

12

 

 

In Witness Whereof, the Executive and a duly authorized Bank officer executed this Executive Deferred Compensation Agreement as of the date first written above.

 

	Executive:	 	Bank:	 
	 	 	The Middlefield Banking Company	 
	 	 	 	 	 
	/s/ Charles O. Moore	 	By:	/s/ James R. Heslop II	 
	Charles O. Moore	 	Its:	Executive Vice President and C.O.O.	 

 

13

 

 

The Middlefield Banking Company

Executive Deferred Compensation Agreement

Beneficiary Designation

 

I designate the following as beneficiary under this Executive Deferred Compensation Agreement of benefits payable after my death.

 

Primary:  

 

 

Contingent: 

 

 

 

	
			Note: 

				
			To name a trust as beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement.

			

 

I understand that I may change these beneficiary designations by filing a new written designation with the Bank. I further understand that the designations will be automatically revoked if the beneficiary predeceases me, or, if I have named my spouse as beneficiary and our marriage is subsequently dissolved.

 

Signature:                                                                                         

Charles O. Moore

 

Date:         _________, 2016

 

Received by the Bank this ____ day of __________, 2016

 

By:                                                                                             

 

Title:                                                                                     

 

 

14Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is entered into by and
between AMERICA’S CAR MART, INC., an Arkansas corporation (the “Company”) and JEFFREY A. WILLIAMS (the
“Associate”) on this 27th day of February, 2020 to be effective as of May 1, 2020 (the “Effective
Date”).

 

W I T N E S S E T H:

 

WHEREAS, the Company is engaged in the business
of the sale and financing of used vehicles (the “Company Business”);

 

WHEREAS, the Associate is presently employed
with the Company as a Senior Executive Officer, pursuant to that certain Employment Agreement dated as of May 1, 2015;

 

WHEREAS, the Company desires to continue the
employment of the Associate as a Senior Executive Officer, 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;

 

WHEREAS, America’s Car-Mart, Inc., a Texas
corporation (the “Parent Company”), owns 100% of the outstanding common stock of the Company and Colonial;

 

WHEREAS, the Associate was appointed as the
Chief Executive Officer of the Parent Company effective January 1, 2018;

 

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, the 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, and for other good and valuable consideration, 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 initial Employment Term shall be one (1) year from
the Effective Date. This Agreement shall be automatically renewed for successive periods of one (1) year commencing at the first
anniversary of the Effective Date and on each subsequent anniversary thereafter, 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 $750,000 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. In addition, nothing contained herein shall affect or in any way limit the Associate’s eligibility
to participate in any nonqualified deferred compensation plan of the Company or the Parent.

 

(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”) pursuant to any incentive bonus plan of the Company or the Parent Company which may be in effect from
time to time during the Employment Term or otherwise as determined by the Compensation Committee of the Parent Company’s
Board of Directors (the “Compensation Committee”).

 

    	2

    

    

 

(c)       Long-Term
Incentives. During the Employment Term, the Associate shall be eligible to participate in the Parent Company’s Amended and
Restated Stock Option Plan (the “Option Plan”) and the Parent Company’s Amended and Restated Stock Incentive
Plan (the “Incentive Plan”) (and any successor incentive plans thereto) to the extent that the Compensation
Committee, in its sole discretion, determines is appropriate.

 

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.

 

6.       Non-Competition,
Non-Solicitation, Non-Disclosure, and Confidentiality Provisions. As used in this Section 6 and Section 7 of this Agreement,
the term “Company” shall mean the Company and its subsidiaries and affiliates, including, without limitation, Colonial
and the Parent Company.

 

(a)       Non-Solicitation:
Customers. During Associate’s employment and for two (2) years 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.

 

(b)       Non-Solicitation:
Employees. During Associate’s employment and for two (2) years 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. 

 

(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.

 

    	3

    

    

 

(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 has been or may be disclosed to Associate or of which Associate
became or may become 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 following the cessation of Associate’s employment with the Company for any reason,
Associate will not, without the prior written consent of the Company, 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.

 

(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.

 

    	4

    

    

 

(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 Alabama, Arkansas, Georgia, Kentucky, Mississippi, Missouri, Oklahoma,
Tennessee and Texas (hereinafter the “Territory”), and that Associate’s duties and responsibilities are
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 two (2) years from
the cessation 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 (i) the Territory, (ii) any county
contiguous to or in which the Company maintained a physical presence during the twelve (12) months prior to the cessation of Associate’s
employment with the Company, or (iii) within any county contiguous to or in which the Company had substantial plans to enter
at the time of the cessation of Associate’s employment with the Company, and of which Associate had knowledge, 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.

 

    	5

    

    

 

(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 A.

 

(g)       Reasonable
Restrictions. Associate acknowledges and agrees that the restrictions contained in this Agreement are reasonable and necessary
in order to protect the valuable proprietary 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 acknowledges and agrees 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. Further, the existence of any claim or cause of action of the Associate against the Company, whether
or not predicated on the terms of this Agreement, shall not constitute a defense to the enforcement of the Associate’s obligations
under this Agreement.

 

(h)       Separate
Covenants. The provisions of this Section 6 shall be deemed to consist of a series of separate covenants. Should a determination
be made by a court of competent jurisdiction that the character, duration, or geographical scope of any provision or provisions
of this Agreement is or are unreasonable in light of the circumstances as they then exist, then it is the intention and the agreement
of the Company and Associate that this Agreement shall be construed by the court in such a manner as to impose only those restrictions
on the conduct of Associate that are reasonable in light of the circumstances as they then exist and as are appropriate to assure
the Company of the intended benefit of this Agreement, and such restrictions shall be interpreted, modified, and/or rewritten to
include as much of the duration, scope, geographic area, or otherwise as will render such restrictions valid and enforceable under
Arkansas law. Further, any period of restriction in this Section 6 shall be tolled during (and shall be deemed automatically extended
by) any period in which the Associate is in violation of this Section 6.

 

    	6

    

    

 

(i)       Cooperation.
Following the effective date of Associate’s termination, upon reasonable request by the Company, the Associate shall cooperate
with the Company with respect to any litigation or other dispute relating to any matter in which the Associate was involved or
had knowledge during his employment with the Company. The Company shall reimburse the Associate for all reasonable out-of-pocket
costs, such as travel, hotel and meal expenses, incurred by the Associate in providing any cooperation pursuant to this Section
6(i). The Company shall make its attorney available to advise the Associate or if, in the reasonable opinion of the Company’s
attorney a conflict arises which would prevent the Company’s attorney from advising the Associate, the Company shall reimburse
the Associate for reasonable legal fees incurred in providing any cooperation pursuant to this Section 6(i).

 

(j)       Non-Disparagement.
The Company and Associate each acknowledge that any disparaging comments by either party against the other are likely to substantially
depreciate the business reputation of the other party. The Company and Associate further agree that neither party will directly
or indirectly defame, disparage, or publicly criticize the services, business, integrity, veracity or reputation of the other party,
including but not limited to, the Company or its officers, directors, shareholders or employees in any forum or through any medium
of communication. Nothing in this Agreement will preclude Associate or the Company from supplying truthful information to any governmental
authority or in response to any lawful subpoena or other legal process.

 

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. All of
the Company’s remedies for breach of this Agreement shall be cumulative and the pursuit of one remedy shall not be deemed
to exclude any other remedies.

 

8.       Termination
Without Compensation.

 

(a)       Unless
terminated earlier in accordance with this Section 8, Section 9, Section 10, Section 11, or Section 12, the Employment Term will
terminate as of the end of the then current term of this Agreement upon written notice of termination given by either party hereto
at least thirty (30) days prior to the expiration of the then current Employment Term.

 

    	7

    

    

 

(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 Sections 8, 10, 11 and 12, then, under such circumstances and subject to
the Associate’s continued compliance with the terms of this Agreement, (i) the Associate shall be paid within sixty (60)
days after termination a lump sum amount equal to twenty-four (24) months of the Associate’s Base Salary then in effect hereunder,
plus the pro rata portion of the Bonus earned, if any, through the date of termination, (ii) all outstanding and unvested stock
options previously granted to the Associate by the Parent Company shall immediately vest in full without regard to the achievement
of any applicable performance conditions, unless otherwise prohibited by the Option Plan (or successor plan) or the stock option
agreements between the Parent Company and the Associate with respect to such stock options, and (iii) all outstanding and unvested
shares of restricted stock (if any) previously granted to the Associate by the Parent Company shall immediately vest in full without
regard to the achievement of any applicable performance conditions, unless otherwise prohibited by the Incentive Plan (or successor
plan) or the restricted stock agreements between the Parent Company and the Associate with respect to such restricted stock awards.

 

Notwithstanding the foregoing, the Associate
shall not be entitled to receive any of the payments or benefits described in this Section 9 unless the Associate has executed
a release of claims in favor of the Company, its affiliates and their respective officers and directors in a form provided by the
Company (the “Release”) and the period during which such Release may be revoked has expired, without the Associate
having revoked the Release, on or before the 60th day following the termination date. None of the payments or benefits
described in this Section 9 shall be paid until the Release has been signed and become effective, and any payments, which would
otherwise be payable during such sixty-day period prior to the date the Release becomes effective, shall be accumulated and paid
to the Associate on the first payroll date following the date the Release becomes effective, without interest; provided, however,
that if such sixty-day period begins in one calendar year and ends in a second calendar year, such payments shall be accumulated,
without interest, and paid to the Associate on the first payroll date during the second calendar year following the date the Release
becomes effective, as described above.

 

    	8

    

    

 

10.       Death
of the Associate. If the Associate dies during the Employment Term, the Employment Term shall terminate, and within sixty (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, all outstanding and unvested stock options
previously granted to the Associate by the Parent Company shall immediately vest in full, without regard to the achievement of
any applicable performance conditions, unless otherwise prohibited by the Option Plan (or successor plan) or the stock option agreements
between the Parent Company and the Associate with respect to such stock options, and all outstanding and unvested shares of restricted
stock (if any) previously granted to the Associate by the Parent Company shall immediately vest in full, without regard to the
achievement of any applicable performance conditions, unless otherwise prohibited by the Incentive Plan (or successor plan) or
the restricted stock agreements between the Parent Company and the Associate with respect to such restricted stock awards.

 

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 within sixty (60) days after termination a lump sum amount equal to
twenty-four (24) months of the Associate’s Base Salary then in effect hereunder; 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, by reason of any
medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a period
of not less than twelve (12) consecutive months, he has received replacement income for a period of at least three (3) months 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
by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected
to last for a period of not less than twelve (12) consecutive months. Any disability, as defined herein, shall not constitute “Cause”
for purposes of Section 8(b) hereof. In addition, all outstanding and unvested stock options previously granted to the Associate
by the Parent Company shall immediately vest in full, without regard to the achievement of any applicable performance conditions,
unless otherwise prohibited by the Option Plan (or successor plan) or the stock option agreements between the Parent Company and
the Associate with respect to such stock options, and all outstanding and unvested shares of restricted stock (if any) previously
granted to the Associate by the Parent Company shall immediately vest in full, without regard to the achievement of any applicable
performance conditions, unless otherwise prohibited by the Incentive Plan (or successor plan) or the restricted stock agreements
between the Parent Company and the Associate with respect to such restricted stock awards.

 

    	9

    

    

 

12.       Change
in Control of the Parent Company

 

(a)       Notwithstanding
any other provision contained herein, if the Associate’s employment is terminated by the Associate for Good Reason (as defined
in Section 12(c) herein) or by the Company or the Parent Company (or the surviving or acquiring entity, as the case may be), other
than for Cause (including, without limitation, written notice by the Company of its intent to terminate the Agreement upon expiration
of the Employment Term pursuant to Section 3 hereof), in each case within six (6) months prior to or twenty-four (24) months following
a Change in Control (as defined in Section 12(b) herein) of the Parent Company, then (i) the Company shall pay to the Associate
a lump sum cash payment equal to twenty-four (24) months of the Associate’s Base Salary in effect immediately prior to the
Double-Trigger Event Date (as defined below in this Section 12(a)), plus the pro rata portion of the Bonus earned, if any, through
the date of Double-Trigger Event Date; (ii) all outstanding and unvested stock options previously granted to the Associate by the
Parent Company shall immediately vest in full, without regard to the achievement of any applicable performance conditions, unless
otherwise prohibited by the Option Plan (or successor plan) or the stock option agreements between the Parent Company and the Associate
with respect to such stock options; and (iii) all outstanding and unvested shares of restricted stock (if any) previously granted
to the Associate by the Parent Company shall immediately vest in full, without regard to the achievement of any applicable performance
conditions, unless otherwise prohibited by the Incentive Plan (or successor plan) or the restricted stock agreements between the
Parent Company and the Associate with respect to such restricted stock awards (collectively, (i), (ii) and (iii) are referred to
as the “Change in Control Payments”).

 

If the termination of the Associate’s
employment, as contemplated by this Section 12, occurs prior to 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 and the Associate’s Base
Salary in effect immediately prior to such termination shall be deemed in effect, for purposes of this Section 12, immediately
prior to the Change in Control. For purposes of this Section 12, the later of (i) the effective date of the Change in Control and
(ii) the date Associate’s employment is terminated as contemplated in this Section 12(a) shall be referred to as the “Double-Trigger
Event Date”.

 

Notwithstanding the foregoing, the
Associate shall not be entitled to receive any Change in Control Payments described in this Section 12 unless the Associate has
executed a release of claims in favor of the Company, its affiliates and their respective officers and directors in a form provided
by the Company (the “Release”) and the period during which such Release may be revoked has expired, without
the Associate having revoked the Release, on or before the 60th day following the Double-Trigger Event Date. None of
the Change in Control Payments shall be paid until the Release has been signed and become effective, and any such payments, which
would otherwise be payable during such sixty-day period prior to the date the Release becomes effective, shall be accumulated and
paid to the Associate on the first payroll date following the date the Release becomes effective, without interest; provided, however,
that if such sixty-day period begins in one calendar year and ends in a second calendar year, the Change in Control Payments shall
be accumulated, without interest, and paid to the Associate on the first payroll date during the second calendar year following
the date the Release becomes effective, as described above.

 

    	10

    

    

 

(b)       For
purposes of this Section 12, “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 Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”)) (a “Person”) of ownership of stock of the Parent Company
that, together with stock held by such Person, constitutes more than fifty percent (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 fifty percent (50%) of the
total fair market value or 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 any 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 thirty-five percent (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

 

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(iii)       Change
in Ownership of a Substantial Portion of Assets. The acquisition by any 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 forty percent (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).

 

(c)       For
purposes of this Section 12, “Good Reason” shall mean the Associate’s resignation from the Company within
thirty (30) days following the occurrence of any of the following events with respect to the Associate:

 

(i)       Without
the Associate’s express written consent, the significant reduction of the Associate’s duties, authority, responsibilities,
or reporting relationships relative to the Associate’s duties, authority, responsibilities, or reporting relationships as
in effect immediately prior to such reduction, or the assignment to the Associate of such reduced duties, authority, responsibilities,
or reporting relationships, which reduction or assigned reduction remains in effect five (5) business days after written notice
by the Associate to the Chief Executive Officer or the Chief Financial Officer of the Parent Company (or the surviving or acquiring
entity, as the case may be) of such conditions; provided, however, that the mere occurrence of a Change in Control shall not, in
and of itself, constitute a material adverse change in the Associate’s duties, authority, responsibilities or reporting relationships.

 

(ii)       A
material reduction by the Company or the Parent Company (or the surviving or acquiring entity, as the case may be) in the Base
Salary, bonus structure or benefits of the Associate as in effect immediately prior to such reduction, with the result that the
Associate’s overall benefits package is significantly reduced; or

 

(iii)       The
relocation of the Associate’s principal work location to a facility or a location more than fifty (50) miles from the Associate’s
then present principal work location, without the Associate’s express written consent.

 

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(d)       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,
except that the Associate shall not be entitled to any payments or benefits under Section 9 hereof.

 

13.       Definition
of Termination of Employment. “Termination of Employment” as used in this Agreement shall have the same meaning
as set out in, and shall occur on the date determined in accordance with, Section 1.409A-1(h) of the regulations promulgated under
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.

 

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 FedEx
Corporation or United Parcel Service, Inc., 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 subsequently changed
by similar notice in writing given by the particular person whose address is to be changed):

 

If to the Associate, to Jeffrey A.
Williams, at the last known address in the Company’s personnel records;

 

    	13

    

    

 

If to the Company, to America’s
Car-Mart, Inc., Attention: Secretary, 802 S. E. Plaza Avenue, Suite 200, Bentonville, Arkansas 72712, Fax #479-273-7556;

 

With a copy to W. Brett Papasan, Chief
Legal Officer, 802 S. E. Plaza Avenue, Suite 200, Bentonville, Arkansas 72712, Fax #479-271-0796.

 

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, without reference
to principles of conflict of laws.

 

17.       Choice
of Venue. Any dispute, controversy, or claim arising out of or in respect of this Agreement (or its validity, interpretation,
or enforcement, or alleging breach thereof) or Associate’s employment with the Company shall be submitted to, adjudicated
by, and subject to the exclusive jurisdiction of the state courts in Benton County, Arkansas, or the federal courts in the Western
District of Arkansas, and both the Company and Associate hereby consent to such venues as the exclusive forums for resolution of
the aforementioned disputes, submit to the personal jurisdiction of said courts to hear such disputes, and waive all objections
to such courts hearing and adjudicating such disputes.

 

18.       Compliance
with Section 409A. The payments due under this Agreement are intended to comply with Section 409A of the Code (“Code
Section 409A”) or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding
any other provision of this Agreement, payments of “nonqualified deferred compensation” provided under this Agreement
may only be made upon an event and in a manner that complies with Code Section 409A or an applicable exemption. Any payments under
this Agreement that may be excluded from Code Section 409A either as separation pay due to an involuntary separation from service
or as a short-term deferral shall be excluded from Code Section 409A to the maximum extent possible. To the extent Code Section
409A applies, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments of “nonqualified
deferred compensation” to be made under this Agreement by reason of a termination of employment shall only be made if such
termination of employment constitutes a “separation from service” under Code Section 409A. Notwithstanding the foregoing,
the Company makes no representations that the payments and benefits provided under this Agreement comply with Code Section 409A
and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may
be incurred by the Associate on account of non-compliance with Code Section 409A. To the extent required by Code Section 409A,
each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following: (i) the
amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (ii) any reimbursement of an eligible
expense shall be paid to the Associate on or before the last day of the calendar year following the calendar year in which the
expense was incurred; and (iii) any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation
or exchange for another benefit.

 

    	14

    

    

 

19.       Section
280G.

 

(a)       In
the event that the total amount of payments to be received by the Associate, pursuant to this Agreement or otherwise, that are
contingent upon a change in ownership or control (within the meaning of Section 280G of the Code) would, but for this Section 19(a),
be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the amount of payments to
be received by the Associate pursuant to this Agreement or otherwise shall be reduced to the maximum amount that will cause the
total amounts of the payments not to be subject to the Excise Tax, but only if the amount of such payments, after such reduction
and after payment of all applicable taxes on the reduced amount, is equal to or greater than the amount of such payments the Associate
would otherwise be entitled to retain without such reduction after the payment of all applicable taxes, including the Excise Tax.

 

(b)       The
accounting firm engaged by the Company for general audit purposes (the “Audit Firm”) shall perform any calculations
necessary in connection with this Section 19; provided that, if for any reason the Audit Firm is unable to, or declines to, perform
such calculations, the Company shall engage such other accounting firm as the Audit Firm shall recommend in writing to the Company
to perform such calculations (the Audit Firm or such other accounting firm, as applicable, being hereinafter referred to as the
“Accounting Firm”).  The Company shall bear all expenses with respect to the determinations by such Accounting
Firm required to be made hereunder. The Accounting Firm engaged to make the determinations under this Section 19 shall provide
its calculations, together with detailed supporting documentation, to the Associate and the Company within fifteen (15) calendar
days after the date on which the Associate’s right to a payment contingent on a Change in Control is triggered (if requested
at that time by Associate or the Company) or such other time as requested by the Associate or the Company.  If the Accounting
Firm determines that no Excise Tax is payable with respect to such payments, it shall furnish the Associate and the Company with
an opinion reasonably acceptable to Associate that no Excise Tax will be imposed with respect to such payments.  Any good
faith determinations of the Accounting Firm made hereunder shall be final, binding, and conclusive upon Associate and the Company.
If a reduction in payments or benefits constituting “parachute payments” is required by Section 19(a), the reduction
shall occur in the following order unless the Associate elects in writing a different order (provided, however, that such election
shall be subject to the Company’s approval if made on or after the date on which the event that triggers the payment occurs
and to the extent that such election does not violate Code Section 409A): reduction of cash payments (in reverse order of the date
on which such cash payments would otherwise be made with the cash payments that would otherwise be made last being reduced first);
cancellation of accelerated vesting of stock awards; reduction of employee benefits.  In the event that accelerated vesting
of stock awards is to be reduced, such accelerated vesting shall be cancelled in the reverse order of the grant date of the Associate’s
stock awards unless the Associate elects in writing a different order for cancellation.

 

20.       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.

 

    	15

    

    

 

21.       Binding
Effect. This Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns.

 

22.       Withholding.
The Company may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.

 

23.       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 (including that certain Employment Agreement
entered into by and between the Company and Associate dated as of May 1, 2015), 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.

 

24.       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.

 

25.       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.

 

26.       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.

 

27.       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.

 

 

[SIGNATURE PAGE FOLLOWS.]

 

 

 

    	16

    

    

 

IN WITNESS WHEREOF, the parties have
executed this Agreement to be effective as of the Effective Date.

 

	 	 	COMPANY:
	 	 	 
	 	 	AMERICA’S CAR MART, INC., 
	 	 	an Arkansas corporation
	 	 	 
	 	 	By:  	/s/ Vickie D. Judy
	 	 	 	 
	 	 	Name: 	Vickie D. Judy
	 	 	 	 
	 	 	Title:	CFO / Secretary
	 	 	 
	 	 	 
	 	 	ASSOCIATE:
	 	 	 
	 	 	/s/ Jeffrey A. Williams

	 	 	Jeffrey A. Williams

 

 

 

 

 

 

 

 

 

 

 

(Signature Page to Employment Agreement of Jeffrey
A. Williams)

 

 

 

 

    	17

    

    

 

APPENDIX A

 

 

TERMINATION CERTIFICATION

 

The undersigned Associate certifies that he
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 will comply
with all the covenants and restrictions contained in Section 6 of his Employment Agreement with the Company dated ___________,
20__.

 

 

	Date:  	 	 	 
	 	 	 	Associate

 

 

 

 

 

 

 

 

 

A-1

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