|
Delaware
|
| |
6770
|
| |
83-2456129
|
|
|
(State or other jurisdiction of
|
| |
(Primary Standard Industrial
|
| |
(I.R.S. Employer
|
|
|
incorporation or organization)
|
| |
Classification Code Number)
|
| |
Identification Number)
|
|
|
Jaime Mercado, Esq.
Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 Telephone: (212) 455-2000 |
| |
Valerie Ford Jacob, Esq.
Michael A. Levitt, Esq. Freshfields Bruckhaus Deringer US LLP 601 Lexington Avenue New York, New York 10022 Telephone: (212) 277-4000 |
|
|
Large accelerated filer
☐
|
| |
Accelerated filer
☐
|
|
|
Non-accelerated filer
☒
|
| |
Smaller reporting company
☒
|
|
| | | |
Emerging growth company
☒
|
|
| | | | | v | | | |
| | | | | ix | | | |
| | | | | 1 | | | |
| | | | | 18 | | | |
| | | | | 20 | | | |
| | | | | 21 | | | |
| | | | | 24 | | | |
| | | | | 26 | | | |
| | | | | 28 | | | |
| | | | | 31 | | | |
| | | | | 31 | | | |
| | | | | 45 | | | |
| | | | | 47 | | | |
| | | | | 54 | | | |
| | | | | 62 | | | |
| | | | | 64 | | | |
| | | | | 77 | | | |
| | | | | 77 | | | |
| | | | | 77 | | | |
| | | | | 77 | | | |
| | | | | 77 | | | |
| | | | | 77 | | | |
| | | | | 78 | | | |
| | | | | 78 | | | |
| | | | | 79 | | | |
| | | | | 79 | | | |
| | | | | 79 | | | |
| | | | | 79 | | | |
| | | | | 80 | | | |
| | | | | 81 | | | |
| | | | | 82 | | | |
| | | | | 82 | | | |
| | | | | 82 | | | |
| | | | | 82 | | | |
| | | | | 83 | | | |
| | | | | 83 | | | |
| | | | | 84 | | | |
| | | | | 85 | | | |
| | | | | 85 | | | |
| | | | | 85 | | |
| | | | | 86 | | | |
| | | | | 86 | | | |
| | | | | 97 | | | |
| | | | | 101 | | | |
| | | | | 104 | | | |
| | | | | 105 | | | |
| | | | | 110 | | | |
| | | | | 110 | | | |
| | | | | 111 | | | |
| | | | | 112 | | | |
| | | | | 124 | | | |
| | | | | 124 | | | |
| | | | | 124 | | | |
| | | | | 124 | | | |
| | | | | 125 | | | |
| | | | | 125 | | | |
| | | | | 127 | | | |
| | | | | 134 | | | |
| | | | | 134 | | | |
| | | | | 135 | | | |
| | | | | 142 | | | |
| | | | | 144 | | | |
| | | | | 150 | | | |
| | | | | 151 | | | |
| | | | | 152 | | | |
| | | | | 152 | | | |
| | | | | 154 | | | |
| | | | | 156 | | | |
| | | | | 157 | | | |
| | | | | 159 | | | |
| | | | | 160 | | | |
| | | | | 160 | | | |
| | | | | 160 | | | |
| | | | | 161 | | | |
| | | | | 162 | | | |
| | | | | 162 | | | |
| | | | | 162 | | | |
| | | | | 162 | | | |
| | | | | 163 | | | |
| | | | | 164 | | | |
| | | | | 164 | | | |
| | | | | 166 | | |
| | | | | 168 | | | |
| | | | | 170 | | | |
| | | | | 171 | | | |
| | | | | 171 | | | |
| | | | | 172 | | | |
| | | | | 174 | | | |
| | | | | 177 | | | |
| | | | | 180 | | | |
| | | | | 180 | | | |
| | | | | 180 | | | |
| | | | | 181 | | | |
| | | | | 183 | | | |
| | | | | 184 | | | |
| | | | | 185 | | | |
| | | | | 191 | | | |
| | | | | 191 | | | |
| | | | | 191 | | | |
| | | | | 191 | | | |
| | | | | 192 | | | |
| | | | | 192 | | | |
| | | | | 192 | | | |
| | | | | 193 | | | |
| | | | | 193 | | | |
| | | | | 193 | | | |
| | | | | 193 | | | |
| | | | | 195 | | | |
| | | | | 196 | | | |
| | | | | 196 | | | |
| | | | | 198 | | | |
| | | | | 198 | | | |
| | | | | 199 | | | |
| | | | | 199 | | | |
| | | | | 200 | | | |
| | | | | 200 | | | |
| | | | | 200 | | | |
| | | | | 200 | | | |
| | | | | 201 | | | |
| | | | | 202 | | | |
| | | | | 202 | | | |
| | | | | 203 | | | |
| | | | | 205 | | | |
| | | | | 212 | | |
| | | | | 219 | | | |
| | | | | 223 | | | |
| | | | | 235 | | | |
| | | | | 238 | | | |
| | | | | 238 | | | |
| | | | | 239 | | | |
| | | | | 240 | | | |
| | | | | 241 | | | |
| | | | | 242 | | | |
| | | | | F-1 | | | |
| | | | | A-1 | | | |
| | | | | B-1 | | | |
| | | | | C-1 | | | |
| | | | | D-1 | | | |
| | | | | E-1 | | |
| | |
Nine Months Ended
September 30, |
| |
Year Ended December 31,
|
| ||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| |
2017
|
| |||||||||||||||
Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Retail vehicle sales
|
| | | $ | 71,388 | | | | | $ | 66,914 | | | | | $ | 90,382 | | | | | $ | 53,448 | | | | | $ | 41,758 | | |
Wholesale vehicle sales
|
| | | | 7,124 | | | | | | 6,427 | | | | | | 8,454 | | | | | | 3,153 | | | | | | 1,340 | | |
Finance and insurance, net
|
| | | | 2,697 | | | | | | 2,312 | | | | | | 3,117 | | | | | | 1,608 | | | | | | 974 | | |
Lease income, net
|
| | | | 373 | | | | | | 416 | | | | | | 533 | | | | | | 142 | | | | | | — | | |
Total revenues
|
| | |
|
81,852
|
| | | |
|
76,069
|
| | | |
|
102,486
|
| | | |
|
58,351
|
| | | |
|
44,072
|
| |
Cost of sales (exclusive of depreciation)
|
| | | | 72,805 | | | | | | 69,341 | | | | | | 93,870 | | | | | | 52,708 | | | | | | 38,519 | | |
Gross profit
|
| | |
|
8,777
|
| | | |
|
6,728
|
| | | |
|
8,706
|
| | | |
|
5,643
|
| | | |
|
5,553
|
| |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Selling, general and administrative
|
| | | | 11,173 | | | | | | 13,629 | | | | | | 18,305 | | | | | | 11,661 | | | | | | 7,254 | | |
Depreciation expense
|
| | | | 269 | | | | | | 412 | | | | | | 504 | | | | | | 338 | | | | | | 218 | | |
Management fee expense – related party
|
| | | | 195 | | | | | | 186 | | | | | | 250 | | | | | | 250 | | | | | | 73 | | |
Total operating expenses
|
| | |
|
11,637
|
| | | |
|
14,227
|
| | | |
|
19,059
|
| | | |
|
12,249
|
| | | |
|
7,545
|
| |
Loss from operations
|
| | | | (2,860) | | | | | | (7,499) | | | | | | (10,353) | | | | | | (6,606) | | | | | | (1,992) | | |
Interest expense
|
| | | | 360 | | | | | | 518 | | | | | | 651 | | | | | | 466 | | | | | | 414 | | |
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Management fee income – related party
|
| | | | — | | | | | | — | | | | | | — | | | | | | 127 | | | | | | 180 | | |
Change in fair value of warrants liability
|
| | | | 30 | | | | | | 18 | | | | | | 24 | | | | | | (2) | | | | | | 50 | | |
Change in fair value of redeemable convertible
preferred stock tranche obligation |
| | | | 962 | | | | | | (336) | | | | | | (1,396) | | | | | | (272) | | | | | | (79) | | |
Other income (expense)
|
| | | | 28 | | | | | | (227) | | | | | | (291) | | | | | | 662 | | | | | | (210) | | |
Total other income (expense), net
|
| | |
|
1,020
|
| | | |
|
(545)
|
| | | |
|
(1,663)
|
| | | |
|
515
|
| | | |
|
(59)
|
| |
| | |
Nine Months Ended
September 30, |
| |
Year Ended December 31,
|
| ||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| |
2017
|
| |||||||||||||||
Loss before income tax expense
|
| | | | (2,200) | | | | | | (8,562) | | | | | | (12,667) | | | | | | (6,557) | | | | | | (2,465) | | |
Income tax expense
|
| | | | 12 | | | | | | 7 | | | | | | 11 | | | | | | 3 | | | | | | 4 | | |
Net loss
|
| | | | (2,212) | | | | | | (8,569) | | | | | | (12,678) | | | | | | (6,560) | | | | | | (2,469) | | |
Redeemable convertible preferred stock dividends (undeclared and cumulative)
|
| | | | (1,399) | | | | | | (1,128) | | | | | | (1,579) | | | | | | (1,014) | | | | | | (274) | | |
Net loss attributable to common stockholders
|
| | | $ | (3,611) | | | | | $ | (9,697) | | | | | $ | (14,257) | | | | | $ | (7,574) | | | | | $ | (2,743) | | |
Net loss per share attributable to common stockholders, basic and diluted
|
| | | $ | (0.97) | | | | | $ | (2.61) | | | | | $ | (3.84) | | | | | $ | (2.04) | | | | | $ | (0.75) | | |
Weighted-average shares used in computing net
loss per share attributable to common stockholders, basic and diluted |
| | | | 3,716,526 | | | | | | 3,716,526 | | | | | | 3,716,526 | | | | | | 3,716,526 | | | | | | 3,660,679 | | |
|
| | |
As of
September 30, 2020 |
| |
As of December 31,
|
| ||||||||||||
| | |
2019
|
| |
2018
|
| ||||||||||||
Cash and cash equivalents
|
| | | $ | 3,742 | | | | | $ | 3,214 | | | | | $ | 1,019 | | |
Inventories
|
| | | | 8,426 | | | | | | 7,625 | | | | | | 10,160 | | |
Total assets
|
| | | | 18,080 | | | | | | 16,635 | | | | | | 16,436 | | |
Floor plan notes payable
|
| | | | 6,696 | | | | | | 6,739 | | | | | | 8,697 | | |
Long-term debt (including current portion)
|
| | | | 5,070 | | | | | | 2,825 | | | | | | 17 | | |
Total current liabilities
|
| | | | 20,286 | | | | | | 16,810 | | | | | | 12,470 | | |
Total liabilities
|
| | | | 26,500 | | | | | | 21,496 | | | | | | 16,043 | | |
Redeemable convertible preferred stock
|
| | | | 17,560 | | | | | | 17,560 | | | | | | 8,670 | | |
Total stockholders’ equity (deficit)
|
| | | | (25,980) | | | | | | (22,421) | | | | | | (8,277) | | |
| | |
Nine Months Ended
September 30, |
| |
Year Ended
December 31, |
| |
For the Period from
November 7, 2018 (Inception) Through December 31, |
| |||||||||||||||
Statement of Operations Data:
|
| |
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| ||||||||||||
Operating costs
|
| | | $ | 1,444,905 | | | | | $ | 658,473 | | | | | $ | 932,834 | | | | | $ | 2,750 | | |
Loss from operations
|
| | | | (1,444,905) | | | | | | (658,473) | | | | | | (932,834) | | | | | | (2,750) | | |
Other income: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest earned on marketable securities held in Trust Account
|
| | | | 1,775,617 | | | | | | 4,144,082 | | | | | | 5,531,557 | | | | | | — | | |
(Loss) income before income taxes
|
| | | | 330,712 | | | | | | 3,485,609 | | | | | | 4,598,723 | | | | | | (2,750) | | |
Provision for income taxes
|
| | | | (341,859) | | | | | | (839,471) | | | | | | (1,120,521) | | | | | | — | | |
Net (loss) income
|
| | | $ | (11,147) | | | | | $ | 2,646,138 | | | | | $ | 3,478,202 | | | | | $ | (2,750) | | |
Weighted average shares outstanding of Class A redeemable common stock
|
| | | | 30,557,322 | | | | | | 30,446,374 | | | | | | 30,479,514 | | | | | | — | | |
Basic and diluted net income per share, Class A
|
| | | $ | 0.04 | | | | | $ | 0.10 | | | | | $ | 0.14 | | | | | | — | | |
Weighted average shares outstanding of Class B non-redeemable common stock
|
| | | | 7,639,330 | | | | | | 7,588,618 | | | | | | 7,601,435 | | | | | | 7,500,000 | | |
Basic and diluted net loss per share, Class B
|
| | | $ | (0.17) | | | | | $ | (0.07) | | | | | $ | (0.10) | | | | | $ | (0.00) | | |
|
Balance Sheet Data
(end of period): |
| |
September 30,
|
| |
December 31,
|
| ||||||||||||||||||
|
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| ||||||||||||||
Cash
|
| | | $ | 429,605 | | | | | $ | 1,776,070 | | | | | $ | 1,600,833 | | | | | $ | 12,000 | | |
Cash and marketable securities held in Trust Account
|
| | | | 310,896,645 | | | | | | 308,748,155 | | | | | | 309,840,375 | | | | | | — | | |
Total assets
|
| | | | 311,516,241 | | | | | | 310,764,415 | | | | | | 311,657,995 | | | | | | 306,004 | | |
Common stock subject to possible redemption, 29,573,697, 29,491,605 and 29,574,811 shares as of September 30, 2020, September 30, 2019 and December 31, 2019, respectively (at $10.00 per share)
|
| | | | 295,736,970 | | | | | | 294,916,051 | | | | | | 295,748,110 | | | | | | — | | |
Total liabilities
|
| | | | 10,779,269 | | | | | | 10,848,360 | | | | | | 10,909,876 | | | | | | 283,754 | | |
Total stockholders’ equity
|
| | | | 5,000,002 | | | | | | 5,000,004 | | | | | | 5,000,009 | | | | | | 22,250 | | |
Cash Flow Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Net cash used in operating activities
|
| | | | (1,890,575) | | | | | | (1,584,837) | | | | | | (2,055,329) | | | | | | (2,750) | | |
Net cash provided by (used in) investing activities
|
| | | | 719,347 | | | | | | (304,604,073) | | | | | | (304,308,818) | | | | | | — | | |
Net cash provided by financing activities
|
| | | | — | | | | | | 307,952,980 | | | | | | 307,952,980 | | | | | | 14,750 | | |
(in thousands, except share and per share data)
|
| |
CarLotz
|
| |
Acamar
Partners |
| |
Pro Forma
Combined Assuming No Redemption into Cash |
| |
Pro Forma
Combined Assuming Maximum Redemptions into Cash |
| ||||||||||||
Statement of Operations Data – For the Nine Months
Ended September 30, 2020 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Revenues
|
| | | $ | 81,582 | | | | | $ | — | | | | | $ | 81,582 | | | | | $ | 81,582 | | |
Cost of sales (exclusive of depreciation)
|
| | | | 72,805 | | | | | | — | | | | | | 72,805 | | | | | | 72,805 | | |
Operating expenses
|
| | | | 11,637 | | | | | | 1,445 | | | | | | 16,340 | | | | | | 16,340 | | |
Loss from operations
|
| | | | (2,860) | | | | | | (1,445) | | | | | | (7,563) | | | | | | (7,563) | | |
Net (loss) income
|
| | | | (2,212) | | | | | | (11) | | | | | | (7,907) | | | | | | (7,907) | | |
Basic and diluted net income (loss) per share attributable to common stockholders
|
| | | $ | (0.97) | | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding – basic and diluted
|
| | | | 3,716,526 | | | | | | | | | | | | | | | | | | | | |
Basic and diluted net income (loss) per Class A share
|
| | | | | | | | | $ | 0.04 | | | | | $ | (0.07) | | | | | $ | (0.09) | | |
Weighted average Class A shares outstanding – basic
and diluted |
| | | | | | | | | | 30,557,322 | | | | | | 113,617,806 | | | | | | 87,974,870 | | |
Basic and diluted net income (loss) per Class B
share |
| | | | | | | | | $ | (0.17) | | | | | | | | | | |||||
Weighted average Class B shares outstanding – basic
and diluted |
| | | | | | | | | | 7,639,330 | | | | | ||||||||||
Balance Sheet Data – As of September 30, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total current assets
|
| | | $ | 17,046 | | | | | $ | 620 | | | | | $ | 336,826 | | | | | $ | 75,929 | | |
Total assets
|
| | | | 18,080 | | | | | | 311,516 | | | | | | 337,860 | | | | | | 76,963 | | |
Total current liabilities
|
| | | | 20,286 | | | | | | 84 | | | | | | 12,783 | | | | | | 12,783 | | |
Total liabilities
|
| | | | 26,500 | | | | | | 10,779 | | | | | | 87,291 | | | | | | 87,291 | | |
Total stockholders’ (deficit) equity
|
| | | | (25,980) | | | | | | 5,000 | | | | | | 250,569 | | | | | | (10,328) | | |
Statement of Operations Data – Year Ended December 31, 2019
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Revenues
|
| | | $ | 102,486 | | | | | $ | — | | | | | $ | 102,486 | | | | | $ | 102,486 | | |
Cost of sales (exclusive of depreciation)
|
| | | | 93,780 | | | | | | — | | | | | | 93,780 | | | | | | 93,780 | | |
Operating expenses
|
| | | | 19,059 | | | | | | 933 | | | | | | 24,411 | | | | | | 24,411 | | |
Loss from operations
|
| | | | (10,353) | | | | | | (933) | | | | | | (15,705) | | | | | | (15,705) | | |
Net (loss) income
|
| | | | (12,678) | | | | | | 3,478 | | | | | | (16,658) | | | | | | (16,658) | | |
Basic and diluted net income (loss) per share attributable to common stockholders
|
| | | $ | (3.84) | | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding – basic and diluted
|
| | | | 3,716,526 | | | | | | | | | | | | | | | | | | | | |
Basic and diluted net income (loss) per Class A share
|
| | | | | | | | | $ | 0.14 | | | | | $ | (0.15) | | | | | $ | (0.19) | | |
(in thousands, except share and per share data)
|
| |
CarLotz
|
| |
Acamar
Partners |
| |
Pro Forma
Combined Assuming No Redemption into Cash |
| |
Pro Forma
Combined Assuming Maximum Redemptions into Cash |
| |||||||||
Weighted average Class A shares outstanding – basic
and diluted |
| | | | | | | 30,479,514 | | | | | | 113,617,806 | | | | | | 87,974,870 | | |
Basic and diluted net income (loss) per Class B
share |
| | | | | | $ | (0.10) | | | | | | | | | | | | | | |
Weighted average Class B shares outstanding – basic
and diluted |
| | | | | | | 7,601,435 | | | | |
(in thousands, except share and per share data)
|
| |
CarLotz
|
| |
Acamar
Partners |
| |
Pro Forma
Combined Assuming No Redemption into Cash |
| |
Pro Forma
Combined Assuming Maximum Redemptions into Cash |
| ||||||||||||
As of and for the Nine Months Ended September 30, 2020
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Net (loss) income
|
| | | $ | (2,212) | | | | | $ | (11) | | | | | $ | (7,907) | | | | | $ | (7,907) | | |
Basic and diluted net income (loss) attributable to common stockholders per share
|
| | | $ | (0.97) | | | | | | |||||||||||||||
Weighted average shares of common stock outstanding – basic and diluted
|
| | | | 3,716,526 | | | | | | |||||||||||||||
Basic and diluted net income (loss) per Class A
share |
| | | | | | | | | $ | 0.04 | | | | | $ | (0.07) | | | | | $ | (0.09) | | |
Weighted average Class A shares outstanding – basic and diluted
|
| | | | | | | | | | 30,557,322 | | | | | | 113,617,806 | | | | | | 87,974,870 | | |
Basic and diluted net income (loss) per Class B
share |
| | | | | | | | | $ | (0.17) | | | | | | | | | | | | | | |
Weighted average Class B shares outstanding – basic diluted
|
| | | | | | | | | | 7,639,330 | | | | | | | | | | | | | | |
Total stockholders’ (deficit) equity
|
| | | $ | (25,980) | | | | | $ | 5,000 | | | | | $ | 250,569 | | | | | $ | (10,328) | | |
Book value per share
|
| | | $ | (6.99) | | | | | $ | 0.16 | | | | | $ | 2.21 | | | | | $ | (0.12) | | |
(in thousands, except share and per share data)
|
| |
CarLotz
|
| |
Acamar
Partners |
| |
Pro Forma
Combined Assuming No Redemption into Cash |
| |
Pro Forma
Combined Assuming Maximum Redemptions into Cash |
| ||||||||||||
As of and for the Year Ended December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | |
Net (loss) income
|
| | | $ | (12,678) | | | | | $ | 3,478 | | | | | $ | (16,658) | | | | | $ | (16,658) | | |
Basic and diluted net income (loss) attributable to common stockholders per share
|
| | | $ | (3.84) | | | | | | |||||||||||||||
Weighted average shares outstanding – basic and diluted
|
| | | | 3,716,526 | | | | | | |||||||||||||||
Basic and diluted net income (loss) per Class A
share |
| | | | | | | | | $ | 0.14 | | | | | $ | (0.15) | | | | | $ | (0.19) | | |
Weighted average Class A shares outstanding – basic and diluted
|
| | | | | | | | | | 30,479,514 | | | | | | 113,617,806 | | | | | | 87,974,870 | | |
Basic and diluted net income (loss) per Class B
share |
| | | | | | | | | $ | (0.10) | | | | | | | | | | | | | | |
Weighted average Class B shares outstanding – basic and diluted
|
| | | | | | | | | | 7,601,435 | | | | | | | | | | | | | | |
Total stockholders’ (deficit) equity
|
| | | $ | (22,421) | | | | | $ | 5,000 | | | | | | N/A(1) | | | | | | N/A(1) | | |
Book value per share
|
| | | $ | (6.03) | | | | | $ | 0.16 | | | | | | N/A(1) | | | | | | N/A(1) | | |
| | |
Acamar Partners Class A
|
| |||||||||||||||||||||||||||||||||
| | |
Units
|
| |
Common Stock
|
| |
Warrants
|
| |||||||||||||||||||||||||||
Quarter Ended
|
| |
High
|
| |
Low
|
| |
High
|
| |
Low
|
| |
High
|
| |
Low
|
| ||||||||||||||||||
2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
First quarter
|
| | | $ | 10.03 | | | | | $ | 9.95 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Second quarter(1)
|
| | | $ | 10.05 | | | | | $ | 9.95 | | | | | $ | 10.01 | | | | | $ | 9.68 | | | | | $ | 1.00 | | | | | $ | 0.70 | | |
Third quarter
|
| | | $ | 10.15 | | | | | $ | 9.97 | | | | | $ | 9.95 | | | | | $ | 9.72 | | | | | $ | 0.86 | | | | | $ | 0.63 | | |
Fourth quarter
|
| | | $ | 10.22 | | | | | $ | 10.07 | | | | | $ | 10.50 | | | | | $ | 9.82 | | | | | $ | 0.77 | | | | | $ | 0.60 | | |
2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
First quarter
|
| | | $ | 11.00 | | | | | $ | 9.66 | | | | | $ | 10.50 | | | | | $ | 9.50 | | | | | $ | 1.00 | | | | | $ | 0.45 | | |
Second quarter
|
| | | $ | 11.02 | | | | | $ | 9.90 | | | | | $ | 10.49 | | | | | $ | 9.83 | | | | | $ | 1.36 | | | | | $ | 0.44 | | |
Third quarter
|
| | | $ | 12.10 | | | | | $ | 10.13 | | | | | $ | 10.50 | | | | | $ | 10.06 | | | | | $ | 1.43 | | | | | $ | 0.85 | | |
Fourth quarter (through December 11, 2020)
|
| | | $ | 11.20 | | | | | $ | 9.81 | | | | | $ | 10.53 | | | | | $ | 10.08 | | | | | $ | 2.00 | | | | | $ | 0.80 | | |
| | | | | | | | | | | | | | |
Scenario 1
Assuming No Redemptions into Cash |
| |
Scenario 2
Assuming Maximum Redemptions into Cash |
| ||||||||||||||||||||||||||||||
| | |
(A)
CarLotz |
| |
(B)
Acamar Partners |
| |
Pro Forma
Adjustments |
| | | | | | | |
Pro Forma
Balance Sheet |
| |
Pro Forma
Adjustments |
| | | | | | | |
Pro Forma
Balance Sheet |
| ||||||||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 3,742 | | | | | $ | 430 | | | | | $ | 310,897 | | | | |
|
(1)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 125,000 | | | | |
|
(2)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | (10,695) | | | | |
|
(3)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | (34,305) | | | | |
|
(4)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | (71,736) | | | | |
|
(6)
|
| | | | $ | 323,332 | | | | | $ | (260,897) | | | | |
|
(5)
|
| | | | $ | 62,435 | | |
Restricted cash
|
| | | | 461 | | | | | | — | | | | | | — | | | | | | | | | | | | 461 | | | | | | | | | | | | | | | | | | 461 | | |
Marketable securities
|
| | | | 975 | | | | | | — | | | | | | — | | | | | | | | | | | | 975 | | | | | | | | | | | | | | | | | | 975 | | |
Accounts receivable, net
|
| | | | 2,961 | | | | | | — | | | | | | — | | | | | | | | | | | | 2,961 | | | | | | | | | | | | | | | | | | 2,961 | | |
Inventories
|
| | | | 8,426 | | | | | | — | | | | | | — | | | | | | | | | | | | 8,426 | | | | | | | | | | | | | | | | | | 8,426 | | |
Other current assets
|
| | | | 481 | | | | | | 190 | | | | | | — | | | | | | | | | | | | 671 | | | | | | | | | | | | | | | | | | 671 | | |
Total current assets
|
| | |
|
17,046
|
| | | |
|
620
|
| | | |
|
319,161
|
| | | | | | | | | |
|
336,826
|
| | | |
|
(260,897)
|
| | | | | | | | | |
|
75,929
|
| |
Cash and marketable securities held in trust account
|
| | | | — | | | | | | 310,897 | | | | | | (310,897) | | | | |
|
(1)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | |
Property and equipment, net
|
| | | | 519 | | | | | | — | | | | | | — | | | | | | | | | | | | 519 | | | | | | | | | | | | | | | | | | 519 | | |
Lease vehicles, net
|
| | | | 200 | | | | | | — | | | | | | — | | | | | | | | | | | | 200 | | | | | | | | | | | | | | | | | | 200 | | |
Other assets
|
| | | | 315 | | | | | | — | | | | | | — | | | | | | | | | | | | 315 | | | | | | | | | | | | | | | | | | 315 | | |
Total assets
|
| | | $ | 18,080 | | | | | $ | 311,516 | | | | | $ | 8,264 | | | | | | | | | | | $ | 337,860 | | | | | $ | (260,897) | | | | | | | | | | | $ | 76,963 | | |
Liabilities, Redeemable Convertible Preferred
Stock, Stockholders’ Equity (Deficit) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Long-term debt, current
|
| | | $ | 3,321 | | | | | $ | — | | | | | $ | (3,321) | | | | |
|
(6)
|
| | | | $ | — | | | | | | | | | | | | | | | | | $ | — | | |
Floor plan notes payable
|
| | | | 6,696 | | | | | | — | | | | | | — | | | | | | | | | | | | 6,696 | | | | | | | | | | | | | | | | | | 6,696 | | |
Accounts payable
|
| | | | 3,027 | | | | | | — | | | | | | — | | | | | | | | | | | | 3,027 | | | | | | | | | | | | | | | | | | 3,027 | | |
Accrued expenses
|
| | | | 2,347 | | | | | | 84 | | | | | | — | | | | | | | | | | | | 2,431 | | | | | | | | | | | | | | | | | | 2,431 | | |
Accrued expenses – related party
|
| | | | 4,576 | | | | | | — | | | | | | (4,266) | | | | |
|
(6)
|
| | | | | 310 | | | | | | | | | | | | | | | | | | 310 | | |
Income taxes payable
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | | | | | | | — | | |
Other current liabilities
|
| | | | 319 | | | | | | — | | | | | | — | | | | | | | | | | | | 319 | | | | | | | | | | | | | | | | | | 319 | | |
Total current liabilities
|
| | |
|
20,286
|
| | | |
|
84
|
| | | |
|
(7,587)
|
| | | | | | | | | |
|
12,783
|
| | | | | | | | | | | | | | | |
|
12,783
|
| |
Long term debt, less current portion
|
| | | | 1,749 | | | | | | — | | | | | | (1,749) | | | | |
|
(6)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | |
Deferred underwriting fee payable
|
| | | | — | | | | | | 10,695 | | | | | | (10,695) | | | | |
|
(3)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | |
Earnout consideration
|
| | | | — | | | | | | — | | | | | | 72,937 | | | | |
|
(8)
|
| | | | | 72,937 | | | | | | | | | | | | | | | | | | 72,937 | | |
Redeemable convertible preferred stock tranche obligation
|
| | | | 2,793 | | | | | | — | | | | | | (2,793) | | | | |
|
(6)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | |
Other liabilities
|
| | | | 1,672 | | | | | | — | | | | | | (101) | | | | |
|
(6)
|
| | | | | 1,571 | | | | | | | | | | | | | | | | | | 1,571 | | |
Total liabilities
|
| | |
|
26,500
|
| | | |
|
10,779
|
| | | |
|
50,012
|
| | | | | | | | | |
|
87,291
|
| | | | | | | | | | | | | | | |
|
87,291
|
| |
Commitments and contingencies | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Redeemable convertible preferred stock
|
| | | | 17,560 | | | | | | — | | | | | | (17,560) | | | | | | (6) | | | | | | — | | | | | | | | | | | | | | | | | | — | | |
Redeemable common stock
|
| | | | — | | | | | | 295,737 | | | | | | (295,737) | | | | | | (5) | | | | | | — | | | | | | | | | | | | | | | | | | — | | |
Stockholders’ equity (deficit)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Common stock
|
| | | | 4 | | | | | | — | | | | | | (4) | | | | |
|
(6)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | |
Class A common stock
|
| | | | — | | | | | | — | | | | | | 1 | | | | |
|
(2)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
|
3
|
| | | | | (5) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 6 | | | | |
|
(6)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1 | | | | |
|
(7)
|
| | | | | 11 | | | | | | (3) | | | | |
|
(5)
|
| | | | | 8 | | |
| | | | | | | | | | | | | | |
Scenario 1
Assuming No Redemptions into Cash |
| |
Scenario 2
Assuming Maximum Redemptions into Cash |
| ||||||||||||||||||||||||||||||
| | |
(A)
CarLotz |
| |
(B)
Acamar Partners |
| |
Pro Forma
Adjustments |
| | | | | | | |
Pro Forma
Balance Sheet |
| |
Pro Forma
Adjustments |
| | | | | | | |
Pro Forma
Balance Sheet |
| ||||||||||||||||||
Class B common stock
|
| | | | — | | | | | | 1 | | | | | | (1) | | | | |
|
(7)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | |
Additional paid-in capital, common
stock |
| | | | 5,198 | | | | | | 1,535 | | | | | | 124,999 | | | | |
|
(2)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | (3,750) | | | | |
|
(4)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 295,734 | | | | |
|
(5)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | (39,984) | | | | |
|
(6)
|
| | | | | 383,732 | | | | | | (260,894) | | | | |
|
(5)
|
| | | | | 122,838 | | |
Retained earnings (accumulated deficit)
|
| | | | (29,698) | | | | | | 3,464 | | | | | | (30,555) | | | | |
|
(4)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
|
(72,937)
|
| | | | | (8) | | | | | | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | (3,464) | | | | |
|
(6)
|
| | | | | (133,190) | | | | | | | | | | | | | | | | | | (133,190) | | |
Accumulated other comprehensive
income |
| | | | 16 | | | | | | — | | | | | | — | | | | | | | | | | | | 16 | | | | | | | | | | | | | | | | | | 16 | | |
Treasury stock
|
| | | | (1,500) | | | | | | — | | | | | | 1,500 | | | | |
|
(6)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | |
Total stockholders’ equity (deficit)
|
| | |
|
(25,980)
|
| | | |
|
5,000
|
| | | |
|
271,549
|
| | | | | | | | | |
|
250,569
|
| | | |
|
(260,897)
|
| | | | | | | | | |
|
(10,328)
|
| |
Total liabilities, redeemable convertible preferred stock, stockholders’ equity (deficit)
|
| | | $ | 18,080 | | | | | $ | 311,516 | | | | | $ | 8,264 | | | | | | | | | | | $ | 337,860 | | | | | $ | (260,897) | | | | | | | | | | | $ | 76,963 | | |
|
| | | | | | | | | | | | | | |
Scenario 1
Assuming No Redemptions into Cash |
| |
Scenario 2
Assuming Maximum Redemptions into Cash |
| | ||||||||||||||||||||||||||||||||
| | |
(A)
CarLotz |
| |
(B)
Acamar Partners |
| |
Pro Forma
Adjustments |
| | | | | | | |
Pro Forma
Income Statement |
| |
Pro Forma
Adjustments |
| | | | | | | |
Pro Forma
Income Statement |
| | ||||||||||||||||||||
Total revenues
|
| | | $ | 81,582 | | | | | $ | — | | | | | $ | — | | | | | | | | | | | $ | 81,582 | | | | | | | | | | | | | | | | | $ | 81,582 | | | | ||
Cost of sales
|
| | | | 72,805 | | | | | | — | | | | | | — | | | | | | | | | | | | 72,805 | | | | | | | | | | | | | | | | | | 72,805 | | | | ||
Gross profit
|
| | |
|
8,777
|
| | | |
|
—
|
| | | |
|
—
|
| | | | | | | | | |
|
8,777
|
| | | | | | | | | | | | | | | |
|
8,777
|
| | | ||
Selling, general and administrative expenses
|
| | | | 11,173 | | | | | | 1,445 | | | | | | (333) | | | | |
|
(1)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | | | ||
| | | | | | | | | | | | | | | | | 3,591 | | | | |
|
(5)
|
| | | | | 15,876 | | | | | | | | | | | | | | | | | | 15,876 | | | | ||
Depreciation expense
|
| | | | 269 | | | | | | — | | | | | | — | | | | | | | | | | | | 269 | | | | | | | | | | | | | | | | | | 269 | | | | ||
Management fee – related party
|
| | | | 195 | | | | | | — | | | | | | — | | | | | | | | | | | | 195 | | | | | | | | | | | | | | | | | | 195 | | | | ||
Total loss from operations
|
| | |
|
(2,860)
|
| | | |
|
(1,445)
|
| | | |
|
(3,258)
|
| | | | | | | | | |
|
(7,563)
|
| | | | | | | | | | | | | | | |
|
(7,563)
|
| | | ||
Interest expense
|
| | |
|
360
|
| | | |
|
—
|
| | | |
|
—
|
| | | | | | | | | |
|
360
|
| | | | | | | | | | | | | | | |
|
360
|
| | | ||
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Change in fair value of warrants liability
|
| | | | 30 | | | | | | — | | | | | | (30) | | | | |
|
(2)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | | | ||
Change in fair value of redeemable convertible preferred stock tranche obligation
|
| | | | 962 | | | | | | — | | | | | | (962) | | | | |
|
(2)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | | | ||
Interest earned on marketable securities
|
| | | | — | | | | | | 1,776 | | | | | | (1,776) | | | | |
|
(3)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | | | ||
Other income (expense)
|
| | | | 28 | | | | | | — | | | | | | — | | | | | | | | | | | | 28 | | | | | | | | | | | | | | | | | | 28 | | | | ||
Total other income (expense), net
|
| | |
|
1,020
|
| | | |
|
1,776
|
| | | |
|
(2,768)
|
| | | | | | | | | |
|
28
|
| | | | | | | | | | | | | | | |
|
28
|
| | | ||
(Loss) income before income tax expense
|
| | |
|
(2,200)
|
| | | |
|
331
|
| | | |
|
(6,026)
|
| | | | | | | | | |
|
(7,895)
|
| | | | | | | | | | | | | | | |
|
(7,895)
|
| | | ||
Income tax expense
|
| | |
|
12
|
| | | |
|
342
|
| | | |
|
(342)
|
| | | |
|
(4)
|
| | | |
|
12
|
| | | | | | | | | | | | | | | |
|
12
|
| | | ||
Net (loss) income
|
| | |
|
(2,212)
|
| | | |
|
(11)
|
| | | |
|
(5,684)
|
| | | | | | | | | |
|
(7,907)
|
| | | | | | | | | | | | | | | |
|
(7,907)
|
| | | ||
Redeemable convertible preferred stock dividends
|
| | | | 1,399 | | | | | | — | | | | | | (1,399) | | | | |
|
(2)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | | | ||
Net loss attributable to
common stockholders |
| | | $ | (3,611) | | | | | $ | (11) | | | | | $ | (4,285) | | | | | | | | | | | $ | (7,907) | | | | | | | | | | | | | | | | | $ | (7,907) | | | | ||
Basic and diluted net income (loss) attributable to common stockholders per share
|
| | | $ | (0.97) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Weighted average shares outstanding of common stock, basic and diluted
|
| | | | 3,716,526 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted net
income (loss) per Class A share |
| | | | | | | | | $ | 0.04 | | | | | | | | | | | | | | | | | $ | (0.07) | | | | | | | | | | | | | | | | | $ | (0.09) | | | | ||
Weighted average Class A
shares outstanding, basic and diluted |
| | | | | | | | | | 30,557,322 | | | | | | 83,060,484 | | | | |
|
(6)
|
| | | | | 113,617,806 | | | | | | (25,642,936) | | | | |
|
(4)
|
| | | | | 87,974,870 | | | | ||
Basic and diluted net
income (loss) per Class B share |
| | | | | | | | | $ | (0.17) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Weighted average Class B
shares outstanding, basic and diluted |
| | | | | | | | | | 7,639,330 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
| | | | | | | | | | | | | | |
Scenario 1
Assuming No Redemptions into Cash |
| |
Scenario 2
Assuming Maximum Redemptions into Cash |
| | ||||||||||||||||||||||||||||||||
| | |
(C)
CarLotz |
| |
(D)
Acamar Partners |
| |
Pro Forma
Adjustments |
| | | | | | | |
Pro Forma
Income Statement |
| |
Pro Forma
Adjustments |
| | | | | | | |
Pro Forma
Income Statement |
| | ||||||||||||||||||||
Total revenues
|
| | | $ | 102,486 | | | | | $ | — | | | | | $ | — | | | | | | | | | | | $ | 102,486 | | | | | | | | | | | | | | | | | $ | 102,486 | | | | ||
Cost of sales (exclusive of depreciation)
|
| | | | 93,780 | | | | | | — | | | | | | — | | | | | | | | | | | | 93,780 | | | | | | | | | | | | | | | | | | 93,780 | | | | ||
Gross profit
|
| | | | 8,706 | | | | | | — | | | | | | — | | | | | | | | | | | | 8,706 | | | | | | | | | | | | | | | | | | 8,706 | | | | ||
Selling, general and administrative expenses
|
| | | | 18,305 | | | | | | 933 | | | | | | (370) | | | | |
|
(1)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | | | ||
| | | | | | | | | | | | | | | | | 4,789 | | | | |
|
(5)
|
| | | | | 23,657 | | | | | | | | | | | | | | | | | | 23,657 | | | | ||
Depreciation expense
|
| | | | 504 | | | | | | — | | | | | | — | | | | | | | | | | | | 504 | | | | | | | | | | | | | | | | | | 504 | | | | ||
Management fee – related
party |
| | | | 250 | | | | | | — | | | | | | — | | | | | | | | | | | | 250 | | | | | | | | | | | | | | | | | | 250 | | | | ||
Total loss from operations
|
| | |
|
(10,353)
|
| | | |
|
(933)
|
| | | |
|
(4,419)
|
| | | | | | | | | |
|
(15,705)
|
| | | | | | | | | | | | | | | |
|
(15,705)
|
| | | ||
Interest expense
|
| | | | 651 | | | | | | — | | | | | | — | | | | | | | | | | | | 651 | | | | | | | | | | | | | | | | | | 651 | | | | ||
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Change in fair value of warrants liability
|
| | | | 24 | | | | | | — | | | | | | (24) | | | | |
|
(2)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | | | ||
Change in fair value of redeemable convertible preferred stock tranche obligation
|
| | | | (1,396) | | | | | | — | | | | | | 1,396 | | | | |
|
(2)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | | | ||
Interest earned on marketable securities
|
| | | | — | | | | | | 5,532 | | | | | | (5,532) | | | | |
|
(3)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | | | ||
Other income (expense)
|
| | | | (291) | | | | | | — | | | | | | — | | | | | | | | | | | | (291) | | | | | | | | | | | | | | | | | | (291) | | | | ||
Total other income (expense), net
|
| | | | (1,663) | | | | | | 5,532 | | | | | | (4,160) | | | | | | | | | | | | (291) | | | | | | | | | | | | | | | | | | (291) | | | | ||
(Loss) income before income tax expense
|
| | |
|
(12,667)
|
| | | |
|
4,599
|
| | | |
|
(8,579)
|
| | | | | | | | | |
|
(16,647)
|
| | | | | | | | | | | | | | | |
|
(16,647)
|
| | | ||
Income tax expense
|
| | |
|
11
|
| | | |
|
1,121
|
| | | |
|
(1,121)
|
| | | |
|
(4)
|
| | | |
|
11
|
| | | | | | | | | | | | | | | |
|
11
|
| | | ||
Net (loss) income
|
| | |
|
(12,678)
|
| | | |
|
3,478
|
| | | |
|
(7,458)
|
| | | | | | | | | |
|
(16,658)
|
| | | | | | | | | | | | | | | |
|
(16,658)
|
| | | ||
Redeemable convertible preferred stock dividends
|
| | | | 1,579 | | | | | | — | | | | | | (1,579) | | | | |
|
(2)
|
| | | | | — | | | | | | | | | | | | | | | | | | — | | | | ||
Net income (loss)
attributable to common stockholders |
| | | $ | (14,257) | | | | | $ | 3,478 | | | | | $ | (5,879) | | | | | | | | | | | $ | (16,658) | | | | | | | | | | | | | | | | | $ | (16,658) | | | | ||
Basic and diluted net income (loss) attributable to common stockholders per share
|
| | | $ | (3.84) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||
Weighted average shares outstanding of common stock, basic and diluted
|
| | | | 3,716,526 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted net
income (loss) per Class A share |
| | | | | | | | | $ | 0.14 | | | | | | | | | | | | | | | | | $ | (0.15) | | | | | | | | | | | | | | | | | $ | (0.19) | | | | ||
Weighted average Class A
shares outstanding, basic and diluted |
| | | | | | | | | | 30,479,514 | | | | | | 83,138,292 | | | | |
|
(6)
|
| | | | | 113,617,806 | | | | | | (25,642,936) | | | | |
|
(4)
|
| | | | | 87,974,870 | | | | ||
Basic and diluted net
income (loss) per Class B share |
| | | | | | | | | $ | (0.10) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Weighted average Class B
shares outstanding, basic and diluted |
| | | | | | | | | | 7,601,435 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
Scenario 1 Combined
(Assuming no cash redemption) |
| |
Scenario 2 Combined
(Assuming max cash redemptions) |
| ||||||
Weighted average shares calculation, basic and diluted
|
| | | | | | | | | | | | |
Acamar Partners public shares
|
| | | | 30,557,322 | | | | | | 4,914,386 | | |
Acamar Partners Sponsor shares(a)
|
| | | | 7,639,330 | | | | | | 7,639,330 | | |
Acamar Partners shares issued to PIPE investors
|
| | | | 12,500,000 | | | | | | 12,500,000 | | |
Acamar Partners shares issued to CarLotz stockholders on the Closing Date(b)
|
| | | | 62,921,154 | | | | | | 62,921,154 | | |
|
| | |
Scenario 1 Combined
(Assuming no cash redemption) |
| |
Scenario 2 Combined
(Assuming max cash redemptions) |
| ||||||
Weighted average shares outstanding(c)
|
| | | | 113,617,806 | | | | | | 87,974,870 | | |
Percent of shares owned by CarLotz (excluding shares acquired in the PIPE Investment)(c)
|
| | | | 55.4% | | | | | | 71.5% | | |
Percent of shares owned by Acamar Partners (excluding the Sponsor)(c)
|
| | | | 26.9% | | | | | | 5.6% | | |
Percent of shares owned by PIPE investors(c)
|
| | | | 11.0% | | | | | | 14.2% | | |
Percent of shares owned by the Sponsor (including
shares subject to forfeiture and excluding shares acquired in the PIPE Investment)(c) |
| | | | 6.7% | | | | | | 8.7% | | |
Name
|
| |
Office
|
|
Michael W. Bor | | | Chief Executive Officer | |
John W. Foley II | | | Chief Operating Officer | |
Daniel A. Valerian | | | Chief Technology Officer | |
Elizabeth Sanders | | | Chief Administrative Officer | |
Rebecca C. Polak | | | Chief Commercial Officer and General Counsel | |
Thomas W. Stoltz | | | Chief Financial Officer | |
Michael Chapman | | | Chief Marketing Officer | |
Robert Imhof | | | Senior Vice President of Finance & Accounting | |
| | |
Vested
CarLotz options |
| |
Unvested
CarLotz options |
| ||||||
Named Executive Officers | | | | | | | | | | | | | |
Michael W. Bor
|
| | | | 25,000 | | | | | | 110,188 | | |
John W. Foley II
|
| | | | 15,000 | | | | | | 102,688 | | |
Daniel A. Valerian
|
| | | | 35,000 | | | | | | 79,000 | | |
All Other Executive Officers as a Group
|
| | | | 1,000 | | | | | | 40,000 | | |
Non-Executive Directors | | | | | | | | | | | | | |
Steven G. Carrel
|
| | | | — | | | | | | — | | |
David R. Mitchell
|
| | | | — | | | | | | — | | |
Michael Vellucci
|
| | | | — | | | | | | — | | |
Aaron S. Montgomery
|
| | | | 25,000 | | | | | | — | | |
William S. Boland
|
| | | | 25,000 | | | | | | — | | |
Robert Kurnick
|
| | | | — | | | | | | — | | |
Name
|
| |
Transaction
Bonus ($) |
| |||
Michael W. Bor
|
| | | | 450,000 | | |
John W. Foley
|
| | | | 350,000 | | |
Daniel A. Valerian
|
| | | | 150,000 | | |
Name
|
| |
Annual
Base Salary ($) |
| |
Target Bonus
(%) |
| ||||||
Michael W. Bor
Chief Executive Officer |
| | | | 600,000 | | | | | | 100 | | |
John W. Foley
Chief Operating Officer |
| | | | 400,000 | | | | | | 75 | | |
Daniel A. Valerian
Chief Technology Officer |
| | | | 350,000 | | | | | | 50 | | |
Rebecca C. Polak
Chief Commercial Officer and General Counsel |
| | | | 400,000 | | | | | | 75 | | |
Thomas W. Stoltz
Chief Financial Officer |
| | | | 340,000 | | | | | | 50 | | |
| | |
Existing Charter
|
| |
Proposed Charter
|
|
Authorized Shares (Proposal 2)
|
| | The Acamar Partners existing charter authorizes 220,000,000 shares, consisting of (a) 215,000,000 shares of common stock, including (i) 200,000,000 shares of Class A common stock and (ii) 15,000,000 shares of Class B common stock, and (b) 5,000,000 shares of preferred stock. | | | The proposed New CarLotz charter would authorize 510,000,000 shares, consisting of 500,000,000 shares of Class A common stock and 10,000,000 shares of preferred stock. | |
Classification of the Board of Directors (Proposal 3)
|
| | The Acamar Partners existing charter provides that the Acamar Partners board of directors is divided into two classes with only one class of directors being elected each year and each class (except those directors appointed prior to Acamar Partners’ first annual meeting of stockholders) serving a two-year term. | | | The proposed New CarLotz charter provides that the New CarLotz board of directors be divided into three classes with only one class of directors being elected in each year and each class serving a three-year term. | |
Director Removal (Proposal 4)
|
| | Acamar Partners existing charter provides that directors can be removed only for cause, by the affirmative vote of the majority of the holders of the outstanding shares of capital stock entitled to elect such director or directors. | | | The proposed New CarLotz charter provides that subject to the rights granted to certain stockholders pursuant to the New CarLotz Stockholders Agreement, directors may be removed only for cause with a supermajority vote consisting of 662∕3% of outstanding shares of stockholders. | |
Required Vote to Amend the Charter (Proposal 5)
|
| |
Acamar Partners has the right from time to time, to amend, alter, change, add or repeal any provision of the Acamar Partners’ charter.
Any amendment, modification or repeal of Acamar Partners charter Article VIII (Indemnification) shall not adversely affect any right or protection of a director of Acamar Partners under Article VIII in respect of any act or omission occurring prior to the time of such amendment, modification or repeal.
|
| |
The proposed New CarLotz charter provides that a supermajority vote consisting of 662∕3% of outstanding shares of stockholders is required to amend most charter provisions.
Stockholders of common stock are not entitled to vote on any amendment to the New CarLotz charter that alters or changes the powers, preferences, rights or other terms of one or more outstanding series of preferred stock.
|
|
Required Vote to Amend the Bylaws (Proposal 6)
|
| | Acamar Partners existing charter provides that the affirmative vote of the majority of the board of directors is required to make, repeal, alter, amend or repeal any or all of the bylaws. | | | The proposed New CarLotz charter provides that the board of directors has the power to make, repeal, alter or amend any or all of the bylaws. | |
| | |
Existing Charter
|
| |
Proposed Charter
|
|
| | | Affirmative vote of the holders of at least a majority of the voting power of all outstanding shares of capital stock entitled to elect such director or directors, voting as a single class required to adopt, amend, alter or repeal the bylaws. Stockholders cannot adopt bylaws that would invalidate any prior act of the board of directors that would have been valid if such bylaws had not been adopted. | | | Supermajority threshold (662∕3% of outstanding shares of stockholders) required to amend the bylaws. | |
Corporate Opportunity (Proposal 7)
|
| | Acamar Partners existing charter provides that to the extent allowed by law, the doctrine of corporate opportunity, or any other analogous doctrine, shall not apply with respect to Acamar Partners or any of its officers or directors, in circumstances where the application of any such doctrine would conflict with any fiduciary duties or contractual obligations they may have as of the date of the Acamar Partners charter or in the future, and Acamar Partners renounces any expectancy that any of the directors or officers of Acamar Partners will offer any such corporate opportunity of which he or she may become aware to Acamar Partners. In addition to the foregoing, prior to the consummation of the proposed transaction, the doctrine of corporate opportunity shall not apply to any other corporate opportunity with respect to any of the directors or officers of Acamar Partners unless such corporate opportunity is offered to such person solely in his or her capacity as a director or officer of Acamar Partners and such opportunity is one Acamar Partners is legally and contractually permitted to undertake and would otherwise be reasonable for Acamar Partners to pursue and the director or officer is permitted to refer that opportunity to Acamar Partners without violating any legal obligation. | | | The proposed New CarLotz charter recognizes that certain directors, principals, officers, employees and/or other representatives of the stockholders party to the New CarLotz Stockholders Agreement and their affiliates may serve as directors of New CarLotz and may now engage and may continue to engage in the same or similar activities or related lines of business as those in which New CarLotz, directly or indirectly, may engage or propose to engage and/or other business activities that overlap with or compete with those in which New CarLotz or any of its affiliates, directly or indirectly, may engage or propose to engage. No such persons shall, to the fullest extent permitted by law, have any duty to refrain from directly or indirectly (i) engaging in the same or similar business activities or lines of business in which New CarLotz or any of its affiliates now engages or proposes to engage or (ii) otherwise competing with New CarLotz or any of its affiliates, and, to the fullest extent permitted by law, no such person shall be liable to New CarLotz or its stockholders or to any affiliate of New CarLotz for breach of any fiduciary duty solely by reason of the fact that such person engages in any such activities. To the fullest extent permitted by law, New CarLotz renounces any interest or expectancy in, or right to be | |
| | |
Existing Charter
|
| |
Proposed Charter
|
|
| | | | | |
offered an opportunity to participate in, any business opportunity that may be a corporate opportunity for such person and New CarLotz or any of its affiliates.
New CarLotz (a) acknowledges that the stockholders party to the New CarLotz Stockholders Agreement are in the business of making investments in, and have or may have investments in, other businesses that may be similar to and that may compete with the businesses of New CarLotz (“Competing Businesses”) and (b) agrees that such parties shall have the unfettered right to make investments in or have relationships with other Competing Businesses independent of their investments in New CarLotz.
|
|
Approval of Additional Amendments in Connection with the Merger (Proposal 8)
|
| | The Acamar Partners existing charter contains various provisions applicable only to blank check companies and other provisions to be amended as a result of the merger. | | | The proposed New CarLotz charter will (i) change the combined company’s name to “CarLotz, Inc.” and (ii) remove certain provisions of the Acamar Partners existing charter related to Acamar Partners’ status as a SPAC and make certain related changes. Pursuant to these amendments, Article IX of the Acamar Partners existing charter will not be included in the New CarLotz charter. | |
Name and Principal Position(s)
|
| |
Number
of Stock Options |
| |
Number of
Restricted Stock Units |
|
Michael W. Bor
|
| | | | | | |
Chief Executive Officer | | | | | | | |
John W. Foley II
|
| | | | | | |
Chief Operating Officer | | | | | | | |
Daniel A. Valerian
|
| | | | | | |
Chief Technology Officer
|
| | | | | | |
All executive officers as a group (8 persons)
|
| | | | | | |
All non-executive directors as a group (7 persons)
|
| | | | | | |
All employees, including all officers who are not executive officers, as a group (95 persons)
|
| | | | | | |
| | |
Nine Months Ended
September 30, |
| |
Years Ended December 31,
|
| ||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| |
2017
|
| |||||||||||||||
Retail vehicles sold
|
| | | | 4,400 | | | | | | 4,821 | | | | | | 6,435 | | | | | | 4,077 | | | | | | 3,412 | | |
Number of hubs
|
| | | | 8 | | | | | | 8 | | | | | | 8 | | | | | | 8 | | | | | | 5 | | |
Average monthly unique visitors
|
| | | | 54,294 | | | | | | 58,962 | | | | | | 57,151 | | | | | | 39,781 | | | | | | 26,591 | | |
Vehicles available for sale
|
| | | | 1,567 | | | | | | 1,098 | | | | | | 1,061 | | | | | | 1,067 | | | | | | 587 | | |
Average days to sale
|
| | | | 54 | | | | | | 55 | | | | | | 55 | | | | | | 57 | | | | | | 54 | | |
Retail gross profit per unit
|
| | | $ | 1,900 | | | | | $ | 1,444 | | | | | $ | 1,393 | | | | | $ | 1,602 | | | | | $ | 1,774 | | |
Customer acquisition cost per unit
|
| | | $ | 320 | | | | | $ | 636 | | | | | $ | 591 | | | | | $ | 459 | | | | | $ | 357 | | |
Contribution margin per unit
|
| | | $ | 1,580 | | | | | $ | 808 | | | | | $ | 802 | | | | | $ | 1,143 | | | | | $ | 1,417 | | |
Percentage of unit sales via consignment
|
| |
63%
|
| |
46%
|
| |
46%
|
| |
41%
|
| |
52%
|
|
| | |
Nine Months Ended
September 30, |
| |
Year Ended December 31,
|
| ||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| |
2017
|
| |||||||||||||||
| | |
(unaudited, $ in thousands)
|
| |
(audited, $ in thousands)
|
| ||||||||||||||||||||||||
Retail vehicle sales
|
| | | $ | 71,388 | | | | | $ | 66,914 | | | | | $ | 90,382 | | | | | $ | 53,448 | | | | | $ | 41,758 | | |
Wholesale vehicle sales
|
| | | | 7,124 | | | | | | 6,427 | | | | | | 8,454 | | | | | | 3,153 | | | | | | 1,340 | | |
Finance and insurance, net
|
| | | | 2,697 | | | | | | 2,312 | | | | | | 3,117 | | | | | | 1,608 | | | | | | 974 | | |
Lease income, net
|
| | | | 373 | | | | | | 416 | | | | | | 533 | | | | | | 142 | | | | | | — | | |
Total revenues
|
| | | | 81,582 | | | | | | 76,069 | | | | | | 102,486 | | | | | | 58,351 | | | | | | 44,072 | | |
Cost of sales (exclusive of depreciation)
|
| | | | 72,805 | | | | | | 69,341 | | | | | | 93,780 | | | | | | 52,708 | | | | | | 38,519 | | |
Gross profit
|
| | | | 8,777 | | | | | | 6,728 | | | | | | 8,706 | | | | | | 5,643 | | | | | | 5,553 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Selling, general and administrative
|
| | | | 11,173 | | | | | | 13,629 | | | | | | 18,305 | | | | | | 11,661 | | | | | | 7,254 | | |
Depreciation expense
|
| | | | 269 | | | | | | 412 | | | | | | 504 | | | | | | 338 | | | | | | 218 | | |
Management fee expense – related party
|
| | | | 195 | | | | | | 186 | | | | | | 250 | | | | | | 250 | | | | | | 73 | | |
Total operating expenses
|
| | | | 11,637 | | | | | | 14,227 | | | | | | 19,059 | | | | | | 12,249 | | | | | | 7,545 | | |
Loss from operations
|
| | | | (2,860) | | | | | | (7,499) | | | | | | (10,353) | | | | | | (6,606) | | | | | | (1,992) | | |
Interest expense
|
| | | | (360) | | | | | | (518) | | | | | | (651) | | | | | | (466) | | | | | | (414) | | |
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Management fee income – related party
|
| | | | — | | | | | | — | | | | | | — | | | | | | 127 | | | | | | 180 | | |
Change in fair value of warrants liability
|
| | | | 30 | | | | | | 18 | | | | | | 24 | | | | | | (2) | | | | | | 50 | | |
Change in fair value of redeemable convertible preferred stock tranche obligation
|
| | | | 962 | | | | | | (336) | | | | | | (1,396) | | | | | | (272) | | | | | | (79) | | |
Other income (expense)
|
| | | | 28 | | | | | | (227) | | | | | | (291) | | | | | | 662 | | | | | | (210) | | |
Total other income (expense), net
|
| | | | 1,020 | | | | | | (545) | | | | | | (1,663) | | | | | | 515 | | | | | | (59) | | |
Loss before income tax expense
|
| | | | (2,200) | | | | | | (8,562) | | | | | | (12,667) | | | | | | (6,557) | | | | | | (2,465) | | |
Income tax expense
|
| | | | 12 | | | | | | 7 | | | | | | 11 | | | | | | 3 | | | | | | 4 | | |
Net loss
|
| | | $ | (2,212) | | | | | $ | (8,569) | | | | | $ | (12,678) | | | | | $ | (6,560) | | | | | $ | (2,469) | | |
| | |
Nine Months Ended September 30,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
Change
|
| |||||||||
| | |
($ in thousands, except per unit metrics)
|
| |||||||||||||||
Revenue: | | | | | | | | | | | | | | | | | | | |
Retail vehicle sales
|
| | | $ | 71,388 | | | | | $ | 66,914 | | | | | | 6.7% | | |
Wholesale vehicle sales
|
| | | | 7,124 | | | | | | 6,427 | | | | | | 10.8% | | |
Finance and insurance, net
|
| | | | 2,697 | | | | | | 2,312 | | | | | | 16.7% | | |
Lease income, net
|
| | | | 373 | | | | | | 416 | | | | | | (10.3)% | | |
Total revenues
|
| | | $ | 81,582 | | | | | $ | 76,069 | | | | | | 7.2% | | |
Cost of sales: | | | | | | | | | | | | | | | | | | | |
Retail vehicle cost of sales
|
| | | $ | 65,723 | | | | | $ | 62,264 | | | | | | 5.6% | | |
Wholesale vehicle cost of sales
|
| | | | 7,082 | | | | | | 7,077 | | | | | | 0.1% | | |
Total cost of sales
|
| | | $ | 72,805 | | | | | $ | 69,341 | | | | | | 5.0% | | |
Gross profit: | | | | | | | | | | | | | | | | | | | |
Retail vehicle gross profit
|
| | | $ | 5,665 | | | | | $ | 4,650 | | | | | | 21.8% | | |
Wholesale vehicle gross profit
|
| | | | 42 | | | | | | (650) | | | | | | 106.5% | | |
Finance and insurance gross profit
|
| | | | 2,697 | | | | | | 2,312 | | | | | | 16.7% | | |
Lease income, net
|
| | | | 373 | | | | | | 416 | | | | | | (10.3)% | | |
Total gross profit
|
| | | $ | 8,777 | | | | | $ | 6,728 | | | | | | 30.5% | | |
Unit sales information: | | | | | | | | | | | | | | | | | | | |
Retail vehicles unit sales
|
| | | | 4,400 | | | | | | 4,821 | | | | | | (8.7)% | | |
Wholesale vehicles unit sales
|
| | | | 793 | | | | | | 928 | | | | | | (14.5)% | | |
Gross profit per unit(1): | | | | | | | | | | | | | | | | | | | |
Retail vehicles gross profit per unit
|
| | | $ | 1,900 | | | | | $ | 1,444 | | | | | | 31.6% | | |
Wholesale vehicles gross profit per unit
|
| | | | 53 | | | | | | (700) | | | | | | 107.6% | | |
Total gross profit per unit
|
| | | $ | 1,690 | | | | | $ | 1,170 | | | | | | 44.4% | | |
| | |
Nine Months Ended September 30,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
Change
|
| |||||||||
| | |
($ in thousands)
|
| | | | | | | |||||||||
Compensation and benefits(1)
|
| | | $ | 5,337 | | | | | $ | 6,548 | | | | | | (18.5)% | | |
Marketing expense
|
| | | | 1,406 | | | | | | 3,064 | | | | | | (54.1)% | | |
Other costs(2)
|
| | | | 4,430 | | | | | | 4,017 | | | | | | 10.3% | | |
Total selling, general and administrative expenses
|
| | | $ | 11,173 | | | | | $ | 13,629 | | | | | | (18.0)% | | |
| | |
Years Ended December 31,
|
| |||||||||||||||||||||||||||
| | |
2019
|
| |
2018
|
| |
Change
|
| |
2017
|
| |
Change
|
| |||||||||||||||
| | |
($ in thousands, except per unit metrics)
|
| |||||||||||||||||||||||||||
Revenue: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Retail vehicle sales
|
| | | $ | 90,382 | | | | | $ | 53,448 | | | | | | 69.1% | | | | | $ | 41,758 | | | | | | 28.0% | | |
Wholesale vehicle sales
|
| | | | 8,454 | | | | | | 3,153 | | | | | | 168.1% | | | | | | 1,340 | | | | | | 135.3% | | |
Finance and insurance, net
|
| | | | 3,117 | | | | | | 1,608 | | | | | | 93.8% | | | | | | 974 | | | | | | 65.1% | | |
Lease income, net
|
| | | | 533 | | | | | | 142 | | | | | | 275.4% | | | | | | — | | | | | | NM% | | |
Total revenues
|
| | | $ | 102,486 | | | | | $ | 58,351 | | | | | | 75.6% | | | | | $ | 44,072 | | | | | | 32.4% | | |
Cost of sales (exclusive of depreciation): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Retail vehicle cost of sales
|
| | | $ | 84,534 | | | | | $ | 48,523 | | | | | | 74.2% | | | | | $ | 36,680 | | | | | | 32.3% | | |
Wholesale vehicle cost of sales
|
| | | | 9,246 | | | | | | 4,185 | | | | | | 120.9% | | | | | | 1,839 | | | | | | 127.6% | | |
Total cost of sales
|
| | | $ | 93,780 | | | | | $ | 52,708 | | | | | | 77.9% | | | | | $ | 38,519 | | | | | | 36.8% | | |
Gross profit: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Retail vehicle gross profit
|
| | | $ | 5,848 | | | | | $ | 4,925 | | | | | | 18.7% | | | | | $ | 5,078 | | | | | | (3.0)% | | |
Wholesale vehicle gross profit
|
| | | | (792) | | | | | | (1,032) | | | | | | (23.3)% | | | | | | (499) | | | | | | 106.8% | | |
Finance and insurance gross profit
|
| | | | 3,117 | | | | | | 1,608 | | | | | | 93.8% | | | | | | 974 | | | | | | 65.1% | | |
Lease income, net
|
| | | | 533 | | | | | | 142 | | | | | | 275.4% | | | | | | — | | | | | | NM | | |
Total gross profit
|
| | | $ | 8,706 | | | | | $ | 5,643 | | | | | | 54.3% | | | | | $ | 5,553 | | | | | | 1.6% | | |
|
| | |
Years Ended December 31,
|
| |||||||||||||||||||||||||||
| | |
2019
|
| |
2018
|
| |
Change
|
| |
2017
|
| |
Change
|
| |||||||||||||||
| | |
($ in thousands, except per unit metrics)
|
| |||||||||||||||||||||||||||
Unit sales information: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Retail vehicles unit sales
|
| | | | 6,435 | | | | | | 4,077 | | | | | | 57.8% | | | | | | 3,412 | | | | | | 19.5% | | |
Wholesale vehicles unit sales
|
| | | | 1,159 | | | | | | 610 | | | | | | 90.0% | | | | | | 239 | | | | | | 155.2% | | |
Gross profit per unit(1): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Retail vehicles gross profit per unit
|
| | | $ | 1,393 | | | | | $ | 1,602 | | | | | | (13.1)% | | | | | $ | 1,774 | | | | | | (9.7)% | | |
Wholesale vehicles gross profit per unit
|
| | | | (683) | | | | | | (1,692) | | | | | | (59.6)% | | | | | | (2,088) | | | | | | (19.0)% | | |
Total gross profit per unit
|
| | | $ | 1,146 | | | | | $ | 1,204 | | | | | | (4.8)% | | | | | $ | 1,521 | | | | | | (20.8)% | | |
| | |
Years Ended December 31,
|
| |||||||||||||||||||||||||||
| | |
2019
|
| |
2018
|
| |
Change
|
| |
2017
|
| |
Change
|
| |||||||||||||||
| | |
($ in thousands)
|
| |||||||||||||||||||||||||||
Compensation and benefits(1)
|
| | | $ | 8,992 | | | | | $ | 6,418 | | | | | | 40.1% | | | | | $ | 4,138 | | | | | | 55.1% | | |
Marketing expense
|
| | | | 3,803 | | | | | | 1,871 | | | | | | 103.3% | | | | | | 1,217 | | | | | | 53.7% | | |
Other costs(2)
|
| | | | 5,510 | | | | | | 3,372 | | | | | | 63.4% | | | | | | 1,899 | | | | | | 77.6% | | |
Total selling, general and administrative expenses
|
| | | $ | 18,305 | | | | | $ | 11,661 | | | | | | 57.0% | | | | | $ | 7,254 | | | | | | 60.8% | | |
| | |
Nine Months Ended
September 30, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
| | |
($ in thousands)
|
| |||||||||
Cash Flow Data: | | | | | | | | | | | | | |
Net cash (used in) operating activities
|
| | | $ | (1,039) | | | | | $ | (4,017) | | |
Net cash (used in) investing activities
|
| | | | (1,059) | | | | | | (309) | | |
Net cash provided by financing activities
|
| | | | 2,199 | | | | | | 5,560 | | |
| | |
Year Ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
| | |
($ in thousands)
|
| |||||||||||||||
Cash Flow Data: | | | | | | | | | | | | | | | | | | | |
Net cash used in operating activities
|
| | | $ | (5,473) | | | | | $ | (11,761) | | | | | $ | (5,323) | | |
Net cash used in investing activities
|
| | | | (487) | | | | | | (362) | | | | | | (204) | | |
Net cash provided by financing activities
|
| | | | 8,492 | | | | | | 4,503 | | | | | | 12,709 | | |
| | |
Payments Due by Period
|
| |||||||||||||||||||||||||||
| | |
Total
|
| |
Less than 1 Year
|
| |
1 – 3 Years
|
| |
3 – 5 Years
|
| |
More than 5 years
|
| |||||||||||||||
| | |
($ in thousands)
|
| |||||||||||||||||||||||||||
Floor plan facility(1)
|
| | | $ | 6,739 | | | | | $ | 6,739 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Convertible note
|
| | | | 3,000 | | | | | | 3,000 | | | | | | — | | | | | | — | | | | | | — | | |
Cumulative preferred dividends
payable |
| | | | 2,900 | | | | | | 2,900 | | | | | | — | | | | | | — | | | | | | — | | |
Operating lease obligations
|
| | | | 12,388 | | | | | | 2,955 | | | | | | 5,175 | | | | | | 2,849 | | | | | | 1,409 | | |
Total
|
| | | $ | 25,027 | | | | | $ | 16,094 | | | | | $ | 5,175 | | | | | $ | 2,849 | | | | | $ | 1,409 | | |
Name and Principal
Position |
| |
Year
|
| |
Salary
($)(1) |
| |
Bonus
($) |
| |
Stock
Awards ($) |
| |
Option
Awards ($)(2) |
| |
Non-Equity
Incentive Plan Compensation ($)(3) |
| |
Change in
Pension Value and Nonqualified Deferred Compensation Earnings ($) |
| |
All Other
Compensation ($)(4) |
| |
Total
($) |
| |||||||||||||||||||||||||||
Michael W. Bor
Chief Executive Officer |
| | | | 2019 | | | | | | 334,793 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 24,975 | | | | | | 359,768 | | |
John W. Foley II
Chief Operating Officer |
| | | | 2019 | | | | | | 168,269 | | | | | | — | | | | | | — | | | | | | 10,490 | | | | | | 25,500 | | | | | | — | | | | | | 17,106 | | | | | | 221,365 | | |
Daniel A. Valerian
Chief Technology Officer |
| | | | 2019 | | | | | | 124,500 | | | | | | — | | | | | | — | | | | | | 13,112 | | | | | | — | | | | | | — | | | | | | 1,202 | | | | | | 138,814 | | |
Aaron S. Montgomery
Director of Commercial Sales |
| | | | 2019 | | | | | | 231,780 | | | | | | — | | | | | | — | | | | | | 8,800 | | | | | | — | | | | | | — | | | | | | 58,882 | | | | | | 299,462 | | |
William S. Boland
Former Chief Marketing Officer |
| | | | 2019 | | | | | | 231,780 | | | | | | — | | | | | | — | | | | | | 8,800 | | | | | | — | | | | | | — | | | | | | 66,626 | | | | | | 307,206 | | |
Named Executive Officer
|
| |
2019 Stock
Options Granted |
| |||
Michael W. Bor
|
| | | | — | | |
John W. Foley II
|
| | | | 40,000 | | |
Daniel A. Valerian
|
| | | | 50,000 | | |
Aaron S. Montgomery
|
| | | | — | | |
William S. Boland
|
| | | | — | | |
| | | | | | | | |
Option Awards
|
| |||||||||||||||||||||||||||
Name
|
| |
Grant Date
|
| |
Number of
Securities Underlying Unexercised Options (#) Exercisable |
| |
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
| |
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
| |
Option
Exercise Price ($) |
| |
Option
Expiration Date |
| ||||||||||||||||||
Michael W. Bor
|
| | | | 11/1/2015(1) | | | | | | 25,000 | | | | | | — | | | | | | — | | | | | | 6.82 | | | | | | 8/31/2022 | | |
| | | | | 4/23/2018(2) | | | | | | — | | | | | | — | | | | | | 60,188 | | | | | | 9.82 | | | | | | 4/23/2028 | | |
John W. Foley II
|
| | | | 2/1/2015(1) | | | | | | 5,000 | | | | | | — | | | | | | — | | | | | | 6.82 | | | | | | 8/31/2022 | | |
| | | | | 6/1/2016(1) | | | | | | 2,500 | | | | | | — | | | | | | — | | | | | | 6.82 | | | | | | 8/31/2022 | | |
| | | | | 1/1/2017(1) | | | | | | 7,500 | | | | | | 2,500 | | | | | | — | | | | | | 6.82 | | | | | | 8/31/2022 | | |
| | | | | 5/14/2018(2) | | | | | | — | | | | | | — | | | | | | 60,188 | | | | | | 9.82 | | | | | | 5/14/2028 | | |
| | | | | 11/1/2019(2) | | | | | | — | | | | | | — | | | | | | 40,000 | | | | | | 9.82 | | | | | | 11/1/2029 | | |
Daniel A. Valerian
|
| | | | 1/20/2014(1) | | | | | | 2,500 | | | | | | — | | | | | | — | | | | | | 2.56 | | | | | | 8/31/2022 | | |
| | | | | 1/20/2014(1) | | | | | | 2,500 | | | | | | — | | | | | | — | | | | | | 2.56 | | | | | | 8/31/2022 | | |
| | | | | 1/20/2014(1) | | | | | | 5,000 | | | | | | — | | | | | | — | | | | | | 2.56 | | | | | | 8/31/2022 | | |
| | | | | 1/1/2015(1) | | | | | | 5,000 | | | | | | — | | | | | | — | | | | | | 6.82 | | | | | | 8/31/2022 | | |
| | | | | 1/1/2016(1) | | | | | | 5,000 | | | | | | — | | | | | | — | | | | | | 6.82 | | | | | | 8/31/2022 | | |
| | | | | 1/1/2017(1) | | | | | | 15,000 | | | | | | 5,000 | | | | | | — | | | | | | 6.82 | | | | | | 8/31/2022 | | |
| | | | | 4/23/2018(2) | | | | | | — | | | | | | — | | | | | | 6,000 | | | | | | 9.82 | | | | | | 4/23/2028 | | |
| | | | | 11/1/2019(2) | | | | | | — | | | | | | — | | | | | | 50,000 | | | | | | 9.82 | | | | | | 11/1/2029 | | |
Aaron S. Montgomery
|
| | | | 11/1/2015(1) | | | | | | 25,000 | | | | | | — | | | | | | — | | | | | | 6.82 | | | | | | 8/31/2022 | | |
William S. Boland
|
| | | | 11/1/2015(1) | | | | | | 25,000 | | | | | | — | | | | | | — | | | | | | 6.82 | | | | | | 8/31/2022 | | |
Name
|
| |
Age
|
| |
Title
|
|
Juan Carlos Torres Carretero | | |
71
|
| | Chairman of the Board | |
Luis Ignacio Solorzano Aizpuru | | |
48
|
| | Chief Executive Officer and Director | |
Raffaele R. Vitale | | |
58
|
| | President | |
Juan Duarte Hinterholzer | | |
41
|
| | Chief Operating Officer | |
Joseba Asier Picaza Ucar | | |
40
|
| | Chief Financial Officer and Secretary | |
Domenico de Sole | | |
76
|
| | Director | |
James E. Skinner | | |
67
|
| | Director | |
Teck H. Wong | | |
47
|
| | Director | |
| | | | | | | | | | | | | | |
After the Merger
|
| |||||||||
| | |
Before the Merger
|
| |
Assuming No
Redemption |
| |
Assuming Maximum
Redemption(2) |
| |||||||||||||||
Class A shares
|
| | | | 30,557,322 | | | | | | 80.0% | | | | | | | | | | | | | | |
Class B shares
|
| | | | 7,639,330 | | | | | | 20.0% | | | | | | | | | | | | | | |
Common stock outstanding(1)
|
| | | | 38,196,652 | | | | | | | | | | | | 113,617,806 | | | | | | 87,974,870 | | |
Name of Beneficial Owner
|
| |
Shares
|
| |
%
total |
| |
%
Class A common stock |
| |
Shares
|
| |
% total
|
| |
Shares
|
| |
% total
|
| |||||||||||||||||||||
Acamar Partners Five Percent Holders | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Acamar Partners Sponsor I LLC (3)
|
| | | | 7,639,330 | | | | | | 20.0% | | | | | | n.a. | | | | | | 13,963,640 | | | | | | 11.7% | | | | | | 13,963,640 | | | | | | 14.8% | | |
Glazer Capital LLC(4)
|
| | | | 4,221,532 | | | | | | 11.1% | | | | | | 13.8% | | | | | | 4,221,532 | | | | | | 3.7% | | | | | | — | | | | | | — | | |
Manulife Financial Corporation(5)
|
| | | | 2,255,181 | | | | | | 5.9% | | | | | | 7.4% | | | | | | 3,006,906 | | | | | | 2.6% | | | | | | 751,725 | | | | | | * | | |
Governors Lane LP(6)
|
| | | | 2,201,000 | | | | | | 5.8% | | | | | | 7.2% | | | | | | 2,201,000 | | | | | | 1.9% | | | | | | — | | | | | | — | | |
UBS O’Connor LLC(7)
|
| | | | 2,074,000 | | | | | | 5.4% | | | | | | 6.8% | | | | | | 2,074,000 | | | | | | 1.8% | | | | | | — | | | | | | — | | |
Woodson Capital(8)
|
| | | | 2,000,000 | | | | | | 5.2% | | | | | | 6.5% | | | | | | 2,000,000 | | | | | | 1.8% | | | | | | — | | | | | | — | | |
Deutsche Bank AG(9)
|
| | | | 1,795,030 | | | | | | 4.7% | | | | | | 5.9% | | | | | | 2,523,563 | | | | | | 2.2% | | | | | | 728,533 | | | | | | * | | |
Millennium Management LLC(10)
|
| | | | 1,600,000 | | | | | | 4.2% | | | | | | 5.2% | | | | | | 1,833,333 | | | | | | 1.6% | | | | | | 233,333 | | | | | | * | | |
Directors and Executive Officers of Acamar Partners
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Juan Carlos Torres Carretero(3)
|
| | | | 7,639,330 | | | | | | 20.0% | | | | | | n.a. | | | | | | 13,963,640 | | | | | | 11.7% | | | | | | 13,963,640 | | | | | | 14.8% | | |
Luis Ignacio Solorzano Aizpuru(3)
|
| | | | 7,639,330 | | | | | | 20.0% | | | | | | n.a. | | | | | | 13,963,640 | | | | | | 11.7% | | | | | | 13,963,640 | | | | | | 14.8% | | |
Raffaele R. Vitale(3)
|
| | | | 7,639,330 | | | | | | 20.0% | | | | | | n.a. | | | | | | 13,963,640 | | | | | | 11.7% | | | | | | 13,963,640 | | | | | | 14.8% | | |
Juan Duarte Hinterholzer(3)
|
| | | | 7,639,330 | | | | | | 20.0% | | | | | | n.a. | | | | | | 13,963,640 | | | | | | 11.7% | | | | | | 13,963,640 | | | | | | 14.8% | | |
Joseba Asier Picaza Ucar(3)
|
| | | | 7,639,330 | | | | | | 20.0% | | | | | | n.a. | | | | | | 13,963,640 | | | | | | 11.7% | | | | | | 13,963,640 | | | | | | 14.8% | | |
Domenico de Sole(11)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Teck H. Wong(11)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
James E. Skinner(11)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
All Directors and Executive Officers of Acamar Partners as a Group (8 Individuals)
|
| | | | 7,639,330 | | | | | | 20.0% | | | | | | n.a. | | | | | | 13,963,640 | | | | | | 11.7% | | | | | | 13,963,640 | | | | | | 14.8% | | |
Five Percent Holders, Directors and Named
Executive Officers of CarLotz |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
TRP(12) | | | | | — | | | | | | — | | | | | | — | | | | | | 21,739,677 | | | | | | 19.1% | | | | | | 21,739,677 | | | | | | 24.7% | | |
Michael W. Bor(13)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 11,585,166 | | | | | | 10.1% | | | | | | 11,585,166 | | | | | | 13.0% | | |
KAR(14) | | | | | — | | | | | | — | | | | | | — | | | | | | 7,154,353 | | | | | | 6.3% | | | | | | 7,154,353 | | | | | | 8.1% | | |
Aaron S. Montgomery(15)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 4,374,069 | | | | | | 3.8% | | | | | | 4,374,069 | | | | | | 5.0% | | |
John W. Foley II(16)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,199,563 | | | | | | 1.0% | | | | | | 1,199,563 | | | | | | 1.3% | | |
Daniel A. Valerian(17)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,161,971 | | | | | | 1.0% | | | | | | 1,161,971 | | | | | | 1.3% | | |
Steven G. Carrel(12)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 21,739,677 | | | | | | 19.1% | | | | | | 21,739,677 | | | | | | 24.7% | | |
David R. Mitchell(12)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 21,739,677 | | | | | | 19.1% | | | | | | 21,739,677 | | | | | | 24.7% | | |
Michael F. Vellucci(18)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
William S. Boland(19)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 3,446,531 | | | | | | 3.0% | | | | | | 3,446,531 | | | | | | 3.9% | | |
Robert E. Kurnick
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
All Directors and Executive Officers of CarLotz as a Group
(14 Individuals)(20) |
| | | | — | | | | | | — | | | | | | — | | | | | | 43,654,412 | | | | | | 37.0% | | | | | | 43,654,412 | | | | | | 47.3% | | |
Directors and Named Executive Officers of
New CarLotz After the Closing |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Michael W. Bor(13)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 11,585,166 | | | | | | 10.1% | | | | | | 11,585,166 | | | | | | 13.0% | | |
Name of Beneficial Owner
|
| |
Shares
|
| |
%
total |
| |
%
Class A common stock |
| |
Shares
|
| |
% total
|
| |
Shares
|
| |
% total
|
| |||||||||||||||||||||
John W. Foley II(16)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,199,563 | | | | | | 1.0% | | | | | | 1,199,563 | | | | | | 1.3% | | |
Daniel A. Valerian(17)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,161,971 | | | | | | 1.0% | | | | | | 1,161,971 | | | | | | 1.3% | | |
David R. Mitchell(12)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 21,739,677 | | | | | | 19.1% | | | | | | 21,739,677 | | | | | | 24.7% | | |
Steven G. Carrel(12)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 21,739,677 | | | | | | 19.1% | | | | | | 21,739,677 | | | | | | 24.7% | | |
Luis Ignacio Solorzano Aizpuru(3)
|
| | | | 7,639,330 | | | | | | 20.0% | | | | | | n.a. | | | | | | 13,963,640 | | | | | | 11.7% | | | | | | 13,963,640 | | | | | | 14.8% | | |
James E. Skinner(11)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Linda B. Abraham
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Sarah M. Kauss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Kimberly H. Sheehy
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
All Directors and Executive Officers of New CarLotz as a Group (15 Individuals)(21)
|
| | |
|
7,639,330
|
| | | |
|
20.0%
|
| | | |
|
n.a.
|
| | | |
|
50,067,919
|
| | | |
|
40.4%
|
| | | |
|
50,067,919
|
| | | |
|
51.0%
|
| |
Name of Beneficial Owner
|
| |
Number of
Shares of Common Stock Beneficially Owned |
| |
Percentage of
Outstanding Common Stock |
| |
Number of
Shares of Preferred Stock Beneficially Owned |
| |
Percentage of
Outstanding Preferred Stock |
| |
Percentage of
Total Shares of CarLotz Stock |
| |||||||||||||||
Five Percent Holders, Directors and Named Executive Officers
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
TRP
|
| | | | — | | | | | | — | | | | | | 2,034,751 | | | | | | 100% | | | | | | 36.9% | | |
Michael W. Bor(1)
|
| | | | 1,010,136 | | | | | | 28.8% | | | | | | — | | | | | | — | | | | | | 18.2% | | |
Aaron S. Montgomery(2)
|
| | | | 429,136 | | | | | | 12.2% | | | | | | — | | | | | | — | | | | | | 7.7% | | |
KAR(3) | | | | | 652,860 | | | | | | 15.8% | | | | | | — | | | | | | — | | | | | | 10.6% | | |
John W. Foley II(4)
|
| | | | 15,000 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
Daniel A. Valerian(5)
|
| | | | 35,000 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
Steven G. Carrel(6)
|
| | | | — | | | | | | — | | | | | | 2,034,751 | | | | | | 100% | | | | | | 36.9% | | |
David R. Mitchell(6)
|
| | | | — | | | | | | — | | | | | | 2,034,751 | | | | | | 100% | | | | | | 36.9% | | |
Michael F. Vellucci(7)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
William S. Boland(8)
|
| | | | 338,136 | | | | | | 9.6% | | | | | | — | | | | | | — | | | | | | 6.1% | | |
Robert E. Kurnick
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
All Directors and Executive Officers of CarLotz as a Group (14 individuals)
|
| | | | 1,828,408 | | | | | | 50.6% | | | | | | 2,034,751 | | | | | | 100% | | | | | | 68.4% | | |
Name
|
| |
Age
|
| |
Position
|
|
Michael W. Bor | | |
46
|
| | Chief Executive Officer and Chairman (Class II Director) | |
John W. Foley II | | |
44
|
| | Chief Operating Officer | |
Daniel A. Valerian | | |
47
|
| | Chief Technology Officer | |
Elizabeth Sanders | | |
30
|
| | Chief Administrative Officer | |
Rebecca C. Polak | | |
50
|
| |
Chief Commercial Officer and General Counsel
|
|
Thomas W. Stoltz | | |
59
|
| | Chief Financial Officer | |
Robert Imhof | | |
43
|
| |
Senior Vice President of Finance & Accounting
|
|
Michael Chapman | | |
47
|
| | Chief Marketing Officer | |
David R. Mitchell | | |
53
|
| | Class I Director | |
Luis Ignacio Solorzano Aizpuru | | |
48
|
| | Class I Director | |
Kimberly H. Sheehy | | |
56
|
| | Class I Director | |
Steven G. Carrel | | |
46
|
| | Class II Director | |
James E. Skinner | | |
67
|
| | Class II Director | |
Linda B. Abraham | | |
58
|
| | Class III Director | |
Sarah M. Kauss | | |
45
|
| | Class III Director | |
|
CarLotz
|
| |
New CarLotz
|
|
|
Authorized Capital Stock
|
| |||
|
CarLotz is currently authorized to issue 7,600,000 shares of common stock, par value $0.001 per share. As of December 11, 2020, there were 3,485,534 shares of CarLotz common stock outstanding.
CarLotz is currently authorized to issue 3,052,127 shares of Series A preferred stock, par value $0.001 per share. As of December 11, 2020, there were 2,034,751 shares of CarLotz preferred stock outstanding.
|
| |
New CarLotz will be authorized to issue 510,000,000 shares of capital stock, consisting of (i) 500,000,000 shares of Class A common stock, par value $0.0001 per share, and (ii) 10,000,000 shares of preferred stock, par value $0.0001 per share. As of December 11, 2020, we expect there will be 113,617,806 shares of New CarLotz common stock outstanding following consummation of the merger, assuming no redemptions holders of Acamar Partners public shares.
Following consummation of the merger, New CarLotz is not expected to have any preferred stock outstanding.
|
|
|
Number of Directors
|
| |||
| CarLotz initial board of directors consisted of three directors and was subsequently expanded to seven directors. The number of directors can be determined from time to time by resolution of the CarLotz board of directors. | | | Subject to the rights of holders of any series of preferred stock to elect directors and the terms of the New CarLotz Stockholders Agreement, the number of directors is fixed from time to time by resolution of the New CarLotz board of directors. | |
|
Classified Board of Directors
|
| |||
| All directors are elected annually. | | | A three-class classified board of directors, with directors split as evenly as possible across the three classes. | |
|
CarLotz
|
| |
New CarLotz
|
|
|
Nomination Rights
|
| |||
| Holders of CarLotz preferred stock, as a class, are entitled to elect three or five directors, depending on whether there is additional investment, and holders of CarLotz common stock are entitled to elect three directors. | | | The board of directors has the right to grant separate voting rights to any class or series of preferred stock, but none currently exist. Nomination rights will be granted in the New CarLotz Stockholders Agreement. | |
|
Filling Vacancies on the Board of Directors
|
| |||
|
If holders of shares of CarLotz preferred stock or CarLotz common stock fail to elect a sufficient number of directors to fill all director positions, the seats unfilled will remain vacant until the class of stock entitled to fill the director seat elects a director. A vacancy in any seat filled by the holders of a class or series may only be filled by the remaining director or directors elected by that class or series of directors.
CarLotz bylaws provide that the majority of the directors then in office, including those who have resigned, have the power to fill vacancies.
|
| | Subject to the rights granted to certain stockholders pursuant to the New CarLotz Stockholders Agreement, vacancies may be filled only by the affirmative vote of a majority of the directors then in office, even if less than quorum, or by a sole remaining director. | |
|
Removal of Directors
|
| |||
| Directors can be removed, with or without cause, by the affirmative vote of the majority of the holders of the shares of the class or series of capital stock entitled to elect such director or directors. | | | Subject to the rights granted to certain stockholders pursuant to the New CarLotz Stockholders Agreement, directors may be removed only for cause with a supermajority vote (662∕3%) of outstanding shares). | |
|
Calling a Special Meeting of Stockholders
|
| |||
| Stockholders holding at least 10% of shares in the aggregate, the board of directors, chairperson or president can call a special meeting of stockholders. | | | Special meetings may be called by the chairperson and may also be called by vote of a majority of the board of directors or the secretary, at the direction of the chairperson or a majority of the board of directors. | |
|
Advance Notice of Stockholder Proposal or Nomination
|
| |||
| None. | | | Advance notice required not less than 90 nor more 120 days prior to annual meeting. Highly detailed disclosure required, including disclosure of derivatives, options, short positions, and the requirement that the stockholder nominee and nominator submit a questionnaire with the nomination and make various representations, agreements and warranties to New CarLotz. | |
|
Restrictions on Outside Compensation of Directors
|
| |||
| No restrictions on outside compensation of directors. | | | There are no restrictions on outside compensation of directors, however director nominees nominated pursuant to the advance notice bylaw must represent that he or she does not have any undisclosed direct or indirect compensation in connection with service as a director from a third party. | |
|
CarLotz
|
| |
New CarLotz
|
|
|
Stockholder Action by Written Consent
|
| |||
| The Existing CarLotz Charter contains various references to rights that may be exercised by written consent. CarLotz bylaws provide stockholders can take action by written consent, subject to signature and delivery requirements. | | | No action may be taken by stockholders via written consent unless the board of directors consents. | |
|
Voting Requirements for Amendments to Charter
|
| |||
|
The Existing CarLotz Charter is silent regarding mechanics of amending to the Existing CarLotz Charter.
The Existing CarLotz Charter does not allow for an amendment, alteration or repeal of provisions of CarLotz preferred stock without the written consent or affirmative vote of holders of a majority of CarLotz preferred stock. Any amendment, repeal or modification of Article Tenth (Indemnification) of the Existing CarLotz Charter shall not affect any right or protection for any person for any act or omission occurring prior to such amendment, repeal or modification and shall not adversely affect any right or protection of any director, officer or other agent of CarLotz existing at the time of such amendment, repeal or modification.
|
| |
The New CarLotz charter contains a supermajority threshold (662∕3% of outstanding shares) required to amend most charter provisions.
Holders of common stock are not entitled to vote on any amendment to the New CarLotz charter that alters or changes the powers, preferences, rights or other terms of one or more outstanding series of preferred stock.
|
|
|
Voting Requirements for Amendments to Bylaws
|
| |||
| The board of directors has the power to make, repeal, alter, amend and rescind any or all of the CarLotz bylaws. Stockholders are entitled to vote to adopt, amend or repeal the CarLotz bylaws. Cannot amend, alter or repeal provision of bylaws that adversely affect the powers, preferences or rights of CarLotz preferred stockholders without the written consent or affirmative vote of holders of a majority of CarLotz preferred stock. The CarLotz bylaws do not provide for special mechanics to amend the bylaws, so the general voting mechanics applicable to stockholders voting at stockholder meetings (majority of the votes cast affirmatively or negatively) apply. | | |
The board of directors has the power to make, repeal, alter or amend any or all of the New CarLotz bylaws.
Supermajority threshold (662∕3% of outstanding shares) required to amend the New CarLotz bylaws.
|
|
|
Blank Check Preferred Stock
|
| |||
| No blank check. The board of directors has authorized 3,052,127 shares of CarLotz preferred stock, of which 2,034,751 shares are outstanding. | | | The board of directors is authorized to issue preferred stock. | |
|
Delaware Forum Selection Provision
|
| |||
| Not included. | | | The Court of Chancery of the State of Delaware (or the federal district court for the District of Delaware) shall be the sole and exclusive forum for specified actions, unless New CarLotz consents in writing to an alternative forum. The federal district | |
|
CarLotz
|
| |
New CarLotz
|
|
| | | | courts are the exclusive forum for claims arising under the Securities Act. | |
|
Waiver of Corporate Opportunity
|
| |||
| The Existing CarLotz charter renounces opportunities offered to any person who is a director of CarLotz. | | | New CarLotz recognizes that the stockholders party to the New CarLotz Stockholders Agreement may compete in the same line of business, and have waived the obligation of those stockholders, their affiliates and any of their director nominees serving on the board of directors to bring known potential business opportunities to New CarLotz for consideration. | |
Redemption Date
(period to expiration of warrants) |
| |
Fair Market Value of New CarLotz Common Stock
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
|
$10.00
|
| |
$11.00
|
| |
$12.00
|
| |
$13.00
|
| |
$14.00
|
| |
$15.00
|
| |
$16.00
|
| |
$17.00
|
| |
$18.00
|
| |||||||||||||||||||||||||||||
57 months
|
| | | | 0.257 | | | | | | 0.277 | | | | | | 0.294 | | | | | | 0.310 | | | | | | 0.324 | | | | | | 0.337 | | | | | | 0.348 | | | | | | 0.358 | | | | | | 0.365 | | |
54 months
|
| | | | 0.252 | | | | | | 0.272 | | | | | | 0.291 | | | | | | 0.307 | | | | | | 0.322 | | | | | | 0.335 | | | | | | 0.347 | | | | | | 0.357 | | | | | | 0.365 | | |
51 months
|
| | | | 0.246 | | | | | | 0.268 | | | | | | 0.287 | | | | | | 0.304 | | | | | | 0.320 | | | | | | 0.333 | | | | | | 0.346 | | | | | | 0.357 | | | | | | 0.365 | | |
48 months
|
| | | | 0.241 | | | | | | 0.263 | | | | | | 0.283 | | | | | | 0.301 | | | | | | 0.317 | | | | | | 0.332 | | | | | | 0.344 | | | | | | 0.356 | | | | | | 0.365 | | |
45 months
|
| | | | 0.235 | | | | | | 0.258 | | | | | | 0.279 | | | | | | 0.298 | | | | | | 0.315 | | | | | | 0.330 | | | | | | 0.343 | | | | | | 0.356 | | | | | | 0.365 | | |
42 months
|
| | | | 0.228 | | | | | | 0.252 | | | | | | 0.274 | | | | | | 0.294 | | | | | | 0.312 | | | | | | 0.328 | | | | | | 0.342 | | | | | | 0.355 | | | | | | 0.364 | | |
39 months
|
| | | | 0.221 | | | | | | 0.246 | | | | | | 0.269 | | | | | | 0.290 | | | | | | 0.309 | | | | | | 0.325 | | | | | | 0.340 | | | | | | 0.354 | | | | | | 0.364 | | |
36 months
|
| | | | 0.213 | | | | | | 0.239 | | | | | | 0.263 | | | | | | 0.285 | | | | | | 0.305 | | | | | | 0.323 | | | | | | 0.339 | | | | | | 0.353 | | | | | | 0.364 | | |
33 months
|
| | | | 0.205 | | | | | | 0.232 | | | | | | 0.257 | | | | | | 0.280 | | | | | | 0.301 | | | | | | 0.320 | | | | | | 0.337 | | | | | | 0.352 | | | | | | 0.364 | | |
30 months
|
| | | | 0.196 | | | | | | 0.224 | | | | | | 0.250 | | | | | | 0.274 | | | | | | 0.297 | | | | | | 0.316 | | | | | | 0.335 | | | | | | 0.351 | | | | | | 0.364 | | |
27 months
|
| | | | 0.185 | | | | | | 0.214 | | | | | | 0.242 | | | | | | 0.268 | | | | | | 0.291 | | | | | | 0.313 | | | | | | 0.332 | | | | | | 0.350 | | | | | | 0.364 | | |
24 months
|
| | | | 0.173 | | | | | | 0.204 | | | | | | 0.233 | | | | | | 0.260 | | | | | | 0.285 | | | | | | 0.308 | | | | | | 0.329 | | | | | | 0.348 | | | | | | 0.364 | | |
21 months
|
| | | | 0.161 | | | | | | 0.193 | | | | | | 0.223 | | | | | | 0.252 | | | | | | 0.279 | | | | | | 0.304 | | | | | | 0.326 | | | | | | 0.347 | | | | | | 0.364 | | |
18 months
|
| | | | 0.146 | | | | | | 0.179 | | | | | | 0.211 | | | | | | 0.242 | | | | | | 0.271 | | | | | | 0.298 | | | | | | 0.322 | | | | | | 0.345 | | | | | | 0.363 | | |
15 months
|
| | | | 0.130 | | | | | | 0.164 | | | | | | 0.197 | | | | | | 0.230 | | | | | | 0.262 | | | | | | 0.291 | | | | | | 0.317 | | | | | | 0.342 | | | | | | 0.363 | | |
12 months
|
| | | | 0.111 | | | | | | 0.146 | | | | | | 0.181 | | | | | | 0.216 | | | | | | 0.250 | | | | | | 0.282 | | | | | | 0.312 | | | | | | 0.339 | | | | | | 0.363 | | |
9 months
|
| | | | 0.090 | | | | | | 0.125 | | | | | | 0.162 | | | | | | 0.199 | | | | | | 0.237 | | | | | | 0.272 | | | | | | 0.305 | | | | | | 0.336 | | | | | | 0.362 | | |
6 months
|
| | | | 0.065 | | | | | | 0.099 | | | | | | 0.137 | | | | | | 0.178 | | | | | | 0.219 | | | | | | 0.259 | | | | | | 0.296 | | | | | | 0.331 | | | | | | 0.362 | | |
3 months
|
| | | | 0.034 | | | | | | 0.065 | | | | | | 0.104 | | | | | | 0.150 | | | | | | 0.197 | | | | | | 0.243 | | | | | | 0.286 | | | | | | 0.326 | | | | | | 0.361 | | |
0 months
|
| | | | — | | | | | | — | | | | | | 0.042 | | | | | | 0.115 | | | | | | 0.179 | | | | | | 0.233 | | | | | | 0.281 | | | | | | 0.323 | | | | | | 0.361 | | |
|
CarLotz, Inc. Audited Financial Statements
Audited Consolidated Financial Statements for the years ended December 31, 2019, 2018 and 2017 |
| | | | | | |
| | | | | F-2 | | | |
| | | | | F-3 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | |
|
CarLotz, Inc. Unaudited Condensed Financial Statements
Unaudited Condensed Consolidated Financial Statements as of September 30, 2020 |
| | | | | | |
| | | | | F-32 | | | |
| | | | | F-33 | | | |
| | | | | F-34 | | | |
| | | | | F-35 | | | |
| | | | | F-36 | | | |
| | | | | F-38 | | |
| ACAMAR PARTNERS FINANCIAL STATEMENTS | | | | | | | |
| Acamar Partners Acquisition Corp. Audited Financial Statements | | | |||||
|
Audited Financial Statements for the Years Ended December 31, 2019 and for the period from November 7, 2018 (inception) to December 31, 2018
|
| | | | | | |
| | | | | F-56 | | | |
| | | | | F-57 | | | |
| | | | | F-58 | | | |
| | | | | F-59 | | | |
| | | | | F-60 | | | |
| | | | | F-61 | | | |
| Acamar Partners Acquisition Corp. Unaudited Condensed Financial Statements | | | | | | | |
| | | | | F-74 | | | |
| | | | | F-75 | | | |
| | | | | F-76 | | | |
| | | | | F-77 | | | |
| | | | | F-78 | | |
| | |
2019
|
| |
2018
|
| ||||||
Assets | | | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 3,214 | | | | | $ | 1,019 | | |
Restricted cash
|
| | | | 888 | | | | | | 551 | | |
Accounts receivable, net
|
| | | | 3,256 | | | | | | 2,412 | | |
Inventories
|
| | | | 7,625 | | | | | | 10,160 | | |
Other current assets
|
| | | | 234 | | | | | | 228 | | |
Total Current Assets
|
| | | | 15,217 | | | | | | 14,370 | | |
Property and equipment, net
|
| | | | 631 | | | | | | 1,030 | | |
Lease vehicles, net
|
| | | | 444 | | | | | | 731 | | |
Other assets
|
| | | | 343 | | | | | | 305 | | |
Total Assets
|
| | | $ | 16,635 | | | | | $ | 16,436 | | |
Liabilities, Redeemable Convertible Preferred Stock, Stockholders’ Equity (Deficit) | | | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | | | |
Long-term debt, current
|
| | | $ | 2,825 | | | | | $ | 6 | | |
Floor plan notes payable
|
| | | | 6,739 | | | | | | 8,697 | | |
Promissory note
|
| | | | — | | | | | | 418 | | |
Accounts payable
|
| | | | 2,134 | | | | | | 742 | | |
Accrued expenses
|
| | | | 1,576 | | | | | | 1,051 | | |
Accrued expenses – related party
|
| | | | 3,102 | | | | | | 1,351 | | |
Other current liabilities
|
| | | | 434 | | | | | | 205 | | |
Total Current Liabilities
|
| | | | 16,810 | | | | | | 12,470 | | |
Long-term debt, less current portion
|
| | | | — | | | | | | 11 | | |
Redeemable convertible preferred stock tranche obligation
|
| | | | 3,755 | | | | | | 3,261 | | |
Other liabilities
|
| | | | 931 | | | | | | 301 | | |
Total Liabilities
|
| | | | 21,496 | | | | | | 16,043 | | |
Commitments and Contingencies (Note 16)
|
| | | | — | | | | | | — | | |
Redeemable Convertible Preferred Stock: | | | | | | | | | | | | | |
Series A Preferred Stock $0.001 stated value; authorized 3,052,127 shares; issued and
outstanding 2,034,751 and 1,220,851 shares, as of December 31, 2019 and 2018, respectively; aggregate liquidation preference of approximately $34,300 and $19,931 as of December 31, 2019 and 2018, respectively |
| | | | 17,560 | | | | | | 8,670 | | |
Stockholders’ Equity (Deficit): | | | | | | | | | | | | | |
Common stock, $0.001 par value; authorized 7,600,000 shares, issued 3,869,118 shares, and outstanding 3,716,526 shares
|
| | | | 4 | | | | | | 4 | | |
Additional paid-in capital
|
| | | | 6,560 | | | | | | 8,026 | | |
Accumulated deficit
|
| | | | (27,485) | | | | | | (14,807) | | |
Treasury stock, $0.001 par value; 152,592 shares
|
| | | | (1,500) | | | | | | (1,500) | | |
Total Stockholders’ Equity (Deficit)
|
| | | | (22,421) | | | | | | (8,277) | | |
Total Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
|
| | | $ | 16,635 | | | | | $ | 16,436 | | |
|
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Revenues: | | | | | | | | | | | | | | | | | | | |
Retail vehicle sales
|
| | | $ | 90,382 | | | | | $ | 53,448 | | | | | $ | 41,758 | | |
Wholesale vehicle sales
|
| | | | 8,454 | | | | | | 3,153 | | | | | | 1,340 | | |
Finance and insurance, net
|
| | | | 3,117 | | | | | | 1,608 | | | | | | 974 | | |
Lease income, net
|
| | | | 533 | | | | | | 142 | | | | | | — | | |
Total Revenues
|
| | | | 102,486 | | | | | | 58,351 | | | | | | 44,072 | | |
Cost of sales (exclusive of depreciation)
|
| | | | 93,780 | | | | | | 52,708 | | | | | | 38,519 | | |
Gross Profit
|
| | | | 8,706 | | | | | | 5,643 | | | | | | 5,553 | | |
Operating Expenses: | | | | | | | | | | | | | | | | | | | |
Selling, general and administrative
|
| | | | 18,305 | | | | | | 11,661 | | | | | | 7,254 | | |
Depreciation expense
|
| | | | 504 | | | | | | 338 | | | | | | 218 | | |
Management fee expense – related party
|
| | | | 250 | | | | | | 250 | | | | | | 73 | | |
Total Operating Expenses
|
| | | | 19,059 | | | | | | 12,249 | | | | | | 7,545 | | |
Loss from Operations
|
| | | | (10,353) | | | | | | (6,606) | | | | | | (1,992) | | |
Interest Expense
|
| | | | 651 | | | | | | 466 | | | | | | 414 | | |
Other Income (Expense), net | | | | | | | | | | | | | | | | | | | |
Management fee income – related party
|
| | | | — | | | | | | 127 | | | | | | 180 | | |
Change in fair value of warrants liability
|
| | | | 24 | | | | | | (2) | | | | | | 50 | | |
Change in fair value of redeemable convertible preferred stock tranche obligation
|
| | | | (1,396) | | | | | | (272) | | | | | | (79) | | |
Other income (expense)
|
| | | | (291) | | | | | | 662 | | | | | | (210) | | |
Total Other Income (Expense), net
|
| | | | (1,663) | | | | | | 515 | | | | | | (59) | | |
Loss Before Income Tax Expense
|
| | | | (12,667) | | | | | | (6,557) | | | | | | (2,465) | | |
Income Tax Expense
|
| | | | 11 | | | | | | 3 | | | | | | 4 | | |
Net Loss
|
| | | $ | (12,678) | | | | | $ | (6,560) | | | | | $ | (2,469) | | |
Redeemable convertible preferred stock dividends (undeclared and
cumulative) |
| | | | (1,579) | | | | | | (1,014) | | | | | | (274) | | |
Net loss attributable to common stockholders
|
| | | $ | (14,257) | | | | | $ | (7,574) | | | | | $ | (2,743) | | |
Net loss per share attributable to common stockholders, basic and diluted
|
| | | $ | (3.84) | | | | | $ | (2.04) | | | | | $ | (0.75) | | |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
|
| | | | 3,716,526 | | | | | | 3,716,526 | | | | | | 3,660,679 | | |
| | |
Redeemable
Convertible Preferred Stock |
| | |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Accumulated
Deficit |
| |
Treasury Stock
|
| |
Stockholders’
Equity (Deficit) |
| ||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||
Balance January 1, 2017
|
| | | | — | | | | | $ | — | | | | | | | 3,638,126 | | | | | $ | 4 | | | | | $ | 6,993 | | | | | $ | (5,778) | | | | | | — | | | | | $ | — | | | | | $ | 1,219 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,469) | | | | | | — | | | | | | — | | | | | | (2,469) | | |
Purchase of treasury stock
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (152,592) | | | | | | (1,500) | | | | | | (1,500) | | |
Conversion of debt to equity
|
| | | | — | | | | | | — | | | | | | | 230,992 | | | | | | — | | | | | | 2,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,000 | | |
Redeemable convertible preferred
stock issuance |
| | | | 1,220,851 | | | | | | 8,670 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Accrued dividends on redeemable
convertible preferred stock |
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | (274) | | | | | | — | | | | | | — | | | | | | — | | | | | | (274) | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 170 | | | | | | — | | | | | | — | | | | | | — | | | | | | 170 | | |
Balance December 31, 2017
|
| | | | 1,220,851 | | | | | $ | 8,670 | | | | | | | 3,869,118 | | | | | $ | 4 | | | | | $ | 8,889 | | | | | $ | (8,247) | | | | | | (152,592) | | | | | $ | (1,500) | | | | | $ | (854) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (6,560) | | | | | | — | | | | | | — | | | | | | (6,560) | | |
Accrued dividends on redeemable
convertible preferred stock |
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | (1,014) | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,014) | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 151 | | | | | | — | | | | | | — | | | | | | — | | | | | | 151 | | |
Balance December 31, 2018
|
| | | | 1,220,851 | | | | | $ | 8,670 | | | | | | | 3,869,118 | | | | | $ | 4 | | | | | $ | 8,026 | | | | | $ | (14,807) | | | | | | (152,592) | | | | | $ | (1,500) | | | | | $ | (8,277) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (12,678) | | | | | | — | | | | | | — | | | | | | (12,678) | | |
Redeemable convertible preferred
stock issuance |
| | | | 813,900 | | | | | | 8,890 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Accrued dividends on redeemable
convertible preferred stock |
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | (1,579) | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,579) | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 113 | | | | | | — | | | | | | — | | | | | | — | | | | | | 113 | | |
Balance December 31, 2019
|
| | | | 2,034,751 | | | | | $ | 17,560 | | | | | | | 3,869,118 | | | | | $ | 4 | | | | | $ | 6,560 | | | | | $ | (27,485) | | | | | | (152,592) | | | | | $ | (1,500) | | | | | $ | (22,421) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Cash Flow from Operating Activities | | | | | | | | | | | | | | | | | | | |
Net loss
|
| | | $ | (12,678) | | | | | $ | (6,560) | | | | | $ | (2,469) | | |
Adjustments to reconcile net loss to net cash used in operating activities | | | | | | | | | | | | | | | | | | | |
Depreciation – property and equipment
|
| | | | 260 | | | | | | 253 | | | | | | 218 | | |
Depreciation – lease vehicles
|
| | | | 244 | | | | | | 85 | | | | | | — | | |
Loss on disposition of property and equipment
|
| | | | 321 | | | | | | — | | | | | | 44 | | |
Gain on sale of lease vehicles
|
| | | | — | | | | | | (16) | | | | | | — | | |
Provision for doubtful accounts
|
| | | | (14) | | | | | | (30) | | | | | | 51 | | |
Share-based compensation expense
|
| | | | 113 | | | | | | 151 | | | | | | 170 | | |
Change in fair value of warrants liability
|
| | | | (24) | | | | | | 2 | | | | | | (50) | | |
Change in fair value of redeemable convertible preferred stock tranche obligation
|
| | | | 1,396 | | | | | | 272 | | | | | | 79 | | |
Other
|
| | | | — | | | | | | (599) | | | | | | 177 | | |
Change in Operating Assets and Liabilities:
|
| | | | | | | | | | | | | | | | | | |
Accounts receivable
|
| | | | (830) | | | | | | (706) | | | | | | (636) | | |
Inventories
|
| | | | 2,883 | | | | | | (4,810) | | | | | | (2,855) | | |
Other current assets
|
| | | | (6) | | | | | | 48 | | | | | | (63) | | |
Other assets
|
| | | | (38) | | | | | | (164) | | | | | | (60) | | |
Accounts payable
|
| | | | 1,392 | | | | | | 223 | | | | | | (79) | | |
Accrued expenses
|
| | | | 525 | | | | | | 133 | | | | | | 3 | | |
Accrued expenses – related party
|
| | | | 172 | | | | | | (9) | | | | | | 72 | | |
Other current liabilities
|
| | | | 229 | | | | | | 20 | | | | | | (108) | | |
Other liabilities
|
| | | | 582 | | | | | | (54) | | | | | | 183 | | |
Net Cash Used in Operating Activities
|
| | | | (5,473) | | | | | | (11,761) | | | | | | (5,323) | | |
Cash Flows from Investing Activities | | | | | | | | | | | | | | | | | | | |
Cash related to consolidation of Orange Grove
|
| | | | — | | | | | | 5 | | | | | | — | | |
Purchase of property and equipment
|
| | | | (235) | | | | | | (474) | | | | | | (204) | | |
Proceeds from sale of lease vehicles
|
| | | | — | | | | | | 119 | | | | | | — | | |
Purchase of lease vehicles
|
| | | | (252) | | | | | | (12) | | | | | | — | | |
Net Cash Used in Investing Activities
|
| | | | (487) | | | | | | (362) | | | | | | (204) | | |
Cash Flows from Financing Activities | | | | | | | | | | | | | | | | | | | |
Issuance of redeemable convertible preferred stock, net
|
| | | | 7,988 | | | | | | — | | | | | | 11,580 | | |
Purchase of treasury stock
|
| | | | — | | | | | | — | | | | | | (1,500) | | |
Payments made on long-term debt
|
| | | | (8) | | | | | | (4) | | | | | | — | | |
Borrowings on long-term debt
|
| | | | 3,000 | | | | | | — | | | | | | — | | |
Payments of debt issuance costs
|
| | | | (112) | | | | | | — | | | | | | — | | |
Payments on floor plan notes payable
|
| | | | (41,711) | | | | | | (24,567) | | | | | | (11,531) | | |
Borrowings on floor plan notes payable
|
| | | | 39,753 | | | | | | 29,171 | | | | | | 14,160 | | |
Payments made on promissory note
|
| | | | (418) | | | | | | (97) | | | | | | — | | |
Net Cash Provided by Financing Activities
|
| | | | 8,492 | | | | | | 4,503 | | | | | | 12,709 | | |
Net Change in Cash and Cash Equivalents and Restricted Cash
|
| | | | 2,532 | | | | | | (7,620) | | | | | | 7,182 | | |
Cash and cash equivalents and restricted cash, beginning
|
| | | | 1,570 | | | | | | 9,190 | | | | | | 2,008 | | |
Cash and cash equivalents and restricted cash, ending
|
| | | $ | 4,102 | | | | | $ | 1,570 | | | | | $ | 9,190 | | |
Supplemental Disclosure of Cash Flow Information | | | | | | | | | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 684 | | | | | $ | 436 | | | | | $ | 441 | | |
Supplementary Schedule of Non-cash Investing and Financing Activities: | | | | | | | | | | | | | | | | | | | |
Transfer from property and equipment to inventory
|
| | | $ | 53 | | | | | $ | 26 | | | | | $ | — | | |
Transfer from lease vehicles to inventory
|
| | | $ | 295 | | | | | $ | — | | | | | $ | — | | |
Redeemable convertible preferred stock distributions accrued
|
| | | $ | 1,579 | | | | | $ | 1,014 | | | | | $ | 274 | | |
Purchase of property and equipment with long-term debt
|
| | | $ | — | | | | | $ | 21 | | | | | $ | — | | |
Conversion from debt to equity
|
| | | $ | — | | | | | $ | — | | | | | $ | 2,000 | | |
Promissory note based on consolidation of Orange Grove
|
| | | $ | — | | | | | $ | 515 | | | | | $ | — | | |
Issuance of common stock warrants
|
| | | $ | 72 | | | | | $ | — | | | | | $ | — | | |
Settlement of redeemable convertible preferred stock tranche obligation
|
| | | $ | (902) | | | | | $ | — | | | | | $ | — | | |
Issuance date fair value of redeemable convertible preferred stock tranche obligation
|
| | | $ | — | | | | | $ | — | | | | | $ | 2,910 | | |
| Leasehold Improvements | | | Lesser of 15 years or underlying lease terms | |
| Equipment, Furniture, and Fixtures | | | 1 – 5 years | |
| Corporate Vehicles | | | 5 years | |
| | |
2019
|
| |||||||||||||||
| | |
Vehicle Sales
|
| |
Fleet
Management |
| |
Total
|
| |||||||||
Retail vehicle sales
|
| | | $ | 90,382 | | | | | $ | — | | | | | $ | 90,382 | | |
Wholesale vehicle sales
|
| | | | 8,454 | | | | | | — | | | | | | 8,454 | | |
Finance and insurance, net
|
| | | | 3,117 | | | | | | — | | | | | | 3,117 | | |
Lease income, net
|
| | | | — | | | | | | 533 | | | | | | 533 | | |
Total Revenues
|
| | | $ | 101,953 | | | | | $ | 533 | | | | | $ | 102,486 | | |
| | |
2018
|
| |||||||||||||||
| | |
Vehicle Sales
|
| |
Fleet
Management |
| |
Total
|
| |||||||||
Retail vehicle sales
|
| | | $ | 53,448 | | | | | $ | — | | | | | $ | 53,448 | | |
Wholesale vehicle sales
|
| | | | 3,153 | | | | | | — | | | | | | 3,153 | | |
Finance and insurance, net
|
| | | | 1,608 | | | | | | — | | | | | | 1,608 | | |
Lease income, net
|
| | | | — | | | | | | 142 | | | | | | 142 | | |
Total Revenues
|
| | | $ | 58,209 | | | | | $ | 142 | | | | | $ | 58,351 | | |
| | |
2017
|
| |||||||||||||||
| | |
Vehicle Sales
|
| |
Fleet
Management |
| |
Total
|
| |||||||||
Retail vehicle sales
|
| | | $ | 41,758 | | | | | $ | — | | | | | $ | 41,758 | | |
Wholesale vehicle sales
|
| | | | 1,340 | | | | | | — | | | | | | 1,340 | | |
Finance and insurance, net
|
| | | | 974 | | | | | | — | | | | | | 974 | | |
Lease income, net
|
| | | | — | | | | | | — | | | | | | — | | |
Total Revenues
|
| | | $ | 44,072 | | | | | $ | — | | | | | $ | 44,072 | | |
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Retail vehicles: | | | | | | | | | | | | | | | | | | | |
Retail vehicle sales
|
| | | $ | 90,382 | | | | | $ | 53,448 | | | | | $ | 41,758 | | |
Retail vehicle cost of sales
|
| | | | 84,534 | | | | | | 48,523 | | | | | | 36,679 | | |
Gross Profit – Retail Vehicles
|
| | | $ | 5,848 | | | | | $ | 4,925 | | | | | $ | 5,079 | | |
Wholesale vehicles: | | | | | | | | | | | | | | | | | | | |
Wholesale vehicle sales
|
| | | $ | 8,454 | | | | | $ | 3,153 | | | | | $ | 1,340 | | |
Wholesale vehicle cost of sales
|
| | | | 9,246 | | | | | | 4,185 | | | | | | 1,840 | | |
Gross Profit – Wholesale Vehicles
|
| | | $ | (792) | | | | | $ | (1,032) | | | | | $ | (500) | | |
| | |
2019
|
| |||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Assets: | | | | | | | | | | | | | | | | | | | |
Money market funds
|
| | | $ | 688 | | | | | $ | — | | | | | $ | — | | |
Liabilities: | | | | | | | | | | | | | | | | | | | |
Redeemable convertible preferred stock tranche obligation
|
| | | | — | | | | | | — | | | | | | 3,755 | | |
Stock warrants liability
|
| | | | — | | | | | | — | | | | | | 115 | | |
Total Liabilities:
|
| | | $ | — | | | | | $ | — | | | | | $ | 3,870 | | |
| | |
2018
|
| |||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Assets: | | | | | | | | | | | | | | | | | | | |
Money market funds
|
| | | $ | 351 | | | | | $ | — | | | | | $ | — | | |
Liabilities: | | | | | | | | | | | | | | | | | | | |
Redeemable convertible preferred stock tranche obligation
|
| | | | — | | | | | | — | | | | | | 3,261 | | |
Stock warrants liability
|
| | | | — | | | | | | — | | | | | | 67 | | |
Total Liabilities:
|
| | | $ | — | | | | | $ | — | | | | | $ | 3,328 | | |
Year-ended December 31, 2019
|
| |
January 1,
|
| |
Issuances
|
| |
Settlements
|
| |
Change in
Fair Value |
| |
December 31,
|
| |||||||||||||||
Redeemable convertible preferred stock tranche obligation
|
| | | $ | 3,261 | | | | | $ | — | | | | | $ | (902) | | | | | $ | 1,396 | | | | | $ | 3,755 | | |
Stock warrants liability
|
| | | | 67 | | | | | | 72 | | | | | | — | | | | | | (24) | | | | | | 115 | | |
Total
|
| | | $ | 3,328 | | | | | $ | 72 | | | | | $ | (902) | | | | | $ | 1,372 | | | | | $ | 3,870 | | |
Year-ended December 31, 2018
|
| |
January 1,
|
| |
Issuances
|
| |
Settlements
|
| |
Change in
Fair Value |
| |
December 31,
|
| |||||||||||||||
Redeemable convertible preferred stock tranche obligation
|
| | | $ | 2,989 | | | | | $ | — | | | | | $ | — | | | | | $ | 272 | | | | | $ | 3,261 | | |
Stock warrants liability
|
| | | | 65 | | | | | | — | | | | | | — | | | | | | 2 | | | | | | 67 | | |
Total
|
| | | $ | 3,054 | | | | | $ | — | | | | | $ | — | | | | | $ | 274 | | | | | $ | 3,328 | | |
| | |
2019
|
| |
2018
|
|
Expected volatility
|
| |
45.00%
|
| |
60.00%
|
|
Expected dividend yield
|
| |
0.00%
|
| |
0.00%
|
|
Expected term (in years)
|
| |
5 years
|
| |
6 years
|
|
Risk-free interest rate
|
| |
1.69%
|
| |
2.55%
|
|
Marketability discount
|
| |
50.00%
|
| |
60.00%
|
|
| | |
2019
|
| |
2018
|
| ||||||
Contracts in transit
|
| | | $ | 2,645 | | | | | $ | 2,098 | | |
Trade
|
| | | | 202 | | | | | | 261 | | |
Finance commission
|
| | | | 87 | | | | | | 69 | | |
Other
|
| | | | 349 | | | | | | 25 | | |
Total
|
| | | | 3,283 | | | | | | 2,453 | | |
Allowance for doubtful accounts
|
| | | | (27) | | | | | | (41) | | |
Total Accounts Receivable, net
|
| | | $ | 3,256 | | | | | $ | 2,412 | | |
| | |
2019
|
| |
2018
|
| ||||||
Used vehicles
|
| | | $ | 7,592 | | | | | $ | 10,069 | | |
Parts
|
| | | | 33 | | | | | | 91 | | |
Total | | | | $ | 7,625 | | | | | $ | 10,160 | | |
| | |
2019
|
| |
2018
|
| ||||||
Leasehold improvements
|
| | | $ | 688 | | | | | $ | 1,096 | | |
Furniture, fixtures, and equipment
|
| | | | 715 | | | | | | 723 | | |
Corporate vehicles
|
| | | | 104 | | | | | | 201 | | |
Total property and equipment
|
| | | | 1,507 | | | | | | 2,020 | | |
Less: accumulated depreciation
|
| | | | (876) | | | | | | (990) | | |
Property and Equipment, net
|
| | | $ | 631 | | | | | $ | 1,030 | | |
| | |
2019
|
| |
2018
|
| ||||||
Vehicles
|
| | | $ | 1,083 | | | | | $ | 1,333 | | |
Less: accumulated depreciation
|
| | | | (639) | | | | | | (602) | | |
Total Lease Vehicles, net
|
| | | $ | 444 | | | | | $ | 731 | | |
Year
|
| |
Minimum Rental Receipts
Under Operating Leases |
| |||
2020
|
| | | $ | 149 | | |
2021
|
| | | | 25 | | |
2022
|
| | | | 8 | | |
2023
|
| | | | 2 | | |
Total | | | | $ | 184 | | |
| | |
2019
|
| |
2018
|
| ||||||
Other Current Assets: | | | | | | | | | | | | | |
Lease receivable, net
|
| | | $ | 13 | | | | | $ | 41 | | |
Deferred acquisition costs
|
| | | | 32 | | | | | | 12 | | |
Prepaid expenses
|
| | | | 189 | | | | | | 175 | | |
Total Other Current Assets
|
| | | $ | 234 | | | | | $ | 228 | | |
Other Assets: | | | | | | | | | | | | | |
Lease receivable, net
|
| | | $ | 38 | | | | | $ | 39 | | |
Deferred acquisition costs
|
| | | | 50 | | | | | | 10 | | |
Security deposits
|
| | | | 255 | | | | | | 256 | | |
Total Other Assets
|
| | | $ | 343 | | | | | $ | 305 | | |
| | |
2019
|
| |
2018
|
| ||||||
Beginning
|
| | | $ | 22 | | | | | $ | 22 | | |
Written
|
| | | | 93 | | | | | | 16 | | |
Amortized
|
| | | | (33) | | | | | | (16) | | |
Ending
|
| | | | 82 | | | | | | 22 | | |
Less: current portion
|
| | | | 32 | | | | | | 12 | | |
Non-current
|
| | | | 50 | | | | | | 10 | | |
Total Deferred Acquisition Costs
|
| | | $ | 82 | | | | | $ | 22 | | |
| | |
2019
|
| |
2018
|
| ||||||
Term note payable
|
| | | $ | 9 | | | | | $ | 17 | | |
Convertible notes payable, net
|
| | | | 2,816 | | | | | | — | | |
| | | | | 2,825 | | | | | | 17 | | |
Current portion of long-term debt
|
| | | | (2,825) | | | | | | (6) | | |
Long-term Debt
|
| | | $ | — | | | | | $ | 11 | | |
|
Maturity
|
| |
5 years
|
|
|
Risk-free interest rate
|
| |
1.69%
|
|
|
Volatility
|
| |
60.00%
|
|
|
Dividend yield
|
| |
0.00%
|
|
|
Weighted average fair value per share
|
| |
1.81
|
|
| | |
2019
|
| |
2018
|
| ||||||
Stock warrants outstanding
|
| | | | 23,460 | | | | | | 23,460 | | |
Stock warrants issued with convertible notes payable
|
| | | | 45,121 | | | | | | — | | |
Stock warrants cancelled
|
| | | | — | | | | | | — | | |
Stock warrants exercised
|
| | | | — | | | | | | — | | |
Stock warrants vested
|
| | | | 68,581 | | | | | | 23,460 | | |
| | |
2019
|
| |
2018
|
| ||||||
License and title fees
|
| | | $ | 399 | | | | | $ | 203 | | |
Payroll and bonuses
|
| | | | 388 | | | | | | 308 | | |
Deferred rent
|
| | | | 300 | | | | | | 255 | | |
Other accrued expenses
|
| | | | 489 | | | | | | 285 | | |
Total Accrued Expenses
|
| | | $ | 1,576 | | | | | $ | 1,051 | | |
| | |
2019
|
| |
2018
|
| ||||||
Other Liabilities, Current | | | | | | | | | | | | | |
Unearned insurance premiums
|
| | | $ | 434 | | | | | $ | 205 | | |
Other Liabilities | | | | | | | | | | | | | |
Unearned insurance premiums
|
| | | | 719 | | | | | | 172 | | |
Other long-term liabilities
|
| | | | 97 | | | | | | 62 | | |
Stock warrants liability
|
| | | | 115 | | | | | | 67 | | |
Other Liabilities, Long-term
|
| | | $ | 931 | | | | | $ | 301 | | |
| | |
Total Per Year
|
| |||
2020
|
| | | $ | 1,976 | | |
2021
|
| | | | 1,963 | | |
2022
|
| | | | 1,995 | | |
2023
|
| | | | 1,830 | | |
2024
|
| | | | 878 | | |
Thereafter
|
| | | | 1,409 | | |
Total
|
| | | $ | 10,051 | | |
| | |
Payments Due
to Third Parties |
| |
Future Receipts
|
| ||||||
2020
|
| | | $ | 979 | | | | | $ | 1,609 | | |
2021
|
| | | | 819 | | | | | | 1,315 | | |
2022
|
| | | | 398 | | | | | | 634 | | |
2023
|
| | | | 129 | | | | | | 192 | | |
2024
|
| | | | 12 | | | | | | 18 | | |
Total
|
| | | $ | 2,337 | | | | | $ | 3,768 | | |
| | |
2017
|
|
Expected volatility
|
| |
80.00%
|
|
Expected dividend yield
|
| |
0.00%
|
|
Expected term (in years)
|
| |
5 years
|
|
Risk-free interest rate
|
| |
1.94%
|
|
| | |
Number of
Options |
| |
Weighted
Averaged Exercise Price |
| ||||||
Balance (January 1, 2017)
|
| | | | 145,000 | | | | | $ | 5.86 | | |
Granted
|
| | | | 30,150 | | | | | | 6.82 | | |
Forfeited
|
| | | | — | | | | | | — | | |
Balance (December 31, 2017)
|
| | | | 175,150 | | | | | | 5.99 | | |
Granted
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | (13,500) | | | | | | 5.56 | | |
Balance (December 31, 2018)
|
| | | | 161,650 | | | | | | 6.07 | | |
Granted
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | (7,500) | | | | | | 6.82 | | |
Balance (December 31, 2019)
|
| | | | 154,150 | | | | | | 6.03 | | |
Vested (as of December 31, 2019)
|
| | | | 136,450 | | | | | $ | 5.93 | | |
| | |
Number of
Options |
| |
Weighted
Average Remaining Contractual Life |
| |
Weighted
Average Exercise Price |
| ||||||
Outstanding
|
| | | | 154,150 | | | |
2.67 years
|
| | | $ | 6.03 | | |
Exercisable
|
| | | | 136,450 | | | |
2.67 years
|
| | | $ | 5.93 | | |
| | |
Number of
Units |
| |
Weighted
Averaged Exercise Price |
| ||||||
Balance (January 1, 2018)
|
| | | | — | | | | | | — | | |
Granted
|
| | | | 261,552 | | | | | $ | 9.82 | | |
Forfeited
|
| | | | (6,500) | | | | | | 9.82 | | |
Balance (December 31, 2018)
|
| | | | 255,052 | | | | | | 9.82 | | |
Granted
|
| | | | 154,000 | | | | | | 9.82 | | |
Forfeited
|
| | | | (129,876) | | | | | | 9.82 | | |
Balance (December 31, 2019)
|
| | | | 279,176 | | | | | $ | 9.82 | | |
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Current Income Tax Expense: | | | | | | | | | | | | | | | | | | | |
Federal | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
State and local
|
| | | | 11 | | | | | | 3 | | | | | | 4 | | |
Total Current Income Tax Expense
|
| | | | 11 | | | | | | 3 | | | | | | 4 | | |
Deferred Income Tax Expense: | | | | | | | | | | | | | | | | | | | |
Federal
|
| | | | — | | | | | | — | | | | | | — | | |
State and local
|
| | | | — | | | | | | — | | | | | | — | | |
Total Income Tax Expense
|
| | | $ | 11 | | | | | $ | 3 | | | | | $ | 4 | | |
| | |
2019
|
| |
2018
|
| ||||||
Deferred Tax Assets: | | | | | | | | | | | | | |
Net operating losses
|
| | | $ | 5,881 | | | | | $ | 3,259 | | |
Contract expense
|
| | | | 262 | | | | | | 307 | | |
Other
|
| | | | 809 | | | | | | 569 | | |
Total deferred tax assets
|
| | | | 6,952 | | | | | | 4,135 | | |
Less: valuation allowance
|
| | | | (6,910) | | | | | | (3,986) | | |
Net Deferred Tax Assets
|
| | | | 42 | | | | | | 149 | | |
Deferred Tax Liabilities | | | | | | | | | | | | | |
Fixed assets
|
| | | | (42) | | | | | | (149) | | |
Total deferred tax liabilities
|
| | | | (42) | | | | | | (149) | | |
Net Deferred Tax Liabilities
|
| | | | (42) | | | | | | (149) | | |
Net Deferred Tax Assets/Liabilities
|
| | | $ | — | | | | | $ | — | | |
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
January 1, | | | | $ | 3,986 | | | | | $ | 2,008 | | | | | $ | 2,116 | | |
Additions – Charged
|
| | | | 2,924 | | | | | | 1,731 | | | | | | — | | |
Deductions – Charged
|
| | | | — | | | | | | — | | | | | | (108) | | |
Other
|
| | | | | | | | | | 247 | | | | | | | | |
December 31, | | | | $ | 6,910 | | | | | $ | 3,986 | | | | | $ | 2,008 | | |
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Loss Before Income Tax Expense
|
| | | $ | (12,667) | | | | | $ | (6,557) | | | | | $ | (2,465) | | |
Income tax benefit at federal statutory rates
|
| | | | (2,660) | | | | | | (1,377) | | | | | | (838) | | |
State and local income taxes
|
| | | | (471) | | | | | | (238) | | | | | | (81) | | |
Investment remeasurement
|
| | | | — | | | | | | (126) | | | | | | — | | |
Valuation allowances
|
| | | | 2,924 | | | | | | 1,731 | | | | | | (108) | | |
Impact of federal rate change
|
| | | | — | | | | | | — | | | | | | 991 | | |
Change in fair value of redeemable convertible preferred stock tranche obligation
|
| | | | 293 | | | | | | 57 | | | | | | 27 | | |
Other
|
| | | | (75) | | | | | | (44) | | | | | | 13 | | |
Total Income Tax Expense
|
| | | $ | 11 | | | | | $ | 3 | | | | | $ | 4 | | |
Effective Tax Rate
|
| | | | (.09)% | | | | | | (.05)% | | | | | | (.16)% | | |
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Numerator: | | | | | | | | | | | | | | | | | | | |
Net loss
|
| | | $ | (12,678) | | | | | $ | (6,560) | | | | | $ | (2,469) | | |
Redeemable Convertible Preferred Stock dividends (undeclared and cumulative)
|
| | | | (1,579) | | | | | | (1,014) | | | | | | (274) | | |
Net loss attributable to common stockholders
|
| | | | (14,257) | | | | | | (7,574) | | | | | | (2,743) | | |
Denominator: | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding, basic and diluted
|
| | | | 3,716,526 | | | | | | 3,716,526 | | | | | | 3,660,679 | | |
Net loss per share attributable to common stockholders, basic and diluted
|
| | | $ | (3.84) | | | | | $ | (2.04) | | | | | $ | (0.75) | | |
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Redeemable Convertible Preferred Stock outstanding
|
| | | | 2,034,751 | | | | | | 1,220,851 | | | | | | 1,220,851 | | |
Convertible notes payable
|
| | | | 282,211 | | | | | | — | | | | | | — | | |
Stock warrants
|
| | | | 68,581 | | | | | | 23,460 | | | | | | 22,985 | | |
Stock options outstanding to purchase shares of common stock
|
| | | | 433,326 | | | | | | 416,702 | | | | | | 175,150 | | |
Total | | | | | 2,818,869 | | | | | | 1,661,013 | | | | | | 1,418,986 | | |
| | |
Total purchases from vendor to total purchases
for the year ended December 31, |
| |||||||||||||||
Vendor
|
| |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Vendor A
|
| | | | —% | | | | | | —% | | | | | | 12% | | |
Vendor B
|
| | | | 12% | | | | | | —% | | | | | | —% | | |
| | |
Accounts payable to the
vendor as of December 31, |
| |||||||||
Vendor
|
| |
2019
|
| |
2018
|
| ||||||
Vendor A
|
| | | $ | — | | | | | $ | — | | |
Vendor B
|
| | | $ | 257 | | | | | $ | — | | |
| | |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
Assets | | | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 3,742 | | | | | $ | 3,214 | | |
Restricted cash
|
| | | | 461 | | | | | | 888 | | |
Marketable securities – at fair value
|
| | | | 975 | | | | | | — | | |
Accounts receivable, net
|
| | | | 2,961 | | | | | | 3,256 | | |
Inventories | | | | | 8,426 | | | | | | 7,625 | | |
Other current assets
|
| | | | 481 | | | | | | 234 | | |
Total Current Assets
|
| | | | 17,046 | | | | | | 15,217 | | |
Property and equipment, net
|
| | | | 519 | | | | | | 631 | | |
Lease vehicles, net
|
| | | | 200 | | | | | | 444 | | |
Other assets
|
| | | | 315 | | | | | | 343 | | |
Total Assets
|
| | | $ | 18,080 | | | | | $ | 16,635 | | |
Liabilities, Redeemable Convertible Preferred Stock, Stockholders’ Equity (Deficit) | | | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | | | |
Long-term debt, current
|
| | | $ | 3,321 | | | | | $ | 2,825 | | |
Floor plan notes payable
|
| | | | 6,696 | | | | | | 6,739 | | |
Accounts payable
|
| | | | 3,027 | | | | | | 2,134 | | |
Accrued expenses
|
| | | | 2,347 | | | | | | 1,576 | | |
Accrued expenses – related party
|
| | | | 4,576 | | | | | | 3,102 | | |
Other current liabilities
|
| | | | 319 | | | | | | 434 | | |
Total Current Liabilities
|
| | | | 20,286 | | | | | | 16,810 | | |
Long-term debt, less current portion
|
| | | | 1,749 | | | | | | — | | |
Redeemable convertible preferred stock tranche obligation
|
| | | | 2,793 | | | | | | 3,755 | | |
Other liabilities
|
| | | | 1,672 | | | | | | 931 | | |
Total Liabilities
|
| | | | 26,500 | | | | | | 21,496 | | |
Commitments and Contingencies (Note 16)
|
| | | | — | | | | | | — | | |
Redeemable Convertible Preferred Stock: | | | | | | | | | | | | | |
Series A Preferred Stock $0.001 stated value; authorized 3,052,127 shares; issued
and outstanding 2,034,751, as of September 30, 2020 and December 31, 2019; aggregate liquidation preference of $36,388 and $34,300 as of September 30, 2020 and December 31, 2019, respectively |
| | | | 17,560 | | | | | | 17,560 | | |
Stockholders’ Equity (Deficit): | | | | | | | | | | | | | |
Common stock, $0.001 par value; authorized 7,600,000 shares, issued 3,869,118 shares, and outstanding 3,716,526 shares
|
| | | | 4 | | | | | | 4 | | |
Additional paid-in capital
|
| | | | 5,198 | | | | | | 6,560 | | |
Accumulated deficit
|
| | | | (29,698) | | | | | | (27,485) | | |
Accumulated other comprehensive income
|
| | | | 16 | | | | | | — | | |
Treasury stock, $0.001 par value; 152,592 shares
|
| | | | (1,500) | | | | | | (1,500) | | |
Total Stockholders’ Equity (Deficit)
|
| | | | (25,980) | | | | | | (22,421) | | |
Total Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
|
| | | $ | 18,080 | | | | | $ | 16,635 | | |
| | |
Nine Months
Ended September 30, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Revenues: | | | | | | | | | | | | | |
Retail vehicle sales
|
| | | $ | 71,388 | | | | | $ | 66,914 | | |
Wholesale vehicle sales
|
| | | | 7,124 | | | | | | 6,427 | | |
Finance and insurance, net
|
| | | | 2,697 | | | | | | 2,312 | | |
Lease income, net
|
| | | | 373 | | | | | | 416 | | |
Total Revenues
|
| | | | 81,582 | | | | | | 76,069 | | |
Cost of sales (exclusive of depreciation)
|
| | | | 72,805 | | | | | | 69,341 | | |
Gross Profit
|
| | | | 8,777 | | | | | | 6,728 | | |
Operating Expenses: | | | | | | | | | | | | | |
Selling, general and administrative
|
| | | | 11,173 | | | | | | 13,629 | | |
Depreciation expense
|
| | | | 269 | | | | | | 412 | | |
Management fee expense – related party
|
| | | | 195 | | | | | | 186 | | |
Total Operating Expenses
|
| | | | 11,637 | | | | | | 14,227 | | |
Loss from Operations
|
| | | | (2,860) | | | | | | (7,499) | | |
Interest Expense
|
| | | | 360 | | | | | | 518 | | |
Other Income (Expense), net | | | | | | | | | | | | | |
Change in fair value of warrants liability
|
| | | | 30 | | | | | | 18 | | |
Change in fair value of redeemable convertible preferred stock tranche obligation
|
| | | | 962 | | | | | | (336) | | |
Other income (expense)
|
| | | | 28 | | | | | | (227) | | |
Total Other Income (Expense), net
|
| | | | 1,020 | | | | | | (545) | | |
Loss Before Income Tax Expense
|
| | | | (2,200) | | | | | | (8,562) | | |
Income Tax Expense
|
| | | | 12 | | | | | | 7 | | |
Net Loss
|
| | | $ | (2,212) | | | | | $ | (8,569) | | |
Redeemable convertible preferred stock dividends (undeclared and
cumulative) |
| | | | (1,399) | | | | | | (1,128) | | |
Net loss attributable to common stockholders
|
| | | $ | (3,611) | | | | | $ | (9,697) | | |
Net loss per share attributable to common stockholders, basic and diluted
|
| | | $ | (0.97) | | | | | $ | (2.61) | | |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
|
| | | | 3,716,526 | | | | | | 3,716,526 | | |
| | |
Nine Months
Ended September 30, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net loss
|
| | | $ | (2,212) | | | | | $ | (8,569) | | |
Other comprehensive income, net of tax: | | | | | | | | | | | | | |
Unrealized gains on marketable securities arising during the period
|
| | | | 14 | | | | | | — | | |
Tax effect
|
| | | | — | | | | | | — | | |
Unrealized gains on marketable securities arising during the period, net of tax
|
| | | | 14 | | | | | | — | | |
Reclassification adjustment for realized losses
|
| | | | 2 | | | | | | — | | |
Tax effect
|
| | | | — | | | | | | — | | |
Reclassification adjustment for realized losses, net of tax
|
| | | | 2 | | | | | | — | | |
Other Comprehensive Income, net of tax
|
| | | | 16 | | | | |
|
—
|
| |
Total Comprehensive Income
|
| | | $ | (2,196) | | | | | $ | (8,569) | | |
| | |
Redeemable
Convertible Preferred Stock |
| | |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Accumulated
Deficit |
| |
Accumulated
Other Comprehensive Income |
| |
Treasury Stock
|
| |
Stockholders’
Equity (Deficit) |
| |||||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| | |
Shares
|
| |
Amount
|
| | | | | | | | | | | | | | | | | | | |
Shares
|
| |
Amount
|
| | | | | | | ||||||||||||||||||
Balance December 31, 2019
|
| | | | 2,034,751 | | | | | $ | 17,560 | | | | | | | 3,869,118 | | | | | $ | 4 | | | | | $ | 6,560 | | | | | $ | (27,485) | | | | | $ | — | | | | | | (152,592) | | | | | $ | (1,500) | | | | | $ | (22,421) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,212) | | | | | | | | | | | | — | | | | | | — | | | | | | (2,212) | | |
Other comprehensive income, net of
tax |
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 16 | | | | | | — | | | | | | — | | | | | | 16 | | |
Accrued dividends on redeemable convertible preferred stock
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | (1,399) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,399) | | |
Stock-based compensation
|
| | | | — | | | | | | | | | | | | | — | | | | | | — | | | | | | 37 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 37 | | |
Balance September 30, 2020
|
| | | | 2,034,751 | | | | | $ | 17,560 | | | | | | | 3,869,118 | | | | | $ | 4 | | | | | $ | 5,198 | | | | | $ | (29,697) | | | | | $ | 16 | | | | | | (152,592) | | | | | $ | (1,500) | | | | | $ | (25,979) | | |
| | |
Redeemable
Convertible Preferred Stock |
| | |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Accumulated
Deficit |
| |
Accumulated
Other Comprehensive Income |
| |
Treasury Stock
|
| |
Stockholders’
Equity (Deficit) |
| |||||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| | |
Shares
|
| |
Amount
|
| | | | | | | | | | | | | | | | | | | |
Shares
|
| |
Amount
|
| | | | | | | ||||||||||||||||||
Balance December 31, 2018
|
| | | | 1,220,851 | | | | | $ | 8,670 | | | | | | | 3,869,118 | | | | | $ | 4 | | | | | $ | 8,026 | | | | | $ | (14,807) | | | | | $ | — | | | | | | (152,592) | | | | | $ | (1,500) | | | | | $ | (8,277) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (8,569) | | | | | | — | | | | | | — | | | | | | — | | | | | | (8,569) | | |
Redeemable convertible preferred stock issuance
|
| | | | 813,900 | | | | | | 8,890 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Accrued dividends on redeemable convertible preferred stock
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | (1,128) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,128) | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 45 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 45 | | |
Balance September 30, 2019
|
| | | | 2,034,751 | | | | | $ | 17,560 | | | | | | | 3,869,118 | | | | | $ | 4 | | | | | $ | 6,943 | | | | | $ | (23,376) | | | | | $ | — | | | | | | (152,592) | | | | | $ | (1,500) | | | | | $ | (17,929) | | |
| | |
Nine Months
Ended September 30, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Cash Flow from Operating Activities | | | | | | | | | | | | | |
Net loss
|
| | | $ | (2,212) | | | | | | (8,569) | | |
Adjustments to reconcile net loss to net cash used in operating activities | | | | | | | | | | | | | |
Depreciation – property and equipment
|
| | | | 148 | | | | | | 205 | | |
Depreciation – lease vehicles
|
| | | | 121 | | | | | | 207 | | |
Loss on disposition of property and equipment
|
| | | | — | | | | | | 276 | | |
Gain on marketable securities
|
| | | | (13) | | | | | | — | | |
Provision for doubtful accounts
|
| | | | 5 | | | | | | 11 | | |
Share-based compensation expense
|
| | | | 37 | | | | | | 45 | | |
Change in fair value of warrants liability
|
| | | | (30) | | | | | | (18) | | |
Amortization of debt issuance costs and stock warrant
|
| | | | 18 | | | | | | — | | |
Change in fair value of redeemable convertible preferred stock tranche obligation
|
| | | | (962) | | | | | | 336 | | |
Change in Operating Assets and Liabilities: | | | | | | | | | | | | | |
Accounts receivable
|
| | | | 290 | | | | | | (916) | | |
Inventories | | | | | (602) | | | | | | 2,497 | | |
Other current assets
|
| | | | (247) | | | | | | (55) | | |
Other assets
|
| | | | 28 | | | | | | (85) | | |
Accounts payable
|
| | | | 893 | | | | | | 582 | | |
Accrued expenses
|
| | | | 771 | | | | | | 822 | | |
Accrued expenses – related party
|
| | | | 75 | | | | | | — | | |
Other current liabilities
|
| | | | (115) | | | | | | 182 | | |
Other liabilities
|
| | | | 756 | | | | | | 463 | | |
Net Cash Used in Operating Activities
|
| | | | (1,039) | | | | | | (4,017) | | |
Cash Flows from Investing Activities | | | | | | | | | | | | | |
Purchase of property and equipment
|
| | | | (37) | | | | | | (180) | | |
Purchase of marketable securities
|
| | | | (999) | | | | | | — | | |
Proceeds from sales of marketable securities
|
| | | | 53 | | | | | | — | | |
Purchase of lease vehicles
|
| | | | (76) | | | | | | (129) | | |
Net Cash Used in Investing Activities
|
| | | | (1,059) | | | | | | (309) | | |
Cash Flows from Financing Activities | | | | | | | | | | | | | |
Issuance of redeemable convertible preferred stock
|
| | | | — | | | | | | 7,988 | | |
Payments made on long-term debt
|
| | | | (7) | | | | | | (336) | | |
Borrowings on long-term debt
|
| | | | 2,249 | | | | | | — | | |
Payments on floor plan notes payable
|
| | | | (16,877) | | | | | | (32,581) | | |
Borrowings on floor plan notes payable
|
| | | | 16,834 | | | | | | 30,489 | | |
Net Cash Provided by Financing Activities
|
| | | | 2,199 | | | | | | 5,560 | | |
Net Change in Cash and Cash Equivalents Including Restricted Cash
|
| | | | 101 | | | | | | 1,234 | | |
Cash and cash equivalents and restricted cash, beginning
|
| | | | 4,102 | | | | | | 1,570 | | |
Cash and cash equivalents and restricted cash, ending
|
| | | $ | 4,203 | | | | | $ | 2,804 | | |
| | |
2020
|
| |
2019
|
| ||||||
Cash paid for interest
|
| | | $ | 248 | | | | | $ | 374 | | |
Supplementary Schedule of Non-cash Investing and Financing Activities: | | | | | | | | | | | | | |
Transfer from property and equipment to inventory
|
| | | $ | — | | | | | $ | 14 | | |
Transfer from lease vehicles to inventory
|
| | | $ | 199 | | | | | $ | 164 | | |
Redeemable convertible preferred stock distributions accrued
|
| | | $ | 1,399 | | | | | $ | 1,128 | | |
Issuance of common stock warrants
|
| | | $ | 15 | | | | | | — | | |
Settlement of redeemable convertible preferred stock tranche obligation
|
| | | $ | — | | | | | $ | (902) | | |
| | |
Nine Months Ended September 30, 2020
|
| |||||||||||||||
| | |
Vehicle Sales
|
| |
Fleet
Management |
| |
Total
|
| |||||||||
Retail vehicle sales
|
| | | $ | 71,388 | | | | | $ | — | | | | | $ | 71,388 | | |
Wholesale vehicle sales
|
| | | | 7,124 | | | | | | — | | | | | | 7,124 | | |
Finance and insurance, net
|
| | | | 2,697 | | | | | | — | | | | | | 2,697 | | |
Lease income, net
|
| | | | — | | | | | | 373 | | | | | | 373 | | |
Total Revenues
|
| | | $ | 81,209 | | | | | $ | 373 | | | | | $ | 81,582 | | |
| | |
Nine Months Ended September 30, 2019
|
| |||||||||||||||
| | |
Vehicle Sales
|
| |
Fleet
Management |
| |
Total
|
| |||||||||
Retail vehicle sales
|
| | | $ | 66,914 | | | | | $ | — | | | | | $ | 66,914 | | |
Wholesale vehicle sales
|
| | | | 6,427 | | | | | | — | | | | | | 6,427 | | |
Finance and insurance, net
|
| | | | 2,312 | | | | | | — | | | | | | 2,312 | | |
Lease income, net
|
| | | | — | | | | | | 416 | | | | | | 416 | | |
Total Revenues
|
| | | $ | 75,653 | | | | | $ | 416 | | | | | $ | 76,069 | | |
| | |
2020
|
| |
2019
|
| ||||||
Retail vehicles: | | | | | | | | | | | | | |
Retail vehicle sales
|
| | | $ | 71,388 | | | | | $ | 66,914 | | |
Retail vehicle cost of sales
|
| | | | 65,723 | | | | | | 62,264 | | |
Gross Profit – Retail Vehicles
|
| | | $ | 5,665 | | | | | $ | 4,650 | | |
Wholesale vehicles:
|
| | | | | | | | | | | | |
Wholesale vehicle sales
|
| | | $ | 7,124 | | | | | $ | 6,427 | | |
Wholesale vehicle cost of sales
|
| | | | 7,082 | | | | | | 7,077 | | |
Gross Profit – Wholesale Vehicles
|
| | | $ | 42 | | | | | $ | (650) | | |
| | |
Amortized
Cost/ Cost Basis |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Estimated
Fair Value |
| ||||||||||||
U.S. Treasuries
|
| | | $ | 240 | | | | | $ | 7 | | | | | $ | — | | | | | $ | 247 | | |
Corporate bonds
|
| | | | 261 | | | | | | 6 | | | | | | (1) | | | | | | 266 | | |
U.S. states, territories, and political subdivisions
|
| | | | 142 | | | | | | 4 | | | | | | — | | | | | | 146 | | |
Total Fixed Maturity Debt Securities
|
| | | $ | 643 | | | | | $ | 17 | | | | | $ | (1) | | | | | $ | 659 | | |
| | |
Amortized Cost
|
| |
Fair Value
|
| ||||||
Due in one year or less
|
| | | $ | 77 | | | | | $ | 78 | | |
Due after one year through five years
|
| | | | 353 | | | | | | 361 | | |
Due after five years through ten years
|
| | | | 213 | | | | | | 220 | | |
Total | | | | $ | 643 | | | | | $ | 659 | | |
| | |
Less Than 12 Months
|
| |
12 Months or More
|
| |
Total
|
| |||||||||||||||||||||||||||
| | |
Estimated
Fair Value |
| |
Unrealized
Losses |
| |
Estimated
Fair Value |
| |
Unrealized
Losses |
| |
Estimated
Fair Value |
| |
Unrealized
Losses |
| ||||||||||||||||||
Corporate bonds
|
| | | $ | 59 | | | | | $ | (1) | | | | | $ | — | | | | | $ | — | | | | | $ | 59 | | | | | $ | (1) | | |
Total Fixed Maturity Debt Securities
|
| | | $ | 59 | | | | | $ | (1) | | | | | $ | — | | | | | $ | — | | | | | $ | 59 | | | | | $ | (1) | | |
| | |
Cost
|
| |
Estimated
Fair Value |
| ||||||
Equity securities
|
| | | $ | 301 | | | | | $ | 316 | | |
| | |
Proceeds
|
| |
Gross
Realized Gains |
| |
Gross
Realized Losses |
| |
Net
Realized Losses |
| ||||||||||||
Fixed maturity debt securities
|
| | | $ | 18 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Equity securities
|
| | | | 35 | | | | | | — | | | | | | (2) | | | | | | (2) | | |
Total Marketable Securities
|
| | | $ | 53 | | | | | $ | — | | | | | $ | (2) | | | | | $ | (2) | | |
| | |
September 30, 2020
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Money market funds
|
| | | $ | 261 | | | | | $ | — | | | | | $ | — | | | | | $ | 261 | | |
Equity securities
|
| | | | 316 | | | | | | — | | | | | | — | | | | | | 316 | | |
Fixed maturity debt securities
|
| | | | 247 | | | | | | 412 | | | | | | | | | | | | 659 | | |
Total Assets:
|
| | | $ | 824 | | | | | $ | 412 | | | | | $ | — | | | | | $ | 1,236 | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Redeemable convertible preferred stock tranche obligation
|
| | | $ | — | | | | | $ | — | | | | | $ | 2,793 | | | | | $ | 2,793 | | |
Stock warrants liability
|
| | | | — | | | | | | — | | | | | | 100 | | | | | | 100 | | |
Total Liabilities:
|
| | | $ | — | | | | | $ | — | | | | | $ | 2,893 | | | | | $ | 2,893 | | |
| | |
December 31, 2019
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Money market funds
|
| | | $ | 688 | | | | | $ | — | | | | | $ | — | | | | | $ | 688 | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Redeemable convertible preferred stock tranche obligation
|
| | | $ | — | | | | | $ | — | | | | | $ | 3,755 | | | | | $ | 3,755 | | |
Stock warrants liability
|
| | | | — | | | | | | — | | | | | | 115 | | | | | | 115 | | |
Total Liabilities:
|
| | | $ | — | | | | | $ | — | | | | | $ | 3,870 | | | | | $ | 3,870 | | |
| | |
January 1,
2020 |
| |
Issuances
|
| |
Settlements
|
| |
Change in
fair value |
| |
September 30,
2020 |
| |||||||||||||||
Redeemable convertible preferred stock tranche obligation
|
| | | $ | 3,755 | | | | | $ | — | | | | | $ | — | | | | | $ | (962) | | | | | $ | 2,793 | | |
Stock warrants liability
|
| | | | 115 | | | | | | 15 | | | | | | — | | | | | | (30) | | | | | | 100 | | |
Total | | | | $ | 3,870 | | | | | $ | 15 | | | | | $ | — | | | | | $ | (992) | | | | | $ | 2,893 | | |
| | |
January 1,
2019 |
| |
Issuances
|
| |
Settlements
|
| |
Change in
fair value |
| |
September 30,
2019 |
| |||||||||||||||
Redeemable convertible preferred stock tranche obligation
|
| | | $ | 3,261 | | | | | $ | — | | | | | $ | (902) | | | | | $ | 336 | | | | | $ | 2,695 | | |
Stock warrants liability
|
| | | | 67 | | | | | | — | | | | | | — | | | | | | (18) | | | | | | 49 | | |
Total | | | | $ | 3,328 | | | | | $ | — | | | | | $ | (902) | | | | | $ | 318 | | | | | $ | 2,744 | | |
| | |
September 30, 2020
|
| |
December 31, 2019
|
| ||||||
Expected volatility
|
| | | | 45.00% | | | | | | 45.00% | | |
Expected dividend yield
|
| | | | 0.00% | | | | | | 0.00% | | |
Expected term (in years)
|
| |
4.25 years
|
| |
5 years
|
| ||||||
Risk-free interest rate
|
| | | | 0.24% | | | | | | 1.69% | | |
Marketability discount
|
| | | | 50.00% | | | | | | 50.00% | | |
| | |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
Contracts in transit
|
| | | $ | 2,208 | | | | | $ | 2,645 | | |
Trade | | | | | 196 | | | | | | 202 | | |
Finance commission
|
| | | | 85 | | | | | | 87 | | |
Other | | | | | 504 | | | | | | 349 | | |
Total | | | | | 2,993 | | | | | | 3,283 | | |
Allowance for doubtful accounts
|
| | | | (32) | | | | | | (27) | | |
Total Accounts Receivable, net
|
| | | $ | 2,961 | | | | | $ | 3,256 | | |
| | |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
Used vehicles
|
| | | $ | 8,417 | | | | | $ | 7,592 | | |
Parts | | | | | 9 | | | | | | 33 | | |
Total | | | | $ | 8,426 | | | | | $ | 7,625 | | |
| | |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
Leasehold improvements
|
| | | $ | 695 | | | | | $ | 688 | | |
Furniture, fixtures and equipment
|
| | | | 722 | | | | | | 715 | | |
Corporate vehicles
|
| | | | 120 | | | | | | 104 | | |
Total property and equipment
|
| | | | 1,537 | | | | | | 1,507 | | |
Less: accumulated depreciation
|
| | | | (1,018) | | | | | | (876) | | |
Property and Equipment, net
|
| | | $ | 519 | | | | | $ | 631 | | |
| | |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
Vehicles | | | | $ | 687 | | | | | $ | 1,083 | | |
Less: accumulated depreciation
|
| | | | (487) | | | | | | (639) | | |
Total Lease Vehicles, net
|
| | | $ | 200 | | | | | $ | 444 | | |
Year
|
| |
Minimum Rental
Receipts Under Operating Leases |
| |||
2020 (remaining)
|
| | | $ | 33 | | |
2021 | | | | | 12 | | |
2022 | | | | | 6 | | |
Total | | | | $ | 51 | | |
| | |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
Other Current Assets: | | | | | | | | | | | | | |
Lease receivable, net
|
| | | $ | 19 | | | | | $ | 13 | | |
Deferred acquisition costs
|
| | | | 71 | | | | | | 32 | | |
Prepaid expenses
|
| | | | 391 | | | | | | 189 | | |
Total Other Current Assets
|
| | | $ | 481 | | | | | $ | 234 | | |
Other Assets: | | | | | | | | | | | | | |
Lease receivable, net
|
| | | $ | 17 | | | | | $ | 38 | | |
Deferred acquisition costs
|
| | | | 46 | | | | | | 50 | | |
Security deposits
|
| | | | 252 | | | | | | 255 | | |
Total Other Assets
|
| | | $ | 315 | | | | | $ | 343 | | |
| | |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
Term note payable
|
| | | $ | 2 | | | | | $ | 9 | | |
Convertible notes payable, net
|
| | | | 3,319 | | | | | | 2,816 | | |
Paycheck protection program loan
|
| | | | 1,749 | | | | | | — | | |
| | | | | 5,070 | | | | | | 2,825 | | |
Current portion of long-term debt
|
| | | | (3,321) | | | | | | (2,825) | | |
Long-term Debt
|
| | | $ | 1,749 | | | | | $ | — | | |
| Maturity | | |
4.25 years
|
| |||
|
Risk-free interest rate
|
| | | | 0.24% | | |
| Volatility | | | | | 60.00% | | |
|
Dividend yield
|
| | | | 0.00% | | |
|
Weighted average fair value per share
|
| | | | 1.32 | | |
| | |
September 30,
2020 |
| |
September 30,
2019 |
| ||||||
Stock warrants outstanding
|
| | | | 63,297 | | | | | | 23,460 | | |
Stock warrants issued with convertible notes payable
|
| | | | 12,903 | | | | | | — | | |
Stock warrants cancelled
|
| | | | — | | | | | | — | | |
Stock warrants exercised
|
| | | | — | | | | | | — | | |
Stock warrants vested
|
| | | | 76,200 | | | | | | 23,460 | | |
| | |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
License and title fees
|
| | | $ | 528 | | | | | $ | 399 | | |
Payroll and bonuses
|
| | | | 597 | | | | | | 388 | | |
Deferred rent
|
| | | | 337 | | | | | | 300 | | |
Other accrued expenses
|
| | | | 885 | | | | | | 489 | | |
Total Accrued Expenses
|
| | | $ | 2,347 | | | | | $ | 1,576 | | |
| | |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
Other Liabilities, Current | | | | | | | | | | | | | |
Unearned insurance premiums
|
| | | $ | 319 | | | | | $ | 434 | | |
Other Liabilities | | | | | | | | | | | | | |
Unearned insurance premiums
|
| | | | 1,459 | | | | | | 719 | | |
Other long-term liabilities
|
| | | | 113 | | | | | | 97 | | |
Stock warrants liability
|
| | | | 100 | | | | | | 115 | | |
Other Liabilities, Long-term
|
| | | $ | 1,672 | | | | | $ | 931 | | |
| | |
Total Per Year
|
| |||
2020 (remaining)
|
| | | $ | 502 | | |
2021 | | | | | 1,963 | | |
2022 | | | | | 1,995 | | |
2023 | | | | | 1,830 | | |
2024 | | | | | 878 | | |
Thereafter | | | | | 1,409 | | |
Total | | | | $ | 8,577 | | |
| | |
Payments Due to
Third-Parties |
| |
Future Receipts
|
| ||||||
2020 (remaining)
|
| | | $ | 381 | | | | | $ | 465 | | |
2021 | | | | | 1,356 | | | | | | 1,639 | | |
2022 | | | | | 865 | | | | | | 1,045 | | |
2023 | | | | | 455 | | | | | | 540 | | |
2024 | | | | | 94 | | | | | | 112 | | |
Total | | | | $ | 3,151 | | | | | $ | 3,801 | | |
| | |
Number of
Stock Options |
| |
Weighted Average
Exercise Price |
| ||||||
Balance (December 31, 2019)
|
| | | | 154,150 | | | | | $ | 6.03 | | |
Granted
|
| | | | — | | | | | | — | | |
Forfeited | | | | | — | | | | | | | | |
Balance (September 30, 2020)
|
| | | | 154,150 | | | | | | 6.03 | | |
Vested (as of September 30, 2020)
|
| | | | 146,613 | | | | | $ | 5.99 | | |
| | |
Number of
Stock Options |
| |
Weighted Average
Exercise Price |
| ||||||
Balance (December 31, 2018)
|
| | | | 161,650 | | | | | $ | 6.07 | | |
Granted | | | | | — | | | | | | — | | |
Forfeited | | | | | (7,500) | | | | | | 6.82 | | |
Balance (September 30, 2019)
|
| | | | 154,150 | | | | | | 6.03 | | |
Vested (as of September 30, 2019)
|
| | | | 136,450 | | | | | $ | 5.93 | | |
| | |
Number of
Stock Options |
| |
Weighted Average
Remaining Contractual Life |
| |
Weighted Average
Exercise Price |
| |||||||||
Outstanding
|
| | | | 154,150 | | | | | | 1.92 years | | | | | $ | 6.03 | | |
Exercisable
|
| | | | 146,613 | | | | | | 1.92 years | | | | | $ | 5.99 | | |
| | |
Number of Units
|
| |
Weighted Averaged
Exercise Price |
| ||||||
Balance (December 31, 2019)
|
| | | | 279,176 | | | | | $ | 9.82 | | |
Granted | | | | | 109,500 | | | | | | 9.82 | | |
Forfeited | | | | | — | | | | | | — | | |
Balance (September 30, 2020)
|
| | | | 388,676 | | | | | $ | 9.82 | | |
| | |
Number of Units
|
| |
Weighted Averaged
Exercise Price |
| ||||||
Balance (December 31, 2018)
|
| | | | 255,052 | | | | | $ | 9.82 | | |
Granted | | | | | 9,000 | | | | | | 9.82 | | |
Forfeited | | | | | (4,500) | | | | | | — | | |
Balance (September 30, 2019)
|
| | | | 259,552 | | | | | $ | 9.82 | | |
| | |
2020
|
| |
2019
|
| ||||||
Numerator: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (2,212) | | | | | $ | (8,569) | | |
Redeemable convertible preferred stock dividends undeclared and cumulative
|
| | | | (1,399) | | | | | | (1,128) | | |
Net loss attributable to common stockholders
|
| | | | (3,611) | | | | | | (9,697) | | |
Denominator: | | | | | | | | | | | | | |
Weighted average common shares outstanding, basic and diluted
|
| | | | 3,716,526 | | | | | | 3,716,526 | | |
Net loss per share attributable to common stockholders, basic and diluted
|
| | | $ | (0.97) | | | | | $ | (2.61) | | |
| | |
2020
|
| |
2019
|
| ||||||
Series A Preferred Stock outstanding
|
| | | | 2,034,751 | | | | | | 2,034,751 | | |
Convertible notes payable
|
| | | | 343,754 | | | | | | — | | |
Stock warrants
|
| | | | 76,200 | | | | | | 23,460 | | |
Stock options outstanding to purchase shares of common stock
|
| | | | 542,826 | | | | | | 413,702 | | |
Total | | | | | 2,997,531 | | | | | | 2,471,913 | | |
| | |
Total purchases from vendor to total
purchases for the nine months period ended September 30, |
| |||||||||
Vendor
|
| |
2020
|
| |
2019
|
| ||||||
Vendor A
|
| | | | 23% | | | | | | —% | | |
Vendor B
|
| | | | 15% | | | | | | 12% | | |
Vendor C
|
| | | | 11% | | | | | | —% | | |
| | |
Accounts payable to the vendor as of,
|
| |||||||||
Vendor
|
| |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
Vendor A
|
| | | $ | 634 | | | | | $ | — | | |
Vendor B
|
| | | | 95 | | | | | | 257 | | |
Vendor C
|
| | | | 93 | | | | | | — | | |
| | |
December 31,
2019 |
| |
December 31,
2018 |
| ||||||
ASSETS | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash
|
| | | $ | 1,600,833 | | | | | $ | 12,000 | | |
Prepaid income taxes
|
| | | | 120,579 | | | | | | — | | |
Prepaid expenses
|
| | | | 96,208 | | | | | | — | | |
Total Current Assets
|
| | | | 1,817,620 | | | | | | 12,000 | | |
Deferred offering costs
|
| | | | — | | | | | | 294,004 | | |
Cash and marketable securities held in Trust Account
|
| | | | 309,840,375 | | | | | | — | | |
Total Assets
|
| | | $ | 311,657,995 | | | | | $ | 306,004 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Accrued expenses
|
| | | $ | 214,813 | | | | | $ | — | | |
Promissory note – related party
|
| | | | — | | | | | | 283,754 | | |
Total Current Liabilities
|
| | | | 214,813 | | | | | | 283,754 | | |
Deferred underwriting fee payable
|
| | | | 10,695,063 | | | | | | — | | |
Total Liabilities
|
| | | | 10,909,876 | | | | | | 283,754 | | |
Commitments and contingencies (Note 5) | | | | | | | | | | | | | |
Common stock subject to possible redemption, 29,574,811 shares at $10.00 per share as of December 31, 2019
|
| | | | 295,748,110 | | | | | | — | | |
Stockholders’ Equity | | | | | | | | | | | | | |
Preferred stock, $0.0001 par value; 5,000,000 shares authorized, none issued
and outstanding |
| | | | — | | | | | | — | | |
Class A common stock, $0.0001 par value; 200,000,000 shares authorized;
982,511 and no shares issued and outstanding (excluding 29,574,811 and no shares subject to possible redemption) as of December 31, 2019 and 2018, respectively |
| | | | 98 | | | | | | — | | |
Class B common stock, $0.0001 par value; 15,000,000 shares authorized; 7,639,330 and 8,625,000(1) shares issued and outstanding at December 31, 2019 and 2018, respectively
|
| | | | 764 | | | | | | 863 | | |
Additional paid in capital
|
| | | | 1,523,695 | | | | | | 24,137 | | |
Retained earnings/(Accumulated deficit)
|
| | | | 3,475,452 | | | | | | (2,750) | | |
Total Stockholders’ Equity
|
| | | | 5,000,009 | | | | | | 22,250 | | |
Total Liabilities and Stockholders’ Equity
|
| | | $ | 311,657,995 | | | | | $ | 306,004 | | |
| | |
Year Ended
December 31, 2019 |
| |
For the Period
From November 7, 2018 (Inception) Through December 31, 2018 |
| ||||||
Operating costs
|
| | | $ | 932,834 | | | | | $ | 2,750 | | |
Loss from operations
|
| | | | (932,834) | | | | | | (2,750) | | |
Other income: | | | | | | | | | | | | | |
Interest earned on marketable securities held in Trust Account
|
| | | | 5,531,557 | | | | | | — | | |
Income (loss) before provision for income taxes
|
| | | | 4,598,723 | | | | | | (2,750) | | |
Provision for income taxes
|
| | | | (1,120,521) | | | | | | — | | |
Net income (loss)
|
| | | $ | 3,478,202 | | | | | $ | (2,750) | | |
Weighted average shares outstanding of Class A redeemable common stock
|
| | | | 30,479,514 | | | | | | — | | |
Basic and diluted net income per share, Class A
|
| | | $ | 0.14 | | | | | | — | | |
Weighted average shares outstanding of Class B non-redeemable common stock
|
| | | | 7,601,435 | | | | | | 7,500,000 | | |
Basic and diluted net loss per share, Class B
|
| | | $ | (0.10) | | | | | $ | (0.00) | | |
| | |
Class A
Common Stock |
| |
Class B
Common Stock |
| |
Additional
Paid in Capital |
| |
Retained
Earnings (Accumulated Deficit) |
| |
Total
Stockholders’ Equity |
| |||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||
Balance – November 7, 2018 (inception)
|
| | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Issuance of Class B common stock to Sponsor
|
| | | | | | | | | | | | | | | | 8,625,000 | | | | | | 863 | | | | | | 24,137 | | | | | | — | | | | | | 25,000 | | |
Net loss
|
| | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,750) | | | | | | (2,750) | | |
Balance – December 31, 2018
|
| | | | — | | | | | | — | | | | | | 8,625,000 | | | | | | 863 | | | | | | 24,137 | | | | | | (2,750) | | | | | | 22,250 | | |
Sale of 30,557,322 Units, net of underwriting discount and offering costs
|
| | | | 30,557,322 | | | | | | 3,056 | | | | | | — | | | | | | — | | | | | | 288,133,146 | | | | | | — | | | | | | 288,136,202 | | |
Sale of 6,074,310 Private Placement Warrants
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,111,465 | | | | | | — | | | | | | 9,111,465 | | |
Forfeiture of Class B common stock by Sponsor
|
| | | | — | | | | | | — | | | | | | (985,670) | | | | | | (99) | | | | | | 99 | | | | | | — | | | | | | — | | |
Common stock subject to possible redemption
|
| | | | (29,574,811) | | | | | | (2,958) | | | | | | — | | | | | | — | | | | | | (295,745,152) | | | | | | — | | | | | | (295,748,110) | | |
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,478,202 | | | | | | 3,478,202 | | |
Balance – December 31, 2019
|
| | | | 982,511 | | | | | $ | 98 | | | | | | 7,639,330 | | | | | $ | 764 | | | | | $ | 1,523,695 | | | | | $ | 3,475,452 | | | | | $ | 5,000,009 | | |
|
| | |
Year Ended
December 31, 2019 |
| |
For the Period From
November 7, 2018 (Inception) Through December 31, 2018 |
| ||||||
Cash Flows from Operating Activities: | | | | | | | | | | | | | |
Net income (loss)
|
| | | $ | 3,478,202 | | | | | $ | (2,750) | | |
Adjustments to reconcile net income (loss) to net cash used in operating
activities: |
| | | | | | | | | | | | |
Interest earned on marketable securities held in Trust Account
|
| | | | (5,531,557) | | | | | | — | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Prepaid income taxes
|
| | | | (120,579) | | | | | | — | | |
Prepaid expenses
|
| | | | (96,208) | | | | | | — | | |
Accrued expenses
|
| | | | 214,813 | | | | | | — | | |
Net cash used in operating activities
|
| | | | (2,055,329) | | | | | | (2,750) | | |
Cash Flows from Investing Activities: | | | | | | | | | | | | | |
Investment of cash into Trust Account
|
| | | | (305,573,220) | | | | | | — | | |
Cash withdrawn from Trust Account
|
| | | | 1,264,402 | | | | | | — | | |
Net cash used in investing activities
|
| | | | (304,308,818) | | | | | | — | | |
Cash Flows from Financing Activities: | | | | | | | | | | | | | |
Proceeds from issuance of Class B common stock to Sponsor
|
| | | | — | | | | | | 25,000 | | |
Proceeds from sale of Units, net of underwriting discounts paid
|
| | | | 299,461,755 | | | | | | — | | |
Proceeds from sale of Private Placement Warrants
|
| | | | 9,111,465 | | | | | | — | | |
Repayment of advances from related party
|
| | | | (77,389) | | | | | | — | | |
Proceeds from promissory note – related party
|
| | | | 79,500 | | | | | | 70,000 | | |
Repayment of promissory note – related party
|
| | | | (400,000) | | | | | | — | | |
Payment of offering costs
|
| | | | (222,351) | | | | | | (80,250) | | |
Net cash provided by financing activities
|
| | | | 307,952,980 | | | | | | 14,750 | | |
Net Change in Cash
|
| | | | 1,588,833 | | | | | | 12,000 | | |
Cash – Beginning of period
|
| | | | 12,000 | | | | | | — | | |
Cash – End of period
|
| | | $ | 1,600,833 | | | | | $ | 12,000 | | |
Supplemental cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes
|
| | | $ | 1,241,100 | | | | | | — | | |
Non-Cash investing and financing activities: | | | | | | | | | | | | | |
Initial classification of common stock subject to possible redemption
|
| | | $ | 292,267,800 | | | | | $ | — | | |
Change in value of common stock subject to possible redemption
|
| | | $ | 3,480,310 | | | | | $ | — | | |
Deferred underwriting fee payable
|
| | | $ | 10,695,063 | | | | | $ | — | | |
Payment of offering costs through promissory note and advances
|
| | | $ | 114,135 | | | | | $ | 213,754 | | |
| | |
December 31,
2019 |
| |||
Deferred tax asset | | | | | | | |
Organizational costs/Startup expenses
|
| | | $ | 153,773 | | |
Total deferred tax asset
|
| | | | 153,773 | | |
Valuation allowance
|
| | | | (153,773) | | |
Deferred tax asset, net of allowance
|
| | | $ | — | | |
| | |
December 31,
2019 |
| |||
Federal | | | | | | | |
Current
|
| | | $ | 1,120,521 | | |
Deferred
|
| | | | (153,773) | | |
State | | | | | | | |
Current
|
| | | | — | | |
Deferred
|
| | | | — | | |
Change in valuation allowance
|
| | | | 153,773 | | |
Income tax provision
|
| | | $ | 1,120,521 | | |
|
Statutory federal income tax rate
|
| | | | 21.0% | | |
|
State taxes, net of federal tax benefit
|
| | | | 0.0% | | |
|
Change in valuation allowance
|
| | | | 3.3% | | |
|
Income tax provision
|
| | | | 24.3% | | |
| | |
Held-To-Maturity
|
| |
Amortized Cost
|
| |
Gross
Holding Gain |
| |
Fair Value
|
| |||||||||
December 31, 2019
|
| |
U.S. Treasury Securities (Mature on 2/6/2020)
|
| | | $ | 309,688,279 | | | | | $ | 2,018 | | | | | $ | 309,690,297 | | |
| | |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
| | |
(unaudited)
|
| | | | | | | |||
ASSETS | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash
|
| | | $ | 429,605 | | | | | $ | 1,600,833 | | |
Prepaid income taxes
|
| | | | 154,720 | | | | | | 120,579 | | |
Prepaid expenses
|
| | | | 35,271 | | | | | | 96,208 | | |
Total Current Assets
|
| | | | 619,596 | | | | | | 1,817,620 | | |
Cash and marketable securities held in Trust Account
|
| | | | 310,896,645 | | | | | | 309,840,375 | | |
Total Assets
|
| | | $ | 311,516,241 | | | | | $ | 311,657,995 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities — Accrued expenses
|
| | | $ | 84,206 | | | | | $ | 214,813 | | |
Deferred underwriting fee payable
|
| | | | 10,695,063 | | | | | | 10,695,063 | | |
Total Liabilities
|
| | | | 10,779,269 | | | | | | 10,909,876 | | |
Commitments and Contingencies | | | | | | | | | | | | | |
Common stock subject to possible redemption, 29,573,697 and 29,574,811 shares as of September 30, 2020 and December 31, 2019, respectively (at $10.00 per share)
|
| | | | 295,736,970 | | | | | | 295,748,110 | | |
Stockholders’ Equity | | | | | | | | | | | | | |
Preferred stock, $0.0001 par value; 5,000,000 shares authorized, none issued and outstanding
|
| | | | — | | | | | | — | | |
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 983,625 and 982,511 shares issued and outstanding (excluding 29,573,697 and 29,574,811 subject to possible redemption) as of September 30, 2020 and December 31, 2019, respectively
|
| | | | 98 | | | | | | 98 | | |
Class B common stock, $0.0001 par value; 15,000,000 shares authorized;
7,639,330 shares issued and outstanding at September 30, 2020 and December 31, 2019 |
| | | | 764 | | | | | | 764 | | |
Additional paid-in capital
|
| | | | 1,534,835 | | | | | | 1,523,695 | | |
Retained earnings
|
| | | | 3,464,305 | | | | | | 3,475,452 | | |
Total Stockholders’ Equity
|
| | | | 5,000,002 | | | | | | 5,000,009 | | |
Total Liabilities and Stockholders’ Equity
|
| | | $ | 311,516,241 | | | | | $ | 311,657,995 | | |
| | |
Three Months Ended
September 30, |
| |
Nine Months Ended
September 30, |
| ||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2020
|
| |
2019
|
| ||||||||||||
Operating costs
|
| | | $ | 255,207 | | | | | $ | 268,252 | | | | | $ | 1,444,905 | | | | | $ | 658,473 | | |
Loss from operations
|
| | | | (255,207) | | | | | | (268,252) | | | | | | (1,444,905) | | | | | | (658,473) | | |
Other income: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest earned on marketable securities held in Trust Account
|
| | | | 98,485 | | | | | | 1,683,965 | | | | | | 1,775,617 | | | | | | 4,144,082 | | |
(Loss) income before income taxes
|
| | | | (156,722) | | | | | | 1,415,713 | | | | | | 330,712 | | | | | | 3,485,609 | | |
Provision for income taxes
|
| | | | (10,473) | | | | | | (343,567) | | | | | | (341,859) | | | | | | (839,471) | | |
Net (loss) income
|
| | | $ | (167,195) | | | | | $ | 1,072,146 | | | | | $ | (11,147) | | | | | $ | 2,646,138 | | |
Weighted average shares outstanding of Class A redeemable common stock
|
| | | | 30,557,322 | | | | | | 30,557,322 | | | | | | 30,557,322 | | | | | | 30,446,374 | | |
Basic and diluted net income per share, Class A
|
| | | $ | 0.00 | | | | | $ | 0.04 | | | | | $ | 0.04 | | | | | $ | 0.10 | | |
Weighted average shares outstanding of Class B non-redeemable common stock
|
| | | | 7,639,330 | | | | | | 7,639,330 | | | | | | 7,639,330 | | | | | | 7,588,618 | | |
Basic and diluted net loss per share, Class B
|
| | | $ | (0.03) | | | | | $ | (0.03) | | | | | $ | (0.17) | | | | | $ | (0.07) | | |
| | |
Class A
Common Stock |
| |
Class B
Common Stock |
| |
Additional
Paid-in Capital |
| |
Retained
Earnings |
| |
Total
Stockholders’ Equity |
| |||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||
Balance — January 1, 2020 | | | | | 982,511 | | | | | $ | 98 | | | | | | 7,639,330 | | | | | $ | 764 | | | | | $ | 1,523,695 | | | | | $ | 3,475,452 | | | | | $ | 5,000,009 | | |
Change in value of common stock subject to possible redemption
|
| | | | (1,124) | | | | | | — | | | | | | — | | | | | | — | | | | | | (11,240) | | | | | | — | | | | | | (11,240) | | |
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 11,236 | | | | | | 11,236 | | |
Balance — March 31, 2020 | | | | | 981,387 | | | | | | 98 | | | | | | 7,639,330 | | | | | | 764 | | | | | | 1,512,455 | | | | | | 3,486,688 | | | | | | 5,000,005 | | |
Change in value of common stock subject to possible redemption
|
| | | | (14,481) | | | | | | (1) | | | | | | — | | | | | | — | | | | | | (144,809) | | | | | | — | | | | | | (144,810) | | |
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 144,812 | | | | | | 144,812 | | |
Balance — June 30, 2020
|
| | | | 966,906 | | | | | | 97 | | | | | | 7,639,330 | | | | | | 764 | | | | | | 1,367,646 | | | | | | 3,631,500 | | | | | | 5,000,007 | | |
Change in value of common stock subject to possible redemption
|
| | | | 16,719 | | | | | | 1 | | | | | | — | | | | | | — | | | | | | 167,189 | | | | | | — | | | | | | 167,190 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (167,195) | | | | | | (167,195) | | |
Balance — September 30, 2020 | | | | | 983,625 | | | | | $ | 98 | | | | | | 7,639,330 | | | | | $ | 764 | | | | | $ | 1,534,835 | | | | | $ | 3,464,305 | | | | | $ | 5,000,002 | | |
|
| | |
Common Stock
Class A |
| |
Class B
Common Stock (1) |
| |
Additional
Paid-in Capital |
| |
(Accumulated
Deficit) Retained Earnings |
| |
Total
Stockholders’ Equity |
| |||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||
Balance — January 1, 2019 | | | | | — | | | | | $ | — | | | | | | 8,625,000 | | | | | $ | 863 | | | | | $ | 24,137 | | | | | $ | (2,750) | | | | | $ | 22,250 | | |
Sale of 30,000,000 Units, net of underwriting discount and offering costs
|
| | | | 30,000,000 | | | | | | 3,000 | | | | | | — | | | | | | — | | | | | | 282,866,510 | | | | | | — | | | | | | 282,869,510 | | |
Sale of 6,000,000 Private Placement Warrants
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,000,000 | | | | | | — | | | | | | 9,000,000 | | |
Common stock subject to possible redemption
|
| | | | (28,729,792) | | | | | | (2,873) | | | | | | — | | | | | | — | | | | | | (287,295,047) | | | | | | — | | | | | | (287,297,920) | | |
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 406,165 | | | | | | 406,165 | | |
Balance — March 31, 2019 | | | | | 1,270,208 | | | | | | 127 | | | | | | 8,625,000 | | | | | | 863 | | | | | | 4,595,600 | | | | | | 403,415 | | | | | | 5,000,005 | | |
Sale of 557,322 Units, net of underwriting discount and offering costs
|
| | | | 557,322 | | | | | | 56 | | | | | | — | | | | | | — | | | | | | 5,266,636 | | | | | | — | | | | | | 5,266,692 | | |
Sale of 74,310 Private Placement Warrants
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 111,465 | | | | | | — | | | | | | 111,465 | | |
Forfeiture of Class B common stock by Sponsor
|
| | | | — | | | | | | — | | | | | | (985,670) | | | | | | (99) | | | | | | 99 | | | | | | — | | | | | | — | | |
Change in value of common stock subject to possible redemption
|
| | | | (654,598) | | | | | | (66) | | | | | | — | | | | | | — | | | | | | (6,545,914) | | | | | | — | | | | | | (6,545,980) | | |
Net income
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | | | 1,167,827 | | | | | | 1,167,827 | | |
Balance — June 30, 2019 | | | | | 1,172,932 | | | | | | 117 | | | | | | 7,639,330 | | | | | | 764 | | | | | | 3,427,886 | | | | | | 1,571,242 | | | | | | 5,000,009 | | |
Change in value of common stock subject to possible redemption
|
| | | | (107,215) | | | | | | (10) | | | | | | — | | | | | | — | | | | | | (1,072,141) | | | | | | — | | | | | | (1,072,151) | | |
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,072,146 | | | | | | 1,072,146 | | |
Balance — September 30, 2019 | | | | | 1,065,717 | | | | | $ | 107 | | | | | | 7,639,330 | | | | | $ | 764 | | | | | $ | 2,355,745 | | | | | $ | 2,643,388 | | | | | $ | 5,000,004 | | |
|
| | |
Nine Months Ended September 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Cash Flows from Operating Activities: | | | | | | | | | | | | | |
Net income (loss)
|
| | | $ | (11,147) | | | | | $ | 2,646,138 | | |
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
| | | | | | | | | | | | |
Interest earned on marketable securities held in Trust Account
|
| | | | (1,775,617) | | | | | | (4,144,082) | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Prepaid income taxes
|
| | | | (34,141) | | | | | | (114,106) | | |
Prepaid expenses
|
| | | | 60,937 | | | | | | (126,084) | | |
Accrued expenses
|
| | | | (130,607) | | | | | | 153,297 | | |
Net cash used in operating activities
|
| | | | (1,890,575) | | | | | | (1,584,837) | | |
Cash Flows from Investing Activities: | | | | | | | | | | | | | |
Investment of cash into Trust Account
|
| | | | — | | | | | | (305,573,220) | | |
Cash withdrawn from Trust Account for franchise and income taxes
|
| | | | 719,347 | | | | | | 969,147 | | |
Net cash provided by (used in) investing activities
|
| | | | 719,347 | | | | | | (304,604,073) | | |
Cash Flows from Financing Activities: | | | | | | | | | | | | | |
Proceeds from sale of Units, net of underwriting discounts paid
|
| | | | — | | | | | | 299,461,755 | | |
Proceeds from sale of Private Placement Warrants
|
| | | | — | | | | | | 9,111,465 | | |
Repayment of advances from related party
|
| | | | — | | | | | | (77,389) | | |
Proceeds from promissory note — related party
|
| | | | — | | | | | | 79,500 | | |
Repayment of promissory note — related party
|
| | | | — | | | | | | (400,000) | | |
Payment of offering costs
|
| | | | — | | | | | | (222,351) | | |
Net cash provided by financing activities
|
| | | | — | | | | | | 307,952,980 | | |
Net Change in Cash
|
| | | | (1,171,228) | | | | | | 1,764,070 | | |
Cash — Beginning of period
|
| | | | 1,600,833 | | | | | | 12,000 | | |
Cash — End of period
|
| | | $ | 429,605 | | | | | $ | 1,776,070 | | |
Supplemental cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes
|
| | | $ | 376,000 | | | | | $ | 953,577 | | |
Non-cash investing and financing activities: | | | | | | | | | | | | | |
Initial classification of common stock subject to possible redemption
|
| | | $ | — | | | | | $ | 292,267,800 | | |
Change in value of common stock subject to possible redemption
|
| | | $ | (11,140) | | | | | $ | 2,648,251 | | |
Deferred underwriting fee payable
|
| | | $ | — | | | | | $ | 10,695,063 | | |
Payment of offering costs through promissory note and advances
|
| | | $ | — | | | | | $ | 114,135 | | |
| | |
Held-To-Maturity
|
| |
Amortized
Cost |
| |
Gross
Holding (Loss) Gain |
| |
Fair Value
|
| |||||||||
September 30, 2020
|
| |
U.S. Treasury Securities (Matures on 11/17/2020)
|
| | | $ | 285,882,793 | | | | | $ | (7,102) | | | | | $ | 285,875,691 | | |
December 31, 2019
|
| | U.S. Treasury Securities (Matured on 2/6/2020) | | | | $ | 309,688,279 | | | | | $ | 2,018 | | | | | $ | 309,690,297 | | |
| | |
Page
|
| |||
| | | | A-2 | | | |
| | | | A-2 | | | |
| | | | A-14 | | | |
| | | | A-15 | | | |
| | | | A-15 | | | |
| | | | A-15 | | | |
| | | | A-15 | | | |
| | | | A-15 | | | |
| | | | A-15 | | | |
| | | | A-15 | | | |
| | | | A-16 | | | |
| | | | A-16 | | | |
| | | | A-16 | | | |
| | | | A-16 | | | |
| | | | A-17 | | | |
| | | | A-18 | | | |
| | | | A-18 | | | |
| | | | A-19 | | | |
| | | | A-19 | | | |
| | | | A-19 | | | |
| | | | A-21 | | | |
| | | | A-21 | | | |
| | | | A-21 | | | |
| | | | A-22 | | | |
| | | | A-23 | | | |
| | | | A-23 | | | |
| | | | A-23 | | | |
| | | | A-24 | | | |
| | | | A-24 | | | |
| | | | A-25 | | | |
| | | | A-26 | | | |
| | | | A-26 | | | |
| | | | A-27 | | | |
| | | | A-27 | | | |
| | | | A-27 | | | |
| | | | A-28 | | | |
| | | | A-29 | | | |
| | | | A-30 | | | |
| | | | A-32 | | | |
| | | | A-33 | | | |
| | | | A-34 | | |
| | |
Page
|
| |||
| | | | A-34 | | | |
| | | | A-35 | | | |
| | | | A-35 | | | |
| | | | A-36 | | | |
| | | | A-38 | | | |
| | | | A-38 | | | |
| | | | A-38 | | | |
| | | | A-38 | | | |
| | | | A-39 | | | |
| | | | A-39 | | | |
| | | | A-39 | | | |
| | | | A-39 | | | |
| | | | A-39 | | | |
| | | | A-40 | | | |
| | | | A-40 | | | |
| | | | A-40 | | | |
| | | | A-41 | | | |
| | | | A-41 | | | |
| | | | A-42 | | | |
| | | | A-42 | | | |
| | | | A-43 | | | |
| | | | A-43 | | | |
| | | | A-43 | | | |
| | | | A-44 | | | |
| | | | A-44 | | | |
| | | | A-44 | | | |
| | | | A-44 | | | |
| | | | A-44 | | | |
| | | | A-45 | | | |
| | | | A-45 | | | |
| | | | A-46 | | | |
| | | | A-46 | | | |
| | | | A-46 | | | |
| | | | A-47 | | | |
| | | | A-47 | | | |
| | | | A-47 | | | |
| | | | A-47 | | | |
| | | | A-47 | | | |
| | | | A-48 | | | |
| | | | A-48 | | | |
| | | | A-48 | | | |
| | | | A-49 | | |
| | |
Page
|
| |||
| | | | A-50 | | | |
| | | | A-52 | | | |
| | | | A-52 | | | |
| | | | A-52 | | | |
| | | | A-52 | | | |
| | | | A-53 | | | |
| | | | A-55 | | | |
| | | | A-56 | | | |
| | | | A-56 | | | |
| | | | A-57 | | | |
| | | | A-58 | | | |
| | | | A-59 | | | |
| | | | A-59 | | | |
| | | | A-59 | | | |
| | | | A-59 | | | |
| | | | A-59 | | | |
| | | | A-60 | | | |
| | | | A-60 | | | |
| | | | A-60 | | | |
| | | | A-60 | | | |
| | | | A-60 | | | |
| | | | A-61 | | | |
| | | | A-61 | | | |
| | | | A-61 | | | |
| | | | A-61 | | | |
| | | | A-62 | | | |
| | | | A-63 | | | |
| | | | A-64 | | | |
| | | | A-64 | | | |
| | | | A-64 | | | |
| | | | A-65 | | | |
| | | | A-65 | | | |
| | | | A-65 | | | |
| | | | A-65 | | | |
| | | | A-65 | | | |
| | | | A-65 | | | |
| | | | A-66 | | | |
| | | | A-66 | | | |
| | | | A-66 | | | |
| | | | A-66 | | | |
| | | | A-67 | | | |
| | | | A-67 | | | |
| | | | A-67 | | |
| | |
Page
|
| |||
| | | | A-67 | | | |
| | | | A-67 | | | |
| | | | A-67 | | | |
| | | | A-67 | | | |
| | | | A-68 | | | |
| | | | A-68 | | | |
| | | | A-68 | | |
| Exhibits | | | | |
| Exhibit A – Form of Amended and Restated Certificate of Incorporation of Acquiror | | | | |
| Exhibit B – Form of Amended and Restated Bylaws of Acquiror | | | | |
| Exhibit C – Form of Amended and Restated Certificate of Incorporation of the Company | | | | |
| Exhibit D – Form of Amended and Restated Bylaws of the Company | | | | |
| Exhibit E – Form of Sponsor Letter Agreement | | | | |
| Exhibit F – Form of Stockholder Letter Agreement | | | | |
| Exhibit G – Form of Equity Incentive Plan | | | | |
| Exhibit H – Pre-Closing Company Charter Amendment | | | | |
| Exhibit I – Form of Registration Rights Agreement | | | | |
| Exhibit J – Form of Stockholders Agreement | | | | |
| | | | ACAMAR PARTNERS ACQUISITION CORP. | | |||
| | | | By: | | |
/s/ Luis Ignacio Solorzano Aizpuru
Name:
Luis Ignacio Solorzano Aizpuru
|
|
| | | | | | |
Title:
Chief Executive Officer
|
|
| | | | ACAMAR PARTNERS SUB, INC. | | |||
| | | | By: | | |
/s/ Luis Ignacio Solorzano Aizpuru
Name:
Luis Ignacio Solorzano Aizpuru
|
|
| | | | | | |
Title:
Chief Executive Officer
|
|
| | | | CARLOTZ, INC. | | |||
| | | | By: | | |
/s/ Michael Bor
Name:
Michael Bor
|
|
| | | | | | |
Title:
Chief Executive Officer
|
|
| | | | | 1 | | | |
| | | | | 1 | | | |
| | | | | 1 | | | |
| | | | | 1 | | | |
| | | | | 1 | | | |
| | | | | 1 | | | |
| | | | | 1 | | | |
| | | | | 1 | | | |
| | | | | 2 | | | |
| | | | | 2 | | | |
| | | | | 2 | | | |
| | | | | 2 | | | |
| | | | | 3 | | | |
| | | | | 4 | | | |
| | | | | 4 | | | |
| | | | | 5 | | | |
| | | | | 5 | | | |
| | | | | 9 | | | |
| | | | | 9 | | | |
| | | | | 9 | | | |
| | | | | 10 | | | |
| | | | | 10 | | | |
| | | | | 10 | | | |
| | | | | 10 | | | |
| | | | | 10 | | | |
| | | | | 11 | | | |
| | | | | 11 | | | |
| | | | | 11 | | | |
| | | | | 11 | | | |
| | | | | 12 | | | |
| | | | | 12 | | | |
| | | | | 12 | | | |
| | | | | 12 | | | |
| | | | | 12 | | | |
| | | | | 12 | | | |
| | | | | 13 | | | |
| | | | | 13 | | | |
| | | | | 13 | | | |
| | | | | 13 | | | |
| | | | | 13 | | | |
| | | | | 14 | | | |
| | | | | 14 | | | |
| | | | | 14 | | | |
| | | | | 14 | | |
| | | | | 14 | | | |
| | | | | 15 | | | |
| | | | | 15 | | | |
| | | | | 15 | | | |
| | | | | 15 | | | |
| | | | | 15 | | | |
| | | | | 15 | | | |
| | | | | 16 | | | |
| | | | | 16 | | | |
| | | | | 16 | | | |
| | | | | 16 | | | |
| | | | | 16 | | | |
| | | | | 16 | | | |
| | | | | 17 | | | |
| | | | | 17 | | | |
| | | | | 17 | | | |
| | | | | 17 | | | |
| | | | | 17 | | | |
| | | | | 18 | | | |
| | | | | 18 | | | |
| | | | | 18 | | | |
| | | | | 18 | | | |
| | | | | 18 | | | |
| | | | | 18 | | | |
| | | | | 18 | | | |
| | | | | 19 | | | |
| | | | | 19 | | |
| | | |
/s/ [•]
[•]
[•] |
|
| | | | Sincerely, | | |||
| | | | ACAMAR PARTNERS SPONSOR I LLC | | |||
| | | | By: | | |
Name:
Title: |
|
| | | | By: | | |
Name:
Title: |
|
| | | | By: | | |
Name:
Title: |
|
| | | | By: | | |
Name:
Title: |
|
| | | | By: | | |
Name:
Title: |
|
| | | | Acknowledged and Agreed: | | |||
| | | | ACAMAR PARTNERS ACQUISITION CORP. | | |||
| | | | By: | | |
Name:
Title: |
|
| | | | Acknowledged and Agreed: | | |||
| | | | CARLOTZ, INC. | | |||
| | | | By: | | |
Name:
Title: |
|
| | | |
Corporate Secretary
|
|
| | | | COMPANY: | | |||
| | | | ACAMAR PARTNERS ACQUISITION CORP. | | |||
| | | | By | | |
Name:
Title: |
|
| | | | HOLDER: | | |||
| | | | TRP CAPITAL PARTNERS, LP | | |||
| | | | By | | |
Name:
Title: |
|
| | | | HOLDER: | | |||
| | | | MICHAEL W. BOR | | |||
| | | | By: | | |
|
|
| | | | Print Name: Michael W. Bor | | |||
| | | | Address: | | |
|
|
| | | | Email: | | |
|
|
| | | | HOLDER: | | |||
| | | | AARON S. MONTGOMERY | | |||
| | | | By: | | |
|
|
| | | | Print Name: Aaron S. Montgomery | | |||
| | | | Address: | | |
|
|
| | | | Email: | | |
|
|
| | | | HOLDER: | | |||
| | | | WILLIAM S. BOLAND | | |||
| | | | By: | | |
|
|
| | | | Print Name: William S. Boland | | |||
| | | | Address: | | |
|
|
| | | | Email: | | |
|
|
| | | | HOLDER: | | |||
| | | | AUTOMOTIVE FINANCE CORPORATION | | |||
| | | | By | | |
Name:
Title: |
|
| | | | HOLDER: | | |||
| | | | KAR AUCTION SERVICES, INC. | | |||
| | | | By | | |
Name:
Title: |
|
| | | | HOLDER: | | |||
| | | | MICHAEL W. BOR 2020 FAMILY TRUST | | |||
| | | | By | | |
Name:
Title: |
|
| | | | HOLDER: | | |||
| | | | AARON S. MONTGOMERY 2020 FAMILY TRUST | | |||
| | | | By | | |
Name:
Title: |
|
| | | | HOLDER: | | |||
| | | | WILLIAM S. BOLAND 2020 FAMILY TRUST | | |||
| | | | By | | |
Name:
Title: |
|
| | | | HOLDER: | | |||
| | | | MICHAEL W. BOR 2020 QUALIFIED GRANTOR RETAINED ANNUITY TRUST | | |||
| | | | By | | |
Name:
Title: |
|
| | | | HOLDER: | | |||
| | | | ACAMAR PARTNERS SPONSOR I LLC | | |||
| | | | By | | |
Name:
Title: |
|
|
Name of Holder
|
| |
Number of Shares
|
|
| TRP Capital Partners, LP | | | | |
| Michael W. Bor | | | | |
| Aaron S. Montgomery | | | | |
| William S. Boland | | | | |
| Automotive Finance Corporation | | | | |
| KAR Auction Services, Inc. | | | | |
| Michael W. Bor 2020 Family Trust | | | | |
| Aaron S. Montgomery 2020 Family Trust | | | | |
| William S. Boland 2020 Family Trust | | | | |
|
Michael W. Bor 2020 Qualified Grantor Retained Annuity Trust
|
| | | |
| | | | ACQUIROR: | | | |||||
| | | |
ACAMAR PARTNERS ACQUISITION
CORP. |
| | |||||
| | | | By: | | |
/s/ Luis Ignacio Solorzano Aizpuru
Name: Luis Ignacio Solorzano Aizpuru
Title: Chief Executive Officer |
| | ||
| | | | MERGER SUB: | | | |||||
| | | | ACAMAR PARTNERS SUB, INC. | | | | | |||
| | | | By: | | |
/s/ Luis Ignacio Solorzano Aizpuru
Name: Luis Ignacio Solorzano Aizpuru
Title: Chief Executive Officer |
| |
| | | | COMPANY: | | |||
| | | | CARLOTZ, INC. | | |||
| | | | By: | | |
/s/ Michael W. Bor
Name: Michael W. Bor
Title: Chief Executive Officer |
|
| | | | CARLOTZ, INC. | | |||
| | | | By: | | |
/s/ [•]
[•]
[•] |
|
| | | |
Corporate Secretary
|
|
|
Signature
|
| |
Title Date
|
| |
Date
|
|
|
*
Juan Carlos Torres Carretero
|
| |
Chairman
|
| |
December 16, 2020
|
|
|
/s/ Luis Ignacio Solorzano Aizpuru
Luis Ignacio Solorzano Aizpuru
|
| |
Chief Executive Officer and Director
(Principal Executive Officer) |
| |
December 16, 2020
|
|
|
/s/ Joseba Asier Picaza Ucar
Joseba Asier Picaza Ucar
|
| |
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer) |
| |
December 16, 2020
|
|
|
*
Domenico de Sole
|
| |
Director
|
| |
December 16, 2020
|
|
|
*
Teck H. Wong
|
| |
Director
|
| |
December 16, 2020
|
|
|
*
James E. Skinner
|
| |
Director
|
| |
December 16, 2020
|
|
|
*By:
/s/ Joseba Asier Picaza Ucar
Attorney-in-fact
|
| | |
Exhibit 4.5
NUMBER | NUMBER | |||
C- | ||||
SHARES | ||||
SEE REVERSE FOR CERTAIN DEFINITIONS | ||||
CUSIP 142552 108 |
CARLOTZ, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CLASS A COMMON STOCK
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $0.0001 EACH OF THE CLASS A COMMON STOCK OF
CARLOTZ, INC.
(THE “CORPORATION”)
transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this certificate properly endorsed.
This certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar.
Witness the seal of the Corporation and the facsimile signatures of its duly authorized officers.
Secretary | [Corporate Seal] Delaware | Chief Executive Officer | ||
CARLOTZ, INC.
The Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof of the Corporation and the qualifications, limitations, or restrictions of such preferences and/or rights. This certificate and the shares represented thereby are issued and shall be held subject to all the provisions of the Certificate of Incorporation and all amendments thereto and resolutions of the Board of Directors providing for the issue of securities (copies of which may be obtained from the secretary of the Corporation), to all of which the holder of this certificate by acceptance hereof assents. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM | — | as tenants in common | UNIF GIFT MIN ACT | — | Custodian | ||
TEN ENT | — | as tenants by the entireties | (Cust) | (Minor) |
JT TEN | — | as joint tenants with right of survivorship and not as tenants in common | under Uniform Gifts to Minors Act | ||
(State) |
Additional abbreviations may also be used though not in the above list.
For value received, hereby sells, assigns and transfers unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER(S) OF ASSIGNEE(S))
|
(PLEASE PRINT OR TYPEWRITE NAME(S) AND ADDRESS(ES), INCLUDING ZIP CODE, OF ASSIGNEE(S)) |
|
|
|
Shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitutes and appoints
|
Attorney to transfer the said stock on the books of the within named Company with full power of substitution in the premises. |
Dated:
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed: |
By |
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Exhibit 4.6
[Form of Warrant Certificate]
[FACE]
Number
Warrants
THIS WARRANT SHALL BE VOID IF NOT EXERCISED PRIOR TO
THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR
IN THE WARRANT AGREEMENT DESCRIBED BELOW
CARLOTZ, INC.
Incorporated Under the Laws of the State of Delaware
CUSIP 142552 116
Warrant Certificate
This Warrant Certificate certifies that , or registered assigns, is the registered holder of warrant(s) evidenced hereby (the “Warrants” and each, a “Warrant”) to purchase shares of Class A common stock, $0.0001 par value per share (“Common Stock”), of CarLotz, Inc., a Delaware corporation (the “Company”). Each Warrant entitles the holder, upon exercise during the period set forth in the Warrant Agreement referred to below, to receive from the Company that number of fully paid and non-assessable shares of Common Stock as set forth below, at the exercise price (the “Exercise Price”) as determined pursuant to the Warrant Agreement, payable in lawful money (or through “cashless exercise” as provided for in the Warrant Agreement) of the United States of America upon surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent referred to below, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.
Each whole Warrant is initially exercisable for one fully paid and non-assessable share of Common Stock. No fractional shares will be issued upon exercise of any Warrant. If, upon the exercise of Warrants, a holder would be entitled to receive a fractional interest in a share of Common Stock, the Company will, upon exercise, round down to the nearest whole number the number of shares of Common Stock to be issued to the Warrant holder. The number of shares of Common Stock issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.
The initial Exercise Price per share of Common Stock for any Warrant is equal to $11.50 per share. The Exercise Price is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.
Subject to the conditions set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the end of such Exercise Period, such Warrants shall become void. The Warrants may be redeemed, subject to certain conditions, as set forth in the Warrant Agreement.
Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.
[signature page follows]
This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflicts of laws principles thereof.
CARLOTZ, INC. |
By: |
Name: | |
Title: |
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, as Warrant Agent |
By: |
Name: | |
Title: |
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive shares of Common Stock and are issued or to be issued pursuant to a Warrant Agreement dated as of , 2019 (the “Warrant Agreement”), duly executed and delivered by the Company to American Stock Transfer & Trust Company, LLC, a New York limited liability trust company, as warrant agent (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the Registered Holders or Registered Holder, respectively) of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company. Capitalized terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.
Warrants may be exercised at any time during the Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this Warrant Certificate may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon properly completed and executed, together with payment of the Exercise Price as specified in the Warrant Agreement (or through “cashless exercise” as provided for in the Warrant Agreement) at the principal corporate trust office of the Warrant Agent. In the event that upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number of Warrants not exercised.
Notwithstanding anything else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration statement covering the shares of Common Stock to be issued upon exercise is effective under the Securities Act and (ii) a prospectus thereunder relating to the shares of Common Stock is current, except through “cashless exercise” as provided for in the Warrant Agreement.
The Warrant Agreement provides that upon the occurrence of certain events the number of shares of Common Stock issuable upon exercise of the Warrants set forth on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof would be entitled to receive a fractional interest in a share of Common Stock, the Company shall, upon exercise, round down to the nearest whole number of shares of Common Stock to be issued to the holder of the Warrant.
Warrant Certificates, when surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.
Election to Purchase
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive shares of Common Stock and herewith tenders payment for such shares of Common Stock to the order of CarLotz, Inc. (the “Company”) in the amount of $ in accordance with the terms hereof. The undersigned requests that a certificate for such shares of Common Stock be registered in the name of , whose address is and that such shares of Common Stock be delivered to whose address is . If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares of Common Stock be registered in the name of , whose address is and that such Warrant Certificate be delivered to , whose address is .
In the event that the Warrant has been called for redemption by the Company pursuant to Section 6.1 or 6.2 of the Warrant Agreement and the Company has required cashless exercise pursuant to Section 6.4 of the Warrant Agreement, the number of shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with subsection 3.3.1(b) and Section 6.4 of the Warrant Agreement.
In the event that the Warrant is a Private Placement Warrant or a Working Capital Warrant that is to be exercised on a “cashless” basis pursuant to subsection 3.3.1(c) of the Warrant Agreement, the number of shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with subsection 3.3.1(c) of the Warrant Agreement.
In the event that the Warrant is to be exercised on a “cashless” basis pursuant to Section 7.4 of the Warrant Agreement, the number of shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with Section 7.4 of the Warrant Agreement.
In the event that the Warrant may be exercised, to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of shares of Common Stock that this Warrant is exercisable for would be determined in accordance with the relevant section of the Warrant Agreement which allows for such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, through the cashless exercise provisions of the Warrant Agreement, to receive shares of Common Stock. If said number of shares is less than all of the shares of Common Stock purchasable hereunder (after giving effect to the cashless exercise), the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares of Common Stock be registered in the name of , whose address is and that such Warrant Certificate be delivered to , whose address is .
[Signature Page Follows]
Date: , 20 | ||
(Signature) | ||
(Address) | ||
(Tax Identification Number) | ||
Signature Guaranteed: | ||
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED).
Exhibit 5.1
December 16, 2020
Acamar Partners Acquisition Corp.
1450 Brickell Avenue, Suite 2130
Miami, Florida 33131
Ladies and Gentlemen:
We have acted as counsel to Acamar Partners Acquisition Corp., a Delaware corporation (the “Company”), in connection with the Registration Statement on Form S-4 (the “Registration Statement”) filed by the Company with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”), relating to the issuance by the Company of up to 80,000,000 shares of Class A Common Stock, par value $0.0001 per share (the “Shares”), pursuant to that certain Agreement and Plan of Merger, dated October 21, 2020 (as amended by Amendment No. 1 thereto dated as of December 16, 2020, the “Merger Agreement”) by and among the Company, Acamar Partners Sub, Inc., a Delaware corporation and direct wholly-owned subsidiary of the Company (“Merger Sub”), and CarLotz, Inc., a Delaware corporation (“CarLotz”), providing for, among other things, and subject to the conditions therein, the combination of the Company and CarLotz pursuant to the proposed merger of Merger Sub with and into the CarLotz with CarLotz continuing as the surviving entity (the “Merger”).
We have examined the Registration Statement and each of (i) the Merger Agreement, (ii) the form of the Second Amended and Restated Certificate of Incorporation of the Company following consummation of the Merger and (iii) the form of the Amended and Restated Bylaws of the Company following consummation of the Merger, each of which has been filed with the Commission as an exhibit to the Registration Statement. In addition, we have examined and have relied as to matters of fact upon, originals, or duplicates or certified or conformed copies, of such records, agreements, documents and other instruments and such certificates or comparable documents of public officials and of officers and representatives of the Company and have made such other investigations as we have deemed relevant and necessary in connection with the opinions hereinafter set forth.
In rendering the opinion set forth below, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as duplicates or certified or conformed copies and the authenticity of the originals of such latter documents.
Based upon the foregoing, and subject to the qualifications, assumptions and limitations stated herein, we are of the opinion that the issuance of the Shares has been duly authorized by the Company and, when issued by the Company upon consummation of the Merger in accordance with the provisions of the Merger Agreement, the Shares will be validly issued, fully paid and nonassessable.
We do not express any opinion herein concerning any law other than the Delaware General Corporation Law.
We hereby consent to the filing of this opinion letter as Exhibit 5 to the Registration Statement and to the use of our name under the caption “Legal Matters” in the prospectus included in the Registration Statement.
Very truly yours, | |
/s/ SIMPSON THACHER & BARTLETT LLP | |
SIMPSON THACHER & BARTLETT LLP |
Exhibit 10.15
CARLOTZ, INC.
Employment Agreement
This Employment Agreement (this “Agreement”), dated as of December 11, 2020, is made by and between CarLotz, Inc., a Delaware corporation (together with any successor thereto, the “Company”), and Michael W. Bor (“Executive”) (collectively referred to as the “Parties” or individually referred to as a “Party”).
WHEREAS, pursuant to that certain Employment Agreement, dated September 18, 2017 (the “Prior Agreement”), by and between the Company and Executive, Executive is currently employed as the Chief Executive Officer of the Company;
WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated October 21, 2020, with Acamar Partners Acquisition Corp. and Acamar Partners Sub, Inc. (the “Merger Agreement”);
WHEREAS, it is the desire of the Company to continue the employment of Executive and to assure itself of the services of Executive following the closing of the transactions contemplated by the Merger Agreement (the “Closing”) and thereafter on the terms herein provided by entering into this Agreement, which will supersede the Prior Agreement; and
WHEREAS, it is the desire of Executive to continue to provide services to the Company following the Closing and thereafter on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, including the respective covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1. Employment.
(a) General. Effective on the Closing Date (as defined in the Merger Agreement) as of immediately prior to the Closing (the “Effective Date”), the Company shall employ Executive and Executive shall remain in the employ of the Company, for the period and in the positions set forth in this Section 1, and subject to the other terms and conditions herein.
(b) Employment Term. The term of employment under this Agreement (the “Term”) shall commence on the Effective Date and end on the third anniversary of the Effective Date, subject to earlier termination as provided in Section 3 below. The Term shall automatically renew for additional twelve (12) month periods unless no later than ninety (90) days prior to the end of the applicable Term either Party gives written notice of non-renewal (“Notice of Non-Renewal”) to the other, in which case Executive’s employment will terminate at the end of the then-applicable Term, subject to earlier termination as provided in Section 3 below.
(c) Positions. Executive shall serve as the Chief Executive Officer of the Company with such responsibilities, duties and authority normally associated with such position and, to the extent consistent with such position, as may from time to time be reasonably assigned to Executive by the Board, as defined below. Executive shall report directly to the Board. In addition, promptly following the Effective Date, the Board shall take such action as may be necessary to appoint or elect Executive to serve as a member of the Board. Thereafter, for so long as Executive is the Chief Executive Officer of the Company, the Board shall nominate Executive for re-election as a member of the Board at the expiration of the then-current term and continue to take such action as may be necessary to appoint or elect Executive to serve as a member of the Board, to the extent not prohibited by legal or regulatory requirements. At the Company’s request, Executive shall serve the Company and/or its subsidiaries and affiliates in such other capacities in addition to the foregoing as the Company shall designate, provided that such additional capacities are consistent with Executive’s position as the Company’s Chief Executive Officer. In the event that Executive serves in any one or more of such additional capacities, Executive’s compensation shall not automatically be increased on account of such additional service.
(d) Duties. Executive shall devote substantially all of Executive’s working time, attention and efforts to the business and affairs of the Company (which shall include service to its affiliates), except during any paid vacation or other excused absence periods or during periods of illness. Executive shall not engage in outside business activities (including serving on outside boards or committees) without the prior written consent of the Board, which consent shall not be unreasonably withheld or delayed; provided that Executive shall be permitted to (i) manage Executive’s personal, financial and legal affairs, which may include certain personal outside business activities, (ii) participate in trade associations and charitable and community affairs, and (iii) continue to serve on the board of directors or advisory boards of the companies/organizations set forth on Exhibit A attached hereto, if any, in each case, subject to compliance with this Agreement and provided that such activities do not materially interfere with Executive’s performance of Executive’s duties and responsibilities hereunder or violate the terms of that certain Loyalty Agreement entered into by and between Executive and the Company as of the date hereof, attached as Exhibit B hereto (the “Loyalty Agreement”). Executive agrees to observe and comply with the rules and policies of the Company as adopted by the Company from time to time, in each case as amended from time to time, as set forth in writing and as delivered to Executive (each, a “Policy”). The principal place of Executive’s employment shall be the Company’s primary office, located in Richmond, Virginia.
2. Compensation and Related Matters.
(a) Annual Base Salary. During the Term, Executive shall receive a base salary at a rate of $600,000 per annum, which shall be paid in accordance with the customary payroll practices of the Company, no less frequently than monthly, and shall be pro-rated for partial years of employment. Such annual base salary shall be reviewed from time to time by the Board (such annual base salary, as it may be adjusted from time to time pursuant to this Section 2(a), the “Annual Base Salary”). The Annual Base Salary may not be decreased during the Term other than by no more than ten (10%) in connection with an across-the board decrease for all executives.
(b) Annual Bonus. During the Term, beginning with calendar year 2021, Executive will be eligible to participate in an annual incentive program established by the Board. Executive’s annual incentive compensation under such incentive program (the “Annual Bonus”) shall be targeted at one hundred percent (100)% of Executive’s Annual Base Salary (the “Target Bonus”). To the extent the targeted performance levels are exceeded, the annual incentive plan will provide a means by which the Annual Bonus may be higher than the Target Bonus, and to the extent the target performance levels are not achieved, the annual incentive plan will provide a means by which the Annual Bonus may be lower than the Target Bonus. The Annual Bonus payable under the incentive program shall be based on the achievement of performance goals established in good faith by the Board within the first ninety (90) days of the calendar year, after consultation with the Executive. Notwithstanding the foregoing, except as set forth in Section 4(b), no bonus shall be payable with respect to any calendar year unless Executive remains continuously employed with the Company during the period beginning on the Effective Date and ending on December 31 of such calendar year. The payment of any Annual Bonus pursuant to the incentive program will be made on or before March 15th of the year following the year to which such Annual Bonus relates.
(c) Transaction Bonus. Executive will be paid a transaction bonus of $450,000 (the “Transaction Bonus”) within thirty (30) days of the Closing.
(d) Equity-Based Compensation. The Company shall grant to Executive stock options (“Options”) to purchase shares of the Company’s common stock, par value of $.01 per share (the “Company Common Stock”) and restricted stock units with respect to the Company Common Stock (“Restricted Stock Units”) with an aggregate value of $2 million based on the per share fair market value of the Company’s common stock on the Effective Date, equally split between the Options and the Restricted Stock Units. The value of the Options for this purpose shall be calculated using the Black-Scholes method. Such Options shall have an exercise price per share equal to the fair market value of a share of Company Common Stock as of the date of grant (as determined in accordance with Section 409A (as defined below)). Such Options and Restricted Stock Units shall (i) be subject to time-based vesting in equal annual installments over a four (4)-year period based on Executive’s continued employment with the Company (commencing as of the Effective Date), (ii) vest and, if applicable, become exercisable upon a Change in Control (as defined in the CarLotz, Inc. 2020 Incentive Award Plan (the “Plan”)) in the event that the successor in connection with the Change in Control does not assume or substitute for any such outstanding Options or Restricted Stock Units, and (iii) be subject to the terms and conditions set forth in the Plan under which the Options and Restricted Stock Units will be granted and the related Award Agreements (as defined in the Plan), and subject to shareholder approval of the Plan. The Options shall be granted on the Effective Date. The grant of the Restricted Stock Units shall not be effective until, and the exercisability of the Stock Options shall be contingent on, the filing of a Form S-8 registration statement by New Carlotz, Inc. with respect to the Plan, no later than sixty-five (65) calendar days after the Effective Date. In order to satisfy the exercise price or any tax withholding obligations of the Company pertaining to Executive’s Options or the Restricted Stock Units, Executive will be permitted to instruct a broker, in compliance with applicable laws and regulations, to sell the necessary amount of Executive’s shares subject to such awards, such that the cash proceeds of such sale can be used to satisfy such exercise price or tax withholding obligations, and to adopt a Rule 10b5-1 plan, in compliance with applicable laws, to permit Executive to sell shares of Company Common Stock during blackout periods, when Executive has exposure to material non-public information and/or Executive otherwise is subject to insider trading restrictions. Additionally, during the Term, Executive shall have the right to receive stock options, restricted stock, restricted stock units, stock appreciation rights and/or other equity awards under the Company’s applicable equity plans as the Company may determine on a basis not less favorable than that provided to the class of employees that includes Executive and taking into account Executive’s position with the Company and customary award grants of similar publicly-traded companies.
(e) Benefits. During the Term, Executive shall be eligible to participate in employee benefit plans, programs and arrangements as the Company may from time to time offer to provide to its executives, consistent with the terms thereof and as such plans, programs and arrangements may be amended from time to time. Notwithstanding the foregoing, nothing herein is intended, or shall be construed, to require the Company to institute or continue any, or any particular, plan or benefit. In no event shall Executive be eligible to participate in any severance plan or program of the Company, except as set forth in Section 4 below.
(f) Vacation; Holidays. During the Term, Executive shall be entitled to four (4) weeks of paid vacation per calendar year (pro-rated for partial years) in accordance with the Policies. Any vacation shall be taken at the reasonable and mutual convenience of the Company and Executive. Unused vacation will not carry over from calendar year to calendar year. Upon termination of employment, the Executive will be entitled to payment for accumulated unused vacation for the year of termination. In addition, the Company will offer to Executive employee time off for standard Company holidays in accordance with the Policies.
(g) Business Expenses. During the Term, the Company shall reimburse Executive for all reasonable travel and other business expenses incurred by Executive in the performance of Executive’s duties to the Company in accordance with the Company’s expense reimbursement Policy.
(h) Indemnification. The Company hereby agrees to indemnify Executive and hold Executive harmless to the fullest extent permitted under the organizational documents of the Company and applicable law against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorney’s fees), losses, and damages (including advancement of fees and expenses) resulting from Executive’s performance of Executive’s duties and obligations with the Company hereunder. The Company shall cover Executive under directors’ and officers’ liability insurance both during and, while potential liability exists, after the Term in the same amount and to the same extent as the Company covers its other officers and directors. The foregoing obligations shall survive the termination of Executive’s employment with the Company.
3. Termination.
(a) Circumstances. Executive’s employment hereunder may be terminated by the Company or Executive, as applicable, without any breach of this Agreement under the following circumstances:
(i) Death. Executive’s employment hereunder shall terminate automatically upon Executive’s death.
(ii) Disability. If Executive has incurred a Disability, as defined below, the Company may terminate Executive’s employment.
(iii) Termination for Cause. The Company may terminate Executive’s employment for Cause, as defined below.
(iv) Termination without Cause. The Company may terminate Executive’s employment without Cause, which shall include Executive’s termination as a result of the Company delivering a Notice of Non-Renewal.
(v) Resignation from the Company with Good Reason. Executive may resign Executive’s employment with the Company with Good Reason, as defined below.
(vi) Resignation from the Company without Good Reason. Executive may resign Executive’s employment with the Company for any reason other than Good Reason or for no reason, which shall include Executive’s termination as a result of Executive delivering a Notice of Non-Renewal.
(b) Notice of Termination. During the Term, any termination of Executive’s employment by the Company or by Executive under this Section 3 (other than termination pursuant to Sections 3(a)(i)) shall be communicated by a written notice (a “Notice of Termination”) to the other Party hereto (i) indicating the specific termination provision in this Agreement relied upon, (ii) except with respect to a termination pursuant to Section 3(a)(iv) or 3(a)(vi), setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) specifying a Date of Termination (as defined below). Notwithstanding the foregoing, the Company may not terminate Executive’s employment for Cause unless and until (i) there has been delivered to Executive a letter from the Board finding that Executive has engaged in conduct set forth in the definition of Cause and specifying the particulars thereof in detail and (ii) Executive is given a reasonable opportunity, together with Executive’s counsel, to be heard before the Board, and, after such hearing, Executive is delivered a copy of a resolution duly adopted by the affirmative vote of the majority of the members of the Board, not counting Executive, finding that Executive has engaged in the specified conduct. The failure by either party to set forth in the Notice of Termination any fact or circumstance shall not waive any right of the party hereunder or preclude the party from asserting such fact or circumstance in enforcing the party’s rights hereunder.
(c) Termination Date. For purposes of this Agreement, “Date of Termination” shall mean the date of the termination of Executive’s employment with the Company, which, if Executive’s employment is terminated as a result of Executive’s death, will be the date of Executive’s death, and otherwise shall be the date specified in a Notice of Termination. Except in the case of a termination pursuant to Sections 3(a)(i) and (ii) above, the Date of Termination shall be at least fifteen (15) days following the date of the Notice of Termination or such later date as may be required pursuant to this Agreement. Notwithstanding the foregoing, (i) the Company may deliver its Notice of Termination to Executive that specifies any Date of Termination that occurs on or after the date of its Notice of Termination (subject to the procedures set forth herein for a Cause termination); (ii) in the event that Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, change the Date of Termination to any date that occurs on or following the date of the Notice of Termination and is prior to the Date of Termination specified in the Notice of Termination, and (iii) if the Executive’s employment is to terminate at the end of a Term, the Date of Termination shall be the last day of such Term.
(d) Deemed Resignation. Upon termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any of its subsidiaries.
4. Obligations upon a Termination of Employment.
(a) Company Obligations upon Termination. Upon termination of Executive’s employment pursuant to any of the circumstances listed in Section 3(a) above, Executive (or Executive’s estate) shall be entitled to receive the sum of: (i) the portion of Executive’s Annual Base Salary earned through the Date of Termination, but not yet paid to Executive, which shall be paid as described in Section 2(a) above; (ii) except in the event of a termination for Cause pursuant to Section 3(a)(iii), any unpaid Annual Bonus earned by Executive for the year prior to the year in which the Date of Termination occurs, as determined by the Board in its good faith discretion based upon actual performance achieved, which Annual Bonus, if any, shall be paid to Executive when bonuses for such year are paid to actively employed senior executives of the Company but in no event later than March 15 of the year in which the Date of Termination occurs; (iii) any expenses owed to Executive pursuant to Section 2(g) above, which shall be paid within thirty (30) days after the Date of Termination; (iv) any accumulated unused vacation, which shall be paid in a lump sum within thirty (30) days after the Date of Termination; and (v) any amount accrued and arising from Executive’s participation in, or benefits accrued under any employee benefit plans, programs or arrangements, which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements (collectively, the “Company Arrangements”). Except as otherwise expressly required by law or as specifically provided in a Company Arrangement or herein, all of Executive’s rights to salary, severance, benefits, bonuses and other compensatory amounts hereunder (if any) shall cease upon the termination of Executive’s employment hereunder.
(b) Executive’s Obligations upon Termination.
(i) Cooperation. For a period of five (5) years after the Date of Termination, Executive shall provide Executive’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during Executive’s employment hereunder; provided the Company shall indemnify and hold harmless Executive with respect to any such cooperation and reimburse Executive for Executive’s reasonable costs and expenses (including legal counsel selected by Executive and reasonably acceptable to the Company), within thirty (30) days after the incurrence by Executive of such costs and expenses, and such cooperation shall not unreasonably burden Executive or unreasonably interfere with any subsequent employment or other activities that Executive may undertake.
(ii) Return of Company Property. Executive hereby acknowledges and agrees that all Personal Property (as defined below) and equipment furnished to, or prepared by, Executive in the course of, or incident to, Executive’s employment, belongs to the Company and shall be promptly returned to the Company upon termination of Executive’s employment (and will not be kept in Executive’s possession or delivered to anyone else). For purposes of this Agreement, “Personal Property” includes, without limitation, all books, manuals, records, reports, notes, contracts, lists, blueprints, and other documents, or materials, or copies thereof (including computer files), keys, building card keys, company credit cards, telephone calling cards, computer hardware and software, laptop computers, docking stations, cellular and portable telephone equipment, personal digital assistant (PDA) devices and all other proprietary information relating to the business of the Company or its subsidiaries or affiliates. Notwithstanding the foregoing, Personal Property shall not include (i) copies of documents relating to any employee benefit plans applicable to Executive, (ii) income records to the extent necessary for Executive to prepare Executive’s individual tax returns, or (iii) any other records, notes, documents and property that are inconsequential or de minimis in value or that relate to Executive’s compensation, equity, tax records and other personal information. Following termination, Executive shall not retain any written or other tangible Personal Property containing any proprietary information of the Company or its subsidiaries or affiliates. Notwithstanding the foregoing, the Company shall provide Executive, for no less than thirty (30) days after termination of Executive’s employment, a reasonable opportunity to recover and obtain records, notes, documents and property that are personal to Executive and do not constitute Personal Property of the Company, and the Company will not retain any Executive property, information, documents and records, including without limitation Executive’s emails and similar electronic records, that the Company is not required by law to retain.
(c) Severance Payments upon a Termination without Cause or Resignation with Good Reason.
(i) If, during the Term and not in a Change in Control Period, Executive’s employment terminates pursuant to Section 3(a)(iv) above due to the Company’s termination without Cause or pursuant to Section 3(a)(v) above due to Executive’s resignation with Good Reason, then, subject to Executive’s delivery to the Company of an executed waiver and release of claims in a form approved by the Company (the “Release”) that becomes effective and irrevocable in accordance with Section 9(n) below, and Executive’s continued compliance with Section 5 below, Executive shall receive, in addition to the payments and benefits set forth in Section 4(a) above, the following:
(A) an amount in cash equal to twelve (12) months of Executive’s then-existing Annual Base Salary, payable, less applicable withholdings and deductions, in the form of salary continuation in regular installments over the 12-month period following the date of Executive’s Separation from Service in accordance with the Company’s normal payroll practices, no less frequently than monthly, with the first of such installments to commence on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise provided in Section 9(n) below;
(B) a pro-rated portion (based on the number of days Executive was employed by the Company during the calendar year in which the Date of Termination occurs) of the Annual Bonus that Executive would have earned had Executive remained employed through the end of the calendar year in which Executive’s Date of Termination occurs, as determined by the Board in good faith. If and to the extent earned, such pro-rated Annual Bonus shall be paid out at the same time annual bonuses are paid generally to other executives of the Company for the relevant year, less applicable withholdings and deductions, but in no event later than March 15th of the year immediately following that in which the Date of Termination occurs;
(C) the vesting and, if applicable, exercisability shall be accelerated (and, if applicable, all restrictions and rights of repurchase on such awards shall lapse) effective as of immediately prior to the Date of Termination with respect to that number of shares subject to Executive’s then outstanding equity awards that would have become vested during the twelve (12) month period following the Date of Termination as if Executive had remained employed by the Company through such date (excluding any such awards that vest in whole or in part based on the attainment of performance-vesting conditions, which shall be governed by the terms of the applicable award agreement); and
(D) during the period commencing on the Date of Termination and ending on the twelve (12) month anniversary thereof or, if earlier, the date on which Executive becomes eligible for comparable replacement coverage under a subsequent employer’s group health plan (in any case, the “COBRA Period”), subject to Executive’s valid election to continue healthcare coverage under Section 4980B of the Code and the regulations thereunder, the Company shall, in its sole discretion, either (A) continue to provide to Executive and Executive’s dependents, at the Company’s sole expense, or (B) reimburse Executive and Executive’s dependents for coverage under its group health plan (if any), at the same levels and costs in effect on the Date of Termination (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars); provided, however, that if (1) any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the continuation coverage period to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), (2) the Company is otherwise unable to continue to cover Executive or Executive’s dependents under its group health plans or (3) the Company cannot provide the benefit without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining Company subsidy shall thereafter be paid to Executive in substantially equal monthly installments over the COBRA Period (or remaining portion thereof).
(ii) If, during the Term and during a Change in Control Period, Executive’s employment terminates pursuant to Section 3(a)(iv) above due to the Company’s termination without Cause or pursuant to Section 3(a)(v) above due to Executive’s resignation with Good Reason, then, subject to Executive’s delivery to the Company of a Release that becomes effective and irrevocable in accordance with Section 9(n) below, and Executive’s continued compliance with Section 5 below, Executive shall receive, in addition to the payments and benefits set forth in Section 4(a) above (but without duplication of any payments payable pursuant to Section 4(c)(i)(A)), the following:
(A) an amount in cash equal to twelve (12) months of the sum of (1) Executive’s then-existing Annual Base Salary and (2) Executive’s Target Bonus, less applicable withholdings and deductions, payable in the form of salary continuation in regular installments over the twelve (12)-month period following the date of Executive’s Separation from Service in accordance with the Company’s normal payroll practices, no less frequently than monthly, with the first of such installments to commence on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise provided in Section 9(n) below; provided, however that (x) if Executive’s employment terminates under the circumstances described herein on or within twelve (12) months after the Change in Control (and provided such Change in Control constitutes a change in control event within the meaning of Section 409A of the Code), such amount will be paid in the form of a single lump sum in accordance with the Company’s normal payroll practices on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise set forth in Section 9(n) below, (y) if Executive’s employment terminates under the circumstances described herein within the six (6) months prior to the Change in Control (and such Change in Control constitutes a change in control event within the meaning of Section 409A of the Code), the portion of Executive’s severance that equals the Target Bonus will be paid in the form of a single lump sum in accordance with the Company’s normal payroll practices on the first regular payroll date following the later of the date the Release becomes effective and irrevocable or as otherwise set forth in Section 9(n) below and the date of the Change in Control, and (z) if Executive’s employment terminates under the circumstances described herein within the six (6) months prior to the Change in Control (and such Change in Control does not constitute a change in control event within the meaning of Section 409A of the Code), the portion of Executive’s severance that equals the Target Bonus will be paid in the form of a single lump sum in accordance with the Company’s normal payroll practices on the first regular payroll date following the later of the date the Release becomes effective and irrevocable or as otherwise set forth in Section 9(n) below and the date that is six (6) months after the Date of Termination;
(B) a pro-rated portion (based on the number of days Executive was employed by the Company during the calendar year in which the Date of Termination occurs) of the Annual Bonus that Executive would have earned had Executive remained employed through the end of the calendar year in which Executive’s Date of Termination occurs, as determined by the Board in good faith. If and to the extent earned, such pro-rated Annual Bonus shall be paid out at the same time annual bonuses are paid generally to other executives of the Company for the relevant year, less applicable withholdings and deductions, but in no event later than March 15th of the year immediately following that in which the Date of Termination occurs;
(C) the vesting and, if applicable, exercisability shall be accelerated (and, if applicable, all restrictions and rights of repurchase on such awards shall lapse) effective as of immediately prior to the Date of Termination with respect to 100% of the shares subject to Executive’s then outstanding equity awards (including any such awards that vest in whole or in part based on the attainment of performance-vesting conditions, which shall vest based on actual performance as of the Date of Termination and otherwise be governed by the terms of the applicable award agreement); and
(D) during the COBRA Period, subject to Executive’s valid election to continue healthcare coverage under Section 4980B of the Code and the regulations thereunder, the Company shall, in its sole discretion, either (A) continue to provide to Executive and Executive’s dependents, at the Company’s sole expense, or (B) reimburse Executive and Executive’s dependents for coverage under its group health plan (if any), at the same levels and costs in effect on the Date of Termination (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars); provided, however, that if (1) any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the continuation coverage period to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), (2) the Company is otherwise unable to continue to cover Executive or Executive’s dependents under its group health plans or (3) the Company cannot provide the benefit without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining Company subsidy shall thereafter be paid to Executive in substantially equal monthly installments over the COBRA Period (or remaining portion thereof).
(d) No Requirement to Mitigate; Survival. Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or in any other manner. Notwithstanding anything to the contrary in this Agreement, the termination of Executive’s employment shall not impair the rights or obligations of any Party.
(e) No Other Severance. Executive shall not be entitled to any severance benefits, pay in lieu of notice, or other similar benefits from the Company in connection with Executive’s termination other than as set forth herein.
(f) Survival. Notwithstanding anything to the contrary in this Agreement, the provisions of Sections 5 through 9 of this Agreement will survive the termination of Executive’s employment and the termination of the Term.
5. Restrictive Covenants and Confidentiality.
As a condition to the effectiveness of this Agreement, Executive will execute and deliver to the Company contemporaneously herewith Exhibit B, the Loyalty Agreement. Executive agrees to abide by the terms of the Loyalty Agreement, which are hereby incorporated by reference into this Agreement. Executive acknowledges that the provisions of the Loyalty Agreement will survive the termination of Executive’s employment and the termination of the Term for the periods set forth in the Loyalty Agreement. Notwithstanding any other provision of this Agreement, no payment shall be made or benefit provided pursuant to Section 4(c) following the date Executive first violates any of the restrictive covenants set forth in the Loyalty Agreement, and as of the first date on which Executive violates any such restrictive covenants, Executive shall pay the Company an amount equal to the sum of all payments theretofore paid to Executive pursuant to Section 4(c).
6. Assignment and Successors.
The Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise). This Agreement shall be binding upon and inure to the benefit of the Company, Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only by will or the laws of descent and distribution or operation of law. Notwithstanding the foregoing, Executive shall be entitled, to the extent permitted under applicable law and Company Arrangements, to select and change a beneficiary or beneficiaries to receive compensation hereunder following Executive’s death by giving written notice thereof to the Company.
7. Certain Definitions.
(a) Board. The “Board” shall mean the Board of Directors of the Company or an authorized committee of the Board.
(b) Cause. “Cause” shall mean any of the following:
(i) Executive’s commission of any act or omission that results in, or may reasonably be expected to result in, a conviction of (or plea of no contest or nolo contendere to) any felony (other than in connection with a traffic violation that does not result in imprisonment) under any state, federal or foreign law or any crime involving moral turpitude or dishonesty or that would reasonably be expected to cause material reputational or other material harm or damage to the Company;
(ii) Executive’s commission of an act of fraud, embezzlement, misappropriation of funds, material malfeasance, breach of fiduciary duty or other willful and material act of misconduct, in each case, against the Company;
(iii) any willful, material damage to any material property of the Company by Executive;
(iv) Executive’s willful, intentional and repeated failure to substantially perform Executive’s material job functions hereunder (other than any such failure resulting from Executive’s Disability or during periods of illness), which failure has not been cured (or cannot be cured) within thirty (30) days after the Company gives written notice to Executive regarding such failure;
(v) Executive’s breach of any Policy causing material reputational or other material harm or damage to the Company, which breach has not been cured (or cannot be cured) within thirty (30) days after the Company gives written notice to Executive regarding such breach;
(vi) Executive’s unlawful use (including being under the influence) of illegal drugs or continued excessive use of alcohol, in each case that materially impairs Executive’s ability to perform Executive’s duties contemplated hereunder;
(vii) Any grossly negligent or reckless act by Executive resulting in or causing material reputational or other material harm or damage to the Company; and
(viii) Executive’s material breach of this Agreement, the Loyalty Agreement or any other written agreement between Executive and the Company and failure to cure such breach (if capable of cure) within thirty (30) days after the Company gives written notice to Executive regarding such breach.
For purposes of this definition, an action or inaction is only “willful” if it is done or omitted by Executive without a good faith and reasonable belief that such action or inaction is in the best interests of the Company or any of its affiliates. The failure by the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing the Company’s rights hereunder. Notwithstanding the foregoing, a termination for Cause shall be deemed to occur if following Executive's termination of employment for any reason the Company determines that circumstances existing prior to such termination would have entitled the Company to terminate Executive's employment for Cause.
(c) Change in Control. “Change in Control” shall have the meaning set forth in the version of the Company’s 2020 Incentive Award Plan in effect on the Effective Date.
(d) Change in Control Period. “Change in Control Period” shall mean either of (i) the six (6)-month period prior to the consummation of a Change in Control; provided that such period shall begin no earlier than the date the Company commences substantial discussions to effect a transaction that would constitute a Change in Control if consummated, and (ii) the period beginning upon the consummation of a Change in Control and ending twelve (12) months following the consummation of such Change in Control.
(e) Code. “Code” shall mean the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder.
(f) Disability. “Disability” shall mean a disability within the meaning of Section 22(e)(3) of the Code, as it may be amended from time to time. Any determination of the Executive’s Disability made in good faith by the Board shall be conclusive and binding on the Executive, unless within ten (10) days after written notice to the Executive of such determination, the Executive elects by written notice to the Company to challenge such determination, in which case determination of Disability shall be made by arbitration pursuant to Section 9(i) below.
(g) Good Reason. For the sole purpose of determining Executive’s right to severance payments and benefits as described above, “Good Reason” shall mean any one of the following, that occurs without Executive’s written consent:
(i) a material reduction in Executive’s Annual Base Salary (except pursuant to the last sentence of Section 2(a)) or Target Bonus;
(ii) a material diminution in Executive’s duties, authority or responsibilities, including any requirement that Executive report directly to anyone other than the Board, or the assignment to Executive of any duties, authority or responsibilities that are materially inconsistent with Executive’s position as the Chief Executive Officer of the Company, other than any change made solely in connection with the adoption by the Board, following the Effective Date, of customary delegation of authority guidelines setting forth the roles of Executive and other employees of the Company covering levels of approvals required for the taking of certain actions based on thresholds that are customary for a company of the size and market capitalization of the Company;
(iii) the relocation of Executive’s primary place of employment to a location more than fifty (50) miles from the Company’s primary office located in Richmond, Virginia;
(iv) the failure of the Board to nominate Executive for election or re-election as a member of the Board and continue to take such action as may be necessary to appoint or elect Executive to serve as a member of the Board, to the extent not prohibited by legal or regulatory requirements; and
(v) a material breach by the Company of this Agreement or any other written agreement with Executive.
Notwithstanding the foregoing, no Good Reason will have occurred unless and until: (A) Executive has provided the Company, within sixty (60) days of becoming aware of the initial occurrence of the Good Reason event, written-notice stating with specificity the applicable facts and circumstances underlying such finding of Good Reason; and (B) the Company or the successor company fails to cure such condition within forty-five (45) days after receiving such written notice (the “Cure Period”) and (C) Executive’s resignation based on such Good Reason is effective within thirty (30) days after expiration of the Cure Period with the Company or the successor company having failed to cure same.
8. Parachute Payments.
(a) Notwithstanding any other provisions of this Agreement or any Company Arrangement, in the event that any payment or benefit by the Company or otherwise to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (all such payments and benefits, including the payments and benefits under Section 4 above, being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments shall be reduced (in the order provided in Section 8(b) below) to the minimum extent necessary to avoid the imposition of the Excise Tax on the Total Payments, but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income and employment taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income and employment taxes on such Total Payments and the amount of the Excise Tax to which Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).
(b) The Total Payments shall be reduced in the following order: (i) reduction on a pro-rata basis of any cash severance payments that are exempt from Section 409A of the Code (“Section 409A”), (ii) reduction on a pro-rata basis of any non-cash severance payments or benefits that are exempt from Section 409A, (iii) reduction on a pro-rata basis of any other payments or benefits that are exempt from Section 409A, and (iv) reduction of any payments or benefits otherwise payable to Executive on a pro-rata basis or such other manner that complies with Section 409A; provided, in case of subclauses (ii), (iii) and (iv), that reduction of any payments attributable to the acceleration of vesting of Company equity awards shall be first applied to Company equity awards that would otherwise vest last in time.
(c) The Company will select an adviser with experience in performing calculations regarding the applicability of Section 280G of the Code and the Excise Tax, provided that the adviser’s determination shall be made based upon “substantial authority” within the meaning of Section 6662 of the Code (the “Independent Advisors”) to make determinations regarding the application of this Section 8. The Independent Adviser shall provide its determination, together with detailed supporting calculations and documentation, to Executive and the Company within fifteen (15) business days following the date on which Executive’s right to the Total Payments is triggered, if applicable, or such other time as requested by Executive (provided that Executive reasonably believes that any of the Total Payments may be subject to the Excise Tax) or the Company. Additionally, the Company agrees to engage the Independent Advisor to perform or obtain an independent valuation of any non-compete covenants to which Executive is a party in order to allocate an appropriate value to such non-compete for purposes of the applicability of Section 280G of the Code. The costs of obtaining such determinations and all related fees and expenses (including related fees and expenses incurred in any later audit) shall be borne by the Company. Any good faith determinations of the Independent Adviser made hereunder shall be final, binding and conclusive upon the Company and Executive.
(d) In the event it is later determined that to implement the objective and intent of this Section 8, (i) a greater reduction in the Total Payments should have been made, the excess amount shall be returned promptly by Executive to the Company or (ii) a lesser reduction in the Total Payments should have been made, the excess amount shall be paid or provided promptly by the Company to Executive, except to the extent the Company reasonably determines would result in imposition of an excise tax under Section 409A.
9. Miscellaneous Provisions.
(a) Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the Commonwealth of Virginia without reference to the principles of conflicts of law of the Commonwealth of Virginia or any other jurisdiction that would result in application of the laws of a jurisdiction other than the Commonwealth of Virginia, and where applicable, the laws of the United States.
(b) Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(c) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses or e-mail addresses (or at such other address or email address for a party as shall be specified in a notice given in accordance with this Section 9(c)):
(i) If to the Company:
CarLotz, Inc.
611 Bainbridge Street, Suite 100
Richmond, VA 23224
Attn: Board of Directors
With a copy to:
Freshfields Bruckhaus Deringer LLP
601 Lexington Ave,
New York, NY 10022
Attn: Valerie Jacob and Lori Goodman
Valerie.Jacob@freshfields.com
Lori.Goodman@freshfields.com
(ii) If to Executive, to the last address that the Company has in its personnel records for Executive, or
(iii) At any other address as any Party shall have specified by notice in writing to the other Party.
(d) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile or PDF shall be deemed effective for all purposes.
(e) Entire Agreement. The terms of this Agreement, the Loyalty Agreement, any indemnification agreement between the Company and Executive and any equity award agreement between the Company and Executive are intended by the Parties to be the final expression of their agreement with respect to the subject matter hereof and supersede all prior understandings and agreements, whether written or oral, including without limitation any prior employment agreement, offer letter between Executive and the Company (including the Prior Agreement) and any prior bonus agreement, including that certain bonus agreement between Executive and the Company dated February 17, 2020; provided that the equity acceleration provisions in this Agreement shall supersede the provisions of any equity award agreement between the Company and Executive. The Parties further intend that this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.
(f) Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by Executive and a duly authorized representative of Company. By an instrument in writing similarly executed, Executive or a duly authorized representative of the Company may waive compliance by the other Party with any specifically identified provision of this Agreement that such other Party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.
(g) No Inconsistent Actions. The Parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the Parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.
(h) Construction. This Agreement shall be deemed drafted equally by both the Parties. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any Party shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (i) the plural includes the singular and the singular includes the plural; (ii) “and” and “or” are each used both conjunctively and disjunctively; (iii) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (iv) “includes” and “including” are each “without limitation”; (v) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (vi) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.
(i) Arbitration. Any controversy, claim or dispute arising out of or relating to this Agreement, shall be settled solely and exclusively by a binding arbitration process administered by JAMS/Endispute in the State of Virginia. Such arbitration shall be conducted in accordance with the then-existing JAMS/Endispute Rules of Practice and Procedure. The arbitrator shall: (i) provide adequate discovery for the resolution of the dispute; and (ii) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award. The arbitrator shall award the prevailing Party attorneys’ fees and expert fees, if any. The Parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and conclusive. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided, however, that nothing in this subsection shall be construed as precluding the bringing of an action for injunctive relief or specific performance as provided in this Agreement or the Confidentiality Agreement. This dispute resolution process and any arbitration hereunder shall be confidential and neither any Party nor the neutral arbitrator shall disclose the existence, contents or results of such process without the prior written consent of all Parties, except where necessary or compelled in a court to enforce this arbitration provision or an award from such arbitration or otherwise in a legal proceeding. If JAMS/Endispute no longer exists or is otherwise unavailable, the Parties agree that the American Arbitration Association (“AAA”) shall administer the arbitration in accordance with its then-existing rules as modified by this subsection. In such event, all references herein to JAMS/Endispute shall mean AAA. Executive and the Company understand that by agreement to arbitrate any claim pursuant to this Section 9(i), they will not have the right to have any claim decided by a jury or a court, but shall instead have any claim decided through arbitration. Executive and the Company waive any constitutional or other right to bring claims covered by this Agreement other than in their individual capacities. Except as may be prohibited by applicable law, the foregoing waiver includes the ability to assert claims as a plaintiff or class member in any purported class or representative proceeding. Notwithstanding the foregoing, Executive and the Company each have the right to resolve any issue or dispute over intellectual property rights by court action instead of arbitration.
(j) Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the Term, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
(k) Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges that the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.
(l) Whistleblower Protections and Trade Secrets. Notwithstanding anything to the contrary contained herein, nothing in this Agreement prohibits Executive from reporting possible violations of federal law or regulation to any United States governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation (including the right to receive an award for information provided to any such government agencies). Furthermore, in accordance with 18 U.S.C. § 1833, notwithstanding anything to the contrary in this Agreement: (i) Executive shall not be in breach of this Agreement, and shall not be held criminally or civilly liable under any federal or state trade secret law (A) for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (B) for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (ii) if Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Executive may disclose the trade secret to Executive’s attorney, and may use the trade secret information in the court proceeding, if Executive files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.
(m) Section 409A.
(i) General. The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A. All amounts payable to the Executive pursuant to Section 4(b)] shall, to the maximum extent permitted by Section 409A, be made in reliance on Section 1.409A-1(b)(9) (Separation Pay Plans) or Section 1.409A-1(b)(4) (Short-Term Deferrals) of the Department of Treasury regulations.
(ii) Separation from Service. Notwithstanding anything in this Agreement to the contrary, any compensation or benefits payable under this Agreement that is considered nonqualified deferred compensation under Section 409A and is designated under this Agreement as payable upon Executive’s termination of employment shall be payable only upon Executive’s “separation from service” with the Company within the meaning of Section 409A (a “Separation from Service”).
(iii) Specified Employee. Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (A) the expiration of the six (6)-month period measured from the date of Executive’s Separation from Service with the Company or (B) the date of Executive’s death. Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.
(iv) Expense Reimbursements. To the extent that any reimbursements under this Agreement are subject to Section 409A, any such reimbursements payable to Executive shall be paid to Executive no later than December 31st of the year following the year in which the expense was incurred; provided that Executive submits Executive’s reimbursement request promptly following the date the expense is incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, other than medical expenses referred to in Section 105(b) of the Code, and Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.
(v) Installments. Executive’s right to receive any installment payments under this Agreement, including without limitation any continuation salary payments that are payable on Company payroll dates, shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A.
(n) Release. Notwithstanding anything to the contrary in this Agreement, to the extent that any payments due under this Agreement as a result of Executive’s termination of employment are subject to Executive’s execution and delivery of a Release, (i) the Company shall deliver the Release to Executive within ten (10) business days following Executive’s Date of Termination, and the Company’s failure to deliver a Release prior to the expiration of such ten (10) business day period shall constitute a waiver of any requirement to execute a Release, (ii) if Executive fails to execute the Release on or prior to the Release Expiration Date (as defined below) or timely revokes Executive’s acceptance of the Release thereafter, Executive shall not be entitled to any payments or benefits otherwise conditioned on the Release, and (iii) in any case where Executive’s Date of Termination and the last day of the applicable revocation period fall in two separate taxable years, any payments required to be made to Executive that are conditioned on the Release and are treated as nonqualified deferred compensation for purposes of Section 409A shall be made in the later taxable year. For purposes hereof, “Release Expiration Date” shall mean the date that is twenty-one (21) days following the date upon which the Company timely delivers the Release to Executive, or, in the event that Executive’s termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date. To the extent that any payments of nonqualified deferred compensation (within the meaning of Section 409A) due under this Agreement as a result of Executive’s termination of employment are delayed pursuant to this Section 9(n), such amounts shall be paid in a lump sum on the first payroll date following the date that Executive executes and does not revoke the Release (and the applicable revocation period has expired) or, in the case of any payments subject to Section 9(n)(iii), on the first payroll period to occur in the subsequent taxable year, if later.
10. Executive Acknowledgement.
Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on Executive’s own judgment.
[Signature Page Follows]
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and year first above written.
CARLOTZ, INC. | ||
By: | /s/ Elizabeth Sanders | |
Name: Elizabeth Sanders | ||
Title: Chief Administrative Officer | ||
EXECUTIVE | ||
/s/ Michael W. Bor | ||
Michael W. Bor |
EXHIBIT A
CURRENT SERVICE
Virginia Motor Vehicle Dealer Board
Sheltering Arms Foundation
World Pediatric Project (Finance Committee)
2
EXHIBIT B
LOYALTY AGREEMENT
CARLOTZ, INC.
LOYALTY AGREEMENT
THIS AMENDED AND RESTATED LOYALTY AGREEMENT (this “Agreement”) is made as of December 11, 2020 (the “Effective Date”), by and between CarLotz, Inc., a Delaware corporation (the “CarLotz”), and Michael W. Bor (“I” or “me”). This Agreement is referenced as Exhibit B to the employment agreement between the Company and Executive dated December 11, 2020 (the “Employment Agreement”).
NOW, THEREFORE, in exchange and consideration for (a) my being employed as an employee, officer, director, or independent contractor of (i) CarLotz, (ii) any affiliate of CarLotz, and/or (iii) any entity with respect to which more than 30% of the outstanding shares or other equity interests thereof are owned, directly or indirectly, by CarLotz (each of (i), (ii) or (iii) for whom I am so employed at any time after the date hereof or for any of whose customers I provide services or products within the Restricted Business (as defined below) on behalf of any of (i), (ii) or (iii) at any time after the date hereof, jointly and severally and together with any successors and assignees under Section 14(d) below, the “Company”), and all wages, salary, bonuses, compensation, and benefits associated with my employment as an employee (whether full-time, part-time, or casual), officer, manager, director, or independent contractor of the Company and (b) for other good and valuable consideration, the receipt and sufficiency of which I hereby acknowledge, do hereby agree as follows:
1. Not an Employment Agreement. I agree, understand and acknowledge that this Agreement is not an employment agreement.
2. Confidential Information.
(a) Company Information. I agree at all times during the term of my employment and during the five (5) years thereafter, to hold in strictest confidence, and not to use (except for the benefit of the Company to fulfill my obligations to it) or to disclose to any person, firm or corporation without written authorization of the Board of Directors of the Company (the “Board”), any Confidential Information of the Company. I agree that “Confidential Information” means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, any non-public research, product or service plans, products, services, customer lists, investor lists, and customers and investors (including, but not limited to, customers of the Company on whom I called, to whom I rendered services or provided products or with whom I became acquainted during the term of my employment), pricing, costs, markets, summaries, investment strategies, marketing strategies and other strategies, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration, marketing, financial information or other business information obtained by me or disclosed to me by the Company or any other person or entity during the term of and in connection with my employment with the Company either directly or indirectly in writing, orally by drawings, by observation of services, products, systems or other aspects of the Company’s business or otherwise.
(b) Former Employer Information. I agree that I will not, during my employment with the Company, improperly use or disclose any proprietary information or trade secrets of any former or concurrent employer or other person or entity and that I will not bring onto the premises of the Company any unpublished or published document containing confidential or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
(c) Inventions.
(i) Inventions Contributed, Retained and Licensed. I hereby contribute, transfer and assign to the Company all of my right, title and interest in and to any and all patents, patents pending, discoveries, copyrights, trademarks, service marks, original works of authorship, developments, inventions, trade secrets, improvements, enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable, which are related to any items, ideas or activities described on Exhibit C (collectively, “Prior Inventions”), except for those Prior Inventions listed on Exhibit D hereto, ownership of which I hereby retain (“Retained Inventions”). I represent that Exhibit D is a complete list of my Retained Inventions that I desire to have specifically excluded from my obligations under this Section. If no items are listed on Exhibit D, I hereby represent that there are no such Retained Inventions. If in the course of my employment with the Company, I incorporate into a Company product, process or service a Retained Invention owned by me or in which I have an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide, unlimited license to make, have made, modify, use and sell such Retained Invention as part of or in connection with such products, process or service.
(ii) Assignment of Future Inventions.
(a) I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and shall contribute, transfer and assign to the Company, or its designee, all my right, title, and interest in and to any and all patents, patents pending, copyrights, trademarks, service marks, discoveries, original works of authorship, developments, inventions, trade secrets, improvements, enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable, under copyright or similar laws, including without limitation all goodwill associated with the foregoing, which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice during the period of time I am in the employ of the Company (collectively referred to as “Inventions”), but excluding Excluded Inventions (as defined in Section 2(c)(ii)(b) below). I further acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of and during the period of my employment with the Company and which are protected by copyright are “works made for hire,” as that term is defined in the United States Copyright Act. I shall not knowingly incorporate any invention, original work of authorship, development, improvement, or trade secret owned, in whole or in part, by any third party, into any Invention without the Company’s prior written permission.
2
(b) Inventions covered by Section 2(c)(ii)(a) above do not include any invention that I develop entirely on my own time and to which all of the following apply: (x) its development did not involve the use of any equipment, supplies, facilities or trade secret or proprietary information of the Company; (y) it is not related to or useful to a Restricted Business; and (z) it does not result from any work performed by me for the Company. In addition, the Inventions covered by Section 2(c)(ii)(a) above do not include any Retained Inventions. The inventions described in this Section 2(c)(ii)(b) are collectively referred to as “Excluded Inventions.”
(iii) Maintenance of Records. I agree to keep and maintain adequate and current written records of all Inventions made by me (solely or jointly with others) during the term of and in connection with my employment with the Company. The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company. The records will be available to and remain the sole property of the Company at all times.
(iv) Registrations. I agree to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the Inventions and any copyrights, patents, trademarks, service marks, or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, trademarks, service marks or other intellectual property rights relating thereto. I further agree that my obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of my mental or physical incapacity or for any other reason to secure my signature to apply for or to pursue any application for any United States or foreign patents, copyright, trademarks, service marks, or other intellectual property registrations covering Inventions or original works of authorship assigned to the Company as above, then I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright, trademark, service mark, or other intellectual property registrations contemplated by this Section 2(c)(iv) with the same legal force and effect as if executed by me. THIS POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE.
3
(d) Third Party Information. I recognize that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. I agree to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out my work for the Company consistent with the Company’s agreement with such third party.
3. Conflicting Employment. Without limiting the application of Section 10 below, I agree that, during the term of my employment with the Company, I will not engage in any other employment, occupation, consulting or other business activity directly related to the Restricted Business without the advance written approval of the Board of the Company. Nor will I engage in any other activities that conflict with the business of the Company. Furthermore, I agree to devote such time as may be necessary to fulfill my obligations to the Company.
4. Returning Company Property. I agree that, at the time of leaving the employ of the Company, I will deliver to the Company (and will not keep in my possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items developed by me or others pursuant to or during my employment with the Company or otherwise belonging to the Company, its successors or assigns (“Company Property”); provided, however, these restrictions shall not apply to records, notes, documents and property that are inconsequential or de minimis in value or that relate to my compensation, equity, tax records and other personal information. In the event of the termination of my employment, I agree to certify in writing that I have returned all Company Property to the Company.
5. Notification of New Employer. In the event that I leave the employ of the Company, I hereby grant consent to notification by the Company to my new employer (whether I am employed as an employee, consultant, independent contractor, director, partner, officer, advisor, executive or manager) about my obligations under this Agreement and delivery by the Company of a copy of this Agreement to any such new employer. For purposes of this Agreement, so long as I am employed by any entity that is a “Company” as defined herein, my employment by the Company shall not be deemed to have terminated or expired.
6. Non-Solicitation. I agree that while I am employed by the Company and (a) in the event I terminate my employment without Good Reason (as defined below) or the Company terminates my employment for Cause (as defined below) (either event, a “Fault Event”), for a period of two (2) years immediately following any such termination of my employment with the Company, or (b) in the event of a termination or expiration of my employment with the Company for any other reason, for a period of one (1) year immediately following the termination or expiration of my employment with the Company, I shall not directly or indirectly, either on behalf of myself or any other person or entity, (i) intentionally solicit, induce, recruit or encourage any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company to leave his, her or its employment or engagement with the Company, or attempt to solicit, recruit, or take away any such employees or independent contractors (or induce or encourage any such employee or independent contractor to terminate its employment or engagement with the Company); provided that after termination or expiration of my employment, this provision shall only apply to those employees or independent contractors of the Company who (A) are current employees or independent contracts of the Company and (B) were such at any time within 12 months prior to the date of such termination or expiration, (ii) intentionally interfere in any manner with the contractual or employment relationship between the Company and any employee, independent contractor, Customer (as defined below) or supplier of the Company or cause any such employee, independent contractor, Customer or supplier to cease employment with, cease doing business with or reduce the amount of business it does with the Company; provided that after termination or expiration of my employment, this provision shall apply only to the employees, independent contractors, Customers or suppliers of the Company who (A) are current employees, independent contractors, Customers or suppliers of the Company and (B) were such at any time within 12 months prior to such termination or expiration, (iii) after termination or expiration of my employment, hire or otherwise employ any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company or who has provided services to or on behalf of the Company at any time during the prior three month period, or (iv) whether as a direct solicitor or provider of such services or products, or in a management or supervisory capacity over others who solicit or provide such services or products, intentionally solicit or provide services or products that fall within the definition of Restricted Business to any Customer of the Company; provided that after the expiration or termination of my employment, this provision shall only apply to those customers of the Company who are current Customers and were Customers at any time within 12 months prior to the termination or expiration of my employment with the Company. “Customer” shall mean those persons or affiliates to which the Company has rendered services or provided products within the last three months that fall within the definition of Restricted Business (including, for the avoidance of doubt, commercial clients of the Company that provide vehicles to the Company in connection with the services provided by the Company). The terms “Cause” and “Good Reason” shall have the respective meanings signed to each such term in the Employment Agreement.
4
7. Covenants not to Compete. For purposes of this Agreement, the term “Non- Compete Period” shall mean a period from the date hereof until in the case of a Fault Event, two (2) years immediately following the date of termination or expiration of my employment with the Company, or in the event of a termination or expiration for any other reason, for a period of one (1) year immediately following the termination or expiration of my employment with the Company. During the Non-Compete Period, I covenant and agree that I will not, directly or indirectly, (i) own or hold, directly or beneficially, as a shareholder (other than as a shareholder with less than 3% of the outstanding common stock of a publicly traded corporation), option holder, warrant holder, partner, member or other equity or security owner or holder of any company or business that derives revenue from the Restricted Business (as defined below) within the Restricted Area (as defined below), or any company or business controlling, controlled by or under common control with any company or business directly engaged in such Restricted Business within the Restricted Area (any of the foregoing, a “Restricted Company”) or (ii) engage or participate as an employee, director, officer, manager, executive, partner, independent contractor, consultant or technical or business advisor (or any foreign equivalents of the foregoing) in the Restricted Activities within the Restricted Area. Nothing in this Section 7 shall preclude me from accepting employment with a multi-division company so long as (x) my employment is not within a division of my new employer that engages in the Restricted Business within the Restricted Area, (y) during the course of such employment, I do not communicate related to Restricted Activities with any division of my new employer engaged in the Restricted Business within the Restricted Area and (z) I do not engage in the Restricted Activities within the Restricted Area.
(a) For purposes of this Agreement, the terms “Restricted Activities” and “Restricted Business” shall have the meanings given to them in Exhibit E hereto, and the term “Restricted Area” shall have the following meaning: (i) City of Richmond, Virginia, (ii) any municipality wherein the Company operates the Restricted Business if the Company operated such Restricted Business in such location at any time during the 12 months immediately preceding the termination or expiration of my employment, (iii) any municipality wherein the Company operates the Restricted Business or plans to operate the Restricted Business if the Company planned to operate the Restricted Business in such location as of the termination or expiration of my employment, (iv) any municipality wherein an office of the Company is located, in which office I was physically present while rendering services or providing products in behalf of the Company at any time during the 12 months immediately preceding the termination or expiration of my employment, (v) the area within 50 miles of the municipal limits of each of the foregoing and (vi) any other area in the United States of America.
5
(b) In the event that I intend to associate (whether as an employee, consultant, independent contractor, officer, manager, advisor, partner, executive or director) with any Restricted Company during the Non-Compete Period, I must provide information in writing to the Board relating to the activities proposed to be engaged in by me for such Restricted Company. In the event that the Board consents in writing to my engagement in such activity, the engaging in such activity by me shall be conclusively deemed not to be a violation of Section 7 hereof and the Company may not seek its remedies under Section 8 below with respect to my engaging in such activity.
(c) Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be construed to prohibit any activity which cannot reasonably be construed to further in any meaningful way any competition against the Company.
8. Specific Enforcement; Remedies Cumulative; Attorney Fees. I acknowledge that the Company will be irreparably injured if the provisions of Sections 2, 4, 6 and 7 hereof are not specifically enforced and I agree that the terms of such provisions (including without limitation the periods set forth in Sections 6 and 7) are reasonable and appropriate. If I commit or, in the reasonable belief of the Company, threaten to commit a breach of any of the provisions of Sections 2, 4, 6 and 7 hereof, the Company shall have the right and remedy, in addition to and not in limitation of any other remedy that may be available at law or in equity, to have the provisions of Sections 2, 4, 6 and 7 hereof specifically enforced by any court having jurisdiction through immediate injunctive and other equitable relief, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy therefor. Such injunction shall be available without the posting of any bond or other security. Each party agrees to pay to the other party the other party’s reasonable attorney’s fees and court costs in obtaining, or defending against, the enforcement of, or determining the validity of, this Agreement or any provision hereof, whether in an action, suit, motion or matter brought by me or the Company (or any other person or entity), provided the other party is the prevailing party in such action, suit, motion or matter.
9. Re-Set of Period for Non-Competition and Non-Solicitation. In the event that a legal or equitable action is commenced with respect to any of the provisions of Section 6 or Section 7 hereof and I have not strictly observed the provisions in such sections with respect to which such action has been commenced then the one-year or two-year periods, as applicable, described in such sections not strictly observed by me shall begin to run anew from the date of any Final Judicial Determination of such legal action. “Final Judicial Determination” shall mean the expiration of time to file any possible appeal from a final judgment in such legal action or, if an appeal is taken, the final determination of the final appellate proceeding and that any failure to do so shall constitute a breach of the provisions hereof.
10. Conflict of Interest Guidelines. I agree to diligently adhere to the Company’s policies, including any policy pertaining to conflicts of interest. I agree that if I do not adhere to any of the provisions of such guidelines, I will be in breach of the provisions hereof.
11. Representations. I agree to execute any proper oath or verify any proper document required to carry out the terms of this Agreement. I represent that my performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any oral or written agreement in conflict herewith and my employment by the Company and my services to the Company will not violate the terms of any oral or written agreement to which I am a party.
6
12. Company Opportunity. During the term of my employment, I shall submit to the Board all business, commercial and investment opportunities or offers presented to me or of which I become aware which relate to the business of the Company at any time during such term (“Company Opportunities”). Unless approved in advance in writing by the Board, I shall not accept or pursue, directly or indirectly, any Company Opportunities on my own behalf.
13. Cooperation. During the term of my employment and thereafter, I shall cooperate with the Company in any internal investigation, any administrative, regulatory or judicial investigation or proceeding or any dispute with a third party as reasonably requested by the Company (including, without limitation, my being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information and turning over to the Company all relevant documents which are or may come into my possession, all at times and on schedules that are reasonably consistent with my other permitted activities and commitments). In the event the Company requires my cooperation in accordance with this Section, the Company shall reimburse me solely for reasonable travel expenses (including lodging and meals) upon submission of receipts.
14. General Provisions.
(a) Governing Law; Interpretation; Venue; Waiver of Jury Trial. This Agreement will be governed by the internal substantive laws, but not the choice of law rules, of the Commonwealth of Virginia. Nothing in this Agreement shall be construed to prohibit activity could not be in any way competition with the Company or could not help in any way another company or me to compete with the Company.
(i) THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE FOLLOWING COURTS IN MATTERS RELATED TO THIS AGREEMENT OR MY EMPLOYMENT WITH THE COMPANY AND AGREE NOT TO COMMENCE ANY SUIT, ACTION OR PROCEEDING RELATING THERETO EXCEPT IN ANY OF SUCH COURTS: THE ST ATE COURTS OF THE COMMONWEALTH OF VIRGINIA OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA.
(ii) I AGREE TO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY ME, AND I ACKNOWLEDGE THAT, EXCEPT FOR THE COMPANY’S AGREEMENT TO LIKEWISE WAIVE ITS RIGHTS TO A TRIAL BY JURY (WHICH THE COMPANY HEREBY MAKES), COMPANY HAS NOT MADE ANY REPRESENTATIONS OF FACTS TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. I FURTHER ACKNOWLEDGE THAT I HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF MY OWN FREE WILL, AND THAT I HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. I FURTHER ACKNOWLEDGE THAT I HAVE READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF THIS WAIVER AND AS EVIDENCE OF THIS FACT SIGN THIS AGREEMENT BELOW.
7
(b) Entire Agreement. This Agreement (including the recitals hereto, which are hereby made a binding part of this Agreement, and the Exhibits hereto) sets forth the entire agreement and understanding between the Company and me relating to the subject matter herein and therein and, effective as of the date hereof, merges and supersedes all prior discussions and agreements between the Company and me relating thereto. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the party to be charged.
(c) Severability. If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.
(d) Successors and Assigns. This Agreement will be binding after my death upon my heirs, executors, administrators and other legal representatives, but shall otherwise not be assignable by me. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. The Company may assign this Agreement to any successor to the Company (whether by merger or otherwise) and any corporation or other entity to which the Company may, directly or indirectly, be sold or transfer all or substantially all of its assets and business, in which case the term “Company,” as used herein, shall mean such corporation or other successor entity.
(e) Reformation. If the provisions of this Agreement should ever be adjudicated to exceed the time, geographic, service, product or other limitations permitted by applicable law in any jurisdiction, I agree that such provisions shall be deemed reformed in such jurisdiction so as to continue to apply to the maximum time, geographic, service, product or other limitations permitted by law in such jurisdiction.
(f) Survival. Notwithstanding the expiration of my employment with the Company, either as an employee, officer, director, or independent contractor, my obligations under Sections 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14 hereof shall survive and remain in full force and effect and the Company shall be entitled to equitable relief against me pursuant to the provisions of Section 8.
(g) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses or e-mail addresses (or at such other address or email address for a party as shall be specified in a notice given in accordance with this Section 14(g)):
8
(i) If to the Company:
CarLotz, Inc.
611 Bainbridge Street, Suite 100
Richmond, VA 23224
Attn: Board of Directors
With a copy to:
Freshfields Bruckhaus Deringer LLP
601 Lexington Ave,
New York, NY 10022
Attn: Valerie Jacob and Lori Goodman
Valerie.Jacob@freshfields.com
Lori.Goodman@freshfields.com
(ii) If to Executive, to the last address that the Company has in its personnel records for Executive, or
(iii) At any other address as any Party shall have specified by notice in writing to the other Party.
(h) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile or PDF shall be deemed effective for all purposes.
15. Counsel. This Agreement has been prepared in part by counsel to the Company, after full disclosure of its representation of the Company and with the consent and direction of all parties. I have reviewed the contents of this Agreement and fully understand its terms. I acknowledge that I am fully aware of my right to seek independent advice and the risks in not seeking such independent advice, and that I fully understand the potentially adverse interests of the parties with respect to this Agreement. I further acknowledge that neither the Company nor its Counsel has made representations or given any advice to me with respect to the consequences of this Agreement or any matters contemplated by this Agreement and that I have been advised of the importance of seeking independent counsel with respect to such consequences. By executing this Agreement, I represent that I have, after being advised of the potential conflicts between me and the Company with respect to the future consequences of this Agreement, either consulted independent legal counsel or elected, notwithstanding the advisability of seeking such independent legal counsel, not to consult with such independent legal counsel. I hereby agree at in interpretation or construction of this Agreement, the Agreement shall not be construed against either party on the basis that such party was the drafter of this Agreement or on any other basis.
16. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the parties, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth in this Agreement. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by both the Company and Executive. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver or continuing waiver of any other provision hereof. Notwithstanding this paragraph 16, this Agreement shall be considered an exhibit to the Employment Agreement and therefore neither the Employment Agreement nor this Agreement shall supersede one another. To the extent a conflict arises between the Employment Agreement and this Agreement, the terms of this Agreement shall control for all matters relating to the non-competition, non-solicitation, and confidentiality.
[Signature Page Follows]
9
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and year first above written.
CARLOTZ, INC. | ||
By: | /s/ Elizabeth Sanders |
Name: | Elizabeth Sanders |
Title: | Chief Administrative Officer |
EXECUTIVE | |
/s/ Michael W. Bor | |
Michael W. Bor |
EXHIBIT C
LIST OF PRIOR INVENTIONS
EXHIBIT D
[LIST OF RETAINED INVENTIONS]
EXHIBIT E
RESTRICTED ACTIVITIES
“Restricted Activities” shall include providing sales, administrative, management and/or executive services of the type I provide or have provided (or after the termination or expiration of my employment with the Company, of the type I provided at any time within the 12 months prior to the date of such termination or expiration) to or on behalf of the Company, to any company with respect to any of the following businesses: (i) vehicle retailing business, (ii) vehicle auction business, or (iii) vehicle rental, vehicle finance or vehicle leasing business, in each case within this clause (iii) related to the remarketing of vehicles for the secondary market (the “Restricted Business”).
Exhibit 10.16
CARLOTZ, INC.
Employment Agreement
This Employment Agreement (this “Agreement”), dated as of December 11, 2020, is made by and between CarLotz, Inc., a Delaware corporation (together with any successor thereto, the “Company”), and John Foley (“Executive”) (collectively referred to as the “Parties” or individually referred to as a “Party”).
WHEREAS, pursuant to that certain Officer Certificate, dated October 31, 2019, as amended (the “Prior Agreement”), by and between the Company and Executive, Executive is currently employed as the Chief Operating Officer of the Company;
WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated October 21, 2020, with Acamar Partners Acquisition Corp. and Acamar Partners Sub, Inc. (the “Merger Agreement”);
WHEREAS, it is the desire of the Company to continue the employment of Executive and to assure itself of the services of Executive following the closing of the transactions contemplated by the Merger Agreement (the “Closing”) and thereafter on the terms herein provided by entering into this Agreement, which will supersede the Prior Agreement; and
WHEREAS, it is the desire of Executive to continue to provide services to the Company following the Closing and thereafter on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, including the respective covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1. Employment.
(a) General. Effective on the Closing Date (as defined in the Merger Agreement) as of immediately prior to the Closing (the “Effective Date”), the Company shall employ Executive and Executive shall remain in the employ of the Company, for the period and in the positions set forth in this Section 1, and subject to the other terms and conditions herein.
(b) Employment Term. The term of employment under this Agreement (the “Term”) shall commence on the Effective Date and end on the third anniversary of the Effective Date, subject to earlier termination as provided in Section 3 below. The Term shall automatically renew for additional twelve (12) month periods unless no later than ninety (90) days prior to the end of the applicable Term either Party gives written notice of non-renewal (“Notice of Non-Renewal”) to the other, in which case Executive’s employment will terminate at the end of the then-applicable Term, subject to earlier termination as provided in Section 3 below.
(c) Positions. Executive shall serve as the Chief Operating Officer of the Company with such responsibilities, duties and authority normally associated with such position and as may from time to time be reasonably assigned to Executive by the Board, as defined below, or by the Chief Executive Officer of the Company. Executive shall report to the Chief Executive Officer of the Company. At the Company’s request, Executive shall serve the Company and/or its subsidiaries and affiliates in such other capacities in addition to the foregoing as the Company shall designate, provided that such additional capacities are consistent with Executive’s position. In the event that Executive serves in any one or more of such additional capacities, Executive’s compensation shall not automatically be increased on account of such additional service.
(d) Duties. Executive shall devote substantially all of Executive’s working time, attention and efforts to the business and affairs of the Company (which shall include service to its affiliates), except during any paid vacation or other excused absence periods or during periods of illness. Executive shall not engage in outside business activities (including serving on outside boards or committees) without the prior written consent of the Chief Executive Officer; provided that Executive shall be permitted to (i) manage Executive’s personal, financial and legal affairs, which may include certain personal outside business activities, (ii) participate in trade associations and charitable and community affairs, and (iii) continue to serve on the board of directors or advisory boards of the companies/organizations set forth on Exhibit A attached hereto, if any, in each case, subject to compliance with this Agreement and provided that such activities do not materially interfere with Executive’s performance of Executive’s duties and responsibilities hereunder or violate the terms of that certain Loyalty Agreement entered into by and between Executive and the Company as of the date hereof, attached as Exhibit B hereto (the “Loyalty Agreement”). Executive agrees to observe and comply with the rules and policies of the Company as adopted by the Company from time to time, in each case as amended from time to time, as set forth in writing and as delivered to Executive (each, a “Policy”). The principal place of Executive’s employment shall be the Company’s primary office located in Richmond, Virginia.
2. Compensation and Related Matters.
(a) Annual Base Salary. During the Term, Executive shall receive a base salary at a rate of $400,000.00 per annum, which shall be paid in accordance with the customary payroll practices of the Company, no less frequently than monthly, and shall be pro-rated for partial years of employment. Such annual base salary shall be reviewed from time to time by the Company (such annual base salary, as it may be adjusted from time to time pursuant to this Section 2(a), the “Annual Base Salary”). The Annual Base Salary may not be decreased during the Term other than in connection with an across-the-board decrease for all executives.
(b) Annual Bonus. During the Term, beginning with calendar year 2021, Executive will be eligible to participate in an annual incentive program established by the Board. Executive’s annual incentive compensation under such incentive program (the “Annual Bonus”) shall be targeted at 75% of Executive’s Annual Base Salary (the “Target Bonus”). To the extent the targeted performance levels are exceeded, the annual incentive plan will provide a means by which the Annual Bonus may be higher than the Target Bonus, and to the extent the target performance levels are not achieved, the annual incentive plan will provide a means by which the Annual Bonus may be lower than the Target Bonus. The Annual Bonus payable under the incentive program shall be based on the achievement of performance goals to be determined by the Board. Notwithstanding the foregoing, except as set forth in Section 4(b), no bonus shall be payable with respect to any calendar year unless Executive remains continuously employed with the Company during the period beginning on the Effective Date and ending on December 31 of such calendar year. The payment of any Annual Bonus pursuant to the incentive program will be made on or before March 15th of the year following the year to which such Annual Bonus relates.
(c) Transaction Bonus. Executive will be paid a transaction bonus of $350,000.00 (the “Transaction Bonus”) within thirty (30) days of the Closing.
2
(d) Equity-Based Compensation. The Company shall grant to Executive stock options (“Options”) to purchase shares of the Company’s common stock, par value $.01 per share (the “Company Common Stock”) and restricted stock units with respect to the Company Common Stock (“Restricted Stock Units”) with an aggregate value of $1,000,000.00 based on the per share fair market value of the Company’s common stock on the Effective Date, equally split between the Options and the Restricted Stock Units. The value of the Options for this purpose shall be calculated using the Black-Scholes method. Such Options shall have an exercise price per share equal to the fair market value of a share of Company Common Stock as of the date of grant (as determined in accordance with Section 409A (as defined below)). Such Options and Restricted Stock Units shall (i) be subject to time-based vesting in equal annual installments over a four (4)-year period based on Executive’s continued employment with the Company (commencing as of the Effective Date), (ii) vest and, if applicable, become exercisable upon a Change in Control (as defined in the CarLotz, Inc. 2020 Incentive Award Plan (the “Plan”)) in the event that the successor in connection with the Change in Control does not assume or substitute for any such outstanding Options or Restricted Stock Units, and (iii) be subject to the terms and conditions set forth in the Plan under which the Options and Restricted Stock Units will be granted and the related Award Agreements (as defined in the Plan), and subject to shareholder approval of the Plan. The Options shall be granted on the Effective Date. The grant of the Restricted Stock Units shall not be effective until, and the exercisability of the Stock Options shall be contingent on the filing of a Form S-8 registration statement by New CarLotz, Inc. with respect to the Plan, no later than sixty-five (65) calendar days after the Effective Date. In order to satisfy the exercise price or any tax withholding obligations of the Company pertaining to Executive’s Options or the Restricted Stock Units, Executive will be permitted to instruct a broker, in compliance with applicable laws and regulations, to sell the necessary amount of Executive’s shares subject to such awards, such that the cash proceeds of such sale can be used to satisfy such exercise price or tax withholding obligations, and to adopt a Rule 10b5-1 plan, in compliance with applicable laws, to permit Executive to sell shares of Company Common Stock during blackout periods, when Executive has exposure to material non-public information and/or Executive otherwise is subject to insider trading restrictions. Additionally, during the Term, Executive shall have the right to receive stock options, restricted stock, restricted stock units, stock appreciation rights and/or other equity awards under the Company’s applicable equity plans as the Company may determine on a basis not less favorable than that provided to the class of employees that includes Executive and taking into account Executive’s position with the Company and customary award grants of similar publicly-traded companies.
(e) Benefits. During the Term, Executive shall be eligible to participate in employee benefit plans, programs and arrangements as the Company may from time to time offer to provide to its executives, consistent with the terms thereof and as such plans, programs and arrangements may be amended from time to time. Notwithstanding the foregoing, nothing herein is intended, or shall be construed, to require the Company to institute or continue any, or any particular, plan or benefit. In no event shall Executive be eligible to participate in any severance plan or program of the Company, except as set forth in Section 4 below.
(f) Vacation; Holidays. During the Term, Executive shall be entitled to four (4) weeks of paid vacation per calendar year (pro-rated for partial years) in accordance with the Policies. Any vacation shall be taken at the reasonable and mutual convenience of the Company and Executive. Unused vacation will not carry over from calendar year to calendar year. Upon termination of employment, the Executive will be entitled to payment for accumulated unused vacation for the year of termination. In addition, the Company will offer to Executive employee time off for standard Company holidays in accordance with the Policies.
(g) Business Expenses. During the Term, the Company shall reimburse Executive for all reasonable travel and other business expenses incurred by Executive in the performance of Executive’s duties to the Company in accordance with the Company’s expense reimbursement Policy.
(h) Indemnification. The Company hereby agrees to indemnify Executive and hold Executive harmless to the fullest extent permitted under the organizational documents of the Company and applicable law against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorney’s fees), losses, and damages (including advancement of fees and expenses) resulting from Executive’s performance of Executive’s duties and obligations with the Company hereunder. The Company shall cover Executive under directors’ and officers’ liability insurance both during and, while potential liability exists, after the Term in the same amount and to the same extent as the Company covers its other officers and directors. The foregoing obligations shall survive the termination of Executive’s employment with the Company.
3
3. Termination.
(a) Circumstances. Executive’s employment hereunder may be terminated by the Company or Executive, as applicable, without any breach of this Agreement under the following circumstances:
(i) Death. Executive’s employment hereunder shall terminate automatically upon Executive’s death.
(ii) Disability. If Executive has incurred a Disability, as defined below, the Company may terminate Executive’s employment.
(iii) Termination for Cause. The Company may terminate Executive’s employment for Cause, as defined below.
(iv) Termination without Cause. The Company may terminate Executive’s employment without Cause, which shall include Executive’s termination as a result of the Company delivering a Notice of Non-Renewal.
(v) Resignation from the Company with Good Reason. Executive may resign Executive’s employment with the Company with Good Reason, as defined below.
(vi) Resignation from the Company without Good Reason. Executive may resign Executive’s employment with the Company for any reason other than Good Reason or for no reason, which shall include Executive’s termination as a result of Executive delivering a Notice of Non-Renewal.
(b) Notice of Termination. During the Term, any termination of Executive’s employment by the Company or by Executive under this Section 3 (other than termination pursuant to Sections 3(a)(i)) shall be communicated by a written notice (a “Notice of Termination”) to the other Party hereto (i) indicating the specific termination provision in this Agreement relied upon, (ii) except with respect to a termination pursuant to Section 3(a)(iv) or 3(a)(vi), setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) specifying a Date of Termination (as defined below). The failure by either party to set forth in the Notice of Termination any fact or circumstance shall not waive any right of the party hereunder or preclude the party from asserting such fact or circumstance in enforcing the party’s rights hereunder.
(c) Termination Date. For purposes of this Agreement, “Date of Termination” shall mean the date of the termination of Executive’s employment with the Company, which, if Executive’s employment is terminated as a result of Executive’s death, will be the date of Executive’s death, and otherwise shall be the date specified in a Notice of Termination. Except in the case of a termination pursuant to Sections 3(a)(i) and (ii) above, the Date of Termination shall be at least fifteen (15) days following the date of the Notice of Termination or such later date as may be required pursuant to this Agreement. Notwithstanding the foregoing, (i) the Company may deliver its Notice of Termination to Executive that specifies any Date of Termination that occurs on or after the date of its Notice of Termination; (ii) in the event that Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, change the Date of Termination to any date that occurs on or following the date of the Notice of Termination and is prior to the Date of Termination specified in the Notice of Termination; and (iii) if the Executive’s employment is to terminate at the end of a Term, the Date of Termination shall be the last day of such Term.
4
(d) Deemed Resignation. Upon termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any of its subsidiaries.
4. Obligations upon a Termination of Employment.
(a) Company Obligations upon Termination. Upon termination of Executive’s employment pursuant to any of the circumstances listed in Section 3(a) above, Executive (or Executive’s estate) shall be entitled to receive the sum of: (i) the portion of Executive’s Annual Base Salary earned through the Date of Termination, but not yet paid to Executive, which shall be paid as described in Section 2(a) above; (ii) except in the event of a termination for Cause pursuant to Section 3(a)(iii), any unpaid Annual Bonus earned by Executive for the year prior to the year in which the Date of Termination occurs, as determined by the Board in its good faith discretion based upon actual performance achieved, which Annual Bonus, if any, shall be paid to Executive when bonuses for such year are paid to actively employed senior executives of the Company but in no event later than March 15 of the year in which the Date of Termination occurs; (iii) any expenses owed to Executive pursuant to Section 2(g) above, which shall be paid within thirty (30) days after the Date of Termination; (iv) any accumulated unused vacation, which shall be paid in a lump sum within thirty (30) days after the Date of Termination; and (v) any amount accrued and arising from Executive’s participation in, or benefits accrued under any employee benefit plans, programs or arrangements, which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements (collectively, the “Company Arrangements”). Except as otherwise expressly required by law or as specifically provided in a Company Arrangement or herein, all of Executive’s rights to salary, severance, benefits, bonuses and other compensatory amounts hereunder (if any) shall cease upon the termination of Executive’s employment hereunder.
(b) Executive’s Obligations upon Termination.
(i) Cooperation. Executive shall provide Executive’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during Executive’s employment hereunder; provided the Company shall indemnify and hold harmless Executive with respect to any such cooperation and reimburse Executive for Executive’s reasonable costs and expenses (including legal counsel selected by Executive and reasonably acceptable to the Company), within thirty (30) days after the incurrence by Executive of such costs and expenses, and such cooperation shall not unreasonably burden Executive or unreasonably interfere with any subsequent employment or other activities that Executive may undertake.
(ii) Return of Company Property. Executive hereby acknowledges and agrees that all Personal Property (as defined below) and equipment furnished to, or prepared by, Executive in the course of, or incident to, Executive’s employment, belongs to the Company and shall be promptly returned to the Company upon termination of Executive’s employment (and will not be kept in Executive’s possession or delivered to anyone else). For purposes of this Agreement, “Personal Property” includes, without limitation, all books, manuals, records, reports, notes, contracts, lists, blueprints, and other documents, or materials, or copies thereof (including computer files), keys, building card keys, company credit cards, telephone calling cards, computer hardware and software, laptop computers, docking stations, cellular and portable telephone equipment, personal digital assistant (PDA) devices and all other proprietary information relating to the business of the Company or its subsidiaries or affiliates. Following termination, Executive shall not retain any written or other tangible material containing any proprietary information of the Company or its subsidiaries or affiliates.
5
(c) Severance Payments upon a Termination without Cause or Resignation with Good Reason.
(i) If, during the Term and not in a Change in Control Period, Executive’s employment terminates pursuant to Section 3(a)(iv) above due to the Company’s termination without Cause or pursuant to Section 3(a)(v) above due to Executive’s resignation with Good Reason, then, subject to Executive’s delivery to the Company of an executed waiver and release of claims in a form approved by the Company (the “Release”) that becomes effective and irrevocable in accordance with Section 9(n) below, and Executive’s continued compliance with Section 5 below, Executive shall receive, in addition to the payments and benefits set forth in Section 4(a) above, the following:
(A) an amount in cash equal to twelve (12) months of Executive’s then-existing Annual Base Salary, payable, less applicable withholdings and deductions, in the form of salary continuation in regular installments over the 12-month period following the date of Executive’s Separation from Service in accordance with the Company’s normal payroll practices, no less frequently than monthly, with the first of such installments to commence on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise provided in Section 9(n) below; and
(B) during the period commencing on the Date of Termination and ending on the twelve (12) month anniversary thereof or, if earlier, the date on which Executive becomes eligible for comparable replacement coverage under a subsequent employer’s group health plan (in any case, the “COBRA Period”), subject to Executive’s valid election to continue healthcare coverage under Section 4980B of the Code and the regulations thereunder, the Company shall, in its sole discretion, either (A) continue to provide to Executive and Executive’s dependents, at the Company’s sole expense, or (B) reimburse Executive and Executive’s dependents for coverage under its group health plan (if any), at the same levels and costs in effect on the Date of Termination (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars); provided, however, that if (1) any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the continuation coverage period to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), (2) the Company is otherwise unable to continue to cover Executive or Executive’s dependents under its group health plans or (3) the Company cannot provide the benefit without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining Company subsidy shall thereafter be paid to Executive in substantially equal monthly installments over the COBRA Period (or remaining portion thereof).
(ii) If, during the Term and during a Change in Control Period, Executive’s employment terminates pursuant to Section 3(a)(iv) above due to the Company’s termination without Cause or pursuant to Section 3(a)(v) above due to Executive’s resignation with Good Reason, then, subject to Executive’s delivery to the Company of a Release that becomes effective and irrevocable in accordance with Section 9(n) below, and Executive’s continued compliance with Section 5 below, Executive shall receive, in addition to the payments and benefits set forth in Section 4(a) above, the following:
6
(A) an amount in cash equal to twelve (12) months of Executive’s then-existing Annual Base Salary, less applicable withholdings and deductions, payable in the form of salary continuation in regular installments over the twelve (12)-month period following the date of Executive’s Separation from Service in accordance with the Company’s normal payroll practices, no less frequently than monthly, with the first of such installments to commence on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise provided in Section 9(n) below; provided, however that if the Change in Control constitutes a change in control event within the meaning of Section 409A of the Code, such amount will be paid in the form of a single lump sum in accordance with the Company’s normal payroll practices on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise set forth in Section 9(n) below;
(B) a pro-rated portion (based on the number of days Executive was employed by the Company during the calendar year in which the Date of Termination occurs) of the Annual Bonus that Executive would have earned had Executive remained employed through the end of the calendar year in which Executive’s Date of Termination occurs, as determined by the Board in good faith. If and to the extent earned, such pro-rated Annual Bonus shall be paid out at the same time annual bonuses are paid generally to other executives of the Company for the relevant year, less applicable withholdings and deductions, but in no event later than March 15th of the year immediately following that in which the Date of Termination occurs;
(C) the vesting and, if applicable, exercisability shall be accelerated (and, if applicable, all restrictions and rights of repurchase on such awards shall lapse) effective as of immediately prior to the Date of Termination with respect to 100% of the shares subject to Executive’s then outstanding equity awards (including any such awards that vest in whole or in part based on the attainment of performance-vesting conditions, which shall vest based on actual performance as of the Date of Termination and otherwise be governed by the terms of the applicable award agreement); and
(D) during the COBRA Period, subject to Executive’s valid election to continue healthcare coverage under Section 4980B of the Code and the regulations thereunder, the Company shall, in its sole discretion, either (A) continue to provide to Executive and Executive’s dependents, at the Company’s sole expense, or (B) reimburse Executive and Executive’s dependents for coverage under its group health plan (if any), at the same levels and costs in effect on the Date of Termination (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars); provided, however, that if (1) any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the continuation coverage period to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), (2) the Company is otherwise unable to continue to cover Executive or Executive’s dependents under its group health plans or (3) the Company cannot provide the benefit without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining Company subsidy shall thereafter be paid to Executive in substantially equal monthly installments over the COBRA Period (or remaining portion thereof).
7
(d) No Requirement to Mitigate; Survival. Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or in any other manner. Notwithstanding anything to the contrary in this Agreement, the termination of Executive’s employment shall not impair the rights or obligations of any Party.
(e) No Other Severance. Executive shall not be entitled to any severance benefits, pay in lieu of notice, or other similar benefits from the Company in connection with Executive’s termination other than as set forth herein.
(f) Survival. Notwithstanding anything to the contrary in this Agreement, the provisions of Sections 5 through 9 of this Agreement will survive the termination of Executive’s employment and the termination of the Term.
5. Restrictive Covenants and Confidentiality.
As a condition to the effectiveness of this Agreement, Executive will execute and deliver to the Company contemporaneously herewith Exhibit B, the Loyalty Agreement. Executive agrees to abide by the terms of the Loyalty Agreement, which are hereby incorporated by reference into this Agreement. Executive acknowledges that the provisions of the Loyalty Agreement will survive the termination of Executive’s employment and the termination of the Term for the periods set forth in the Loyalty Agreement. Notwithstanding any other provision of this Agreement, no payment shall be made or benefit provided pursuant to Section 4(c) following the date Executive first violates any of the restrictive covenants set forth in the Loyalty Agreement, and as of the first date on which Executive violates any such restrictive covenants, Executive shall pay the Company an amount equal to the sum of all payments theretofore paid to Executive pursuant to Section 4(c).
6. Assignment and Successors.
The Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise). This Agreement shall be binding upon and inure to the benefit of the Company, Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only by will or the laws of descent and distribution or operation of law. Notwithstanding the foregoing, Executive shall be entitled, to the extent permitted under applicable law and Company Arrangements, to select and change a beneficiary or beneficiaries to receive compensation hereunder following Executive’s death by giving written notice thereof to the Company.
7. Certain Definitions.
(a) Board. The “Board” shall mean the Board of Directors of the Company or an authorized committee of the Board.
8
(b) Cause. “Cause” shall mean any of the following:
(i) Executive’s commission of any act or omission that results in, or may reasonably be expected to result in, a conviction of (or plea of no contest or nolo contendere to) any felony (other than in connection with a traffic violation that does not result in imprisonment) under any state, federal or foreign law or any crime involving moral turpitude or dishonesty or that would reasonably be expected to cause material reputational or other material harm or damage to the Company;
(ii) Executive’s commission of an act of fraud, embezzlement, misappropriation of funds, material malfeasance, breach of fiduciary duty or other willful and material act of misconduct, in each case, against the Company;
(iii) any willful, material damage to any material property of the Company by Executive;
(iv) Executive’s willful, intentional and repeated failure to substantially perform Executive’s material job functions hereunder (other than any such failure resulting from Executive’s Disability or during periods of illness) or (B) carry out or comply with a lawful and reasonable directive of the Board or the Chief Executive Officer, in each case, which failure has not been cured (or cannot be cured) within thirty (30) days after the Company gives written notice to Executive regarding such failure;
(v) Executive’s breach of any Policy causing material reputational or other material harm or damage to the Company, which breach has not been cured (or cannot be cured) within thirty (30) days after the Company gives written notice to Executive regarding such breach;
(vi) Executive’s unlawful use (including being under the influence) of illegal drugs or continued excessive use of alcohol, in each case that materially impairs Executive’s ability to perform Executive’s duties contemplated hereunder;
(vii) Any grossly negligent or reckless act by Executive resulting in or causing material reputational or other material harm or damage to the Company; and
(viii) Executive’s material breach of this Agreement, the Loyalty Agreement or any other written agreement between Executive and the Company and failure to cure such breach (if capable of cure) within thirty (30) days after the Company gives written notice to Executive regarding such breach.
For purposes of this definition, an action or inaction is only “willful” if it is done or omitted by Executive without a good faith and reasonable belief that such action or inaction is in the best interests of the Company or any of its affiliates. The failure by the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing the Company’s rights hereunder. Notwithstanding the foregoing, a termination for Cause shall be deemed to occur if following Executive's termination of employment for any reason the Company determines that circumstances existing prior to such termination would have entitled the Company to terminate Executive's employment for Cause.
(c) Change in Control. “Change in Control” shall have the meaning set forth in the version of the Company’s 2020 Incentive Award Plan in effect on the Effective Date.
9
(d) Change in Control Period. “Change in Control Period” shall mean the period beginning upon the consummation of a Change in Control and ending twelve (12) months following the consummation of such Change in Control.
(e) Code. “Code” shall mean the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder.
(f) Disability. “Disability” shall mean a disability within the meaning of Section 22(e)(3) of the Code, as it may be amended from time to time. Any determination of the Executive’s Disability made in good faith by the Board shall be conclusive and binding on the Executive, unless within ten (10) days after written notice to the Executive of such determination, the Executive elects by written notice to the Company to challenge such determination, in which case determination of Disability shall be made by arbitration pursuant to Section 9(i) below.
(g) Good Reason. For the sole purpose of determining Executive’s right to severance payments and benefits as described above, “Good Reason” shall mean any one of the following, that occurs without Executive’s written consent:
(i) a material reduction in Executive’s Annual Base Salary (except pursuant to the last sentence of Section 2(a)) or Target Bonus;
(ii) a material diminution in Executive’s duties, authority or responsibilities, other than any change made solely in connection with the adoption by the Board, following the Effective Date, of customary delegation of authority guidelines setting forth the roles of Executive and other employees of the Company covering levels of approvals required for the taking of certain actions based on thresholds that are customary for a company of the size and market capitalization of the Company;
(iii) the relocation of Executive’s primary place of employment to a location more than fifty (50) miles from the Company’s primary office located in Richmond, Virginia; and
(iv) a material breach by the Company of this Agreement or any other written agreement with Executive.
Notwithstanding the foregoing, no Good Reason will have occurred unless and until: (A) Executive has provided the Company, within sixty (60) days of becoming aware of the initial occurrence of the Good Reason event, written-notice stating with specificity the applicable facts and circumstances underlying such finding of Good Reason; and (B) the Company or the successor company fails to cure such condition within forty-five (45) days after receiving such written notice (the “Cure Period”) and (C) Executive’s resignation based on such Good Reason is effective within thirty (30) days after expiration of the Cure Period with the Company or the successor company having failed to cure same.
8. Parachute Payments.
(a) Notwithstanding any other provisions of this Agreement or any Company Arrangement, in the event that any payment or benefit by the Company or otherwise to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (all such payments and benefits, including the payments and benefits under Section 4 above, being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments shall be reduced (in the order provided in Section 8(b) below) to the minimum extent necessary to avoid the imposition of the Excise Tax on the Total Payments, but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income and employment taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income and employment taxes on such Total Payments and the amount of the Excise Tax to which Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).
10
(b) The Total Payments shall be reduced in the following order: (i) reduction on a pro-rata basis of any cash severance payments that are exempt from Section 409A of the Code (“Section 409A”), (ii) reduction on a pro-rata basis of any non-cash severance payments or benefits that are exempt from Section 409A, (iii) reduction on a pro-rata basis of any other payments or benefits that are exempt from Section 409A, and (iv) reduction of any payments or benefits otherwise payable to Executive on a pro-rata basis or such other manner that complies with Section 409A; provided, in case of subclauses (ii), (iii) and (iv), that reduction of any payments attributable to the acceleration of vesting of Company equity awards shall be first applied to Company equity awards that would otherwise vest last in time.
(c) The Company will select an adviser with experience in performing calculations regarding the applicability of Section 280G of the Code and the Excise Tax, provided that the adviser’s determination shall be made based upon “substantial authority” within the meaning of Section 6662 of the Code, (the “Independent Advisors”) to make determinations regarding the application of this Section 8. The Independent Adviser shall provide its determination, together with detailed supporting calculations and documentation, to Executive and the Company within fifteen (15) business days following the date on which Executive’s right to the Total Payments is triggered, if applicable, or such other time as requested by Executive (provided that Executive reasonably believes that any of the Total Payments may be subject to the Excise Tax) or the Company. The costs of obtaining such determination and all related fees and expenses (including related fees and expenses incurred in any later audit) shall be borne by the Company. Any good faith determinations of the Independent Adviser made hereunder shall be final, binding and conclusive upon the Company and Executive.
(d) In the event it is later determined that to implement the objective and intent of this Section 8, (i) a greater reduction in the Total Payments should have been made, the excess amount shall be returned promptly by Executive to the Company or (ii) a lesser reduction in the Total Payments should have been made, the excess amount shall be paid or provided promptly by the Company to Executive, except to the extent the Company reasonably determines would result in imposition of an excise tax under Section 409A.
9. Miscellaneous Provisions.
(a) Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the Commonwealth of Virginia without reference to the principles of conflicts of law of the Commonwealth of Virginia or any other jurisdiction that would result in application of the laws of a jurisdiction other than the Commonwealth of Virginia, and where applicable, the laws of the United States.
(b) Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(c) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses or e-mail addresses (or at such other address or email address for a party as shall be specified in a notice given in accordance with this Section 9(c)):
11
(i) | If to the Company: |
CarLotz, Inc.
611 Bainbridge Street, Suite 100
Richmond, VA 23224
Attn: Board of Directors
With a copy to:
Freshfields Bruckhaus Deringer LLP
601 Lexington Ave,
New York, NY 10022
Attn: Valerie Jacob and Lori Goodman
Valerie.Jacob@freshfields.com
Lori.Goodman@freshfields.com
(ii) If to Executive, to the last address that the Company has in its personnel records for Executive, or
(iii) At any other address as any Party shall have specified by notice in writing to the other Party.
(d) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile or PDF shall be deemed effective for all purposes.
(e) Entire Agreement. The terms of this Agreement, the Loyalty Agreement, any indemnification agreement between the Company and Executive and any equity award agreement between the Company and Executive are intended by the Parties to be the final expression of their agreement with respect to the subject matter hereof and supersede all prior understandings and agreements, whether written or oral, including without limitation any prior employment agreement, offer letter between Executive and the Company (including the Prior Agreement). The Parties further intend that this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.
(f) Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by Executive and a duly authorized representative of Company. By an instrument in writing similarly executed, Executive or a duly authorized representative of the Company may waive compliance by the other Party with any specifically identified provision of this Agreement that such other Party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.
(g) No Inconsistent Actions. The Parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the Parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.
12
(h) Construction. This Agreement shall be deemed drafted equally by both the Parties. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any Party shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (i) the plural includes the singular and the singular includes the plural; (ii) “and” and “or” are each used both conjunctively and disjunctively; (iii) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (iv) “includes” and “including” are each “without limitation”; (v) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (vi) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.
(i) Arbitration. Any controversy, claim or dispute arising out of or relating to this Agreement, shall be settled solely and exclusively by a binding arbitration process administered by JAMS/Endispute in the State of Virginia. Such arbitration shall be conducted in accordance with the then-existing JAMS/Endispute Rules of Practice and Procedure. The arbitrator shall: (i) provide adequate discovery for the resolution of the dispute; and (ii) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award. The arbitrator shall award the prevailing Party attorneys’ fees and expert fees, if any. The Parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and conclusive. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided, however, that nothing in this subsection shall be construed as precluding the bringing of an action for injunctive relief or specific performance as provided in this Agreement or the Confidentiality Agreement. This dispute resolution process and any arbitration hereunder shall be confidential and neither any Party nor the neutral arbitrator shall disclose the existence, contents or results of such process without the prior written consent of all Parties, except where necessary or compelled in a court to enforce this arbitration provision or an award from such arbitration or otherwise in a legal proceeding. If JAMS/Endispute no longer exists or is otherwise unavailable, the Parties agree that the American Arbitration Association (“AAA”) shall administer the arbitration in accordance with its then-existing rules as modified by this subsection. In such event, all references herein to JAMS/Endispute shall mean AAA. Executive and the Company understand that by agreement to arbitrate any claim pursuant to this Section 9(i), they will not have the right to have any claim decided by a jury or a court, but shall instead have any claim decided through arbitration. Executive and the Company waive any constitutional or other right to bring claims covered by this Agreement other than in their individual capacities. Except as may be prohibited by applicable law, the foregoing waiver includes the ability to assert claims as a plaintiff or class member in any purported class or representative proceeding. Notwithstanding the foregoing, Executive and the Company each have the right to resolve any issue or dispute over intellectual property rights by court action instead of arbitration.
(j) Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the Term, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
13
(k) Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges that the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.
(l) Whistleblower Protections and Trade Secrets. Notwithstanding anything to the contrary contained herein, nothing in this Agreement prohibits Executive from reporting possible violations of federal law or regulation to any United States governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation (including the right to receive an award for information provided to any such government agencies). Furthermore, in accordance with 18 U.S.C. § 1833, notwithstanding anything to the contrary in this Agreement: (i) Executive shall not be in breach of this Agreement, and shall not be held criminally or civilly liable under any federal or state trade secret law (A) for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (B) for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (ii) if Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Executive may disclose the trade secret to Executive’s attorney, and may use the trade secret information in the court proceeding, if Executive files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.
(m) Section 409A.
(i) General. The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A. All amounts payable to the Executive pursuant to Section 4(b) shall, to the maximum extent permitted by Section 409A, be made in reliance on Section 1.409A-1(b)(9) (Separation Pay Plans) or Section 1.409A-1(b)(4) (Short-Term Deferrals) of the Department of Treasury regulations.
(ii) Separation from Service. Notwithstanding anything in this Agreement to the contrary, any compensation or benefits payable under this Agreement that is considered nonqualified deferred compensation under Section 409A and is designated under this Agreement as payable upon Executive’s termination of employment shall be payable only upon Executive’s “separation from service” with the Company within the meaning of Section 409A (a “Separation from Service”).
(iii) Specified Employee. Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (A) the expiration of the six (6)-month period measured from the date of Executive’s Separation from Service with the Company or (B) the date of Executive’s death. Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.
14
(iv) Expense Reimbursements. To the extent that any reimbursements under this Agreement are subject to Section 409A, any such reimbursements payable to Executive shall be paid to Executive no later than December 31st of the year following the year in which the expense was incurred; provided that Executive submits Executive’s reimbursement request promptly following the date the expense is incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, other than medical expenses referred to in Section 105(b) of the Code, and Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.
(v) Installments. Executive’s right to receive any installment payments under this Agreement, including without limitation any continuation salary payments that are payable on Company payroll dates, shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A.
(n) Release. Notwithstanding anything to the contrary in this Agreement, to the extent that any payments due under this Agreement as a result of Executive’s termination of employment are subject to Executive’s execution and delivery of a Release, (i) the Company shall deliver the Release to Executive within ten (10) business days following Executive’s Date of Termination, and the Company’s failure to deliver a Release prior to the expiration of such ten (10) business day period shall constitute a waiver of any requirement to execute a Release, (ii) if Executive fails to execute the Release on or prior to the Release Expiration Date (as defined below) or timely revokes Executive’s acceptance of the Release thereafter, Executive shall not be entitled to any payments or benefits otherwise conditioned on the Release, and (iii) in any case where Executive’s Date of Termination and the last day of the applicable revocation period fall in two separate taxable years, any payments required to be made to Executive that are conditioned on the Release and are treated as nonqualified deferred compensation for purposes of Section 409A shall be made in the later taxable year. For purposes hereof, “Release Expiration Date” shall mean the date that is twenty-one (21) days following the date upon which the Company timely delivers the Release to Executive, or, in the event that Executive’s termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date. To the extent that any payments of nonqualified deferred compensation (within the meaning of Section 409A) due under this Agreement as a result of Executive’s termination of employment are delayed pursuant to this Section 9(n), such amounts shall be paid in a lump sum on the first payroll date following the date that Executive executes and does not revoke the Release (and the applicable revocation period has expired) or, in the case of any payments subject to Section 9(n)(iii), on the first payroll period to occur in the subsequent taxable year, if later.
10. Executive Acknowledgement.
Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on Executive’s own judgment.
[Signature Page Follows]
15
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and year first above written.
CARLOTZ, INC. | ||
By: | /s/ Michael W.Bor | |
Name: Michael W. Bor | ||
Title: President and Chief Executive Officer | ||
EXECUTIVE | ||
/s/ John Foley | ||
John Foley |
EXHIBIT A
CURRENT SERVICE
EXHIBIT B
LOYALTY AGREEMENT
CARLOTZ, INC.
LOYALTY AGREEMENT
THIS AMENDED AND RESTATED LOYALTY AGREEMENT (this “Agreement”) is made as of December 11, 2020 (the “Effective Date”), by and between CarLotz, Inc., a Delaware corporation (the “CarLotz”), and John Foley (“I” or “me”). This Agreement is referenced as Exhibit B to the employment agreement between the Company and Executive dated December 11, 2020 (the “Employment Agreement”).
NOW, THEREFORE, in exchange and consideration for (a) my being employed as an employee, officer, director, or independent contractor of (i) CarLotz, (ii) any affiliate of CarLotz, and/or (iii) any entity with respect to which more than 30% of the outstanding shares or other equity interests thereof are owned, directly or indirectly, by CarLotz (each of (i), (ii) or (iii) for whom I am so employed at any time after the date hereof or for any of whose customers I provide services or products within the Restricted Business (as defined below) on behalf of any of (i), (ii) or (iii) at any time after the date hereof, jointly and severally and together with any successors and assignees under Section 14(d) below, the “Company”), and all wages, salary, bonuses, compensation, and benefits associated with my employment as an employee (whether full-time, part-time, or casual), officer, manager, director, or independent contractor of the Company and (b) for other good and valuable consideration, the receipt and sufficiency of which I hereby acknowledge, do hereby agree as follows:
1. Not an Employment Agreement. I agree, understand and acknowledge that this Agreement is not an employment agreement.
2. Confidential Information.
(a) Company Information. I agree at all times during the term of my employment and thereafter, to hold in strictest confidence, and not to use (except for the benefit of the Company to fulfill my obligations to it) or to disclose to any person, firm or corporation without written authorization of the Board of Directors of the Company (the “Board”), any Confidential Information of the Company. I agree that “Confidential Information” means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, any non-public research, product or service plans, products, services, customer lists, investor lists, and customers and investors (including, but not limited to, customers of the Company on whom I called, to whom I rendered services or provided products or with whom I became acquainted during the term of my employment), pricing, costs, markets, summaries, investment strategies, marketing strategies and other strategies, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration, marketing, financial information or other business information obtained by me or disclosed to me by the Company or any other person or entity during the term of and in connection with my employment with the Company either directly or indirectly in writing, orally by drawings, by observation of services, products, systems or other aspects of the Company’s business or otherwise.
(b) Former Employer Information. I agree that I will not, during my employment with the Company, improperly use or disclose any proprietary information or trade secrets of any former or concurrent employer or other person or entity and that I will not bring onto the premises of the Company any unpublished or published document containing confidential or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
(c) Inventions.
(i) Inventions Contributed, Retained and Licensed. I hereby contribute, transfer and assign to the Company all of my right, title and interest in and to any and all patents, patents pending, discoveries, copyrights, trademarks, service marks, original works of authorship, developments, inventions, trade secrets, improvements, enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable, which are related to any items, ideas or activities described on Exhibit C (collectively, “Prior Inventions”), except for those Prior Inventions listed on Exhibit D hereto, ownership of which I hereby retain (“Retained Inventions”). I represent that Exhibit D is a complete list of my Retained Inventions that I desire to have specifically excluded from my obligations under this Section. If no items are listed on Exhibit D, I hereby represent that there are no such Retained Inventions. If in the course of my employment with the Company, I incorporate into a Company product, process or service a Retained Invention owned by me or in which I have an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide, unlimited license to make, have made, modify, use and sell such Retained Invention as part of or in connection with such products, process or service.
(ii) Assignment of Future Inventions.
(a) I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and shall contribute, transfer and assign to the Company, or its designee, all my right, title, and interest in and to any and all patents, patents pending, copyrights, trademarks, service marks, discoveries, original works of authorship, developments, inventions, trade secrets, improvements, enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable, under copyright or similar laws, including without limitation all goodwill associated with the foregoing, which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice during the period of time I am in the employ of the Company (collectively referred to as “Inventions”), but excluding Excluded Inventions (as defined in Section 2(c)(ii)(b) below). I further acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of and during the period of my employment with the Company and which are protected by copyright are “works made for hire,” as that term is defined in the United States Copyright Act. I shall not knowingly incorporate any invention, original work of authorship, development, improvement, or trade secret owned, in whole or in part, by any third party, into any Invention without the Company’s prior written permission.
2
(b) Inventions covered by Section 2(c)(ii)(a) above do not include any invention that I develop entirely on my own time and to which all of the following apply: (x) its development did not involve the use of any equipment, supplies, facilities or trade secret or proprietary information of the Company; (y) it is not related to or useful to a Restricted Business; and (z) it does not result from any work performed by me for the Company. In addition, the Inventions covered by Section 2(c)(ii)(a) above do not include any Retained Inventions. The inventions described in this Section 2(c)(ii)(b) are collectively referred to as “Excluded Inventions.”
(iii) Maintenance of Records. I agree to keep and maintain adequate and current written records of all Inventions made by me (solely or jointly with others) during the term of and in connection with my employment with the Company. The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company. The records will be available to and remain the sole property of the Company at all times.
(iv) Registrations. I agree to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the Inventions and any copyrights, patents, trademarks, service marks, or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, trademarks, service marks or other intellectual property rights relating thereto. I further agree that my obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of my mental or physical incapacity or for any other reason to secure my signature to apply for or to pursue any application for any United States or foreign patents, copyright, trademarks, service marks, or other intellectual property registrations covering Inventions or original works of authorship assigned to the Company as above, then I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright, trademark, service mark, or other intellectual property registrations contemplated by this Section 2(c)(iv) with the same legal force and effect as if executed by me. THIS POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE.
(d) Third Party Information. I recognize that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. I agree to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out my work for the Company consistent with the Company’s agreement with such third party.
3. Conflicting Employment. Without limiting the application of Section 10 below, I agree that, during the term of my employment with the Company, I will not engage in any other employment, occupation, consulting or other business activity directly related to the Restricted Business without the advance written approval of the Board of the Company. Nor will I engage in any other activities that conflict with the business of the Company. Furthermore, I agree to devote such time as may be necessary to fulfill my obligations to the Company.
3
4. Returning Company Property. I agree that, at the time of leaving the employ of the Company, I will deliver to the Company (and will not keep in my possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items developed by me or others pursuant to or during my employment with the Company or otherwise belonging to the Company, its successors or assigns (“Company Property”). In the event of the termination of my employment, I agree to certify in writing that I have returned all Company Property to the Company.
5. Notification of New Employer. In the event that I leave the employ of the Company, I hereby grant consent to notification by the Company to my new employer (whether I am employed as an employee, consultant, independent contractor, director, partner, officer, advisor, executive or manager) about my obligations under this Agreement and delivery by the Company of a copy of this Agreement to any such new employer. For purposes of this Agreement, so long as I am employed by any entity that is a “Company” as defined herein, my employment by the Company shall not be deemed to have terminated or expired.
6. Non-Solicitation. I agree that while I am employed by the Company and (a) in the event I terminate my employment without Good Reason (as defined below) or the Company terminates my employment for Cause (as defined below) (either event, a “Fault Event”), for a period of two years immediately following any such termination of my employment with the Company, or (b) in the event of a termination or expiration of my employment with the Company for any other reason, for a period of one year immediately following the termination or expiration of my employment with the Company, I shall not directly or indirectly, either on behalf of myself or any other person or entity, (i) intentionally solicit, induce, recruit or encourage any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company to leave his, her or its employment or engagement with the Company, or attempt to solicit, recruit, or take away any such employees or independent contractors (or induce or encourage any such employee or independent contractor to terminate its employment or engagement with the Company); provided that after termination or expiration of my employment, this provision shall only apply to those employees or independent contractors of the Company who (A) are current employees or independent contracts of the Company and (B) were such at any time within 12 months prior to the date of such termination or expiration, (ii) intentionally interfere in any manner with the contractual or employment relationship between the Company and any employee, independent contractor, Customer (as defined below) or supplier of the Company or cause any such employee, independent contractor, Customer or supplier to cease employment with, cease doing business with or reduce the amount of business it does with the Company; provided that after termination or expiration of my employment, this provision shall apply only to the employees, independent contractors, Customers or suppliers of the Company who (A) are current employees, independent contractors, Customers or suppliers of the Company and (B) were such at any time within 12 months prior to such termination or expiration, (iii) after termination or expiration of my employment, hire or otherwise employ any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company or who has provided services to or on behalf of the Company at any time during the prior three month period, or (iv) whether as a direct solicitor or provider of such services or products, or in a management or supervisory capacity over others who solicit or provide such services or products, intentionally solicit or provide services or products that fall within the definition of Restricted Business to any Customer of the Company; provided that after the expiration or termination of my employment, this provision shall only apply to those customers of the Company who are current Customers and were Customers at any time within 12 months prior to the termination or expiration of my employment with the Company. “Customer” shall mean those persons or affiliates to which the Company has rendered services or provided products within the last three months that fall within the definition of Restricted Business (including, for the avoidance of doubt, commercial clients of the Company that provide vehicles to the Company in connection with the services provided by the Company). The terms “Cause” and “Good Reason” shall have the respective meanings signed to each such term in the Employment Agreement.
4
7. Covenants not to Compete. For purposes of this Agreement, the term “Non- Compete Period” shall mean a period from the date hereof until in the case of a Fault Event, two (2) years immediately following the date of termination or expiration of my employment with the Company, or in the event of a termination or expiration for any other reason, one (1) year immediately following the termination or expiration of my employment with the Company. During the Non-Compete Period, I covenant and agree that I will not, directly or indirectly, (i) own or hold, directly or beneficially, as a shareholder (other than as a shareholder with less than 3% of the outstanding common stock of a publicly traded corporation), option holder, warrant holder, partner, member or other equity or security owner or holder of any company or business that derives revenue from the Restricted Business (as defined below) within the Restricted Area (as defined below), or any company or business controlling, controlled by or under common control with any company or business directly engaged in such Restricted Business within the Restricted Area (any of the foregoing, a “Restricted Company”) or (ii) engage or participate as an employee, director, officer, manager, executive, partner, independent contractor, consultant or technical or business advisor (or any foreign equivalents of the foregoing) in the Restricted Activities within the Restricted Area. Nothing in this Section 7 shall preclude me from accepting employment with a multi-division company so long as (x) my employment is not within a division of my new employer that engages in the Restricted Business within the Restricted Area, (y) during the course of such employment, I do not communicate related to Restricted Activities with any division of my new employer engaged in the Restricted Business within the Restricted Area and (z) I do not engage in the Restricted Activities within the Restricted Area.
(a) For purposes of this Agreement, the terms “Restricted Activities” and “Restricted Business” shall have the meanings given to them in Exhibit E hereto, and the term “Restricted Area” shall have the following meaning: (i) City of Richmond, Virginia, (ii) any municipality wherein the Company operates the Restricted Business if the Company operated such Restricted Business in such location at any time during the 12 months immediately preceding the termination or expiration of my employment, (iii) any municipality wherein the Company operates the Restricted Business or plans to operate the Restricted Business if the Company planned to operate the Restricted Business in such location as of the termination or expiration of my employment, (iv) any municipality wherein an office of the Company is located, in which office I was physically present while rendering services or providing products in behalf of the Company at any time during the 12 months immediately preceding the termination or expiration of my employment, (v) the area within 50 miles of the municipal limits of each of the foregoing and (vi) any other area in the United States of America.
(b) In the event that I intend to associate (whether as an employee, consultant, independent contractor, officer, manager, advisor, partner, executive or director) with any Restricted Company during the Non-Compete Period, I must provide information in writing to the Board relating to the activities proposed to be engaged in by me for such Restricted Company. In the event that the Board consents in writing to my engagement in such activity, the engaging in such activity by me shall be conclusively deemed not to be a violation of Section 7 hereof and the Company may not seek its remedies under Section 8 below with respect to my engaging in such activity.
(c) Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be construed to prohibit any activity which cannot reasonably be construed to further in any meaningful way any competition against the Company.
5
8. Specific Enforcement; Remedies Cumulative; Attorney Fees. I acknowledge that the Company will be irreparably injured if the provisions of Sections 2, 4, 6 and 7 hereof are not specifically enforced and I agree that the terms of such provisions (including without limitation the periods set forth in Sections 6 and 7) are reasonable and appropriate. If I commit or, in the reasonable belief of the Company, threaten to commit a breach of any of the provisions of Sections 2, 4, 6 and 7 hereof, the Company shall have the right and remedy, in addition to and not in limitation of any other remedy that may be available at law or in equity, to have the provisions of Sections 2, 4, 6 and 7 hereof specifically enforced by any court having jurisdiction through immediate injunctive and other equitable relief, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy therefor. Such injunction shall be available without the posting of any bond or other security. Each party agrees to pay to the other party the other party’s reasonable attorney’s fees and court costs in obtaining, or defending against, the enforcement of, or determining the validity of, this Agreement or any provision hereof, whether in an action, suit, motion or matter brought by me or the Company (or any other person or entity), provided the other party is the prevailing party in such action, suit, motion or matter.
9. Re-Set of Period for Non-Competition and Non-Solicitation. In the event that a legal or equitable action is commenced with respect to any of the provisions of Section 6 or Section 7 hereof and I have not strictly observed the provisions in such sections with respect to which such action has been commenced then the one-year or two-year periods, as applicable, described in such sections not strictly observed by me shall begin to run anew from the date of any Final Judicial Determination of such legal action. “Final Judicial Determination” shall mean the expiration of time to file any possible appeal from a final judgment in such legal action or, if an appeal is taken, the final determination of the final appellate proceeding and that any failure to do so shall constitute a breach of the provisions hereof.
10. Conflict of Interest Guidelines. I agree to diligently adhere to the Company’s policies, including any policy pertaining to conflicts of interest. I agree that if I do not adhere to any of the provisions of such guidelines, I will be in breach of the provisions hereof.
11. Representations. I agree to execute any proper oath or verify any proper document required to carry out the terms of this Agreement. I represent that my performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any oral or written agreement in conflict herewith and my employment by the Company and my services to the Company will not violate the terms of any oral or written agreement to which I am a party.
12. Company Opportunity. During the term of my employment, I shall submit to the Board all business, commercial and investment opportunities or offers presented to me or of which I become aware which relate to the business of the Company at any time during such term (“Company Opportunities”). Unless approved in advance in writing by the Board, I shall not accept or pursue, directly or indirectly, any Company Opportunities on my own behalf.
6
13. Cooperation. During the term of my employment and thereafter, I shall cooperate with the Company in any internal investigation, any administrative, regulatory or judicial investigation or proceeding or any dispute with a third party as reasonably requested by the Company (including, without limitation, my being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information and turning over to the Company all relevant documents which are or may come into my possession, all at times and on schedules that are reasonably consistent with my other permitted activities and commitments). In the event the Company requires my cooperation in accordance with this Section, the Company shall reimburse me solely for reasonable travel expenses (including lodging and meals) upon submission of receipts.
14. General Provisions.
(a) Governing Law; Interpretation; Venue; Waiver of Jury Trial. This Agreement will be governed by the internal substantive laws, but not the choice of law rules, of the Commonwealth of Virginia. Nothing in this Agreement shall be construed to prohibit activity could not be in any way competition with the Company or could not help in any way another company or me to compete with the Company.
(i) THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE FOLLOWING COURTS IN MATTERS RELATED TO THIS AGREEMENT OR MY EMPLOYMENT WITH THE COMPANY AND AGREE NOT TO COMMENCE ANY SUIT, ACTION OR PROCEEDING RELATING THERETO EXCEPT IN ANY OF SUCH COURTS: THE ST ATE COURTS OF THE COMMONWEALTH OF VIRGINIA OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA.
(ii) I AGREE TO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY ME, AND I ACKNOWLEDGE THAT, EXCEPT FOR THE COMPANY’S AGREEMENT TO LIKEWISE WAIVE ITS RIGHTS TO A TRIAL BY JURY (WHICH THE COMPANY HEREBY MAKES), COMPANY HAS NOT MADE ANY REPRESENTATIONS OF FACTS TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. I FURTHER ACKNOWLEDGE THAT I HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF MY OWN FREE WILL, AND THAT I HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. I FURTHER ACKNOWLEDGE THAT I HAVE READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF THIS WAIVER AND AS EVIDENCE OF THIS FACT SIGN THIS AGREEMENT BELOW.
(b) Entire Agreement. This Agreement (including the recitals hereto, which are hereby made a binding part of this Agreement, and the Exhibits hereto) sets forth the entire agreement and understanding between the Company and me relating to the subject matter herein and therein and, effective as of the date hereof, merges and supersedes all prior discussions and agreements between the Company and me relating thereto. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the party to be charged.
7
(c) Severability. If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.
(d) Successors and Assigns. This Agreement will be binding after my death upon my heirs, executors, administrators and other legal representatives, but shall otherwise not be assignable by me. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. The Company may assign this Agreement to any successor to the Company (whether by merger or otherwise) and any corporation or other entity to which the Company may, directly or indirectly, be sold or transfer all or substantially all of its assets and business, in which case the term “Company,” as used herein, shall mean such corporation or other successor entity.
(e) Reformation. If the provisions of this Agreement should ever be adjudicated to exceed the time, geographic, service, product or other limitations permitted by applicable law in any jurisdiction, I agree that such provisions shall be deemed reformed in such jurisdiction so as to continue to apply to the maximum time, geographic, service, product or other limitations permitted by law in such jurisdiction.
(f) Survival. Notwithstanding the expiration of my employment with the Company, either as an employee, officer, director, or independent contractor, my obligations under Sections 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14 hereof shall survive and remain in full force and effect and the Company shall be entitled to equitable relief against me pursuant to the provisions of Section 8.
(g) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses or e-mail addresses (or at such other address or email address for a party as shall be specified in a notice given in accordance with this Section 14(g)):
(i) If to the Company:
CarLotz, Inc.
611 Bainbridge Street, Suite 100
Richmond, VA 23224
Attn: Board of Directors
With a copy to:
Freshfields Bruckhaus Deringer LLP
601 Lexington Ave,
New York, NY 10022
Attn: Valerie Jacob and Lori Goodman
Valerie.Jacob@freshfields.com
Lori.Goodman@freshfields.com
8
(ii) If to Executive, to the last address that the Company has in its personnel records for Executive, or
(iii) At any other address as any Party shall have specified by notice in writing to the other Party.
(h) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile or PDF shall be deemed effective for all purposes.
15. Counsel. This Agreement has been prepared in part by counsel to the Company, after full disclosure of its representation of the Company and with the consent and direction of all parties. I have reviewed the contents of this Agreement and fully understand its terms. I acknowledge that I am fully aware of my right to seek independent advice and the risks in not seeking such independent advice, and that I fully understand the potentially adverse interests of the parties with respect to this Agreement. I further acknowledge that neither the Company nor its Counsel has made representations or given any advice to me with respect to the consequences of this Agreement or any matters contemplated by this Agreement and that I have been advised of the importance of seeking independent counsel with respect to such consequences. By executing this Agreement, I represent that I have, after being advised of the potential conflicts between me and the Company with respect to the future consequences of this Agreement, either consulted independent legal counsel or elected, notwithstanding the advisability of seeking such independent legal counsel, not to consult with such independent legal counsel. I hereby agree at in interpretation or construction of this Agreement, the Agreement shall not be construed against either party on the basis that such party was the drafter of this Agreement or on any other basis.
16. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the parties, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth in this Agreement. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by both the Company and Executive. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver or continuing waiver of any other provision hereof. Notwithstanding this paragraph 16, this Agreement shall be considered an exhibit to the Employment Agreement and therefore neither the Employment Agreement nor this Agreement shall supersede one another. To the extent a conflict arises between the Employment Agreement and this Agreement, the terms of this Agreement shall control for all matters relating to the non-competition, non-solicitation, and confidentiality.
[Signature Page Follows]
9
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and year first above written.
CARLOTZ, INC. | ||
By: | /s/ Michael W. Bor | |
Name: | Michael W. Bor | |
Title: | President and Chief Executive Officer | |
EXECUTIVE | ||
/s/ John Foley | ||
John Foley |
EXHIBIT C
LIST OF PRIOR INVENTIONS
EXHIBIT D
LIST OF RETAINED INVENTIONS
EXHIBIT E
RESTRICTED ACTIVITIES
“Restricted Activities” shall include providing sales, administrative, management and/or executive services of the type I provide or have provided (or after the termination or expiration of my employment with the Company, of the type I provided at any time within the 12 months prior to the date of such termination or expiration) to or on behalf of the Company, to any company with respect to any of the following businesses: (i) vehicle retailing business, (ii) vehicle auction business, or (iii) vehicle rental, vehicle finance or vehicle leasing business, in each case within this clause (iii) related to the remarketing of vehicles for the secondary market (the “Restricted Business”).
Exhibit 10.17
CARLOTZ, INC.
Employment Agreement
This Employment Agreement (this “Agreement”), dated as of December 11, 2020, is made by and between CarLotz, Inc., a Delaware corporation (together with any successor thereto, the “Company”), and Daniel Valerian (“Executive”) (collectively referred to as the “Parties” or individually referred to as a “Party”).
WHEREAS, pursuant to that certain Offer Letter, dated January 1, 2015, as amended (the “Prior Agreement”), by and between the Company and Executive, Executive is currently employed as the Chief Technology Officer of the Company;
WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated October 21, 2020, with Acamar Partners Acquisition Corp. and Acamar Partners Sub, Inc. (the “Merger Agreement”);
WHEREAS, it is the desire of the Company to continue the employment of Executive and to assure itself of the services of Executive following the closing of the transactions contemplated by the Merger Agreement (the “Closing”) and thereafter on the terms herein provided by entering into this Agreement, which will supersede the Prior Agreement; and
WHEREAS, it is the desire of Executive to continue to provide services to the Company following the Closing and thereafter on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, including the respective covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1. Employment.
(a) General. Effective on the Closing Date (as defined in the Merger Agreement) as of immediately prior to the Closing (the “Effective Date”), the Company shall employ Executive and Executive shall remain in the employ of the Company, for the period and in the positions set forth in this Section 1, and subject to the other terms and conditions herein.
(b) Employment Term. The term of employment under this Agreement (the “Term”) shall commence on the Effective Date and end on the third anniversary of the Effective Date, subject to earlier termination as provided in Section 3 below. The Term shall automatically renew for additional twelve (12) month periods unless no later than ninety (90) days prior to the end of the applicable Term either Party gives written notice of non-renewal (“Notice of Non-Renewal”) to the other, in which case Executive’s employment will terminate at the end of the then-applicable Term, subject to earlier termination as provided in Section 3 below.
(c) Positions. Executive shall serve as the Chief Technology Officer of the Company with such responsibilities, duties and authority normally associated with such position and as may from time to time be reasonably assigned to Executive by the Board, as defined below, or by the Chief Executive Officer of the Company. Executive shall report to the Chief Executive Officer of the Company. At the Company’s request, Executive shall serve the Company and/or its subsidiaries and affiliates in such other capacities in addition to the foregoing as the Company shall designate, provided that such additional capacities are consistent with Executive’s position. In the event that Executive serves in any one or more of such additional capacities, Executive’s compensation shall not automatically be increased on account of such additional service.
(d) Duties. Executive shall devote substantially all of Executive’s working time, attention and efforts to the business and affairs of the Company (which shall include service to its affiliates), except during any paid vacation or other excused absence periods or during periods of illness. Executive shall not engage in outside business activities (including serving on outside boards or committees) without the prior written consent of the Chief Executive Officer; provided that Executive shall be permitted to (i) manage Executive’s personal, financial and legal affairs, which may include certain personal outside business activities, (ii) participate in trade associations and charitable and community affairs, and (iii) continue to serve on the board of directors or advisory boards of the companies/organizations set forth on Exhibit A attached hereto, if any, in each case, subject to compliance with this Agreement and provided that such activities do not materially interfere with Executive’s performance of Executive’s duties and responsibilities hereunder or violate the terms of that certain Loyalty Agreement entered into by and between Executive and the Company as of the date hereof, attached as Exhibit B hereto (the “Loyalty Agreement”). Executive agrees to observe and comply with the rules and policies of the Company as adopted by the Company from time to time, in each case as amended from time to time, as set forth in writing and as delivered to Executive (each, a “Policy”). The principal place of Executive’s employment shall be the Company’s primary office located in Richmond, Virginia.
2. Compensation and Related Matters.
(a) Annual Base Salary. During the Term, Executive shall receive a base salary at a rate of $350,000.00 per annum, which shall be paid in accordance with the customary payroll practices of the Company, no less frequently than monthly, and shall be pro-rated for partial years of employment. Such annual base salary shall be reviewed from time to time by the Company (such annual base salary, as it may be adjusted from time to time pursuant to this Section 2(a), the “Annual Base Salary”). The Annual Base Salary may not be decreased during the Term other than in connection with an across-the-board decrease for all executives.
(b) Annual Bonus. During the Term, beginning with calendar year 2021, Executive will be eligible to participate in an annual incentive program established by the Board. Executive’s annual incentive compensation under such incentive program (the “Annual Bonus”) shall be targeted at 50% of Executive’s Annual Base Salary (the “Target Bonus”). To the extent the targeted performance levels are exceeded, the annual incentive plan will provide a means by which the Annual Bonus may be higher than the Target Bonus, and to the extent the target performance levels are not achieved, the annual incentive plan will provide a means by which the Annual Bonus may be lower than the Target Bonus. The Annual Bonus payable under the incentive program shall be based on the achievement of performance goals to be determined by the Board. Notwithstanding the foregoing, except as set forth in Section 4(b), no bonus shall be payable with respect to any calendar year unless Executive remains continuously employed with the Company during the period beginning on the Effective Date and ending on December 31 of such calendar year. The payment of any Annual Bonus pursuant to the incentive program will be made on or before March 15th of the year following the year to which such Annual Bonus relates.
(c) Transaction Bonus. Executive will be paid a transaction bonus of $150,000.00 (the “Transaction Bonus”) within thirty (30) days of the Closing.
2
(d) Equity-Based Compensation. The Company shall grant to Executive stock options (“Options”) to purchase shares of the Company’s common stock, par value $.01 per share (the “Company Common Stock”) and restricted stock units with respect to the Company Common Stock (“Restricted Stock Units”) with an aggregate value of $700,000.00 based on the per share fair market value of the Company’s common stock on the Effective Date, equally split between the Options and the Restricted Stock Units. The value of the Options for this purpose shall be calculated using the Black-Scholes method. Such Options shall have an exercise price per share equal to the fair market value of a share of Company Common Stock as of the date of grant (as determined in accordance with Section 409A (as defined below)). Such Options and Restricted Stock Units shall (i) be subject to time-based vesting in equal annual installments over a four (4)-year period based on Executive’s continued employment with the Company (commencing as of the Effective Date), (ii) vest and, if applicable, become exercisable upon a Change in Control (as defined in the CarLotz, Inc. 2020 Incentive Award Plan (the “Plan”)) in the event that the successor in connection with the Change in Control does not assume or substitute for any such outstanding Options or Restricted Stock Units, and (iii) be subject to the terms and conditions set forth in the Plan under which the Options and Restricted Stock Units will be granted and the related Award Agreements (as defined in the Plan), and subject to shareholder approval of the Plan. The Options shall be granted on the Effective Date. The grant of the Restricted Stock Units shall not be effective until, and the exercisability of the Stock Options shall be contingent on the filing of a Form S-8 registration statement by New CarLotz, Inc. with respect to the Plan, no later than sixty-five (65) calendar days after the Effective Date. In order to satisfy the exercise price or any tax withholding obligations of the Company pertaining to Executive’s Options or the Restricted Stock Units, Executive will be permitted to instruct a broker, in compliance with applicable laws and regulations, to sell the necessary amount of Executive’s shares subject to such awards, such that the cash proceeds of such sale can be used to satisfy such exercise price or tax withholding obligations, and to adopt a Rule 10b5-1 plan, in compliance with applicable laws, to permit Executive to sell shares of Company Common Stock during blackout periods, when Executive has exposure to material non-public information and/or Executive otherwise is subject to insider trading restrictions. Additionally, during the Term, Executive shall have the right to receive stock options, restricted stock, restricted stock units, stock appreciation rights and/or other equity awards under the Company’s applicable equity plans as the Company may determine on a basis not less favorable than that provided to the class of employees that includes Executive and taking into account Executive’s position with the Company and customary award grants of similar publicly-traded companies.
(e) Benefits. During the Term, Executive shall be eligible to participate in employee benefit plans, programs and arrangements as the Company may from time to time offer to provide to its executives, consistent with the terms thereof and as such plans, programs and arrangements may be amended from time to time. Notwithstanding the foregoing, nothing herein is intended, or shall be construed, to require the Company to institute or continue any, or any particular, plan or benefit. In no event shall Executive be eligible to participate in any severance plan or program of the Company, except as set forth in Section 4 below.
(f) Vacation; Holidays. During the Term, Executive shall be entitled to four (4) weeks of paid vacation per calendar year (pro-rated for partial years) in accordance with the Policies. Any vacation shall be taken at the reasonable and mutual convenience of the Company and Executive. Unused vacation will not carry over from calendar year to calendar year. Upon termination of employment, the Executive will be entitled to payment for accumulated unused vacation for the year of termination. In addition, the Company will offer to Executive employee time off for standard Company holidays in accordance with the Policies.
(g) Business Expenses. During the Term, the Company shall reimburse Executive for all reasonable travel and other business expenses incurred by Executive in the performance of Executive’s duties to the Company in accordance with the Company’s expense reimbursement Policy.
(h) Indemnification. The Company hereby agrees to indemnify Executive and hold Executive harmless to the fullest extent permitted under the organizational documents of the Company and applicable law against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorney’s fees), losses, and damages (including advancement of fees and expenses) resulting from Executive’s performance of Executive’s duties and obligations with the Company hereunder. The Company shall cover Executive under directors’ and officers’ liability insurance both during and, while potential liability exists, after the Term in the same amount and to the same extent as the Company covers its other officers and directors. The foregoing obligations shall survive the termination of Executive’s employment with the Company.
3
3. Termination.
(a) Circumstances. Executive’s employment hereunder may be terminated by the Company or Executive, as applicable, without any breach of this Agreement under the following circumstances:
(i) Death. Executive’s employment hereunder shall terminate automatically upon Executive’s death.
(ii) Disability. If Executive has incurred a Disability, as defined below, the Company may terminate Executive’s employment.
(iii) Termination for Cause. The Company may terminate Executive’s employment for Cause, as defined below.
(iv) Termination without Cause. The Company may terminate Executive’s employment without Cause, which shall include Executive’s termination as a result of the Company delivering a Notice of Non-Renewal.
(v) Resignation from the Company with Good Reason. Executive may resign Executive’s employment with the Company with Good Reason, as defined below.
(vi) Resignation from the Company without Good Reason. Executive may resign Executive’s employment with the Company for any reason other than Good Reason, which shall include Executive’s termination as a result of Executive delivering a Notice of Non-Renewal.
(b) Notice of Termination. During the Term, any termination of Executive’s employment by the Company or by Executive under this Section 3 (other than termination pursuant to Sections 3(a)(i)) shall be communicated by a written notice (a “Notice of Termination”) to the other Party hereto (i) indicating the specific termination provision in this Agreement relied upon, (ii) except with respect to a termination pursuant to Section 3(a)(iv) or 3(a)(vi), setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) specifying a Date of Termination (as defined below). The failure by either party to set forth in the Notice of Termination any fact or circumstance shall not waive any right of the party hereunder or preclude the party from asserting such fact or circumstance in enforcing the party’s rights hereunder.
(c) Termination Date. For purposes of this Agreement, “Date of Termination” shall mean the date of the termination of Executive’s employment with the Company, which, if Executive’s employment is terminated as a result of Executive’s death, will be the date of Executive’s death, and otherwise shall be the date specified in a Notice of Termination. Except in the case of a termination pursuant to Sections 3(a)(i) and (ii) above, the Date of Termination shall be at least fifteen (15) days following the date of the Notice of Termination or such later date as may be required pursuant to this Agreement. Notwithstanding the foregoing, (i) the Company may deliver its Notice of Termination to Executive that specifies any Date of Termination that occurs on or after the date of its Notice of Termination; (ii) in the event that Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, change the Date of Termination to any date that occurs on or following the date of the Notice of Termination and is prior to the Date of Termination specified in the Notice of Termination; and (iii) if the Executive’s employment is to terminate at the end of a Term, the Date of Termination shall be the last day of such Term.
4
(d) Deemed Resignation. Upon termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any of its subsidiaries.
4. Obligations upon a Termination of Employment.
(a) Company Obligations upon Termination. Upon termination of Executive’s employment pursuant to any of the circumstances listed in Section 3(a) above, Executive (or Executive’s estate) shall be entitled to receive the sum of: (i) the portion of Executive’s Annual Base Salary earned through the Date of Termination, but not yet paid to Executive, which shall be paid as described in Section 2(a) above; (ii) except in the event of a termination for Cause pursuant to Section 3(a)(iii), any unpaid Annual Bonus earned by Executive for the year prior to the year in which the Date of Termination occurs, as determined by the Board in its good faith discretion based upon actual performance achieved, which Annual Bonus, if any, shall be paid to Executive when bonuses for such year are paid to actively employed senior executives of the Company but in no event later than March 15 of the year in which the Date of Termination occurs; (iii) any expenses owed to Executive pursuant to Section 2(g) above, which shall be paid within thirty (30) days after the Date of Termination; (iv) any accumulated unused vacation, which shall be paid in a lump sum within thirty (30) days after the Date of Termination; and (v) any amount accrued and arising from Executive’s participation in, or benefits accrued under any employee benefit plans, programs or arrangements, which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements (collectively, the “Company Arrangements”). Except as otherwise expressly required by law or as specifically provided in a Company Arrangement or herein, all of Executive’s rights to salary, severance, benefits, bonuses and other compensatory amounts hereunder (if any) shall cease upon the termination of Executive’s employment hereunder.
(b) Executive’s Obligations upon Termination.
(i) Cooperation. Executive shall provide Executive’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during Executive’s employment hereunder; provided the Company shall indemnify and hold harmless Executive with respect to any such cooperation and reimburse Executive for Executive’s reasonable costs and expenses (including legal counsel selected by Executive and reasonably acceptable to the Company), within thirty (30) days after the incurrence by Executive of such costs and expenses, and such cooperation shall not unreasonably burden Executive or unreasonably interfere with any subsequent employment or other activities that Executive may undertake.
(ii) Return of Company Property. Executive hereby acknowledges and agrees that all Personal Property (as defined below) and equipment furnished to, or prepared by, Executive in the course of, or incident to, Executive’s employment, belongs to the Company and shall be promptly returned to the Company upon termination of Executive’s employment (and will not be kept in Executive’s possession or delivered to anyone else). For purposes of this Agreement, “Personal Property” includes, without limitation, all books, manuals, records, reports, notes, contracts, lists, blueprints, and other documents, or materials, or copies thereof (including computer files), keys, building card keys, company credit cards, telephone calling cards, computer hardware and software, laptop computers, docking stations, cellular and portable telephone equipment, personal digital assistant (PDA) devices and all other proprietary information relating to the business of the Company or its subsidiaries or affiliates. Following termination, Executive shall not retain any written or other tangible material containing any proprietary information of the Company or its subsidiaries or affiliates.
5
(c) Severance Payments upon a Termination without Cause or Resignation with Good Reason.
(i) If, during the Term and not in a Change in Control Period, Executive’s employment terminates pursuant to Section 3(a)(iv) above due to the Company’s termination without Cause or pursuant to Section 3(a)(v) above due to Executive’s resignation with Good Reason, then, subject to Executive’s delivery to the Company of an executed waiver and release of claims in a form approved by the Company (the “Release”) that becomes effective and irrevocable in accordance with Section 9(n) below, and Executive’s continued compliance with Section 5 below, Executive shall receive, in addition to the payments and benefits set forth in Section 4(a) above, the following:
(A) an amount in cash equal to twelve (12) months of Executive’s then-existing Annual Base Salary, payable, less applicable withholdings and deductions, in the form of salary continuation in regular installments over the 12-month period following the date of Executive’s Separation from Service in accordance with the Company’s normal payroll practices, no less frequently than monthly, with the first of such installments to commence on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise provided in Section 9(n) below; and
(B) during the period commencing on the Date of Termination and ending on the twelve (12) month anniversary thereof or, if earlier, the date on which Executive becomes eligible for comparable replacement coverage under a subsequent employer’s group health plan (in any case, the “COBRA Period”), subject to Executive’s valid election to continue healthcare coverage under Section 4980B of the Code and the regulations thereunder, the Company shall, in its sole discretion, either (A) continue to provide to Executive and Executive’s dependents, at the Company’s sole expense, or (B) reimburse Executive and Executive’s dependents for coverage under its group health plan (if any), at the same levels and costs in effect on the Date of Termination (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars); provided, however, that if (1) any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the continuation coverage period to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), (2) the Company is otherwise unable to continue to cover Executive or Executive’s dependents under its group health plans or (3) the Company cannot provide the benefit without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining Company subsidy shall thereafter be paid to Executive in substantially equal monthly installments over the COBRA Period (or remaining portion thereof).
6
(ii) If, during the Term and during a Change in Control Period, Executive’s employment terminates pursuant to Section 3(a)(iv) above due to the Company’s termination without Cause or pursuant to Section 3(a)(v) above due to Executive’s resignation with Good Reason, then, subject to Executive’s delivery to the Company of a Release that becomes effective and irrevocable in accordance with Section 9(n) below, and Executive’s continued compliance with Section 5 below, Executive shall receive, in addition to the payments and benefits set forth in Section 4(a) above, the following:
(A) an amount in cash equal to twelve (12) months of Executive’s then-existing Annual Base Salary, less applicable withholdings and deductions, payable in the form of salary continuation in regular installments over the twelve (12)-month period following the date of Executive’s Separation from Service in accordance with the Company’s normal payroll practices, no less frequently than monthly, with the first of such installments to commence on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise provided in Section 9(n) below; provided, however that if the Change in Control constitutes a change in control event within the meaning of Section 409A of the Code, such amount will be paid in the form of a single lump sum in accordance with the Company’s normal payroll practices on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise set forth in Section 9(n) below;
(B) a pro-rated portion (based on the number of days Executive was employed by the Company during the calendar year in which the Date of Termination occurs) of the Annual Bonus that Executive would have earned had Executive remained employed through the end of the calendar year in which Executive’s Date of Termination occurs, as determined by the Board in good faith. If and to the extent earned, such pro-rated Annual Bonus shall be paid out at the same time annual bonuses are paid generally to other executives of the Company for the relevant year, less applicable withholdings and deductions, but in no event later than March 15th of the year immediately following that in which the Date of Termination occurs;
(C) the vesting and, if applicable, exercisability shall be accelerated (and, if applicable, all restrictions and rights of repurchase on such awards shall lapse) effective as of immediately prior to the Date of Termination with respect to 100% of the shares subject to Executive’s then outstanding equity awards (including any such awards that vest in whole or in part based on the attainment of performance-vesting conditions, which shall vest based on actual performance as of the Date of Termination and otherwise be governed by the terms of the applicable award agreement); and
(D) during the COBRA Period, subject to Executive’s valid election to continue healthcare coverage under Section 4980B of the Code and the regulations thereunder, the Company shall, in its sole discretion, either (A) continue to provide to Executive and Executive’s dependents, at the Company’s sole expense, or (B) reimburse Executive and Executive’s dependents for coverage under its group health plan (if any), at the same levels and costs in effect on the Date of Termination (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars); provided, however, that if (1) any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the continuation coverage period to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), (2) the Company is otherwise unable to continue to cover Executive or Executive’s dependents under its group health plans or (3) the Company cannot provide the benefit without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining Company subsidy shall thereafter be paid to Executive in substantially equal monthly installments over the COBRA Period (or remaining portion thereof).
7
(d) No Requirement to Mitigate; Survival. Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or in any other manner. Notwithstanding anything to the contrary in this Agreement, the termination of Executive’s employment shall not impair the rights or obligations of any Party.
(e) No Other Severance. Executive shall not be entitled to any severance benefits, pay in lieu of notice, or other similar benefits from the Company in connection with Executive’s termination other than as set forth herein.
(f) Survival. Notwithstanding anything to the contrary in this Agreement, the provisions of Sections 5 through 9 of this Agreement will survive the termination of Executive’s employment and the termination of the Term.
5. Restrictive Covenants and Confidentiality.
As a condition to the effectiveness of this Agreement, Executive will execute and deliver to the Company contemporaneously herewith Exhibit B, the Loyalty Agreement. Executive agrees to abide by the terms of the Loyalty Agreement, which are hereby incorporated by reference into this Agreement. Executive acknowledges that the provisions of the Loyalty Agreement will survive the termination of Executive’s employment and the termination of the Term for the periods set forth in the Loyalty Agreement. Notwithstanding any other provision of this Agreement, no payment shall be made or benefit provided pursuant to Section 4(c) following the date Executive first violates any of the restrictive covenants set forth in the Loyalty Agreement, and as of the first date on which Executive violates any such restrictive covenants, Executive shall pay the Company an amount equal to the sum of all payments theretofore paid to Executive pursuant to Section 4(c).
6. Assignment and Successors.
The Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise). This Agreement shall be binding upon and inure to the benefit of the Company, Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only by will or the laws of descent and distribution or operation of law. Notwithstanding the foregoing, Executive shall be entitled, to the extent permitted under applicable law and Company Arrangements, to select and change a beneficiary or beneficiaries to receive compensation hereunder following Executive’s death by giving written notice thereof to the Company.
7. Certain Definitions.
(a) Board. The “Board” shall mean the Board of Directors of the Company or an authorized committee of the Board.
8
(b) Cause. “Cause” shall mean any of the following:
(i) Executive’s commission of any act or omission that results in, or may reasonably be expected to result in, a conviction of (or plea of no contest or nolo contendere to) any felony (other than in connection with a traffic violation that does not result in imprisonment) under any state, federal or foreign law or any crime involving moral turpitude or dishonesty or that would reasonably be expected to cause material reputational or other material harm or damage to the Company;
(ii) Executive’s commission of an act of fraud, embezzlement, misappropriation of funds, material malfeasance, breach of fiduciary duty or other willful and material act of misconduct, in each case, against the Company;
(iii) any willful, material damage to any material property of the Company by Executive;
(iv) Executive’s willful, intentional and repeated failure to substantially perform Executive’s material job functions hereunder (other than any such failure resulting from Executive’s Disability or during periods of illness) or (B) carry out or comply with a lawful and reasonable directive of the Board or the Chief Executive Officer, in each case, which failure has not been cured (or cannot be cured) within thirty (30) days after the Company gives written notice to Executive regarding such failure;
(v) Executive’s breach of any Policy causing material reputational or other material harm or damage to the Company, which breach has not been cured (or cannot be cured) within thirty (30) days after the Company gives written notice to Executive regarding such breach;
(vi) Executive’s unlawful use (including being under the influence) of illegal drugs or continued excessive use of alcohol, in each case that materially impairs Executive’s ability to perform Executive’s duties contemplated hereunder;
(vii) Any grossly negligent or reckless act by Executive resulting in or causing material reputational or other material harm or damage to the Company; and
(viii) Executive’s material breach of this Agreement, the Loyalty Agreement or any other written agreement between Executive and the Company and failure to cure such breach (if capable of cure) within thirty (30) days after the Company gives written notice to Executive regarding such breach.
For purposes of this definition, an action or inaction is only “willful” if it is done or omitted by Executive without a good faith and reasonable belief that such action or inaction is in the best interests of the Company or any of its affiliates. The failure by the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing the Company’s rights hereunder. Notwithstanding the foregoing, a termination for Cause shall be deemed to occur if following Executive's termination of employment for any reason the Company determines that circumstances existing prior to such termination would have entitled the Company to terminate Executive's employment for Cause.
(c) Change in Control. “Change in Control” shall have the meaning set forth in the version of the Company’s 2020 Incentive Award Plan in effect on the Effective Date.
9
(d) Change in Control Period. “Change in Control Period” shall mean the period beginning upon the consummation of a Change in Control and ending twelve (12) months following the consummation of such Change in Control.
(e) Code. “Code” shall mean the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder.
(f) Disability. “Disability” shall mean a disability within the meaning of Section 22(e)(3) of the Code, as it may be amended from time to time. Any determination of the Executive’s Disability made in good faith by the Board shall be conclusive and binding on the Executive, unless within ten (10) days after written notice to the Executive of such determination, the Executive elects by written notice to the Company to challenge such determination, in which case determination of Disability shall be made by arbitration pursuant to Section 9(i) below.
(g) Good Reason. For the sole purpose of determining Executive’s right to severance payments and benefits as described above, “Good Reason” shall mean any one of the following, that occurs without Executive’s written consent:
(i) a material reduction in Executive’s Annual Base Salary (except pursuant to the last sentence of Section 2(a)) or Target Bonus; and
(ii) a material breach by the Company of this Agreement or any other written agreement with Executive.
Notwithstanding the foregoing, no Good Reason will have occurred unless and until: (A) Executive has provided the Company, within sixty (60) days of becoming aware of the initial occurrence of the Good Reason event, written-notice stating with specificity the applicable facts and circumstances underlying such finding of Good Reason; and (B) the Company or the successor company fails to cure such condition within forty-five (45) days after receiving such written notice (the “Cure Period”) and (C) Executive’s resignation based on such Good Reason is effective within thirty (30) days after expiration of the Cure Period with the Company or the successor company having failed to cure same.
8. Parachute Payments.
(a) Notwithstanding any other provisions of this Agreement or any Company Arrangement, in the event that any payment or benefit by the Company or otherwise to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (all such payments and benefits, including the payments and benefits under Section 4 above, being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments shall be reduced (in the order provided in Section 8(b) below) to the minimum extent necessary to avoid the imposition of the Excise Tax on the Total Payments, but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income and employment taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income and employment taxes on such Total Payments and the amount of the Excise Tax to which Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).
10
(b) The Total Payments shall be reduced in the following order: (i) reduction on a pro-rata basis of any cash severance payments that are exempt from Section 409A of the Code (“Section 409A”), (ii) reduction on a pro-rata basis of any non-cash severance payments or benefits that are exempt from Section 409A, (iii) reduction on a pro-rata basis of any other payments or benefits that are exempt from Section 409A, and (iv) reduction of any payments or benefits otherwise payable to Executive on a pro-rata basis or such other manner that complies with Section 409A; provided, in case of subclauses (ii), (iii) and (iv), that reduction of any payments attributable to the acceleration of vesting of Company equity awards shall be first applied to Company equity awards that would otherwise vest last in time.
(c) The Company will select an adviser with experience in performing calculations regarding the applicability of Section 280G of the Code and the Excise Tax, provided that the adviser’s determination shall be made based upon “substantial authority” within the meaning of Section 6662 of the Code, (the “Independent Advisors”) to make determinations regarding the application of this Section 8. The Independent Adviser shall provide its determination, together with detailed supporting calculations and documentation, to Executive and the Company within fifteen (15) business days following the date on which Executive’s right to the Total Payments is triggered, if applicable, or such other time as requested by Executive (provided that Executive reasonably believes that any of the Total Payments may be subject to the Excise Tax) or the Company. The costs of obtaining such determination and all related fees and expenses (including related fees and expenses incurred in any later audit) shall be borne by the Company. Any good faith determinations of the Independent Adviser made hereunder shall be final, binding and conclusive upon the Company and Executive.
(d) In the event it is later determined that to implement the objective and intent of this Section 8, (i) a greater reduction in the Total Payments should have been made, the excess amount shall be returned promptly by Executive to the Company or (ii) a lesser reduction in the Total Payments should have been made, the excess amount shall be paid or provided promptly by the Company to Executive, except to the extent the Company reasonably determines would result in imposition of an excise tax under Section 409A.
9. Miscellaneous Provisions.
(a) Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the Commonwealth of Virginia without reference to the principles of conflicts of law of the Commonwealth of Virginia or any other jurisdiction that would result in application of the laws of a jurisdiction other than the Commonwealth of Virginia, and where applicable, the laws of the United States.
(b) Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(c) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses or e-mail addresses (or at such other address or email address for a party as shall be specified in a notice given in accordance with this Section 9(c)):
(i) If to the Company:
CarLotz, Inc.
611 Bainbridge Street, Suite 100
Richmond, VA 23224
Attn: Board of Directors
11
With a copy to:
Freshfields Bruckhaus Deringer LLP
601 Lexington Ave,
New York, NY 10022
Attn: Valerie Jacob and Lori Goodman
Valerie.Jacob@freshfields.com
Lori.Goodman@freshfields.com
(ii) If to Executive, to the last address that the Company has in its personnel records for Executive, or
(iii) At any other address as any Party shall have specified by notice in writing to the other Party.
(d) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile or PDF shall be deemed effective for all purposes.
(e) Entire Agreement. The terms of this Agreement, the Loyalty Agreement, any indemnification agreement between the Company and Executive and any equity award agreement between the Company and Executive are intended by the Parties to be the final expression of their agreement with respect to the subject matter hereof and supersede all prior understandings and agreements, whether written or oral, including without limitation any prior employment agreement, offer letter between Executive and the Company (including the Prior Agreement). The Parties further intend that this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.
(f) Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by Executive and a duly authorized representative of Company. By an instrument in writing similarly executed, Executive or a duly authorized representative of the Company may waive compliance by the other Party with any specifically identified provision of this Agreement that such other Party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.
(g) No Inconsistent Actions. The Parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the Parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.
(h) Construction. This Agreement shall be deemed drafted equally by both the Parties. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any Party shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (i) the plural includes the singular and the singular includes the plural; (ii) “and” and “or” are each used both conjunctively and disjunctively; (iii) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (iv) “includes” and “including” are each “without limitation”; (v) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (vi) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.
12
(i) Arbitration. Any controversy, claim or dispute arising out of or relating to this Agreement, shall be settled solely and exclusively by a binding arbitration process administered by JAMS/Endispute in the State of Virginia. Such arbitration shall be conducted in accordance with the then-existing JAMS/Endispute Rules of Practice and Procedure. The arbitrator shall: (i) provide adequate discovery for the resolution of the dispute; and (ii) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award. The arbitrator shall award the prevailing Party attorneys’ fees and expert fees, if any. The Parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and conclusive. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided, however, that nothing in this subsection shall be construed as precluding the bringing of an action for injunctive relief or specific performance as provided in this Agreement or the Confidentiality Agreement. This dispute resolution process and any arbitration hereunder shall be confidential and neither any Party nor the neutral arbitrator shall disclose the existence, contents or results of such process without the prior written consent of all Parties, except where necessary or compelled in a court to enforce this arbitration provision or an award from such arbitration or otherwise in a legal proceeding. If JAMS/Endispute no longer exists or is otherwise unavailable, the Parties agree that the American Arbitration Association (“AAA”) shall administer the arbitration in accordance with its then-existing rules as modified by this subsection. In such event, all references herein to JAMS/Endispute shall mean AAA. Executive and the Company understand that by agreement to arbitrate any claim pursuant to this Section 9(i), they will not have the right to have any claim decided by a jury or a court, but shall instead have any claim decided through arbitration. Executive and the Company waive any constitutional or other right to bring claims covered by this Agreement other than in their individual capacities. Except as may be prohibited by applicable law, the foregoing waiver includes the ability to assert claims as a plaintiff or class member in any purported class or representative proceeding. Notwithstanding the foregoing, Executive and the Company each have the right to resolve any issue or dispute over intellectual property rights by court action instead of arbitration.
(j) Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the Term, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
(k) Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges that the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.
13
(l) Whistleblower Protections and Trade Secrets. Notwithstanding anything to the contrary contained herein, nothing in this Agreement prohibits Executive from reporting possible violations of federal law or regulation to any United States governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation (including the right to receive an award for information provided to any such government agencies). Furthermore, in accordance with 18 U.S.C. § 1833, notwithstanding anything to the contrary in this Agreement: (i) Executive shall not be in breach of this Agreement, and shall not be held criminally or civilly liable under any federal or state trade secret law (A) for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (B) for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (ii) if Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Executive may disclose the trade secret to Executive’s attorney, and may use the trade secret information in the court proceeding, if Executive files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.
(m) Section 409A.
(i) General. The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A. All amounts payable to the Executive pursuant to Section 4(b) shall, to the maximum extent permitted by Section 409A, be made in reliance on Section 1.409A-1(b)(9) (Separation Pay Plans) or Section 1.409A-1(b)(4) (Short-Term Deferrals) of the Department of Treasury regulations.
(ii) Separation from Service. Notwithstanding anything in this Agreement to the contrary, any compensation or benefits payable under this Agreement that is considered nonqualified deferred compensation under Section 409A and is designated under this Agreement as payable upon Executive’s termination of employment shall be payable only upon Executive’s “separation from service” with the Company within the meaning of Section 409A (a “Separation from Service”).
(iii) Specified Employee. Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (A) the expiration of the six (6)-month period measured from the date of Executive’s Separation from Service with the Company or (B) the date of Executive’s death. Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.
(iv) Expense Reimbursements. To the extent that any reimbursements under this Agreement are subject to Section 409A, any such reimbursements payable to Executive shall be paid to Executive no later than December 31st of the year following the year in which the expense was incurred; provided that Executive submits Executive’s reimbursement request promptly following the date the expense is incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, other than medical expenses referred to in Section 105(b) of the Code, and Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.
14
(v) Installments. Executive’s right to receive any installment payments under this Agreement, including without limitation any continuation salary payments that are payable on Company payroll dates, shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A.
(n) Release. Notwithstanding anything to the contrary in this Agreement, to the extent that any payments due under this Agreement as a result of Executive’s termination of employment are subject to Executive’s execution and delivery of a Release, (i) the Company shall deliver the Release to Executive within ten (10) business days following Executive’s Date of Termination, and the Company’s failure to deliver a Release prior to the expiration of such ten (10) business day period shall constitute a waiver of any requirement to execute a Release, (ii) if Executive fails to execute the Release on or prior to the Release Expiration Date (as defined below) or timely revokes Executive’s acceptance of the Release thereafter, Executive shall not be entitled to any payments or benefits otherwise conditioned on the Release, and (iii) in any case where Executive’s Date of Termination and the last day of the applicable revocation period fall in two separate taxable years, any payments required to be made to Executive that are conditioned on the Release and are treated as nonqualified deferred compensation for purposes of Section 409A shall be made in the later taxable year. For purposes hereof, “Release Expiration Date” shall mean the date that is twenty-one (21) days following the date upon which the Company timely delivers the Release to Executive, or, in the event that Executive’s termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date. To the extent that any payments of nonqualified deferred compensation (within the meaning of Section 409A) due under this Agreement as a result of Executive’s termination of employment are delayed pursuant to this Section 9(n)9(n), such amounts shall be paid in a lump sum on the first payroll date following the date that Executive executes and does not revoke the Release (and the applicable revocation period has expired) or, in the case of any payments subject to Section 9(n)(iii), on the first payroll period to occur in the subsequent taxable year, if later.
10. Executive Acknowledgement.
Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on Executive’s own judgment.
[Signature Page Follows]
15
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and year first above written.
CARLOTZ, INC. | ||
By: | /s/ Michael W. Bor | |
Name: Michael W. Bor | ||
Title: President and Chief Executive Officer | ||
EXECUTIVE | ||
/s/ Daniel Valerian | ||
Daniel Valerian |
EXHIBIT A
CURRENT SERVICE
EXHIBIT B
LOYALTY AGREEMENT
CARLOTZ, INC.
LOYALTY AGREEMENT
THIS AMENDED AND RESTATED LOYALTY AGREEMENT (this “Agreement”) is made as of December 11, 2020 (the “Effective Date”), by and between CarLotz, Inc., a Delaware corporation (the “CarLotz”), and Daniel Valerian (“I” or “me”). This Agreement is referenced as Exhibit B to the employment agreement between the Company and Executive dated December 11, 2020 (the “Employment Agreement”).
NOW, THEREFORE, in exchange and consideration for (a) my being employed as an employee, officer, director, or independent contractor of (i) CarLotz, (ii) any affiliate of CarLotz, and/or (iii) any entity with respect to which more than 30% of the outstanding shares or other equity interests thereof are owned, directly or indirectly, by CarLotz (each of (i), (ii) or (iii) for whom I am so employed at any time after the date hereof or for any of whose customers I provide services or products within the Restricted Business (as defined below) on behalf of any of (i), (ii) or (iii) at any time after the date hereof, jointly and severally and together with any successors and assignees under Section 14(d) below, the “Company”), and all wages, salary, bonuses, compensation, and benefits associated with my employment as an employee (whether full-time, part-time, or casual), officer, manager, director, or independent contractor of the Company and (b) for other good and valuable consideration, the receipt and sufficiency of which I hereby acknowledge, do hereby agree as follows:
1. Not an Employment Agreement. I agree, understand and acknowledge that this Agreement is not an employment agreement.
2. Confidential Information.
(a) Company Information. I agree at all times during the term of my employment and thereafter, to hold in strictest confidence, and not to use (except for the benefit of the Company to fulfill my obligations to it) or to disclose to any person, firm or corporation without written authorization of the Board of Directors of the Company (the “Board”), any Confidential Information of the Company. I agree that “Confidential Information” means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, any non-public research, product or service plans, products, services, customer lists, investor lists, and customers and investors (including, but not limited to, customers of the Company on whom I called, to whom I rendered services or provided products or with whom I became acquainted during the term of my employment), pricing, costs, markets, summaries, investment strategies, marketing strategies and other strategies, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration, marketing, financial information or other business information obtained by me or disclosed to me by the Company or any other person or entity during the term of and in connection with my employment with the Company either directly or indirectly in writing, orally by drawings, by observation of services, products, systems or other aspects of the Company’s business or otherwise.
(b) Former Employer Information. I agree that I will not, during my employment with the Company, improperly use or disclose any proprietary information or trade secrets of any former or concurrent employer or other person or entity and that I will not bring onto the premises of the Company any unpublished or published document containing confidential or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
(c) Inventions.
(i) Inventions Contributed, Retained and Licensed. I hereby contribute, transfer and assign to the Company all of my right, title and interest in and to any and all patents, patents pending, discoveries, copyrights, trademarks, service marks, original works of authorship, developments, inventions, trade secrets, improvements, enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable, which are related to any items, ideas or activities described on Exhibit C (collectively, “Prior Inventions”), except for those Prior Inventions listed on Exhibit D hereto, ownership of which I hereby retain (“Retained Inventions”). I represent that Exhibit D is a complete list of my Retained Inventions that I desire to have specifically excluded from my obligations under this Section. If no items are listed on Exhibit D, I hereby represent that there are no such Retained Inventions. If in the course of my employment with the Company, I incorporate into a Company product, process or service a Retained Invention owned by me or in which I have an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide, unlimited license to make, have made, modify, use and sell such Retained Invention as part of or in connection with such products, process or service.
(ii) Assignment of Future Inventions.
(a) I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and shall contribute, transfer and assign to the Company, or its designee, all my right, title, and interest in and to any and all patents, patents pending, copyrights, trademarks, service marks, discoveries, original works of authorship, developments, inventions, trade secrets, improvements, enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable, under copyright or similar laws, including without limitation all goodwill associated with the foregoing, which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice during the period of time I am in the employ of the Company (collectively referred to as “Inventions”), but excluding Excluded Inventions (as defined in Section 2(c)(ii)(b) below). I further acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of and during the period of my employment with the Company and which are protected by copyright are “works made for hire,” as that term is defined in the United States Copyright Act. I shall not knowingly incorporate any invention, original work of authorship, development, improvement, or trade secret owned, in whole or in part, by any third party, into any Invention without the Company’s prior written permission.
2
(b) Inventions covered by Section 2(c)(ii)(a) above do not include any invention that I develop entirely on my own time and to which all of the following apply: (x) its development did not involve the use of any equipment, supplies, facilities or trade secret or proprietary information of the Company; (y) it is not related to or useful to a Restricted Business; and (z) it does not result from any work performed by me for the Company. In addition, the Inventions covered by Section 2(c)(ii)(a) above do not include any Retained Inventions. The inventions described in this Section 2(c)(ii)(b) are collectively referred to as “Excluded Inventions.”
(iii) Maintenance of Records. I agree to keep and maintain adequate and current written records of all Inventions made by me (solely or jointly with others) during the term of and in connection with my employment with the Company. The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company. The records will be available to and remain the sole property of the Company at all times.
(iv) Registrations. I agree to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the Inventions and any copyrights, patents, trademarks, service marks, or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, trademarks, service marks or other intellectual property rights relating thereto. I further agree that my obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of my mental or physical incapacity or for any other reason to secure my signature to apply for or to pursue any application for any United States or foreign patents, copyright, trademarks, service marks, or other intellectual property registrations covering Inventions or original works of authorship assigned to the Company as above, then I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright, trademark, service mark, or other intellectual property registrations contemplated by this Section 2(c)(iv) with the same legal force and effect as if executed by me. THIS POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE.
(d) Third Party Information. I recognize that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. I agree to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out my work for the Company consistent with the Company’s agreement with such third party.
3. Conflicting Employment. Without limiting the application of Section 10 below, I agree that, during the term of my employment with the Company, I will not engage in any other employment, occupation, consulting or other business activity directly related to the Restricted Business without the advance written approval of the Board of the Company. Nor will I engage in any other activities that conflict with the business of the Company. Furthermore, I agree to devote such time as may be necessary to fulfill my obligations to the Company.
3
4. Returning Company Property. I agree that, at the time of leaving the employ of the Company, I will deliver to the Company (and will not keep in my possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items developed by me or others pursuant to or during my employment with the Company or otherwise belonging to the Company, its successors or assigns (“Company Property”). In the event of the termination of my employment, I agree to certify in writing that I have returned all Company Property to the Company.
5. Notification of New Employer. In the event that I leave the employ of the Company, I hereby grant consent to notification by the Company to my new employer (whether I am employed as an employee, consultant, independent contractor, director, partner, officer, advisor, executive or manager) about my obligations under this Agreement and delivery by the Company of a copy of this Agreement to any such new employer. For purposes of this Agreement, so long as I am employed by any entity that is a “Company” as defined herein, my employment by the Company shall not be deemed to have terminated or expired.
6. Non-Solicitation. I agree that while I am employed by the Company and (a) in the event I terminate my employment without Good Reason (as defined below) or the Company terminates my employment for Cause (as defined below) (either event, a “Fault Event”), for a period of two years immediately following any such termination of my employment with the Company, or (b) in the event of a termination or expiration of my employment with the Company for any other reason, for a period of one year immediately following the termination or expiration of my employment with the Company, I shall not directly or indirectly, either on behalf of myself or any other person or entity, (i) intentionally solicit, induce, recruit or encourage any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company to leave his, her or its employment or engagement with the Company, or attempt to solicit, recruit, or take away any such employees or independent contractors (or induce or encourage any such employee or independent contractor to terminate its employment or engagement with the Company); provided that after termination or expiration of my employment, this provision shall only apply to those employees or independent contractors of the Company who (A) are current employees or independent contracts of the Company and (B) were such at any time within 12 months prior to the date of such termination or expiration, (ii) intentionally interfere in any manner with the contractual or employment relationship between the Company and any employee, independent contractor, Customer (as defined below) or supplier of the Company or cause any such employee, independent contractor, Customer or supplier to cease employment with, cease doing business with or reduce the amount of business it does with the Company; provided that after termination or expiration of my employment, this provision shall apply only to the employees, independent contractors, Customers or suppliers of the Company who (A) are current employees, independent contractors, Customers or suppliers of the Company and (B) were such at any time within 12 months prior to such termination or expiration, (iii) after termination or expiration of my employment, hire or otherwise employ any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company or who has provided services to or on behalf of the Company at any time during the prior three month period, or (iv) whether as a direct solicitor or provider of such services or products, or in a management or supervisory capacity over others who solicit or provide such services or products, intentionally solicit or provide services or products that fall within the definition of Restricted Business to any Customer of the Company; provided that after the expiration or termination of my employment, this provision shall only apply to those customers of the Company who are current Customers and were Customers at any time within 12 months prior to the termination or expiration of my employment with the Company. “Customer” shall mean those persons or affiliates to which the Company has rendered services or provided products within the last three months that fall within the definition of Restricted Business (including, for the avoidance of doubt, commercial clients of the Company that provide vehicles to the Company in connection with the services provided by the Company). The terms “Cause” and “Good Reason” shall have the respective meanings signed to each such term in the Employment Agreement.
4
7. Covenants not to Compete. For purposes of this Agreement, the term “Non- Compete Period” shall mean a period from the date hereof until in the case of a Fault Event, two (2) years immediately following the date of termination or expiration of my employment with the Company, or in the event of a termination or expiration for any other reason, one (1) year immediately following the termination or expiration of my employment with the Company. During the Non-Compete Period, I covenant and agree that I will not, directly or indirectly, (i) own or hold, directly or beneficially, as a shareholder (other than as a shareholder with less than 3% of the outstanding common stock of a publicly traded corporation), option holder, warrant holder, partner, member or other equity or security owner or holder of any company or business that derives revenue from the Restricted Business (as defined below) within the Restricted Area (as defined below), or any company or business controlling, controlled by or under common control with any company or business directly engaged in such Restricted Business within the Restricted Area (any of the foregoing, a “Restricted Company”) or (ii) engage or participate as an employee, director, officer, manager, executive, partner, independent contractor, consultant or technical or business advisor (or any foreign equivalents of the foregoing) in the Restricted Activities within the Restricted Area. Nothing in this Section 7 shall preclude me from accepting employment with a multi-division company so long as (x) my employment is not within a division of my new employer that engages in the Restricted Business within the Restricted Area, (y) during the course of such employment, I do not communicate related to Restricted Activities with any division of my new employer engaged in the Restricted Business within the Restricted Area and (z) I do not engage in the Restricted Activities within the Restricted Area.
(a) For purposes of this Agreement, the terms “Restricted Activities” and “Restricted Business” shall have the meanings given to them in Exhibit E hereto, and the term “Restricted Area” shall have the following meaning: (i) City of Richmond, Virginia, (ii) any municipality wherein the Company operates the Restricted Business if the Company operated such Restricted Business in such location at any time during the 12 months immediately preceding the termination or expiration of my employment, (iii) any municipality wherein the Company operates the Restricted Business or plans to operate the Restricted Business if the Company planned to operate the Restricted Business in such location as of the termination or expiration of my employment, (iv) any municipality wherein an office of the Company is located, in which office I was physically present while rendering services or providing products in behalf of the Company at any time during the 12 months immediately preceding the termination or expiration of my employment, (v) the area within 50 miles of the municipal limits of each of the foregoing and (vi) any other area in the United States of America.
(b) In the event that I intend to associate (whether as an employee, consultant, independent contractor, officer, manager, advisor, partner, executive or director) with any Restricted Company during the Non-Compete Period, I must provide information in writing to the Board relating to the activities proposed to be engaged in by me for such Restricted Company. In the event that the Board consents in writing to my engagement in such activity, the engaging in such activity by me shall be conclusively deemed not to be a violation of Section 7 hereof and the Company may not seek its remedies under Section 8 below with respect to my engaging in such activity.
5
(c) Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be construed to prohibit any activity which cannot reasonably be construed to further in any meaningful way any competition against the Company.
8. Specific Enforcement; Remedies Cumulative; Attorney Fees. I acknowledge that the Company will be irreparably injured if the provisions of Sections 2, 4, 6 and 7 hereof are not specifically enforced and I agree that the terms of such provisions (including without limitation the periods set forth in Sections 6 and 7) are reasonable and appropriate. If I commit or, in the reasonable belief of the Company, threaten to commit a breach of any of the provisions of Sections 2, 4, 6 and 7 hereof, the Company shall have the right and remedy, in addition to and not in limitation of any other remedy that may be available at law or in equity, to have the provisions of Sections 2, 4, 6 and 7 hereof specifically enforced by any court having jurisdiction through immediate injunctive and other equitable relief, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy therefor. Such injunction shall be available without the posting of any bond or other security. Each party agrees to pay to the other party the other party’s reasonable attorney’s fees and court costs in obtaining, or defending against, the enforcement of, or determining the validity of, this Agreement or any provision hereof, whether in an action, suit, motion or matter brought by me or the Company (or any other person or entity), provided the other party is the prevailing party in such action, suit, motion or matter.
9. Re-Set of Period for Non-Competition and Non-Solicitation. In the event that a legal or equitable action is commenced with respect to any of the provisions of Section 6 or Section 7 hereof and I have not strictly observed the provisions in such sections with respect to which such action has been commenced then the one-year or two-year periods, as applicable, described in such sections not strictly observed by me shall begin to run anew from the date of any Final Judicial Determination of such legal action. “Final Judicial Determination” shall mean the expiration of time to file any possible appeal from a final judgment in such legal action or, if an appeal is taken, the final determination of the final appellate proceeding and that any failure to do so shall constitute a breach of the provisions hereof.
10. Conflict of Interest Guidelines. I agree to diligently adhere to the Company’s policies, including any policy pertaining to conflicts of interest. I agree that if I do not adhere to any of the provisions of such guidelines, I will be in breach of the provisions hereof.
11. Representations. I agree to execute any proper oath or verify any proper document required to carry out the terms of this Agreement. I represent that my performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any oral or written agreement in conflict herewith and my employment by the Company and my services to the Company will not violate the terms of any oral or written agreement to which I am a party.
12. Company Opportunity. During the term of my employment, I shall submit to the Board all business, commercial and investment opportunities or offers presented to me or of which I become aware which relate to the business of the Company at any time during such term (“Company Opportunities”). Unless approved in advance in writing by the Board, I shall not accept or pursue, directly or indirectly, any Company Opportunities on my own behalf.
6
13. Cooperation. During the term of my employment and thereafter, I shall cooperate with the Company in any internal investigation, any administrative, regulatory or judicial investigation or proceeding or any dispute with a third party as reasonably requested by the Company (including, without limitation, my being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information and turning over to the Company all relevant documents which are or may come into my possession, all at times and on schedules that are reasonably consistent with my other permitted activities and commitments). In the event the Company requires my cooperation in accordance with this Section, the Company shall reimburse me solely for reasonable travel expenses (including lodging and meals) upon submission of receipts.
14. General Provisions.
(a) Governing Law; Interpretation; Venue; Waiver of Jury Trial. This Agreement will be governed by the internal substantive laws, but not the choice of law rules, of the Commonwealth of Virginia. Nothing in this Agreement shall be construed to prohibit activity could not be in any way competition with the Company or could not help in any way another company or me to compete with the Company.
(i) THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE FOLLOWING COURTS IN MATTERS RELATED TO THIS AGREEMENT OR MY EMPLOYMENT WITH THE COMPANY AND AGREE NOT TO COMMENCE ANY SUIT, ACTION OR PROCEEDING RELATING THERETO EXCEPT IN ANY OF SUCH COURTS: THE ST ATE COURTS OF THE COMMONWEALTH OF VIRGINIA OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA.
(ii) I AGREE TO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY ME, AND I ACKNOWLEDGE THAT, EXCEPT FOR THE COMPANY’S AGREEMENT TO LIKEWISE WAIVE ITS RIGHTS TO A TRIAL BY JURY (WHICH THE COMPANY HEREBY MAKES), COMPANY HAS NOT MADE ANY REPRESENTATIONS OF FACTS TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. I FURTHER ACKNOWLEDGE THAT I HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF MY OWN FREE WILL, AND THAT I HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. I FURTHER ACKNOWLEDGE THAT I HAVE READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF THIS WAIVER AND AS EVIDENCE OF THIS FACT SIGN THIS AGREEMENT BELOW.
(b) Entire Agreement. This Agreement (including the recitals hereto, which are hereby made a binding part of this Agreement, and the Exhibits hereto) sets forth the entire agreement and understanding between the Company and me relating to the subject matter herein and therein and, effective as of the date hereof, merges and supersedes all prior discussions and agreements between the Company and me relating thereto. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the party to be charged.
7
(c) Severability. If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.
(d) Successors and Assigns. This Agreement will be binding after my death upon my heirs, executors, administrators and other legal representatives, but shall otherwise not be assignable by me. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. The Company may assign this Agreement to any successor to the Company (whether by merger or otherwise) and any corporation or other entity to which the Company may, directly or indirectly, be sold or transfer all or substantially all of its assets and business, in which case the term “Company,” as used herein, shall mean such corporation or other successor entity.
(e) Reformation. If the provisions of this Agreement should ever be adjudicated to exceed the time, geographic, service, product or other limitations permitted by applicable law in any jurisdiction, I agree that such provisions shall be deemed reformed in such jurisdiction so as to continue to apply to the maximum time, geographic, service, product or other limitations permitted by law in such jurisdiction.
(f) Survival. Notwithstanding the expiration of my employment with the Company, either as an employee, officer, director, or independent contractor, my obligations under Sections 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14 hereof shall survive and remain in full force and effect and the Company shall be entitled to equitable relief against me pursuant to the provisions of Section 8.
(g) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses or e-mail addresses (or at such other address or email address for a party as shall be specified in a notice given in accordance with this Section 14(g)):
(i) If to the Company:
CarLotz, Inc.
611 Bainbridge Street, Suite 100
Richmond, VA 23224
Attn: Board of Directors
With a copy to:
Freshfields Bruckhaus Deringer LLP
601 Lexington Ave,
New York, NY 10022
Attn: Valerie Jacob and Lori Goodman
Valerie.Jacob@freshfields.com
Lori.Goodman@freshfields.com
8
(ii) If to Executive, to the last address that the Company has in its personnel records for Executive, or
(iii) At any other address as any Party shall have specified by notice in writing to the other Party.
(h) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile or PDF shall be deemed effective for all purposes.
15. Counsel. This Agreement has been prepared in part by counsel to the Company, after full disclosure of its representation of the Company and with the consent and direction of all parties. I have reviewed the contents of this Agreement and fully understand its terms. I acknowledge that I am fully aware of my right to seek independent advice and the risks in not seeking such independent advice, and that I fully understand the potentially adverse interests of the parties with respect to this Agreement. I further acknowledge that neither the Company nor its Counsel has made representations or given any advice to me with respect to the consequences of this Agreement or any matters contemplated by this Agreement and that I have been advised of the importance of seeking independent counsel with respect to such consequences. By executing this Agreement, I represent that I have, after being advised of the potential conflicts between me and the Company with respect to the future consequences of this Agreement, either consulted independent legal counsel or elected, notwithstanding the advisability of seeking such independent legal counsel, not to consult with such independent legal counsel. I hereby agree at in interpretation or construction of this Agreement, the Agreement shall not be construed against either party on the basis that such party was the drafter of this Agreement or on any other basis.
16. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the parties, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth in this Agreement. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by both the Company and Executive. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver or continuing waiver of any other provision hereof. Notwithstanding this paragraph 16, this Agreement shall be considered an exhibit to the Employment Agreement and therefore neither the Employment Agreement nor this Agreement shall supersede one another. To the extent a conflict arises between the Employment Agreement and this Agreement, the terms of this Agreement shall control for all matters relating to the non-competition, non-solicitation, and confidentiality.
[Signature Page Follows]
9
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and year first above written.
CARLOTZ, INC. | ||
By: | /s/ Michael W. Bor | |
Name: | Michael W. Bor | |
Title: | President and Chief Executive Officer | |
EXECUTIVE | ||
/s/ Daniel Valerian | ||
Daniel Valerian |
EXHIBIT C
LIST OF PRIOR INVENTIONS
EXHIBIT D
LIST OF RETAINED INVENTIONS
EXHIBIT E
RESTRICTED ACTIVITIES
“Restricted Activities” shall include providing sales, administrative, management and/or executive services of the type I provide or have provided (or after the termination or expiration of my employment with the Company, of the type I provided at any time within the 12 months prior to the date of such termination or expiration) to or on behalf of the Company, to any company with respect to any of the following businesses: (i) vehicle retailing business, (ii) vehicle auction business, or (iii) vehicle rental, vehicle finance or vehicle leasing business, in each case within this clause (iii) related to the remarketing of vehicles for the secondary market (the “Restricted Business”).
Exhibit 10.18
CARLOTZ, INC.
2020 INCENTIVE AWARD PLAN
RESTRICTED STOCK UNIT AWARD GRANT NOTICE AND RESTRICTED STOCK UNIT AGREEMENT
CarLotz, Inc., a corporation organized under the laws of Delaware (the “Company”), pursuant to its 2020 Incentive Award Plan, as amended from time to time (the “Plan”), hereby grants to the holder listed below (“Participant”) the number of Restricted Stock Units set forth below (the “RSUs”). The RSUs are subject to the terms and conditions set forth in this Restricted Stock Unit Grant Notice (the “Grant Notice”), the Restricted Stock Unit Agreement attached hereto as Exhibit A (the “Agreement”), and the Plan, each of which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Agreement.
Participant: | _______________________ |
Grant Date:1 | _______________________ |
Vesting Start Date: | _______________________ |
Number of RSUs: | _______________________ |
Vesting Schedule: | See Exhibit B |
By Participant’s signature below, Participant agrees to be bound by the terms and conditions of the Plan, the Agreement and the Grant Notice. Participant has reviewed the Agreement, the Plan and the Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing the Grant Notice and fully understands all provisions of the Grant Notice, the Agreement, and the Plan. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, the Grant Notice or the Agreement.
CARLOTZ, INC. | PARTICIPANT | |||
By: | By: | |||
Name: | [__________________] | Name: | ||
Title: | [__________________] |
1 The Grant Date will not occur prior to the filing of a Form S-8 registration statement by New CarLotz, Inc.
EXHIBIT A
TO RESTRICTED STOCK UNIT AWARD GRANT NOTICE
RESTRICTED STOCK UNIT AWARD AGREEMENT
Pursuant to the Grant Notice to which this Agreement is attached, the Company has granted to Participant the number of RSUs set forth in the Grant Notice.
ARTICLE I.
GENERAL
Section 1.1 Defined Terms. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan or the Grant Notice. For purposes of this Agreement, the following terms shall have the following meanings:
(a) “Cause” shall mean a Company Group Member having “Cause” to terminate Participant’s employment or services, as such term is defined in any relevant employment or consulting agreement between Participant and a Company Group Member; provided that, in the absence of such agreement containing such definition, a Company Group Member shall have “Cause” to terminate Participant’s employment or services upon: (i) Participant’s commission of any act or omission that results in, or may reasonably be expected to result in, a conviction of (or plea of no contest or nolo contendere to) any felony (other than in connection with a traffic violation that does not result in imprisonment) under any state, federal or foreign law or any crime involving moral turpitude or dishonesty or that has or could have the effect, in the Company’s reasonable and good faith determination, of causing material reputational or other material harm or damage to the Company Group; (ii) Participant’s commission of an act of fraud, embezzlement, misappropriation of funds, misrepresentation, malfeasance, breach of fiduciary duty or other willful and material act of misconduct, in each case, against any Company Group Member; (iii) any willful, material damage to any property of a Company Group Member by Participant; (iv) Participant’s willful failure to (A) substantially perform Participant’s material job functions (other than any such failure resulting from Participant’s Disability) or (B) carry out or comply with a lawful and reasonable directive of a Company Group Member, in each case, which failure has not been cured (or cannot be cured) within fifteen (15) days after the Company gives written notice to Participant regarding such failure; (v) Participant’s breach of any Company policy which materially harms the Company Group, which breach has not been cured (or cannot be cured) within fifteen (15) days after the Company gives written notice to Participant regarding such failure; (vi) Participant’s unlawful use (including being under the influence) or possession of illegal drugs, or excessive use of alcohol, in each case that materially impairs Participant’s ability to perform Participant’s duties contemplated; (vii) any negligent or reckless act by Participant resulting in or causing material reputational or other material harm or damage to the Company Group, in the good faith reasonable judgment of the Company and (viii) Participant’s breach of any material provision of any written agreement between Participant and any Company Group Member, and failure to cure such breach (if capable of cure) within fifteen (15) days after the Company gives written notice to Participant regarding such breach. Whether or not an event giving rise to “Cause” occurs for purposes of this definition (for Participants who do not have an employment or consulting agreement that includes a definition of Cause) will be determined by the Board in its sole discretion.
(a) “Company Group” shall mean the Company and its Subsidiaries.
(b) “Company Group Member” shall mean each member of the Company Group.
(c) “Disability” shall have the meaning ascribed to such term in any relevant employment agreement between Participant and a Company Group Member; provided that, in the absence of such agreement containing such definition, “Disability” shall mean the disability of Participant such as would entitle the Participant to receive disability income benefits pursuant to the long-term disability plan of the Company Group Member then covering Participant or, if no such plan exists or is applicable to Participant, the permanent and total disability of Participant within the meaning of Section 22(e)(3) of the Code.
Section 1.2 Incorporation of Terms of Plan. The RSUs are subject to the terms and conditions set forth in this Agreement, and the Plan, each of which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.
ARTICLE II.
AWARD OF RESTRICTED STOCK UNITS AND DIVIDEND EQUIVALENTS
Section 2.1 Award of RSUs and Dividend Equivalents.
(a) In consideration of Participant’s past and/or continued employment with or service to a Company Group Member and for other good and valuable consideration, effective as of the grant date set forth in the Grant Notice (the “Grant Date”), the Company has granted to Participant the number of RSUs set forth in the Grant Notice, upon the terms and conditions set forth in the Grant Notice, the Plan and this Agreement, subject to adjustment as provided in Section 12.2 of the Plan. Each RSU represents the right to receive one Share at the times and subject to the conditions set forth herein. However, unless and until the RSUs have vested, Participant will have no right to the shares of Common Stock (“Shares”) subject thereto. Prior to the actual delivery of any Shares, the RSUs will represent an unsecured obligation of the Company, payable only from the general assets of the Company.
(b) The Company hereby grants to Participant an Award of Dividend Equivalents with respect to each RSU granted pursuant to the Grant Notice for all ordinary cash dividends that are paid to all or substantially all holders of the outstanding Shares between the Grant Date and the date when the applicable RSU is distributed or paid to Participant or is forfeited or expires. The Dividend Equivalents for each RSU shall be equal to the amount of cash that is paid as a dividend on one Share. All such Dividend Equivalents shall be credited to Participant and be deemed to be reinvested in additional RSUs as of the date of payment of any such dividend based on the Fair Market Value of a Share on such date. Each additional RSU that results from such deemed reinvestment of Dividend Equivalents granted hereunder shall be subject to the same vesting, distribution or payment, adjustment and other provisions that apply to the underlying RSU to which such additional RSU relates.
Section 2.2 Vesting of RSUs and Dividend Equivalents.
(a) Subject to Participant’s continued employment with or service to a Company Group Member on each applicable vesting date and subject to the terms of this Agreement, including, without limitation, Section 2.2(b), the RSUs shall vest in such amounts and at such times as are set forth in the Grant Notice. Each additional RSU that results from deemed reinvestments of Dividend Equivalents pursuant to Section 2.1(b) shall vest whenever the underlying RSU to which such additional RSU relates vests.
(b) In the event Participant incurs a Termination of Service, except as otherwise provided in Section 2.2(c), or as may be otherwise provided by the Administrator or as set forth in a written agreement between Participant and the Company, including any employment agreement between Participant and the Company, Participant shall immediately forfeit any and all RSUs and Dividend Equivalents granted under this Agreement that have not vested or do not vest on or prior to the date on which such Termination of Service occurs, and Participant’s rights in any such RSUs and Dividend Equivalents that are not so vested shall lapse and expire.
(c) In the event Participant incurs a Termination of Service without Cause upon or within twelve (12) months following a Change in Control, such Participant’s RSUs shall be fully vested as of immediately prior to such Termination of Service.
Section 2.3 Settlement of RSUs
(a) Participant’s RSUs shall be settled in Shares (either in book-entry form or otherwise) as soon as administratively practicable following the vesting of the applicable RSU pursuant to Section 2.2, and, in any event, no later than March 15th of the calendar year following the year in which such vesting occurred (for the avoidance of doubt, this deadline is intended to comply with the “short-term deferral” exemption from Section 409A). Notwithstanding the foregoing, the Company may delay a settlement of RSUs if it reasonably determines that such settlement will violate federal securities laws or any other Applicable Law, provided that such distribution or payment shall be made at the earliest date at which the Company reasonably determines that the settlement will not cause such violation, as required by Treasury Regulation Section 1.409A-2(b)(7)(ii), and provided further that no settlement shall be delayed under this Section 2.3(a) if such delay will result in a violation of Section 409A.
(b) All settlements shall be made by the Company in the form of whole Shares, and any fractional share shall be distributed in cash in an amount equal to the value of such fractional share determined based on the Fair Market Value as of the date immediately preceding the date of such distribution.
Section 2.4 Conditions to Issuance of Shares. The Company shall not be required to issue or deliver any Shares underlying the RSUs prior to the fulfillment of all of the following conditions: (a) the admission of such Shares to listing on all stock exchanges on which such Shares are then listed, (b) the completion of any registration or other qualification of such Shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or other governmental regulatory body, that the Administrator shall, in its absolute discretion, deem necessary or advisable, (c) the obtaining of any approval or other clearance from any state or federal governmental agency that the Administrator shall, in its absolute discretion, determine to be necessary or advisable, and (d) the receipt of full payment of any applicable withholding tax in accordance with Section 2.5 by the Company Group Member with respect to which the applicable withholding obligation arises.
Section 2.5 Tax Withholding. Notwithstanding any other provision of this Agreement:
(a) Upon vesting and settlement of Participant’s RSUs, the Company shall instruct any brokerage firm determined acceptable to the Company for such purpose to sell on Participant’s behalf a whole number of Shares from those Shares that are subject to the Award as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy any applicable federal, state, local and foreign taxes (including the employee portion of any FICA obligation) required by Applicable Law to be withheld, and to remit the proceeds of such sale to the Company Group Member with respect to which the withholding obligation arises. Participant’s acceptance of this Award constitutes Participant’s instruction and irrevocable authorization to the Company and such brokerage firm to complete the transactions described in this Section 2.5(a), including the transactions described in the previous sentence, as applicable. In the event of the occurrence of any broker-assisted sale of Shares in connection with the payment of withholding taxes as provided in this Section 2.5(a): (i) any Shares to be sold through a broker-assisted sale will be sold on the day the tax withholding obligation arises, or as soon thereafter as practicable; (ii) such Shares may be sold as part of a block trade with other participants in the Plan in which all participants receive an average price; (iii) Participant will be responsible for all broker’s fees and other costs of sale, and Participant agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale; (iv) to the extent the proceeds of such sale exceed the applicable tax withholding obligation, the Company agrees to pay such excess in cash to Participant as soon as reasonably practicable; (v) Participant acknowledges that the Company or its designee is under no obligation to arrange for such sale at any particular price, and that the proceeds of any such sale may not be sufficient to satisfy the applicable tax withholding obligation; and (vi) in the event the proceeds of such sale are insufficient to satisfy the applicable tax withholding obligation, Participant agrees to pay immediately upon demand to the Company Group Member with respect to which the withholding obligation arises, an amount in cash sufficient to satisfy any remaining portion of the applicable Company Group Member’s withholding obligation.
(b) Participant is ultimately liable and responsible for, and, to the extent permitted by Applicable Law, agrees to indemnify and keep indemnified the Company Group from, all taxes owed in connection with the Award, regardless of any action any Company Group Member takes with respect to any tax withholding obligations that arise in connection with the Award. No Company Group Member makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or settlement of the Award or the subsequent sale of Shares. The Company Group does not commit and is under no obligation to structure the Award to reduce or eliminate Participant’s tax liability.
Section 2.6 Rights as Stockholder. Neither Participant nor any Person claiming under or through Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares (which may be in book-entry form) will have been issued and recorded on the records of the Company or its transfer agents or registrars and delivered to Participant (including through electronic delivery to a brokerage account). Except as otherwise provided herein, after such issuance, recordation and delivery, Participant will have all the rights of a stockholder of the Company with respect to such Shares, including, without limitation, the right to receipt of dividends and distributions on such Shares.
ARTICLE III.
OTHER PROVISIONS
Section 3.1 Administration. The Administrator shall have the power to interpret the Plan, the Grant Notice and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan, the Grant Notice and this Agreement as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator will be final and binding upon Participant, the Company and all other interested Persons. To the extent allowable pursuant to Applicable Law, no member of the Committee or the Board will be personally liable for any action, determination or interpretation made with respect to the Plan, the Grant Notice or this Agreement.
Section 3.2 RSUs Not Transferable. The RSUs may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution, unless and until the Shares underlying the RSUs have been issued, and all restrictions applicable to such Shares have lapsed. No RSUs or any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence. Notwithstanding the foregoing, with the consent of the Administrator, the RSUs may be transferred to Permitted Transferees, pursuant to any conditions and procedures the Administrator may require.
Section 3.3 Adjustments. The Administrator may accelerate the vesting of all or a portion of the RSUs in such circumstances as it, in its sole discretion, may determine. Participant acknowledges that the RSUs are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan, including Section 12.2 of the Plan.
Section 3.4 Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the Company’s principal office, and any notice to be given to Participant shall be addressed to Participant at Participant’s last address reflected on the Company’s records. By a notice given pursuant to this Section 3.4, either party may hereafter designate a different address for notices to be given to that party. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.
Section 3.5 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.
Section 3.6 Governing Law. The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.
Section 3.7 Conformity to Securities Laws. Participant acknowledges that the Plan, the Grant Notice, and this Agreement are intended to conform to the extent necessary with all Applicable Laws, including, without limitation, the provisions of the Securities Act and the Exchange Act, and any and all regulations and rules promulgated thereunder by the Securities and Exchange Commission, and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the RSUs are granted, only in such a manner as to conform to Applicable Law. To the extent permitted by Applicable Law, the Plan, the Grant Notice and this Agreement shall be deemed amended to the extent necessary to conform to Applicable Law.
Section 3.8 Amendment, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or the Board, provided that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall adversely affect the RSUs in any material way without the prior written consent of Participant.
Section 3.9 Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in Section 3.2 and the Plan, this Agreement shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.
Section 3.10 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the RSUs (including RSUs that result from the deemed reinvestment of Dividend Equivalents), the Dividend Equivalents, the Grant Notice and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by Applicable Law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
Section 3.11 Not a Contract of Employment. Nothing in this Agreement or in the Plan shall confer upon Participant any right to continue to serve as an employee or other service provider of any Company Group Member or shall interfere with or restrict in any way the rights of any Company Group Member, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between a Company Group Member and Participant.
Section 3.12 Entire Agreement. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.
Section 3.13 Section 409A. This Award is not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A. However, notwithstanding any other provision of the Plan, the Grant Notice or this Agreement, if at any time the Administrator determines that this Award (or any portion thereof) may be subject to Section 409A, the Administrator shall have the right in its sole discretion (without any obligation to do so or to indemnify Participant or any other Person for failure to do so) to adopt such amendments to the Plan, the Grant Notice or this Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Administrator determines are necessary or appropriate for this Award either to be exempt from the application of Section 409A or to comply with the requirements of Section 409A.
Section 3.14 Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.
Section 3.15 Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the RSUs and Dividend Equivalents.
Section 3.16 Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which shall be deemed an original and all of which together shall constitute one instrument.
Section 3.17 Special Provisions for Restricted Stock Units Granted to Participants Outside the United States. If the Participant performs services for the Company outside of the United States, this Agreement shall be subject to the special provisions, if any, for the Participant’s country of residence, as may be set forth in a foreign appendix.
(a) If the Participant relocates to another country during the life of this Agreement, special provisions for such country shall apply to the Participant, to the extent the Company determines that the application of such provisions is necessary or advisable in order to comply with applicable foreign and local law or facilitate the administration of the Plan.
(b) The Company reserves the right to impose other requirements on this Agreement, the RSUs and the Shares issued upon settlement of the RSUs, to the extent the Company determines it is necessary or advisable in order to comply with applicable foreign or local laws or facilitate the administration of the Plan, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
* * * * *
EXHIBIT B
Vesting Schedule
Exhibit 10.19
CARLOTZ, INC.
2020 INCENTIVE AWARD PLAN
STOCK OPTION GRANT NOTICE AND STOCK OPTION AGREEMENT
CarLotz, Inc., a corporation organized under the laws of Delaware (the “Company”), pursuant to its 2020 Incentive Award Plan, as amended from time to time (the “Plan”), hereby grants to the holder listed below (“Participant”) an option to purchase the number of Shares set forth below (the “Option”). The Option is subject to the terms and conditions set forth in this Stock Option Grant Notice (the “Grant Notice”), the Stock Option Agreement attached hereto as Exhibit A (the “Agreement”), and the Plan, each of which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Agreement.
Participant: | [ ] |
Grant Date: | [ ] |
Exercise Price Per Share: | $[ ] |
Total Exercise Price: | $[ ] |
Total Number of Shares Subject to Option: | [ ] |
Expiration Date: | [ ] |
Type of Option: | ¨ Incentive Stock Option þ Non-Qualified Stock Option |
Vesting Schedule: | See Exhibit B |
By Participant’s signature below, Participant agrees to be bound by the terms and conditions of the Plan, the Agreement and the Grant Notice. Participant has reviewed the Agreement, the Plan and the Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing the Grant Notice and fully understands all provisions of the Grant Notice, the Agreement and the Plan. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, the Grant Notice or the Agreement.
CARLOTZ, INC. | PARTICIPANT | |||
By: | By: | |||
Print Name: | [ ] | Print Name: | [ ] | |
Title: | [ ] |
EXHIBIT A
TO STOCK OPTION GRANT NOTICE
STOCK OPTION AGREEMENT
Pursuant to the Grant Notice to which this Agreement is attached, the Company has granted to Participant an Option under the Plan to purchase the number of Shares set forth in the Grant Notice.
ARTICLE I.
GENERAL
1.1 Defined Terms. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan or the Grant Notice. For purposes of this Agreement, the following terms shall have the following meanings:
(a) “Cause” shall mean a Company Group Member having “Cause” to terminate Participant’s employment or services, as such term is defined in any relevant employment or consulting agreement between Participant and a Company Group Member; provided that, in the absence of such agreement containing such definition, a Company Group Member shall have “Cause” to terminate Participant’s employment or services upon: (i) Participant’s commission of any act or omission that results in, or may reasonably be expected to result in, a conviction of (or plea of no contest or nolo contendere to) any felony (other than in connection with a traffic violation that does not result in imprisonment) under any state, federal or foreign law or any crime involving moral turpitude or dishonesty or that has or could have the effect, in the Company’s reasonable and good faith determination, of causing material reputational or other material harm or damage to the Company Group; (ii) Participant’s commission of an act of fraud, embezzlement, misappropriation of funds, misrepresentation, malfeasance, breach of fiduciary duty or other willful and material act of misconduct, in each case, against any Company Group Member; (iii) any willful, material damage to any property of a Company Group Member by Participant; (iv) Participant’s willful failure to (A) substantially perform Participant’s material job functions (other than any such failure resulting from Participant’s Disability) or (B) carry out or comply with a lawful and reasonable directive of a Company Group Member, in each case, which failure has not been cured (or cannot be cured) within fifteen (15) days after the Company gives written notice to Participant regarding such failure; (v) Participant’s breach of any Company policy which materially harms the Company Group, which breach has not been cured (or cannot be cured) within fifteen (15) days after the Company gives written notice to Participant regarding such failure; (vi) Participant’s unlawful use (including being under the influence) or possession of illegal drugs, or excessive use of alcohol, in each case that materially impairs Participant’s ability to perform Participant’s duties contemplated ; (vii) any negligent or reckless act by Participant resulting in or causing material reputational or other material harm or damage to the Company Group, in the good faith reasonable judgment of the Company and (viii) Participant’s breach of any material provision of any written agreement between Participant and any Company Group Member, and failure to cure such breach (if capable of cure) within fifteen (15) days after the Company gives written notice to Participant regarding such breach. Whether or not an event giving rise to “Cause” occurs for purposes of this definition (for Participants who do not have an employment or consulting agreement that includes a definition of Cause) will be determined by the Board in its sole discretion.
(b) “Cessation Date” shall mean the date of Participant’s Termination of Service (regardless of the reason for such termination).
(c) “Company Group” shall mean the Company and its Subsidiaries.
(d) “Company Group Member” shall mean each member of the Company Group.
(e) “Disability” shall have the meaning ascribed to such term in any relevant employment agreement between Participant and a Company Group Member; provided that, in the absence of such agreement containing such definition, “Disability” shall mean the disability of Participant such as would entitle the Participant to receive disability income benefits pursuant to the long-term disability plan of the Company Group Member then covering Participant or, if no such plan exists or is applicable to Participant, the permanent and total disability of Participant within the meaning of Section 22(e)(3) of the Code.
1.2 Incorporation of Terms of Plan. The Option is subject to the terms and conditions set forth in this Agreement and the Plan, each of which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.
ARTICLE II.
GRANT OF OPTION
2.1 Grant of Option. In consideration of Participant’s past and/or continued employment with or service to any Company Group Member and for other good and valuable consideration, effective as of the grant date set forth in the Grant Notice (the “Grant Date”), the Company has granted to Participant the Option to purchase any part or all of an aggregate number of Shares set forth in the Grant Notice, upon the terms and conditions set forth in the Grant Notice, the Plan and this Agreement, subject to adjustment as provided in Section 12.2 of the Plan.
2.2 Exercise Price. The exercise price per Share of the Shares subject to the Option (the “Exercise Price”) shall be as set forth in the Grant Notice.
ARTICLE III.
PERIOD OF EXERCISABILITY
3.1 Commencement of Exercisability.
(a) Subject to Participant’s continued employment with or service to a Company Group Member on each applicable vesting date and subject to Sections 3.2, 3.3, 5.9 and 5.14 hereof, the Option shall become vested and exercisable in such amounts and at such times as are set forth in the Grant Notice.
(b) Except as otherwise provided under Section 3.1(c), as determined by the Administrator or as set forth in a written agreement between Participant and the Company, any portion of the Option that has not become vested and exercisable on or prior to the Cessation Date (including, without limitation, pursuant to any employment or similar agreement by and between Participant and the Company) shall be forfeited on the Cessation Date and shall not thereafter become vested and exercisable.
(c) In the event Participant incurs a Termination of Service without Cause upon or within twelve (12) months following a Change in Control, any portion of the Option that has not become vested and exercisable on or prior to the Cessation Date, shall become fully vested and exercisable as of immediately prior to the Termination of Service.
3.2 Duration of Exercisability. The installments provided for in the vesting schedule set forth in the Grant Notice are cumulative. Each such installment that becomes vested and exercisable pursuant to the vesting schedule set forth in the Grant Notice shall remain vested and exercisable until it becomes unexercisable under Section 3.3 hereof. Once the Option becomes unexercisable, it shall be forfeited immediately.
3.3 Expiration of Option. The Option may not be exercised to any extent by anyone after the first to occur of the following events:
(a) The expiration date set forth in the Grant Notice;
(b) Except as the Administrator may otherwise approve, the expiration of twelve (12) months from the Cessation Date by reason of Participant’s Termination of Service due to death or Disability;
(c) Except as the Administrator may otherwise approve, immediately upon the Cessation Date by reason of Participant’s Termination of Service by the Company Group for Cause; and
(d) Except as the Administrator may otherwise approve, the expiration of three (3) months from the Cessation Date by reason of Participant’s Termination of Service for any reason other than by the Company Group for Cause or due to death or Disability.
3.4 Tax Withholding. Notwithstanding any other provision of this Agreement:
(a) The Company Group has the authority to deduct or withhold, or require Participant to remit to the applicable Company Group Member, an amount sufficient to satisfy any applicable federal, state, local, provincial and foreign taxes (including the employee portion of any FICA obligation) required by Applicable Law to be withheld with respect to any taxable event arising pursuant to this Agreement. The Company Group may withhold or Participant may make such payment in one or more of the forms specified below:
(i) by cash or check made payable to the Company Group Member with respect to which the withholding obligation arises;
(ii) by the deduction of such amount from other compensation payable to Participant;
(iii) with respect to any withholding taxes arising in connection with the exercise of the Option, with the consent of the Administrator, by requesting that the Company withhold a net number of Shares issuable upon the exercise of the Option having a then current Fair Market Value not exceeding the amount necessary to satisfy the withholding obligation of the Company Group based on the maximum statutory withholding rates in Participant’s applicable jurisdictions for federal, state, local, provincial and foreign income tax and payroll tax purposes that are applicable to such taxable income;
(iv) with respect to any withholding taxes arising in connection with the exercise of the Option, with the consent of the Administrator, by tendering to the Company vested Shares held for such period of time as may be required by the Administrator in order to avoid adverse accounting consequences and having a then current Fair Market Value not exceeding the amount necessary to satisfy the withholding obligation of the Company Group based on the maximum statutory withholding rates in Participant’s applicable jurisdictions for federal, state, local, provincial and foreign income tax and payroll tax purposes that are applicable to such taxable income;
(v) with respect to any withholding taxes arising in connection with the exercise of the Option, through the delivery of a notice that Participant has placed a market sell order with a broker acceptable to the Company with respect to Shares then issuable to Participant pursuant to the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company Group Member with respect to which the withholding obligation arises in satisfaction of such withholding taxes; provided that payment of such proceeds is then made to the applicable Company Group Member at such time as may be required by the Administrator, but in any event not later than the settlement of such sale; or
(vi) in any combination of the foregoing.
(b) With respect to any withholding taxes arising in connection with the Option, in the event Participant fails to provide timely payment of all sums required pursuant to Section 3.4(a), the Company shall have the right and option, but not the obligation, to treat such failure as an election by Participant to satisfy all or any portion of Participant’s required payment obligation pursuant to Section 3.4(a)(ii) or Section 3.4(a)(iii) above, or any combination of the foregoing as the Company may determine to be appropriate. The Company shall not be obligated to deliver any certificate representing Shares issuable with respect to the exercise of the Option to, or to cause any such Shares to be held in book-entry form by, Participant or his or her legal representative unless and until Participant or his or her legal representative shall have paid or otherwise satisfied in full the amount of all federal, state, local, provincial and foreign taxes applicable with respect to the taxable income of Participant resulting from the exercise of the Option or any other taxable event related to the Option.
(c) In the event any tax withholding obligation arising in connection with the Option will be satisfied under Section 3.4(a)(iii), then the Company may elect to instruct any brokerage firm determined acceptable to the Company for such purpose to sell on Participant’s behalf a whole number of Shares from those Shares then issuable upon the exercise of the Option as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the tax withholding obligation and to remit the proceeds of such sale to the Company Group Member with respect to which the withholding obligation arises. Participant’s acceptance of this Option constitutes Participant’s instruction and authorization to the Company and such brokerage firm to complete the transactions described in this Section 3.4(c), including the transactions described in the previous sentence, as applicable. The Company may refuse to issue any Shares to Participant until the foregoing tax withholding obligations are satisfied, provided that no payment shall be delayed under this Section 3.4(c) if such delay will result in a violation of Section 409A.
(d) Participant is ultimately liable and responsible for all taxes owed in connection with the Option, regardless of any action any Company Group Member takes with respect to any tax withholding obligations that arise in connection with the Option. No Company Group Member makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or exercise of the Option or the subsequent sale of Shares. The Company Group does not commit and is under no obligation to structure the Option to reduce or eliminate Participant’s tax liability.
(e) For purposes of this Section 3.4, (i) “Applicable Law” shall include without limitation, all applicable securities, corporate, tax and other laws, rules, regulations, instruments, notices, blanket orders, decision documents, statements, circulars, procedures and policies, and (ii) “withholding taxes” shall include any and all taxes and other source deductions, or other amounts which the Company Group Member is required by Applicable Law to withhold from any amounts paid or credited to a Participant under the Plan.
ARTICLE IV.
EXERCISE OF OPTION
4.1 Person Eligible to Exercise. During the lifetime of Participant, only Participant may exercise the Option or any portion thereof. After the death of Participant, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under Section 3.3 hereof, be exercised by Participant’s personal representative or by any Person empowered to do so under the deceased Participant’s will or under the then Applicable Laws of descent and distribution.
4.2 Partial Exercise. Subject to Section 5.2, any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Section 3.3 hereof.
4.3 Manner of Exercise. The Option, or any exercisable portion thereof, may be exercised solely by delivery to the Secretary of the Company (or any third party administrator or other Person designated by the Company), during regular business hours, of all of the following prior to the time when the Option or such portion thereof becomes unexercisable under Section 3.3 hereof.
(a) An exercise notice in a form specified by the Administrator, stating that the Option or portion thereof is thereby exercised, such notice complying with all applicable rules established by the Administrator;
(b) The receipt by the Company of full payment for the Shares with respect to which the Option or portion thereof is exercised, in such form of consideration permitted under Section 4.4 hereof that is acceptable to the Administrator;
(c) The payment of any applicable withholding tax in accordance with Section 3.4;
(d) Any other written representations or documents as may be required in the Administrator’s sole discretion to effect compliance with Applicable Law; and
(e) In the event the Option or portion thereof shall be exercised pursuant to Section 4.1 hereof by any Person or Persons other than Participant, appropriate proof of the right of such Person or Persons to exercise the Option.
Notwithstanding any of the foregoing, the Administrator shall have the right to specify all conditions of the manner of exercise, which conditions may vary by country and which may be subject to change from time to time.
4.4 Method of Payment. Payment of the Exercise Price shall be by any of the following, or a combination thereof, at the election of Participant:
(a) Cash or check;
(b) With the consent of the Administrator, surrender of vested Shares (including, without limitation, Shares otherwise issuable upon exercise of the Option) held for such period of time as may be required by the Administrator in order to avoid adverse accounting consequences and having a Fair Market Value on the date of delivery equal to the aggregate Exercise Price of the Option or exercised portion thereof;
(c) Through the delivery of a notice that Participant has placed a market sell order with a broker acceptable to the Company with respect to Shares then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Exercise Price; provided that payment of such proceeds is then made to the Company at such time as may be required by the Administrator, but in any event not later than the settlement of such sale; or
(d) Any other form of legal consideration acceptable to the Administrator.
4.5 Conditions to Issuance of Shares. The Company shall not be required to issue or deliver Shares purchased upon the exercise of the Option or portion thereof prior to fulfillment of all of the following conditions: (a) the admission of such Shares to listing on all stock exchanges on which such Shares are then listed, (b) the completion of any registration or other qualification of such Shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable, (c) the obtaining of any approval or other clearance from any state or federal governmental agency that the Administrator shall, in its absolute discretion, determine to be necessary or advisable, (d) the receipt by the Company of full payment for such Shares, which may be in one or more of the forms of consideration permitted under Section 4.4 hereof, and (e) the receipt of full payment of any applicable withholding tax in accordance with Section 3.4 by the Company Group Member with respect to which the applicable withholding obligation arises.
4.6 Rights as Stockholder. Neither Participant nor any Person claiming under or through Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares purchasable upon the exercise of any part of the Option unless and until certificates representing such Shares (which may be in book-entry form) will have been issued and recorded on the records of the Company or its transfer agents or registrars and delivered to Participant (including through electronic delivery to a brokerage account). No adjustment will be made for a dividend or other right for which the record date is prior to the date of such issuance, recordation and delivery, except as provided in Section 12.2 of the Plan. Except as otherwise provided herein, after such issuance, recordation and delivery, Participant will have all the rights of a stockholder of the Company with respect to such Shares, including, without limitation, the right to receipt of dividends and distributions on such Shares.
ARTICLE V.
OTHER PROVISIONS
5.1 Administration. The Administrator shall have the power to interpret the Plan, the Grant Notice and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan, the Grant Notice and this Agreement as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator will be final and binding upon Participant, the Company and all other interested Persons. To the extent allowable pursuant to Applicable Law, no member of the Committee or the Board will be personally liable for any action, determination or interpretation made with respect to the Plan, the Grant Notice or this Agreement.
5.2 Whole Shares. The Option may only be exercised for whole Shares.
5.3 Option Not Transferable. Subject to Section 4.1 hereof, the Option may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution, unless and until the Shares underlying the Option have been issued, and all restrictions applicable to such Shares have lapsed. Neither the Option nor any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence. Notwithstanding the foregoing, with the consent of the Administrator, if the Option is a Non-Qualified Stock Option, it may be transferred to Permitted Transferees pursuant to any conditions and procedures the Administrator may require.
5.4 Adjustments. The Administrator may accelerate the vesting of all or a portion of the Option in such circumstances as it, in its sole discretion, may determine. Participant acknowledges that the Option is subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan, including Section 12.2 of the Plan.
5.5 Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the Company’s principal office, and any notice to be given to Participant shall be addressed to Participant at Participant’s last address reflected on the Company’s records. By a notice given pursuant to this Section 5.5, either party may hereafter designate a different address for notices to be given to that party. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.
5.6 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.
5.7 Governing Law. The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.
5.8 Conformity to Securities Laws. Participant acknowledges that the Plan, the Grant Notice, and this Agreement are intended to conform to the extent necessary with all Applicable Laws, including, without limitation, the provisions of the Securities Act and the Exchange Act, and any and all regulations and rules promulgated thereunder by the Securities and Exchange Commission and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Option is granted and may be exercised, only in such a manner as to conform to Applicable Law. To the extent permitted by Applicable Law, the Plan, the Grant Notice, and this Agreement shall be deemed amended to the extent necessary to conform to Applicable Law.
5.9 Amendment, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or the Board, provided that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall adversely affect the Option in any material way without the prior written consent of Participant.
5.10 Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in Section 5.3 and the Plan, this Agreement shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.
5.11 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Option, the Grant Notice and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by Applicable Law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
5.12 Not a Contract of Employment. Nothing in this Agreement or in the Plan shall confer upon Participant any right to continue to serve as an employee or other service provider of any Company Group Member or shall interfere with or restrict in any way the rights of any Company Group Member, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between a Company Group Member and Participant.
5.13 Entire Agreement. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.
5.14 Section 409A. This Award is not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A. However, notwithstanding any other provision of the Plan, the Grant Notice or this Agreement, if at any time the Administrator determines that this Award (or any portion thereof) may be subject to Section 409A, the Administrator shall have the right in its sole discretion (without any obligation to do so or to indemnify Participant or any other Person for failure to do so) to adopt such amendments to the Plan, the Grant Notice or this Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Administrator determines are necessary or appropriate for this Award either to be exempt from the application of Section 409A or to comply with the requirements of Section 409A.
5.15 Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.
5.16 Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant shall have only the right to receive Shares as a general unsecured creditor with respect to the Option, as and when exercised pursuant to the terms hereof.
5.17 Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which shall be deemed an original and all of which together shall constitute one instrument.
5.18 Incentive Stock Options. Participant acknowledges that to the extent the aggregate Fair Market Value of Shares (determined as of the time the option with respect to the Shares is granted) with respect to which Incentive Stock Options, including this Option (if applicable), are exercisable for the first time by Participant during any calendar year exceeds $100,000 or if for any other reason such Incentive Stock Options do not qualify or cease to qualify for treatment as “incentive stock options” under Section 422 of the Code, such Incentive Stock Options shall be treated as Non-Qualified Stock Options. Participant further acknowledges that the rule set forth in the preceding sentence shall be applied by taking the Option and other stock options into account in the order in which they were granted, as determined under Section 422(d) of the Code and the Treasury Regulations thereunder. Participant also acknowledges that an Incentive Stock Option exercised more than three (3) months after Participant’s Termination of Service, other than by reason of death or disability, will be taxed as a Non-Qualified Stock Option.
5.19 Notification of Disposition. If this Option is designated as an Incentive Stock Option, Participant shall give prompt written notice to the Company of any disposition or other transfer of any Shares acquired under this Agreement if such disposition or transfer is made (a) within two (2) years from the Grant Date or (b) within one (1) year after the transfer of such Shares to Participant. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by Participant in such disposition or other transfer.
5.20 Special Provisions for Options Granted to Participants Outside the United States. If the Participant performs services for the Company outside of the United States, this Agreement shall be subject to the special provisions, if any, for the Participant’s country of residence, as may be set forth in a foreign appendix.
(a) If the Participant relocates to another country during the life of this Agreement, special provisions for such country shall apply to the Participant, to the extent the Company determines that the application of such provisions is necessary or advisable in order to comply with applicable foreign and local law or facilitate the administration of the Plan.
(b) The Company reserves the right to impose other requirements on this Agreement, the Option and the Shares issued upon exercise of the Option, to the extent the Company determines it is necessary or advisable in order to comply with applicable foreign or local laws or facilitate the administration of the Plan, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
EXHIBIT B
Vesting Schedule
Exhibit 10.20
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement (“Agreement”) is made as of [·], by and between CarLotz, Inc., a Delaware corporation (the “Company”), and [·] (“Indemnitee”).
WHEREAS, highly qualified persons have become more reluctant to serve corporations as directors or officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;
WHEREAS, the Company and Indemnitee recognize the increasing difficulty in obtaining directors’ and officers’ liability insurance, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited;
WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve as directors and officers of the Company;
WHEREAS, it is reasonable, prudent and in the best interests of the Company and its stockholders for the Company to obligate itself contractually to indemnify persons serving as directors and officers of the Company to the fullest extent permitted by applicable law in order that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified.
NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a director or officer from and after the date hereof, the Company and Indemnitee do hereby covenant and agree as follows:
1. Services to the Company. Indemnitee agrees to serve as a director or officer of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position. The foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve as director or officer of the Company, as provided in Section 16 hereof.
1
2. Definitions. As used in this Agreement:
(a) References to “agent” shall mean any person who is or was a director, officer, or employee of the Company or a subsidiary of the Company or other person authorized by the Company to act for the Company, to include such person serving in such capacity as a director, officer, employee, fiduciary or other official of another corporation, partnership, limited liability company, joint venture, trust or other enterprise at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company.
(b) “Board” shall mean the board of directors of the Company.
(c) “By-laws” shall mean the bylaws of the Company, as may be amended, modified or restated from time to time.
(d) “Certificate of Incorporation” shall mean the Certificate of incorporation of the Company, as may be amend, modified or restated from time to time.
(e) A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:
i. Acquisition of Stock by Third Party. Any Person (as defined below), other than Michael W. Bor, TRP Capital Partners, LP and Acamar Partners Sponsor I LLC, is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities unless the change in relative ownership by the Beneficial Owner of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;
ii. Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(e)i), 2(e)iii) or 2(e)iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;
iii. Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity; and
iv. Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.
2
For purposes of this Section 2(e), the following terms shall have the following meanings:
(A) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.
(B) “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
(C) “Beneficial Owner” shall have the meaning given to such term in Rule 13d3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.
(f) “Corporate Status” describes the status of a person who is or was a director, officer, employee or agent of the Company or of any other corporation, limited liability company, partnership or joint venture, trust or other enterprise which such person is or was serving at the request of the Company.
(g) “Disinterested Director” shall mean a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
(h) “Enterprise” shall mean the Company and any other corporation, limited liability company, partnership, joint venture, trust or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, employee, agent or fiduciary.
(i) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 14(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise. The parties agree that for the purposes of any advancement of Expenses for which Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such demand that are certified by affidavit of Indemnitee’s counsel as being reasonable shall be presumed conclusively to be reasonable. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
3
(j) “Independent Counsel” shall mean a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
(k) “Proceeding” shall include any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative, legislative, or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action taken by him (or a failure to take action by him) or of any action (or failure to act) on Indemnitee’s part while acting pursuant to Indemnitee’s Corporate Status, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided under this Agreement. If the Indemnitee believes in good faith that a given situation may lead to or culminate in the institution of a Proceeding, this shall be considered a Proceeding under this paragraph.
(l) Reference to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in manner “not opposed to the best interests of the Company” as referred to in this Agreement.
3. Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, judgments, penalties, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding had no reasonable cause to believe that Indemnitee’s conduct was unlawful. The parties hereto intend that this Agreement shall provide to the fullest extent permitted by law for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Certificate of Incorporation, the By-laws or vote of its stockholders or disinterested directors.
4
4. Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4 Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company; provided, however, that no indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that the Delaware Court (as hereinafter defined) or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.
5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee, by reason of Indemnitee’s Corporate Status, is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, Indemnitee shall be indemnified to the maximum extent permitted by law against all Expenses actually and reasonably incurred by Indemnitee in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with or related to each successfully resolved claim, issue or matter to the fullest extent permitted by law. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
5
6. Indemnification For Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness or otherwise asked to participate in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.
7. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
8. Additional Indemnification.
(a) Notwithstanding any limitation in Sections 3, 4 and 5 the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, penalties, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding.
(b) For purposes of Section 8(a), the meaning of the phrase “to the fullest extent permitted by applicable law” shall include, but not be limited to:
i. to the fullest extent permitted by the provision of the Delaware General Corporation Law (the “DGCL”) that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL, and
ii. to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.
9. Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnification payment or advancement of expenses in connection with any claim made against Indemnitee:
(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or
(b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as defined in Section 2(e) hereof) or similar provisions of state statutory law or common law, or (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the SarbanesOxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act);
6
(c) except as provided in Section 14(d) of this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law;
(d) any reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board, including but not limited to any such policy adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act; or
(e) for amounts paid in settlement of any Proceeding effected without the written consent of the Company (which consent shall not be unreasonably withheld).
10. Advances of Expenses. Notwithstanding any provision of this Agreement to the contrary (other than Section 14(d)), the Company shall advance, to the extent not prohibited by law, the Expenses incurred by Indemnitee in connection with any Proceeding (or any part of any Proceeding) not initiated by Indemnitee, and such advancement shall be made within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. In accordance with Section 14(d), advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. The Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement, which shall constitute an undertaking providing that the Indemnitee undertakes to repay the amounts advanced (without interest) to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company. Except as set forth in this Section 10, no other form of undertaking shall be required other than the execution of this Agreement. This Section 10 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 9.
11. Procedure for Notification and Defense of Claim.
(a) Indemnitee shall notify the Company in writing of any matter with respect to which Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof. The written notification to the Company shall include a description of the nature of the Proceeding and the facts underlying the Proceeding. To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding. The omission by Indemnitee to notify the Company hereunder will not relieve the Company from any liability which it may have to Indemnitee hereunder or otherwise than under this Agreement, and any delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights under this Agreement unless, and to the extent that, such failure actually and materially prejudices the interests of the Company. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.
7
(b) The Company will be entitled to participate in the Proceeding at its own expense.
12. Procedure Upon Application for Indemnification.
(a) Upon written request by Indemnitee for indemnification pursuant to Section 11(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Board, by the stockholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within thirty (30) days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or Expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Company promptly will advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied.
(b) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be selected as provided in this Section 12(b). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply) and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Delaware Court has determined that such objection is without merit. If, within twenty (20) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) hereof and the final disposition of the Proceeding, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Delaware Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by such court or by such other person as such court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 12(a) hereof. Upon the due commencement of any judicial proceeding pursuant to Section 14(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
8
13. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall, to the fullest extent not prohibited by law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(a) of this Agreement, and the Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(b) Subject to Section 14(e), if the person, persons or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such sixty (60) day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 13(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 12(a) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) of this Agreement.
9
(c) Indemnitee shall cooperate with the Person making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such Person upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including reasonable attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the Person making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(d) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
(e) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the directors or officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with the reasonable care by the Enterprise. The provisions of this Section 13(e) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.
10
(f) The knowledge and/or actions, or failure to act, of any director, officer, trustee, partner, managing member, fiduciary, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
14. Remedies of Indemnitee.
(a) Subject to Section 14(e), in the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 10 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 12(a) of this Agreement within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, 6 or 7, the penultimate sentence of Section 12(a) or the last sentence of Section 13(c)of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) payment of indemnification pursuant to Section 3, 4 or 8 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of Indemnitee’s entitlement to such indemnification or advancement of Expenses.
(b) In the event that a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 14 shall be conducted in all respects as a de novo trial on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding commenced pursuant to this Section 14 the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.
11
(d) The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement. It is the intent of the Company that, to the fullest extent permitted by law, the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Company shall, to the fullest extent permitted by law, indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by law, such Expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company if, in the case of indemnification, Indemnitee is wholly successful on the underlying claims; if Indemnitee is not wholly successful on the underlying claims, then such indemnification shall be only to the extent Indemnitee is successful on such underlying claims or otherwise as permitted by law, whichever is greater.
(e) Notwithstanding anything in this Agreement to the contrary but subject to Sections 10 and 22, no determination as to entitlement of Indemnitee to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.
15. Non-exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the By-Laws, Certificate of Incorporation and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
(b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Enterprise, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such claim or of the commencement of a Proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.
12
(c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement of Expenses is provided hereunder) hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
(e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such other corporation, limited liability company, partnership, joint venture, trust or other enterprise.
16. Duration of Agreement. This Agreement shall continue until and terminate upon the later of: (a) six (6) years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company or (b) the date of the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement relating thereto. The indemnification and advancement of expenses rights provided by or granted pursuant to this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
17. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
13
18. Enforcement.
(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director or officer of the Company.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the By-Laws and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.
19. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.
20. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation or liability which it may have to the Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.
21. Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication shall have been directed or (d) sent by facsimile or other electronic transmission, with receipt of oral confirmation that such transmission has been received:
(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide to the Company.
(b) If to the Company:
CarLotz, Inc.
611 Bainbridge Street, Suite 100
Richmond, Virginia 23224
Attention: Becca Polak
Email: bpolak@carlotz.com
or to any other address as may have been furnished to Indemnitee by the Company.
14
22. Contribution.
(a) Whether or not the indemnification provided in Sections 3, 4, 5 and 8 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), to the fullest extent permitted by applicable law, the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not, without the Indemnitee’s prior written consent, enter into any such settlement of any action, suit or proceeding (in whole or in part) unless such settlement (i) provides for a full and final release of all claims asserted against Indemnitee and (ii) does not impose any Expense, judgment, fine, penalty or limitation on Indemnitee.
(b) Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), to the fullest extent permitted by applicable law, the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.
(c) To the fullest extent permitted by applicable law, the Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.
15
(d) To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding, and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
23. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
24. Identical Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
25. Miscellaneous. The headings of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. This Agreement supersedes and replaces any and all previous agreements between the Company and Indemnitee covering the subject matter of this Agreement.
[signature page follows]
16
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.
CARLOTZ, INC. |
By: | ||
Name: | ||
Title: |
indemnitee |
Name: | ||
Address: |
Exhibit 10.21
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item (601)(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed. |
DEMAND PROMISSORY NOTE AND SECURITY AGREEMENT
FOR VALUE RECEIVED, each of the undersigned (hereinafter referred to jointly and severally as the “Dealer” which. term shall mean as applicable each of the undersigned individually and all of :the undersigned, collectively) on behalf of themselves individually and in their representative capacity hereby promise to pay to the order of Automotive Finance Corporation, an Indiana corporation (“LENDER”‘), with its principal office listed on the web site currently located at www.AFCDEALER.com or a successor thereto or such other place as LENDER may designate, the principal sum of Two Million Dollars ($2,000,000.00) (the “Aggregate Advance Limit”) or such greater or lesser principal amount as may be outstanding pursuant hereto, with interest on any outstanding balance prior to an Event of Default, as defined in Section 7.0 hereof, at the rate of interest (based upon a 360 day year, compounded daily, meaning that the annual interest rate set forth in the Term Sheet will be divided by 360 to arrive at a daily rate, and the daily rate will be applied to the outstanding balance each day, and interest will accrue each day and be added to the outstanding balance) set forth in the Term Sheet and as amended from time to time. In the event that no Term Sheet is executed or effective, then interest shall accrue at a variable rate, adjusted each business day, based upon the most recent prime rate published in The Wall Street Journal (“Prime Rate”) plus six and three quarters percent (6.75%) per annum (based on a 360-day year and applied as described above). Interest shall accrue from the earliest of the date an item of Purchase Money Inventory is purchased by Dealer or the date of an Advance or the date that an Obligation is incurred and shall be compounded daily. Said variable rate shall change from time to time with any change of the Prime Rate. After an Event of Default, interest shall accrue at a rate of [***] per annum (“Default Rate”), with such interest compounded daily and accruing from the date on which the Event of Default first occurred. All payments shall be made in lawful money of the United States and in immediately available funds, whether via Check, via ACH, via certified funds, or otherwise.
Until demand by LENDER or until an Event of Default (at which time the Obligations shall at LENDER’s option and without notice become immediately due and payable in full), Dealer shall pay the Obligations as provided in Section 2.6.
Dealer: (a) waives demand and presentment for payment, protest, notice of protest and notice of non-payment or dishonor of this Note; (b) consents to any extension of the time of payment thereof; (c) waives all defenses based on suretyship or impairment of collateral; and (d) waives any defenses which Dealer may assert on the Obligations including but not limited to failure of consideration, breach of warranty, fraud, payment, statute of frauds, bankruptcy, lack of legal capacity, statute of limitations, lender liability, accord and satisfaction, and usury.
In consideration of the premises and the mutual covenants and conditions contained herein, the parties further agree as follows:
AGREEMENT
1.0 | DEFINITIONS. When, used herein, the following terms shall have the following meanings: |
1.1 | ACH - an electronic network for financial transactions, also known as automated clearing house payment system, which processes credit and debit transactions including payments by or on behalf of Dealer or LENDER. |
1.2 | Advance - discretionary loan(s) to Dealer or payment(s) on behalf of Dealer by LENDER pursuant to the terms of this Note. |
1.3 | Aggregate Advance Limit - the maximum lending limit, as set forth above. |
1.4 | Approved, Auction Purchase - any Vehicle, vehicle part, or goods of any kind, now or hereafter acquired by Dealer from a LENDER-approved auction if LENDER pays the Advance for such Vehicle, vehicle part, or other good directly to the auction. |
1.5 | Check - a payment by or on behalf of Dealer to LENDER which is other than a payment in cash, via ACH or wire transfer, or via certified funds. |
1.6 | Collateral - all of Dealer’s assets and properties wherever located, including without limitation: (a) accounts, chattel paper, deposit accounts, documents, equipment, fixtures, inventory, and other goods, general intangibles, instruments, insurance policies, investment property, letter of credit rights, money, software, supporting obligations, and Titles, all of the foregoing now owned or hereafter acquired by Dealer; (b) any and all proceeds, products, additions, accessions, accessories, and replacements of the foregoing; (c) all of Dealer’s computer records, business papers, ledger sheets, files, books, and records relating to the foregoing, now owned or hereafter acquired; and (d) the following: |
1.7 | Curtailment Date - that certain day at the end of the Period when all Obligations concerning or relating to an item of Purchase Money Inventory become due and payable. |
1.8 | Dealer’s Place of. Business - any or all of the following locations: (a) the place where the Collateral and Dealer’s books and records are kept; (b) the place from which Dealer’s business affairs and operations are conducted, unless otherwise disclosed in writing to LENDER by Dealer; and (c) the place where Dealer’s registered office is located. |
1.9 | Default Rate has the meaning given to it in the introductory paragraph of this Note. |
1.10 | Electronic Signature - any electronic sound, symbol or process attached to or logically associated with a record and executed or adopted by a party with the intent to sign such record, including but not limited to, a facsimile or e-mail electronic signature, a signature submitted on an electronic form, or electronically checking a click-to-agree checkbox in an online document. |
1.11 | Equipment - all goods, other than inventory, of any kind and wherever located. |
1.12 | Floorplan Fee - that non-refundable fee payable to LENDER by Dealer in the amount set forth on the Term Sheet for each Period, or portion thereof, in which an Advance for each individual item of Purchase Money Inventory is outstanding, provided that in the event no Term Sheet is executed and effective, then the Floorplan Fee shall be equal to [***]. Notwithstanding the foregoing or any provision in the Term Sheet to the contrary, LENDER reserves the right to charge a Floorplan Fee in a higher amount as a condition to making an Advance if, in its sole discretion, LENDER determines that the circumstances so warrant. |
1.13 | Interest - those finance charges owed by Dealer to LENDER on all outstanding Obligations, which charges shall begin to accrue, on the earliest of the date an item of Purchase Money Inventory is purchased by Dealer or the date of an Advance or the date that an Obligation is incurred, compounded daily, and shall be payable at the rate and upon the terms and conditions set forth in this Note. |
THIS RECEIVABLE HAS BEEN SOLD TO AFC FUNDING CORPORATION AND AN INTEREST THEREIN HAS BEEN GRANTED TO BANK OF MONTREAL, AS AGENT
Page 1 of 11 |
1.14 | Late Fee - that non-refundable fee payable to LENDER by Dealer, in the amount set forth on the Term Sheet for each item of Purchase Money Inventory, assessed each week, or portion thereof, that Dealer fails to repay Obligations under this Note when due as provided by this Note, provided that in the event no Term Sheet is executed and effective, then the Late Fee shall be equal to [***]. Dealer agrees that this Late Fee is a reasonable estimate of LENDER’s probable losses due to the delay, inconvenience, and administrative expense associated with late payment. LENDER may also charge an amount not to exceed the maximum amount permitted by law or, if there is no applicable law, an amount not to exceed [***] for each Check or ACH tendered to LENDER, by or on behalf of Dealer, that is subsequently dishonored, in addition to any charge or fee imposed by the depository institution for each returned or dishonored item and any other charges or fees permitted by law. |
1.15 | NAP Fee - that non-refundable fee payable to LENDER by Dealer, in addition to the Floorplan Fee, in the amount set forth on the Term Sheet for each individual item of Purchase Money Inventory acquired by Dealer as a Non-Auction Purchase, provided that in the event ho Term Sheet is executed and effective or no NAP Fee is listed in the Term Sheet, then the NAP Fee shall be equal to [***]. Notwithstanding the foregoing or any provision in the Term Sheet to the contrary, LENDER reserves the right to charge a NAP Fee in a higher amount as a condition to making an Advance for a Non-Auction Purchase if, in its sole discretion, LENDER determines that the circumstances so warrant. |
1.16 | Non-Auction Purchase - a transaction other than an Approved Auction Purchase in which any Vehicle, vehicle part, or goods of any. kind, is now or hereafter acquired or refinanced by Dealer. |
1.17 | Note - this Demand Promissory Note and Security Agreement and all amendments and addenda thereto. |
1.18 | Number of Curtailment Date Extensions - the number of times set forth on the Term Sheet that the Curtailment Date may be extended for an item of Purchase Money Inventory pursuant to this Note, provided that in the event no Term Sheet is executed and effective, the Number, of Curtailment Date Extensions shall be [***]. |
1.19 | Obligations - all Advances, debts. Purchase Money Inventory Obligations, liabilities, financial obligations, charges, expenses, fees, attorney fees, costs of collection, covenants, and duties owing, arising, due, or payable from Dealer to LENDER of any kind or nature, present or future, under any instrument, guaranty, or other document whether arising under this Note or any other agreement, whether direct or indirect (including those acquired by assignment), absolute or contingent, primary or secondary, due or become due, now existing or hereafter arising and however acquired including, without limitation, all Interest, Floorplan Fee(s), Late Fee(s), NAP Fee(s), and other expenses, costs or fees provided for herein. |
1.20 | Odometer Disclosure Statement - that statement of mileage for a Vehicle required, by the Motor Vehicle Information and Cost Savings Act as amended (49 U.S.C. § 32701 et seq.) and the regulations implementing same (49 C.F.R. § 580 et seq.), to be provided to a Vehicle transferee by the transferor. |
1.21 | Period - that number of days that an item of Purchase Money Inventory will be financed by LENDER pursuant to this Note as set forth on the Term Sheet, beginning on the earliest of the date an item of Purchase Money Inventory is purchased by Dealer or the date of an Advance or the date that an Obligation is incurred and ending on the Curtailment Date, provided that in the event no Term Sheet is executed and effective, then the Period shall be [***] days. |
1.22 | Prime Rate has the meaning given to it in the introductory paragraph of this Note. |
1.23 | Purchase Money Inventory - any and all Vehicles, vehicle parts, or goods of any kind, now or hereafter acquired, financed or refinanced by Dealer with an Advance. |
1.24 | Purchase Money Inventory Obligations - the liabilities owing, arising, due, or payable from Dealer to LENDER with respect to specific Advances for specific items of Purchase Money Inventory now existing or hereafter arising including, without limitation, all Interest, Floorplan Fee(s) and Late Fee(s), and other expenses, costs or fees provided for herein. |
1.25 | Retail Installment Contract - that contract of sale and security agreement, whether or not constituting chattel paper under Article 9 of the UCC, whereby Dealer sells a Vehicle to a retail customer in the ordinary course of Dealer’s business. |
1.26 | Terms and Conditions - All provisions of this Note, excluding any language specifically referencing Dealer by individual or business name or address, or referencing the dollar amount of Dealer’s Aggregate Advance Limit. |
1.27 | Term Sheet - that agreement in effect from time to time executed by Dealer and LENDER containing information including but not limited to the Floorplan Fee and other fees, Interest and Period, attached hereto as Exhibit A and incorporated herein by reference. |
1.28 | Title - the certificate of title, manufacturer’s statement of origin or certificate of origin, or other document issued by a duly authorized state, province or government agency evidencing ownership of a Vehicle. |
1.29 | UCC - the Uniform Commercial Code as enacted in Indiana and amended from time to time. |
1.30 | Vehicle - a vehicle, the ownership of which is embodied in a Title, driven or drawn by mechanical power, manufactured primarily for use on the public streets, roads, and highways. |
Any term used in the UCC and not defined herein has the meaning given to the term in the UCC as presently enacted in Indiana or modified hereafter.
2.0 | FINANCING PROCEDURES. |
2.1 | Discretionary Advances. LENDER may, in its sole discretion, from time to time make an Advance to or on behalf of Dealer for the purpose of enabling Dealer to purchase and/or hold Purchase Money Inventory for resale, and for other purposes as determined in LENDER’S sole discretion. Dealer acknowledges and agrees that LENDER may, with or without cause, refuse to make an Advance. Dealer further agrees that LENDER’s decision to make an Advance shall be binding only if it is in writing and signed by LENDER. Dealer and LENDER agree that Dealer is not obligated to finance any Purchase Money Inventory, or any other assets through LENDER. |
THIS RECEIVABLE HAS BEEN SOLD TO AFC FUNDING CORPORATION AND AN INTEREST THEREIN HAS BEEN GRANTED TO BANK OF MONTREAL, AS AGENT
Page 2 of 11 |
2.2 | Advance Requests: Purchase Money Inventory. Dealer may request an Advance for the purpose of enabling Dealer to purchase, finance or refinance and hold an item of Purchase Money Inventory for resale by providing LENDER with: (a) a copy of the bill of sale which indicates the vendor and the actual purchase price of the Purchase Money Inventory; and (b) as to Vehicles, a completed Odometer Disclosure Statement and the Title duly assigned to Dealer. Dealer represents and warrants that each such Advance will be used only to purchase, finance or refinance Vehicles encumbered by this Note. |
2.3 | Advance Requests: Other Purposes. Dealer may request an Advance for purposes other than enabling Dealer to purchase and hold an item of Purchase Money inventory for resale by providing LENDER with: (a) a written request setting forth the purpose for the requested Advance, and (b) such other information as LENDER may require. If LENDER elects to make any such Advance, the Advance shall be deemed an additional Obligation under this Note from the date on which the Advance is made. |
2.4 | Conditions to Advances. Each request for an Advance submitted by Dealer shall be deemed to be a representation and warranty that (a) no Event of Default has occurred or is continuing, (b) Dealer is in complete compliance with the terms and conditions of this Note, (c) all prior Advances made for the purpose of enabling Dealer to purchase an item of Purchase Money Inventory have only been used to purchase Vehicles encumbered by this Note, (d) the requested Advance will only be used to enable Dealer to purchase an item of Purchase Money Inventory, (e) no material adverse effect to the operation or prospects of Dealer (financial, business, labor or otherwise) exists or is threatened, and (f) no Checks or ACHs issued by Dealer to LENDER have been dishonored. In addition, as a condition precedent to an Advance, Dealer shall deliver to LENDER, at LENDER’s request, a certificate in a form acceptable to LENDER certifying such other information as LENDER may request. |
2.5 | Advances Without Request. If at any time including but without limitation during an Event of Default or acceleration under this Note, Dealer is in default on any obligation to a third party, LENDER may in its sole discretion elect, but is not required, to make payment or transfer on Dealer’s behalf to the third party, in any amount up to the total obligation owed by Dealer to the third party, as a means of satisfying Dealer’s obligation to the third party in whole or in part. If LENDER elects to make any such payments or transfers, they shall be deemed additional Obligations under this Note from the date on which the payment or transfer is made. Such payments or transfers may be made without prior notice to Dealer and without regard to any Aggregate Advance Limit then in effect for Dealer. |
2.6 | Repayment of Obligations. Dealer shall pay to LENDER at the offices of LENDER the Obligations, on demand and without notice, and in any event, with respect to an item of Purchase Money Inventory on the earliest of: (a) LENDER’s demand, (b) forty-eight (48) hours after the disposition by sale or otherwise of an item of Purchase Money Inventory; or (c) the Curtailment Date. All proceeds of any such disposition shall be received by Dealer in trust for LENDER and forwarded promptly to LENDER as noted below. If no Event of Default has occurred and is continuing, LENDER shall apply applicable payments to the Purchase Money Inventory Obligation incurred from said item of Purchase Money Inventory. Notwithstanding anything herein to the contrary including Sections 3.0 and 4.0 if, after the disposition by sale or otherwise and subsequent payment to LENDER as delineated above, a shortage exists between any payments received by LENDER and the Purchase Money Inventory Obligation with respect to an item of Purchase Money Inventory, that shortage shall be considered an Obligation owed by Dealer to LENDER and secured with Collateral other than Purchase Money Inventory. The order and method of application of payments of the Obligations, excluding payments with respect to Purchase Money Inventory Obligations made when no Event of Default has occurred and is continuing, shall be at the sole discretion of LENDER. Notwithstanding anything herein to the contrary, LENDER reserves the right to require that payments be made via ACH, and Dealer shall execute an ACH payment authorization upon request. |
2.7 | Extension of Curtailment Date. If Dealer is in compliance with all other provisions of this Note, LENDER may, in its sole discretion, permit an extension of the Curtailment Date relative to an item of Purchase Money Inventory for a Period, upon the payment of Interest, Floorplan Fee(s) and the minimum principal amount of the Advance relating to such item of Purchase Money Inventory as set forth in the Term Sheet, provided that in the event no Term Sheet is executed and effective, then the minimum amount of such payment shall be equal to [***] of the outstanding principal amount of the Advance relating to such item of Purchase Money Inventory. |
2.8 | Presumptions Regarding Outstanding Balance. The date and amount of each Advance made by LENDER and of each repayment of principal or interest thereon shall be recorded by LENDER. The aggregate unpaid principal amount, interest, fees, and other Obligations so recorded by LENDER shall constitute prima facie evidence of the sums owing and unpaid under this Note; provided, however, that the failure by LENDER to so record any such amount or any error in so recording any such amount shall not limit or otherwise affect the liability of Dealer under this Note to repay the Obligations. |
2.9 | Purchase Money Inventory and Title Control. At any and all reasonable times Dealer shall allow LENDER’s officers, employees, agents, attorneys, designees and representatives (including but not limited to representatives of AutoVin, Inc., its successors, affiliates, subsidiaries and parent companies) access to Dealer’s books and records and the Dealer’s Place of Business for the purpose of conducting an audit of Dealer’s inventory, books and records. Dealer agrees to pay an audit charge in the amount set forth on the Term Sheet for each audit, and all of LENDER’s expenses in conducting such audit, provided that in the event no Term Sheet is executed and effective, then the audit charge shall be equal to [***]. In addition, LENDER may also charge a failed audit fee if any item of Purchase Money Inventory is unverified at close of the audit or the audit is otherwise failed. Dealer may request the Title to a Vehicle or Vehicles held by LENDER for purposes of correcting same or taking said Vehicle(s) to an auction. If LENDER in its sole discretion agrees with such request, Dealer shall deliver to LENDER a Check or draft in an amount equal to the Advance(s) relating to such Vehicle(s). Unless such Title(s) are returned to LENDER within the time period established by LENDER, (a) LENDER may (i) deposit or present such Check or draft for payment or (ii) process such payment via ACH and return the Check to Dealer, and (b) any outstanding Obligation(s), Floorplan Fee(s) or accrued interest relating to Advance(s) for such Vehicle(s) shall become immediately due and payable. |
THIS RECEIVABLE HAS BEEN SOLD TO AFC FUNDING CORPORATION AND AN INTEREST THEREIN HAS BEEN GRANTED TO BANK OF MONTREAL, AS AGENT
Page 3 of 11 |
2.10 | Authorization of LENDER. By execution of this Note, Dealer authorizes LENDER and any of its officers, employees or agents to take any and all action to secure and perfect its interest in the Collateral including but not limited to taking possession of the Collateral and executing and filing, on behalf of Dealer and without Dealer’s signature, original financing statements, amendments, continuation statements, and any other documents LENDER deems necessary or desirable to protect its interests. Dealer authorizes LENDER to supply any omitted information and correct errors in any document executed by or on behalf of Dealer, and to contact any. bank or other depository institution to obtain account information concerning Dealer. Dealer authorizes LENDER to obtain credit information from a credit bureau, and any financial institutions or trade creditor that Dealer has provided as well as other credit investigation that LENDER in LENDER’s sole discretion deems necessary. Dealer also authorizes LENDER to contact any third parties to disclose information, including information contained in this Note, for the purposes of, including, but not limited to assessing Dealer’s credit worthiness, collection of any outstanding debt, obtaining intercreditor agreements, and perfecting LENDER’s security interest. Dealer also authorizes LENDER to disclose the above described information to any of its successors, affiliates, subsidiaries, and parent companies. Further, Dealer authorizes LENDER to review Dealer’s account periodically, which could include obtaining additional credit reports. Dealer authorizes LENDER to disclose Dealer’s credit information into any credit database. In addition, Dealer shall execute the Power of Attorney incorporated herein by reference as Exhibit B. |
3.0 | GRANT OF SECURITY INTEREST. To secure Dealer’s prompt payment of the Purchase Money Inventory Obligations, Dealer hereby grants to LENDER a lien and a security interest in the Purchase Money Inventory and the Titles thereto. To secure Dealer’s prompt payment of the Obligations and prompt payment of all liabilities owed to LENDER by any affiliates of Dealer, Dealer hereby grants to LENDER a lien and security interest in all of the Collateral. Dealer understands and agrees that LENDER at all times intends to maintain the status of a purchase money secured creditor with priority rights in the Purchase Money Inventory as provided under the UCC. Therefore, to the extent purchase money status can be maintained under applicable law, Dealer also grants LENDER a lien and a security interest as follows: (a) the Purchase Money Inventory also secures Obligations that are not Purchase Money Inventory Obligations, and (b) Collateral that is not Purchase Money Inventory also secures Purchase Money Inventory Obligations. Dealer authorizes LENDER and any of its officers or employees to file original financing statements, amendments, continuation statements, and any other documents LENDER deems necessary or desirable to protect its interests. Dealer authorizes, ratifies and confirms the effectiveness of any financing statements regarding the security interests granted by this Note that may have been filed prior to the date of this Note. |
4.0 | SALES OF PURCHASE MONEY INVENTORY. Unless and until an Event of Default shall have occurred, Dealer may sell the Purchase Money Inventory to bona fide buyers in the ordinary and regular course of Dealer’s business, but nothing herein shall be deemed to waive or release any interest LENDER may have hereunder or under any other agreement in any proceeds or replacements of the Purchase Money Inventory. Upon the sale of any item of Purchase Money Inventory, Dealer shall hold the amount received from the disposition of inventory in trust for the benefit of LENDER and Dealer shall pay promptly to LENDER, in accordance with Section 2.6, an amount equal to the unpaid balance of the Purchase Money Inventory Obligations and any other Obligations relating to such Purchase Money Inventory. |
5.0 | DEALER’S COVENANTS. Until payment in full of all of the Obligations or unless LENDER shall otherwise consent in writing, each undersigned Dealer covenants and agrees as follows: |
5.1 | Disposition of Purchase Money Inventory. Unless Purchase Money Inventory is the subject of a Retail Installment Contract that satisfies the requirements of Section 6.7 of is sold pursuant to Section 4.0, Dealer shall not attempt to or actually, sell, lease, transfer, mortgage, encumber, or otherwise dispose of the Purchase Money Inventory, any part thereof, or any interest therein, or remove, for a period exceeding twenty-four (24) hours, any item of Purchase Money Inventory from the Dealer’s Place of Business. In addition, Dealer shall keep the Purchase Money Inventory free from any lien, security interest, mortgage, claim, charge or other encumbrance, other than those granted pursuant to this Note or permitted in writing by LENDER. |
5.2 | Unconditional Payment Obligation. Dealer’s obligation to make full payment under this Note is unconditional and shall not be affected by claims or disputes Dealer may have against any other person, including but not limited to claims or disputes Dealer may have against LENDER or any person or entity that transferred, conveyed, or sold one or more Vehicles to Dealer. |
5.3 | Maintenance of Collateral. Dealer shall keep and maintain the Collateral in good repair and safe condition, and not cannibalize, alter or substantially modify the Collateral except to enhance its value, nor secrete or conceal the Collateral. |
5.4 | Dealer’s Books and Records. Dealer has kept and shall continue to keep true and accurate books and records concerning its business affairs and the Collateral. Such books and records shall contain full and correct entries of all business transactions and shall be kept in accordance with generally accepted accounting principles consistently applied. Dealer shall at least annually and upon request furnish financial statements and sales information to LENDER based upon said books and records and upon request shall permit LENDER to inspect, make extracts from and receive from Dealer originals or true copies of Dealer’s books and records and any papers relating to the Collateral. All financial statements submitted to LENDER shall fairly present the financial condition of Dealer and any other person or entity identified in such financial statements as of the preparation date. Dealer represents and warrants that all information provided to LENDER concerning Dealer’s business affairs and the Collateral, including without limitation financial statements and sales information, is true, accurate and complete. Dealer shall notify LENDER, in writing, of any material adverse change in the financial condition of Dealer as compared to any prior financial statements submitted to LENDER. |
5.5 | Insurance. Dealer shall keep the Collateral insured against such risks and in an amount equal to the Aggregate Advance Limit or such lesser amount as LENDER may from time to time permit and with such insurer or insurers as LENDER may from time to time approve. Dealer shall provide LENDER, or LENDER’s designees, with copies of its policies of insurance covering the Collateral together with evidence that the premium therefor has been paid, that LENDER has been named as loss payee or additional insured on such policies, and that the insurer will notify LENDER in writing at least thirty (30) days prior to non-renewal or cancellation of such policies. The proceeds of loss under such policies are hereby assigned to LENDER. If LENDER determines, in its sole discretion, that Dealer has not maintained adequate insurance coverage for the Collateral, LENDER may, but has no obligation to, purchase a policy or policies of insurance (through forced placement or otherwise) and may treat amounts so expended as additional Obligations. The risk of loss or damage to the Collateral shall at all times remain solely with Dealer. |
THIS RECEIVABLE HAS BEEN SOLD TO AFC FUNDING CORPORATION AND AN INTEREST THEREIN HAS BEEN GRANTED TO BANK OF MONTREAL, AS AGENT
Page 4 of 11 |
5.6 | Litigation Notice. Dealer shall provide to LENDER within five (5) days after service of process, notice of any litigation, arbitration, or other proceeding by or before any court, governmental agency, or entity affecting Dealer. |
5.7 | Taxes. Dealer has paid and shall pay all taxes and assessments relating to its business affairs and shall pay all taxes and assessments at any time levied on the Collateral as and when the same become due and payable in the ordinary course. If Dealer fails to pay taxes or assessments relating to the Collateral, LENDER may, but has no obligation to, pay said taxes or assessments and may treat amounts so expended as additional Obligations. |
5.8 | Further Assurances. Dealer shall execute any and all documents necessary to confirm an Advance or perfect LENDER’s lien and security interest in the Collateral. Dealer shall, at any time and at the request of LENDER, deliver the originally executed Retail Installment Contracts to LENDER. Dealer shall, at any time and at the request of LENDER, assign in writing any or all Retail Installment Contracts. |
5.9 | Acknowledgments. Dealer acknowledges that LENDER has relied on Dealer’s Covenants and Dealer’s Representations and Warranties as delineated in this Note, and is not charged with any contrary knowledge that may be ascertained by examination of the public records, or that may have been received by any officer, director, agent, employee, representative or shareholder of LENDER. |
5.10 | Changes in Dealer’s Business. Upon the execution of this Note, Dealer shall provide LENDER with a document listing Dealer’s Place(s) of Business. Dealer shall provide LENDER written notice within 30 days of any of the following: (a) any change in Dealer’s Place of Business or chief executive office, (b) any change in the corporate, business or ownership structure of Dealer, (c) any change in the state or jurisdiction of incorporation, organization or business entity registration of Dealer, (d) any change in the legal name or trade name of Dealer, (e) any consolidation or merger with any other person or entity, (f) any change in control of Dealer, (g) any sale, transfer or issuance of equity securities or reclassification, readjustment or other change in capital structure, or (h) any amendment to Dealer’s articles, by-laws or other organizational documents. |
5.11 | Notice to Account Debtors. Dealer shall, at any time and at the request of LENDER, notify any or all account debtors or obligors that LENDER has the right to enforce Dealer’s rights against the account debtors or obligors, that LENDER has a security interest in the accounts and/or chattel paper, and that the account debtors and obligors must direct payment to LENDER. |
5.12 | Guaranties. At the request of LENDER prior to the execution of this Note and at any time thereafter, Dealer shall deliver to LENDER a duly executed guaranty or guaranties of a third party or parties in the form attached hereto as Exhibit C. |
5.13 | Control Agreements. Dealer shall cooperate with LENDER in obtaining control agreements or similar type agreements in form and substance satisfactory to LENDER with respect to Collateral consisting of deposit accounts, certificates of deposit, investment property, letter of credit rights, electronic chattel paper, certified or uncertified securities, and other collateral which may require steps in addition to filing a financing statement to perfect LENDER’s security interest. In the event satisfactory control agreements cannot be obtained, Dealer shall cooperate with LENDER in placing the account or other property in LENDER’s name as owner or co-owner. |
6.0 | DEALER’S REPRESENTATIONS AND WARRANTIES. On the date of this Note and until the Obligations are paid in full and Dealer has performed all of its obligations hereunder, the representations and warranties contained in this Note and every factual matter in any other document delivered to LENDER by or on behalf of each individual undersigned Dealer shall be true and correct in all: material respects for each individual undersigned Dealer and will remain true and correct for each individual undersigned Dealer. |
6.1 | Permits and Licenses. Dealer has all applicable permits and licenses necessary to conduct business as a retail of wholesale seller, as applicable, of the Collateral. Dealer has all required government certificates, licenses, registrations, and charters to operate as the entity or business type identified by Dealer in the Dealer application and is in good standing with all applicable governmental authorities. Dealer shall comply with, and not permit any violation by its agents or employees of, all applicable laws, regulations, and orders of public authorities relating to Dealer’s business affairs and the Collateral. |
6.2 | Authority. The undersigned is legally competent, and has been duly authorized by all necessary action, to execute and deliver this Note and consummate all of the transactions contemplated hereby. Dealer has now and will have at the time of each Advance full right, power, and authority to borrow in the manner and on the terms and conditions set out in this Note, and to grant LENDER the lien and security interest granted in this Note without the consent or approval of any third party or public authority. |
6.3 | Ownership. Dealer has now and will have at the time of each Advance good and marketable title to the Purchase Money inventory, free and clear of all liens, security interests, mortgages, charges, claims, and other encumbrances or interests whatsoever, except the lien and security interest granted under this Note, or except as permitted by LENDER in writing or acknowledged by LENDER’s written notification to such third party advising such third party of LENDER’s purchase money security interest in the Purchase Money Inventory and the proceeds thereof. |
6.4 | Enforceability. This Note, and any other agreements or documents contemplated herein or executed in connection herewith, constitute valid and binding obligations of the Dealer and all are enforceable in accordance with their respective terms. |
6.5 | Litigation. No legal, arbitration, or administrative proceedings are pending or threatened against Dealer which could reasonably affect the Collateral or which materially and adversely affect the properties, business, prospects, or condition, financial or otherwise, of the Dealer or Dealer’s ability to honor its obligations hereunder, |
6.6 | Check Representations. With each and every payment to LENDER by Check or ACH, Dealer represents and warrants (regardless of whether Dealer is the drawer thereof), that, at the time of issuance of the Check or ACH and at the time such Check or ACH may be presented for payment, the account upon which such Check or ACH is drawn contains immediately available funds sufficient for payment of that Check or ACH and all other Checks and ACHs issued or outstanding at that time. Dealer acknowledges that LENDER may submit a check for payment electronically, and that checks processed electronically may initiate same-day debits from Dealer’s bank account. |
THIS RECEIVABLE HAS BEEN SOLD TO AFC FUNDING CORPORATION AND AN INTEREST THEREIN HAS BEEN GRANTED TO BANK OF MONTREAL, AS AGENT
Page 5 of 11 |
6.7 | Retail Installment Contract Representations. With respect to each Retail Installment Contract: (a) Dealer is the owner thereof; (b) Dealer has made all filings and recordations, and has taken, all necessary actions (including registration on a certificate of title) which are required to perfect Dealer’s interest with respect to the Collateral thereunder; (c) such Retail Installment Contract is the result of a bona fide transaction entered into in the ordinary course of Dealer’s operations; (d) such Retail Installment Contract is true, valid, genuine, binding, and enforceable in accordance with the written terms thereof; (e) such Retail Installment Contract is the only chattel paper with respect to the subject thereof; (f) such Retail Installment Contract is and will continue to be free from all defenses, setoffs, and counterclaims of any kind; (g) such Retail Installment Contract conforms with all applicable law; (h) except as to any interest disclosed in writing to LENDER, such Retail Installment Contract is free from all security, liens, and/or encumbrances; and (i) the property which is the subject of the Retail Installment Contract has been delivered to the retail purchaser under such Retail Installment Contract. |
6.8 | Lot Representation. All Vehicles located at Dealer’s Place of Business constitute inventory for resale in the ordinary course of Dealer’s business unless the Vehicle is plainly marked otherwise. None of the Vehicles are in Dealer’s possession pursuant to a consignment or other agreement providing that someone other than Dealer is the Vehicle’s owner or has rights in the Vehicle superior to the rights of Dealer or LENDER, unless (a) LENDER has been notified in writing that such Vehicles are in Dealer’s possession and (b) the Vehicles are plainly so marked and identified. |
6.9 | Name of Dealer. Dealer’s legal name is precisely the name set forth as such on the last page of this Note. |
6.10 | State of Organization. Dealer’s jurisdiction of incorporation, organization or other business entity registration is the state or jurisdiction set forth as such on the last page of this Note. Upon request, Dealer shall furnish to LENDER an official certificate from the appropriate governing authority evidencing the current legal status of Dealer’s business organization. |
6.11 | Financial Status. The fair value of Dealer’s assets is greater than the fair value of Dealer’s liabilities (including, without limitation, contingent liabilities if and to the extent required to be recorded as a liability on the financial statements of Dealer in accordance with generally accepted accounting principles as consistently applied to Dealer’s financial statements). Dealer is and will be solvent, is and will be able to pay its debts as they mature and does not and will not have an unreasonably small capital to engage in the business in which Dealer is engaged and proposes to engage. Dealer has not incurred and does not intend to incur debts beyond its ability to pay such debts as they mature. Dealer is not contemplating the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of Dealer or any of its assets. Dealer is not transferring any Collateral with any intent to hinder, delay or defraud any of its creditors. |
7.0 | EVENT OF DEFAULT. Each and every one of the following events shall be considered an Event of Default: |
7.1 | the default in any payment or repayment when due of any of the Purchase Money Inventory Obligations or Obligations, as provided in the Note; |
7.2 | LENDER’s deeming itself insecure regarding the Collateral or the possibility of Dealer’s default in any payment or repayment of any of the Obligations; |
7.3 | LENDER’s receipt of any report indicating that LENDER is not prior to all other liens, security interests, mortgages, charges, claims, encumbrances or interests of any kind in the Purchase Money Inventory, except as expressly permitted by LENDER in writing or acknowledged by LENDER’s written notification to such third party advising such third party of LENDER’s purchase money security interest in the Purchase Money Inventory and the proceeds thereof; |
7.4 | the default in payment or performance of any debt or obligation of Dealer, any guarantor or any affiliate, whether to LENDER or to a third party; |
7.5 | LENDER determining, in its sole discretion, that any covenant, warranty, representation, or statement made by Dealer in connection with this Note, related documents, any Advance or otherwise to or for the benefit of LENDER has been breached or is false or misleading; |
7.6 | the loss, theft, damage, destruction, sale (except as permitted by Section 4.0), or encumbrance of the Collateral (except as permitted by Section 6.3), or the making of any levy, seizure, attachment, or execution against Dealer, any of the Collateral or any of its other property; |
7.7 | the inability of Dealer or any guarantor to pay debts as they mature, insolvency of Dealer or any guarantor, appointment of a receiver for Dealer or any guarantor, assignment for the benefit of creditors by Dealer, commencement of any proceeding under any bankruptcy or insolvency law by or against Dealer or any guarantor, or entry of or issuance of any order of attachment, execution, sequestration, or other order in the nature of a writ levied upon the Collateral; |
7.8 | the death or incompetency of Dealer if Dealer is an individual or any guarantor, or the death, incompetency, or resignation of a principal stockholder, officer, or manager of Dealer or any guarantor; |
7.9 | dissolution, merger or consolidation, or transfer of any substantial part of the property of Dealer or of any guarantor, or |
7.10 | LENDER’s determination, in its sole discretion, that control contests or other management disputes within or regarding the Dealer threaten or may threaten the timely repayment of the Obligations by Dealer. |
7.11 | An Event of Default by any one undersigned Dealer shall be deemed an event of default by all the undersigned Dealers. |
8.0 | REMEDIES. |
8.1 | Whenever an Event of Default shall exist, or at any time thereafter (such a default not having previously been cured), LENDER, at its option and without demand or notice of any kind, may declare the Obligations to be immediately due and payable. Upon such Event of Default, LENDER shall have the rights and remedies of a secured party under the UCC with respect to the Collateral, and any other rights or remedies at law, in equity, by agreement or otherwise. LENDER shall have the right to pursue any of its rights and remedies separately, successively or concurrently, and the exercise of any right or remedy shall not preclude its subsequent exercise at a later time or the exercise of other rights or remedies. Without limiting the foregoing, LENDER may (a) notify any or all creditors, account debtors or obligors of Dealer’s default and/or of the security interest of LENDER in Dealer’s accounts or chattel paper and direct payment of same to LENDER; (b) demand, receive, sue for and give receipts or acquittances for any moneys due or to become due on any account receivable, Retail Installment Contract, or under any chattel paper or endorse any item representing any payment on or proceeds of the Collateral; (c) assent to any or all extensions or postponements of time of payment or any other indulgence in release of the Collateral, to the addition or release of acceptance of partial payments and the settlement, compromise or adjustment of such claims, all in a manner and at times as LENDER shall deem advisable; (d) execute and deliver for value all necessary or appropriate bills of sale, documents of title, and other documents and instruments in connection with the management or disposition of the Collateral or any part thereof; (e) hold; store, keep idle, lease, operate, remove, or otherwise use or permit the use of the Collateral or any part of if for that time and upon those terms as LENDER, in its sole discretion, deems to be in its own best interests; and/or (f) take possession of the Collateral and sell the same. For all such purposes, LENDER may, without prior notice, enter upon the premises on which the Collateral is situated (or is believed to be situated) and either cause the Collateral to remain on, be stored on, or managed at such premises at Dealer’s expense, pending sale or other disposition of the Collateral, or remove the Collateral to such other place as LENDER shall determine. Notwithstanding the foregoing rights, Dealer shall, upon LENDER’s demand, make the Collateral available to LENDER at a place to be designated by LENDER which is reasonably convenient to both parties. Dealer hereby consents to the appointment of a receiver by any court of competent jurisdiction without necessity of notice, hearing, or bond. |
THIS RECEIVABLE HAS BEEN SOLD TO AFC FUNDING CORPORATION AND AN INTEREST THEREIN HAS BEEN GRANTED TO BANK OF MONTREAL, AS AGENT
Page 6 of 11 |
8.2 | Procedures. LENDER may comply with any provision of this Note and any applicable state or federal law requirements in connection with a disposition of the Collateral, and compliance will not be considered adversely to affect the commercial reasonableness of any sale of Collateral. Dealer agrees that a sale of any Vehicle by auction to other vehicle dealers shall be commercially reasonable. LENDER may sell Collateral without giving any warranties and may specifically disclaim warranties, including warranties of title and the like. LENDER shall not be liable or accountable for the failure to seize, collect, realize, sell, or obtain possession or payment of all or any part of the Collateral and shall not be bound to institute proceedings for the purpose of seizing, collecting, realizing, selling or obtaining possession or payment of same or for the purpose of preserving any rights of LENDER, Dealer or any other person. LENDER shall not have any obligation to take any steps to preserve rights against prior parties to any Collateral, whether or not in LENDER’s possession, and shall not be liable for failure to do so. Dealer shall remain liable to pay LENDER any deficiency balance remaining after any sale. |
8.3 | No Obligation to Pursue Others. LENDER shall have no obligation to attempt to. satisfy the Obligations by collecting them from any other person liable for them, and LENDER may release, modify or waive any Collateral provided by any other person to secure any of the Obligations, all without affecting LENDER’s rights against Dealer. Dealer waives any right it may have to require LENDER to pursue any third person for any of the Obligations. |
8.4 | Sales on Credit. If LENDER sells any of the Collateral on credit, Dealer will be credited only with payments actually made by the purchaser, received by LENDER and applied to the indebtedness of the purchaser. In the event the purchaser fails to pay for the. Collateral, LENDER may resell the Collateral and Dealer shall be credited with the net proceeds of the sale. |
8.5 | Notice of Sale. Dealer agrees that motor vehicles are a type of collateral customarily sold on a recognized market and that LENDER therefore has no obligation to notify Dealer, or any other person, prior to their sale. In the event LENDER does send notice prior to sale of any Collateral, Dealer agrees that the sending of notice, whether delivered personally, by courier service or by certified or registered mail to any address of Dealer set forth in this Note, of the time and place of any public sale or the time after which any private sale or other intended disposition is to be made, shall be deemed reasonable notice thereof. LENDER may, without further notice of publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place at which it was announced at the sale so adjourned. Dealer agrees that a sale of any Vehicle by auction to other vehicle dealers shall be commercially reasonable. |
8.6 | Action Against Bond. To the extent not prohibited by law, Dealer authorizes LENDER to proceed in an action to collect on or against any bond posted by Dealer with any state or local authorities. |
8.7 | No Marshalling. LENDER shall have no obligation to marshal any assets in favor of Dealer, or against or in payment of the Note, any Obligations or any other obligation owed to LENDER by Dealer or any other person. |
8.8 | Right of Set-Off. Upon the occurrence and during the continuance of an Event of Default, LENDER is authorized at any time and from time to time, without notice to Dealer, to set-off and apply, directly or through any of LENDER’s affiliates, any and all deposits (whether general or special, time or demand, provisional or final, or otherwise) and other assets and properties at any time held in the possession, custody or control of LENDER or its affiliates, and any indebtedness at any time owing by LENDER or its affiliates to or for the credit, account or benefit of Dealer, against any and all of Dealer’s Obligations. |
9.0 | GENERAL. |
9.1 | Indemnification. Dealer shall indemnify and hold LENDER and its directors, officers, equity owners, employees, affiliates, agents, attorneys, accountants, successors and/or assigns (each an “Indemnitee”) harmless from and against any and all liabilities, loss, damage, costs, or expenses of whatever kind or nature relating to claims of third parties arising out of or in any way connected to this Note or Dealer’s business affairs including, without limitation, attorneys’ fees and expenses incurred both in the defense of any action against an Indemnitee and in any action to enforce these indemnity rights as against the Dealer. |
THIS RECEIVABLE HAS BEEN SOLD TO AFC FUNDING CORPORATION AND AN INTEREST THEREIN HAS BEEN GRANTED TO BANK OF MONTREAL, AS AGENT
Page 7 of 11 |
9.2 | No Partnership; Joint Venture; Dealer’s Business Affairs. Notwithstanding anything to the contrary herein contained or implied, LENDER, by this Note or by any action pursuant hereto, shall not be deemed to be a partner or joint venturer of Dealer. Dealer furthermore agrees that notwithstanding the conditions of lending herein, the purchase or sale of Vehicles or Equipment by Dealer is in the ordinary course and, prior to an Event of Default, at the discretion and subject to the business judgment of Dealer. LENDER has no responsibility or liability of any kind with regard to the quantity, quality, condition, purchase price, or marketability of any item of Purchase Money Inventory. LENDER is not a party to any loss or gain in the sale of any Purchase Money Inventory: sold by Dealer. |
9.3 | Expenses. Dealer agrees to pay in the ordinary course as additional Obligations all LENDER’s fees, expenses and costs incidental to the financing provided for under this Note. Such charges shall include, but are not limited to, Late Fees, fees for dishonored Checks, ACH payments or other electronic fund transfers charged by LENDER or imposed by the depository institution, NAP Fees, highline fees, document processing fees, title fees, audit fees, lot audit failure fees, lien holder direct pay service fees, title release fees, balance transfer fees, unit transfer fees, courier fees, and other standard fees charged by LENDER, fees and expenses incurred by LENDER or it’s counsel (including paralegals and similar persons), and any filing fees, stamp taxes, insurance or other charges associated with the creation, perfection, or maintenance of the security interest granted herein. Dealer agrees that if it fails or refuses to pay any taxes or assessments relating to the Collateral or maintain proper insurance coverage for the Collateral, LENDER may, but has no obligation to, pay said taxes or assessments and purchase a policy or policies of insurance and may treat amounts so expended as additional Obligations. Any amount so paid or advanced by LENDER, plus related costs, shall be repaid by Dealer on demand and shall bear interest at the Default Rate from the date of such payment or advance. |
9.4 | Notices. All notices, requests, or other communications by Dealer required by, permitted under, or relating to this Note shall be in writing. Any notice shall be effective (a) if delivered personally (or by courier) with signed receipt therefor, or (b) three days after dispatch, if delivered via certified or registered U.S. Mail, postage prepaid and addressed as follows: |
If intended for LENDER
Automotive Finance Corporation
then addressed to LENDER at the corporate headquarters of LENDER as listed on the web site currently located at www.AFCDEALER.com or a successor thereto.
If intended for Dealer
CARLOTZ, INC. DBA: CARLOTZ
406 WEST FRANKLIN STREET
RICHMOND, VA 23220
All such notices shall be deemed reasonably and promptly given if the effective date thereof is at least five (5) days prior to the event with respect to which notice is-given.
9.5 | Merger, Modification; Headings. This Note and the documents contemplated hereby are intended by the parties as an amendment and restatement of any prior Promissory Note and Security Agreement or agreements with regard to the subject matter hereof. Notwithstanding the foregoing, this Note and the documents contemplated hereby contain the entire agreement of the parties with regard to the subject matter hereof, and shall be binding upon and inure to the benefit of the successors and assigns of the parties; however, no obligation or rights of Dealer shall be assignable. Dealer, authorizes LENDER to alter, amend or modify the Terms and Conditions of this Note at any time by posting notice of such altered, amended or modified Terms and Conditions on its web site currently located at www.AFCDEALER.com or any successor web site. Any request for an Advance by Dealer and subsequent Advance by LENDER pursuant to Sections 2.1, 2.2 or 2.3 shall constitute the assent of the parties to the Terms and Conditions in effect at that time. The provisions of this Note may not be altered, amended, or modified by Dealer except in a writing signed by both parties The parties acknowledge that the headings herein are for convenience only and shall not be considered in the interpretation of this Note. Oral agreements or commitments to loan money, extend credit or to forbear from enforcing repayment of a debt including promises to extend or renew such debt are not enforceable, regardless of the legal theory upon which it is based that is in any way related to the credit agreement. |
9.6 | Usury. Notwithstanding any provisions of this Note to the contrary, at no time shall Dealer be obligated to pay interest at a rate which would subject LENDER to either civil or criminal liability due to interest being in excess of the maximum rate LENDER is permitted by law to contract or Dealer is permitted by law to agree to pay. In such circumstances, the rate of interest hereunder shall be deemed to be immediately reduced to such maximum rate, and such interest and the portion of all prior interest payments in excess of such maximum rate shall be applied and shall be deemed to have been payments in reduction of the principal balance of the Obligations as of the date such payment was made. Any such excess shall be held by LENDER for Dealer’s benefit without interest and shall be subject to setoff by LENDER. |
9.7 | No Waiver. No delay or omission by LENDER to exercise any right or remedy shall (a) impair any right or remedy, (b) waive any default or operate as an acquiescence to any Event of Default, or (c) affect any subsequent default, right or remedy of the same or of a different nature. |
9.8 | Demand Nature of Credit Facility. Dealer acknowledges and agrees that the Obligations evidenced by this Note are payable upon demand. Nothing in this Note is intended to nor shall be deemed to change the demand nature of this Note, including, without limitation, any reference to Events of Default, to annual financial statements, to Curtailment Dates, to Periods, or otherwise. Dealer acknowledges and agrees that LENDER, at any time, without notice and with or without reason, may demand that this Obligation be immediately paid in full. Dealer acknowledges that demand may be made by LENDER even if the Dealer is in compliance with each and every term of this Note. |
9.9 | Signature. LENDER and Dealer expressly agree that LENDER may, at LENDER’s option, execute this Note and the documents contemplated hereby by way of a signature stamp or other authorized facsimile signature of an officer of LENDER, or by way of an electronic signature. LENDER and Dealer expressly agree that except as authorized under Section 2.10 or the attached Power of Attorney, Dealer may only execute this Note and the documents contemplated hereby by way of an original manual signature (not a facsimile thereof) or by way of an electronic signature; provided, however, that LENDER, in LENDER’s sole discretion, may require Dealer to execute this Note with manual signatures. |
9.10 | Enforcement. LENDER and Dealer intend and believe that each provision in this Note complies with all applicable ordinances, laws, statutes and judicial and administrative decisions; however, if any provision in this Note is found by a court of law to be in violation of any applicable ordinances, laws, statutes, judicial or administrative decisions, or public policy, then it is the intent of the parties of this Note that such provision be given force to the fullest possible extent that it is. legal, valid and enforceable, that the remainder of this Note shall be construed as if such provision were not contained herein and that the remainder of this Note continue in full force and effect. |
THIS RECEIVABLE HAS BEEN SOLD TO AFC FUNDING CORPORATION AND AN INTEREST THEREIN HAS BEEN GRANTED TO BANK OF MONTREAL, AS AGENT
Page 8 of 11
9.11 | JURISDICTION AND CHOICE OF LAW. THIS NOTE AND ANY AND ALL AGREEMENTS OR AUTHORIZATIONS EXECUTED BY DEALER OR LENDER IN CONNECTION HEREWITH SHALL BE GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF INDIANA, AS AMENDED FROM TIME TO TIME, WITHOUT RESORT TO PRINCIPLES OF CONFLICTS OF LAWS. BY EXECUTION OF THIS NOTE, DEALER SUBMITS TO THE PERSONAL JURISDICTION OF THE COURTS OF THE STATE OF INDIANA AND TO VENUE IN THE CIRCUIT AND SUPERIOR COURTS OF HAMILTON COUNTY OR MARION COUNTY, INDIANA. ANY ACTION INITIATED BY DEALER AGAINST LENDER SHALL BE FILED AND CONDUCTED SOLELY IN SAID COURTS. LENDER MAY BRING ANY SUIT AGAINST DEALER IN ANY COURT OF COMPETENT JURISDICTION, AND DEALER HEREBY CONSENTS TO LENDER’S CHOICE IN FORUM. DEALER FURTHER WAIVES ANY RIGHT WHICH IT MAY HAVE TO REMOVE SUCH LITIGATION OR MATTER TO A FEDERAL COURT OR TO REQUIRE THAT ANY SUCH LITIGATION OR MATTER TAKE PLACE IN A FEDERAL COURT. DEALER AND LENDER AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN THE CLAIMANT’S INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING OR AS A NAMED OR UNNAMED MEMBER IN A CLASS, CONSOLIDATED, REPRESENTATIVE OR PRIVATE ATTORNEY GENERAL ACTION. THIS PARAGRAPH IS A MATERIAL INDUCEMENT FOR LENDER ENTERING INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY. |
9.12 | WAIVER OF JURY TRIAL RIGHTS. DEALER AND LENDER EACH ACKNOWLEDGE THAT THE. RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. THEREFORE, EACH PARTY, AFTER CONSULTING, OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR CHOICE, HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY, FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN RESPECT TO ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH ANY ASPECT OF THE PAST, PRESENT, OR FUTURE RELATIONSHIP OF THE PARTIES INCLUDING, BUT NOT LIMITED TO, ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THIS NOTE AND ANY RELATED AGREEMENTS, INSTRUMENTS OR TRANSACTIONS. THIS PARAGRAPH IS A MATERIAL INDUCEMENT FOR LENDER ENTERING LNTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY. Nothing in this section shall be construed as limiting or waiving any right LENDER may have pursuant to Section 9.13 of this Agreement. |
9.13 | Arbitration. Except as expressly provided elsewhere in this agreement, or as otherwise expressly agreed to in writing by LENDER, any and all questions or disputes between LENDER and Dealer, including, but not limited to, any questions or disputes arising from or relating to the operation of, the interpretation of, or in any way connected with, this Agreement, may, at the unilateral discretion and direction of LENDER, be submitted for final determination via arbitration pursuant to applicable laws of Indiana, and Dealer hereby consents to the final determination by arbitration of any disputes so submitted by LENDER. In the event that litigation has been commenced by Dealer or guarantor(s), (if any), against LENDER prior to such submission, or if in the event that litigation has been commenced by LENDER against Dealer, guarantor or any third party, at the sole discretion of LENDER to arbitrate such litigation, all parties to such litigation hereby agree to permanently discontinue, without delay, such litigation upon receipt of 15 days written notice. ANY DISPUTE RESOLUTION PROCEEDINGS, WHETHER IN ARBITRATION OR COURT, WILL BE CONDUCTED ONLY ON AN INDIVIDUAL BASIS AND NOT IN A CLASS OR REPRESENTATIVE ACTION OR AS A NAMED OR UNNAMED MEMBER IN A CLASS, CONSOLIDATED, REPRESENTATIVE OR PRIVATE ATTORNEY GENERAL ACTION, UNLESS BOTH DEALER AND LENDER SPECIFICALLY AGREE TO DO SO IN WRITING FOLLOWING INITIATION OF THE ARBITRATION. The arbitration shall be conducted by a single arbitrator. Each party shall select a certified arbitrator. Those arbitrators shall then select one arbitrator who shall arbitrate the case. Any arbitrator selected shall be qualified to conduct commercial arbitrations under the provisions of the applicable laws of Indiana. The proceedings before the arbitrator shall take place in Hamilton County or Marion County, Indiana or such other place as the arbitrator may direct. The parties to this agreement, including guarantor(s), (if any), agree and represent to one another that the decision or award of the arbitrator so appointed shall be final and binding upon such parties and shall not be subject to appeal or judicial review. The parties to this agreement, including the guarantor(s), (if any), represent to one another that this section constitutes an express agreement between them to arbitrate in the event that LENDER, in its sole discretion, decides to submit a question or dispute to arbitration. The parties to this agreement hereby agree that the costs of the arbitration shall be Obligations as defined in this agreement. |
9.14 | LIMITATION OF LIABILITY. LENDER’S LIABILITY TO DEALER HEREUNDER FOR DAMAGES REGARDLESS OF THE LEGAL THEORY OF THE CLAIM SHALL NOT EXCEED, IN THE AGGREGATE, THE TOTAL AMOUNT OF FLOORPLAN FEES AND INTEREST THAT DEALER HAS PAID TO LENDER UNDER THIS NOTE DURING THE TWELVE (12) MONTHS IMMEDIATELY PRECEDING THE EVENT UPON WHICH SUCH LIABILITY IS BASED. FURTHER, LENDER SHALL NOT BE LIABLE TO DEALER FOR LOST PROFITS OR FOR ANY SPECIAL, PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHATSOEVER EVEN IF LENDER KNEW ABOUT THE POSSIBILITY OF SUCH DAMAGES. |
9.15 | Title Processing Fees. If LENDER determines that it is necessary or desirable to transfer or convert title or obtain a new or replacement Title for any Vehicle, Dealer agrees to pay LENDER a title transfer or processing fee not to exceed [***] for each Title processed, in addition to all of LENDER’s expenses and costs incidental thereto, which shall include, but are not limited to, fees and expenses incurred by attorneys (including paralegals and similar persons) and any filing fees or taxes. |
THIS RECEIVABLE HAS BEEN SOLD TO AFC FUNDING CORPORATION AND AN INTEREST THEREIN HAS BEEN GRANTED TO BANK OF MONTREAL, AS AGENT
Page 9 of 11
9.16 | Attorneys’ Fees Expenses and Costs. In addition to all other amounts payable hereunder by Dealer, Dealer agrees to reimburse LENDER on demand for any and all attorneys’ (including paralegals’ and similar persons’) fees, accountants’ fees, appraisers’ fees, and all expenses and costs incurred in collecting or enforcing payment of the Obligations hereunder or in curing any default, including without limitation those fees and costs incurred (a) with or without suit; (b) in any appeal; (c) in any bankruptcy, insolvency or receivership proceeding; and (d) in any post-judgment collection proceedings, plus Interest at the rate provided herein. |
9.17 | Communication. Dealer acknowledges that Dealer is obtaining credit from, or is guaranteeing credit from; LENDER. Dealer authorizes LENDER to (a) share any and all information that it possesses regarding Dealer’s account, including but not limited to information regarding Dealer’s loan history, account history, account balance, credit worthiness, and inventory vehicle data with any third party and (b) to receive information concerning Dealer’s business affairs from any third party. Dealer does hereby authorize LENDER to release and disclose any and all of Dealer’s general business information now or hereinafter in LENDER’s possession, including but not limited to information regarding the business name, address, email address, and telephone number, to any third party. Dealer also authorizes LENDER to release and disclose any and all of Dealer’s account and inventory information now or hereinafter in LENDER’s possession, including but not limited to any and all inventory vehicle data loan documents, any business financial information retained or maintained by LENDER, and/or any information relating to Dealer’s performance history with LENDER to any third party. Dealer authorizes LENDER, and its respective affiliates, subsidiaries and parent companies to; a) send facsimile transmissions to Dealer at the facsimile numbers listed as Dealer’s facsimile number in any communication sent from time to time by Dealer; b) make telephone calls to Dealer at the. telephone numbers listed as Dealer’s telephone number in any communication sent from time to time by Dealer; c) send emails to Dealer at the email addresses listed as Dealer’s email address in any communication sent from time to time by Dealer; and d) communicate to Dealer via any and all other forms of communications, for the purposes of including, but not limited to marketing, collection and any other communication needs. Dealer agrees that this permission will remain in effect until cancelled by Dealer in writing. |
9.18 | Access By Electronic Means. Dealer may access or receive Dealer’s account information by electronic means, including, without limitation, via AFCDealer.com and LENDER’s other online and mobile tools. Dealer shall use commercially reasonable efforts to prevent unauthorized access to or use of such account information, and shall notify LENDER promptly of any such unauthorized access or use LENDER may restrict Dealer’s access to LENDER’s online and mobile tools at any time for any reason. |
9.19 | DISCLAIMER. DEALER ACKNOWLEDGES THAT AFCDEALER.COM AND ITS MATERIALS, ANY SUCCESSOR PORTAL AND OTHER ONLINE AND MOBILE TOOLS PROVIDED BY LENDER (COLLECTIVELY, THE “PORTAL”) ARE PROVIDED ON AN “AS IS” AND AN “AS AVAILABLE” BASIS. LENDER EXPRESSLY DISCLAIMS (I) ALL WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, OR WARRANTIES ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE, AND (II) ALL WARRANTIES (A) THAT THE PORTAL AND ITS MATERIALS WILL BE ERROR-FREE OR VIRUS-FREE; (B) THAT THE PORTAL WILL BE UNINTERRUPTED AND SECURE; (C) THAT THE PORTAL WILL MEET DEALER’S REQUIREMENTS; AND (D) REGARDING THE ACCURACY, COMPLETENESS, VALIDITY, OR TIMELINESS OF ANY SUBMITTED INFORMATION. IN THE EVENT OF LOSS OF CONNECTIVITY OR FUNCTIONALITY, OR DEALER IS OTHERWISE DISSATISFIED WITH THE PORTAL, DEALER’S SOLE AND EXCLUSIVE REMEDY IS TO DISCONTINUE USING THE PORTAL. |
9.20 | Electronic Signatures. Each party agrees that electronic signatures of the parties included in this Note (i) are intended to authenticate this writing and to have the same force and effect as manual signatures, and (ii) are deemed to satisfy all legal requirements regarding the validity and enforceability of electronic signatures, including without limitation the federal Electronic Signatures in Global and National Commerce Act, the UCC and state e-sign laws such as the Uniform Electronic Transactions Act; provided, however, that LENDER in LENDER’s sole discretion, may require Dealer or any guarantor to execute this Note with manual signatures. |
THIS RECEIVABLE HAS BEEN SOLD TO AFC FUNDING CORPORATION AND AN INTEREST THEREIN HAS BEEN GRANTED TO BANK OF MONTREAL, AS AGENT
Page 10 of 11
Dealer’s Name and Dealer’s
Place(s) of Business:
CARLOTZ, INC. DBA: CARLOTZ
406 WEST FRANKLIN STREET
RICHMOND, VA 23220
Dealer’s state of incorporation, organization or other business entity registration: VA
WHEREFORE, the Dealer has on behalf of themselves individually and in their representative capacity, executed this Note on the Twenty Second day of January, 2016.
Dealership: CARLOTZ, INC. DBA: CARLOTZ |
Automotive Finance Corporation (“LENDER”) | |
By: _________________________________ | By: | |
An Officer of LENDER | ||
To be executed at AFC Corporate office | ||
By: _________________________________ | ||
By: _________________________________ | ||
THIS RECEIVABLE HAS BEEN SOLD TO AFC FUNDING CORPORATION AND AN INTEREST THEREIN HAS BEEN GRANTED TO BANK OF MONTREAL, AS AGENT
Page 11 of 11
TERM SHEET FOR
DEMAND PROMISSORY NOTE AND SECURITY AGREEMENT
Dealer: CARLOTZ, INC. DBA: CARLOTZ
Date of Original Note: January 22,2016
The following terms, as defined in the Demand Promissory Note and Security Agreement (the “Note”), shall apply effective immediately:
Floorplan Fee: The Floorplan Fee shall be: [***]
In addition, for each extension of the Curtailment Date, the Floorplan Fee shall be [***].
Purchases of vehicles with a purchase price over [***] will be charged a Highline Fee of [***] of the principal amount advanced for that vehicle instead of the Floorplan Fee for the initial Period. The Floorplan Fee will be charged for any additional Period.
Interest: Interest shall accrue on all Obligations under the Note at a variable rate, adjusted each business day, based upon the most recent prime rate published in The Wall Street Journal plus:
[***] per annum, compounded daily.
However, in no event shall the prime interest rate be less than [***] per annum.
Number of Curtailment Date Extensions: The Number of Curtailment Date extensions shall be limited to: [***]
Notwithstanding the definition of Period below, the Period for each such extension shall be equal to [***] days.
Period: The Period shall be: [***] days.
Executed by the undersigned duly authorized representatives effective as of the Twenty Second day of January, 2016.
Dealership: CARLOTZ, INC. DBA: CARLOTZ |
Automotive Finance Corporation (“LENDER”) | |
By: _________________________________ | By: | |
An Officer of LENDER | ||
To be executed at AFC Corporate office | ||
By: _________________________________ | ||
By: _________________________________ | ||
EXHIBIT A
THIS RECEIVABLE HAS BEEN SOLD TO AFC FUNDING CORPORATION AND AN INTEREST THEREIN HAS BEEN GRANTED TO BANK OF MONTREAL, AS AGENT
Exhibit 10.21.1
U.S. AGGREGATE ADVANCE LIMIT AMENDMENT
TO DEMAND PROMISSORY NOTE AND SECURITY AGREEMENT
Dealer: CARLOTZ, INC CARLOTZ
Dealer#: 502105 Date of Original Note: 01/15/2016
Contract Id #: 16812588 Branch #:1171
IN ACCORDANCE with the Demand Promissory Note and Security Agreement ("Note") between Automotive Finance Corporation ("LENDER") and the undersigned Dealer, said Note incorporated herein by reference, and in consideration of credit and/or services given or to be given to the undersigned by LENDER under the Note, the undersigned and LENDER expressly agree as follows:
1) The Aggregate Advance Limit under the Note shall be Twelve Million Dollars ($12,000,000).
2) Dealer agrees to pay all additional charges, fees and expenses that are set forth in Section 9.3 of the Note which includes, but is not limited to, the document processing fee which is charged on each Advance. LENDER is not required, but may grant Dealer's request for additional services and/or terms. In the event LENDER grants Dealer's request, additional fees may apply as described in Section 9,3 of the Note in addition to all other applicable fees and charges.
3) Dealer acknowledges and agrees that Interest and fees shall begin to accrue on the earliest of (regardless of the date the Advance is funded) the date an item of Purchase Money Inventory is purchased by Dealer, the date of the request of an Advance, or die date that an Obligation is incurred, and Interest shall be compounded daily. Dealer further acknowledges and agrees that it has no defenses or claims whatsoever, at law or in equity, against LENDER, or to the extent that such claims or defenses now exist or have existed prior to execution of this Amendment, whether known or unknown, Dealer hereby knowingly and irrevocably releases and waives any and all claims and defenses against LENDER as part of the consideration to LENDER for entering this Amendment. The waiver contained in this paragraph shall be deemed to be in addition to, rather than in lieu of, any waiver previously made by Dealer by the terms of the Note and Guaranty or any documents executed in connection or conjunction therewith.
4) The Section of the Note entitled "Jurisdiction and Choice of Law" is hereby amended by adding the following sentence if such sentence is not currently in the Note: "DEALER AND LENDER AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN THE CLAIMANT'S INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING OR AS A NAMED OR UNNAMED MEMBER IN A CLASS, CONSOLIDATED, REPRESENTATIVE OR PRIVATE ATTORNEY GENERAL ACTION."
5) The Section of the Note entitled "Arbitration" is hereby amended by adding the following sentence if such sentence is not currently in the Note: "ANY DISPUTE RESOLUTION PROCEEDINGS, WHETHER IN ARBITRATION OR COURT, WILL BE CONDUCTED ONLY ON AN INDIVIDUAL BASIS AND NOT IN A CLASS OR REPRESENTATIVE ACTION OR A NAMED OR UNNAMED MEMBER IN A CLASS, CONSOLIDATED, REPRESENTATIVE OR PRIVATE ATTORNEY GENERAL ACTION, UNLESS BOTH DEALER AND LENDER SPECIFICALLY AGREE TO DO SO IN WRITING FOLLOWING INITIATION OF THE ARBITRATION."
6) The Unconditional Guarantor(s), hereinafter collectively referred to as "Guarantor", reaffirms the terms and obligations of Guarantor's Unconditional Guaranty with respect to the Note, including but not limited to the increase in the Aggregate Advance Lim it as set out above.
[Signatures on next page]
Exhibit 10.22
CARLOTZ, INC.
Employment Agreement
This Employment Agreement (this “Agreement”), dated as of December 14, 2020, is made by and between CarLotz, Inc., a Delaware corporation (together with any successor thereto, the “Company”), and Rebecca Polak (“Executive”) (collectively referred to as the “Parties” or individually referred to as a “Party”).
WHEREAS, pursuant to that certain Offer Letter, dated October 24, 2020 (the “Prior Agreement”), by and between the Company and Executive, Executive is currently employed as the General Counsel and Chief Commercial Officer of the Company;
WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated October 21, 2020, with Acamar Partners Acquisition Corp. and Acamar Partners Sub, Inc. (the “Merger Agreement”);
WHEREAS, it is the desire of the Company to continue the employment of Executive and to assure itself of the services of Executive following the closing of the transactions contemplated by the Merger Agreement (the “Closing”) and thereafter on the terms herein provided by entering into this Agreement, which will supersede the Prior Agreement; and
WHEREAS, it is the desire of Executive to continue to provide services to the Company following the Closing and thereafter on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, including the respective covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1. Employment.
(a) General. Effective on the Closing Date (as defined in the Merger Agreement) as of immediately prior to the Closing (the “Effective Date”), the Company shall employ Executive and Executive shall remain in the employ of the Company, for the period and in the positions set forth in this Section 1, and subject to the other terms and conditions herein.
(b) Employment Term. The term of employment under this Agreement (the “Term”) shall commence on the Effective Date and end on the third anniversary of the Effective Date, subject to earlier termination as provided in Section 3 below. The Term shall automatically renew for additional twelve (12) month periods unless no later than ninety (90) days prior to the end of the applicable Term either Party gives written notice of non-renewal (“Notice of Non-Renewal”) to the other, in which case Executive’s employment will terminate at the end of the then-applicable Term, subject to earlier termination as provided in Section 3 below.
(c) Positions. Executive shall serve as the General Counsel and Chief Commercial Officer of the Company with such responsibilities, duties and authority normally associated with such position and as may from time to time be reasonably assigned to Executive by the Board, as defined below, or by the Chief Executive Officer of the Company. Executive shall report to the Chief Executive Officer of the Company. At the Company’s request, Executive shall serve the Company and/or its subsidiaries and affiliates in such other capacities in addition to the foregoing as the Company shall designate, provided that such additional capacities are consistent with Executive’s position. In the event that Executive serves in any one or more of such additional capacities, Executive’s compensation shall not automatically be increased on account of such additional service.
(d) Duties. Executive shall devote substantially all of Executive’s working time, attention and efforts to the business and affairs of the Company (which shall include service to its affiliates), except during any paid vacation or other excused absence periods or during periods of illness. Executive shall not engage in outside business activities (including serving on outside boards or committees) without the prior written consent of the Chief Executive Officer; provided that Executive shall be permitted to (i) manage Executive’s personal, financial and legal affairs, which may include certain personal outside business activities, (ii) participate in trade associations and charitable and community affairs, and (iii) continue to serve on the board of directors or advisory boards of the companies/organizations set forth on Exhibit A attached hereto, if any, in each case, subject to compliance with this Agreement and provided that such activities do not materially interfere with Executive’s performance of Executive’s duties and responsibilities hereunder or violate the terms of that certain Loyalty Agreement entered into by and between Executive and the Company as of the date hereof, attached as Exhibit B hereto (the “Loyalty Agreement”). Executive agrees to observe and comply with the rules and policies of the Company as adopted by the Company from time to time, in each case as amended from time to time, as set forth in writing and as delivered to Executive (each, a “Policy”).
2. Compensation and Related Matters.
(a) Annual Base Salary. During the Term, Executive shall receive a base salary at a rate of $400,000.00 per annum, which shall be paid in accordance with the customary payroll practices of the Company, no less frequently than monthly, and shall be pro-rated for partial years of employment. Such annual base salary shall be reviewed from time to time by the Company (such annual base salary, as it may be adjusted from time to time pursuant to this Section 2(a), the “Annual Base Salary”). The Annual Base Salary may not be decreased during the Term other than in connection with an across-the-board decrease for all executives.
(b) Annual Bonus. During the Term, beginning with calendar year 2021, Executive will be eligible to participate in an annual incentive program established by the Board. Executive’s annual incentive compensation under such incentive program (the “Annual Bonus”) shall be targeted at 75% of Executive’s Annual Base Salary (the “Target Bonus”). To the extent the targeted performance levels are exceeded, the annual incentive plan will provide a means by which the Annual Bonus may be higher than the Target Bonus, and to the extent the target performance levels are not achieved, the annual incentive plan will provide a means by which the Annual Bonus may be lower than the Target Bonus. The Annual Bonus payable under the incentive program shall be based on the achievement of performance goals to be determined by the Board. Notwithstanding the foregoing, except as set forth in Section 4(b), no bonus shall be payable with respect to any calendar year unless Executive remains continuously employed with the Company during the period beginning on the Effective Date and ending on December 31 of such calendar year. The payment of any Annual Bonus pursuant to the incentive program will be made on or before March 15th of the year following the year to which such Annual Bonus relates.
(c) Signing Bonus. Executive has been paid a signing bonus of $120,000 (the “Signing Bonus”). In the event that Executive resigns for any reason or Executive’s employment is terminated by the Company for Cause on or prior to the 12-month anniversary of the Effective Date (the “Anniversary Date”), then Executive shall repay a prorated portion of the Signing Bonus to the Company within 30 days after the date of Executive’s termination of employment, with such portion determined by multiplying the Signing Bonus by a fraction, the numerator of which is the number of days in the period between the date of termination of Executive’s employment and the Anniversary Date and the denominator of which is 365. Executive hereby authorizes the Company to offset against and reduce any amounts otherwise due to Executive for any amounts in respect of Executive’s obligation to repay the Signing Bonus, except to the extent that any such offset would result in penalties under Section 409A of the Code.
2
(d) Equity-Based Compensation. The Company shall grant to Executive stock options (“Options”) to purchase shares of the Company’s common stock, par value $.01 per share (the “Company Common Stock”) and restricted stock units with respect to Company Common Stock (“Restricted Stock Units”) as set forth in this Section 2(d). The Options shall have an exercise price per share (the “Option Exercise Price”) equal to the closing price per share of common stock of Acamar Partners Acquisition Corp. on NASDAQ on the day immediately prior to the Effective Date. The Company shall grant to Executive a number of Restricted Stock Units equal to: (i) 86,175 plus (ii) (a) 344,700 times the excess, if any, of (x) the Option Exercise Price over (y) $10.00, divided by (b) the Option Exercise Price. The Company shall grant to Executive Options to purchase a number of shares of Company Common Stock equal to 344,700 minus the number of Restricted Stock Units set forth in clause (ii) of the immediately preceding sentence. Such Options and Restricted Stock Units shall (i) be subject to time-based vesting in equal annual installments over a four (4)-year period based on Executive’s continued employment with the Company (with vesting commencing as of October 26, 2020), (ii) vest and, if applicable, become exercisable upon a Change in Control (as defined in the CarLotz, Inc. 2020 Incentive Award Plan (the “Plan”)) in the event that the successor in connection with the Change in Control does not assume or substitute for any such outstanding Options or Restricted Stock Units, and (iii) be subject to the terms and conditions set forth in the Plan and the related Award Agreements (as defined in the Plan), and subject to shareholder approval of the Plan. In addition, Executive shall be granted an additional 86,175 Restricted Stock Units that will vest on the same terms and conditions as are applicable to the earnout-based employee equity awards described in the Merger Agreement and Executive’s continued employment with the Company through the applicable vesting date, and will be subject to the terms and conditions set forth in the Plan and the related Award Agreements, and subject to shareholder approval of the Plan. The Options shall be granted on the Effective Date. The grant of the Restricted Stock Units shall not be effective until, and the exercisability of the Stock Options shall be contingent on, the filing of a Form S-8 registration statement by New CarLotz, Inc. with respect to the Plan, no later than sixty-five (65) calendar days after the Effective Date. In order to satisfy the exercise price or any tax withholding obligations of the Company pertaining to Executive’s Options or the Restricted Stock Units, Executive will be permitted to instruct a broker, in compliance with applicable laws and regulations, to sell the necessary amount of Executive’s shares subject to such awards, such that the cash proceeds of such sale can be used to satisfy such exercise price or tax withholding obligations, and to adopt a Rule 10b5-1 plan, in compliance with applicable laws, to permit Executive to sell shares of Company Common Stock during blackout periods, when Executive has exposure to material non-public information and/or Executive otherwise is subject to insider trading restrictions. Additionally, during the Term, Executive shall have the right to receive stock options, restricted stock, restricted stock units, stock appreciation rights and/or other equity awards under the Company’s applicable equity plans as the Company may determine on a basis not less favorable than that provided to the class of employees that includes Executive and taking into account Executive’s position with the Company and customary award grants of similar publicly-traded companies.
(e) Benefits. During the Term, Executive shall be eligible to participate in employee benefit plans, programs and arrangements as the Company may from time to time offer to provide to its executives, consistent with the terms thereof and as such plans, programs and arrangements may be amended from time to time. Notwithstanding the foregoing, nothing herein is intended, or shall be construed, to require the Company to institute or continue any, or any particular, plan or benefit. In no event shall Executive be eligible to participate in any severance plan or program of the Company, except as set forth in Section 4 below.
3
(f) Vacation; Holidays. During the Term, Executive shall be entitled to four (4) weeks of paid vacation per calendar year (pro-rated for partial years) in accordance with the Policies. Any vacation shall be taken at the reasonable and mutual convenience of the Company and Executive. Unused vacation will not carry over from calendar year to calendar year. Upon termination of employment, the Executive will be entitled to payment for accumulated unused vacation for the year of termination. In addition, the Company will offer to Executive employee time off for standard Company holidays in accordance with the Policies.
(g) Business Expenses. During the Term, the Company shall reimburse Executive for all reasonable travel and other business expenses incurred by Executive in the performance of Executive’s duties to the Company in accordance with the Company’s expense reimbursement Policy.
(h) Indemnification. The Company hereby agrees to indemnify Executive and hold Executive harmless to the fullest extent permitted under the organizational documents of the Company and applicable law against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorney’s fees), losses, and damages (including advancement of fees and expenses) resulting from Executive’s performance of Executive’s duties and obligations with the Company hereunder. The Company shall cover Executive under directors’ and officers’ liability insurance both during and, while potential liability exists, after the Term in the same amount and to the same extent as the Company covers its other officers and directors. The foregoing obligations shall survive the termination of Executive’s employment with the Company.
3. Termination.
(a) Circumstances. Executive’s employment hereunder may be terminated by the Company or Executive, as applicable, without any breach of this Agreement under the following circumstances:
(i) Death. Executive’s employment hereunder shall terminate automatically upon Executive’s death.
(ii) Disability. If Executive has incurred a Disability, as defined below, the Company may terminate Executive’s employment.
(iii) Termination for Cause. The Company may terminate Executive’s employment for Cause, as defined below.
(iv) Termination without Cause. The Company may terminate Executive’s employment without Cause, which shall include Executive’s termination as a result of the Company delivering a Notice of Non-Renewal.
(v) Resignation from the Company with Good Reason. Executive may resign Executive’s employment with the Company with Good Reason, as defined below.
(vi) Resignation from the Company without Good Reason. Executive may resign Executive’s employment with the Company for any reason other than Good Reason or for no reason, which shall include Executive’s termination as a result of Executive delivering a Notice of Non-Renewal.
(b) Notice of Termination. During the Term, any termination of Executive’s employment by the Company or by Executive under this Section 3 (other than termination pursuant to Sections 3(a)(i)) shall be communicated by a written notice (a “Notice of Termination”) to the other Party hereto (i) indicating the specific termination provision in this Agreement relied upon, (ii) except with respect to a termination pursuant to Section 3(a)(iv) or 3(a)(vi), setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) specifying a Date of Termination (as defined below). The failure by either party to set forth in the Notice of Termination any fact or circumstance shall not waive any right of the party hereunder or preclude the party from asserting such fact or circumstance in enforcing the party’s rights hereunder.
4
(c) Termination Date. For purposes of this Agreement, “Date of Termination” shall mean the date of the termination of Executive’s employment with the Company, which, if Executive’s employment is terminated as a result of Executive’s death, will be the date of Executive’s death, and otherwise shall be the date specified in a Notice of Termination. Except in the case of a termination pursuant to Sections 3(a)(i) and (ii) above, the Date of Termination shall be at least fifteen (15) days following the date of the Notice of Termination or such later date as may be required pursuant to this Agreement. Notwithstanding the foregoing, (i) the Company may deliver its Notice of Termination to Executive that specifies any Date of Termination that occurs on or after the date of its Notice of Termination; (ii) in the event that Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, change the Date of Termination to any date that occurs on or following the date of the Notice of Termination and is prior to the Date of Termination specified in the Notice of Termination; and (iii) if the Executive’s employment is to terminate at the end of a Term, the Date of Termination shall be the last day of such Term.
(d) Deemed Resignation. Upon termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any of its subsidiaries.
4. Obligations upon a Termination of Employment.
(a) Company Obligations upon Termination. Upon termination of Executive’s employment pursuant to any of the circumstances listed in Section 3(a) above, Executive (or Executive’s estate) shall be entitled to receive the sum of: (i) the portion of Executive’s Annual Base Salary earned through the Date of Termination, but not yet paid to Executive, which shall be paid as described in Section 2(a) above; (ii) except in the event of a termination for Cause pursuant to Section 3(a)(iii), any unpaid Annual Bonus earned by Executive for the year prior to the year in which the Date of Termination occurs, as determined by the Board in its good faith discretion based upon actual performance achieved, which Annual Bonus, if any, shall be paid to Executive when bonuses for such year are paid to actively employed senior executives of the Company but in no event later than March 15 of the year in which the Date of Termination occurs; (iii) any expenses owed to Executive pursuant to Section 2(g) above, which shall be paid within thirty (30) days after the Date of Termination; (iv) any accumulated unused vacation, which shall be paid in a lump sum within thirty (30) days after the Date of Termination; and (v) any amount accrued and arising from Executive’s participation in, or benefits accrued under any employee benefit plans, programs or arrangements, which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements (collectively, the “Company Arrangements”). Except as otherwise expressly required by law or as specifically provided in a Company Arrangement or herein, all of Executive’s rights to salary, severance, benefits, bonuses and other compensatory amounts hereunder (if any) shall cease upon the termination of Executive’s employment hereunder.
(b) Executive’s Obligations upon Termination.
(i) Cooperation. Executive shall provide Executive’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during Executive’s employment hereunder; provided the Company shall indemnify and hold harmless Executive with respect to any such cooperation and reimburse Executive for Executive’s reasonable costs and expenses (including legal counsel selected by Executive and reasonably acceptable to the Company), within thirty (30) days after the incurrence by Executive of such costs and expenses, and such cooperation shall not unreasonably burden Executive or unreasonably interfere with any subsequent employment or other activities that Executive may undertake.
5
(ii) Return of Company Property. Executive hereby acknowledges and agrees that all Personal Property (as defined below) and equipment furnished to, or prepared by, Executive in the course of, or incident to, Executive’s employment, belongs to the Company and shall be promptly returned to the Company upon termination of Executive’s employment (and will not be kept in Executive’s possession or delivered to anyone else). For purposes of this Agreement, “Personal Property” includes, without limitation, all books, manuals, records, reports, notes, contracts, lists, blueprints, and other documents, or materials, or copies thereof (including computer files), keys, building card keys, company credit cards, telephone calling cards, computer hardware and software, laptop computers, docking stations, cellular and portable telephone equipment, personal digital assistant (PDA) devices and all other proprietary information relating to the business of the Company or its subsidiaries or affiliates. Following termination, Executive shall not retain any written or other tangible material containing any proprietary information of the Company or its subsidiaries or affiliates.
(c) Severance Payments upon a Termination without Cause or Resignation with Good Reason.
(i) If, during the Term and not in a Change in Control Period, Executive’s employment terminates pursuant to Section 3(a)(iv) above due to the Company’s termination without Cause or pursuant to Section 3(a)(v) above due to Executive’s resignation with Good Reason, then, subject to Executive’s delivery to the Company of an executed waiver and release of claims in a form approved by the Company (the “Release”) that becomes effective and irrevocable in accordance with Section 9(n) below, and Executive’s continued compliance with Section 5 below, Executive shall receive, in addition to the payments and benefits set forth in Section 4(a) above, the following:
(A) an amount in cash equal to twelve (12) months of Executive’s then-existing Annual Base Salary, payable, less applicable withholdings and deductions, in the form of salary continuation in regular installments over the 12-month period following the date of Executive’s Separation from Service in accordance with the Company’s normal payroll practices, no less frequently than monthly, with the first of such installments to commence on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise provided in Section 9(n) below; and
(B) during the period commencing on the Date of Termination and ending on the twelve (12) month anniversary thereof or, if earlier, the date on which Executive becomes eligible for comparable replacement coverage under a subsequent employer’s group health plan (in any case, the “COBRA Period”), subject to Executive’s valid election to continue healthcare coverage under Section 4980B of the Code and the regulations thereunder, the Company shall, in its sole discretion, either (A) continue to provide to Executive and Executive’s dependents, at the Company’s sole expense, or (B) reimburse Executive and Executive’s dependents for coverage under its group health plan (if any), at the same levels and costs in effect on the Date of Termination (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars); provided, however, that if (1) any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the continuation coverage period to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), (2) the Company is otherwise unable to continue to cover Executive or Executive’s dependents under its group health plans or (3) the Company cannot provide the benefit without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining Company subsidy shall thereafter be paid to Executive in substantially equal monthly installments over the COBRA Period (or remaining portion thereof).
6
(ii) If, during the Term and during a Change in Control Period, Executive’s employment terminates pursuant to Section 3(a)(iv) above due to the Company’s termination without Cause or pursuant to Section 3(a)(v) above due to Executive’s resignation with Good Reason, then, subject to Executive’s delivery to the Company of a Release that becomes effective and irrevocable in accordance with Section 9(n) below, and Executive’s continued compliance with Section 5 below, Executive shall receive, in addition to the payments and benefits set forth in Section 4(a) above, the following:
(A) an amount in cash equal to twelve (12) months of Executive’s then-existing Annual Base Salary, less applicable withholdings and deductions, payable in the form of salary continuation in regular installments over the twelve (12)-month period following the date of Executive’s Separation from Service in accordance with the Company’s normal payroll practices, no less frequently than monthly, with the first of such installments to commence on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise provided in Section 9(n) below; provided, however that if the Change in Control constitutes a change in control event within the meaning of Section 409A of the Code, such amount will be paid in the form of a single lump sum in accordance with the Company’s normal payroll practices on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise set forth in Section 9(n) below;
(B) a pro-rated portion (based on the number of days Executive was employed by the Company during the calendar year in which the Date of Termination occurs) of the Annual Bonus that Executive would have earned had Executive remained employed through the end of the calendar year in which Executive’s Date of Termination occurs, as determined by the Board in good faith. If and to the extent earned, such pro-rated Annual Bonus shall be paid out at the same time annual bonuses are paid generally to other executives of the Company for the relevant year, less applicable withholdings and deductions, but in no event later than March 15th of the year immediately following that in which the Date of Termination occurs;
(C) the vesting and, if applicable, exercisability shall be accelerated (and, if applicable, all restrictions and rights of repurchase on such awards shall lapse) effective as of immediately prior to the Date of Termination with respect to 100% of the shares subject to Executive’s then outstanding equity awards (including any such awards that vest in whole or in part based on the attainment of performance-vesting conditions, which shall vest based on actual performance as of the Date of Termination and otherwise be governed by the terms of the applicable award agreement); and
7
(D) during the COBRA Period, subject to Executive’s valid election to continue healthcare coverage under Section 4980B of the Code and the regulations thereunder, the Company shall, in its sole discretion, either (A) continue to provide to Executive and Executive’s dependents, at the Company’s sole expense, or (B) reimburse Executive and Executive’s dependents for coverage under its group health plan (if any), at the same levels and costs in effect on the Date of Termination (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars); provided, however, that if (1) any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the continuation coverage period to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), (2) the Company is otherwise unable to continue to cover Executive or Executive’s dependents under its group health plans or (3) the Company cannot provide the benefit without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining Company subsidy shall thereafter be paid to Executive in substantially equal monthly installments over the COBRA Period (or remaining portion thereof).
(d) No Requirement to Mitigate; Survival. Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or in any other manner. Notwithstanding anything to the contrary in this Agreement, the termination of Executive’s employment shall not impair the rights or obligations of any Party.
(e) No Other Severance. Executive shall not be entitled to any severance benefits, pay in lieu of notice, or other similar benefits from the Company in connection with Executive’s termination other than as set forth herein.
(f) Survival. Notwithstanding anything to the contrary in this Agreement, the provisions of Sections 5 through 9 of this Agreement will survive the termination of Executive’s employment and the termination of the Term.
5. Restrictive Covenants and Confidentiality.
As a condition to the effectiveness of this Agreement, Executive will execute and deliver to the Company contemporaneously herewith Exhibit B, the Loyalty Agreement. Executive agrees to abide by the terms of the Loyalty Agreement, which are hereby incorporated by reference into this Agreement. Executive acknowledges that the provisions of the Loyalty Agreement will survive the termination of Executive’s employment and the termination of the Term for the periods set forth in the Loyalty Agreement. Notwithstanding any other provision of this Agreement, no payment shall be made or benefit provided pursuant to Section 4(c) following the date Executive first violates any of the restrictive covenants set forth in the Loyalty Agreement, and as of the first date on which Executive violates any such restrictive covenants, Executive shall pay the Company an amount equal to the sum of all payments theretofore paid to Executive pursuant to Section 4(c).
6. Assignment and Successors.
The Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise). This Agreement shall be binding upon and inure to the benefit of the Company, Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only by will or the laws of descent and distribution or operation of law. Notwithstanding the foregoing, Executive shall be entitled, to the extent permitted under applicable law and Company Arrangements, to select and change a beneficiary or beneficiaries to receive compensation hereunder following Executive’s death by giving written notice thereof to the Company.
8
7. Certain Definitions.
(a) Board. The “Board” shall mean the Board of Directors of the Company or an authorized committee of the Board.
(b) Cause. “Cause” shall mean any of the following:
(i) Executive’s commission of any act or omission that results in, or may reasonably be expected to result in, a conviction of (or plea of no contest or nolo contendere to) any felony (other than in connection with a traffic violation that does not result in imprisonment) under any state, federal or foreign law or any crime involving moral turpitude or dishonesty or that would reasonably be expected to cause material reputational or other material harm or damage to the Company;
(ii) Executive’s commission of an act of fraud, embezzlement, misappropriation of funds, material malfeasance, breach of fiduciary duty or other willful and material act of misconduct, in each case, against the Company;
(iii) any willful, material damage to any material property of the Company by Executive;
(iv) Executive’s willful, intentional and repeated failure to substantially perform Executive’s material job functions hereunder (other than any such failure resulting from Executive’s Disability or during periods of illness) or (B) carry out or comply with a lawful and reasonable directive of the Board or the Chief Executive Officer, in each case, which failure has not been cured (or cannot be cured) within thirty (30) days after the Company gives written notice to Executive regarding such failure;
(v) Executive’s breach of any Policy causing material reputational or other material harm or damage to the Company, which breach has not been cured (or cannot be cured) within thirty (30) days after the Company gives written notice to Executive regarding such breach;
(vi) Executive’s unlawful use (including being under the influence) of illegal drugs or continued excessive use of alcohol, in each case that materially impairs Executive’s ability to perform Executive’s duties contemplated hereunder;
(vii) Any grossly negligent or reckless act by Executive resulting in or causing material reputational or other material harm or damage to the Company; and
(viii) Executive’s material breach of this Agreement, the Loyalty Agreement or any other written agreement between Executive and the Company and failure to cure such breach (if capable of cure) within thirty (30) days after the Company gives written notice to Executive regarding such breach.
9
For purposes of this definition, an action or inaction is only “willful” if it is done or omitted by Executive without a good faith and reasonable belief that such action or inaction is in the best interests of the Company or any of its affiliates. The failure by the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing the Company’s rights hereunder. Notwithstanding the foregoing, a termination for Cause shall be deemed to occur if following Executive's termination of employment for any reason the Company determines that circumstances existing prior to such termination would have entitled the Company to terminate Executive's employment for Cause.
(c) Change in Control. “Change in Control” shall have the meaning set forth in the version of the Company’s 2020 Incentive Award Plan in effect on the Effective Date.
(d) Change in Control Period. “Change in Control Period” shall mean the period beginning upon the consummation of a Change in Control and ending twelve (12) months following the consummation of such Change in Control.
(e) Code. “Code” shall mean the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder.
(f) Disability. “Disability” shall mean a disability within the meaning of Section 22(e)(3) of the Code, as it may be amended from time to time. Any determination of the Executive’s Disability made in good faith by the Board shall be conclusive and binding on the Executive, unless within ten (10) days after written notice to the Executive of such determination, the Executive elects by written notice to the Company to challenge such determination, in which case determination of Disability shall be made by arbitration pursuant to Section 9(i) below.
(g) Good Reason. For the sole purpose of determining Executive’s right to severance payments and benefits as described above, “Good Reason” shall mean any one of the following, that occurs without Executive’s written consent:
(i) a material reduction in Executive’s Annual Base Salary (except pursuant to the last sentence of Section 2(a)) or Target Bonus;
(ii) a material diminution in Executive’s duties, authority or responsibilities, other than any change made solely in connection with the adoption by the Board, following the Effective Date, of customary delegation of authority guidelines setting forth the roles of Executive and other employees of the Company covering levels of approvals required for the taking of certain actions based on thresholds that are customary for a company of the size and market capitalization of the Company;
(iii) a relocation of Executive’s primary place of work to Richmond, Virginia; and
(iv) a material breach by the Company of this Agreement or any other written agreement with Executive.
Notwithstanding the foregoing, no Good Reason will have occurred unless and until: (A) Executive has provided the Company, within sixty (60) days of becoming aware of the initial occurrence of the Good Reason event, written-notice stating with specificity the applicable facts and circumstances underlying such finding of Good Reason; and (B) the Company or the successor company fails to cure such condition within forty-five (45) days after receiving such written notice (the “Cure Period”) and (C) Executive’s resignation based on such Good Reason is effective within thirty (30) days after expiration of the Cure Period with the Company or the successor company having failed to cure same.
10
8. Parachute Payments.
(a) Notwithstanding any other provisions of this Agreement or any Company Arrangement, in the event that any payment or benefit by the Company or otherwise to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (all such payments and benefits, including the payments and benefits under Section 4 above, being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments shall be reduced (in the order provided in Section 8(b) below) to the minimum extent necessary to avoid the imposition of the Excise Tax on the Total Payments, but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income and employment taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income and employment taxes on such Total Payments and the amount of the Excise Tax to which Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).
(b) The Total Payments shall be reduced in the following order: (i) reduction on a pro-rata basis of any cash severance payments that are exempt from Section 409A of the Code (“Section 409A”), (ii) reduction on a pro-rata basis of any non-cash severance payments or benefits that are exempt from Section 409A, (iii) reduction on a pro-rata basis of any other payments or benefits that are exempt from Section 409A, and (iv) reduction of any payments or benefits otherwise payable to Executive on a pro-rata basis or such other manner that complies with Section 409A; provided, in case of subclauses (ii), (iii) and (iv), that reduction of any payments attributable to the acceleration of vesting of Company equity awards shall be first applied to Company equity awards that would otherwise vest last in time.
(c) The Company will select an adviser with experience in performing calculations regarding the applicability of Section 280G of the Code and the Excise Tax, provided that the adviser’s determination shall be made based upon “substantial authority” within the meaning of Section 6662 of the Code, (the “Independent Advisors”) to make determinations regarding the application of this Section 8. The Independent Adviser shall provide its determination, together with detailed supporting calculations and documentation, to Executive and the Company within fifteen (15) business days following the date on which Executive’s right to the Total Payments is triggered, if applicable, or such other time as requested by Executive (provided that Executive reasonably believes that any of the Total Payments may be subject to the Excise Tax) or the Company. The costs of obtaining such determination and all related fees and expenses (including related fees and expenses incurred in any later audit) shall be borne by the Company. Any good faith determinations of the Independent Adviser made hereunder shall be final, binding and conclusive upon the Company and Executive.
(d) In the event it is later determined that to implement the objective and intent of this Section 8, (i) a greater reduction in the Total Payments should have been made, the excess amount shall be returned promptly by Executive to the Company or (ii) a lesser reduction in the Total Payments should have been made, the excess amount shall be paid or provided promptly by the Company to Executive, except to the extent the Company reasonably determines would result in imposition of an excise tax under Section 409A.
11
9. Miscellaneous Provisions.
(a) Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the Commonwealth of Virginia without reference to the principles of conflicts of law of the Commonwealth of Virginia or any other jurisdiction that would result in application of the laws of a jurisdiction other than the Commonwealth of Virginia, and where applicable, the laws of the United States.
(b) Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(c) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses or e-mail addresses (or at such other address or email address for a party as shall be specified in a notice given in accordance with this Section 9(c)):
(i) If to the Company:
CarLotz, Inc.
611 Bainbridge Street, Suite 100
Richmond, VA 23224
Attn: Board of Directors
With a copy to:
Freshfields Bruckhaus Deringer LLP
601 Lexington Ave,
New York, NY 10022
Attn: Valerie Jacob and Lori Goodman
Valerie.Jacob@freshfields.com
Lori.Goodman@freshfields.com
(ii) If to Executive, to the last address that the Company has in its personnel records for Executive, or
(iii) At any other address as any Party shall have specified by notice in writing to the other Party.
(d) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile or PDF shall be deemed effective for all purposes.
(e) Entire Agreement. The terms of this Agreement, the Loyalty Agreement, any indemnification agreement between the Company and Executive and any equity award agreement between the Company and Executive are intended by the Parties to be the final expression of their agreement with respect to the subject matter hereof and supersede all prior understandings and agreements, whether written or oral, including without limitation any prior employment agreement, offer letter between Executive and the Company (including the Prior Agreement). The Parties further intend that this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.
12
(f) Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by Executive and a duly authorized representative of Company. By an instrument in writing similarly executed, Executive or a duly authorized representative of the Company may waive compliance by the other Party with any specifically identified provision of this Agreement that such other Party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.
(g) No Inconsistent Actions. The Parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the Parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.
(h) Construction. This Agreement shall be deemed drafted equally by both the Parties. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any Party shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (i) the plural includes the singular and the singular includes the plural; (ii) “and” and “or” are each used both conjunctively and disjunctively; (iii) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (iv) “includes” and “including” are each “without limitation”; (v) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (vi) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.
(i) Arbitration. Any controversy, claim or dispute arising out of or relating to this Agreement, shall be settled solely and exclusively by a binding arbitration process administered by JAMS/Endispute in the State of Virginia. Such arbitration shall be conducted in accordance with the then-existing JAMS/Endispute Rules of Practice and Procedure. The arbitrator shall: (i) provide adequate discovery for the resolution of the dispute; and (ii) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award. The arbitrator shall award the prevailing Party attorneys’ fees and expert fees, if any. The Parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and conclusive. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided, however, that nothing in this subsection shall be construed as precluding the bringing of an action for injunctive relief or specific performance as provided in this Agreement or the Confidentiality Agreement. This dispute resolution process and any arbitration hereunder shall be confidential and neither any Party nor the neutral arbitrator shall disclose the existence, contents or results of such process without the prior written consent of all Parties, except where necessary or compelled in a court to enforce this arbitration provision or an award from such arbitration or otherwise in a legal proceeding. If JAMS/Endispute no longer exists or is otherwise unavailable, the Parties agree that the American Arbitration Association (“AAA”) shall administer the arbitration in accordance with its then-existing rules as modified by this subsection. In such event, all references herein to JAMS/Endispute shall mean AAA. Executive and the Company understand that by agreement to arbitrate any claim pursuant to this Section 9(i), they will not have the right to have any claim decided by a jury or a court, but shall instead have any claim decided through arbitration. Executive and the Company waive any constitutional or other right to bring claims covered by this Agreement other than in their individual capacities. Except as may be prohibited by applicable law, the foregoing waiver includes the ability to assert claims as a plaintiff or class member in any purported class or representative proceeding. Notwithstanding the foregoing, Executive and the Company each have the right to resolve any issue or dispute over intellectual property rights by court action instead of arbitration.
13
(j) Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the Term, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
(k) Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges that the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.
(l) Whistleblower Protections and Trade Secrets. Notwithstanding anything to the contrary contained herein, nothing in this Agreement prohibits Executive from reporting possible violations of federal law or regulation to any United States governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation (including the right to receive an award for information provided to any such government agencies). Furthermore, in accordance with 18 U.S.C. § 1833, notwithstanding anything to the contrary in this Agreement: (i) Executive shall not be in breach of this Agreement, and shall not be held criminally or civilly liable under any federal or state trade secret law (A) for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (B) for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (ii) if Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Executive may disclose the trade secret to Executive’s attorney, and may use the trade secret information in the court proceeding, if Executive files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.
(m) Section 409A.
(i) General. The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A. All amounts payable to the Executive pursuant to Section 4(b) shall, to the maximum extent permitted by Section 409A, be made in reliance on Section 1.409A-1(b)(9) (Separation Pay Plans) or Section 1.409A-1(b)(4) (Short-Term Deferrals) of the Department of Treasury regulations.
14
(ii) Separation from Service. Notwithstanding anything in this Agreement to the contrary, any compensation or benefits payable under this Agreement that is considered nonqualified deferred compensation under Section 409A and is designated under this Agreement as payable upon Executive’s termination of employment shall be payable only upon Executive’s “separation from service” with the Company within the meaning of Section 409A (a “Separation from Service”).
(iii) Specified Employee. Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (A) the expiration of the six (6)-month period measured from the date of Executive’s Separation from Service with the Company or (B) the date of Executive’s death. Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.
(iv) Expense Reimbursements. To the extent that any reimbursements under this Agreement are subject to Section 409A, any such reimbursements payable to Executive shall be paid to Executive no later than December 31st of the year following the year in which the expense was incurred; provided that Executive submits Executive’s reimbursement request promptly following the date the expense is incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, other than medical expenses referred to in Section 105(b) of the Code, and Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.
(v) Installments. Executive’s right to receive any installment payments under this Agreement, including without limitation any continuation salary payments that are payable on Company payroll dates, shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A.
(n) Release. Notwithstanding anything to the contrary in this Agreement, to the extent that any payments due under this Agreement as a result of Executive’s termination of employment are subject to Executive’s execution and delivery of a Release, (i) the Company shall deliver the Release to Executive within ten (10) business days following Executive’s Date of Termination, and the Company’s failure to deliver a Release prior to the expiration of such ten (10) business day period shall constitute a waiver of any requirement to execute a Release, (ii) if Executive fails to execute the Release on or prior to the Release Expiration Date (as defined below) or timely revokes Executive’s acceptance of the Release thereafter, Executive shall not be entitled to any payments or benefits otherwise conditioned on the Release, and (iii) in any case where Executive’s Date of Termination and the last day of the applicable revocation period fall in two separate taxable years, any payments required to be made to Executive that are conditioned on the Release and are treated as nonqualified deferred compensation for purposes of Section 409A shall be made in the later taxable year. For purposes hereof, “Release Expiration Date” shall mean the date that is twenty-one (21) days following the date upon which the Company timely delivers the Release to Executive, or, in the event that Executive’s termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date. To the extent that any payments of nonqualified deferred compensation (within the meaning of Section 409A) due under this Agreement as a result of Executive’s termination of employment are delayed pursuant to this Section 9(n), such amounts shall be paid in a lump sum on the first payroll date following the date that Executive executes and does not revoke the Release (and the applicable revocation period has expired) or, in the case of any payments subject to Section 9(n)(iii), on the first payroll period to occur in the subsequent taxable year, if later.
15
10. Executive Acknowledgement.
Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on Executive’s own judgment.
[Signature Page Follows]
16
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and year first above written.
CARLOTZ, INC. | ||
By: | /s/ Michael W. Bor | |
Name: Michael W. Bor | ||
Title: President and Chief Executive Officer | ||
EXECUTIVE | ||
/s/ Rebecca Polak | ||
Rebecca Polak |
EXHIBIT A
CURRENT SERVICE
EXHIBIT B
LOYALTY AGREEMENT
CARLOTZ, INC.
LOYALTY AGREEMENT
THIS AMENDED AND RESTATED LOYALTY AGREEMENT (this “Agreement”) is made as of December 14, 2020 (the “Effective Date”), by and between CarLotz, Inc., a Delaware corporation (the “CarLotz”), and Rebecca Polak (“I” or “me”). This Agreement is referenced as Exhibit B to the employment agreement between the Company and Executive dated December 14, 2020 (the “Employment Agreement”).
NOW, THEREFORE, in exchange and consideration for (a) my being employed as an employee, officer, director, or independent contractor of (i) CarLotz, (ii) any affiliate of CarLotz, and/or (iii) any entity with respect to which more than 30% of the outstanding shares or other equity interests thereof are owned, directly or indirectly, by CarLotz (each of (i), (ii) or (iii) for whom I am so employed at any time after the date hereof or for any of whose customers I provide services or products within the Restricted Business (as defined below) on behalf of any of (i), (ii) or (iii) at any time after the date hereof, jointly and severally and together with any successors and assignees under Section 14(d) below, the “Company”), and all wages, salary, bonuses, compensation, and benefits associated with my employment as an employee (whether full-time, part-time, or casual), officer, manager, director, or independent contractor of the Company and (b) for other good and valuable consideration, the receipt and sufficiency of which I hereby acknowledge, do hereby agree as follows:
1. Not an Employment Agreement. I agree, understand and acknowledge that this Agreement is not an employment agreement.
2. Confidential Information.
(a) Company Information. I agree at all times during the term of my employment and thereafter, to hold in strictest confidence, and not to use (except for the benefit of the Company to fulfill my obligations to it) or to disclose to any person, firm or corporation without written authorization of the Board of Directors of the Company (the “Board”), any Confidential Information of the Company. I agree that “Confidential Information” means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, any non-public research, product or service plans, products, services, customer lists, investor lists, and customers and investors (including, but not limited to, customers of the Company on whom I called, to whom I rendered services or provided products or with whom I became acquainted during the term of my employment), pricing, costs, markets, summaries, investment strategies, marketing strategies and other strategies, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration, marketing, financial information or other business information obtained by me or disclosed to me by the Company or any other person or entity during the term of and in connection with my employment with the Company either directly or indirectly in writing, orally by drawings, by observation of services, products, systems or other aspects of the Company’s business or otherwise.
(b) Former Employer Information. I agree that I will not, during my employment with the Company, improperly use or disclose any proprietary information or trade secrets of any former or concurrent employer or other person or entity and that I will not bring onto the premises of the Company any unpublished or published document containing confidential or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
(c) Inventions.
(i) Inventions Contributed, Retained and Licensed. I hereby contribute, transfer and assign to the Company all of my right, title and interest in and to any and all patents, patents pending, discoveries, copyrights, trademarks, service marks, original works of authorship, developments, inventions, trade secrets, improvements, enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable, which are related to any items, ideas or activities described on Exhibit C (collectively, “Prior Inventions”), except for those Prior Inventions listed on Exhibit D hereto, ownership of which I hereby retain (“Retained Inventions”). I represent that Exhibit D is a complete list of my Retained Inventions that I desire to have specifically excluded from my obligations under this Section. If no items are listed on Exhibit D, I hereby represent that there are no such Retained Inventions. If in the course of my employment with the Company, I incorporate into a Company product, process or service a Retained Invention owned by me or in which I have an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide, unlimited license to make, have made, modify, use and sell such Retained Invention as part of or in connection with such products, process or service.
(ii) Assignment of Future Inventions.
(a) I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and shall contribute, transfer and assign to the Company, or its designee, all my right, title, and interest in and to any and all patents, patents pending, copyrights, trademarks, service marks, discoveries, original works of authorship, developments, inventions, trade secrets, improvements, enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable, under copyright or similar laws, including without limitation all goodwill associated with the foregoing, which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice during the period of time I am in the employ of the Company (collectively referred to as “Inventions”), but excluding Excluded Inventions (as defined in Section 2(c)(ii)(b) below). I further acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of and during the period of my employment with the Company and which are protected by copyright are “works made for hire,” as that term is defined in the United States Copyright Act. I shall not knowingly incorporate any invention, original work of authorship, development, improvement, or trade secret owned, in whole or in part, by any third party, into any Invention without the Company’s prior written permission.
2
(b) Inventions covered by Section 2(c)(ii)(a) above do not include any invention that I develop entirely on my own time and to which all of the following apply: (x) its development did not involve the use of any equipment, supplies, facilities or trade secret or proprietary information of the Company; (y) it is not related to or useful to a Restricted Business; and (z) it does not result from any work performed by me for the Company. In addition, the Inventions covered by Section 2(c)(ii)(a) above do not include any Retained Inventions. The inventions described in this Section 2(c)(ii)(b) are collectively referred to as “Excluded Inventions.”
(iii) Maintenance of Records. I agree to keep and maintain adequate and current written records of all Inventions made by me (solely or jointly with others) during the term of and in connection with my employment with the Company. The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company. The records will be available to and remain the sole property of the Company at all times.
(iv) Registrations. I agree to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the Inventions and any copyrights, patents, trademarks, service marks, or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, trademarks, service marks or other intellectual property rights relating thereto. I further agree that my obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of my mental or physical incapacity or for any other reason to secure my signature to apply for or to pursue any application for any United States or foreign patents, copyright, trademarks, service marks, or other intellectual property registrations covering Inventions or original works of authorship assigned to the Company as above, then I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright, trademark, service mark, or other intellectual property registrations contemplated by this Section 2(c)(iv) with the same legal force and effect as if executed by me. THIS POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE.
(d) Third Party Information. I recognize that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. I agree to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out my work for the Company consistent with the Company’s agreement with such third party.
3. Conflicting Employment. Without limiting the application of Section 10 below, I agree that, during the term of my employment with the Company, I will not engage in any other employment, occupation, consulting or other business activity directly related to the Restricted Business without the advance written approval of the Board of the Company. Nor will I engage in any other activities that conflict with the business of the Company. Furthermore, I agree to devote such time as may be necessary to fulfill my obligations to the Company.
3
4. Returning Company Property. I agree that, at the time of leaving the employ of the Company, I will deliver to the Company (and will not keep in my possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items developed by me or others pursuant to or during my employment with the Company or otherwise belonging to the Company, its successors or assigns (“Company Property”). In the event of the termination of my employment, I agree to certify in writing that I have returned all Company Property to the Company.
5. Notification of New Employer. In the event that I leave the employ of the Company, I hereby grant consent to notification by the Company to my new employer (whether I am employed as an employee, consultant, independent contractor, director, partner, officer, advisor, executive or manager) about my obligations under this Agreement and delivery by the Company of a copy of this Agreement to any such new employer. For purposes of this Agreement, so long as I am employed by any entity that is a “Company” as defined herein, my employment by the Company shall not be deemed to have terminated or expired.
6. Non-Solicitation. I agree that while I am employed by the Company and for a period of one year immediately following any such termination of my employment with the Company, (i) intentionally solicit, induce, recruit or encourage any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company to leave his, her or its employment or engagement with the Company, or attempt to solicit, recruit, or take away any such employees or independent contractors (or induce or encourage any such employee or independent contractor to terminate its employment or engagement with the Company); provided that after termination or expiration of my employment, this provision shall only apply to those employees or independent contractors of the Company who (A) are current employees or independent contracts of the Company and (B) were such at any time within 12 months prior to the date of such termination or expiration, (ii) intentionally interfere in any manner with the contractual or employment relationship between the Company and any employee, independent contractor, Customer (as defined below) or supplier of the Company or cause any such employee, independent contractor, Customer or supplier to cease employment with, cease doing business with or reduce the amount of business it does with the Company; provided that after termination or expiration of my employment, this provision shall apply only to the employees, independent contractors, Customers or suppliers of the Company who (A) are current employees, independent contractors, Customers or suppliers of the Company and (B) were such at any time within 12 months prior to such termination or expiration, (iii) after termination or expiration of my employment, hire or otherwise employ any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company or who has provided services to or on behalf of the Company at any time during the prior three month period, or (iv) whether as a direct solicitor or provider of such services or products, or in a management or supervisory capacity over others who solicit or provide such services or products, intentionally solicit or provide services or products that fall within the definition of Restricted Business to any Customer of the Company; provided that after the expiration or termination of my employment, this provision shall only apply to those customers of the Company who are current Customers and were Customers at any time within 12 months prior to the termination or expiration of my employment with the Company. “Customer” shall mean those persons or affiliates to which the Company has rendered services or provided products within the last three months that fall within the definition of Restricted Business (including, for the avoidance of doubt, commercial clients of the Company that provide vehicles to the Company in connection with the services provided by the Company). The terms “Cause” and “Good Reason” shall have the respective meanings signed to each such term in the Employment Agreement.
4
7. Covenants not to Compete. For purposes of this Agreement, the term “Non- Compete Period” shall mean a period from the date hereof until one (1) year immediately following the termination or expiration of my employment with the Company. During the Non-Compete Period, I covenant and agree that I will not, directly or indirectly, (i) own or hold, directly or beneficially, as a shareholder (other than as a shareholder with less than 3% of the outstanding common stock of a publicly traded corporation), option holder, warrant holder, partner, member or other equity or security owner or holder of any company or business that derives revenue from the Restricted Business (as defined below) within the Restricted Area (as defined below), or any company or business controlling, controlled by or under common control with any company or business directly engaged in such Restricted Business within the Restricted Area (any of the foregoing, a “Restricted Company”) or (ii) engage or participate as an employee, director, officer, manager, executive, partner, independent contractor, consultant or technical or business advisor (or any foreign equivalents of the foregoing) in the Restricted Activities within the Restricted Area. Nothing in this Section 7 shall preclude me from accepting employment with a multi-division company so long as (x) my employment is not within a division of my new employer that engages in the Restricted Business within the Restricted Area, (y) during the course of such employment, I do not communicate related to Restricted Activities with any division of my new employer engaged in the Restricted Business within the Restricted Area and (z) I do not engage in the Restricted Activities within the Restricted Area.
(a) For purposes of this Agreement, the terms “Restricted Activities” and “Restricted Business” shall have the meanings given to them in Exhibit E hereto, and the term “Restricted Area” shall have the following meaning: (i) City of Richmond, Virginia, (ii) any municipality wherein the Company operates the Restricted Business if the Company operated such Restricted Business in such location at any time during the 12 months immediately preceding the termination or expiration of my employment, (iii) any municipality wherein the Company operates the Restricted Business or plans to operate the Restricted Business if the Company planned to operate the Restricted Business in such location as of the termination or expiration of my employment, (iv) any municipality wherein an office of the Company is located, in which office I was physically present while rendering services or providing products in behalf of the Company at any time during the 12 months immediately preceding the termination or expiration of my employment, (v) the area within 50 miles of the municipal limits of each of the foregoing and (vi) any other area in the United States of America.
(b) In the event that I intend to associate (whether as an employee, consultant, independent contractor, officer, manager, advisor, partner, executive or director) with any Restricted Company during the Non-Compete Period, I must provide information in writing to the Board relating to the activities proposed to be engaged in by me for such Restricted Company. In the event that the Board consents in writing to my engagement in such activity, the engaging in such activity by me shall be conclusively deemed not to be a violation of Section 7 hereof and the Company may not seek its remedies under Section 8 below with respect to my engaging in such activity.
(c) Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be construed to prohibit any activity which cannot reasonably be construed to further in any meaningful way any competition against the Company.
5
8. Specific Enforcement; Remedies Cumulative; Attorney Fees. I acknowledge that the Company will be irreparably injured if the provisions of Sections 2, 4, 6 and 7 hereof are not specifically enforced and I agree that the terms of such provisions (including without limitation the periods set forth in Sections 6 and 7) are reasonable and appropriate. If I commit or, in the reasonable belief of the Company, threaten to commit a breach of any of the provisions of Sections 2, 4, 6 and 7 hereof, the Company shall have the right and remedy, in addition to and not in limitation of any other remedy that may be available at law or in equity, to have the provisions of Sections 2, 4, 6 and 7 hereof specifically enforced by any court having jurisdiction through immediate injunctive and other equitable relief, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy therefor. Such injunction shall be available without the posting of any bond or other security. Each party agrees to pay to the other party the other party’s reasonable attorney’s fees and court costs in obtaining, or defending against, the enforcement of, or determining the validity of, this Agreement or any provision hereof, whether in an action, suit, motion or matter brought by me or the Company (or any other person or entity), provided the other party is the prevailing party in such action, suit, motion or matter.
9. Re-Set of Period for Non-Competition and Non-Solicitation. In the event that a legal or equitable action is commenced with respect to any of the provisions of Section 6 or Section 7 hereof and I have not strictly observed the provisions in such sections with respect to which such action has been commenced then the one-year or two-year periods, as applicable, described in such sections not strictly observed by me shall begin to run anew from the date of any Final Judicial Determination of such legal action. “Final Judicial Determination” shall mean the expiration of time to file any possible appeal from a final judgment in such legal action or, if an appeal is taken, the final determination of the final appellate proceeding and that any failure to do so shall constitute a breach of the provisions hereof.
10. Conflict of Interest Guidelines. I agree to diligently adhere to the Company’s policies, including any policy pertaining to conflicts of interest. I agree that if I do not adhere to any of the provisions of such guidelines, I will be in breach of the provisions hereof.
11. Representations. I agree to execute any proper oath or verify any proper document required to carry out the terms of this Agreement. I represent that my performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any oral or written agreement in conflict herewith and my employment by the Company and my services to the Company will not violate the terms of any oral or written agreement to which I am a party.
12. Company Opportunity. During the term of my employment, I shall submit to the Board all business, commercial and investment opportunities or offers presented to me or of which I become aware which relate to the business of the Company at any time during such term (“Company Opportunities”). Unless approved in advance in writing by the Board, I shall not accept or pursue, directly or indirectly, any Company Opportunities on my own behalf.
13. Cooperation. During the term of my employment and thereafter, I shall cooperate with the Company in any internal investigation, any administrative, regulatory or judicial investigation or proceeding or any dispute with a third party as reasonably requested by the Company (including, without limitation, my being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information and turning over to the Company all relevant documents which are or may come into my possession, all at times and on schedules that are reasonably consistent with my other permitted activities and commitments). In the event the Company requires my cooperation in accordance with this Section, the Company shall reimburse me solely for reasonable travel expenses (including lodging and meals) upon submission of receipts.
6
14. General Provisions.
(a) Governing Law; Interpretation; Venue; Waiver of Jury Trial. This Agreement will be governed by the internal substantive laws, but not the choice of law rules, of the Commonwealth of Virginia. Nothing in this Agreement shall be construed to prohibit activity could not be in any way competition with the Company or could not help in any way another company or me to compete with the Company.
(i) THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE FOLLOWING COURTS IN MATTERS RELATED TO THIS AGREEMENT OR MY EMPLOYMENT WITH THE COMPANY AND AGREE NOT TO COMMENCE ANY SUIT, ACTION OR PROCEEDING RELATING THERETO EXCEPT IN ANY OF SUCH COURTS: THE ST ATE COURTS OF THE COMMONWEALTH OF VIRGINIA OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA.
(ii) I AGREE TO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY ME, AND I ACKNOWLEDGE THAT, EXCEPT FOR THE COMPANY’S AGREEMENT TO LIKEWISE WAIVE ITS RIGHTS TO A TRIAL BY JURY (WHICH THE COMPANY HEREBY MAKES), COMPANY HAS NOT MADE ANY REPRESENTATIONS OF FACTS TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. I FURTHER ACKNOWLEDGE THAT I HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF MY OWN FREE WILL, AND THAT I HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. I FURTHER ACKNOWLEDGE THAT I HAVE READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF THIS WAIVER AND AS EVIDENCE OF THIS FACT SIGN THIS AGREEMENT BELOW.
(b) Entire Agreement. This Agreement (including the recitals hereto, which are hereby made a binding part of this Agreement, and the Exhibits hereto) sets forth the entire agreement and understanding between the Company and me relating to the subject matter herein and therein and, effective as of the date hereof, merges and supersedes all prior discussions and agreements between the Company and me relating thereto. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the party to be charged.
(c) Severability. If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.
7
(d) Successors and Assigns. This Agreement will be binding after my death upon my heirs, executors, administrators and other legal representatives, but shall otherwise not be assignable by me. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. The Company may assign this Agreement to any successor to the Company (whether by merger or otherwise) and any corporation or other entity to which the Company may, directly or indirectly, be sold or transfer all or substantially all of its assets and business, in which case the term “Company,” as used herein, shall mean such corporation or other successor entity.
(e) Reformation. If the provisions of this Agreement should ever be adjudicated to exceed the time, geographic, service, product or other limitations permitted by applicable law in any jurisdiction, I agree that such provisions shall be deemed reformed in such jurisdiction so as to continue to apply to the maximum time, geographic, service, product or other limitations permitted by law in such jurisdiction.
(f) Survival. Notwithstanding the expiration of my employment with the Company, either as an employee, officer, director, or independent contractor, my obligations under Sections 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14 hereof shall survive and remain in full force and effect and the Company shall be entitled to equitable relief against me pursuant to the provisions of Section 8.
(g) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses or e-mail addresses (or at such other address or email address for a party as shall be specified in a notice given in accordance with this Section 14(g)):
(i) If to the Company:
CarLotz, Inc.
611 Bainbridge Street, Suite 100
Richmond, VA 23224
Attn: Board of Directors
With a copy to:
Freshfields Bruckhaus Deringer LLP
601 Lexington Ave,
New York, NY 10022
Attn: Valerie Jacob and Lori Goodman
Valerie.Jacob@freshfields.com
Lori.Goodman@freshfields.com
(ii) If to Executive, to the last address that the Company has in its personnel records for Executive, or
8
(iii) At any other address as any Party shall have specified by notice in writing to the other Party.
(h) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile or PDF shall be deemed effective for all purposes.
15. Counsel. This Agreement has been prepared in part by counsel to the Company, after full disclosure of its representation of the Company and with the consent and direction of all parties. I have reviewed the contents of this Agreement and fully understand its terms. I acknowledge that I am fully aware of my right to seek independent advice and the risks in not seeking such independent advice, and that I fully understand the potentially adverse interests of the parties with respect to this Agreement. I further acknowledge that neither the Company nor its Counsel has made representations or given any advice to me with respect to the consequences of this Agreement or any matters contemplated by this Agreement and that I have been advised of the importance of seeking independent counsel with respect to such consequences. By executing this Agreement, I represent that I have, after being advised of the potential conflicts between me and the Company with respect to the future consequences of this Agreement, either consulted independent legal counsel or elected, notwithstanding the advisability of seeking such independent legal counsel, not to consult with such independent legal counsel. I hereby agree at in interpretation or construction of this Agreement, the Agreement shall not be construed against either party on the basis that such party was the drafter of this Agreement or on any other basis.
16. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the parties, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth in this Agreement. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by both the Company and Executive. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver or continuing waiver of any other provision hereof. Notwithstanding this paragraph 16, this Agreement shall be considered an exhibit to the Employment Agreement and therefore neither the Employment Agreement nor this Agreement shall supersede one another. To the extent a conflict arises between the Employment Agreement and this Agreement, the terms of this Agreement shall control for all matters relating to the non-competition, non-solicitation, and confidentiality.
[Signature Page Follows]
9
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and year first above written.
CARLOTZ, INC. | ||
By: | /s/ Michael W. Bor | |
Name: Michael W. Bor | ||
Title: President and Chief Executive Officer | ||
EXECUTIVE | ||
/s/ Rebecca Polak | ||
Rebecca Polak |
EXHIBIT C
LIST OF PRIOR INVENTIONS
EXHIBIT D
LIST OF RETAINED INVENTIONS
EXHIBIT E
RESTRICTED ACTIVITIES
“Restricted Activities” shall include providing sales, administrative, management and/or executive services of the type I provide or have provided (or after the termination or expiration of my employment with the Company, of the type I provided at any time within the 12 months prior to the date of such termination or expiration) to or on behalf of the Company, to any company with respect to any of the following businesses: (i) vehicle retailing business, (ii) vehicle auction business, or (iii) vehicle rental, vehicle finance or vehicle leasing business, in each case within this clause (iii) related to the remarketing of vehicles for the secondary market (the “Restricted Business”).
Exhibit 10.23
CARLOTZ, INC.
Employment Agreement
This Employment Agreement (this “Agreement”), dated as of December 14, 2020, is made by and between CarLotz, Inc., a Delaware corporation (together with any successor thereto, the “Company”), and Thomas Stoltz (“Executive”) (collectively referred to as the “Parties” or individually referred to as a “Party”).
WHEREAS, pursuant to that certain Offer Letter, dated November 1, 2020 (the “Prior Agreement”), by and between the Company and Executive, Executive is currently employed as the Chief Financial Officer of the Company;
WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated October 21, 2020, with Acamar Partners Acquisition Corp. and Acamar Partners Sub, Inc. (the “Merger Agreement”);
WHEREAS, it is the desire of the Company to continue the employment of Executive and to assure itself of the services of Executive following the closing of the transactions contemplated by the Merger Agreement (the “Closing”) and thereafter on the terms herein provided by entering into this Agreement, which will supersede the Prior Agreement; and
WHEREAS, it is the desire of Executive to continue to provide services to the Company following the Closing and thereafter on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, including the respective covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1. Employment.
(a) General. Effective on the Closing Date (as defined in the Merger Agreement) as of immediately prior to the Closing (the “Effective Date”), the Company shall employ Executive and Executive shall remain in the employ of the Company, for the period and in the positions set forth in this Section 1, and subject to the other terms and conditions herein.
(b) Employment Term. The term of employment under this Agreement (the “Term”) shall commence on the Effective Date and end on the third anniversary of the Effective Date, subject to earlier termination as provided in Section 3 below. The Term shall automatically renew for additional twelve (12) month periods unless no later than ninety (90) days prior to the end of the applicable Term either Party gives written notice of non-renewal (“Notice of Non-Renewal”) to the other, in which case Executive’s employment will terminate at the end of the then-applicable Term, subject to earlier termination as provided in Section 3 below.
(c) Positions. Executive shall serve as the Chief Financial Officer of the Company with such responsibilities, duties and authority normally associated with such position and as may from time to time be reasonably assigned to Executive by the Board, as defined below, or by the Chief Executive Officer of the Company. Executive shall report to the Chief Executive Officer of the Company. At the Company’s request, Executive shall serve the Company and/or its subsidiaries and affiliates in such other capacities in addition to the foregoing as the Company shall designate, provided that such additional capacities are consistent with Executive’s position. In the event that Executive serves in any one or more of such additional capacities, Executive’s compensation shall not automatically be increased on account of such additional service.
(d) Duties. Executive shall devote substantially all of Executive’s working time, attention and efforts to the business and affairs of the Company (which shall include service to its affiliates), except during any paid vacation or other excused absence periods or during periods of illness. Executive shall not engage in outside business activities (including serving on outside boards or committees) without the prior written consent of the Chief Executive Officer; provided that Executive shall be permitted to (i) manage Executive’s personal, financial and legal affairs, which may include certain personal outside business activities, (ii) participate in trade associations and charitable and community affairs, and (iii) continue to serve on the board of directors or advisory boards of the companies/organizations set forth on Exhibit A attached hereto, if any, in each case, subject to compliance with this Agreement and provided that such activities do not materially interfere with Executive’s performance of Executive’s duties and responsibilities hereunder or violate the terms of that certain Loyalty Agreement entered into by and between Executive and the Company as of the date hereof, attached as Exhibit B hereto (the “Loyalty Agreement”). Executive agrees to observe and comply with the rules and policies of the Company as adopted by the Company from time to time, in each case as amended from time to time, as set forth in writing and as delivered to Executive (each, a “Policy”). The principal place of Executive’s employment shall be the Company’s primary office located in Richmond, Virginia.
2. Compensation and Related Matters.
(a) Annual Base Salary. During the Term, Executive shall receive a base salary at a rate of $340,000.00 per annum, which shall be paid in accordance with the customary payroll practices of the Company, no less frequently than monthly, and shall be pro-rated for partial years of employment. Such annual base salary shall be reviewed from time to time by the Company (such annual base salary, as it may be adjusted from time to time pursuant to this Section 2(a), the “Annual Base Salary”). The Annual Base Salary may not be decreased during the Term other than in connection with an across-the-board decrease for all executives.
(b) Annual Bonus. During the Term, beginning with calendar year 2021, Executive will be eligible to participate in an annual incentive program established by the Board. Executive’s annual incentive compensation under such incentive program (the “Annual Bonus”) shall be targeted at 50% of Executive’s Annual Base Salary (the “Target Bonus”). To the extent the targeted performance levels are exceeded, the annual incentive plan will provide a means by which the Annual Bonus may be higher than the Target Bonus, and to the extent the target performance levels are not achieved, the annual incentive plan will provide a means by which the Annual Bonus may be lower than the Target Bonus. The Annual Bonus payable under the incentive program shall be based on the achievement of performance goals to be determined by the Board. Notwithstanding the foregoing, except as set forth in Section 4(b), no bonus shall be payable with respect to any calendar year unless Executive remains continuously employed with the Company during the period beginning on the Effective Date and ending on December 31 of such calendar year. The payment of any Annual Bonus pursuant to the incentive program will be made on or before March 15th of the year following the year to which such Annual Bonus relates.
(c) Signing Bonus. Executive will be paid a signing bonus of $150,000 (the “Signing Bonus”) within thirty (30) days following the Closing. In the event that Executive resigns Executive’s employment is terminated by the Company for Cause on or prior to the 12-month anniversary of the Effective Date (the “Anniversary Date”), then Executive shall repay a prorated portion of the Signing Bonus to the Company within 30 days after the date of Executive’s termination of employment, with such portion determined by multiplying the Signing Bonus by a fraction, the numerator of which is the number of days in the period between the date of termination of Executive’s employment and the Anniversary Date and the denominator of which is 365. Executive hereby authorizes the Company to offset against and reduce any amounts otherwise due to Executive for any amounts in respect of Executive’s obligation to repay the Signing Bonus, except to the extent that any such offset would result in penalties under Section 409A of the Code.
2
(d) Equity-Based Compensation. The Company shall grant to Executive stock options (“Options”) to purchase shares of the Company’s common stock, par value $.01 per share (the “Company Common Stock”) and restricted stock units with respect to Company Common Stock (“Restricted Stock Units”) as set forth in this Section 2(d). The Options shall have an exercise price per share (the “Option Exercise Price”) equal to the closing price per share of common stock of Acamar Partners Acquisition Corp. on NASDAQ on the day immediately prior to the Effective Date. The Company shall grant to Executive a number of Restricted Stock Units equal to: (i) 574,500 times the excess, if any, of (x) the Option Exercise Price over (y) $10.00, divided by (ii) the Option Exercise Price. The Company shall grant to Executive Options to purchase a number of shares of Company Common Stock equal to 574,500 minus the number of Restricted Stock Units set forth in the immediately preceding sentence. Such Options and Restricted Stock Units shall (i) be subject to time-based vesting in equal annual installments over a four (4)-year period based on Executive’s continued employment with the Company (with vesting commencing as of November 30, 2020), (ii) vest and, if applicable, become exercisable upon a Change in Control (as defined in the CarLotz, Inc. 2020 Incentive Award Plan (the “Plan”)) in the event that the successor in connection with the Change in Control does not assume or substitute for any such outstanding Options or Restricted Stock Units, and (iii) be subject to the terms and conditions set forth in the Plan and the related Award Agreements (as defined in the Plan), and subject to shareholder approval of the Plan. The Options shall be granted on the Effective Date. The grant of the Restricted Stock Units shall not be effective until, and the exercisability of the Stock Options shall be contingent on the filing of a Form S-8 registration statement by New CarLotz, Inc. with respect to the Plan, no later than sixty-five (65) calendar days after the Effective Date. In order to satisfy the exercise price or any tax withholding obligations of the Company pertaining to Executive’s Options or the Restricted Stock Units, Executive will be permitted to instruct a broker, in compliance with applicable laws and regulations, to sell the necessary amount of Executive’s shares subject to such awards, such that the cash proceeds of such sale can be used to satisfy such exercise price or tax withholding obligations, and to adopt a Rule 10b5-1 plan, in compliance with applicable laws, to permit Executive to sell shares of Company Common Stock during blackout periods, when Executive has exposure to material non-public information and/or Executive otherwise is subject to insider trading restrictions. Additionally, during the Term, Executive shall have the right to receive stock options, restricted stock, restricted stock units, stock appreciation rights and/or other equity awards under the Company’s applicable equity plans as the Company may determine on a basis not less favorable than that provided to the class of employees that includes Executive and taking into account Executive’s position with the Company and customary award grants of similar publicly-traded companies.
(e) Benefits. During the Term, Executive shall be eligible to participate in employee benefit plans, programs and arrangements as the Company may from time to time offer to provide to its executives, consistent with the terms thereof and as such plans, programs and arrangements may be amended from time to time. Notwithstanding the foregoing, nothing herein is intended, or shall be construed, to require the Company to institute or continue any, or any particular, plan or benefit. In no event shall Executive be eligible to participate in any severance plan or program of the Company, except as set forth in Section 4 below.
(f) Vacation; Holidays. During the Term, Executive shall be entitled to four (4) weeks of paid vacation per calendar year (pro-rated for partial years) in accordance with the Policies. Any vacation shall be taken at the reasonable and mutual convenience of the Company and Executive. Unused vacation will not carry over from calendar year to calendar year. Upon termination of employment, the Executive will be entitled to payment for accumulated unused vacation for the year of termination. In addition, the Company will offer to Executive employee time off for standard Company holidays in accordance with the Policies.
3
(g) Business Expenses. During the Term, the Company shall reimburse Executive for all reasonable travel and other business expenses incurred by Executive in the performance of Executive’s duties to the Company in accordance with the Company’s expense reimbursement Policy.
(h) Indemnification. The Company hereby agrees to indemnify Executive and hold Executive harmless to the fullest extent permitted under the organizational documents of the Company and applicable law against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorney’s fees), losses, and damages (including advancement of fees and expenses) resulting from Executive’s performance of Executive’s duties and obligations with the Company hereunder. The Company shall cover Executive under directors’ and officers’ liability insurance both during and, while potential liability exists, after the Term in the same amount and to the same extent as the Company covers its other officers and directors. The foregoing obligations shall survive the termination of Executive’s employment with the Company.
3. Termination.
(a) Circumstances. Executive’s employment hereunder may be terminated by the Company or Executive, as applicable, without any breach of this Agreement under the following circumstances:
(i) Death. Executive’s employment hereunder shall terminate automatically upon Executive’s death.
(ii) Disability. If Executive has incurred a Disability, as defined below, the Company may terminate Executive’s employment.
(iii) Termination for Cause. The Company may terminate Executive’s employment for Cause, as defined below.
(iv) Termination without Cause. The Company may terminate Executive’s employment without Cause, which shall include Executive’s termination as a result of the Company delivering a Notice of Non-Renewal.
(v) Resignation from the Company with Good Reason. Executive may resign Executive’s employment with the Company with Good Reason, as defined below.
(vi) Resignation from the Company without Good Reason. Executive may resign Executive’s employment with the Company for any reason other than Good Reason, which shall include Executive’s termination as a result of Executive delivering a Notice of Non-Renewal.
(b) Notice of Termination. During the Term, any termination of Executive’s employment by the Company or by Executive under this Section 3 (other than termination pursuant to Sections 3(a)(i)) shall be communicated by a written notice (a “Notice of Termination”) to the other Party hereto (i) indicating the specific termination provision in this Agreement relied upon, (ii) except with respect to a termination pursuant to Section 3(a)(iv) or 3(a)(vi), setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) specifying a Date of Termination (as defined below). The failure by either party to set forth in the Notice of Termination any fact or circumstance shall not waive any right of the party hereunder or preclude the party from asserting such fact or circumstance in enforcing the party’s rights hereunder.
4
(c) Termination Date. For purposes of this Agreement, “Date of Termination” shall mean the date of the termination of Executive’s employment with the Company, which, if Executive’s employment is terminated as a result of Executive’s death, will be the date of Executive’s death, and otherwise shall be the date specified in a Notice of Termination. Except in the case of a termination pursuant to Sections 3(a)(i) and (ii) above, the Date of Termination shall be at least fifteen (15) days following the date of the Notice of Termination or such later date as may be required pursuant to this Agreement. Notwithstanding the foregoing, (i) the Company may deliver its Notice of Termination to Executive that specifies any Date of Termination that occurs on or after the date of its Notice of Termination; (ii) in the event that Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, change the Date of Termination to any date that occurs on or following the date of the Notice of Termination and is prior to the Date of Termination specified in the Notice of Termination; and (iii) if the Executive’s employment is to terminate at the end of a Term, the Date of Termination shall be the last day of such Term.
(d) Deemed Resignation. Upon termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any of its subsidiaries.
4. Obligations upon a Termination of Employment.
(a) Company Obligations upon Termination. Upon termination of Executive’s employment pursuant to any of the circumstances listed in Section 3(a) above, Executive (or Executive’s estate) shall be entitled to receive the sum of: (i) the portion of Executive’s Annual Base Salary earned through the Date of Termination, but not yet paid to Executive, which shall be paid as described in Section 2(a) above; (ii) except in the event of a termination for Cause pursuant to Section 3(a)(iii), any unpaid Annual Bonus earned by Executive for the year prior to the year in which the Date of Termination occurs, as determined by the Board in its good faith discretion based upon actual performance achieved, which Annual Bonus, if any, shall be paid to Executive when bonuses for such year are paid to actively employed senior executives of the Company but in no event later than March 15 of the year in which the Date of Termination occurs; (iii) any expenses owed to Executive pursuant to Section 2(g) above, which shall be paid within thirty (30) days after the Date of Termination; (iv) any accumulated unused vacation, which shall be paid in a lump sum within thirty (30) days after the Date of Termination; and (v) any amount accrued and arising from Executive’s participation in, or benefits accrued under any employee benefit plans, programs or arrangements, which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements (collectively, the “Company Arrangements”). Except as otherwise expressly required by law or as specifically provided in a Company Arrangement or herein, all of Executive’s rights to salary, severance, benefits, bonuses and other compensatory amounts hereunder (if any) shall cease upon the termination of Executive’s employment hereunder.
(b) Executive’s Obligations upon Termination.
(i) Cooperation. Executive shall provide Executive’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during Executive’s employment hereunder; provided the Company shall indemnify and hold harmless Executive with respect to any such cooperation and reimburse Executive for Executive’s reasonable costs and expenses (including legal counsel selected by Executive and reasonably acceptable to the Company), within thirty (30) days after the incurrence by Executive of such costs and expenses, and such cooperation shall not unreasonably burden Executive or unreasonably interfere with any subsequent employment or other activities that Executive may undertake.
5
(ii) Return of Company Property. Executive hereby acknowledges and agrees that all Personal Property (as defined below) and equipment furnished to, or prepared by, Executive in the course of, or incident to, Executive’s employment, belongs to the Company and shall be promptly returned to the Company upon termination of Executive’s employment (and will not be kept in Executive’s possession or delivered to anyone else). For purposes of this Agreement, “Personal Property” includes, without limitation, all books, manuals, records, reports, notes, contracts, lists, blueprints, and other documents, or materials, or copies thereof (including computer files), keys, building card keys, company credit cards, telephone calling cards, computer hardware and software, laptop computers, docking stations, cellular and portable telephone equipment, personal digital assistant (PDA) devices and all other proprietary information relating to the business of the Company or its subsidiaries or affiliates. Following termination, Executive shall not retain any written or other tangible material containing any proprietary information of the Company or its subsidiaries or affiliates.
(c) Severance Payments upon a Termination without Cause or Resignation with Good Reason.
(i) If, during the Term and not in a Change in Control Period, Executive’s employment terminates pursuant to Section 3(a)(iv) above due to the Company’s termination without Cause or pursuant to Section 3(a)(v) above due to Executive’s resignation with Good Reason, then, subject to Executive’s delivery to the Company of an executed waiver and release of claims in a form approved by the Company (the “Release”) that becomes effective and irrevocable in accordance with Section 9(n) below, and Executive’s continued compliance with Section 5 below, Executive shall receive, in addition to the payments and benefits set forth in Section 4(a) above, the following:
(A) an amount in cash equal to twelve (12) months of Executive’s then-existing Annual Base Salary, payable, less applicable withholdings and deductions, in the form of salary continuation in regular installments over the 12-month period following the date of Executive’s Separation from Service in accordance with the Company’s normal payroll practices, no less frequently than monthly, with the first of such installments to commence on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise provided in Section 9(n) below; and
(B) during the period commencing on the Date of Termination and ending on the twelve (12) month anniversary thereof or, if earlier, the date on which Executive becomes eligible for comparable replacement coverage under a subsequent employer’s group health plan (in any case, the “COBRA Period”), subject to Executive’s valid election to continue healthcare coverage under Section 4980B of the Code and the regulations thereunder, the Company shall, in its sole discretion, either (A) continue to provide to Executive and Executive’s dependents, at the Company’s sole expense, or (B) reimburse Executive and Executive’s dependents for coverage under its group health plan (if any), at the same levels and costs in effect on the Date of Termination (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars); provided, however, that if (1) any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the continuation coverage period to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), (2) the Company is otherwise unable to continue to cover Executive or Executive’s dependents under its group health plans or (3) the Company cannot provide the benefit without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining Company subsidy shall thereafter be paid to Executive in substantially equal monthly installments over the COBRA Period (or remaining portion thereof).
6
(ii) If, during the Term and during a Change in Control Period, Executive’s employment terminates pursuant to Section 3(a)(iv) above due to the Company’s termination without Cause or pursuant to Section 3(a)(v) above due to Executive’s resignation with Good Reason, then, subject to Executive’s delivery to the Company of a Release that becomes effective and irrevocable in accordance with Section 9(n) below, and Executive’s continued compliance with Section 5 below, Executive shall receive, in addition to the payments and benefits set forth in Section 4(a) above, the following:
(A) an amount in cash equal to twelve (12) months of Executive’s then-existing Annual Base Salary, less applicable withholdings and deductions, payable in the form of salary continuation in regular installments over the twelve (12)-month period following the date of Executive’s Separation from Service in accordance with the Company’s normal payroll practices, no less frequently than monthly, with the first of such installments to commence on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise provided in Section 9(n) below; provided, however that if the Change in Control constitutes a change in control event within the meaning of Section 409A of the Code, such amount will be paid in the form of a single lump sum in accordance with the Company’s normal payroll practices on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise set forth in Section 9(n) below;
(B) a pro-rated portion (based on the number of days Executive was employed by the Company during the calendar year in which the Date of Termination occurs) of the Annual Bonus that Executive would have earned had Executive remained employed through the end of the calendar year in which Executive’s Date of Termination occurs, as determined by the Board in good faith. If and to the extent earned, such pro-rated Annual Bonus shall be paid out at the same time annual bonuses are paid generally to other executives of the Company for the relevant year, less applicable withholdings and deductions, but in no event later than March 15th of the year immediately following that in which the Date of Termination occurs;
(C) the vesting and, if applicable, exercisability shall be accelerated (and, if applicable, all restrictions and rights of repurchase on such awards shall lapse) effective as of immediately prior to the Date of Termination with respect to 100% of the shares subject to Executive’s then outstanding equity awards (including any such awards that vest in whole or in part based on the attainment of performance-vesting conditions, which shall vest based on actual performance as of the Date of Termination and otherwise be governed by the terms of the applicable award agreement); and
7
(D) during the COBRA Period, subject to Executive’s valid election to continue healthcare coverage under Section 4980B of the Code and the regulations thereunder, the Company shall, in its sole discretion, either (A) continue to provide to Executive and Executive’s dependents, at the Company’s sole expense, or (B) reimburse Executive and Executive’s dependents for coverage under its group health plan (if any), at the same levels and costs in effect on the Date of Termination (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars); provided, however, that if (1) any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the continuation coverage period to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), (2) the Company is otherwise unable to continue to cover Executive or Executive’s dependents under its group health plans or (3) the Company cannot provide the benefit without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining Company subsidy shall thereafter be paid to Executive in substantially equal monthly installments over the COBRA Period (or remaining portion thereof).
(d) No Requirement to Mitigate; Survival. Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or in any other manner. Notwithstanding anything to the contrary in this Agreement, the termination of Executive’s employment shall not impair the rights or obligations of any Party.
(e) No Other Severance. Executive shall not be entitled to any severance benefits, pay in lieu of notice, or other similar benefits from the Company in connection with Executive’s termination other than as set forth herein.
(f) Survival. Notwithstanding anything to the contrary in this Agreement, the provisions of Sections 5 through 9 of this Agreement will survive the termination of Executive’s employment and the termination of the Term.
5. Restrictive Covenants and Confidentiality.
As a condition to the effectiveness of this Agreement, Executive will execute and deliver to the Company contemporaneously herewith Exhibit B, the Loyalty Agreement. Executive agrees to abide by the terms of the Loyalty Agreement, which are hereby incorporated by reference into this Agreement. Executive acknowledges that the provisions of the Loyalty Agreement will survive the termination of Executive’s employment and the termination of the Term for the periods set forth in the Loyalty Agreement. Notwithstanding any other provision of this Agreement, no payment shall be made or benefit provided pursuant to Section 4(c) following the date Executive first violates any of the restrictive covenants set forth in the Loyalty Agreement, and as of the first date on which Executive violates any such restrictive covenants, Executive shall pay the Company an amount equal to the sum of all payments theretofore paid to Executive pursuant to Section 4(c).
6. Assignment and Successors.
The Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise). This Agreement shall be binding upon and inure to the benefit of the Company, Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only by will or the laws of descent and distribution or operation of law. Notwithstanding the foregoing, Executive shall be entitled, to the extent permitted under applicable law and Company Arrangements, to select and change a beneficiary or beneficiaries to receive compensation hereunder following Executive’s death by giving written notice thereof to the Company.
8
7. Certain Definitions.
(a) Board. The “Board” shall mean the Board of Directors of the Company or an authorized committee of the Board.
(b) Cause. “Cause” shall mean any of the following:
(i) Executive’s commission of any act or omission that results in, or may reasonably be expected to result in, a conviction of (or plea of no contest or nolo contendere to) any felony (other than in connection with a traffic violation that does not result in imprisonment) under any state, federal or foreign law or any crime involving moral turpitude or dishonesty or that would reasonably be expected to cause material reputational or other material harm or damage to the Company;
(ii) Executive’s commission of an act of fraud, embezzlement, misappropriation of funds, material malfeasance, breach of fiduciary duty or other willful and material act of misconduct, in each case, against the Company;
(iii) any willful, material damage to any material property of the Company by Executive;
(iv) Executive’s willful, intentional and repeated failure to substantially perform Executive’s material job functions hereunder (other than any such failure resulting from Executive’s Disability or during periods of illness) or (B) carry out or comply with a lawful and reasonable directive of the Board or the Chief Executive Officer, in each case, which failure has not been cured (or cannot be cured) within thirty (30) days after the Company gives written notice to Executive regarding such failure;
(v) Executive’s breach of any Policy causing material reputational or other material harm or damage to the Company, which breach has not been cured (or cannot be cured) within thirty (30) days after the Company gives written notice to Executive regarding such breach;
(vi) Executive’s unlawful use (including being under the influence) of illegal drugs or continued excessive use of alcohol, in each case that materially impairs Executive’s ability to perform Executive’s duties contemplated hereunder;
(vii) Any grossly negligent or reckless act by Executive resulting in or causing material reputational or other material harm or damage to the Company; and
(viii) Executive’s material breach of this Agreement, the Loyalty Agreement or any other written agreement between Executive and the Company and failure to cure such breach (if capable of cure) within thirty (30) days after the Company gives written notice to Executive regarding such breach.
For purposes of this definition, an action or inaction is only “willful” if it is done or omitted by Executive without a good faith and reasonable belief that such action or inaction is in the best interests of the Company or any of its affiliates. The failure by the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing the Company’s rights hereunder. Notwithstanding the foregoing, a termination for Cause shall be deemed to occur if following Executive's termination of employment for any reason the Company determines that circumstances existing prior to such termination would have entitled the Company to terminate Executive's employment for Cause.
9
(c) Change in Control. “Change in Control” shall have the meaning set forth in the version of the Company’s 2020 Incentive Award Plan in effect on the Effective Date.
(d) Change in Control Period. “Change in Control Period” shall mean the period beginning upon the consummation of a Change in Control and ending twelve (12) months following the consummation of such Change in Control.
(e) Code. “Code” shall mean the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder.
(f) Disability. “Disability” shall mean a disability within the meaning of Section 22(e)(3) of the Code, as it may be amended from time to time. Any determination of the Executive’s Disability made in good faith by the Board shall be conclusive and binding on the Executive, unless within ten (10) days after written notice to the Executive of such determination, the Executive elects by written notice to the Company to challenge such determination, in which case determination of Disability shall be made by arbitration pursuant to Section 9(i) below.
(g) Good Reason. For the sole purpose of determining Executive’s right to severance payments and benefits as described above, “Good Reason” shall mean any one of the following, that occurs without Executive’s written consent:
(i) a material reduction in Executive’s Annual Base Salary (except pursuant to the last sentence of Section 2(a)) or Target Bonus; and
(ii) a material breach by the Company of this Agreement or any other written agreement with Executive.
Notwithstanding the foregoing, no Good Reason will have occurred unless and until: (A) Executive has provided the Company, within sixty (60) days of becoming aware of the initial occurrence of the Good Reason event, written-notice stating with specificity the applicable facts and circumstances underlying such finding of Good Reason; and (B) the Company or the successor company fails to cure such condition within forty-five (45) days after receiving such written notice (the “Cure Period”) and (C) Executive’s resignation based on such Good Reason is effective within thirty (30) days after expiration of the Cure Period with the Company or the successor company having failed to cure same.
8. Parachute Payments.
(a) Notwithstanding any other provisions of this Agreement or any Company Arrangement, in the event that any payment or benefit by the Company or otherwise to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (all such payments and benefits, including the payments and benefits under Section 4 above, being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments shall be reduced (in the order provided in Section 8(b) below) to the minimum extent necessary to avoid the imposition of the Excise Tax on the Total Payments, but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income and employment taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income and employment taxes on such Total Payments and the amount of the Excise Tax to which Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).
10
(b) The Total Payments shall be reduced in the following order: (i) reduction on a pro-rata basis of any cash severance payments that are exempt from Section 409A of the Code (“Section 409A”), (ii) reduction on a pro-rata basis of any non-cash severance payments or benefits that are exempt from Section 409A, (iii) reduction on a pro-rata basis of any other payments or benefits that are exempt from Section 409A, and (iv) reduction of any payments or benefits otherwise payable to Executive on a pro-rata basis or such other manner that complies with Section 409A; provided, in case of subclauses (ii), (iii) and (iv), that reduction of any payments attributable to the acceleration of vesting of Company equity awards shall be first applied to Company equity awards that would otherwise vest last in time.
(c) The Company will select an adviser with experience in performing calculations regarding the applicability of Section 280G of the Code and the Excise Tax, provided that the adviser’s determination shall be made based upon “substantial authority” within the meaning of Section 6662 of the Code, (the “Independent Advisors”) to make determinations regarding the application of this Section 8. The Independent Adviser shall provide its determination, together with detailed supporting calculations and documentation, to Executive and the Company within fifteen (15) business days following the date on which Executive’s right to the Total Payments is triggered, if applicable, or such other time as requested by Executive (provided that Executive reasonably believes that any of the Total Payments may be subject to the Excise Tax) or the Company. The costs of obtaining such determination and all related fees and expenses (including related fees and expenses incurred in any later audit) shall be borne by the Company. Any good faith determinations of the Independent Adviser made hereunder shall be final, binding and conclusive upon the Company and Executive.
(d) In the event it is later determined that to implement the objective and intent of this Section 8, (i) a greater reduction in the Total Payments should have been made, the excess amount shall be returned promptly by Executive to the Company or (ii) a lesser reduction in the Total Payments should have been made, the excess amount shall be paid or provided promptly by the Company to Executive, except to the extent the Company reasonably determines would result in imposition of an excise tax under Section 409A.
9. Miscellaneous Provisions.
(a) Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the Commonwealth of Virginia without reference to the principles of conflicts of law of the Commonwealth of Virginia or any other jurisdiction that would result in application of the laws of a jurisdiction other than the Commonwealth of Virginia, and where applicable, the laws of the United States.
(b) Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(c) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses or e-mail addresses (or at such other address or email address for a party as shall be specified in a notice given in accordance with this Section 9(c)):
11
(i) If to the Company:
CarLotz, Inc.
611 Bainbridge Street, Suite 100
Richmond, VA 23224
Attn: Board of Directors
With a copy to:
Freshfields Bruckhaus Deringer LLP
601 Lexington Ave,
New York, NY 10022
Attn: Valerie Jacob and Lori Goodman
Valerie.Jacob@freshfields.com
Lori.Goodman@freshfields.com
(ii) If to Executive, to the last address that the Company has in its personnel records for Executive, or
(iii) At any other address as any Party shall have specified by notice in writing to the other Party.
(d) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile or PDF shall be deemed effective for all purposes.
(e) Entire Agreement. The terms of this Agreement, the Loyalty Agreement, any indemnification agreement between the Company and Executive and any equity award agreement between the Company and Executive are intended by the Parties to be the final expression of their agreement with respect to the subject matter hereof and supersede all prior understandings and agreements, whether written or oral, including without limitation any prior employment agreement, offer letter between Executive and the Company (including the Prior Agreement). The Parties further intend that this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.
(f) Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by Executive and a duly authorized representative of Company. By an instrument in writing similarly executed, Executive or a duly authorized representative of the Company may waive compliance by the other Party with any specifically identified provision of this Agreement that such other Party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.
(g) No Inconsistent Actions. The Parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the Parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.
12
(h) Construction. This Agreement shall be deemed drafted equally by both the Parties. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any Party shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (i) the plural includes the singular and the singular includes the plural; (ii) “and” and “or” are each used both conjunctively and disjunctively; (iii) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (iv) “includes” and “including” are each “without limitation”; (v) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (vi) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.
(i) Arbitration. Any controversy, claim or dispute arising out of or relating to this Agreement, shall be settled solely and exclusively by a binding arbitration process administered by JAMS/Endispute in the State of Virginia. Such arbitration shall be conducted in accordance with the then-existing JAMS/Endispute Rules of Practice and Procedure. The arbitrator shall: (i) provide adequate discovery for the resolution of the dispute; and (ii) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award. The arbitrator shall award the prevailing Party attorneys’ fees and expert fees, if any. The Parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and conclusive. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided, however, that nothing in this subsection shall be construed as precluding the bringing of an action for injunctive relief or specific performance as provided in this Agreement or the Confidentiality Agreement. This dispute resolution process and any arbitration hereunder shall be confidential and neither any Party nor the neutral arbitrator shall disclose the existence, contents or results of such process without the prior written consent of all Parties, except where necessary or compelled in a court to enforce this arbitration provision or an award from such arbitration or otherwise in a legal proceeding. If JAMS/Endispute no longer exists or is otherwise unavailable, the Parties agree that the American Arbitration Association (“AAA”) shall administer the arbitration in accordance with its then-existing rules as modified by this subsection. In such event, all references herein to JAMS/Endispute shall mean AAA. Executive and the Company understand that by agreement to arbitrate any claim pursuant to this Section 9(i), they will not have the right to have any claim decided by a jury or a court, but shall instead have any claim decided through arbitration. Executive and the Company waive any constitutional or other right to bring claims covered by this Agreement other than in their individual capacities. Except as may be prohibited by applicable law, the foregoing waiver includes the ability to assert claims as a plaintiff or class member in any purported class or representative proceeding. Notwithstanding the foregoing, Executive and the Company each have the right to resolve any issue or dispute over intellectual property rights by court action instead of arbitration.
(j) Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the Term, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
13
(k) Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges that the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.
(l) Whistleblower Protections and Trade Secrets. Notwithstanding anything to the contrary contained herein, nothing in this Agreement prohibits Executive from reporting possible violations of federal law or regulation to any United States governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation (including the right to receive an award for information provided to any such government agencies). Furthermore, in accordance with 18 U.S.C. § 1833, notwithstanding anything to the contrary in this Agreement: (i) Executive shall not be in breach of this Agreement, and shall not be held criminally or civilly liable under any federal or state trade secret law (A) for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (B) for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (ii) if Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Executive may disclose the trade secret to Executive’s attorney, and may use the trade secret information in the court proceeding, if Executive files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.
(m) Section 409A.
(i) General. The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A. All amounts payable to the Executive pursuant to Section 4(b) shall, to the maximum extent permitted by Section 409A, be made in reliance on Section 1.409A-1(b)(9) (Separation Pay Plans) or Section 1.409A-1(b)(4) (Short-Term Deferrals) of the Department of Treasury regulations.
(ii) Separation from Service. Notwithstanding anything in this Agreement to the contrary, any compensation or benefits payable under this Agreement that is considered nonqualified deferred compensation under Section 409A and is designated under this Agreement as payable upon Executive’s termination of employment shall be payable only upon Executive’s “separation from service” with the Company within the meaning of Section 409A (a “Separation from Service”).
(iii) Specified Employee. Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (A) the expiration of the six (6)-month period measured from the date of Executive’s Separation from Service with the Company or (B) the date of Executive’s death. Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.
14
(iv) Expense Reimbursements. To the extent that any reimbursements under this Agreement are subject to Section 409A, any such reimbursements payable to Executive shall be paid to Executive no later than December 31st of the year following the year in which the expense was incurred; provided that Executive submits Executive’s reimbursement request promptly following the date the expense is incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, other than medical expenses referred to in Section 105(b) of the Code, and Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.
(v) Installments. Executive’s right to receive any installment payments under this Agreement, including without limitation any continuation salary payments that are payable on Company payroll dates, shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A.
(n) Release. Notwithstanding anything to the contrary in this Agreement, to the extent that any payments due under this Agreement as a result of Executive’s termination of employment are subject to Executive’s execution and delivery of a Release, (i) the Company shall deliver the Release to Executive within ten (10) business days following Executive’s Date of Termination, and the Company’s failure to deliver a Release prior to the expiration of such ten (10) business day period shall constitute a waiver of any requirement to execute a Release, (ii) if Executive fails to execute the Release on or prior to the Release Expiration Date (as defined below) or timely revokes Executive’s acceptance of the Release thereafter, Executive shall not be entitled to any payments or benefits otherwise conditioned on the Release, and (iii) in any case where Executive’s Date of Termination and the last day of the applicable revocation period fall in two separate taxable years, any payments required to be made to Executive that are conditioned on the Release and are treated as nonqualified deferred compensation for purposes of Section 409A shall be made in the later taxable year. For purposes hereof, “Release Expiration Date” shall mean the date that is twenty-one (21) days following the date upon which the Company timely delivers the Release to Executive, or, in the event that Executive’s termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date. To the extent that any payments of nonqualified deferred compensation (within the meaning of Section 409A) due under this Agreement as a result of Executive’s termination of employment are delayed pursuant to this Section 9(n), such amounts shall be paid in a lump sum on the first payroll date following the date that Executive executes and does not revoke the Release (and the applicable revocation period has expired) or, in the case of any payments subject to Section 9(n)(iii), on the first payroll period to occur in the subsequent taxable year, if later.
10. Executive Acknowledgement.
Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on Executive’s own judgment.
[Signature Page Follows]
15
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and year first above written.
CARLOTZ, INC. | |||
By: | /s/ Michael W. Bor | ||
Name: Michael W. Bor | |||
Title: President and Chief Executive Officer | |||
EXECUTIVE | |||
/s/ Thomas Stoltz | |||
Thomas Stoltz |
EXHIBIT A
CURRENT SERVICE
EXHIBIT B
LOYALTY AGREEMENT
CARLOTZ, INC.
LOYALTY AGREEMENT
THIS AMENDED AND RESTATED LOYALTY AGREEMENT (this “Agreement”) is made as of December 14, 2020 (the “Effective Date”), by and between CarLotz, Inc., a Delaware corporation (the “CarLotz”), and Thomas Stoltz (“I” or “me”). This Agreement is referenced as Exhibit B to the employment agreement between the Company and Executive dated December 14, 2020 (the “Employment Agreement”).
NOW, THEREFORE, in exchange and consideration for (a) my being employed as an employee, officer, director, or independent contractor of (i) CarLotz, (ii) any affiliate of CarLotz, and/or (iii) any entity with respect to which more than 30% of the outstanding shares or other equity interests thereof are owned, directly or indirectly, by CarLotz (each of (i), (ii) or (iii) for whom I am so employed at any time after the date hereof or for any of whose customers I provide services or products within the Restricted Business (as defined below) on behalf of any of (i), (ii) or (iii) at any time after the date hereof, jointly and severally and together with any successors and assignees under Section 14(d) below, the “Company”), and all wages, salary, bonuses, compensation, and benefits associated with my employment as an employee (whether full-time, part-time, or casual), officer, manager, director, or independent contractor of the Company and (b) for other good and valuable consideration, the receipt and sufficiency of which I hereby acknowledge, do hereby agree as follows:
1. Not an Employment Agreement. I agree, understand and acknowledge that this Agreement is not an employment agreement.
2. Confidential Information.
(a) Company Information. I agree at all times during the term of my employment and thereafter, to hold in strictest confidence, and not to use (except for the benefit of the Company to fulfill my obligations to it) or to disclose to any person, firm or corporation without written authorization of the Board of Directors of the Company (the “Board”), any Confidential Information of the Company. I agree that “Confidential Information” means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, any non-public research, product or service plans, products, services, customer lists, investor lists, and customers and investors (including, but not limited to, customers of the Company on whom I called, to whom I rendered services or provided products or with whom I became acquainted during the term of my employment), pricing, costs, markets, summaries, investment strategies, marketing strategies and other strategies, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration, marketing, financial information or other business information obtained by me or disclosed to me by the Company or any other person or entity during the term of and in connection with my employment with the Company either directly or indirectly in writing, orally by drawings, by observation of services, products, systems or other aspects of the Company’s business or otherwise.
(b) Former Employer Information. I agree that I will not, during my employment with the Company, improperly use or disclose any proprietary information or trade secrets of any former or concurrent employer or other person or entity and that I will not bring onto the premises of the Company any unpublished or published document containing confidential or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
(c) Inventions.
(i) Inventions
Contributed, Retained and Licensed. I hereby
contribute, transfer and assign to the Company all of my right, title and interest in and to any and all patents, patents pending,
discoveries, copyrights, trademarks, service marks, original works of authorship, developments, inventions, trade secrets, improvements,
enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and
intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable,
which are related to any items, ideas or activities described on Exhibit C (collectively, “Prior Inventions”),
except for those Prior Inventions listed on Exhibit D hereto, ownership of which I hereby retain (“Retained
Inventions”). I represent that Exhibit D is a complete list of my Retained Inventions that I desire to have
specifically excluded from my obligations under this Section. If no items are listed on Exhibit D, I hereby represent
that there are no such Retained Inventions. If in the course of my employment with the Company, I incorporate into a Company
product, process or service a Retained Invention owned by me or in which I have an interest, the Company is hereby granted and
shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide, unlimited license to make, have made, modify, use and
sell such Retained Invention as part of or in connection with such products, process or service.
(ii) Assignment of Future Inventions.
(a) I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and shall contribute, transfer and assign to the Company, or its designee, all my right, title, and interest in and to any and all patents, patents pending, copyrights, trademarks, service marks, discoveries, original works of authorship, developments, inventions, trade secrets, improvements, enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable, under copyright or similar laws, including without limitation all goodwill associated with the foregoing, which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice during the period of time I am in the employ of the Company (collectively referred to as “Inventions”), but excluding Excluded Inventions (as defined in Section 2(c)(ii)(b) below). I further acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of and during the period of my employment with the Company and which are protected by copyright are “works made for hire,” as that term is defined in the United States Copyright Act. I shall not knowingly incorporate any invention, original work of authorship, development, improvement, or trade secret owned, in whole or in part, by any third party, into any Invention without the Company’s prior written permission.
2
(b) Inventions covered by Section 2(c)(ii)(a) above do not include any invention that I develop entirely on my own time and to which all of the following apply: (x) its development did not involve the use of any equipment, supplies, facilities or trade secret or proprietary information of the Company; (y) it is not related to or useful to a Restricted Business; and (z) it does not result from any work performed by me for the Company. In addition, the Inventions covered by Section 2(c)(ii)(a) above do not include any Retained Inventions. The inventions described in this Section 2(c)(ii)(b) are collectively referred to as “Excluded Inventions.”
(iii) Maintenance of Records. I agree to keep and maintain adequate and current written records of all Inventions made by me (solely or jointly with others) during the term of and in connection with my employment with the Company. The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company. The records will be available to and remain the sole property of the Company at all times.
(iv) Registrations. I agree to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the Inventions and any copyrights, patents, trademarks, service marks, or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, trademarks, service marks or other intellectual property rights relating thereto. I further agree that my obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of my mental or physical incapacity or for any other reason to secure my signature to apply for or to pursue any application for any United States or foreign patents, copyright, trademarks, service marks, or other intellectual property registrations covering Inventions or original works of authorship assigned to the Company as above, then I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright, trademark, service mark, or other intellectual property registrations contemplated by this Section 2(c)(iv) with the same legal force and effect as if executed by me. THIS POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE.
(d) Third Party Information. I recognize that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. I agree to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out my work for the Company consistent with the Company’s agreement with such third party.
3. Conflicting Employment. Without limiting the application of Section 10 below, I agree that, during the term of my employment with the Company, I will not engage in any other employment, occupation, consulting or other business activity directly related to the Restricted Business without the advance written approval of the Board of the Company. Nor will I engage in any other activities that conflict with the business of the Company. Furthermore, I agree to devote such time as may be necessary to fulfill my obligations to the Company.
3
4. Returning Company Property. I agree that, at the time of leaving the employ of the Company, I will deliver to the Company (and will not keep in my possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items developed by me or others pursuant to or during my employment with the Company or otherwise belonging to the Company, its successors or assigns (“Company Property”). In the event of the termination of my employment, I agree to certify in writing that I have returned all Company Property to the Company.
5. Notification of New Employer. In the event that I leave the employ of the Company, I hereby grant consent to notification by the Company to my new employer (whether I am employed as an employee, consultant, independent contractor, director, partner, officer, advisor, executive or manager) about my obligations under this Agreement and delivery by the Company of a copy of this Agreement to any such new employer. For purposes of this Agreement, so long as I am employed by any entity that is a “Company” as defined herein, my employment by the Company shall not be deemed to have terminated or expired.
6. Non-Solicitation. I agree that while I am employed by the Company and (a) in the event I terminate my employment without Good Reason (as defined below) or the Company terminates my employment for Cause (as defined below) (either event, a “Fault Event”), for a period of two years immediately following any such termination of my employment with the Company, or (b) in the event of a termination or expiration of my employment with the Company for any other reason, for a period of one year immediately following the termination or expiration of my employment with the Company, I shall not directly or indirectly, either on behalf of myself or any other person or entity, (i) intentionally solicit, induce, recruit or encourage any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company to leave his, her or its employment or engagement with the Company, or attempt to solicit, recruit, or take away any such employees or independent contractors (or induce or encourage any such employee or independent contractor to terminate its employment or engagement with the Company); provided that after termination or expiration of my employment, this provision shall only apply to those employees or independent contractors of the Company who (A) are current employees or independent contracts of the Company and (B) were such at any time within 12 months prior to the date of such termination or expiration, (ii) intentionally interfere in any manner with the contractual or employment relationship between the Company and any employee, independent contractor, Customer (as defined below) or supplier of the Company or cause any such employee, independent contractor, Customer or supplier to cease employment with, cease doing business with or reduce the amount of business it does with the Company; provided that after termination or expiration of my employment, this provision shall apply only to the employees, independent contractors, Customers or suppliers of the Company who (A) are current employees, independent contractors, Customers or suppliers of the Company and (B) were such at any time within 12 months prior to such termination or expiration, (iii) after termination or expiration of my employment, hire or otherwise employ any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company or who has provided services to or on behalf of the Company at any time during the prior three month period, or (iv) whether as a direct solicitor or provider of such services or products, or in a management or supervisory capacity over others who solicit or provide such services or products, intentionally solicit or provide services or products that fall within the definition of Restricted Business to any Customer of the Company; provided that after the expiration or termination of my employment, this provision shall only apply to those customers of the Company who are current Customers and were Customers at any time within 12 months prior to the termination or expiration of my employment with the Company. “Customer” shall mean those persons or affiliates to which the Company has rendered services or provided products within the last three months that fall within the definition of Restricted Business (including, for the avoidance of doubt, commercial clients of the Company that provide vehicles to the Company in connection with the services provided by the Company). The terms “Cause” and “Good Reason” shall have the respective meanings signed to each such term in the Employment Agreement.
4
7. Covenants not to Compete. For purposes of this Agreement, the term “Non- Compete Period” shall mean a period from the date hereof until in the case of a Fault Event, two (2) years immediately following the date of termination or expiration of my employment with the Company, or in the event of a termination or expiration for any other reason, one (1) year immediately following the termination or expiration of my employment with the Company. During the Non-Compete Period, I covenant and agree that I will not, directly or indirectly, (i) own or hold, directly or beneficially, as a shareholder (other than as a shareholder with less than 3% of the outstanding common stock of a publicly traded corporation), option holder, warrant holder, partner, member or other equity or security owner or holder of any company or business that derives revenue from the Restricted Business (as defined below) within the Restricted Area (as defined below), or any company or business controlling, controlled by or under common control with any company or business directly engaged in such Restricted Business within the Restricted Area (any of the foregoing, a “Restricted Company”) or (ii) engage or participate as an employee, director, officer, manager, executive, partner, independent contractor, consultant or technical or business advisor (or any foreign equivalents of the foregoing) in the Restricted Activities within the Restricted Area. Nothing in this Section 7 shall preclude me from accepting employment with a multi-division company so long as (x) my employment is not within a division of my new employer that engages in the Restricted Business within the Restricted Area, (y) during the course of such employment, I do not communicate related to Restricted Activities with any division of my new employer engaged in the Restricted Business within the Restricted Area and (z) I do not engage in the Restricted Activities within the Restricted Area.
(a) For purposes of this Agreement, the terms “Restricted Activities” and “Restricted Business” shall have the meanings given to them in Exhibit E hereto, and the term “Restricted Area” shall have the following meaning: (i) City of Richmond, Virginia, (ii) any municipality wherein the Company operates the Restricted Business if the Company operated such Restricted Business in such location at any time during the 12 months immediately preceding the termination or expiration of my employment, (iii) any municipality wherein the Company operates the Restricted Business or plans to operate the Restricted Business if the Company planned to operate the Restricted Business in such location as of the termination or expiration of my employment, (iv) any municipality wherein an office of the Company is located, in which office I was physically present while rendering services or providing products in behalf of the Company at any time during the 12 months immediately preceding the termination or expiration of my employment, (v) the area within 50 miles of the municipal limits of each of the foregoing and (vi) any other area in the United States of America.
(b) In the event that I intend to associate (whether as an employee, consultant, independent contractor, officer, manager, advisor, partner, executive or director) with any Restricted Company during the Non-Compete Period, I must provide information in writing to the Board relating to the activities proposed to be engaged in by me for such Restricted Company. In the event that the Board consents in writing to my engagement in such activity, the engaging in such activity by me shall be conclusively deemed not to be a violation of Section 7 hereof and the Company may not seek its remedies under Section 8 below with respect to my engaging in such activity.
5
(c) Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be construed to prohibit any activity which cannot reasonably be construed to further in any meaningful way any competition against the Company.
8. Specific Enforcement; Remedies Cumulative; Attorney Fees. I acknowledge that the Company will be irreparably injured if the provisions of Sections 2, 4, 6 and 7 hereof are not specifically enforced and I agree that the terms of such provisions (including without limitation the periods set forth in Sections 6 and 7) are reasonable and appropriate. If I commit or, in the reasonable belief of the Company, threaten to commit a breach of any of the provisions of Sections 2, 4, 6 and 7 hereof, the Company shall have the right and remedy, in addition to and not in limitation of any other remedy that may be available at law or in equity, to have the provisions of Sections 2, 4, 6 and 7 hereof specifically enforced by any court having jurisdiction through immediate injunctive and other equitable relief, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy therefor. Such injunction shall be available without the posting of any bond or other security. Each party agrees to pay to the other party the other party’s reasonable attorney’s fees and court costs in obtaining, or defending against, the enforcement of, or determining the validity of, this Agreement or any provision hereof, whether in an action, suit, motion or matter brought by me or the Company (or any other person or entity), provided the other party is the prevailing party in such action, suit, motion or matter.
9. Re-Set of Period for Non-Competition and Non-Solicitation. In the event that a legal or equitable action is commenced with respect to any of the provisions of Section 6 or Section 7 hereof and I have not strictly observed the provisions in such sections with respect to which such action has been commenced then the one-year or two-year periods, as applicable, described in such sections not strictly observed by me shall begin to run anew from the date of any Final Judicial Determination of such legal action. “Final Judicial Determination” shall mean the expiration of time to file any possible appeal from a final judgment in such legal action or, if an appeal is taken, the final determination of the final appellate proceeding and that any failure to do so shall constitute a breach of the provisions hereof.
10. Conflict of Interest Guidelines. I agree to diligently adhere to the Company’s policies, including any policy pertaining to conflicts of interest. I agree that if I do not adhere to any of the provisions of such guidelines, I will be in breach of the provisions hereof.
11. Representations. I agree to execute any proper oath or verify any proper document required to carry out the terms of this Agreement. I represent that my performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any oral or written agreement in conflict herewith and my employment by the Company and my services to the Company will not violate the terms of any oral or written agreement to which I am a party.
12. Company Opportunity. During the term of my employment, I shall submit to the Board all business, commercial and investment opportunities or offers presented to me or of which I become aware which relate to the business of the Company at any time during such term (“Company Opportunities”). Unless approved in advance in writing by the Board, I shall not accept or pursue, directly or indirectly, any Company Opportunities on my own behalf.
6
13. Cooperation. During the term of my employment and thereafter, I shall cooperate with the Company in any internal investigation, any administrative, regulatory or judicial investigation or proceeding or any dispute with a third party as reasonably requested by the Company (including, without limitation, my being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information and turning over to the Company all relevant documents which are or may come into my possession, all at times and on schedules that are reasonably consistent with my other permitted activities and commitments). In the event the Company requires my cooperation in accordance with this Section, the Company shall reimburse me solely for reasonable travel expenses (including lodging and meals) upon submission of receipts.
14. General Provisions.
(a) Governing Law; Interpretation; Venue; Waiver of Jury Trial. This Agreement will be governed by the internal substantive laws, but not the choice of law rules, of the Commonwealth of Virginia. Nothing in this Agreement shall be construed to prohibit activity could not be in any way competition with the Company or could not help in any way another company or me to compete with the Company.
(i) THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE FOLLOWING COURTS IN MATTERS RELATED TO THIS AGREEMENT OR MY EMPLOYMENT WITH THE COMPANY AND AGREE NOT TO COMMENCE ANY SUIT, ACTION OR PROCEEDING RELATING THERETO EXCEPT IN ANY OF SUCH COURTS: THE ST ATE COURTS OF THE COMMONWEALTH OF VIRGINIA OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA.
(ii) I AGREE TO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY ME, AND I ACKNOWLEDGE THAT, EXCEPT FOR THE COMPANY’S AGREEMENT TO LIKEWISE WAIVE ITS RIGHTS TO A TRIAL BY JURY (WHICH THE COMPANY HEREBY MAKES), COMPANY HAS NOT MADE ANY REPRESENTATIONS OF FACTS TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. I FURTHER ACKNOWLEDGE THAT I HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF MY OWN FREE WILL, AND THAT I HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. I FURTHER ACKNOWLEDGE THAT I HAVE READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF THIS WAIVER AND AS EVIDENCE OF THIS FACT SIGN THIS AGREEMENT BELOW.
(b) Entire Agreement. This Agreement (including the recitals hereto, which are hereby made a binding part of this Agreement, and the Exhibits hereto) sets forth the entire agreement and understanding between the Company and me relating to the subject matter herein and therein and, effective as of the date hereof, merges and supersedes all prior discussions and agreements between the Company and me relating thereto. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the party to be charged.
7
(c) Severability. If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.
(d) Successors and Assigns. This Agreement will be binding after my death upon my heirs, executors, administrators and other legal representatives, but shall otherwise not be assignable by me. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. The Company may assign this Agreement to any successor to the Company (whether by merger or otherwise) and any corporation or other entity to which the Company may, directly or indirectly, be sold or transfer all or substantially all of its assets and business, in which case the term “Company,” as used herein, shall mean such corporation or other successor entity.
(e) Reformation. If the provisions of this Agreement should ever be adjudicated to exceed the time, geographic, service, product or other limitations permitted by applicable law in any jurisdiction, I agree that such provisions shall be deemed reformed in such jurisdiction so as to continue to apply to the maximum time, geographic, service, product or other limitations permitted by law in such jurisdiction.
(f) Survival. Notwithstanding the expiration of my employment with the Company, either as an employee, officer, director, or independent contractor, my obligations under Sections 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14 hereof shall survive and remain in full force and effect and the Company shall be entitled to equitable relief against me pursuant to the provisions of Section 8.
(g) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses or e-mail addresses (or at such other address or email address for a party as shall be specified in a notice given in accordance with this Section 14(g)):
(i) If to the Company:
CarLotz, Inc.
611 Bainbridge Street, Suite 100
Richmond, VA 23224
Attn: Board of Directors
With a copy to:
Freshfields Bruckhaus Deringer LLP
601 Lexington Ave,
New York, NY 10022
Attn: Valerie Jacob and Lori Goodman
Valerie.Jacob@freshfields.com
Lori.Goodman@freshfields.com
8
(ii) If to Executive, to the last address that the Company has in its personnel records for Executive, or
(iii) At any other address as any Party shall have specified by notice in writing to the other Party.
(h) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile or PDF shall be deemed effective for all purposes.
15. Counsel. This Agreement has been prepared in part by counsel to the Company, after full disclosure of its representation of the Company and with the consent and direction of all parties. I have reviewed the contents of this Agreement and fully understand its terms. I acknowledge that I am fully aware of my right to seek independent advice and the risks in not seeking such independent advice, and that I fully understand the potentially adverse interests of the parties with respect to this Agreement. I further acknowledge that neither the Company nor its Counsel has made representations or given any advice to me with respect to the consequences of this Agreement or any matters contemplated by this Agreement and that I have been advised of the importance of seeking independent counsel with respect to such consequences. By executing this Agreement, I represent that I have, after being advised of the potential conflicts between me and the Company with respect to the future consequences of this Agreement, either consulted independent legal counsel or elected, notwithstanding the advisability of seeking such independent legal counsel, not to consult with such independent legal counsel. I hereby agree at in interpretation or construction of this Agreement, the Agreement shall not be construed against either party on the basis that such party was the drafter of this Agreement or on any other basis.
16. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the parties, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth in this Agreement. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by both the Company and Executive. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver or continuing waiver of any other provision hereof. Notwithstanding this paragraph 16, this Agreement shall be considered an exhibit to the Employment Agreement and therefore neither the Employment Agreement nor this Agreement shall supersede one another. To the extent a conflict arises between the Employment Agreement and this Agreement, the terms of this Agreement shall control for all matters relating to the non-competition, non-solicitation, and confidentiality.
[Signature Page Follows]
9
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and year first above written.
CARLOTZ, INC. | |||
By: | /s/ Michael W. Bor | ||
Name: Michael W. Bor | |||
Title: President and Chief Executive Officer | |||
EXECUTIVE | |||
/s/ Thomas Stoltz | |||
Thomas Stoltz |
EXHIBIT C
LIST OF PRIOR INVENTIONS
EXHIBIT D
LIST OF RETAINED INVENTIONS
EXHIBIT E
RESTRICTED ACTIVITIES
“Restricted Activities” shall include providing sales, administrative, management and/or executive services of the type I provide or have provided (or after the termination or expiration of my employment with the Company, of the type I provided at any time within the 12 months prior to the date of such termination or expiration) to or on behalf of the Company, to any company with respect to any of the following businesses: (i) vehicle retailing business, (ii) vehicle auction business, or (iii) vehicle rental, vehicle finance or vehicle leasing business, in each case within this clause (iii) related to the remarketing of vehicles for the secondary market (the “Restricted Business”).
Exhibit 10.24
CARLOTZ, INC. NON-EMPLOYEE DIRECTOR COMPENSATION POLICY
Non-employee members of the board of directors (the “Board”) of CarLotz, Inc. (the “Company”) shall be eligible to receive cash and equity compensation as set forth in this Non-Employee Director Compensation Policy (this “Policy”). The cash and equity compensation described in this Policy shall be paid or be made, as applicable, automatically and without further action of the Board, to each member of the Board who is not an employee of the Company or any parent or subsidiary of the Company and who is not an affiliate of TRP Capital Partners or Acamar Partners (each, a “Non-Employee Director”) who may be eligible to receive such cash or equity compensation, unless such Non-Employee Director declines the receipt of such cash or equity compensation by written notice to the Company. This Policy shall become effective immediately after the completion of the Merger (as defined in the Company’s Form S-4 registration statement) (such time, the “Effective Time”) on the closing date of the Merger (the “Closing Date”) and shall remain in effect until it is revised or rescinded by further action of the Board. This Policy may be amended, modified or terminated by the Board at any time in its sole discretion. The terms and conditions of this Policy shall supersede any prior cash and/or equity compensation arrangements for service as a member of the Board between the Company and any of its Non-Employee Directors and between any subsidiary of the Company and any of its non-employee directors.
1. Cash Compensation.
(a) Annual Retainers. Each Non-Employee Director shall receive an annual retainer of $40,000 for service on the Board.
(b) Additional Annual Retainers. In addition, a Non-Employee Director shall receive the following annual retainers, as applicable to such Non-Employee Director:
(i) Audit Committee. A Non-Employee Director serving as Chairperson of the Audit Committee shall receive an additional annual retainer of $15,000 for such service. A Non-Employee Director serving as a member of the Audit Committee (other than the Chairperson) shall receive an additional annual retainer of $7,500 for such service.
(ii) Compensation Committee. A Non-Employee Director serving as Chairperson of the Compensation Committee shall receive an additional annual retainer of $12,000 for such service. A Non-Employee Director serving as a member of the Compensation Committee (other than the Chairperson) shall receive an additional annual retainer of $6,000 for such service.
(iii) Nominating and Corporate Governance Committee. A Non-Employee Director serving as Chairperson of the Nominating and Corporate Governance Committee shall receive an additional annual retainer of $8,000 for such service. A Non-Employee Director serving as a member of the Nominating and Corporate Governance Committee (other than the Chairperson) shall receive an additional annual retainer of $4,000 for such service.
(c) Payment of Retainers. The annual retainers described in Sections 1(a) and 1(b) shall be earned on a quarterly basis based on a calendar quarter and shall be paid by the Company in arrears not later than the fifteenth day following the end of each calendar quarter. In the event a Non-Employee Director does not serve as a Non-Employee Director, or in the applicable positions described in Section 1(b), for an entire calendar quarter, such Non-Employee Director shall receive a prorated portion of the retainer(s) otherwise payable to such Non-Employee Director for such calendar quarter pursuant to Sections 1(a) and 1(b), with such prorated portion determined by multiplying such otherwise payable retainer(s) by a fraction, the numerator of which is the number of days during which the Non-Employee Director serves as a Non-Employee Director or in the applicable positions described in Section 1(b) during the applicable calendar quarter and the denominator of which is the number of days in the applicable calendar quarter.
2. Equity Compensation. Non-Employee Directors shall be granted the equity awards described below. The awards described below shall be granted under and shall be subject to the terms and provisions of the Company’s 2020 Incentive Award Plan or any other applicable Company equity incentive plan then-maintained by the Company (such plan, as may be amended from time to time, the “Equity Plan”) and shall be granted subject to the execution and delivery of award agreements, including attached exhibits, in substantially the forms previously approved by the Board. All applicable terms of the Equity Plan apply to this Policy as if fully set forth herein, and all equity grants hereunder are subject in all respects to the terms of the Equity Plan.
(a) Initial Awards Following Non-Employee Director Election or Appointment. Except as otherwise determined by the Board, each Non-Employee Director who is initially elected or appointed to the Board on or after the Effective Time (the date of such initial election or appointment, such Non-Employee Director’s “Start Date” (which, for the avoidance of doubt, shall be the Closing Date for Non-Employee Directors who are elected pursuant to the vote solicited in the Company’s Form S-4 registration statement)), but not on the date of an Annual Meeting, shall be automatically granted, on such Non-Employee Director’s Start Date, a restricted stock unit award with respect to a number of shares of the Company’s common stock (“Common Stock”) with a grant-date value (based on the volume weighted-average price per share of the Common Stock over the 20 consecutive trading-day period ending on such Non-Employee Director’s Start Date (or on the last preceding trading day if such Start Date is not a trading day) (provided, however, for grants made on the Closing Date, the number of shares shall be determined based on the closing price per share of common stock of Acamar Partners Acquisition, Corp. on the day immediately prior to the Closing Date) equal to (x) $135,000, multiplied by (y) the Initial Award Applicable Percentage (as defined below), rounded down to the nearest whole share. The “Initial Award Applicable Percentage” shall mean a fraction, the numerator of which is the number of days in the period beginning on the Non-Employee Director’s Start Date and ending on the date of the Company’s next scheduled Annual Meeting (which shall be deemed to be July 1, 2021 in the case of the Company’s first anticipated Annual Meeting), or if such next Annual Meeting (other than the Company’s first Annual Meeting) is not yet scheduled, the one year anniversary from the immediately preceding Annual Meeting occurring after the Effective Time), and the denominator of which is 365.
Notwithstanding the foregoing, if a Non-Employee Director’s Start Date occurs on or following the Effective Time but prior to the S-8 Date, such Non-Employee Director’s Initial Award shall instead be granted on the date immediately following the S-8 Date (but, for the avoidance of doubt, with the number of shares determined as described in this Section 2(a)). The awards described in this Section 2(a) shall be referred to as the “Initial Awards”. For the avoidance of doubt, no Non-Employee Director shall be granted more than one Initial Award.
2 |
(b) Annual Awards. Each Non-Employee Director who (i) serves on the Board as of the date of any annual meeting of the Company’s stockholders (an “Annual Meeting”) after the Effective Time and (ii) will continue to serve as a Non-Employee Director immediately following such Annual Meeting shall be automatically granted, on the date of such Annual Meeting, an award of restricted stock units with respect to a number of shares of Common Stock that has a grant-date value (based on the volume weighted-average price per share of the Common Stock over the 20 consecutive trading-day period ending on the date of such Annual Meeting (or on the last preceding trading day if the date of the Annual Meeting is not a trading day) equal to $135,000, rounded down to the nearest whole share. The awards described in this Section 2(b) shall be referred to as the “Annual Awards”. For the avoidance of doubt, a Non-Employee Director elected for the first time to the Board at an Annual Meeting shall receive only an Annual Award in connection with such election and shall not receive any Initial Award on the date of such Annual Meeting as well.
(c) Termination of Employment of Employee Directors. Members of the Board who are employees of the Company or any parent or subsidiary of the Company who subsequently terminate their employment with the Company and any parent or subsidiary of the Company but who remain on the Board after such termination from employment will not receive an Initial Award pursuant to Section 2(a) above, but to the extent that they are otherwise eligible, will be eligible to receive, after termination from employment with the Company and any parent or subsidiary of the Company, Annual Awards as described in Section 2(b) above.
(d) Vesting of Awards Granted to Non-Employee Directors. Each Initial Award and Annual Award shall vest and become exercisable on the earlier of (i) the day immediately preceding the date of the first Annual Meeting following the date of grant and (ii) the first anniversary of the date of grant, subject to the Non-Employee Director continuing in service on the Board through the applicable vesting date. No portion of an Initial Award or Annual Award, as applicable, that is unvested at the time of a Non-Employee Director’s termination of service on the Board shall become vested thereafter and any such unvested portion shall be terminated as of the date of such termination of service without any consideration therefor. All of a Non-Employee Director’s Initial Awards and Annual Awards, as applicable, shall vest in full immediately prior to the occurrence of a Change in Control (as defined in the Equity Plan), to the extent outstanding at such time, subject to such Non-Employee Director’s continued service on the Board immediately prior to the occurrence of such Change in Control.
3 |
Exhibit 10.25
CARLOTZ, INC.
2011 Stock Incentive Plan
1. Purpose and Effective Date.
(a) The purpose of the CarLotz, Inc. 2011 Stock Incentive Plan (the "Plan") is to promote the long-term stability and financial success of CarLotz, Inc., a Delaware corporation (the "Company") by attracting and retaining personnel, including employees, directors, advisory board members and consultants, through the use of stock incentives. The Company believes that ownership of Common Stock (as defined below) or rights to acquire the same will stimulate the efforts of those persons upon whose judgment, interest and efforts the Company is and will be largely dependent for the successful conduct of its business, and will further align those persons' interests with the interests of the Company's shareholders.
(b) The Plan was adopted by the Board of Directors of the Company and by the shareholders of the Company on March 31, 2011.
2. Definitions.
(a) Act. The Securities Exchange Act of 1934, as amended.
(b) Applicable Withholding Taxes. The aggregate amount of federal, state and local income and payroll taxes that the Company is required to withhold (based on the minimum applicable statutory withholding rates) in connection with any exercise of an Option or the award, lapse of restrictions or payment with respect to Restricted Shares.
(c) Award. The award of an Option or Restricted Shares under the Plan.
(d) Award Agreement. The agreement(s) between the Company and a Participant that govern an Award to such Participant under the Plan.
(e) Board. The Board of Directors of the Company.
(f) Cause. Dishonesty, fraud, misconduct, gross incompetence, gross negligence, breach of a material fiduciary duty, material breach of an agreement with the Company, unauthorized use or disclosure of confidential information or trade secrets, or conviction or confession of a crime punishable by law (except minor violations), in each case as determined by the Committee, which determination shall be binding. Notwithstanding the foregoing, if "Cause" is defined in an employment agreement between a Participant and the Company, "Cause" shall have the meaning assigned to it in such agreement.
(g) Certificate of Incorporation. The Certificate of Incorporation of the Company filed with the Delaware Division of Corporations on March 14, 2011, as may be amended from time to time.
(h) Code. The Internal Revenue Code of 1986, as amended.
(i) Committee. The Compensation Committee created by the Board and appointed to administer the Plan pursuant to Section 14 of the Plan, or if no such Committee exists, the Board.
(j) Common Stock. "Common Stock" of the Company as defined in the Certificate of Incorporation. If the par value of the Common Stock is changed, or in the event of a change in the capital structure of the Company (as provided in Section 12 below), the shares resulting from such change shall be deemed to be Common Stock within the meaning of the Plan.
(k) Consultant. A person or entity rendering services to the Company who is not an "employee" for purposes of employment tax withholding under the Code.
(1) Company. CarLotz, Inc., a Delaware corporation.
(m) Date of Grant. The effective date of an Award granted by the Committee.
(n) Disability or Disabled. As to an Incentive Stock Option, a Disability within the meaning of Code Section 22(e)(3). As to all other Awards, the Committee shall determine whether a Disability exists and such determination shall be conclusive.
(o) Fair Market Value.
(i) If the Common Stock is listed on any established stock exchange or quoted on the NASDAQ stock market system, its Fair Market Value shall be the closing price for such stock on the Date of Grant as reported by such exchange or the NASDAQ stock market system, or, if there are no trades on such date, the value shall be determined as of the last preceding day on which the Common Stock was traded.
(ii) If the Common Stock is not publicly traded, the Fair Market Value shall be determined by the Committee using any reasonable method in good faith.
(iii) Fair Market Value shall be determined as of the Date of Grant specified in the Award.
(p) Incentive Stock Option. An Option intended to meet the requirements of, and qualify for favorable federal income tax treatment under, Code Section 422.
(q) Nonstatutory Stock Option. An Option that does not meet the requirements of Code Section 422, or that is otherwise not intended to be an Incentive Stock Option and is so designated.
2
(r) Option. A right to purchase Common Stock granted under the Plan, at a price determined in accordance with the Plan.
(s) Participant. Any individual who is granted an Award under the Plan.
(t) Restricted Shares. Shares of Common Stock awarded upon the terms and subject to the restrictions set forth in Section 8 below.
(u) Rule 16b-3. Rule 16b-3 promulgated under the Act, including any corresponding subsequent rule or any amendments to Rule 16b-3 enacted after the effective date of the Plan.
(v) Shareholders Agreement. The Shareholders Agreement of the Company to be entered into and effective April 1, 2011.
(w) 10% Shareholder. A person who owns, directly or indirectly, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary of the Company. Indirect ownership of stock shall be determined in accordance with Code Section 424(d).
(x) Triggering Event. Any of the following: (i) a sale, transfer or disposition of all or substantially all of the Company's assets other than to (A) a corporation or other entity of which at least a majority of its combined voting power is owned directly or indirectly by the Company, (B) a corporation or other entity owned directly or indirectly by the holders of capital stock of the Company in substantially the same proportions as their ownership of Common Stock, or (C) an Excluded Entity (as defined in subsection (ii) below); or (ii) any merger, consolidation or other business combination transaction of the Company with or into another corporation, entity or person, other than a transaction with or into another corporation, entity or person in which the holders of at least a majority of the shares of voting capital stock of the Company outstanding immediately prior to such transaction continue to hold (either by such shares remaining outstanding in the continuing entity or by their being converted into shares of voting capital stock of the surviving entity) a majority of the total voting power represented by the shares of voting capital stock of the Company (or the surviving entity) outstanding immediately after such transaction (an "Excluded Entity"). Notwithstanding anything stated herein, a transaction shall not constitute a "Triggering Event" if its sole purpose is to change the state of the Company's incorporation, or to create a holding company that will be owned in substantially the same proportions by the persons who hold the Company's securities immediately before such transaction. For clarity, the term "Triggering Event" as defined herein shall not include stock sale transactions whether by the Company or by the holders of capital stock.
3. General. Awards of Options or Restricted Shares may be granted under the Plan. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options.
3
4. Reservation of Common Stock; Shares Available.
(a) Subject to Section 12 of the Plan, there shall be reserved for issuance under the Plan an aggregate of 586,250 shares of Common Stock, which may include authorized, but unissued, shares. Shares of Common Stock allocable to Options granted under the Plan that expire or otherwise terminate unexercised and shares of Common Stock that are forfeited pursuant to restrictions on Restricted Shares awarded under the Plan may again be subjected to an Award under this Plan. For purposes of determining the number of shares of Common Stock that are available for Awards under the Plan, such number shall include the number of shares of Common Stock surrendered by a Participant or retained by the Company in connection with the exercise of an Option or in payment of Applicable Withholding Taxes.
(b) Subject to adjustment as provided in Section 12, no more than an aggregate of 568,750 shares of Common Stock may be issued pursuant to the exercise of Incentive Stock Options granted under the Plan (including shares issued pursuant to the exercise of Incentive Stock Options that are the subject of disqualifying dispositions within the meaning of Sections 421, 422 and 423 of the Code).
5. Eligibility.
(a) Any employee of, director of or Consultant to the Company (including an employee of, director of, advisory board member of or consultant to an affiliate of the Company), other than Michael Bor, Aaron Montgomery and Will Boland, who, in the judgment of the Committee, has contributed or can be expected to contribute to the profits or growth of the Company is eligible to become a Participant. The Committee shall have the power and complete discretion, as provided in Section 14, to select eligible Participants and to determine for each Participant the terms, conditions and nature of the Award and the number of shares of Common Stock to be allocated as part of the Award; provided, however, that any Award made to a member of the Committee must be approved by the Board. The Committee is expressly authorized to make an Award to a Participant conditioned on the surrender for cancellation of an existing Award.
(b) The grant of an Award shall not obligate the Company to pay an employee any particular amount of remuneration, to continue the employment of the employee after the grant or to make further grants to the employee at any time thereafter.
(c) Non-employee directors and Consultants shall not be eligible to receive the Award of an Incentive Stock Option.
(d) The maximum number of shares of Common Stock with respect to which an Award may be granted in any calendar year to any employee during such calendar year shall be 250,000 shares.
4
6. Options for Common Stock.
(a) Whenever the Committee deems it appropriate to grant Options, notice shall be given to the Participant stating the number of shares of Common Stock for which Options are granted, the exercise price per share, whether the options are Incentive Stock Options or Nonstatutory Stock Options and the conditions to which the grant and exercise of the Options are subject. This notice, when duly accepted in writing by the Participant, shall become an Award Agreement between the Company and the Participant.
(b) The Committee shall establish the exercise price of Options. The exercise price of an Incentive Stock Option shall be not less than 100% of the Fair Market Value of such shares on the Date of Grant, provided that if the Participant is a 10% Shareholder, the exercise price of an Incentive Stock Option shall not be less than 110% of the Fair Market Value of such shares on the Date of Grant. The exercise price of Nonstatutory Stock Option Awards intended to be performance-based for purposes of Code Section 162(m) shall not be less than 100% of the Fair Market Value of such shares on the Date of Grant.
(c) Subject to subsection (d) below, Options may be exercised in whole or in part at such times as may be specified by the Committee in the Participant's Award Agreement. The Committee may impose such vesting conditions and other requirements as the Committee deems appropriate, and the Committee may include such provisions regarding a Triggering Events as the Committee deems appropriate.
(d) The Committee shall establish the term of each Option in the Participant's Award Agreement. The term of an Incentive Stock Option shall not be longer than ten years from the Date of Grant, except that an Incentive Stock Option granted to a 10% Shareholder shall not have a term in excess of five years. No Option may be exercised after the expiration of its term or, except as set forth in the Participant's Award Agreement, after the termination of the Participant's employment. The Committee shall set forth in the Participant's Award Agreement when, and under what circumstances, an Option may be exercised after termination of the Participant's employment or period of service; provided that no Incentive Stock Option may be exercised after (i) three months from the Participant's termination of employment with the Company for reasons other than Disability or death, or (ii) one year from the Participant's termination of employment on account of Disability or death. The Committee may, in its sole discretion, amend a previously granted Incentive Stock Option to provide for more liberal exercise provisions, provided however that if the Incentive Stock Option as amended no longer meets the requirements of Code Section 422, and, as a result the Option no longer qualifies for favorable federal income tax treatment under Code Section 422, the amendment shall not become effective without the written consent of the Participant.
(e) An Incentive Stock Option, by its terms, shall be exercisable in any calendar year only to the extent that the aggregate Fair Market Value (determined at the Date of Grant) of the Common Stock with respect to which Incentive Stock Options are exercisable by the Participant for the first time during the calendar year does not exceed $100,000 (the "Limitation Amount"). Incentive Stock Options granted under the Plan and all other plans of the Company and any parent or subsidiary of the Company shall be aggregated for purposes of determining whether the Limitation Amount has been exceeded. The Board may impose such conditions as it deems appropriate on an Incentive Stock Option to ensure that the foregoing requirement is met. If Incentive Stock Options that first become exercisable in a calendar year exceed the Limitation Amount, the excess Options will be treated as Nonstatutory Stock Options to the extent permitted by law.
5
(f) If a Participant dies and if the Participant's Award Agreement provides that part or all of the Option may be exercised after the Participant's death, then such portion may be exercised by the personal representative of the Participant's estate during the time period specified in the Award Agreement.
(g) If a Participant's employment or services is terminate by the Company for Cause, the Participant's Options shall terminate as of the date of the misconduct.
7. Method of Exercise of Options.
(a) Options may be exercised by giving written notice of the exercise to the Company, stating the number of shares of Common Stock the Participant has elected to purchase under the Option. Such notice shall be effective only if accompanied by the exercise price in full in cash; provided that, if the terms of an Option so permit, the Participant may (i) deliver shares of Common Stock that the Participant has previously acquired and owned (valued at Fair Market Value on the date of exercise), or (ii) deliver a properly executed exercise notice together with irrevocable instructions to a broker to deliver promptly to the Company, from the sale or loan proceeds with respect to the sale of shares of Common Stock or a loan secured by shares of Common Stock, the amount necessary to pay the exercise price and, if required by the Committee, Applicable Withholding Taxes. Unless otherwise specifically provided in the Option, any payment of the exercise price paid by delivery of shares of Common Stock acquired directly or indirectly from the Company shall be paid only with shares of Common Stock that have been held by the Participant for more than six months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes).
(b) The Company may place on any certificate representing shares of Common Stock issued upon the exercise of an Option any legend deemed desirable by the Company's counsel to comply with federal or state securities laws. The Company may require of the Participant a customary indication of his or her investment intent. A Participant shall not possess shareholder rights with respect to shares of Common Stock acquired upon the exercise of an Option until the Participant has made any required payment, including payment of Applicable Withholding Taxes, and the Company has issued a certificate for the shares of Common Stock acquired.
(c) Notwithstanding anything herein to the contrary, Awards shall always be granted and exercised in such a manner as to conform to the provisions of Rule 16b-3.
6
8. Restricted Shares Awards.
(a) Whenever the Committee deems it appropriate to grant a Restricted Shares Award, notice shall be given to the Participant stating the number of Restricted Shares for which the Award is granted, the Date of Grant, and the terms and conditions to which the Award is subject. Certificates representing the Restricted Shares shall be issued in the name of the Participant, subject to any restrictions contained in the Certificate of Incorporation, the Shareholders Agreement and any additional restrictions imposed by the Plan and the Committee. A Restricted Shares Award may be made by the Committee in its discretion without cash consideration.
(b) The Committee may place such additional restrictions, over and above those set forth in the Certificate of Incorporation and the Shareholders Agreement on the transferability and vesting of Restricted Shares as the Committee deems appropriate, including restrictions relating to continued employment and financial performance goals. Without limiting the foregoing, the Committee may provide performance or Triggering Event acceleration parameters under which all, or a portion, of the Restricted Shares will vest on the Company's achievement of established performance objectives. Restricted Shares may not be sold, assigned, transferred, disposed of, pledged, hypothecated or otherwise encumbered until the restrictions on such shares shall have lapsed or shall have been removed pursuant to subsection (c) below.
(c) The Committee shall establish as to each Restricted Shares Award the terms and conditions upon which the restrictions on transferability set forth in paragraph (b) above shall lapse. Such terms and conditions may include, without limitation, the passage of time, the meeting of performance goals, the lapsing of such restrictions as a result of the Disability, death or retirement of the Participant, or the occurrence of a Triggering Event.
(d) A Participant shall hold Restricted Shares subject to the restrictions set forth in the Award agreement and in the Plan. In other respects, the Participant shall have all the rights of a shareholder with respect to the Restricted Shares, including, but not limited to, the right to vote such shares and the right to receive all cash dividends and other distributions paid thereon. Certificates representing Restricted Shares shall bear a legend referring to the restrictions set forth in the Plan and the Participant's Award agreement. If stock dividends or other distributions are declared on Restricted Shares, such stock dividends or other distributions shall be subject to the same restrictions as the underlying Restricted Shares.
9. Applicable Withholding Taxes. Each Participant shall agree, as a condition of receiving an Award, to pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, all Applicable Withholding Taxes with respect to the Award. Until the Applicable Withholding Taxes have been paid or arrangements satisfactory to the Company have been made, no stock certificates (or, in the case of Restricted Shares, no stock certificates free of a restrictive legend) shall be issued to the Participant. As an alternative to making a cash payment to the Company to satisfy Applicable Withholding Tax obligations, the Committee may establish procedures permitting the Participant to elect to (a) deliver shares of Common Stock already owned or (b) have the Company retain that number of shares of Common Stock that would satisfy all or a specified portion of the Applicable Withholding Taxes. Any such election shall be made only in accordance with procedures established by the Committee to avoid a charge to earnings for financial accounting purposes and in accordance with Rule 16b-3.
7
10. Nontransferability of Awards.
(a) In general, Awards, by their terms, shall not be transferable by the Participant except by will or by the laws of descent and distribution or except as described below. Options shall be exercisable, during the Participant's lifetime, only by the Participant or by his guardian or legal representative.
(b) Notwithstanding the provisions of subpart (a) of this section and subject to federal and state securities laws, the Committee may grant or amend Nonstatutory Stock Options that permit a Participant to transfer the Options to one or more immediate family members, to a trust for the benefit of immediate family members, or to a partnership, limited liability company, or other entity the only partners, members, or interest-holders of which are among the Participant's immediate family members. Consideration may not be paid for the transfer of Options. The transferee of an Option shall be subject to all conditions applicable to the Option prior to its transfer. The Award Agreement granting the Option shall set forth the transfer conditions and restrictions. The Committee may impose on any transferable Option and on stock issued upon the exercise of an Option such limitations and conditions as the Committee deems appropriate.
11. Termination, Modification, Change. If not sooner terminated by the Board, this Plan shall terminate at the close of business on March 1, 2021. No Awards shall be made under the Plan after its termination. The Board may terminate the Plan or may amend the Plan in such respects as it shall deem advisable; provided, that, unless authorized by the Company's shareholders, no change shall be made that (a) increases the total number of shares of Common Stock reserved for issuance pursuant to Awards granted under the Plan (except pursuant to Section 12), (b) expands the class of persons eligible to receive Awards, (c) materially increases the benefits accruing to Participants under the Plan, or (d) otherwise requires shareholder approval under the Code, Rule 16b-3, or the rules of a domestic exchange on which shares of Common Stock are traded. Notwithstanding the foregoing, the Board may unilaterally amend the Plan and Awards as it deems appropriate to ensure compliance with Rule 16b-3 and to cause the Incentive Stock Options to meet the requirements of the Code and regulations thereunder. Except as provided in the preceding sentence, a termination or amendment of the Plan shall not, without the consent of the Participant, adversely affect a Participant's rights under an Award previously granted to him.
12. Change in Capital Structure.
(a) In the event of a stock dividend, stock split or combination of shares, spinoff, reorganization, recapitalization or merger in which the Company is the surviving corporation, or other change in the Company's capital stock (including, but not limited to, the creation or issuance to shareholders generally of rights, options or warrants for the purchase of common stock or preferred stock of the Company), the number and kind of shares of stock or securities of the Company to be issued under the Plan (under outstanding Awards and Awards to be granted in the future), the exercise price of options, and other relevant provisions shall be appropriately adjusted by the Committee, whose determination shall be binding on all persons. If the adjustment would produce fractional shares with respect to any Award, the Committee may adjust appropriately the number of shares covered by the Award so as to eliminate the fractional shares.
8
(b) In the event of a reorganization, recapitalization or merger in which the Company is the surviving corporation, the result of which is that the Company becomes a majority owned subsidiary of another entity (the "Parent"), then the Committee may take such actions with respect to Awards as the Committee deems appropriate (whose determination shall be binding on all persons), including without limitation causing any such Award then outstanding to be assumed, or new rights substituted therefore, by the Parent.
(c) In the event the Company distributes to its shareholders a dividend, or sells or causes to be sold to a person other than the Company or a subsidiary shares of stock in any corporation (a "Spinoff Company") which, immediately before the distribution or sale, was a majority owned subsidiary of the Company, the Committee shall have the power, in its sole discretion, to make such adjustments as the Committee deems appropriate. The Committee may make adjustments in the number and kind of shares or other securities to be issued under the Plan (under outstanding Awards and Awards to be granted in the future), the exercise price of Options, and other relevant provisions, and, without limiting the foregoing, may substitute securities of a Spinoff Company for securities of the Company. The Committee shall make such adjustments as it determines to be appropriate, considering the economic effect of the distribution or sale on the interests of the Company' s shareholders and the Participants in the businesses operated by the Spinoff Company. The Committee's determination shall be binding on all persons. If the adjustment would produce fractional shares with respect to any Award, the Committee may adjust appropriately the number of shares covered by the Award so as to eliminate the fractional shares.
(d) Notwithstanding anything in the Plan to the contrary, the Committee may take the foregoing actions without the consent of any Participant, and the Committee's determination shall be conclusive and binding on all persons for all purposes. The Committee shall make its determinations consistent with Rule 16b-3 and the applicable provisions of the Code.
(e) To the extent required to avoid a charge to earnings for financial accounting purposes, adjustments made by the Committee pursuant to this Section 12 to outstanding Awards shall be made so that both (i) the aggregate intrinsic value of an Award immediately after the adjustment is not greater than or less than the Award's aggregate intrinsic value before the adjustment and (ii) the ratio of the exercise price per share to the market value per share is not reduced.
9
13. Triggering Event. In the event of a Triggering Event, the Committee may take such actions with respect to Awards as the Committee deems appropriate. These actions may include, but shall not be limited to, the following:
(a) At the time the Award is made, provide for the acceleration of the vesting schedule relating to the exercise or realization of the Award so that the Award may be exercised or realized in full on or before a date initially fixed by the Committee;
(b) Provide for the purchase or settlement of any such Award by the Company for any amount of cash equal to the amount which could have been obtained upon the exercise of such Award or realization of a Participant's rights had such Award been currently exercisable or payable;
(c) Make adjustments to Awards then outstanding as the Committee deems appropriate to reflect such Triggering Event; provided, however, that to the extent required to avoid a charge to earnings for financial accounting purposes, such adjustments shall be made so that both (i) the aggregate intrinsic value of an Award immediately after the adjustment is not less than or greater than the Award's aggregate intrinsic value before the Award and (ii) the ratio of the exercise price per share to the market value per share is not reduced; or
(d) Cause any such Award then outstanding to be assumed, or new rights substituted therefore, by the acquiring or surviving corporation in such Triggering Event.
14. Administration of the Plan.
(a) The Plan shall be administered by the Committee, who shall be appointed by the Board. If no Committee is appointed, the Plan shall be administered by the Board. To the extent required by Rule 16b-3, all Awards shall be made by members of the Committee who are “Non-Employee Directors” as that term is defined in Rule 16b-3, or by the Board. Awards that are intended to be performance-based for purposes of Code Section 162(m) shall be made by the Committee, or subcommittee of the Committee, comprised solely of two or more "outside directors" as that term is defined for purposes of Code Section 162(m).
(b) The Committee shall have the authority to impose such limitations or conditions upon an Award as the Committee deems appropriate to achieve the objectives of the Award and the Plan. Without limiting the foregoing and in addition to the powers set forth elsewhere in the Plan, the Committee shall have the power and complete discretion to determine (i) which eligible persons shall receive an Award and the nature of the Award, (ii) the number of shares of Common Stock to be covered by each Award, (iii) whether Options shall be Incentive Stock Options or Nonstatutory Stock Options, (iv) the Fair Market Value of Common Stock, (v) the time or times when an Award shall be granted, (vi) whether an Award shall become vested over a period of time, according to a performance-based vesting schedule or otherwise, and when it shall be fully vested, (vii) the terms and conditions under which restrictions imposed upon an Award shall lapse, (viii) whether a Change in Control exists, (ix) factors relevant to the lapse of restrictions on Restricted Stock or Options, (x) when Options may be exercised, (xi) whether to approve a Participant's election with respect to Applicable Withholding Taxes, (xii) conditions relating to the length of time before disposition of Common Stock received in connection with an Award is permitted, (xiii) notice provisions relating to the sale of Common Stock acquired under the Plan, and (xiv) any additional requirements relating to Awards that the Committee deems appropriate.
10
(c) The Committee shall have the power to amend the terms of previously granted Awards so long as the terms as amended are consistent with the terms of the Plan and, where applicable, consistent with the qualification of an Option as an Incentive Stock Option. The consent of the Participant must be obtained with respect to any amendment that would adversely affect the Participant's rights under the Award, except that such consent shall not be required if such amendment is for the purpose of complying with Rule 16b-3 or any requirement of the Code applicable to the Award.
(d) The Committee may adopt rules and regulations for carrying out the Plan. The Committee shall have the express discretionary authority to construe and interpret the Plan and the Award agreements, to resolve any ambiguities, to define any terms, and to make any other determinations required by the Plan or an Award agreement. The interpretation and construction of any provisions of the Plan or an Award agreement by the Committee shall be final and conclusive. The Committee may consult with counsel, who may be counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.
(e) A majority of the members of the Committee shall constitute a quorum, and all actions of the Committee shall be taken by a majority of the members present. Any action may be taken by a written instrument signed by all of the members, and any action so taken shall be fully effective as if it had been taken at a meeting.
15. Notice. All notices and other communications required or permitted to be given under this Plan shall be in writing and shall be deemed to have been duly given if delivered personally, electronically, or mailed first class, postage prepaid, as follows: (a) if to the Company - at its principal business address to the attention of the Secretary; (b) if to any Participant - at the last address of the Participant known to the sender at the time the notice or other communication is sent.
16. Compliance with Code Section 409A. To the extent applicable, this Plan is intended to comply with Section 409A of the Code, and the Committee shall interpret and administer the Plan in accordance therewith. In addition, any provision, including, without limitation, any definition, in this Plan document that is determined to violate the requirements of Section 409A of the Code shall be void and without effect and any provision, including, without limitation, any definition, that is required to appear in this Plan document under Section 409A of the Code that is not expressly set forth shall be deemed to be set forth herein, and the Plan shall be administered in all respects as if such provisions were expressly set forth. In addition, the timing of certain payment of benefits provided for under this Plan shall be revised as necessary for compliance with Section 409A of the Code.
11
17. Interpretation and Governing Law. The terms of this Plan and Awards granted pursuant to the Plan shall be governed, construed and administered in accordance with the laws of the State of Delaware. The Plan and Awards are subject to all present and future applicable provisions of the Code and, to the extent applicable, they are subject to all present and future rulings of the Securities and Exchange Commission with respect to Rule 16b-3. If any provision of the Plan or an Award conflicts with any such Code provision or ruling, the Committee shall cause the Plan to be amended, and shall modify the Award, so as to comply, or if for any reason amendments cannot be made, that provision of the Plan or the Award shall be void and of no effect.
IN WITNESS WHEREOF, the Company has caused this Plan to be adopted this 31st day of March, 2011.
CarLotz, Inc. | ||
By: | /s/ Michael Bor | |
Michael Bor, President and | ||
Chief Executive Officer |
12
Exhibit 10.25.1
FIRST AMENDMENT
TO
CARLOTZ. INC. 2011 STOCK INCENTIVE PLAN
THIS FIRST AMENDMENT (this "Amendment") TO THE CARLOTZ, INC. 2011 STOCK INCENTIVE PLAN (the "Plan") is made as of this 23rd day of February, 2012, by the Board of Directors (the "Board") of CarLotz, Inc., a Delaware corporation (the "Corporation").
W I T N E S S E T H:
WHEREAS, the Board desires to amend the Plan in order to reduce the number of shares of the Corporation's common stock, par value $0.001 per share, reserved for issuance thereunder;
WHEREAS, pursuant to Section 11 of the Plan, the Board may amend the Plan at any time absent the approval of the Corporation's stockholders so long as any such amendments thereto do not alter certain aspects of the Plan as set forth therein;
WHEREAS, the Board has determined that the Amendment will not require the approval of the Corporation's stockholders; and
WHEREAS, the Board has determined that it is in the best interest of the Corporation to amend the Plan as set forth in the Amendment.
NOW, THEREFORE, the Board hereby amends the Plan as follows:
1. Section 4(a) of the Plan is amended and restated in its entirety to read as follows:
“(a) Subject to Section 12 of the Plan, there shall be reserved for issuance under the Plan an aggregate of 325,660 shares of Common Stock, which may include authorized, but unissued, shares. Shares of Common Stock allocable to Options granted under the Plan that expire or otherwise terminate unexercised and shares of Common Stock that are forfeited pursuant to restrictions on Restricted Shares awarded under the Plan may again be subjected to an Award under this Plan. For purposes of determining the number of shares of Common Stock that are available for Awards under the Plan, such number shall include the number of shares of Common Stock surrendered by a Participant or retained by the Company in connection with the exercise of an Option or in payment of Applicable Withholding Taxes.”
2. The Plan is hereby amended to add a new Section 18 as follows:
“18. Shareholders Agreement. Unless otherwise specifically provided in the applicable Award Agreement, each Participant shall, if not already a party thereto, as a condition of receiving shares of Common Stock as, or pursuant to the exercise of, an Award, be required to execute and deliver to the Company a joinder agreement to, and agree to be bound by the terms and conditions of, the Shareholders Agreement.”
3. All other provisions of the Plan shall remain unchanged as a result of this Amendment. This Amendment and the Plan, as amended and modified by the provisions of this Amendment, shall constitute and shall be construed as a single instrument. The provisions of the Plan, as amended and modified by the provisions of this Amendment, are incorporated herein by this reference and are ratified and affirmed. The term "Plan" as used in the Plan shall be deemed to refer to the Plan as amended hereby.
The undersigned hereby certifies that the foregoing FIRST AMENDMENT TO THE CARLOTZ, INC. 2011 STOCK INCENTIVE PLAN was adopted and approved by the unanimous consent of the Board pursuant to a written consent dated February 23, 2012.
![]() |
|
Hank J. Heyming, Secretary |
Exhibit 10.26
CARLOTZ, INC.
2017 STOCK OPTION PLAN
CARLOTZ, INC.
2017 STOCK OPTION PLAN
WHEREAS, CarLotz, Inc., a Delaware corporation (the “Company”), desires to establish a plan under which it may award nonqualified stock options to certain employees and consultants of the Company and its subsidiaries; and
NOW, THEREFORE, the CarLotz, Inc. 2017 Stock Option Plan is hereby adopted under the following terms and conditions:
SECTION 1 - PURPOSE AND DEFINITIONS
(a) Purpose. The Plan is intended to provide a means whereby the Company may, through the grant of Options to Employees and Consultants attract and retain such individuals and motivate them to exercise their best efforts on behalf of the Company and of any Related Corporation.
(b) Definitions. Capitalized terms used herein have the meanings set forth below or in Annex A hereto (as applicable).
(1) | “Board” shall mean the Board of Directors of the Company. |
(2) | “Change of Control” shall have the meaning given to it in Annex A. |
(3) | “Code” shall mean the Internal Revenue Code of 1986, as amended. |
(4) | “Committee” shall mean a committee that is designated by the Board as the committee to administer the Plan or, in the event a committee has not been established, the entire Board. |
(5) | “Company” shall mean CarLotz, Inc., a Delaware corporation. |
(6) | “Consultant” shall mean an individual who is not a director or an employee of the Company or a Related Corporation, and who has entered into a consulting or advisory arrangement with the Company or a Related Corporation to provide bona fide services that (i) are not in connection with the offer or sale of securities in a capital-raising transaction, and (ii) do not directly or indirectly promote or maintain a market for the Company’s securities. |
(7) | “Employee” shall mean an officer or other employee of the Company or a Related Corporation and shall include a director who is also an officer or other employee. |
(8) | “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. |
(9) | “Fair Value” shall mean the fair value of a share of Stock based on the most recent quarterly valuation of the Company prepared by the Board. |
(10) | “Option Agreement” shall mean a written document evidencing the grant of an Option, as described in Section 6 hereof. |
(11) | “Optionee” shall mean an Employee or Consultant who has been granted an Option under the Plan. |
(12) | “Options” shall mean nonqualified stock options. |
(13) | “Plan” shall mean the CarLotz, Inc. Stock Option Plan, as set forth herein and as amended from time to time. |
(14) | “Stock” shall mean the Common Stock, $0.001 par value, of the Company. |
(15) | “Termination of Service” shall mean: |
(A) with respect to an Option granted to an Employee, the termination of the employment relationship between the Employee and the Company and all Related Corporations; and
(B) with respect to an Option granted to a Consultant, the termination of the consulting or advisory arrangement between the Consultant and the Company and all Related Corporations;
provided, however, that if the Optionee’s status changes from Employee or Consultant to any other status eligible to receive Options under the Plan, the Committee (subject to Section 9) may provide that no Termination of Service occurs for purposes of the Plan until the Optionee’s new status with the Company and all Related Corporations terminates. For purposes of this paragraph, if an Optionee’s relationship is with a Related Corporation, and not the Company (i.e., the Optionee is an Employee or Consultant of a Related Corporation and not the Company), the Optionee shall incur a Termination of Service when such corporation ceases to be a Related Corporation, unless the Committee determines otherwise.
(16) | “Transfer” means the transfer of ownership by sale, exchange, assignment, pledge, encumbrance, lien, gift, donation, grant or other conveyance of any kind, whether voluntary or involuntary, including conveyances by operation of law or legal process (and hereby expressly includes, with respect to an Optionee, any voluntary or involuntary (a) appointment of a receiver, trustee, liquidator, custodian or other similar official for such Optionee for all or any part of such Optionee’s property under any bankruptcy law; (b) gift, donation, transfer by will or intestacy or other disposition, whether inter vivos or mortis causa; and (c) transfer or other disposition to a spouse or former spouse (including by reason of a separation agreement or divorce, equitable or community or marital property distribution; judicial decree or other court order relating to the division or partition of property between spouses or former spouses or other persons)). |
- 2 -
(17) | “TRP” means TRP Capital Partners, LP. |
SECTION 2 - ADMINISTRATION
The Plan shall be administered by the Committee and each member of the Committee, while serving as such, shall be deemed to be acting in his or her capacity as a director or officer of the Company.
The Committee shall have full authority, subject to the terms of the Plan, to select the Employees or Consultants to be granted Options under the Plan, to grant Options on behalf of the Company, and to set the date of grant and the other terms of such Options in accordance with the Plan. The Committee may correct any defect, supply any omission, and reconcile any inconsistency in the Plan and in any Option granted hereunder in the manner and to the extent it deems desirable. The Committee also shall have the authority to establish such rules and regulations for the proper administration of the Plan, to amend, modify, or rescind any such rules and regulations, and to make such determinations and interpretations under, or in connection with, the Plan, as it deems necessary or advisable. All such rules, regulations, determinations, and interpretations shall be binding and conclusive upon the Company, its stockholders, and all Employees and Consultants, upon their respective legal representatives, beneficiaries, successors, and assigns, and upon all other persons claiming under or through any of them. Except as otherwise required by the bylaws of the Company or by applicable law, no member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted under it.
SECTION 3 - STOCK
Options may be granted under the Plan to purchase up to a maximum aggregate of 601,875 shares of Stock, subject to adjustment as provided in Section 7. Shares issuable under the Plan may be authorized but unissued shares or treasury shares. If any Option granted under the Plan expires, or if any such Option is canceled for any reason whatsoever (including, without limitation, the Optionee’s surrender thereof), without having been exercised, the shares subject to the unexercised portion of the Option shall continue to be available for the granting of Options under the Plan as fully as if the shares had never been subject to an Option.
- 3 -
SECTION 4 - GRANTING OF OPTIONS
From time to time until the expiration or earlier suspension or discontinuance of the Plan, the Committee may, on behalf of the Company, grant to Employees and Consultants such Options as it determines are warranted.
SECTION 5 - TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall include expressly or by reference the following terms and conditions, as well as such other provisions as the Committee shall deem desirable that are not inconsistent with the provisions of the Plan, section 409A of the Code. Options awarded under the Plan shall permit no other feature of deferral of compensation that would cause such option to be subject to section 409A of the Code.
(a) Number of Shares. The Option Agreement shall state the number of shares of Stock to which it pertains.
(b) Price. The Option Agreement shall state the exercise price which shall be determined and fixed by the Committee in its discretion, but the exercise price shall not be less than the higher of 100 percent of the Fair Value of the shares of Stock subject to the Option on the date the Option is granted, or the par value thereof.
(c) Term. The term of each Option shall be determined by the Committee, in its discretion. Each Option shall be subject to earlier termination as provided in subsections (f), (g), and (h) below and in Section 8 hereof.
(d) Vesting. All Options shall vest pursuant to the vesting schedule set forth on Annex A or as may be accelerated by the Committee. Vested Options shall not be exercisable unless and until the conditions (if any) determined by the Committee pursuant to subsection (e) have occurred or been fulfilled.
(e) Exercise. The Committee shall determine the conditions (if any), such as a Change of Control, that must occur or be fulfilled before an Option, to the extent vested, shall become exercisable. Except as otherwise determined by the Committee:
(1) Any exercisable Options may be exercised at any time up to the expiration or termination of the Option. Exercisable Options may be exercised by the Optionee (or by the Optionee’s designated guardian or legal representative acting under a validly executed durable power of attorney in which the Optionee is the principal), in whole or in part and from time to time by giving written notice of exercise to the Company, as specified in the Optionee’s Option Agreement, setting forth the number of shares to be purchased and accompanied by payment in full of the aggregate exercise price for such shares.
(2) The exercise price shall be paid in cash, its equivalent, or in any other payment method authorized by the Board.
- 4 -
The Committee, in its discretion, may provide that any (or all) outstanding Options shall become exercisable notwithstanding the fact that such Options have not become 100% vested under subsection (d) and notwithstanding the fact that any condition(s) on exercisability as set forth in the Option Agreement have not occurred nor been fulfilled, if it deems such exercisability to be desirable.
(f) Non-Transferability. No Option shall be Transferable by the Optionee other than by will or by the laws of descent and distribution. During the lifetime of the Optionee, an Option shall be exercisable only by the Optionee or, in the event of the Optionee’s legal incapacity, by the Optionee’s guardian or legal representative acting on behalf of the Optionee in a fiduciary capacity under state law and court supervision.
(g) Rights as a Stockholder. An Optionee shall have no rights as a stockholder with respect to any shares covered by his or her Option until such shares have been duly issued upon exercise and all other conditions set forth herein have been satisfied.
(h) | Compliance with Securities Laws. The Committee shall have the right to: |
(1) require an Optionee to execute, as a condition of exercise of an Option, a letter evidencing the Optionee's intent to acquire the Stock for investment and not with a view to the resale or distribution thereof;
(2) place appropriate legends upon the certificate or certificates, if any, for the Stock; and
(3) take such other actions as it deems necessary in order to cause the issuance of Stock upon exercise of Options to comply with applicable provisions of state and Federal securities laws.
Notwithstanding anything in the Plan to the contrary, in furtherance of the foregoing, and not by way of limitation thereof, no Option shall be exercisable unless the Stock to be issued pursuant thereto shall have been registered under appropriate Federal and state securities laws, and any regulations or rules promulgated thereunder, or shall be exempt therefrom, in the opinion of the Committee upon advice of counsel to the Company. This provision shall in no way obligate the Company to undertake registration of Options or Stock hereunder. The issuance, transfer or delivery of certificates, if any, for Stock pursuant to the exercise of Options may be delayed, at the discretion of the Committee until the Committee is satisfied that the applicable requirements of the Federal and state securities laws have been met.
(i) Withholding and Use of Shares to Satisfy Tax Obligations. The obligation of the Company to deliver shares of Stock upon the exercise of any Option shall be subject to applicable Federal, state, and local tax withholding requirements. If the exercise of any Option is subject to the withholding requirements of applicable Federal, state or local tax law, the Committee, in its discretion, may permit or require the Optionee to satisfy the Federal, state and/or local withholding tax, in whole or in part, by electing to have the Company withhold shares of Stock subject to the exercise (or by returning previously acquired shares of Stock to the Company); provided, however, that the Company may limit the number of shares withheld to satisfy the tax withholding requirements to the extent necessary to avoid adverse accounting consequences. Shares of Stock shall be valued, for purposes of this subsection, at their Fair Value determined as of the date the amount attributable to the exercise of the Option is includible in income by the Optionee under section 83 of the Code. The Committee shall adopt such withholding rules as it deems necessary to carry out the provisions of this subsection.
- 5 -
SECTION 6 - OPTION AGREEMENTS — OTHER PROVISIONS
Options granted under the Plan shall be evidenced by Option Agreements in such form as the Committee shall from time to time approve, and containing such provisions as the Committee shall deem advisable that are not inconsistent with the provisions of the Plan and section 409A of the Code. Each Optionee shall enter into, and be bound by, an Option Agreement as soon as practicable after the grant of an Option.
SECTION 7 - ADJUSTMENT IN CASE OF CHANGES IN STOCK
The type and maximum number of shares which may be issued under the Plan, as stated in Section 3 hereof, and the type and number of shares issuable upon exercise of the unexercised portion of each outstanding Option under the Plan (as well as the exercise price per share under such outstanding Options) shall be adjusted, as may be deemed appropriate by the Committee, to reflect any stock split, reverse stock split, stock dividend, distribution, spin-off, recapitalization, share combination or reclassification, or similar change in the capitalization of the Company; provided, however, that (i) no such adjustment shall be made to an outstanding Option if such adjustment would cause the Option to be subject to section 409A of the Code, and (ii) no such adjustment shall be made in the event of a capital distribution except as determined by the Committee, in its sole discretion. For the sake of clarity, this Section 7 shall not apply to an issuance of equity securities by the Company other than in connection with any stock split, reverse stock split, stock dividend, distribution, spin-off, recapitalization, share combination or reclassification, or similar change in the capitalization of the Company. In the event any such change in capitalization cannot be reflected in a straight mathematical adjustment of the number of shares issuable upon the exercise of outstanding Options (and a straight mathematical adjustment of the exercise price thereof), the Committee shall make such adjustments as are appropriate to reflect most nearly such straight mathematical adjustment. Such adjustments shall be made only as necessary to maintain the proportionate interest of Optionees, and preserve, without exceeding, the value of Options. The determination of the Committee as to any adjustments pursuant to this Section shall be in the Committee’s sole discretion and shall be binding and conclusive upon the Optionee. In the event of any such transaction or event or upon a Change of Control, the Board may, but shall not be obligated to, provide in substitution for any outstanding Options such alternative consideration as it may determine to be equitable in the circumstances and may require in connection therewith the surrender of such outstanding Options.
- 6 -
SECTION 8 - CERTAIN CORPORATE TRANSACTIONS
Notwithstanding any other provision of the Plan, in the event of (i) a consolidation, merger, or similar transaction or series of related transactions in which the Company is not the surviving corporation or which results in the acquisition of all or substantially all of the Company’s then outstanding capital stock (determined by aggregate voting rights) or other voting interests by a single person or entity or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or substantially all of the Company’s assets accompanied by the distribution of all of the proceeds of that sale to the Company’s stockholders, or (iii) a dissolution or liquidation of the Company accompanied by the distribution of all of the proceeds of that event to the Company’s stockholders (collectively, a “Corporate Transaction”), the surviving or successor entity shall assume each outstanding Option, or substitute a new option for each outstanding Option; provided, however, that, upon the affirmative vote of the Committee and the approval of at least two-thirds of the Board members, any outstanding Option may be terminated, effective upon the closing of the Corporate Transaction, if the Committee and the Board reasonably and in good faith determine that such termination is in the best interests of the Company. Upon determination to so terminate an outstanding Option, the Company shall pay or deliver, or cause to be paid or delivered, to the holder of such terminated Option an amount in cash or securities having a value equal to the product of (I) the number of shares of Stock for which the outstanding Option is vested and exercisable (after giving effect to exercisability resulting from the Corporate Transaction if it is a Change of Control and the Option was not terminated prior to the Change of Control) immediately prior to such termination, multiplied by (II) the excess of (A) over (B) where (A) is the formula or fixed price per share of Stock paid to the holders of Stock pursuant to such Corporate Transaction, and (B) is the exercise price applicable to the outstanding Option, it being understood that in the case of any Option with an exercise price that equals or exceeds the formula or fixed price per share of Stock paid to the holders of Stock pursuant to such Corporate Transaction, the Board may cancel the Option without the payment of consideration therefor. The Board also may, in its discretion, change the terms of an outstanding Option to reflect any such Corporate Transaction; provided, however, that such change would not cause the Option to be subject to section 409A of the Code and that such change would not adversely affect the rights of the holders under this section.
SECTION 9 - AMENDMENT OR SUSPENSION OF THE PLAN AND OPTIONS
The Board, pursuant to resolution, from time to time may amend or suspend the Plan, and the Committee may amend any outstanding Options in any respect whatsoever. Except as provided in Section 8, no such amendment or suspension shall (i) adversely affect the rights of an Optionee under the Optionee’s outstanding Option Agreement or (ii) cause the Option to be subject to section 409A of the Code.
SECTION 10 - TERMINATION OF PLAN
The Board, pursuant to resolution, may terminate the Plan at any time and for any reason. Nothing contained in this Section, however, shall terminate or affect the continued existence of rights created under Options issued hereunder, and outstanding on the date the Plan is terminated, which by their terms extend beyond such date.
SECTION 11 - EFFECTIVE DATE
This Plan shall become effective on the date the Plan is adopted by the Board.
- 7 -
SECTION 12 - MISCELLANEOUS
(a) Rights. Neither the adoption of the Plan nor any action of the Board or the Committee shall be deemed to give any individual any right to be granted an Option, or any other right hereunder, unless and until the Committee shall have granted such individual an Option, and then his or her rights shall be only such as are provided in the Option Agreement. Notwithstanding any provisions of the Plan or the Option Agreement with an Employee, the Company or a Related Corporation shall have the right, in its discretion but subject to any employment contract entered into with the Employee, to retire the Employee at any time pursuant to its retirement rules or otherwise to terminate his or her employment at any time for any reason whatsoever or for no reason.
(b) Indemnification of Board and Committee. The members of the Board and the members of the Committee shall be indemnified by the Company against all costs and expenses reasonably incurred by them in connection with any claim, action, suit, or proceeding to which they or any of them may be a party by reason of any action taken or failure to act under, or in connection with, the Plan, or any Option granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved in advance by the Company) or paid by them in satisfaction of a judgment in any such action, suit, or proceeding, except a judgment based upon a finding of willful misconduct or recklessness on their part to the maximum extent permitted under the Company’s bylaws and Delaware law or any contract between the Company and any of them providing for indemnification. Upon the making or institution of any such claim, action, suit, or proceeding, the Board or Committee member shall notify the Company in writing, giving the Company an opportunity, at its own expense, to handle and defend the same before such Board or Committee member undertakes to handle it on his or her own behalf. The provisions of this subsection (b) shall not give members of the Board or the Committee greater rights than they would have under the Company’s bylaws or Delaware law. The Company shall be the indemnitor of first resort, (i.e., its obligations to the members of the Board and the Committee to reimburse expenses or provide indemnification are primary, and any other indemnification available to any of them is secondary).
(c) Application of Funds. Any cash received in payment for shares upon exercise of an Option shall be added to the general funds of the Company.
(d) No Obligation to Exercise Option. The granting of an Option shall impose no obligation upon an Optionee to exercise such Option.
(e) Governing Law. The Plan shall be governed by the applicable Code provisions to the maximum extent possible. Otherwise, the laws of Delaware (without reference to principles of conflicts of laws) shall govern the operation of, and the rights of Optionees under, the Plan, and Options granted thereunder.
- 8 -
Annex A
Vesting Schedule
Options shall be exercisable only as follows:
(a) The Option shall become exercisable with respect to 25% of the Option Shares (the “Tier I Performance Vested Option Shares”) only as follows: if (i) a Change of Control occurs prior to the termination of this Option Agreement, and (ii) Optionee remains in the continuous employ of the Company or any Related Corporation until the date of such Change of Control, and (iii) the lower of (A) the Internal Rate of Return on the date of such Change of Control is equal to or greater than 15% or (B) the Cash on Cash Return as of the date of such Change of Control is greater than 1.5 times, the Option shall become exercisable with respect to all of the Tier I Performance Vested Option Shares immediately prior to the consummation of the Change of Control, subject to the consummation of the Change in Control.
(b) The Option shall become exercisable with respect to an additional 25% Option Shares (the “Tier II Performance Vested Option Shares”) only as follows: if (i) a Change of Control occurs prior to the termination of this Option Agreement, and (ii) Optionee remains in the continuous employ of the Company or any Related Corporation until the date of such Change of Control, and (iii) the lower of (A) the Internal Rate of Return on the date of such Change of Control is equal to or greater than 20% or (B) the Cash on Cash Return as of the date of such Change of Control is greater than 2.25 times, the Option shall become exercisable with respect to all of the Tier II Performance Vested Option Shares immediately prior to the consummation of the Change of Control, subject to the consummation of the Change in Control.
(c) The Option shall become exercisable with respect to an additional 25% Option Shares (the “Tier III Performance Vested Option Shares”) only as follows: if (i) a Change of Control occurs prior to the termination of this Option Agreement, and (ii) Optionee remains in the continuous employ of the Company or any Related Corporation until the date of such Change of Control, and (iii) the lower of (A) the Internal Rate of Return on the date of such Change of Control is equal to or greater than 22.5% or (B) the Cash on Cash Return as of the date of such Change of Control is greater than 2.5 times, the Option shall become exercisable with respect to all of the Tier III Performance Vested Option Shares immediately prior to the consummation of the Change of Control, subject to the consummation of the Change in Control.
(d) The Option shall become exercisable with respect to the remaining 25% Option Shares (the “Tier IV Performance Vested Option Shares”) only as follows: if (i) a Change of Control occurs prior to the termination of this Option Agreement, and (ii) Optionee remains in the continuous employ of the Company or any Related Corporation until the date of such Change of Control, and (iii) the lower of (A) the Internal Rate of Return on the date of such Change of Control is equal to or greater than 25% or (B) the Cash on Cash Return as of the date of such Change of Control is greater than 3.0 times, the Option shall become exercisable with respect to all of the Tier IV Performance Vested Option Shares immediately prior to the consummation of the Change of Control, subject to the consummation of the Change in Control.
- 9 -
With respect to the foregoing, if the Internal Rate of Return on the date of such Change of Control is equal to or greater than 15% or the Cash on Cash Return as of the date of such Change of Control is greater than 1.5 times, then the Option shall become exercisable so that the percentage of the Option that is exercisable reflects the proportional Internal Rate of Return or Cash on Cash Return between each of the incremental percentages set forth above. For example, if the Internal Rate of Return on the date of such Change of Control is equal to 23.75% and the Cash on Cash Return as of the date of such Change of Control is equal to 2.75 times, then percentage of the Option exercisable would be 87.5%.
“Cash on Cash Return” means the quotient of (A) the cumulative total of all distributions made to, or other proceeds received by, TRP Capital Partners, LP and its Affiliates (collectively, the “Sponsors”) (excluding management fees, closing fees and expenses but including in the case of a sale of the Company all contingent consideration in the form of holdbacks, escrow or similar contingencies) with respect to its investment in equity or debt securities of the Company during the life of the investment period, divided by (B) total cash investment made in consideration for equity or debt securities of the Company or any of its subsidiaries (including any cash investments made subsequent to the initial closing) (“Cash Invested”) by the Sponsors in the Company or any of its subsidiaries. For purposes of calculating the Cash on Cash Return, all distributions made to the Sponsors will be net of all accrued but unpaid management fees, all expenses associated with, and Company Indebtedness at the time of, the ultimate sale of the Company business and assuming the exercise of all options, warrants and other rights to acquire the Stock (whether or not vested).
“Change of Control” shall mean the disposition of all or substantially all of the operating assets of the Company in one of the following transactions in which the Sponsors dispose of all of their interests in the Company for value:
(a) the consummation of a merger or consolidation of the Company with or into another company in which the stockholders of the Company receive only cash (subject to reserves, escrows, hold backs and earn-outs) in exchange for all of their interests in the Company;
(b) a sale or other disposition of all or substantially all of the assets of the Company that is accompanied by the distribution to the Company’s stockholders of substantially all of the proceeds of that sale (subject to reserves, escrows, hold-backs and earn-outs); or
(c) any other similar transaction or event involving a disposition of all or substantially all of the Company’s operating assets or outstanding equity interests that, in any case, the Board determines constitutes a change in control of the Company.
“Internal Rate of Return” means the annual rate of return on the Cash Invested by the Sponsors in the Company or any of its subsidiaries. The annual rate of return would be measured by comparing Cash Invested against all distributions made to, or other proceeds received by, the Sponsors (excluding management fees, closing fees and expenses but including in the case of a sale of the Company all contingent consideration in the form of holdbacks, escrow or similar contingencies) with respect to its investment in equity or debt securities of the Company during the life of the investment period. For purposes of calculating the Internal Rate of Return, all distributions made to the Sponsors will be net of all accrued but unpaid management fees, all expenses associated with, and Company Indebtedness at the time of, the ultimate sale of the Company business and assuming the exercise of all options, warrants and other rights to acquire the Stock (whether or not vested).
“Option Shares” means, with respect to any Option, the aggregate shares of Common Stock that may be purchased pursuant to such Option.
“Related Corporation” shall mean any “subsidiary corporation” of the Company, as defined in section 424(f) of the Code.
- 10 -
Exhibit 10.27
CARLOTZ, INC.
2011 STOCK INCENTIVE PLAN
Share Option Agreement
No. of shares of Common Stock subject to
Incentive Stock Option: [NUMBER]
THIS SHARE OPTION AGREEMENT (this “Agreement”) dated as of [DATE] (the “Date of Grant”), by and between CARLOTZ, INC., a Delaware corporation (the “Company”), and [EMPLOYEE NAME] (the “Optionee”), is made pursuant and subject to the provisions of the Company’s 2011 Stock Incentive Plan (the “Plan”), a copy of which is attached hereto. All terms used herein that are defined in the Plan have the same meaning given them in the Plan.
1. Grant of Option. Pursuant to the Plan, the Company, as of the Date of Grant, granted to the Optionee, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein set forth, the right and option to purchase from the Company all or any part of an aggregate of [NUMBER] shares of Common Stock at the exercise price of $6.82 per share. Such price per share is not less than the Fair Market Value of a share of Common Stock on the Date of Grant (or, in the case of a 10% Shareholder, not less than one hundred ten percent (110%) of the Fair Market Value of a share of Common Stock on the Date of Grant). This Option is intended to be treated as an Incentive Stock Option, but only to the extent the aggregate Fair Market Value (determined as of the Date of Grant) of the shares of Common Stock for which this Option (and all other options of the Optionee that are intended to be Incentive Stock Options whether granted under the Plan or any other plan of the Company or any parent or subsidiary) becomes exercisable for the first time in any calendar year does not exceed One Hundred Thousand Dollars ($100,000). If that limitation is exceeded, this Option may be exercised for the excess number of shares of Common Stock as a Nonstatutory Stock Option. The Company shall not be liable to the Optionee if this Option or any portion thereof does not qualify as an Incentive Stock Option. This Option is exercisable as hereinafter provided.
2. Terms and Conditions. This Option is subject to the following terms and conditions:
(a) | Expiration Date. This Option shall expire at 11:59 p.m. on August 31, 2022 (the “Expiration Date”) or such earlier time as set forth in Sections 3, 4 or 5 of this Agreement. In no event shall the Expiration Date be later than 10 years from the Date of Grant (or, in the case of a 10% Shareholder, five years from the Date of Grant). |
(b) | Exercise of Option. Except as provided in the Plan and in Sections 3, 4 or 5 of this Agreement, this Option shall become exercisable with respect to twenty-five percent (25%) of the shares of Common Stock subject to the Option on each of [DATE – One Year From Date of Grant] and the following three anniversaries thereof, provided that the Optionee has been continuously employed by the Company or any subsidiary from the Date of Grant until each such time. Once this Option has become exercisable, it shall continue to be exercisable until the earlier of the termination of the Optionee’s rights hereunder pursuant to Sections 3, 4, or 5 of this Agreement or until the Expiration Date. A partial exercise of this Option shall not affect the Optionee’s right to exercise the Option with respect to the remaining shares of Common Stock, subject to the conditions of the Plan and this Agreement. |
(c) | Method of Exercise and Payment for Shares. This Option shall be exercised by delivering written notice of exercise, along with the exercise price for the portion of the Option being exercised and any applicable tax withholdings, to the attention of the Company’s Secretary at the Company’s address specified in Section 11 below. The exercise date shall be the date of delivery. The Optionee shall pay the exercise price and any applicable tax withholdings in cash or cash equivalent acceptable to the Board of Directors. However, the Board of Directors in its discretion may, but is not required to, allow the Optionee to pay the exercise price and any applicable tax withholdings (i) by surrendering shares of Common Stock the Optionee already owns, (ii) by a “net exercise” procedure, (iii) by such other medium of payment as the Board of Directors shall authorize or (iv) by any combination of the allowable methods of payment set forth herein. |
(d) | Nontransferability. This Option is nontransferable except by will or the laws of descent and distribution. During the Optionee’s lifetime, only the Optionee may exercise this Option. No right or interest of a Optionee in this Option shall be liable for, or subject to, any lien, obligation or liability of the Optionee. |
3. Exercise in the Event of Death. This Option shall be exercisable for all or part of the number of shares of Common Stock that the Optionee is entitled to purchase pursuant to Section 2(b) as of the date of the Optionee’s death, reduced by the number of shares of Common Stock for which the Optionee previously exercised the Option, in the event the Optionee dies while employed by the Company or any subsidiary and prior to the Expiration Date and the termination of the Optionee’s rights under Sections 4 or 5 of this Agreement. In that event, this Option may be exercised by the Optionee’s estate, or the person to whom his rights under this Option shall pass by will or the laws of descent and distribution, for the remainder of the period preceding the Expiration Date or within 12 months of the date the Optionee dies, whichever period is shorter.
4. Exercise in the Event of Disability. This Option shall be exercisable for all or part of the number of shares of Common Stock that the Optionee is entitled to purchase pursuant to Section 2(b) as of the date the Optionee ceases to be employed by the Company or any subsidiary as a result of being Disabled, reduced by the number of Shares for which the Optionee previously exercised the Option, if the Optionee ceases to be employed by the Company or any Subsidiary as a result of being Disabled prior to the Expiration Date and the termination of the Optionee’s rights under Sections 3 or 5 of this Agreement. In that event, the Optionee or Optionee’s legal representative may exercise this Option for the remainder of the period preceding the Expiration Date or within six months of the date the Optionee ceases to be employed by the Company or any Subsidiary on account of being Disabled, whichever period is shorter. The Board of Directors, in its sole discretion, shall determine whether the Optionee is Disabled for purposes of this Agreement.
2
5. Exercise After Termination of Employment. This Option shall be exercisable for all or part of the number of shares of Common Stock that the Optionee is entitled to purchase pursuant to Section 2(b) as of the date the Optionee ceases to be employed by the Company or any Subsidiary, reduced by the number of shares of Common Stock for which the Optionee previously exercised the Option, if the Optionee ceases to be employed by the Company or any Subsidiary other than on account of death or becoming Disabled and prior to the Expiration Date and the termination of the Optionee’s rights under Sections 3 or 4 of this Agreement. In that event, the Optionee may exercise this Option for the remainder of the period preceding the Expiration Date or until the date that is three months after the date the Optionee ceases to be employed by the Company or any subsidiary, whichever period is shorter. Notwithstanding the foregoing, if Optionee’s employment or services is terminated by the Company for Cause, this Option shall terminate as of the date of the misconduct. For the sake of clarity, upon termination of employment for any reason, any unexercisable options will no longer ever be exercisable and any exercisable options must be exercised within three months (or upon date of misconduct if terminated for Cause) or will no longer ever be exercisable.
6. Agreement to Terms of the Plan and Agreement. The Optionee has received a copy of the Plan, has read and understands the terms of the Plan and this Agreement, and agrees to be bound by their terms and conditions.
7. Tax Consequences. The Optionee acknowledges (i) that there may be adverse tax consequences upon acquisition or disposition of the shares of Common Stock received upon exercise of this Option and (ii) that Optionee should consult a tax adviser prior to any such acquisition or disposition. This Option is intended to be exempt from Code Section 409A. However, the Optionee is solely responsible for determining the tax consequences of the Option and for satisfying the Optionee’s tax obligations with respect to the Option (including, but not limited to, any income or excise taxes resulting from the application of Code Section 409A), and the Company shall not be liable if this Option is subject to Code Section 409A.
8. Fractional Shares. Fractional shares of Common Stock shall not be issuable hereunder, and when any provision hereof may entitle the Optionee to a fractional share, such fractional share shall be disregarded.
9. Change in Capital Structure. The terms of this Option shall be adjusted in accordance with the terms and conditions of the Plan as the Board of Directors determines is equitably required in the event the Company effects one or more recapitalizations, spin-offs or similar occurrences.
10. Notification Upon Sale. The Optionee shall give written notice of any sale or other disposition of any shares of Common Stock acquired under this Option to the Company’s Secretary at the Company’s address specified in Section 11 below, if the Optionee sells or otherwise disposes of any shares of Common Stock acquired under this Option before the expiration of the later of the two-year period beginning on the Date of Grant or the one-year period beginning on the date that the Optionee exercised this Option with respect to such shares of Common Stock.
3
11. Notice. Any notice or other communication given pursuant to this Agreement, or in any way with respect to this Option, shall be in writing and shall be personally delivered or mailed by United States registered or certified mail, postage prepaid, return receipt requested, to the following addresses:
If to the Company: | CarLotz, Inc. |
406 West Franklin Street | |
Richmond, VA 23220 | |
Attention: President & Chief Executive Officer | |
If to the Optionee: | |
12. Stockholder Rights. The Optionee shall not have any rights as a stockholder with respect to shares of Common Stock subject to this Option until the issuance of the shares of Common Stock upon exercise of the Option.
13. No Right to Continued Employment. This Option does not confer upon the Optionee any right with respect to continued employment by the Company or any subsidiary, nor shall it interfere in any way with the right of the Company or any subsidiary to terminate the Optionee’s employment at any time without assigning a reason therefore.
14. Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon and inure to the benefit of the legatees, distributees, transferees and personal representatives of the Optionee and the successors of the Company.
15. Conflicts. In the event of any conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall govern. All references herein to the Plan shall mean the Plan as in effect on the date hereof.
16. Counterparts. This Agreement may be executed in a number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one in the same instrument.
17. Miscellaneous. The parties agree to execute such further instruments and take such further actions as may be necessary to carry out the intent of the Plan and this Agreement. This Agreement and the Plan shall constitute the entire agreement of the parties with respect to the subject matter hereof.
18. Governing Law. This Agreement shall be governed by the laws of the State of Delaware, except to the extent federal law applies.
19. Bylaws; Shareholders Agreement. The Optionee acknowledges and agrees that, upon exercise of this Option, the shares of Common Stock received by Optionee shall be subject to certain restrictions on transfer contained in the Company’s bylaws, which bylaws have been reviewed by Optionee. Optionee further agrees, in connection with the exercise of this Option and prior to the receipt of any shares of Common Stock in connection therewith, to become a party to the Shareholders Agreement or other similar agreement among the Company and its stockholders, if any, in place on or after the date of such exercise, if the Optionee is not already a party thereto.
{Signature Page to Follow}
4
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly authorized officer, and the Optionee has affixed his signature hereto.
COMPANY: | ||
CARLOTZ, INC. | ||
By: | ||
Name: Michael W. Bor | ||
Title: President & Chief Executive Officer | ||
OPTIONEE: | ||
Name: [NAME] |
5
Exhibit 10.28
CARLOTZ, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This NONQUALIFIED STOCK OPTION AGREEMENT (the “Option Agreement”) is dated as of the _____ day of _______________, 20__ (the “Grant Date”) and between CarLotz, Inc., a Delaware corporation (the “Company”), and _____________ (the “Optionee”).
WITNESSETH:
WHEREAS, the Company desires to afford the Optionee an opportunity to purchase Stock as hereinafter provided, in accordance with the provisions of the CarLotz, Inc. 2017 Stock Option Plan (the “Plan”).
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the right and option (the “Option”) to purchase all or any part of an aggregate of _______ shares of Stock (each, a “Share”). This Option is in all respects limited and conditioned as hereinafter provided, and is subject in all respects to the terms and conditions of the Plan now in effect and as it may be amended from time to time. Such terms and conditions are incorporated herein by reference, made a part hereof, and shall control in the event of any conflict with any terms of this Option Agreement. Capitalized terms not defined in this Option Agreement shall have the meaning given to such terms in the Plan, as amended from time to time.
2. Purchase Price. The purchase price of each Share covered by this Option shall be $___________ per Share.
3. Term. Unless earlier terminated pursuant to any provision of the Plan or this Option Agreement, this Option shall expire on the tenth anniversary of the Grant Date (the “Expiration Date”). This Option shall not be exercisable after the Expiration Date.
4. Vesting Schedule. This Option shall vest as set forth in the Plan.
5. Method of Exercising Option. Subject to the terms and conditions of this Option Agreement, this Option may be exercised (to the extent then vested) by written notice to the Company at its principal office. Such notice (a suggested form of which is attached hereto) shall state the election to exercise this Option and the number of Shares with respect to which it is being exercised; shall be signed by the person so exercising this Option; and shall be accompanied by payment of the full exercise price of such shares.
The exercise price shall be paid to the Company in such method or methods as the Board, in its sole discretion, shall authorize with respect to the Optionee from the following –
(a) in cash, or by certified check, bank draft, or postal or express money order;
(b) in Shares previously acquired by the Optionee, subject to surrender procedures established by the Board;
(c) in Shares newly acquired by the Optionee upon exercise of the Option; or
(d) in any combination of (a), (b) and (c) above.
In the event the exercise price is paid, in whole or in part, with Shares, the portion of the exercise price so paid shall be equal to the Fair Value (as of the date of exercise) of the Shares so surrendered in payment of the exercise price.
Upon receipt of notice of exercise and payment, and execution and acknowledgment of any instruments that may be required by the Board or under that certain First Amended and Restated Shareholders’ Agreement, dated as of September 18, 2017, by and among the Company and the other parties thereto (the “Shareholders’ Agreement) by the person so exercising this Option, the Company shall deliver a certificate or certificates representing the Shares with respect to which this Option is so exercised. In the event this Option is exercised by the Optionee’s estate or personal representative after the death of the Optionee, or by the Optionee’s legal representative or guardian after the Disability of the Optionee, the notice shall be accompanied by appropriate proof of the right of such person or persons to exercise this Option. All Shares that are purchased upon the exercise of this Option as provided herein shall be fully paid and nonassessable.
As a condition to the Company’s obligation to issue Shares to the person exercising this Option, such person shall agree to join and be bound by the terms and conditions of the Shareholders’ Agreement as in effect at the time of exercise and as may be thereafter amended, a copy of which shall be provided to such person promptly after receipt by the Company of a duly completed notice of exercise, together with such instruments, agreements or other documents as may be deemed necessary or appropriate by the Board to evidence the person’s agreement to join and be bound by the Shareholders’ Agreement and such other agreements or documents as may be deemed appropriate by the Board. Any certificated Shares shall bear a legend denoting that they are subject to the terms and conditions of the Shareholders’ Agreement and any other applicable agreements.
In the event of the Optionee’s legal disability, the Option may be exercised by the Optionee’s guardian or legal representative. In the event of Optionee’s death, the Option may be exercised by the Optionee’s estate, personal representative, or beneficiary who acquired the right to exercise such Option by bequest or inheritance or by reason of the death of the Optionee.
If, as a result of a Change of Control, Options vest, the Company may, at its sole election, pay to the Optionee an amount that is equal to the positive difference, if any, between the exercise price of the Option and the net proceeds that the Optionee would have received from the Change of Control had the Option been exercised, net of any amounts required to be withheld in respect of Taxes and subject to applicable provisions for indemnification, escrows, and holdbacks. If the Company elects this option, the Optionee shall exercise all documents, agreements, and instruments necessary to effect it.
- 2 -
6. Non-Transferability of Option. This Option is not assignable or transferable, in whole or in part, by the Optionee other than by will or by the laws of descent and distribution. Any attempt to transfer this Option in violation of this provision shall be null and void. During the lifetime of the Optionee, this Option shall be exercisable only by the Optionee or, in the event of the Optionee's legal disability, by the Optionee's guardian or legal representative.
7. Termination of Service. If the Optionee’s Termination of Service occurs for any reason (including on account of death or disability) before a Change of Control, the Option shall be forfeited.
8. Confidentiality.
(a) Optionee shall not, either during or after the term of this Option Agreement, directly or indirectly, use for Optionee’s own purposes or to the detriment of the Company or any of its subsidiaries, publish, or disclose or divulge to any third party any Confidential Information (as defined below) other than as required to perform Optionee’s duties to the Company or its subsidiaries during the term of his employment. Optionee acknowledges and agrees that, if Optionee improperly used Confidential Information or did not maintain it as confidential, it would cause immediate, substantial and irreparable harm to the Company or any of its subsidiaries. For purposes of this Option Agreement, “Confidential Information” includes any and all confidential, proprietary, trade secrets and other commercially valuable non-public information of the Company or its subsidiaries obtained by or available to Optionee while employed by the Company or any of its subsidiaries (whether before or after the date hereof and in any medium) including, without limitation, any information, observations and data concerning customers, suppliers, services, products, processes, pricing policies, margins, business plans, records, invoices, customer or supplier correspondence, business cards, orders, computer records or software, technical or financial information or data, mailing or telephone or customer lists, or any information relating to the history or prospects of the Company or any of its subsidiaries.
(b) Likewise, Optionee shall not, either during or at any time after the term of this Option Agreement, disclose to any person or entity or use for Optionee’s own purposes any confidential or proprietary information of other persons or entities in the possession of the Company or any of its subsidiaries (“Third-Party Information”).
(c) All documents, files, and records, and all other memoranda, notes, files, records, lists, plans, reports, computer files, discs, drives, tapes and other storage media, printouts and software and other documents and data (and all copies thereof) containing, embodying or relating to any Confidential Information, Third-Party Information or work product are and shall remain the sole property of the Company (whether deemed Confidential Information or not). During the term of this Option Agreement, Optionee shall not, directly or indirectly, copy, reproduce, or remove from the premises of the Company or any of its subsidiaries any Confidential Information, Third-Party Information or work product, except as required to perform Optionee’s duties as an employee of the company or its subsidiaries during the term of this Option Agreement. Any Confidential Information, Third-Party Information, or work product in the possession or under the control of Optionee and all originals and copies thereof shall be delivered to the Company by Optionee upon termination of Optionee’s employment for whatever reason or at such earlier time as the Company may request.
- 3 -
(d) Notwithstanding the foregoing, Optionee shall not have any obligation to keep confidential (i) any Confidential Information or Third-Party Information to the extent that such information becomes generally known to and available for use by the public other than as a result of Optionee’s acts or omissions or (ii) any Confidential Information or Third-Party Information if and to the extent disclosure thereof is specifically required by law, court order or other legal or regulatory process; provided, however, that in the event that disclosure is so required, Optionee shall provide the Company with prompt notice of such requirement prior to making disclosure so that it may seek an appropriate protective order. If Optionee does make any such legally required disclosure, Optionee shall limit the disclosure to that which Optionee reasonably believes, based on the advice of counsel, that Optionee is required to disclose.
9. Non-Competition.
(a) During the term of this Option Agreement and for one (1) year thereafter, Optionee shall not (and shall not permit his agents or affiliates (collectively, “Covered Persons”)), directly or indirectly, compete with or otherwise engage in any business that, directly or indirectly, is engaged in the Business (as defined below), including, not (i) having any direct or indirect interest, whether through contractual arrangement or otherwise, as an officer, director, employee, partner, stockholder, sole proprietor, agent, representative, independent contractor, consultant, franchisor, franchisee, manager, member, creditor, owner or otherwise, or (ii) being employed by, operating, performing management, executive or supervisory functions with respect to, joining, controlling, rendering financial assistance to, receiving any economic benefit from, exerting any influence upon, participating in, or rendering services or advice to any enterprise, business or venture located anywhere in the world which is engaged in the Business; provided, that in no event shall the matters described in this Section 9(a) prohibit ownership by Optionee or any Covered Person of less than 5% of a class of stock of a publicly-held corporation which is regularly traded on a national securities exchange, so long as Optionee or such Covered Person does not have any active participation in the business or management of such entity.
(b) Optionee acknowledges that the restrictive covenants contained in this Agreement are (i) of the essence of this Agreement, (ii) reasonable and necessary to protect and preserve the Confidential Information, customer goodwill, and other interests and properties of the Company and its subsidiaries, and (iii) being made by Optionee in consideration of the Option granted pursuant to the terms of this Agreement.
(c) The restrictive covenants contained in this Agreement (including restrictions as to competition) are in addition to and separate from the noncompetition and other restrictive covenants contained in any other agreement that Optionee is party to with or related to the Company. The restrictions contained in this Option Agreement may be separately enforced, violations of this Option Agreement shall constitute separate causes of action from violations of any such other agreements, and the applicability of the restrictions in this Option Agreement shall not be limited, expanded, or otherwise changed in any way by the noncompetition and other restrictive covenants contained in such other agreements.
(d) In the event of a breach or violation by Optionee of this Section 9, the violation shall be considered a continuing violation on a daily basis for so long a period of time as Optionee continues to violate it, and the duration of Optionee’s covenants set forth in this Section 9 shall be extended by a period of time equal to the number of days during which Optionee is in violation of its provisions.
- 4 -
(e) For purposes of this Option Agreement, “Business” means the business of the facilitation of consigning, or the sales of consigned cars, boats, recreational vehicles, professional or commercial equipment, appliances, and any other goods and services related or ancillary thereto.
10. Non-Solicitation. During the term of this Option Agreement and for one (1) year thereafter, Optionee shall not (and shall not permit his Covered Persons to), directly or indirectly, (i) hire or employ (A) any of the employees or independent contractors (including any persons employed or retained by an independent contractor in connection with the performance of the Business on behalf of the Company) employed or retained by the Company or any of its subsidiaries (collectively, the “Key Employees”); or (ii) solicit, attempt to solicit, induce or encourage any Key Employee to either terminate his or her relationship with the Company or any of its subsidiaries or become employed by (or an independent contractor for) Optionee or any of his Covered Persons, except that nothing in this Section 10 shall prohibit Optionee or any of his Covered Persons from hiring any Key Employee who has been terminated by the Company (in the case of an employee) or who is no longer retained by the Company (in the case of an independent contractor), provided that no Key Employee shall be employed or hired by Optionee or any of his Covered Persons within twelve (12) months of any such termination (in the case of an employee) or of being retained by the Company (in the case of an independent contractor).
11. Forfeiture.
(a) In the event a Change of Control results in less than 100% of the Option becoming vested, the portion of the Option that does not vest as a result of such Change of Control shall be forfeited as of the date of such Change of Control.
(b) If Optionee breaches the non-solicitation, confidentiality or noncompete provisions set forth in this Option Agreement, the Option shall be forfeited whether vested or not.
12. Withholding of Taxes. The obligation of the Company to deliver Shares upon the exercise of this Option shall be subject to applicable Federal, state, and local tax withholding requirements.
13. Acknowledgments. The Optionee acknowledges that:
(a) The Company has the right to grant additional options and issue additional Shares after the Grant Date which may result in dilution of any ownership interest in the Company that Optionee may acquire upon exercise of this Option;
(b) The Shares have not been registered under the Securities Act of 1933, as amended, and applicable state securities laws;
- 5 -
(c) Any and all Shares issued upon exercise of this Option shall be subject to each provision of the Shareholders’ Agreement, as amended from time to time;
(e) Optionee acknowledges that the restrictive covenants contained in this Option Agreement are (i) of the essence of this Option Agreement, (ii) reasonable and necessary to protect and preserve the confidential information, customer goodwill, and other interests and properties of the Company and its subsidiaries, and (iii) being made by Optionee in consideration of this Option Agreement.
14. Rights. Notwithstanding any provisions of this Option Agreement, the Company or its subsidiary shall have the right, in their discretion but subject to any employment contract entered into with the Optionee, to retire the Optionee at any time pursuant to its retirement rules or otherwise to terminate his employment at any time for any reason whatsoever or for no reason.
15. Governing Law. This Option Agreement shall be construed in accordance with, and its interpretation shall be governed by, applicable Federal law, and otherwise by Delaware law (without reference to principles of conflicts of laws).
- 6 -
IN WITNESS WHEREOF, the Company has caused this Option Agreement to be duly executed by its duly authorized officer, and the Optionee has hereunto set his hand and seal, all as of the day and year first above written.
OPTIONEE | CARLOTZ, Inc. | ||
By: | |||
Optionee’s Signature | Name: | ||
Title: |
- 7 -
CARLOTZ, Inc.
STOCK OPTION
Notice of Exercise of Option
I hereby exercise the option granted to me pursuant to the Option Agreement dated as of ________________ ____, ______, by CarLotz, Inc., with respect to the following number of Shares covered by said option:
Number of Shares to be purchased |
Purchase price per share | $ | |||
Total purchase price | $ |
|
A. | Enclosed is cash or my certified check, bank draft, or postal or express money order in the amount of $________ in full payment for the Shares being purchased. | |
|
B. | Enclosed are _______ Shares with a total fair market value of $___________ on the date hereof in full payment for the Shares being purchased. | |
|
C. | Please withhold _________ Shares underlying the Option with a total fair market value of $___________ on the date hereof in full payment for the Shares being purchased. | |
|
D. | Enclosed is cash or my certified check, bank draft, or postal or express money order in the amount of $__________ and _______ Shares with a total fair market value of $___________ on the date hereof, in full payment for the Shares being purchased. |
Alternatives B, C and D are available only if the Board of Directors authorizes them.
DATED: _______________ _____, 20 | |
Optionee’s Signature |
Exhibit 10.29
EXECUTION VERSION
CARLOTZ, INC.
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made as of September 18, 2017 (the “Effective Date”), by and between CarLotz, Inc., a Delaware corporation (the “Company”), and Michael W. Bor (the “Executive”).
WHEREAS, the Company and the Executive previously entered into that certain Amended and Restated Executive Employment Agreement, dated on or about April 1, 2011 (the “Prior Agreement”) substantially in the form of this Agreement; and
WHEREAS, the Company and the Executive desire to amend and restate the Prior Agreement in the form of this Agreement such that the Company shall continue to employ the Executive upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, and intending to be legally bound, the Company and the Executive agree as follows:
1. Position. The Company agrees to employ the Executive, and the Executive agrees to serve the Company, initially as its Chief Executive Officer, or in such other capacities as may from time to time be defined by the Company’s Board of Directors (the “Board”) in its sole discretion. The parties intend that the Executive shall continue to so serve in the aforesaid capacity throughout the Term (as such term is defined below).
2. Term of Employment. The term of the Executive’s employment shall be three (3) years and at the end of such term shall renew for annual terms unless sooner terminated under the provisions of Section 5 below, unless at least three (3) months prior to a subsequent annual anniversary thereof either the Executive or the Company gives to the other written notice that the term shall not be renewed at such annual anniversary, in which case the term shall expire on the day before such subsequent anniversary, as the case may be (the “Term”).
3. Duties. The Executive throughout the Term shall devote such time and attention to the business and affairs of the Company and its affiliates, if any (“Affiliates”), as required to execute and perform the duties described in the last sentence of this Section 3, subject to applicable Company policy regarding holidays and vacations and except for illness or incapacity. The Executive shall not accept any proposed appointment to serve as a director, manager, trustee or the equivalent of any business, civic, charitable or other organization without the prior written approval of the Board. The Executive shall report directly to the Board, and shall have such duties as are set forth in the Bylaws of the Company or as the Board may assign to him from time to time.
4. Compensation.
(a) Salary. During the Term, the Executive’s salary hereunder shall be at the rate of $250,000 per year, payable in accordance the Company’s usual payroll practices (such amount being referred to as the “Annual Salary”). The Annual Salary does not include the deferred compensation currently being paid to Executive pursuant to that certain Deferred Compensation Plan, made effective as of June 1, 2015 of the Company (the “Deferred Compensation Plan”), and which shall continue to be paid to Executive pursuant to the Deferred Compensation Plan. When all such deferred compensation has been paid to the Executive pursuant to the Deferred Compensation Plan, the Annual Salary will be adjusted upwards such that the new Annual Salary shall be equal to the total of the former Annual Salary plus $84,792.72. The Company shall review such salary at least annually, taking into account, among other factors, Company and individual performance.
(b) Bonuses. The Board may define specific company- and personal-performance thresholds such that, if achieved, the Executive may earn additional bonus compensation at or around the end of the calendar year. Any such bonus plan shall require as a condition to receiving any bonus that the Executive be employed by the Company on the last day of the calendar year to which it applies and shall stipulate that Executive shall not be entitled to receive any bonus that remains unpaid as of the date of Executive’s termination for Due Cause.
(c) Loyalty Agreement. In consideration for the Executive’s employment by the Company under the terms of this Agreement (provided that the Executive acknowledges that there can be no guaranty that he will receive any payment hereunder), the Executive hereby agrees to enter into the Amended and Restated Loyalty Agreement in the form attached as Exhibit A hereto (the “Loyalty Agreement”) simultaneously with his execution of this Agreement and to abide by the terms thereof.
(d) Benefits. During the Executive’s employment by the Company hereunder, the Executive shall be entitled to participate in such retirement, health and employment benefit plans (if any) of the Company that are generally available to senior executives of the Company, provided that such participation would not result in the non-compliance of any such benefit plan with applicable laws governing such plans. Any participation by the Executive in any plan sponsored by the Company shall be pursuant to the terms and conditions of such plans, as the same shall be amended from time to time. The Executive shall be entitled 20 days paid vacation per year. Unused vacation will not carry over from calendar year to calendar year and upon termination of employment, the Executive will not be entitled to any payment for accumulated unused vacation.
(e) Put Right.
(i) The Executive shall have the right to require the Company to redeem shares of the Executive’s Common Stock in the Company at a price of $9.83 per share following the Initial Closing, as that term is defined in the Stock Purchase Agreement between the Company and the other parties thereto, dated as of September 8, 2017 (the “Stock Purchase Agreement) (the “First Put Right”); and a second right to require the Company to purchase shares of the Executive’s Common Stock in the Company at a price of $9.83 per share following one of Tranche Two, Tranche Three or Tranche Four, as each of those terms are defined in the Stock Purchase Agreement (the “Second Put Right”, and together with the First Put Right, the “Put Rights”); provided that the aggregate cash value of the shares redeemed in the First Put Right shall not exceed $500,000 and the aggregate cash value of the shares redeemed in the Put Rights, in total, shall not exceed $1,000,000.
2
(ii) Each Put Right shall be exercised within ninety (90) days of the applicable Closing (as such term is defined in the Stock Purchase Agreement) by the delivery of written notice from the Executive to the Company.
(iii) Promptly after the delivery of written notice, the parties will commence the redemption, and the redemption shall be consummated within thirty (30) days of the Executives delivery of notice.
5. Termination.
(a) Death. In the event of the death of the Executive during the Term, his employment shall be terminated as of the date of death and any salary payable to him, subject to the terms of Section 4(a) above, shall be paid to his designated beneficiary, or in the absence of such designation, to the estate or other legal representative of the Executive. Except in accordance with the terms of the Company’s benefit programs and plans then in effect, after the date of his death, the Executive shall not be entitled to any other compensation or benefits from the Company or hereunder.
(b) Disability. In the event of the Executive’s Disability, as hereinafter defined, the Company may terminate the employment of the Executive. After termination of employment for Disability, except in accordance with the Company’s benefit programs and plans then in effect, the Executive shall not be entitled to any compensation or benefits from the Company or hereunder. “Disability,” for purposes of this Agreement, means “disability” within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). Any determination of the Executive’s Disability made in good faith by the Board shall be conclusive and binding on the Executive, unless within 10 days after written notice to the Executive of such determination, the Executive elects by written notice to the Company to challenge such determination, in which case determination of Disability shall be made by arbitration pursuant to Section 11 below.
(c) Termination by the Company for Due Cause. The Company may terminate the Executive’s employment for Due Cause. The Executive shall continue to receive the salary provided for in this Agreement only through the period ending with the date of such termination. Any rights and benefits he may have under employee benefit plans and programs of the Company shall be determined in accordance with the terms of such plans and programs. Except as provided in the two immediately preceding sentences, after termination of employment for Due Cause, the Executive shall not be entitled to any compensation or benefits from the Company or hereunder. “Due Cause,” for purposes of this Agreement, means (i) the Executive’s committing or engaging in (A) any fraud or theft, misappropriation or embezzlement of funds or other assets of the Company or its customers, vendors, or joint venture partners, or (B) any negligent or reckless acts resulting in or causing material reputational or other material harm or damage to the Company or its subsidiaries, in the good faith reasonable judgment of the Board; (ii) the conviction of the Executive for, or the Executive’s plea of guilty or nolo contendere to: (X) any felony or (Y) any other crime (whether or not connected with the Executive’s employment); but in each of the above cases, only if such felony or crime involves fraud or moral turpitude or has or could have the effect, in the Board’s reasonable and good faith determination, of causing material reputational or other material harm or damage to the Company or its subsidiaries; (iii) any repeated failure of the Executive to be actively engaged in his duties, which failure has not been cured within fifteen (15) days after written notice thereof from the Board specifying in reasonable detail such failure; (iv) the Executive’s violation of any reasonable written direction (including any such direction contained in the minutes of any meeting of the Board) or any rule or regulation established by the Board, which violation has not been cured (if curable) by the Executive within fifteen (15) days after written notice thereof from the Board specifying in reasonable detail the violation; (v) any material breach by the Executive of his obligations to the Company (or failure of the Executive to substantially perform his duties) (including any failure to comply with any policies of the Company or the terms of this Agreement or the Loyalty Agreement), which failure has not been cured (if curable) by the Executive within 15 days after written notice thereof from the Board specifying in reasonable detail the failure or breach; or (vi) the Executive’s use of (i) illegal drugs, (ii) any illegal substance, or (iii) excessive use of alcohol; in each case only in such a manner that materially interferes with the performance of his duties under this Agreement and includes the Executive’s failure to take steps to remedy, or seek treatment for, such use within a medically reasonable period of time after written notice thereof from the Board.
3
(d) Termination by the Company Other than for Due Cause. The foregoing notwithstanding, the Company may terminate the Executive’s employment for whatever reason or reasons it deems appropriate, or for no reason whatsoever. Without limiting the foregoing, termination due to the Company’s election not to renew this Agreement upon the expiration of the Term shall be deemed to be termination by the Company other than for Due Cause.
(e) Termination of Employment by the Executive for Good Reason. The Executive may terminate his employment for Good Reason. For purposes of this Agreement, “Good Reason” as a basis for termination of the Executive’s employment shall mean (i) a material breach by the Company of Section 4(a) or 4(d) of this Agreement (which breach is not cured within 10 days after written notice thereof by the Executive to each of the Directors of the Company, which notice shall specifically describe such alleged breach), (ii) a significant reduction by the Board of the Executive’s responsibilities under this Agreement, (iii) a relocation of Executive’s place of employment and office of more than fifty (50) miles, or (iv) a significant health problem of the Executive which materially interferes with the Executive’s ability to perform his responsibilities hereunder. Upon the occurrence of any of the foregoing, Executive shall provide forty-five (45) days’ written notice to Executive’s supervisor, and the Company shall have forty-five (45) days to correct any event that has given rise to the right of Executive to resign with Good Reason, except in the case of subsection (iv) which notice shall be given within a reasonable medical period and which the Company shall have no opportunity to correct.
(f) Voluntary Termination. In the event that the Executive terminates his employment at his own volition prior to the expiration of the Term (except for Good Reason as provided in Section 5(e) above), including, without limitation, any termination as a result of the Executive’s election not to renew this Agreement, such termination shall constitute a “Voluntary Termination” and in such event the Executive shall be limited to the same rights and benefits as provided in connection with a termination for Due Cause under Section 5(c) above.
4
(g) Severance. Upon any termination by the Company other than for Due Cause, or upon any termination by the Executive for Good Reason, and provided that such termination is not due to the death or Disability of the Executive (except as may be Good Reason pursuant to Section 5(e)(iv) above), the Executive shall be entitled to the Termination Payment (as hereinafter defined) and shall remain subject to and bound by the Loyalty Agreement in accordance with its terms. The term “Termination Payment” shall mean a single cash payment equal to the Annual Salary. Provided that the Executive has been paid any salary in accordance with the terms of Section 4(a) above prior to the effective date of the Executive’s termination, any Termination Payment shall be made within sixty (60) days after the effective date of the Executive’s termination. Following the Executive’s termination of employment under this Section, the Executive will have no further obligation to provide services to the Company pursuant to Sections 1 and 3. Except for the Termination Payment and as otherwise provided in accordance with the terms of this Agreement and the Company’s benefit programs and plans then in effect, after termination by the Company of employment for other than death, Disability or Due Cause, the Executive shall not be entitled to any other compensation or benefits from the Company or hereunder.
(h) Notice of Termination; Resignation, Release. Any termination under Section 5(c) by the Company for Due Cause or Section 5(d) by the Company without Due Cause or Section 5(b) for Disability, or by the Executive for Good Reason under Section 5(e), or for a Voluntary Termination by the Executive under Section 5(f), shall be communicated by Notice of Termination to the other party thereto given in accordance with Section 10. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) in the case of termination pursuant to Section 5(c), (d), (e) or (f) (other than an election not to renew), if the termination date is other than the date of receipt of such Notice, specifies the termination date (which date shall not be prior to the date of such notice or more than 15 days after the giving of such Notice).
Notwithstanding anything in this Agreement to the contrary, in order to be eligible to receive any payments or benefits hereunder as a result of the termination of the Executive’s employment, in addition to fulfilling all other conditions precedent to such receipt, the Executive (if he has the legal capacity to do so and if not, his legal representative) (i) within two (2) days after the termination date, must resign as a member of the Board if applicable, and as an officer, manager, director and employee of the Company and its Affiliates (which resignation shall be made effective as of the termination date), and (ii) within 30 days after the termination date, on behalf of the Executive and his estate, heirs and representatives, execute a release in form and substance satisfactory to the Company and its legal counsel releasing the Company, its Affiliates and each of the Company’s and such Affiliate’s respective past, present and future officers, directors, shareholders, members, partners, equity holders, managers, employees, agents, independent contractors, representatives, trustees, advisors, lawyers, accountants, consultants, successors and assigns and each of the foregoing’s respective past, present and future affiliates, heirs, estates, representatives, successors and assigns (all of which persons and entities shall be third party beneficiaries of such release with full power to enforce the provisions thereof) from any and all known or unknown claims related to the Executive’s employment with the Company or separation from such employment (other than with respect to compensation or benefits to be paid or provided by the Company as specifically set forth above in this Section 5).
5
(i) Earned and Accrued Payments. The foregoing notwithstanding, but subject to Section 4(b) and Section 5(c), upon the termination of the Executive’s employment at any time, for any reason, the Executive shall be paid all amounts that had already been earned and accrued as of the time of termination.
(j) Effective Date of Termination. For purposes of this Agreement, the effective date of the Executive’s termination shall be deemed to be: (i) in the case of the death of the Executive, the date of death; (ii) in the case of Disability, the date upon which the definition of Disability is satisfied, as determined by the Board in accordance with Section 5(b) or pursuant to arbitration, if elected; (iii) in the case of any termination by the Company under Section 5(c) or 5(d) or by the Executive under Section 5(e) or Section 5(f), the date a Notice of Termination is received by the other party (or such other termination date specified in the Notice of Termination in accordance with Section 5(h)); and in the case of an election not to renew, the last day of employment.
6. Successors and Assigns.
(a) Assignment by the Company. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. The Company may assign this Agreement to any successor to the Company (whether by merger or otherwise) and any corporation or other entity to which the Company may, directly or indirectly, be sold or transfer all or substantially all of its assets and business, in which case the term “Company,” as used herein, shall mean such corporation or other successor entity.
(b) Assignment by the Executive. The Executive may not assign this Agreement or any part hereof without the prior written consent of the Company; provided, however, that nothing herein shall preclude the Executive from designating one or more beneficiaries to receive any amount that may be payable following occurrence of his legal incompetency or his death and shall not preclude the legal representative of his estate from assigning any right hereunder to the person or persons entitled thereto under his will or, in the case of intestacy, to the person or persons entitled thereto under the laws of intestacy applicable to his estate. The term “beneficiaries,” as used in this Agreement, shall mean a beneficiary or beneficiaries so designated to receive any such amount or, if no beneficiary has been so designated, the legal representative of the Executive (in the event of his incompetency) or the Executive’s estate.
7. Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Virginia without reference to the choice or conflict of law principles thereof.
8. Entire Agreement. This Agreement, along with the Loyalty Agreement, contain all of the understandings and representations between the parties hereto pertaining to the matters referred to herein, and supersede all undertakings and agreements, whether oral or in writing, previously entered into by them with respect thereto, including the Prior Agreement. This Agreement may only be modified by an instrument in writing signed by all parties hereto. The terms of this Agreement and the Loyalty Agreement shall be interpreted to be independent agreements such that the parties must comply with the terms of each such agreement. The Loyalty Agreement contains provisions that are intended by the parties to survive and do survive termination or expiration of this Agreement.
6
9. Code Section 409A. To the extent applicable, this Agreement is intended to comply with Section 409A of the Code, and the Company shall interpret and administer the Agreement in accordance therewith. In addition, any provision, including, without limitation, any definition, in this Agreement that is determined to violate the requirements of Code Section 409A shall be void and without effect and any provision, including, without limitation, any definition, that is required to appear in this Agreement under Code Section 409A that is not expressly set forth shall be deemed to be set forth herein, and the Agreement shall be administered in all respects as if such provisions were expressly set forth herein. In addition, the timing of payment of the benefits provided for under this Agreement shall be revised as necessary for compliance with Code Section 409A.
10. Waiver of Breach. The waiver by any party of a breach of any condition or provision of this Agreement to be performed by such other party shall not operate or be construed to be a waiver of a similar or dissimilar provision or condition at the same or any prior or subsequent time.
11. Notices. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been given when mailed by registered or certified mail, or the next business day if sent for next day delivery by a reputable special courier such as Federal Express or United Parcel Service addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice of hereunder in writing.
If to the Company:
CarLotz, Inc.
406 W. Franklin Street
Richmond, VA 23220
Attn: Board of Directors
With a copy to each of:
McGuireWoods LLP
Gateway Plaza
800 East Canal Street
Richmond, VA 23219-3916
Attn: Bryce D. Jewett III
TRP Capital Partners, LP
2555 Telegraph Road
Bloomfield Hills, MI 48302
7
Attn: Steve Carrel
Drinker Biddle & Reath LLP
One Logan Square, Suite 2000
Philadelphia, PA 19103
Attn: H. John Michel, Jr.
If to the Executive:
Michael W. Bor
12. Arbitration. Any controversy or claim arising out of or relating to this Agreement (other than any claim for injunctive or other equitable relief), or any breach thereof, shall be settled by arbitration in Richmond, Virginia in accordance with the rules of the American Arbitration Association then in effect and judgment upon such award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The board of arbitrators shall consist of one arbitrator to be appointed by the Company, one by the Executive, and one by the two arbitrators so chosen. The cost of arbitration shall be allocated between the parties as determined by the arbitrators.
13. Withholding. Anything to the contrary notwithstanding, all payments required to be made by the Company hereunder to the Executive or his estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation.
14. Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions or portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.
15. Titles. Titles to the Sections in this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the title of any Section.
16. Counsel. This Agreement has been prepared in part by counsel to the Company, after full disclosure of its representation of the Company and with the consent and direction of the Executive. The Executive has reviewed the contents of this Agreement and fully understands its terms. The Executive acknowledges that he is fully aware of his right to seek independent advice and the risks in not seeking such independent advice, and that he fully understands the potentially adverse interests of the Company with respect to the this agreement. The Executive further acknowledges that he has been advised of the importance of seeking independent counsel with respect to the tax or other consequences of this Agreement or any matters contemplated by this Agreement or the Executive’s employment with the Company. By executing this Agreement, the Executive represents that he has either consulted independent legal counsel or elected, notwithstanding the advisability of seeking such independent legal counsel, not to consult with such independent legal counsel. Each party hereby agrees that in the interpretation or construction of this Agreement, the Agreement shall not be construed against any party on the basis that such party was the drafter of this Agreement or on any other basis.
8
17. Amendment of Prior Agreement. The Prior Agreement is hereby amended, restated, terminated and superseded in its entirety and restated herein. Such amendment and restatement is effective upon the execution of this Agreement by the Company and the Executive. Upon such execution, all provisions of, rights granted and covenants made in the Prior Agreement are hereby waived, released and superseded in their entirety and shall have no further force or effect.
[Signature Page Follows]
9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written.
COMPANY: | |
CARLOTZ, INC. | |
/s/ Michael W. Bor | |
By: Michael W. Bor | |
Its: President and Chief Executive Officer | |
EXECUTIVE: | |
/s/ Michael W. Bor | |
Michael W. Bor |
10
Exhibit 10.30
406 W Franklin Street • Richmond, VA 23220 • Phone: +1 (804) 728-3833
E-Mail: amontgomery@CarLotz.com Web: www.CarLotz.com
10/16/2017
John Foley
411 37th Street
Norfolk, VA 23508
Dear John:
Congratulations! CarLotz, Inc. is pleased to offer you employment on the following terms:
1. Position. You will serve in a full-time capacity as the Director of Sales Operations and report to Aaron Montgomery, COO. By signing this offer letter, you represent and warrant to the Company that you are under no contractual commitments inconsistent with your obligations to the Company.
2. Compensation. Your starting salary will be $5,769.23 per pay period (equivalent to $150,000 per year), payable in bi-weekly installments in accordance with the Company's standard payroll practices for salaried employees. This compensation will be subject to adjustment pursuant to the Company's employee compensation policies in effect from time to time. You will be entitled to twelve (12) days of paid time off (PTO) per year. You will also be eligible to receive a quarterly bonus of up to $6,250 per quarter (up to $25,000 per year) for meeting defined performance metrics. This position is considered an exempt position for purposes of federal wage-hour law, which means that you will not be eligible for overtime pay for hours actually worked in excess of 40 in a given workweek.
3. Options. In addition to your cash compensation, you will be granted options representing 1% ownership of the Company over a four-year period (0.25% per year over four years). The options will vest: i) annually over a four-year period or ii) upon a liquidity event, whichever comes first. Any vesting event will only occur if you are still employed by CarLotz. Further details regarding the options are specified in the options grant.
4. Benefits. You will retain your eligibility for the Company's healthcare program. Further details concerning the Company's benefits program can be found in the Employee Handbook.
5. Restrictive Covenants. As a condition to your employment with the Company, you are required to sign the Non-Compete, Non-Solicit, and Confidentiality Agreement, a copy of which is attached hereto as Exhibit A.
6. Period of Employment. Your employment with the Company will be at will, meaning that either you or the Company will be entitled to terminate your employment at any time and for any reason, with or without cause. Any contrary representations, which may have been made to you, are superseded by this offer. This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company's personnel policies and procedures, may change from time to time, the at will nature of your employment may only be changed in an express written agreement signed by you and a duly authorized officer of the Company.
1
7. Outside Activities. While you render services to the Company, you will not engage in any other gainful employment, business or activity without the written consent of the Company.
8. Withholding Taxes. All forms of compensation referred to in this letter are subject to reduction to reflect applicable withholding and payroll taxes.
9. Entire Agreement. This letter and the Exhibit attached hereto contain all of the terms of your employment with the Company and supersede any prior understandings or agreements, whether oral or written, between you and the Company.
10. Amendments and Governing Law. This offer letter may not be amended or modified except by an express written document signed by you and a duly authorized officer of the Company. The terms of this offer letter and the resolution of any disputes will be governed by Virginia law. Venue for any action brought under this agreement shall be in the courts for the County of Chesterfield, Virginia or, if applicable, the U.S. District Court for the Eastern District of Virginia, Richmond Division.
We hope that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this offer by signing and dating, both this letter and the Non-Compete, Non-Solicit, and Confidentiality Agreement and returning them to me. Your employment with the company is contingent upon successful completion of applicable reference, driving and background checks, and as required by law, providing legal proof of your identity and authorization to work in the United States.
Very truly yours,
CarLotz, Inc.
By: | |
/s/ Aaron Montgomery | |
Aaron Montgomery, Chief Operating Officer |
2
I have read and accept this employment offer:
DocuSigned by: | |
/s/ John Foley | |
3D4C5A7BF3BC482 |
Date: | 10/16/2017 ![]() |
3
Performance Metrics –
Initial Bonus Plan (effective 10/1/2017)
Consolidated Existing 5 Stores (applies only to existing 5 stores):
-Total number of vehicles sold increase of 10% LTM YoY; no single store declines by more than 10%
-Total LTM EBITDA, pre-corporate expenses, of $1.5mm
4
NON-COMPETE, NON-SOLICIT, AND CONFIDENTIALITY AGREEMENT
THIS NON-COMPETE, NON-SOLICIT, AND CONFIDENTIALITY AGREEMENT ("Agreement") is made as of this 4th day of December, 2014, between Carlotz, Inc., a Delaware Corporation ("Employer"), and John Foley ("Employee").
In consideration of Employee's employment by Employer as memorialized in the offer letter dated December 4, 2014 and referencing this Agreement as Exhibit A thereto, and for other good and valuable consideration, with the intention that this Agreement shall apply to the entire period of Employee's employment with Employer, and for the periods of time thereafter as set forth in more detail below, Employee hereby agrees as follows:
1. Employment. Employee and Employer acknowledge: that Employee's employment by Employer is "at will" employment and nothing in this Agreement shall in any way affect the "at will" nature. of Employee's employment with Employer. This Agreement is' referenced as Exhibit A to the letter agreement between. Employer and Employee dated December 4, 2014 (the "Letter Agreement").
2. Non-Competition. Employee specifically agrees that during Employee's employment with Employer and for a period of one (1) year after Employee's employment with Employer ceases, for whatever reason (the "Employment Cessation Date"), or for a period of one (1) year from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event of a breach by Employee, whichever is later, Employee covenants and agrees that Employee shall not, directly or indirectly, whether as proprietor, stockholder, partner, member officer, consultant, employee or for the benefit of another engage in any Competitive Services (as that term is defined below) within a fifty (50) mile radius of any of Employer's stores in which Employee performed Competitive Services or duties on behalf of Employer. For the purposes of this Agreement, the term Competitive Services shall be defined as those services rendered by Employee dining the term of his employment with Employer including the provision of automotive consignment services.
3. Non-Solicitation of other Employees. Employee specifically agrees that during Employee's employment with Employer and for a period of one (1) year after the Employment. Cessation Date, Employee shall not, directly or indirectly, whether as proprietor, stockholder, partner, member officer, consultant, employee or for the benefit of another solicit for employment or hire, assist in the solicitation or hiring, induce of influence, or attempt to induce or influence, any person who was an employee, agent, independent contractor, services vendor, partner, officer, or director of the Employer or any of its affiliates, during the one (1) year period preceding the Employment Cessation Date, to terminate his relationship with the Employer or any of its affiliates, or to cease providing services to or on behalf of the Employer or any of its affiliates, as the case may be.
Page 1 of 4 |
4. Confidential Information Disclosure Prohibition. Employee acknowledges that, in the course of performing his duties, he has and shall become acquainted and entrusted with certain confidential information and trade secrets, which confidential information includes all information disclosed to Employee, or known to him as a consequence or through his employment with Employer, where such information is not generally known by the public or was regarded as treated as proprietary by the Employer or its affiliates (including, without limitation, customer information, financial data, referral source information, processes relating to the performance and sales of Competitive Services, methods, systems, designs, client records, business plans, or any other non-public information which, if uses, divulged, published or disclosed by Employee would be reasonably likely to provide a competitive advantage to a competitor)(the "Confidential Information). Employee agrees that he shall not cause or allow the Confidential Information to be exposed to unauthorized persons and that he will not, without the prior written consent of Employer, divulge or make any use of such Confidential Information during the term of his employment with Employer or any time thereafter, except as directed by Employer in connection with Employee's job duties and as may be required by law. Employee further agrees to identify for Employer immediately any third party whom Employee knows or discovers to be in possession of such Confidential Information.
5. Employee Acknowledgement. Employee recognizes that the restrictions contained in this Agreement are of mutual benefit to Employee and Employer and are supported by full and adequate consideration, that the restrictions and covenants set forth in this Agreement are reasonable and necessary for the protection of Employer's legitimate business interest and that Employer will suffer irreparable harm in the event of a breach by Employee of any of the restrictive provisions of this Agreement. Accordingly, the parties agree that in the event of any breach or attempted breach by Employee of any of the restrictive provisions of this Agreement, Employer shall be entitled to institute and prosecute judicial proceedings with respect to such breach, and to recover such costs, expenses, and reasonable attorney's fees as may be incurred by Employer in connection with such proceedings. The parties further recognize that because a remedy at law for any breach or attempted or threatened breach by Employee shall be inadequate, that, in addition to any other relief or damages available, Employer shall be entitled to enjoin Employee, without requirement of bond, from engaging in any conduct in violation of this Agreement and seek any other injunctive or equitable relief as may be appropriate in case of any such breach or attempted breach.
6. Assignment. This Agreement may be assigned by Employer to a successor entity in the event of a merger or consolidation of the Employer or in connection with the sale of all or substantially all of Employer's business or assets.
7. Severability and Reformation. The covenants and restrictions of this Agreement shall be severable, and if any of them is held invalid because of its duration, scope of area or activity, or any other reason, the parties agree that such covenant shall be adjusted or modified by the court to the extent necessary to cure that invalidity, and the modified covenant shall thereafter be enforceable as if originally made in this Agreement.
Page 2 of 4 |
8. Applicable Law. The parties hereto submit to the jurisdiction of the courts of Virginia with respect to this Agreement and all matters arising hereunder and they agree that venue for resolution of any dispute arising hereunder shall be the appropriate state court within Chesterfield County, Virginia or, if applicable, the U.S. District Court for the Eastern District of Virginia, Richmond Division. Questions with respect to the construction and performance of this Agreement and the rights and liabilities of the parties hereunder shall be determined in accordance with the laws of the Commonwealth of Virginia, without regard to its conflicts of laws provisions.
9. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the parties, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth in this Agreement. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by both Employer and Employee. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver or continuing waiver of any other provision hereof. Notwithstanding this paragraph 9 of the Agreement, this Agreement shall be considered an exhibit to the Letter Agreement and therefore neither the Letter Agreement nor this Agreement shall supersede on another. To the extent a conflict arises between the Letter Agreement and this Agreement, the terms of this Agreement shall control for all matters relating to the non-competition, non-solicitation, and confidentiality.
10. Titles and Headings. Titles and headings to provisions of this Agreement are for the purpose of reference only and shall in no way limit, define or otherwise affect the interpretation or construction of such provisions.
11. Modification of Agreement. No provision of this Agreement, including the provisions of this paragraph, may be modified, deleted or amended in any manner except by an agreement in writing executed by the parties hereto.
12. Original Copies. This Agreement may be executed in more than one counterpart, each of which shall be deemed an original.
(Signature Page Follows)
Page 3 of 4 |
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
John Foley | Carlotz, Inc. | ||||
By: | /s/ John W. Foley II | By: | /s/ Aaron Montgomery | ||
Date: | 12/5/2014 11:56 AM ET | Its: | Chief Operating Officer | ||
Date: | December 4, 2014 |
Page 4 of 4 |
Exhibit 10.31
406 W Franklin
Street • Richmond, VA 23220 • Phone: +1 (804) 728-3833
E-Mail: amontgomery@CarLotz.com Web:
www.CarLotz.com
January 1, 2015
Dear Dan:
Congratulations! CarLotz, Inc. is pleased to offer you employment on the following terms:
1. Position. You will serve in a full time capacity as Director of Technology, working from our corporate office at 406 West Franklin Street. You will report to Will Boland, CFO. Your primary duties will be to oversee strategy and execution of all information technology needs. Your duties may change over time as your performance and the needs of the business evolve. By signing this letter agreement, you represent and warrant to the Company that you arc under no contractual commitments inconsistent with your obligations to the Company.
2. Compensation. You will receive an annual salary of $60,000.00, payable bi-weekly in accordance with the Company's standard payroll practices. This compensation will be subject to adjustment pursuant to the Company's employee compensation policies in effect from time to time. You will be entitled to twelve (12) days paid time oil per year in accordance with the company's PTO policy as discussed in the Employee Handbook. This position is considered exempt for purposes of federal wage-hour law, which means that you will not be eligible for overtime pay for hours actually worked in excess of 40 in a given week.
3. Options. In addition to your cash compensation, you will be granted 5,000 options in each of 2015, 2016, and 2017 assuming you remain in full-time employment with the Company for the entire calendar year. The options will vest: i) annually over a four year period or upon a liquidity event if you are still employed by CarLotz, whichever comes first, and the strike price will be at the fair market value of the Company's equity at the time of grant. Further details regarding the options are specified in the options grant.
4. Benefits. You will be eligible for the Company's healthcare program the first of the month following 60 days of employment. Further details concerning the Company's benefits program can be found in the Employee Handbook.
5. Restrictive Covenants. As a condition to your employment with the Company, you arc required to sign the Non-Compete, Non-Solicit, and Confidentiality Agreement, a copy of which is attached hereto as Exhibit A.
6. Period of Employment. Your employment with the Company will be at will, meaning that either you or the Company will be entitled to terminate your employment at any time and for any reason, with or without cause. Any contrary representations which may have been made to you are superseded by this offer. This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company's personnel policies and procedures, may change from time to time, the at will nature of your employment may only be changed in an express written agreement signed by you and a duly authorized officer of the Company.
7. Outside Activities. While you render services to the Company, you will not engage in any other gainful employment, business or activity without the written consent of the Company.
8. Withholding Taxes. All forms of compensation referred to in this letter arc subject to reduction to reflect applicable withholding and payroll taxes.
1 |
9. Entire Agreement. This letter and the Exhibit attached hereto contain all of the terms of your employment with the Company and supersede any prior understandings or agreements, whether oral or written, between you and the Company.
10. Amendment and Governing Law. This letter agreement may not be amended or modified except by an express written agreement signed by you and a duly authorized officer of the Company. The. turns .of this letter agreement and the. resolution of any disputes will be governed by Virginia law. Venue for any action brought wider this. agreement shall be in the courts for the County of Chesterfield, Virginia or, if applicable, the U.S. District Court for the Eastern District of Virginia, Richmond Division.
We hope that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this offer by signing and dating both this letter and the Non-Compete, Non-Solicit, and Confidentiality. Agreement and returning them to me. As required bylaw, your employment is contingent upon your providing legal proof of your identity and authorization to work in the United States.
If acceptable, your start date will be January 1, 2015. If you have any questions,. please call Will Boland at 804-314-6882.
Very truly yours,
CarLotz, Inc.
By:
/s/ Aaron Montgomery |
Aaron Montgomery, Chief Operating Officer
I have read and accept this employment offer:
/s/ Dan Valerian |
Dan Valerian
Date: | 1/1/2015 |
2 |
NON-COMPETE, NON-SOLICIT, AND CONFIDENTIALITY AGREEMENT
THIS NON-COMPETE, NON-SOLICIT, AND CONFIDENTIALITY AGREEMENT ("Agreement") is made as of this Last day of January 2015, between CarLotz, Inc., a Delaware Corporation ("Employer"), and Dan Valerian ("Employee").
In consideration of Employee's employment by Employer as memorialized in the offer letter dated January 1, 2015 and referencing this Agreement as Exhibit A thereto, and for other good and valuable consideration, with the intention that this Agreement shall apply to the entire period of Employee's employment with Employer, and for the periods of time thereafter as set forth in more detail below, Employee hereby agrees as follows:
1. Employment. Employee and Employer acknowledge: that Employee's employment by Employer is "at will" employment and nothing in this Agreement shall in any way affect the "at will" nature. of Employee's employment with Employer. This Agreement is' referenced as Exhibit A to the letter agreement between. Employer and Employee dated January 1, 2015 (the "Letter Agreement").
2. Non-Competition. Employee specifically agrees that during Employee's employment with Employer and for a period of one (1) year after Employee's employment with Employer ceases, for whatever reason (the "Employment Cessation Date"), or for a period of one (1) year from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event of a breach by Employee, whichever is later, Employee covenants and agrees that Employee shall not, directly or indirectly, whether as proprietor, stockholder, partner, member officer, consultant, employee or for the benefit of another engage in any Competitive Services (as that term is defined below) within a fifty (50) mile radius of any of Employer's stores in which Employee performed Competitive Services or duties on behalf of Employer. For the purposes of this Agreement, the term Competitive Services shall be defined as those services rendered by Employee dining the term of his employment with Employer including the provision of automotive consignment services.
3. Non-Solicitation of other Employees. Employee specifically agrees that during Employee's employment with Employer and for a period of one (1) year after the Employment. Cessation Date, Employee shall not, directly or indirectly, whether as proprietor, stockholder, partner, member officer, consultant, employee or for the benefit of another solicit for employment or hire, assist in the solicitation or hiring, induce of influence, or attempt to induce or influence, any person who was an employee, agent, independent contractor, services vendor, partner, officer, or director of the Employer or any of its affiliates, during the one (1) year period preceding the Employment Cessation Date, to terminate his relationship with the Employer or any of its affiliates, or to cease providing services to or on behalf of the Employer or any of its affiliates, as the case may be.
Page 1 of 4 |
4. Confidential Information Disclosure Prohibition. Employee acknowledges that, in the course of performing his duties, he has and shall become acquainted and entrusted with certain confidential information and trade secrets, which confidential information includes all information disclosed to Employee, or known to him as a consequence or through his employment with Employer, where such information is not generally known by the public or was regarded as treated as proprietary by the Employer or its affiliates (including, without limitation, customer information, financial data, referral source information, processes relating to the performance and sales of Competitive Services, methods, systems, designs, client records, business plans, or any other non-public information which, if uses, divulged, published or disclosed by Employee would be reasonably likely to provide a competitive advantage to a competitor)(the "Confidential Information). Employee agrees that he shall not cause or allow the Confidential Information to be exposed to unauthorized persons and that he will not, without the prior written consent of Employer, divulge or make any use of such Confidential Information during the term of his employment with Employer or any time thereafter, except as directed by Employer in connection with Employee's job duties and as may be required by law. Employee further agrees to identify for Employer immediately any third party whom Employee knows or discovers to be in possession of such Confidential Information.
5. Employee Acknowledgement. Employee recognizes that the restrictions contained in this Agreement are of mutual benefit to Employee and Employer and are supported by full and adequate consideration, that the restrictions and covenants set forth in this Agreement are reasonable and necessary for the protection of Employer's legitimate business interest and that Employer will suffer irreparable harm in the event of a breach by Employee of any of the restrictive provisions of this Agreement. Accordingly, the parties agree that in the event of any breach or attempted breach by Employee of any of the restrictive provisions of this Agreement, Employer shall be entitled to institute and prosecute judicial proceedings with respect to such breach, and to recover such costs, expenses, and reasonable attorney's fees as may be incurred by Employer in connection with such proceedings. The parties further recognize that because a remedy at law for any breach or attempted or threatened breach by Employee shall be inadequate, that, in addition to any other relief or damages available, Employer shall be entitled to enjoin Employee, without requirement of bond, from engaging in any conduct in violation of this Agreement and seek any other injunctive or equitable relief as may be appropriate in case of any such breach or attempted breach.
6. Assignment. This Agreement may be assigned by Employer to a successor entity in the event of a merger or consolidation of the Employer or in connection with the sale of all or substantially all of Employer's business or assets.
7. Severability and Reformation. The covenants and restrictions of this Agreement shall be severable, and if any of them is held invalid because of its duration, scope of area or activity, or any other reason, the parties agree that such covenant shall be adjusted or modified by the court to the extent necessary to cure that invalidity, and the modified covenant shall thereafter be enforceable as if originally made in this Agreement.
Page 2 of 4 |
8. Applicable Law. The parties hereto submit to the jurisdiction of the courts of Virginia with respect to this Agreement and all matters arising hereunder and they agree that venue for resolution of any dispute arising hereunder shall be the appropriate state court within Chesterfield County, Virginia or, if applicable, the U.S. District Court for the Eastern District of Virginia, Richmond Division. Questions with respect to the construction and performance of this Agreement and the rights and liabilities of the parties hereunder shall be determined in accordance with the laws of the Commonwealth of Virginia, without regard to its conflicts of laws provisions.
9. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the parties, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth in this Agreement. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by both Employer and Employee. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver or continuing waiver of any other provision hereof. Notwithstanding this paragraph 9 of the Agreement, this Agreement shall be considered an exhibit to the Letter Agreement and therefore neither the Letter Agreement nor this Agreement shall supersede on another. To the extent a conflict arises between the Letter Agreement and this Agreement, the terms of this Agreement shall control for all matters relating to the non-competition, non-solicitation, and confidentiality.
10. Titles and Headings. Titles and headings to provisions of this Agreement are for the purpose of reference only and shall in no way limit, define or otherwise affect the interpretation or construction of such provisions.
11. Modification of Agreement. No provision of this Agreement, including the provisions of this paragraph, may be modified, deleted or amended in any manner except by an agreement in writing executed by the parties hereto.
12. Original Copies. This Agreement may be executed in more than one counterpart, each of which shall be deemed an original.
(Signature Page Follows)
Page 3 of 4 |
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
Dan Valerian | CarLotz, Inc. | ||||
By: | /s/ Dan Valerian | By: | /s/ Aaron Montgomery | ||
Date: | 1/1/2015 | Its: | Chief Operating Officer | ||
Date: | 1/1/2015 |
Page 4 of 4 |
Exhibit 10.32
EXECUTION VERSION
CARLOTZ, INC.
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is made as of September 18, 2017 (the "Effective Date"), by and between CarLotz, Inc., a Delaware corporation (the "Company"), and Aaron S. Montgomery (the "Executive").
WHEREAS, the Company and the Executive previously entered into that certain Amended and Restated Executive Employment Agreement, dated on or about March 28, 2012 (the "Prior Agreement") substantially in the form of this Agreement; and
WHEREAS, the Company and the Executive desire to amend and restate the Prior Agreement in the form of this Agreement such that the Company shall continue to employ the Executive upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, and intending to be legally bound, the Company and the Executive agree as follows:
1. Position. The Company agrees to employ the Executive, and the Executive agrees to serve the Company, initially as its Chief Operating Officer, or in such other capacities as may from time to time be defined by the Company's Board of Directors (the "Board") in its sole discretion. The parties intend that the Executive shall continue to so serve in the aforesaid capacity throughout the Term (as such term is defined below).
2. Term of Employment. The term of the Executive's employment shall be three (3) years and at the end of such term shall renew for annual terms unless sooner terminated under the provisions of Section 5 below, unless at least three (3) months prior to a subsequent annual anniversary thereof either the Executive or the Company gives to the other written notice that the term shall not be renewed at such annual anniversary, in which case the term shall expire on the day before such subsequent anniversary, as the case may be (the "Term").
3. Duties. The Executive throughout the Term shall devote such time and attention to the business and affairs of the Company and its affiliates, if any ("Affiliates"), as required to execute and perform the duties described in the last sentence of this Section 3, subject to applicable Company policy regarding holidays and vacations and except for illness or incapacity. The Executive shall not accept any proposed appointment to serve as a director, manager, trustee or the equivalent of any business, civic, charitable or other organization without the prior written approval of the Board. The Executive shall report directly to the Board, and shall have such duties as are set forth in the Bylaws of the Company or as the Board may assign to him from time to time.
4. Compensation.
(a) Salary. During the Term, the Executive's salary hereunder shall be at the rate of $250,000 per year, payable in accordance the Company's usual payroll practices (such amount being referred to as the "Annual Salary"). The Annual Salary does not include the deferred compensation currently being paid to Executive pursuant to that certain Deferred Compensation Plan, made effective as of June 1, 2015 of the Company (the "Deferred Compensation Plan"), and which shall continue to be paid to Executive pursuant to the Deferred Compensation Plan. When all such deferred compensation has been paid to the Executive pursuant to the Deferred Compensation Plan, the Annual Salary will be adjusted upwards such that the new Annual Salary shall be equal to the total of the former Annual Salary plus $84,792.72. The Company shall review such salary at least annually, taking into account, among other factors, Company and individual performance.
(b) Bonuses. The Board may define specific company- and personal-performance thresholds such that, if achieved, the Executive may earn additional bonus compensation at or around the end of the calendar year. Any such bonus plan shall require as a condition to receiving any bonus that the Executive be employed by the Company on the last day of the calendar year to which it applies and shall stipulate that Executive shall not be entitled to receive any bonus that remains unpaid as of the date of Executive's termination for Due Cause.
(c) Loyalty Agreement. In consideration for the Executive's employment by the Company under the terms of this Agreement (provided that the Executive acknowledges that there can be no guaranty that he will receive any payment hereunder), the Executive hereby agrees to enter into the Amended and Restated Loyalty Agreement in the form attached as Exhibit A hereto (the "Loyalty Agreement") simultaneously with his execution of this Agreement and to abide by the terms thereof.
(d) Benefits. During the Executive's employment by the Company hereunder, the Executive shall be entitled to participate in such retirement, health and employment benefit plans (if any) of the Company that are generally available to senior executives of the Company, provided that such participation would not result in the non-compliance of any such benefit plan with applicable laws governing such plans. Any participation by the Executive in any plan sponsored by the Company shall be pursuant to the terms and conditions of such plans, as the same shall be amended from time to time. The Executive shall be entitled 20 days paid vacation per year. Unused vacation will not carry over from calendar year to calendar year and upon termination of employment, the Executive will not be entitled to any payment for accumulated unused vacation.
(e) Put Right.
(i) The Executive shall have the right to require the Company to redeem shares of the Executive's Common Stock in the Company at a price of $9.83 per share following the Initial Closing, as that term is defined in the Stock Purchase Agreement between the Company and the other parties thereto, dated as of September 8, 2017 (the "Stock Purchase Agreement) (the "First Put Right"); and a second right to require the Company to purchase shares of the Executive's Common Stock in the Company at a price of $9.83 per share following one of Tranche Two, Tranche Three or Tranche Four, as each of those terms are defined in the Stock Purchase Agreement (the "Second Put Right", and together with the First Put Right, the "Put Rights"); provided that the aggregate cash value of the shares redeemed in the First Put Right shall not exceed $500,000 and the aggregate cash value of the shares redeemed in the Put Rights, in total, shall not exceed $1,000,000.
2
(ii) Each Put Right shall be exercised within ninety (90) days of the applicable Closing (as such term is defined in the Stock Purchase Agreement) by the delivery of written notice from the Executive to the Company.
(iii) Promptly after the delivery of written notice, the parties will commence the redemption, and the redemption shall be consummated within thirty (30) days of the Executives delivery of notice.
5. Termination.
(a) Death. In the event of the death of the Executive during the Term, his employment shall be terminated as of the date of death and any salary payable to him, subject to the terms of Section 4(a) above, shall be paid to his designated beneficiary, or in the absence of such designation, to the estate or other legal representative of the Executive. Except in accordance with the terms of the Company's benefit programs and plans then in effect, after the date of his death, the Executive shall not be entitled to any other compensation or benefits from the Company or hereunder.
(b) Disability. In the event of the Executive's Disability, as hereinafter defined, the Company may terminate the employment of the Executive. After termination of employment for Disability, except in accordance with the Company's benefit programs and plans then in effect, the Executive shall not be entitled to any compensation or benefits from the Company or hereunder. "Disability," for purposes of this Agreement, means "disability" within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Any determination of the Executive's Disability made in good faith by the Board shall be conclusive and binding on the Executive, unless within 10 days after written notice to the Executive of such determination, the Executive elects by written notice to the Company to challenge such determination, in which case determination of Disability shall be made by arbitration pursuant to Section 11 below.
(c) Termination by the Company for Due Cause. The Company may terminate the Executive's employment for Due Cause. The Executive shall continue to receive the salary provided for in this Agreement only through the period ending with the date of such termination. Any rights and benefits he may have under employee benefit plans and programs of the Company shall be determined in accordance with the terms of such plans and programs. Except as provided in the two immediately preceding sentences, after termination of employment for Due Cause, the Executive shall not be entitled to any compensation or benefits from the Company or hereunder. "Due Cause," for purposes of this Agreement, means (i) the Executive's committing or engaging in (A) any fraud or theft, misappropriation or embezzlement of funds or other assets of the Company or its customers, vendors, or joint venture partners, or (B) any negligent or reckless acts resulting in or causing material reputational or other material harm or damage to the Company or its subsidiaries, in the good faith reasonable judgment of the Board; (ii) the conviction of the Executive for, or the Executive's plea of guilty or nolo contendere to: (X) any felony or (Y) any other crime (whether or not connected with the Executive's employment); but in each of the above cases, only if such felony or crime involves fraud or moral turpitude or has or could have the effect, in the Board's reasonable and good faith determination, of causing material reputational or other material harm or damage to the Company or its subsidiaries; (iii) any repeated failure of the Executive to be actively engaged in his duties, which failure has not been cured within fifteen (15) days after written notice thereof from the Board specifying in reasonable detail such failure; (iv) the Executive's violation of any reasonable written direction (including any such direction contained in the minutes of any meeting of the Board) or any rule or regulation established by the Board, which violation has not been cured (if curable) by the Executive within fifteen (15) days after written notice thereof from the Board specifying in reasonable detail the violation; (v) any material breach by the Executive of his obligations to the Company (or failure of the Executive to substantially perform his duties) (including any failure to comply with any policies of the Company or the terms of this Agreement or the Loyalty Agreement), which failure has not been cured (if curable) by the Executive within 15 days after written notice thereof from the Board specifying in reasonable detail the failure or breach; or (vi) the Executive's use of (i) illegal drugs, (ii) any illegal substance, or (iii) excessive use of alcohol; in each case only in such a manner that materially interferes with the performance of his duties under this Agreement and includes the Executive's failure to take steps to remedy, or seek treatment for, such use within a medically reasonable period of time after written notice thereof from the Board.
3
(d) Termination by the Company Other than for Due Cause. The foregoing notwithstanding, the Company may terminate the Executive's employment for whatever reason or reasons it deems appropriate, or for no reason whatsoever. Without limiting the foregoing, termination due to the Company's election not to renew this Agreement upon the expiration of the Term shall be deemed to be termination by the Company other than for Due Cause.
(e) Termination of Employment by the Executive for Good Reason. The Executive may terminate his employment for Good Reason. For purposes of this Agreement, "Good Reason" as a basis for termination of the Executive's employment shall mean (i) a material breach by the Company of Section 4(a) or 4(d) of this Agreement (which breach is not cured within 10 days after written notice thereof by the Executive to each of the Directors of the Company, which notice shall specifically describe such alleged breach), (ii) a significant reduction by the Board of the Executive's responsibilities under this Agreement, (iii) a relocation of Executive's place of employment and office of more than fifty (50) miles, or (iv) a significant health problem of the Executive which materially interferes with the Executive's ability to perform his responsibilities hereunder. Upon the occurrence of any of the foregoing, Executive shall provide forty-five (45) days' written notice to Executive's supervisor, and the Company shall have forty-five (45) days to correct any event that has given rise to the right of Executive to resign with Good Reason, except in the case of subsection (iv) which notice shall be given within a reasonable medical period and which the Company shall have no opportunity to correct.
(f) Voluntary Termination. In the event that the Executive terminates his employment at his own volition prior to the expiration of the Term (except for Good Reason as provided in Section 5(e) above), including, without limitation, any termination as a result of the Executive's election not to renew this Agreement, such termination shall constitute a "Voluntary Termination" and in such event the Executive shall be limited to the same rights and benefits as provided in connection with a termination for Due Cause under Section 5(c) above.
4
(g) Severance. Upon any termination by the Company other than for Due Cause, or upon any termination by the Executive for Good Reason, and provided that such termination is not due to the death or Disability of the Executive (except as may be Good Reason pursuant to Section 5(e)(iv) above), the Executive shall be entitled to the Termination Payment (as hereinafter defined) and shall remain subject to and bound by the Loyalty Agreement in accordance with its terms. The term "Termination Payment" shall mean a single cash payment equal to the Annual Salary. Provided that the Executive has been paid any salary in accordance with the terms of Section 4(a) above prior to the effective date of the Executive's termination, any Termination Payment shall be made within sixty (60) days after the effective date of the Executive's termination. Following the Executive's termination of employment under this Section, the Executive will have no further obligation to provide services to the Company pursuant to Sections 1 and 3. Except for the Termination Payment and as otherwise provided in accordance with the terms of this Agreement and the Company's benefit programs and plans then in effect, after termination by the Company of employment for other than death, Disability or Due Cause, the Executive shall not be entitled to any other compensation or benefits from the Company or hereunder.
(h) Notice of Termination; Resignation, Release. Any termination under Section 5(c) by the Company for Due Cause or Section 5(d) by the Company without Due Cause or Section 5(b) for Disability, or by the Executive for Good Reason under Section 5(e), or for a Voluntary Termination by the Executive under Section 5(f), shall be communicated by Notice of Termination to the other party thereto given in accordance with Section 10. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) in the case of termination pursuant to Section 5(c), (d), (e) or (f) (other than an election not to renew), if the termination date is other than the date of receipt of such Notice, specifies the termination date (which date shall not be prior to the date of such notice or more than 15 days after the giving of such Notice).
Notwithstanding anything in this Agreement to the contrary, in order to be eligible to receive any payments or benefits hereunder as a result of the termination of the Executive's employment, in addition to fulfilling all other conditions precedent to such receipt, the Executive (if he has the legal capacity to do so and if not, his legal representative) (i) within two (2) days after the termination date, must resign as a member of the Board if applicable, and as an officer, manager, director and employee of the Company and its Affiliates (which resignation shall be made effective as of the termination date), and (ii) within 30 days after the termination date, on behalf of the Executive and his estate, heirs and representatives, execute a release in form and substance satisfactory to the Company and its legal counsel releasing the Company, its Affiliates and each of the Company's and such Affiliate's respective past, present and future officers, directors, shareholders, members, partners, equity holders, managers, employees, agents, independent contractors, representatives, trustees, advisors, lawyers, accountants, consultants, successors and assigns and each of the foregoing's respective past, present and future affiliates, heirs, estates, representatives, successors and assigns (all of which persons and entities shall be third party beneficiaries of such release with full power to enforce the provisions thereof) from any and all known or unknown claims related to the Executive's employment with the Company or separation from such employment (other than with respect to compensation or benefits to be paid or provided by the Company as specifically set forth above in this Section 5).
5
(i) Earned and Accrued Payments. The foregoing notwithstanding, but subject to Section 4(b) and Section 5(c), upon the termination of the Executive's employment at any time, for any reason, the Executive shall be paid all amounts that had already been earned and accrued as of the time of termination.
(j) Effective Date of Termination. For purposes of this Agreement, the effective date of the Executive's termination shall be deemed to be: (i) in the case of the death of the Executive, the date of death; (ii) in the case of Disability, the date upon which the definition of Disability is satisfied, as determined by the Board in accordance with Section 5(b) or pursuant to arbitration, if elected; (iii) in the case of any termination by the Company under Section 5(c) or 5(d) or by the Executive under Section 5(e) or Section 5(f), the date a Notice of Termination is received by the other party (or such other termination date specified in the Notice of Termination in accordance with Section 5(h)); and in the case of an election not to renew, the last day of employment.
6. Successors and Assigns.
(a) Assignment by the Company. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. The Company may assign this Agreement to any successor to the Company (whether by merger or otherwise) and any corporation or other entity to which the Company may, directly or indirectly, be sold or transfer all or substantially all of its assets and business, in which case the term "Company," as used herein, shall mean such corporation or other successor entity.
(b) Assignment by the Executive. The Executive may not assign this Agreement or any part hereof without the prior written consent of the Company; provided, however, that nothing herein shall preclude the Executive from designating one or more beneficiaries to receive any amount that may be payable following occurrence of his legal incompetency or his death and shall not preclude the legal representative of his estate from assigning any right hereunder to the person or persons entitled thereto under his will or, in the case of intestacy, to the person or persons entitled thereto under the laws of intestacy applicable to his estate. The term "beneficiaries," as used in this Agreement, shall mean a beneficiary or beneficiaries so designated to receive any such amount or, if no beneficiary has been so designated, the legal representative of the Executive (in the event of his incompetency) or the Executive's estate.
7. Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Virginia without reference to the choice or conflict of law principles thereof.
8. Entire Agreement. This Agreement, along with the Loyalty Agreement, contain all of the understandings and representations between the parties hereto pertaining to the matters referred to herein, and supersede all undertakings and agreements, whether oral or in writing, previously entered into by them with respect thereto, including the Prior Agreement. This Agreement may only be modified by an instrument in writing signed by all parties hereto. The terms of this Agreement and the Loyalty Agreement shall be interpreted to be independent agreements such that the parties must comply with the terms of each such agreement. The Loyalty Agreement contains provisions that are intended by the parties to survive and do survive termination or expiration of this Agreement.
6
9. Code Section 409A. To the extent applicable, this Agreement is intended to comply with Section 409A of the Code, and the Company shall interpret and administer the Agreement in accordance therewith. In addition, any provision, including, without limitation, any definition, in this Agreement that is determined to violate the requirements of Code Section 409A shall be void and without effect and any provision, including, without limitation, any definition, that is required to appear in this Agreement under Code Section 409A that is not expressly set forth shall be deemed to be set forth herein, and the Agreement shall be administered in all respects as if such provisions were expressly set forth herein. In addition, the timing of payment of the benefits provided for under this Agreement shall be revised as necessary for compliance with Code Section 409A.
10. Waiver of Breach. The waiver by any party of a breach of any condition or provision of this Agreement to be performed by such other party shall not operate or be construed to be a waiver of a similar or dissimilar provision or condition at the same or any prior or subsequent time.
11. Notices. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been given when mailed by registered or certified mail, or the next business day if sent for next day delivery by a reputable special courier such as Federal Express or United Parcel Service addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice of hereunder in writing.
If to the Company:
CarLotz, Inc.
406 W. Franklin Street
Richmond, VA 23220
Attn: Board of Directors and Chief Executive Officer
With a copy to each of:
McGuireWoods LLP
Gateway Plaza
800 East Canal Street
Richmond, VA 23219-3916
Attn: Bryce D. Jewett III
TRP Capital Partners, LP
2555 Telegraph Road
Bloomfield Hills, MI 48302
7
Attn: Steve Carrel | ||
Drinker Biddle & Reath LLP | ||
One Logan Square, Suite 2000 | ||
Philadelphia, PA 19103 | ||
Attn: H. John Michel, Jr. | ||
If to the Executive: | ||
Aaron S. Montgomery | ||
12. Arbitration. Any controversy or claim arising out of or relating to this Agreement (other than any claim for injunctive or other equitable relief), or any breach thereof, shall be settled by arbitration in Richmond, Virginia in accordance with the rules of the American Arbitration Association then in effect and judgment upon such award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The board of arbitrators shall consist of one arbitrator to be appointed by the Company, one by the Executive, and one by the two arbitrators so chosen. The cost of arbitration shall be allocated between the parties as determined by the arbitrators.
13. Withholding. Anything to the contrary notwithstanding, all payments required to be made by the Company hereunder to the Executive or his estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation.
14. Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions or portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.
15. Titles. Titles to the Sections in this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the title of any Section.
16. Counsel. This Agreement has been prepared in part by counsel to the Company, after full disclosure of its representation of the Company and with the consent and direction of the Executive. The Executive has reviewed the contents of this Agreement and fully understands its terms. The Executive acknowledges that he is fully aware of his right to seek independent advice and the risks in not seeking such independent advice, and that he fully understands the potentially adverse interests of the Company with respect to the this agreement. The Executive further acknowledges that he has been advised of the importance of seeking independent counsel with respect to the tax or other consequences of this Agreement or any matters contemplated by this Agreement or the Executive's employment with the Company. By executing this Agreement, the Executive represents that he has either consulted independent legal counsel or elected, notwithstanding the advisability of seeking such independent legal counsel, not to consult with such independent legal counsel. Each party hereby agrees that in the interpretation or construction of this Agreement, the Agreement shall not be construed against any party on the basis that such party was the drafter of this Agreement or on any other basis.
8
17. Amendment of Prior Agreement. The Prior Agreement is hereby amended, restated, terminated and superseded in its entirety and restated herein. Such amendment and restatement is effective upon the execution of this Agreement by the Company and the Executive. Upon such execution, all provisions of, rights granted and covenants made in the Prior Agreement are hereby waived, released and superseded in their entirety and shall have no further force or effect.
[Signature Page Follows]
9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written.
COMPANY: | |
CARLOTZ, INC. | |
/s/ Michael W. Bor | |
By: Michael W. Bor | |
Its: President & Chief Executive Officer | |
EXECUTIVE: | |
/s/ Aaron S. Montgomery | |
Aaron S. Montgomery |
10
EXECUTION VERSION
CARLOTZ
AMENDED AND RESTATED LOYALTY AGREEMENT
THIS AMENDED AND RESTATED LOYALTY AGREEMENT (this "Agreement") is made as of September 18th, 2017 (the "Effective Date"), by and between CarLotz, Inc., a Delaware corporation (the "CarLotz"), and Aaron S. Montgomery (the "I" or "me").
WHEREAS, on the date hereof, TRP Capital Partners, LP (or one or more of its affiliates) is investing approximately $12 million in CarLotz (the "Transaction") to facilitate its continued growth, including a store expansion that will enable CarLotz to have a nationwide presence, and has committed to, upon the fulfillment of certain conditions, invest additional capital; and
WHEREAS, as part of the Transaction, I have agreed to enter into this Agreement. NOW, THEREFORE, in exchange and consideration for (a) my being employed as an employee, officer, director, or independent contractor of (i) CarLotz, (ii) any affiliate of CarLotz, and/or (iii) any entity with respect to which more than 30% of the outstanding shares or other equity interests thereof are owned, directly or indirectly, by CarLotz (each of (i), (ii) or (iii) for whom I am so employed at any time after the date hereof or for any of whose customers I provide services or products within the Restricted Business (as defined below) on behalf of any of (i), (ii) or (iii) at any time after the date hereof, jointly and severally and together with any successors and assignees under Section 14(d) below, the "Company"), and all wages, salary, bonuses, compensation, and benefits associated with my employment as an employee (whether full-time, part-time, or casual), officer, manager, director, or independent contractor of the Company, (b) certain rights (as set forth in my employment agreement with CarLotz) to have a portion of my equity interest in CarLotz redeemed and (c) for other good and valuable consideration, the receipt and sufficiency of which I hereby acknowledge, do hereby agree as follows:
1. Not an Employment Agreement. I agree, understand and acknowledge that this Agreement is not an employment agreement.
2. Confidential Information.
(a) Company Information. I agree at all times during the term of my employment and thereafter, to hold in strictest confidence, and not to use (except for the benefit of the Company to fulfill my obligations to it) or to disclose to any person, firm or corporation without written authorization of the Board of Directors of the Company (the "Board"), any Confidential Information of the Company. I agree that "Confidential Information" means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, any non-public research, product or service plans, products, services, customer lists, investor lists, and customers and investors (including, but not limited to, customers of the Company on whom I called, to whom I rendered services or provided products or with whom I became acquainted during the term of my employment), pricing, costs, markets, summaries, investment strategies, marketing strategies and other strategies, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration, marketing, financial information or other business information obtained by me or disclosed to me by the Company or any other person or entity during the term of and in connection with my employment with the Company either directly or indirectly in writing, orally by drawings, by observation of services, products, systems or other aspects of the Company's business or otherwise.
(b) Former Employer Information. I agree that I will not, during my employment with the Company, improperly use or disclose any proprietary information or trade secrets of any former or concurrent employer or other person or entity and that I will not bring onto the premises of the Company any unpublished or published document containing confidential or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
(c) Inventions.
(i) Inventions Contributed, Retained and Licensed. I hereby contribute, transfer and assign to the Company all of my right, title and interest in and to any and all patents, patents pending, discoveries, copyrights, trademarks, service marks, original works of authorship, developments, inventions, trade secrets, improvements, enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable, which are related to any items, ideas or activities described on Exhibit A (collectively, "Prior Inventions"), except for those Prior Inventions listed on Exhibit B hereto, ownership of which I hereby retain ("Retained Inventions"). I represent that Exhibit B is a complete list of my Retained Inventions that I desire to have specifically excluded from my obligations under this Section. If no items are listed on Exhibit B, I hereby represent that there are no such Retained Inventions. If in the course of my employment with the Company, I incorporate into a Company product, process or service a Retained Invention owned by me or in which I have an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide, unlimited license to make, have made, modify, use and sell such Retained Invention as part of or in connection with such products, process or service.
(ii) Assignment of Future Inventions.
(A) I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and shall contribute, transfer and assign to the Company, or its designee, all my right, title, and interest in and to any and all patents, patents pending, copyrights, trademarks, service marks, discoveries, original works of authorship, developments, inventions, trade secrets, improvements, enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable, under copyright or similar laws, including without limitation all goodwill associated with the foregoing, which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice during the period of time I am in the employ of the Company (collectively referred to as "Inventions"), but excluding Excluded Inventions (as defined in Section 2(c)(ii)(B) below). I further acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of and during the period of my employment with the Company and which are protected by copyright are "works made for hire," as that term is defined in the United States Copyright Act. I shall not knowingly incorporate any invention, original work of authorship, development, improvement, or trade secret owned, in whole or in part, by any third party, into any Invention without the Company's prior written permission.
2
(B) Inventions covered by Section 2(c)(ii)(A) above do not include any invention that I develop entirely on my own time and to which all of the following apply: (x) its development did not involve the use of any equipment, supplies, facilities or trade secret or proprietary information of the Company; (y) it is not related to or useful to a Restricted Business; and (z) it does not result from any work performed by me for the Company. In addition, the Inventions covered by Section 2(c)(ii)(A) above do not include any Retained Inventions. The inventions described in this Section 2(c)(ii)(B) are collectively referred to as "Excluded Inventions."
(iii) Maintenance of Records. I agree to keep and maintain adequate and current written records of all Inventions made by me (solely or jointly with others) during the term of and in connection with my employment with the Company. The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company. The records will be available to and remain the sole property of the Company at all times.
(iv) Registrations. I agree to assist the Company, or its designee, at the Company's expense, in every proper way to secure the Company's rights in the Inventions and any copyrights, patents, trademarks, service marks, or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, trademarks, service marks or other intellectual property rights relating thereto. I further agree that my obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of my mental or physical incapacity or for any other reason to secure my signature to apply for or to pursue any application for any United States or foreign patents, copyright, trademarks, service marks, or other intellectual property registrations covering Inventions or original works of authorship assigned to the Company as above, then I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright, trademark, service mark, or other intellectual property registrations contemplated by this Section 2(c)(iv) with the same legal force and effect as if executed by me. THIS POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE.
3
(d) Third Party Information. I recognize that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. I agree to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out my work for the Company consistent with the Company's agreement with such third party.
3. Conflicting Employment. Without limiting the application of Section 10 below, I agree that, during the term of my employment with the Company, I will not engage in any other employment, occupation, consulting or other business activity directly related to the Restricted Business without the advance written approval of the Board of the Company. Nor will I engage in any other activities that conflict with the business of the Company. Furthermore, I agree to devote such time as may be necessary to fulfill my obligations to the Company.
4. Returning Company Property. I agree that, at the time of leaving the employ of the Company, I will deliver to the Company (and will not keep in my possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items developed by me or others pursuant to or during my employment with the Company or otherwise belonging to the Company, its successors or assigns. In the event of the termination of my employment, I agree to sign and deliver the "Termination Certification" attached hereto as Exhibit C.
5. Notification of New Employer. In the event that I leave the employ of the Company, I hereby grant consent to notification by the Company to my new employer (whether I am employed as an employee, consultant, independent contractor, director, partner, officer, advisor, executive or manager) about my obligations under this Agreement and delivery by the Company of a copy of this Agreement to any such new employer. For purposes of this Agreement, so long as I am employed by any entity that is a "Company" as defined herein, my employment by the Company shall not be deemed to have terminated or expired.
4
6. Non-Solicitation. I agree that while I am employed by the Company and (a) in the event I terminate my employment by way of a Voluntary Termination (as defined below) or the Company terminates my employment for Due Cause (as defined below) (either event, a "Fault Event"), for a period of two (2) years immediately following any such termination of my employment with the Company, or (b) in the event of a termination or expiration of my employment with the Company for any other reason, for a period of one (1) year immediately following the termination or expiration of my employment with the Company, I shall not directly or indirectly, either on behalf of myself or any other person or entity, (i) intentionally solicit, induce, recruit or encourage any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company to leave his, her or its employment or engagement with the Company, or attempt to solicit, recruit, or take away any such employees or independent contractors (or induce or encourage any such employee or independent contractor to terminate its employment or engagement with the Company); provided that after termination or expiration of my employment, this provision shall only apply to those employees or independent contractors of the Company who (A) are current employees or independent contracts of the Company and (B) were such at any time within 12 months prior to the date of such termination or expiration, (ii) intentionally interfere in any manner with the contractual or employment relationship between the Company and any employee, independent contractor, Customer (as defined below) or supplier of the Company or cause any such employee, independent contractor, Customer or supplier to cease employment with, cease doing business with or reduce the amount of business it does with the Company; provided that after termination or expiration of my employment, this provision shall apply only to the employees, independent contractors, Customers or suppliers of the Company who (A) are current employees, independent contractors, Customers or suppliers of the Company and (B) were such at any time within 12 months prior to such termination or expiration, (iii) after termination or expiration of my employment, hire or otherwise employ any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company or who has provided services to or on behalf of the Company at any time during the prior three month period, or (iv) whether as a direct solicitor or provider of such services or products, or in a management or supervisory capacity over others who solicit or provide such services or products, intentionally solicit or provide services or products that fall within the definition of Restricted Business to any Customer of the Company; provided that after the expiration or termination of my employment, this provision shall only apply to those customers of the Company who are current Customers and were Customers at any time within 12 months prior to the termination or expiration of my employment with the Company. "Customer" shall mean those persons or affiliates to which the Company has rendered services or provided products within the last three months that fall within the definition of Restricted Business (including, for the avoidance of doubt, commercial clients of the Company that provide vehicles to the Company in connection with the services provided by the Company). The terms "Due Cause" and "Voluntary Termination" shall have the respective meanings signed to each such term in the Executive Employment Agreement between me and the Company of even date herewith.
7. Covenants not to Compete. For purposes of this Agreement, the term "Non- Compete Period" shall mean a period from the date hereof until in the case of a Fault Event, two (2) years immediately following the date of termination or expiration of my employment with the Company, or in the event of a termination or expiration for any other reason, for a period of one (1) year immediately following the termination or expiration of my employment with the Company. During the Non-Compete Period, I covenant and agree that I will not, directly or indirectly, (i) own or hold, directly or beneficially, as a shareholder (other than as a shareholder with less than 1% of the outstanding common stock of a publicly traded corporation), option holder, warrant holder, partner, member or other equity or security owner or holder of any company or business that derives revenue from the Restricted Business (as defined below) within the Restricted Area (as defined below), or any company or business controlling, controlled by or under common control with any company or business directly engaged in such Restricted Business within the Restricted Area (any of the foregoing, a "Restricted Company") or (ii) engage or participate as an employee, director, officer, manager, executive, partner, independent contractor, consultant or technical or business advisor (or any foreign equivalents of the foregoing) in the Restricted Activities within the Restricted Area. Nothing in this Section 7 shall preclude me from accepting employment with a multi-division company so long as (x) my employment is not within a division of my new employer that engages in the Restricted Business within the Restricted Area, (y) during the course of such employment, I do not communicate related to Restricted Activities with any division of my new employer engaged in the Restricted Business within the Restricted Area and (z) I do not engage in the Restricted Activities within the Restricted Area.
5
(a) For purposes of this Agreement, the terms "Restricted Activities" and "Restricted Business" shall have the meanings given to them in Exhibit D hereto, and the term "Restricted Area" shall have the following meaning: (i) City of Richmond, Virginia, (ii) any municipality wherein the Company operates the Restricted Business if the Company operated such Restricted Business in such location at any time during the 12 months immediately preceding the termination or expiration of my employment, (iii) any municipality wherein the Company operates the Restricted Business or plans to operate the Restricted Business if the Company planned to operate the Restricted Business in such location as of the termination or expiration of my employment, (iv) any municipality wherein an office of the Company is located, in which office I was physically present while rendering services or providing products in behalf of the Company at any time during the 12 months immediately preceding the termination or expiration of my employment, (v) the area within 50 miles of the municipal limits of each of the foregoing and (vi) any other area in the United States of America.
(b) In the event that I intend to associate (whether as an employee, consultant, independent contractor, officer, manager, advisor, partner, executive or director) with any Restricted Company during the Non-Compete Period, I must provide information in writing to the Board relating to the activities proposed to be engaged in by me for such Restricted Company. All such current associations are set forth on Exhibit E to this Agreement. In the event that the Board consents in writing to my engagement in such activity, the engaging in such activity by me shall be conclusively deemed not to be a violation of Section 7 hereof and the Company may not seek its remedies under Section 8 below with respect to my engaging in such activity.
(c) Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be construed to prohibit any activity which cannot reasonably be construed to further in any meaningful way any competition against the Company.
8. Specific Enforcement; Remedies Cumulative; Attorney Fees. I acknowledge that the Company will be irreparably injured if the provisions of Sections 2, 4, 6 and 7 hereof are not specifically enforced and I agree that the terms of such provisions (including without limitation the periods set forth in Sections 6 and 7) are reasonable and appropriate. If I commit or, in the reasonable belief of the Company, threaten to commit a breach of any of the provisions of Sections 2, 4, 6 and 7 hereof, the Company shall have the right and remedy, in addition to and not in limitation of any other remedy that may be available at law or in equity, to have the provisions of Sections 2, 4, 6 and 7 hereof specifically enforced by any court having jurisdiction through immediate injunctive and other equitable relief, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy therefor. Such injunction shall be available without the posting of any bond or other security. Each party agrees to pay to the other party the other party's reasonable attorney's fees and court costs in obtaining, or defending against, the enforcement of, or determining the validity of, this Agreement or any provision hereof, whether in an action, suit, motion or matter brought by me or the Company (or any other person or entity), provided the other party is the prevailing party in such action, suit, motion or matter.
6
9. Re-Set of Period for Non-Competition and Non-Solicitation. In the event that a legal or equitable action is commenced with respect to any of the provisions of Section 6 or Section 7 hereof and I have not strictly observed the provisions in such sections with respect to which such action has been commenced then the one-year or two-year periods, as applicable, described in such sections not strictly observed by me shall begin to run anew from the date of any Final Judicial Determination of such legal action. "Final Judicial Determination" shall mean the expiration of time to file any possible appeal from a final judgment in such legal action or, if an appeal is taken, the final determination of the final appellate proceeding and that any failure to do so shall constitute a breach of the provisions hereof.
10. Conflict of Interest Guidelines. I agree to diligently adhere to the Conflict of Interest Guidelines attached as Exhibit F hereto and I agree that if I do not adhere to any of the provisions of such Guidelines, I will be in breach of the provisions hereof.
11. Representations. I agree to execute any proper oath or verify any proper document required to carry out the terms of this Agreement. I represent that my performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any oral or written agreement in conflict herewith and my employment by the Company and my services to the Company will not violate the terms of any oral or written agreement to which I am a party.
12. Company Opportunity. During the term of my employment, I shall submit to the Board all business, commercial and investment opportunities or offers presented to me or of which I become aware which relate to the business of the Company at any time during such term ("Company Opportunities"). Unless approved in advance in writing by the Board, I shall not accept or pursue, directly or indirectly, any Company Opportunities on my own behalf.
13. Cooperation. During the term of my employment and thereafter, I shall cooperate with the Company in any internal investigation, any administrative, regulatory or judicial investigation or proceeding or any dispute with a third party as reasonably requested by the Company (including, without limitation, my being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company's request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information and turning over to the Company all relevant documents which are or may come into my possession, all at times and on schedules that are reasonably consistent with my other permitted activities and commitments). In the event the Company requires my cooperation in accordance with this Section, the Company shall reimburse me solely for reasonable travel expenses (including lodging and meals) upon submission of receipts.
14. General Provisions.
(a) Governing Law; Interpretation; Venue; Waiver of Jury Trial. This Agreement will be governed by the internal substantive laws, but not the choice of law rules, of the Commonwealth of Virginia. Nothing in this Agreement shall be construed to prohibit activity could not be in any way competition with the Company or could not help in any way another company or me to compete with the Company.
7
(i) THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE FOLLOWING COURTS IN MATTERS RELATED TO THIS AGREEMENT OR MY EMPLOYMENT WITH THE COMPANY AND AGREE NOT TO COMMENCE ANY SUIT, ACTION OR PROCEEDING RELATING THERETO EXCEPT IN ANY OF SUCH COURTS: THE STATE COURTS OF THE COMMONWEALTH OF VIRGINIA OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA.
(ii) I AGREE TO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY ME, AND I ACKNOWLEDGE THAT, EXCEPT FOR THE COMPANY'S AGREEMENT TO LIKEWISE WAIVE ITS RIGHTS TO A TRIAL BY JURY (WHICH THE COMPANY HEREBY MAKES), COMPANY HAS NOT MADE ANY REPRESENTATIONS OF FACTS TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. I FURTHER ACKNOWLEDGE THAT I HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF MY OWN FREE WILL, AND THAT I HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. I FURTHER ACKNOWLEDGE THAT I HAVE READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF THIS WAIVER AND AS EVIDENCE OF THIS FACT SIGN THIS AGREEMENT BELOW.
(b) Entire Agreement. This Agreement (including the recitals hereto, which are hereby made a binding part of this Agreement, and the Exhibits hereto) sets forth the entire agreement and understanding between the Company and me relating to the subject matter herein and therein and, effective as of the date hereof, merges and supersedes all prior discussions and agreements between the Company and me relating thereto. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the party to be charged.
(c) Severability. If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.
(d) Successors and Assigns. This Agreement will be binding after my death upon my heirs, executors, administrators and other legal representatives, but shall otherwise not be assignable by me. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. The Company may assign this Agreement to any successor to the Company (whether by merger or otherwise) and any corporation or other entity to which the Company may, directly or indirectly, be sold or transfer all or substantially all of its assets and business, in which case the term "Company," as used herein, shall mean such corporation or other successor entity.
8
(e) Reformation. If the provisions of this Agreement should ever be adjudicated to exceed the time, geographic, service, product or other limitations permitted by applicable law in any jurisdiction, I agree that such provisions shall be deemed reformed in such jurisdiction so as to continue to apply to the maximum time, geographic, service, product or other limitations permitted by law in such jurisdiction.
(f) Survival. Notwithstanding the expiration of my employment with the Company, either as an employee, officer, director, or independent contractor, my obligations under Sections 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14 hereof shall survive and remain in full force and effect and the Company shall be entitled to equitable relief against me pursuant to the provisions of Section 8.
(g) Notices. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been given when mailed by registered or certified mail, or the next business day if sent for next day delivery by a reputable special courier such as Federal Express or United Parcel Service addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice of hereunder in writing.
If to Company: | ||
406 W. Franklin Street | ||
Richmond, VA 23220 | ||
Facsimile: 804 698 2249 | ||
Attention: President and Chief Executive Officer | ||
with a copy to (which shall not constitute notice): | ||
McGuireWoods LLP | ||
Gateway Plaza | ||
800 East Canal Street | ||
Richmond, VA 23219-3916 | ||
Attn: Bryce D. Jewett III | ||
TRP Capital Partners, LP | ||
2555 Telegraph Road | ||
Bloomfield Hills, MI 48302 | ||
Attn: Steve Carrel | ||
Drinker Biddle & Reath LLP | ||
One Logan Square, Suite 2000 | ||
Philadelphia, PA 19103 | ||
Attn: H. John Michel, Jr. | ||
If to Aaron S. Montgomery: | ||
9
(h) Counterparts. This Agreement may be executed in one or more counterparts, all of which will be considered one and the same agreement.
15. Counsel. This Agreement has been prepared in part by counsel to the Company, after full disclosure of its representation of the Company and with the consent and direction of all parties. I have reviewed the contents of this Agreement and fully understand its terms. I acknowledge that I am fully aware of my right to seek independent advice and the risks in not seeking such independent advice, and that I fully understand the potentially adverse interests of the parties with respect to this Agreement. I further acknowledge that neither the Company nor its Counsel has made representations or given any advice to me with respect to the consequences of this Agreement or any matters contemplated by this Agreement and that I have been advised of the importance of seeking independent counsel with respect to such consequences. By executing this Agreement, I represent that I have, after being advised of the potential conflicts between me and the Company with respect to the future consequences of this Agreement, either consulted independent legal counsel or elected, notwithstanding the advisability of seeking such independent legal counsel, not to consult with such independent legal counsel. I hereby agree at in interpretation or construction of this Agreement, the Agreement shall not be construed against either party on the basis that such party was the drafter of this Agreement or on any other basis.
16. Amendment of Prior Agreement. I acknowledge that the Company and I previously executed that certain Amended and Restated Loyalty Agreement, dated on or about March 28, 2012 (the "Prior Agreement") substantially in the form of this Agreement. I acknowledge and agree that the Prior Agreement is hereby amended, restated, terminated and superseded in its entirety and restated herein. Such amendment and restatement is effective upon the execution of this Agreement by the Company and I and that upon such execution, all provisions of, rights granted and covenants made in the Prior Agreement are hereby waived, released and superseded in their entirety and shall have no further force or effect.
[Signature Page Follows]
10
IN WITNESS WHEREOF, the Company and I have caused this Agreement to be duly executed to be effective as of the date of execution of the Prior Agreement.
CarLotz, Inc. | ||
By: | /s/ Michael W. Bor | |
Name: | Michael W. Bor | |
Title: | President and Chief Executive Officer | |
Aaron S. Montgomery | ||
/s/ Aaron S. Montgomery |
11
Exhibit 10.33
EXECUTION VERSION
C O N F I D E N T I A L
SEPARATION AND GENERAL RELEASE AGREEMENT
This SEPARATION AND GENERAL RELEASE AGREEMENT (“Agreement”) is made and entered into by and between CarLotz, Inc. (the “Company”) and Aaron S. Montgomery (“Executive”). Executive and the Company shall be referred to in this Agreement as the “Parties” or, each separately, a “Party.” This Agreement is dated as of October 21, 2019.
WHEREAS, Executive has been employed by the Company pursuant to an employment agreement, most recently the Amended and Restated Executive Employment Agreement, dated September 18, 2017 (“Employment Agreement”);
WHEREAS, Executive has proposed to voluntarily terminate his employment pursuant to Section 5(f) of the Employment Agreement; and
WHEREAS, Executive wishes to provide transitional services to the Company for a four-month period following the Separation Date (as defined below), and the Company is willing to pay an agreed upon fee for those services.
THEREFORE, for good and valuable mutual consideration, the receipt of which is hereby acknowledged, and fully intending to be legally bound hereby, Executive and the Company agree as follows:
1. Separation Date. Executive’s voluntary separation from employment shall be effective at the close of business on August 31, 2019 (the “Separation Date”). As of the Separation Date, except as set forth in Section 3 of this Agreement, Executive will relinquish and resign from all titles and positions of any nature that Executive holds or has ever held with the Company, its affiliates and subsidiaries, or any other entity with respect to which the Company has requested Executive to perform services, to the extent he ever held such titles and positions.
2. Valuable Consideration. a. If Executive signs this Agreement, and provided that Executive does not breach this Agreement, the Company shall provide the following benefits to Executive:
i. The Company shall provide Executive with continued healthcare coverage consistent with pre-separation elections, subject to the Executive electing continued coverage under COBRA and paying the same employee share that Executive paid pre-separation, until the earlier of (i) September 1, 2020 or (ii) the date the Executive becomes eligible for coverage under a plan offering benefits that are substantially similar, on the whole, to those provided by the Company’s healthcare plans, whether through a new employer or coverage under a spouse’s plan (“Severance Payment”).
ii. The Company shall pay Executive the Consulting Fee for the Consulting Services to be provided by Executive, as specified and defined in Sections 14 through 17 hereof.
b. The Company will allow Executive to retain his 2015 options, vest the remaining 25% effective November 1, 2019 and extend the exercise period to August 31, 2022, the expiration date in the CarLotz, Inc. 2011 Stock Incentive Plan Share Option Agreement dated November 1, 2015 (“Option Agreement”); provided further that if, at a later date, the 2015 options are extended for active Company employees past their expiration date of August 31, 2022, the same extension shall apply to Executive’s options under the Option Agreement.
3. Personal Guarantee of Floor Plan. Executive has provided a personal guarantee (the “Guarantee”) of the floor plan under the Automotive Finance Corporation Demand Promissory Note and Security Agreement entered into by the Company on January 22, 2016 (the “Floor Plan Debt”). The Company will exercise commercially reasonable efforts to secure replacement financing for the Floor Plan Debt that terminates the Guarantee. Under no circumstances will the Company expand or increase the Aggregate Advance Limit, extend the term, or reduce the security or Collateral provided under the Floor Plan Debt, without terminating, in full, the Guarantee (capitalized terms used in this paragraph are defined as set forth in the Floor Plan Debt). Until the Guarantee is terminated in full, (i) the Company shall promptly forward to Executive copies of all notices provided by either party under the Floor Plan Debt; (ii) the Company will provide Executive with monthly statements of the balances under the Floor Plan Debt and (iii) the Executive will retain his seat on the Company’s Board of Directors (the “Board”) as contemplated by the Company’s Amended and Restated Shareholders Agreement, as amended from time to time (the “Shareholders Agreement”).
4. Return of Company Property. Executive shall immediately return all Company property in his possession (e.g., computer, cellular phone, vehicle) except the Microsoft Surface laptops currently used by the Executive.
5. Representations and Warranties. Executive acknowledges, represents and warrants that, other than the payments to be made pursuant to Section 2 above, Executive has received payment in full of all of the compensation, benefits and/or payments of any kind due him from the Company and its affiliates and subsidiaries (or any of them), including all wages, expense reimbursements, bonuses, equity, incentive pay, payments to benefit plans, and any other payment under any other plan, program, practice, promise, or arrangement of the Company and its subsidiaries and affiliates. Executive understands and agrees that, except as provided herein, Executive is not entitled to any additional compensation or benefits from the Company or any of the other Released Parties (as defined below).
6. Release.
(a) In consideration of the promises contained herein and intending to be legally bound, Executive, for himself, his heirs, executors, administrators, successors, assigns, and legal and personal representatives, hereby unconditionally and irrevocably remises, releases, and forever discharges the Company; each of its subsidiaries, investors, and any other affiliated or related entities; and each of all such entities’ respective current and former officers, consultants, directors, shareholders, agents, Executives, benefit plans, and attorneys (collectively, the “Company Released Parties”) from any and all claims, causes of action, liabilities, obligations, controversies, damages, lawsuits, debts, demands, costs, charges and/or expenses (including attorneys’ fees and costs) of any nature whatsoever, asserted or unasserted, known or unknown, suspected or unsuspected, that Executive ever had, now has or hereafter may have against the Company or any of the other Company Released Parties that arose at any time regarding any matter up to and including the date Executive signs this Agreement. Without in any way limiting the generality of the foregoing, Executive specifically acknowledges and agrees that the claims released herein include, to the maximum extent permitted by law, (a) all discrimination, retaliation, whistleblower, and wrongful termination claims; (b) all claims arising under any federal, state or local statute, ordinance, or regulation, including but not limited to the Americans with Disabilities Act (“ADA”), the Age Discrimination in Employment Act of 1967 (“ADEA”), Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000, et seq., the Civil Rights Act of 1991, the Civil Rights Act of 1866, 42 U.S.C. § 1981, the Employee Retirement Income Security Act (“ERISA”), the Family Medical Leave Act (“FMLA”); the Virginia Human Rights Act, the Virginians with Disabilities Act, the Virginia Payment of Wage Law, and any other employee-protective law of any jurisdiction that may apply; (c) all claims arising under any agreement or contract; (d) all claims arising under any common law, including any claims for breach of any implied or express contract, wrongful or constructive discharge, defamation, unjust enrichment, or negligent or intentional infliction of emotional distress; and (e) all claims arising out of or relating in any way to Executive’s employment with the Company Released Parties, the termination of that employment, Executive’s compensation arrangements, and all attorneys’ fees and costs. Notwithstanding the foregoing, Executive does not release the Released Parties from any claims (i) that may arise under this Agreement, (ii) that may arise under the ADEA based on events that take place after the date on which Executive signed this Agreement; (iii) that cannot be released as a matter of law; or (iv) of fraud.
- 2 -
(b) Subject to Section 12(a) below, Executive agrees to the fullest extent permitted by law that neither he nor any person or entity on his behalf shall commence, maintain or prosecute any lawsuit, complaint, action or proceeding of any kind against the Company or any of the other Company Released Parties with respect to any claim or potential claim that is released by Section 6(a) above.
(c) In consideration of the promises contained herein and intending to be legally bound, the Company, for itself, its successors, assigns, and legal representatives; each of its subsidiaries, investors, and any other affiliated or related entities; and each of all such entities’ respective current and former officers, consultants, directors, shareholders, agents, executives, benefit plans, and attorneys, hereby unconditionally and irrevocably remises, releases, and forever discharges the Executive and his heirs, executors, administrators, successors, assigns, and legal and personal representatives (collectively, the “Executive Released Parties”) from any and all claims, causes of action, liabilities, obligations, controversies, damages, lawsuits, debts, demands, costs, charges and/or expenses (including attorneys’ fees and costs) of any nature whatsoever, asserted or unasserted, known or unknown, suspected or unsuspected, that Company ever had, now has or hereafter may have against the Executive or any of the other Executive Released Parties that arose at any time regarding any matter up to and including the date Company signs this Agreement. Without in any way limiting the generality of the foregoing, Company specifically acknowledges and agrees that the claims released herein include, to the maximum extent permitted by law, (a) all claims arising under any agreement or contract; (b) all claims arising under any common law, including any claims for breach of any implied or express contract, defamation, unjust enrichment, or negligent or intentional infliction of emotional distress; and (c) all claims arising out of or relating in any way to Executive’s employment with the Company Released Parties, the termination of that employment, Executive’s compensation arrangements, and all attorneys’ fees and costs. Notwithstanding the foregoing, Company does not release the Executive Released Parties from any claims (i) that may arise under this Agreement, (ii) that cannot be released as a matter of law; or (iii) of fraud.
- 3 -
(d) Subject to Section 12(b) below, Company agrees to the fullest extent permitted by law that neither it nor any person or entity on its behalf shall commence, maintain or prosecute any lawsuit, complaint, action or proceeding of any kind against the Executive or any of the other Executive Released Parties with respect to any claim or potential claim that is released by Section 6(c) above.
7. | No Other Claims or Proceedings. |
(a) Executive warrants, covenants, and represents that, as of the date that he signs this Agreement, neither he nor anyone acting on his behalf has made or filed any lawsuit, complaint, charge, action or proceeding against any of the Company Released Parties with any federal, state, or local court, agency or authority, or any other regulatory authority.
(b) The Company warrants, covenants, and represents that, as of the date that it signs this Agreement, neither it nor anyone acting on its behalf has made or filed any lawsuit, complaint, charge, action or proceeding against any of the Executive Released Parties with any federal, state, or local court, agency or authority, or any other regulatory authority.
8. | Non-Disparagement. |
(a) Subject to Section 12(a) below, Executive shall not, at any time in the future, disparage or otherwise make statements, electronic, oral or written, that would adversely affect the reputation of the Company or any of its officers, directors or Executives, including to actual or potential customers of the Company, Company vendors or other business partners, the press, or on social media. Notwithstanding the foregoing, this Section 8(a) shall not prohibit Executive from making truthful statements as required by applicable law (e.g., in response to a subpoena or where otherwise compelled to testify).
(b) Subject to Section 12(b) below, the Company agrees that its officers, directors, and executives shall not, at any time in the future disparage or otherwise make statements, electronic, oral or written, that would adversely affect the reputation of Executive, including to actual or potential business partners, the press, or on social media. Notwithstanding the foregoing, this Section 8(b) shall not prohibit the Company’s officers, directors, and executives from making truthful statements as required by applicable law (e.g., in response to a subpoena or where otherwise compelled to testify).
9. Confidentiality. Except as otherwise required by applicable law and subject to Section 12 below, Executive and the Company shall keep the existence and terms of this Agreement strictly confidential, and each shall not disclose (a) the terms or any information concerning this Agreement or (b) any non-public documents or information concerning the Company (as to Executive) or Executive (as to Company), or their respective non-public business practices or activities, to any person or entity, except that each may disclose the terms of this Agreement to current or future attorneys and tax advisors and trusted advisors, each of whom shall have first agreed to be bound by this confidentiality provision. Furthermore, the Company may disclose the terms of this Agreement to the Company’s Board, Chief Executive Officer, and Human Resources personnel, provided that the Company notifies such persons that the existence and terms of this Agreement are confidential and shall not be disclosed to any person or entity except as otherwise permitted by this Agreement.
- 4 -
10. Breach. Upon the breach of this Agreement by either party, the non-defaulting party shall have the remedies available at law and in equity, and the prevailing party in any effort to enforce or defend any rights hereunder will be entitled to reasonably incurred legal, accounting and similar costs. In the event of any breach hereunder, the non-defaulting party shall deliver a notice and a fifteen (15) day opportunity to cure to the defaulting party.
11. Knowing and Voluntary Waiver. Executive acknowledges that he has been given at least 21 days to consider whether to sign the Agreement; that he has carefully reviewed the Agreement before signing it; and that he enters into this Agreement knowingly and voluntarily. Executive understands and acknowledges that the release and other obligations described in this Agreement are in exchange for consideration that is in addition to anything to which Executive is already entitled and that, by this Section, the Company has advised Executive to consult with an attorney of his choosing prior to executing this Agreement. Executive acknowledges that neither the Company nor any of its Executives, representatives or attorneys have made any representations or promises concerning the terms or effects of this Agreement other than those contained herein.
12. | Non-Interference. |
(a) For clarity, the Company confirms that nothing in this Agreement - including in the Confidentiality, Non-Disparagement, and Release sections - is intended to prevent, impede or interfere with Executive’s right, without notice to the Company, to (a) file a charge or complaint with any governmental agency, including any agency that enforces anti-discrimination, workplace safety, securities, or other laws; (b) communicate with, cooperate with or provide truthful information to any governmental agency, or participate in any government investigation; (c) testify truthfully in any court or administrative proceeding; or (d) receive and retain any monetary award from a government administered whistleblower award program for providing information directly to a government agency. However, Executive understands that by signing this Agreement, he has waived his right to recover any money from the Company or any other Released Parties, other than the Severance Payment.
(b) Nothing in this Agreement - including the Confidentiality, Non-disparagement and Release sections - is intended to prevent, impede or interfere with the Company’s right, without notice to the Executive, to (a) communicate with, cooperate with or provide truthful information to any governmental agency, or participate in any government investigation, or (b) testify truthfully in any court or administrative proceeding.
13. Cooperation. In consideration for the Severance Payment, Executive agrees to cooperate with the Company and its affiliates in connection with (i) information requested by the Company as to matters that he worked on during his employment, and (ii) pending or future litigation, investigations, proceedings or other matters involving the Company, its affiliates and/or their Executives, to the extent concerning or relating to any matter falling within Executive’s knowledge or former area of responsibility, such cooperation to include making himself available for meetings, communications, and other litigation-related events as reasonably requested by the Company. The Company agrees to use reasonable efforts to schedule the need for Executive’s cooperation so as to avoid interfering with his personal and other professional obligations. Executive shall be reimbursed for all reasonable expenses incurred by him in providing such cooperation. The Executive’s obligations under this Section 13 will terminate on December 31, 2020.
- 5 -
14. Consulting Services. From the Separation Date to December 31, 2019, unless extended by mutual written agreement by the Parties or terminated earlier pursuant to Section 16 (the “Consulting Period”), as may be requested by the Company, Executive shall provide certain consulting transitional services, at the direction of the Board, which shall include assisting in the orderly transition of job responsibilities to other or new employees of the Company, on the terms expressly contained herein and on such other terms to be mutually agreed upon by the Parties (the “Consulting Services”). Executive shall perform the Consulting Services in a timely, professional and high-quality manner using his best efforts, but otherwise on his schedule and while working from his desired work location.
15. Consulting Compensation. During the Consulting Period, the Company shall compensate Executive for being available to provide the Consulting Services with a monthly fee of Ten Thousand Dollars ($10,000.00), to be paid monthly in arrears (the “Consulting Payment”). The initial Consulting Payment shall be made within five business days after the Effective Date and shall be with respect to September 2019. Executive acknowledges and agrees that there is adequate consideration, not already owed by the Company, set forth herein and paid by the Company for providing the general release of claims in this Agreement. Executive further acknowledges and agrees that he would not be entitled to such compensation but for his execution of this Agreement. The Company will issue a Form 1099 to Executive in connection with the Consulting Payment.
16. Termination of Consulting Arrangement. The Consulting Period shall terminate immediately, and prior to the end date set forth above in Section 14, upon the occurrence of the earlier of (i) Executive’s death or inability due to physical or mental condition to perform the Consulting Services, (ii) Executive’s material breach of this Agreement or (iii) Executive’s failure to perform the covenants set out in Section 14 hereof, after notice from the Company and the opportunity to cure such performance failure within 15 days.
17. Independent Contractor. Executive agrees and acknowledges that the Consulting Services that he provides will be in the nature of consulting only, that after the Separation Date his relationship with the Company will be as an independent contractor and not an Executive, and that after the Separation Date he shall not be entitled to participate in any Executive benefits or benefit or compensation plans offered by the Company. Executive further agrees and acknowledges that he shall have sole responsibility to pay all of the taxes associated with the Consulting Payment, including any social security taxes, unemployment insurance, state income taxes, federal income taxes and all other local, county, state and federal taxes incurred. Executive agrees to indemnify the Released Parties for any taxes due and owing with respect to the Consulting Payment, as well as any interest, costs, expenses, fees, including all reasonable attorneys’ fees, penalties, or other payments that may be incurred as a result of an allegation that any taxes are due and owing, or were not timely paid, with respect to the Consulting Payment.
- 6 -
18. Interpretation and Governing Law. This Agreement will be governed by and construed according to the laws of the Commonwealth of Virginia, without reference to the choice or conflict of law principles thereof. The Parties irrevocably hereby submit to the exclusive jurisdiction and venue of the state and federal courts located within Virginia in any action or proceeding brought with respect to or in connection with this Agreement.
19. Severability. If any provision of this Agreement under any circumstances is deemed invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction.
20. Headings/Counterparts. The section headings used in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions of this Agreement. This Agreement may be executed in two or more counterparts, and facsimile or emailed signature pages shall be treated the same as those with original signatures.
21. Entire Agreement; Amendments.
(a) This Agreement constitutes the entire agreement between Executive and the Company with respect to the subject matter hereof, and it supersedes all prior or contemporaneous agreements or understandings; provided, however, that Executive’s September 18, 2017 Amended and Restated Loyalty Agreement (“Loyalty Agreement”) shall remain in full force and effect and he shall remain bound by any other prior agreements containing post-separation obligations, including as to the non-disclosure and non-use of confidential information belonging to the Company. Amendments to this Agreement shall not be effective unless they are in writing signed by Executive and the President of the Company.
(b) Notwithstanding Section 2 of the Loyalty Agreement, pursuant to the federal Defend Trade Secrets Act of 2016, Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made to Executive’s attorney in relation to a lawsuit for retaliation against Executive for reporting a suspected violation of law; or (c) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
22. Post-Separation Obligations. Executive acknowledges and agrees that he shall continue to be bound by the post-separation restrictions set forth in Sections 2 (Confidential Information), 6 (Non-Solicitation), and 7 (Covenants Not to Compete) of the Loyalty Agreement, and that the Company shall continue to have the right to seek equitable relief against Executive pursuant to Section 8 of the Loyalty Agreement (Specific Enforcement; Remedies Cumulative; Attorney Fees).
- 7 -
23. Section 409A of the Code. It is intended that compensation paid and benefits delivered to Executive pursuant to this Agreement shall be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (collectively, “Section 409A”), and this Agreement should be interpreted and administered in accordance with such intentions. However, the Company does not warrant to Executive that all amounts paid or benefits delivered to him will be exempt from, or paid in compliance with, Section 409A. Executive understands and agrees that he bears the entire risk of any adverse federal, state or local tax consequences and penalty taxes which may result from payment on a basis contrary to the provisions of Section 409A or comparable provisions of any applicable state or local income tax laws. Executive acknowledges that he has been advised to seek the advice of a tax advisor with respect to the tax consequences of all payments pursuant to this Agreement, including any adverse tax consequence under Section 409A and applicable state tax law. In applying Section 409A to amounts paid pursuant to this Agreement, any right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.
24. Effective Date.
(a) To accept the terms of the Agreement, Executive must sign this Agreement no later than November 11, 2019 and deliver it to the Company c/o Michael Bor.
(b) Executive may revoke the Agreement during the seven (7) day period immediately following his execution of the Agreement by delivering written notice of revocation to the Company c/o Michael Bor. Assuming no revocation, the Agreement will become final and binding on the Parties on the eighth day following Employee’s execution of this Agreement (“Effective Date”).
25. Attorneys’ Fees. The Executive shall be reimbursed for reasonable attorneys’ fees and costs incurred in connection with the negotiation and drafting of this Agreement, in an amount not to exceed $3,750.00. BY SIGNING THIS AGREEMENT, AARON S. MONTGOMERY ACKNOWLEDGES THAT HE DOES SO VOLUNTARILY AFTER CAREFULLY READING AND FULLY UNDERSTANDING EACH PROVISION AND ALL OF THE EFFECTS OF THIS AGREEMENT, WHICH INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS AND RESTRICTS FUTURE LEGAL ACTION AGAINST CARLOTZ, INC. AND OTHER RELEASED PARTIES.
[SIGNATURES PAGE FOLLOWS]
- 8 -
IN WITNESS WHEREOF, and intending to be legally bound hereby, the Parties have executed this Agreement.
AARON S. MONTGOMERY | CARLOTZ, INC. | ||||
/s/ Aaron S. Montgomery | / 10/24/19 | By: | /s/ Michael Bor | / 10/21/19 | |
/ Date | Name: | Michael Bor | / Date | ||
Title: | Chief Executive Officer |
Exhibit 10.34
CONSULTING AGREEMENT
This Consulting Agreement (the “Agreement”) is entered into as of October 7, 2020 (the “Effective Date”) by and between CarLotz, Inc., a Delaware corporation (the “Company”), and Aaron Montgomery, an individual residing in the Commonwealth of Virginia (the “Contractor”).
WHEREAS, the Company requests that the Contractor consult with and provide project-based services for the Company regarding general strategy.
WHEREAS, the Company and the Contractor desire to enter into this agreement, which defines the respective rights and duties as to the services to be performed hereunder.
NOW, THEREFORE, in consideration of the mutual terms, conditions and covenants hereinafter set forth, the Company and Contractor agree as follows:
1. Services. Beginning on the Effective Date and remaining in effect until the one year anniversary of the Effective Date (the “Termination Date”), the Contractor shall provide the Company with the services, without limitation, listed on Appendix A attached hereto. The parties may extend the Termination Date in increments mutually agreed to between the parties.
2. Contractor Representations and Warranties. The Contractor makes the following representations and warranties to the Company, which representations and warranties shall survive the termination of this Agreement.
2.1 That he is fully authorized and empowered to enter into this Agreement, and that his performance of the obligations under this Agreement will not violate any agreement between the Contractor and any other person, firm or organization or any law or governmental regulation.
2.2 That he is more than eighteen (18) years of age and not otherwise incapacitated at the time of the Agreement, and by his signature below, he consents to a background and driving history check to be performed by the Company.
2.3 That he will bear all ordinary expenses incurred in the performance of this Agreement, including but not limited to, network/internet service fees, and mobile phone fees. Notwithstanding the foregoing, Contractor may continue to use his Company-issued laptop computer and e-mail during the term of this Agreement, and the Company will reimburse Contractor for extraordinary out of pocket expenses incurred by Contractor on the Company’s behalf, including, but not limited to reasonable travel expenses, provided Contractor follows the Company’s reimbursement policies and such expenses do not exceed $500 without the Company’s prior written consent to increase Contractor’s reimbursement authority incrementally by $500.
1
2.4 Contractor will be the Company’s primary point of contact for the services to be rendered hereunder, but he may subcontract tasks as he sees fit; provided that Contractor shall be solely responsible for any and all payments made to any such subcontractor(s). Contractor shall remain liable for all actions of his subcontractor(s).
3. Company Representations and Warranties. The Company represents and warrants that it is fully authorized and empowered to enter into this Agreement, and that its performance of the obligations under this Agreement will not violate, in any material respect, any agreement between the Company and any other person, firm or organization or any law or governmental regulation.
4. Compensation. The work performed by the Contractor shall be performed for the consideration set forth in Appendix A. The Contractor shall submit an invoice to the Company on a monthly basis for time incurred hereunder, invoiced in arrears. The Company agrees to pay all undisputed invoices within thirty (30) days of receipt.
5. | Independent Contractor Status. |
5.1 The Contractor shall perform his duties as an independent contractor and not as an employee of the Company. Accordingly, the Contractor and the Company each acknowledge and agree that the Contractor will not be treated as an employee of the Company for purposes of the Federal Insurance Contributions Act, the Social Security Act, the Federal Unemployment Tax Act, federal and state income tax withholding, state unemployment taxes, State Workmen's Compensation Insurance and similar laws covering the employer-employee relationship. The Contractor further acknowledges that he is responsible for the payment of any state or federal income tax and that he understands his responsibilities with respect to the payment of these taxes. Nothing in this Agreement shall establish an agency, partnership, joint venture or employee relationship between the Company, on the one hand, and the Contractor, on the other hand. In addition, the parties agree that by virtue of the Contractor providing the services under this Agreement, the Contractor shall not be entitled to any benefits of the Company, including but not limited to life insurance, death benefits, accident or health insurance, qualified pension or retirement plans or other employee benefits.
5.2 The Contractor shall have no authority to act as agent for, or on behalf of, the Company, or to represent the Company, or bind the Company in any manner.
5.3 The Contractor shall not be entitled to workers’ compensation, retirement, insurance or other benefits afforded to employees of the Company.
5.4 As an independent contractor, the Contractor understands and agrees that he is solely responsible for the control and supervision of the means by which the services are performed.
2
6. | Restrictive Covenants. |
6.1 Confidentiality. The Contractor shall not, during the time of rendering services to the Company or thereafter, disclose to anyone other than authorized employees of the Company (or persons designated by such duly authorized employees of the Company) or use for the benefit of the Contractor or for any entity other than the Company, any Confidential Information. For purposes of this Agreement, Confidential Information shall mean know-how, trade secrets, client lists, supplier lists, referral source lists, computer software or data of any sort developed or compiled by the Company, algorithms, source or other computer code, requirements and specifications, procedures, security practices, regulatory compliance information, personnel matters, drawings, specifications, instructions, methods, processes, techniques, formulae, costs, profits or margin information, markets, sales, pricing policies, operational methods, plans for future development, data drawings, samples, processes, products, the financial condition, results of operations, business, properties, assets, liabilities, or future prospects of the Company.
6.2 Non-Solicitation of Customers. Contractor specifically agrees that during the term of this Agreement and for a period of one (1) year after the termination hereof, for whatever reason, or for a period of one (1) year from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event of a breach by Contractor, whichever is later, Contractor covenants and agrees that Contractor shall not, directly or indirectly, whether as proprietor, stockholder, partner, member, officer, consultant, employee or for the benefit of another, solicit, divert, reduce or otherwise modify or attempt to solicit, divert, reduce or otherwise modify, the business of the clients, suppliers, licensors, licensees, franchisees, customers, accounts or business relations, or prospective clients, suppliers, licensors, licensees, franchisees, customers, accounts or business relations, of the Company’s business.
6.3 Non-Solicitation of Employees. Contractor specifically agrees that during the term of this Agreement and for a period of one (1) year after the termination hereof, Contractor shall not, directly or indirectly, whether as proprietor, stockholder, partner, member, officer, consultant, employee or for the benefit of another solicit for employment or hire, assist in the solicitation or hiring, induce of influence, or attempt to induce or influence, any person who was an employee, agent, independent contractor, services vendor, partner, officer, or director of the The Company or any of its affiliates, during the one (1) year period preceding the termination of this Agreement, to terminate his relationship with the Company or any of its affiliates, or to cease providing services to or on behalf of the Company or any of its affiliates, as the case may be.
6.4 Non-Disparagement. Contractor understands and agrees that, as a condition to entering into this Agreement, Contractor will not make any false, disparaging, defamatory or derogatory statements in public or in private regarding the Company or any of its directors, officers, founders, employees, agents, representatives.
3
6.5 Acknowledgement. Contractor recognizes the provisions of this Section 6 shall survive the termination of this Agreement. Contractor further recognizes that the restrictions contained in this Agreement are of mutual benefit to Contractor and the Company, and are supported by full and adequate consideration, that the restrictions and covenants set forth in this Agreement are reasonable and necessary for the protection of the Company’s legitimate business interest and that the Company will suffer irreparable harm in the event of a breach by Contractor of any of the restrictive provisions of this Agreement. Accordingly, the parties agree that in the event of any breach or attempted breach by Contractor of any of the restrictive provisions of this Agreement, the Company shall be entitled to institute and prosecute judicial proceedings with respect to such breach, and to recover such costs, expenses, and reasonable attorneys’ fees as may be incurred by the Company in connection with such proceedings. The parties further recognize that because a remedy at law for any breach or attempted or threatened breach by Contractor shall be inadequate, that, in addition to any other relief or damages available, the Company shall be entitled to enjoin Contractor, without requirement of bond, from engaging in any conduct in violation of this Agreement and seek any other injunctive or equitable relief as may be appropriate in case of any such breach or attempted breach.
7. | Liability. |
7.1 Except as expressly provided in Section 2.3, the Company shall not be responsible for any costs incurred by the Contractor, including, without limitation, any fees or other payments due to subcontractor(s).
7.2 The Contractor shall perform the services set out in this Agreement at his own risk.
7.3 EXCEPT WITH RESPECT TO THE PARTIES’ INDEMNIFICATION OBLIGATIONS, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES ARISING FROM OR RELATED TO THIS AGREEMENT, INCLUDING BODILY INJURY, DEATH, LOSS OF REVENUE, OR PROFITS OR OTHER BENEFITS, AND CLAIMS BY ANY THIRD PARTY, EVEN IF THE PARTIES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE FOREGOING LIMITATION APPLIES TO ALL CAUSES OF ACTION IN THE AGGREGATE, INCLUDING WITHOOUT LIMITATION TO BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY, AND OTHER TORTS.
8. | Disclaimer of Warranty. |
8.1 THE WARRANTIES CONTAINED HEREIN ARE THE ONLY WARRANTIES MADE BY THE PARTIES HEREUNDER. EACH PARTY MAKES NO OTHER WARRANTY, WHETHER EXPRESS OR IMPLIED, AND EXPRESSLY EXCLUDES AND DISCLAIMS ALL OTHER WARRANTIES.
4
9. | Indemnification. |
9.1 The Contractor agrees to indemnify and hold harmless the Company, its affiliates, and its respective officers, shareholders, directors, agents and employees from any and all claims, demands, losses, causes of action, damage, lawsuits, judgments, including reasonable attorneys’ fees and costs of litigation, arising out of, or relating to, the Contractor’s services under this Agreement.
9.2 The Contractor agrees to defend and hold the Company harmless against any and all claims, demands, causes of action, lawsuits, and/or judgments arising out of, or relating to, the Contractor’s services under this Agreement, unless expressly stated otherwise by the Company, in writing.
9.3 The Contractor’s indemnification obligations hereunder shall survive the termination of this Agreement.
10. | Duration, Scope and Severability. |
10.1 This Agreement shall take effect immediately and shall remain in full force and effect until the Termination Date, unless the Termination Date is extended by the parties as provided in Section 1 hereof.
10.2 Either party may terminate this Agreement for any reason upon thirty (30) days written notice to the other.
10.3 This Agreement, and any accompanying appendices, duplicates, or copies, constitutes the entire agreement between the Parties with respect to the subject matter of this Agreement, and supersedes all prior negotiations, agreements, representations, and understandings of any kind, whether written or oral, between the Parties, preceding the date of this Agreement.
10.4 This Agreement may be amended only by written agreement duly executed by an authorized representative of each party.
10.5 If any provision or provisions of this Agreement shall be held unenforceable for any reason, then such provision shall be modified to reflect the parties’ intention. All remaining provisions of this Agreement shall remain in full force and effect for the duration of this Agreement.
10.6 No modifications to this Agreement shall be binding upon the Company without the express, written consent of the Company.
10.7 This Agreement shall not be assigned by either party without the express, written consent of the other party.
5
11. | Governing Law and Jurisdiction. |
11.1 This Agreement shall be governed in all respects by the laws of the Commonwealth of Virginia without regard to its laws or regulations relating to conflicts of laws. In all court proceedings brought in connection with this Agreement, the parties hereto irrevocably consent to non-exclusive personal jurisdiction by, and venue in, the Circuit Court of the County of Henrico, Virginia, and the United States District Court for the Eastern District of Virginia, Richmond Division (to the extent such court has subject matter jurisdiction). Each party waives any right to object to such jurisdiction.
[SIGNATURES APPEAR ON THE NEXT PAGE]
6
IN WITNESS WHEREOF, the parties, intending to be legally bound, have each executed this agreement as of the Effective Date.
CARLOTZ, INC. |
By: | /s/ Michael Bor | |
Name: Michael Bor | ||
Title: CEO |
CONTRACTOR: |
/s/ Aaron Montgomery | ||
Name: | Aaron Montgomery |
7
APPENDIX A
Services (see Section 1):
• | Consult with and provide strategic project-based services for the Company assigned by the Company’s CEO. |
Compensation (see Section 4):
• | $50/hour for project-based tasks |
8
Exhibit 10.35
EXECUTION VERSION
CARLOTZ, INC.
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is made as of September 18, 2017 (the "Effective Date"), by and between CarLotz, Inc., a Delaware corporation (the "Company"), and William S. Boland (the "Executive").
WHEREAS, the Company and the Executive previously entered into that certain Amended and Restated Executive Employment Agreement, dated on or about March 28, 2012 (the "Prior Agreement") substantially in the form of this Agreement; and
WHEREAS, the Company and the Executive desire to amend and restate the Prior Agreement in the form of this Agreement such that the Company shall continue to employ the Executive upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, and intending to be legally bound, the Company and the Executive agree as follows:
1. Position. The Company agrees to employ the Executive, and the Executive agrees to serve the Company, initially as its Chief Marketing Officer, or in such other capacities as may from time to time be defined by the Company's Board of Directors (the "Board") in its sole discretion. The parties intend that the Executive shall continue to so serve in the aforesaid capacity throughout the Term (as such term is defined below).
2. Term of Employment. The term of the Executive's employment shall be three (3) years and at the end of such term shall renew for annual terms unless sooner terminated under the provisions of Section 5 below, unless at least three (3) months prior to a subsequent annual anniversary thereof either the Executive or the Company gives to the other written notice that the term shall not be renewed at such annual anniversary, in which case the term shall expire on the day before such subsequent anniversary, as the case may be (the "Term").
3. Duties. The Executive throughout the Term shall devote such time and attention to the business and affairs of the Company and its affiliates, if any ("Affiliates"), as required to execute and perform the duties described in the last sentence of this Section 3, subject to applicable Company policy regarding holidays and vacations and except for illness or incapacity. The Executive shall not accept any proposed appointment to serve as a director, manager, trustee or the equivalent of any business, civic, charitable or other organization without the prior written approval of the Board. The Executive shall report directly to the Board, and shall have such duties as are set forth in the Bylaws of the Company or as the Board may assign to him from time to time.
4. Compensation.
(a) Salary. During the Term, the Executive's salary hereunder shall be at the rate of $250,000 per year, payable in accordance the Company's usual payroll practices (such amount being referred to as the "Annual Salary"). The Annual Salary does not include the deferred compensation currently being paid to Executive pursuant to that certain Deferred Compensation Plan, made effective as of June 1, 2015 of the Company (the "Deferred Compensation Plan"), and which shall continue to be paid to Executive pursuant to the Deferred Compensation Plan. When all such deferred compensation has been paid to the Executive pursuant to the Deferred Compensation Plan, the Annual Salary will be adjusted upwards such that the new Annual Salary shall be equal to the total of the former Annual Salary plus $84,792.72. The Company shall review such salary at least annually, taking into account, among other factors, Company and individual performance.
(b) Bonuses. The Board may define specific company- and personal-performance thresholds such that, if achieved, the Executive may earn additional bonus compensation at or around the end of the calendar year. Any such bonus plan shall require as a condition to receiving any bonus that the Executive be employed by the Company on the last day of the calendar year to which it applies and shall stipulate that Executive shall not be entitled to receive any bonus that remains unpaid as of the date of Executive's termination for Due Cause.
(c) Loyalty Agreement. In consideration for the Executive's employment by the Company under the terms of this Agreement (provided that the Executive acknowledges that there can be no guaranty that he will receive any payment hereunder), the Executive hereby agrees to enter into the Amended and Restated Loyalty Agreement in the form attached as Exhibit A hereto (the "Loyalty Agreement") simultaneously with his execution of this Agreement and to abide by the terms thereof.
(d) Benefits. During the Executive's employment by the Company hereunder, the Executive shall be entitled to participate in such retirement, health and employment benefit plans (if any) of the Company that are generally available to senior executives of the Company, provided that such participation would not result in the non-compliance of any such benefit plan with applicable laws governing such plans. Any participation by the Executive in any plan sponsored by the Company shall be pursuant to the terms and conditions of such plans, as the same shall be amended from time to time. The Executive shall be entitled 20 days paid vacation per year. Unused vacation will not carry over from calendar year to calendar year and upon termination of employment, the Executive will not be entitled to any payment for accumulated unused vacation.
(e) Put Right.
(i) The Executive shall have the right to require the Company to redeem shares of the Executive's Common Stock in the Company at a price of $9.83 per share following the Initial Closing, as that term is defined in the Stock Purchase Agreement between the Company and the other parties thereto, dated as of September 8, 2017 (the "Stock Purchase Agreement) (the "First Put Right"); and a second right to require the Company to purchase shares of the Executive's Common Stock in the Company at a price of $9.83 per share following one of Tranche Two, Tranche Three or Tranche Four, as each of those terms are defined in the Stock Purchase Agreement (the "Second Put Right", and together with the First Put Right, the "Put Rights"); provided that the aggregate cash value of the shares redeemed in the First Put Right shall not exceed $500,000 and the aggregate cash value of the shares redeemed in the Put Rights, in total, shall not exceed $1,000,000.
2 |
(ii) Each Put Right shall be exercised within ninety (90) days of the applicable Closing (as such term is defined in the Stock Purchase Agreement) by the delivery of written notice from the Executive to the Company.
(iii) Promptly after the delivery of written notice, the parties will commence the redemption, and the redemption shall be consummated within thirty (30) days of the Executives delivery of notice.
5. Termination.
(a) Death. In the event of the death of the Executive during the Term, his employment shall be terminated as of the date of death and any salary payable to him, subject to the terms of Section 4(a) above, shall be paid to his designated beneficiary, or in the absence of such designation, to the estate or other legal representative of the Executive. Except in accordance with the terms of the Company's benefit programs and plans then in effect, after the date of his death, the Executive shall not be entitled to any other compensation or benefits from the Company or hereunder.
(b) Disability. In the event of the Executive's Disability, as hereinafter defined, the Company may terminate the employment of the Executive. After termination of employment for Disability, except in accordance with the Company's benefit programs and plans then in effect, the Executive shall not be entitled to any compensation or benefits from the Company or hereunder. "Disability," for purposes of this Agreement, means "disability" within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Any determination of the Executive's Disability made in good faith by the Board shall be conclusive and binding on the Executive, unless within 10 days after written notice to the Executive of such determination, the Executive elects by written notice to the Company to challenge such determination, in which case determination of Disability shall be made by arbitration pursuant to Section 11 below.
(c) Termination by the Company for Due Cause. The Company may terminate the Executive's employment for Due Cause. The Executive shall continue to receive the salary provided for in this Agreement only through the period ending with the date of such termination. Any rights and benefits he may have under employee benefit plans and programs of the Company shall be determined in accordance with the terms of such plans and programs. Except as provided in the two immediately preceding sentences, after termination of employment for Due Cause, the Executive shall not be entitled to any compensation or benefits from the Company or hereunder. "Due Cause," for purposes of this Agreement, means (i) the Executive's committing or engaging in (A) any fraud or theft, misappropriation or embezzlement of funds or other assets of the Company or its customers, vendors, or joint venture partners, or (B) any negligent or reckless acts resulting in or causing material reputational or other material harm or damage to the Company or its subsidiaries, in the good faith reasonable judgment of the Board; (ii) the conviction of the Executive for, or the Executive's plea of guilty or nolo contendere to: (X) any felony or (Y) any other crime (whether or not connected with the Executive's employment); but in each of the above cases, only if such felony or crime involves fraud or moral turpitude or has or could have the effect, in the Board's reasonable and good faith determination, of causing material reputational or other material harm or damage to the Company or its subsidiaries; (iii) any repeated failure of the Executive to be actively engaged in his duties, which failure has not been cured within fifteen (15) days after written notice thereof from the Board specifying in reasonable detail such failure; (iv) the Executive's violation of any reasonable written direction (including any such direction contained in the minutes of any meeting of the Board) or any rule or regulation established by the Board, which violation has not been cured (if curable) by the Executive within fifteen (15) days after written notice thereof from the Board specifying in reasonable detail the violation; (v) any material breach by the Executive of his obligations to the Company (or failure of the Executive to substantially perform his duties) (including any failure to comply with any policies of the Company or the terms of this Agreement or the Loyalty Agreement), which failure has not been cured (if curable) by the Executive within 15 days after written notice thereof from the Board specifying in reasonable detail the failure or breach; or (vi) the Executive's use of (i) illegal drugs, (ii) any illegal substance, or (iii) excessive use of alcohol; in each case only in such a manner that materially interferes with the performance of his duties under this Agreement and includes the Executive's failure to take steps to remedy, or seek treatment for, such use within a medically reasonable period of time after written notice thereof from the Board.
3 |
(d) Termination by the Company Other than for Due Cause. The foregoing notwithstanding, the Company may terminate the Executive's employment for whatever reason or reasons it deems appropriate, or for no reason whatsoever. Without limiting the foregoing, termination due to the Company's election not to renew this Agreement upon the expiration of the Term shall be deemed to be termination by the Company other than for Due Cause.
(e) Termination of Employment by the Executive for Good Reason. The Executive may terminate his employment for Good Reason. For purposes of this Agreement, "Good Reason" as a basis for termination of the Executive's employment shall mean (i) a material breach by the Company of Section 4(a) or 4(d) of this Agreement (which breach is not cured within 10 days after written notice thereof by the Executive to each of the Directors of the Company, which notice shall specifically describe such alleged breach), (ii) a significant reduction by the Board of the Executive's responsibilities under this Agreement, (iii) a relocation of Executive's place of employment and office of more than fifty (50) miles, or (iv) a significant health problem of the Executive which materially interferes with the Executive's ability to perform his responsibilities hereunder. Upon the occurrence of any of the foregoing, Executive shall provide forty-five (45) days' written notice to Executive's supervisor, and the Company shall have forty-five (45) days to correct any event that has given rise to the right of Executive to resign with Good Reason, except in the case of subsection (iv) which notice shall be given within a reasonable medical period and which the Company shall have no opportunity to correct.
(f) Voluntary Termination. In the event that the Executive terminates his employment at his own volition prior to the expiration of the Term (except for Good Reason as provided in Section 5(e) above), including, without limitation, any termination as a result of the Executive's election not to renew this Agreement, such termination shall constitute a "Voluntary Termination" and in such event the Executive shall be limited to the same rights and benefits as provided in connection with a termination for Due Cause under Section 5(c) above.
4 |
(g) Severance. Upon any termination by the Company other than for Due Cause, or upon any termination by the Executive for Good Reason, and provided that such termination is not due to the death or Disability of the Executive (except as may be Good Reason pursuant to Section 5(e)(iv) above), the Executive shall be entitled to the Termination Payment (as hereinafter defined) and shall remain subject to and bound by the Loyalty Agreement in accordance with its terms. The term "Termination Payment" shall mean a single cash payment equal to the Annual Salary. Provided that the Executive has been paid any salary in accordance with the terms of Section 4(a) above prior to the effective date of the Executive's termination, any Termination Payment shall be made within sixty (60) days after the effective date of the Executive's termination. Following the Executive's termination of employment under this Section, the Executive will have no further obligation to provide services to the Company pursuant to Sections 1 and 3. Except for the Termination Payment and as otherwise provided in accordance with the terms of this Agreement and the Company's benefit programs and plans then in effect, after termination by the Company of employment for other than death, Disability or Due Cause, the Executive shall not be entitled to any other compensation or benefits from the Company or hereunder.
(h) Notice of Termination; Resignation, Release. Any termination under Section 5(c) by the Company for Due Cause or Section 5(d) by the Company without Due Cause or Section 5(b) for Disability, or by the Executive for Good Reason under Section 5(e), or for a Voluntary Termination by the Executive under Section 5(f), shall be communicated by Notice of Termination to the other party thereto given in accordance with Section 10. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) in the case of termination pursuant to Section 5(c), (d), (e) or (f) (other than an election not to renew), if the termination date is other than the date of receipt of such Notice, specifies the termination date (which date shall not be prior to the date of such notice or more than 15 days after the giving of such Notice).
Notwithstanding anything in this Agreement to the contrary, in order to be eligible to receive any payments or benefits hereunder as a result of the termination of the Executive's employment, in addition to fulfilling all other conditions precedent to such receipt, the Executive (if he has the legal capacity to do so and if not, his legal representative) (i) within two (2) days after the termination date, must resign as a member of the Board if applicable, and as an officer, manager, director and employee of the Company and its Affiliates (which resignation shall be made effective as of the termination date), and (ii) within 30 days after the termination date, on behalf of the Executive and his estate, heirs and representatives, execute a release in form and substance satisfactory to the Company and its legal counsel releasing the Company, its Affiliates and each of the Company's and such Affiliate's respective past, present and future officers, directors, shareholders, members, partners, equity holders, managers, employees, agents, independent contractors, representatives, trustees, advisors, lawyers, accountants, consultants, successors and assigns and each of the foregoing's respective past, present and future affiliates, heirs, estates, representatives, successors and assigns (all of which persons and entities shall be third party beneficiaries of such release with full power to enforce the provisions thereof) from any and all known or unknown claims related to the Executive's employment with the Company or separation from such employment (other than with respect to compensation or benefits to be paid or provided by the Company as specifically set forth above in this Section 5).
5 |
(i) Earned and Accrued Payments. The foregoing notwithstanding, but subject to Section 4(b) and Section 5(c), upon the termination of the Executive's employment at any time, for any reason, the Executive shall be paid all amounts that had already been earned and accrued as of the time of termination.
0) Effective Date of Termination. For purposes of this Agreement, the effective date of the Executive's termination shall be deemed to be: (i) in the case of the death of the Executive, the date of death; (ii) in the case of Disability, the date upon which the definition of Disability is satisfied, as determined by the Board in accordance with Section 5(b) or pursuant to arbitration, if elected; (iii) in the case of any termination by the Company under Section 5(c) or 5(d) or by the Executive under Section 5(e) or Section 5(f), the date a Notice of Termination is received by the other party (or such other termination date specified in the Notice of Termination in accordance with Section 5(h)); and in the case of an election not to renew, the last day of employment.
6. Successors and Assigns.
(a) Assignment by the Company. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. The Company may assign this Agreement to any successor to the Company (whether by merger or otherwise) and any corporation or other entity to which the Company may, directly or indirectly, be sold or transfer all or substantially all of its assets and business, in which case the term "Company," as used herein, shall mean such corporation or other successor entity.
(b) Assignment by the Executive. The Executive may not assign this Agreement or any part hereof without the prior written consent of the Company; provided, however, that nothing herein shall preclude the Executive from designating one or more beneficiaries to receive any amount that may be payable following occurrence of his legal incompetency or his death and shall not preclude the legal representative of his estate from assigning any right hereunder to the person or persons entitled thereto under his will or, in the case of intestacy, to the person or persons entitled thereto under the laws of intestacy applicable to his estate. The term "beneficiaries," as used in this Agreement, shall mean a beneficiary or beneficiaries so designated to receive any such amount or, if no beneficiary has been so designated, the legal representative of the Executive (in the event of his incompetency) or the Executive's estate.
7. Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Virginia without reference to the choice or conflict of law principles thereof.
8. Entire Agreement. This Agreement, along with the Loyalty Agreement, contain all of the understandings and representations between the parties hereto pertaining to the matters referred to herein, and supersede all undertakings and agreements, whether oral or in writing, previously entered into by them with respect thereto, including the Prior Agreement. This Agreement may only be modified by an instrument in writing signed by all parties hereto. The terms of this Agreement and the Loyalty Agreement shall be interpreted to be independent agreements such that the parties must comply with the terms of each such agreement. The Loyalty Agreement contains provisions that are intended by the parties to survive and do survive termination or expiration of this Agreement.
6 |
9. Code Section 409A. To the extent applicable, this Agreement is intended to comply with Section 409A of the Code, and the Company shall interpret and administer the Agreement in accordance therewith. In addition, any provision, including, without limitation, any definition, in this Agreement that is determined to violate the requirements of Code Section 409A shall be void and without effect and any provision, including, without limitation, any definition, that is required to appear in this Agreement under Code Section 409A that is not expressly set forth shall be deemed to be set forth herein, and the Agreement shall be administered in all respects as if such provisions were expressly set forth herein. In addition, the timing of payment of the benefits provided for under this Agreement shall be revised as necessary for compliance with Code Section 409A.
10. Waiver of Breach. The waiver by any party of a breach of any condition or provision of this Agreement to be performed by such other party shall not operate or be construed to be a waiver of a similar or dissimilar provision or condition at the same or any prior or subsequent time.
11. Notices. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been given when mailed by registered or certified mail, or the next business day if sent for next day delivery by a reputable special courier such as Federal Express or United Parcel Service addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice of hereunder in writing.
If to the Company:
CarLotz, Inc.
406 W. Franklin Street
Richmond, VA 23220
Attn: Board of Directors and Chief Executive Officer
With a copy to each of:
McGuireWoods LLP
Gateway Plaza
800 East Canal Street
Richmond, VA 23219-3916
Attn: Bryce D. Jewett III
TRP Capital Partners, LP
2555 Telegraph Road
Bloomfield Hills, MI 48302
Attn: Steve Carrel
7 |
Drinker Biddle & Reath LLP
One Logan Square, Suite 2000
Philadelphia, PA 19103
Attn: H. John Michel, Jr.
If to the Executive:
William S. Boland
________________________________
________________________________
12. Arbitration. Any controversy or claim arising out of or relating to this Agreement (other than any claim for injunctive or other equitable relief), or any breach thereof, shall be settled by arbitration in Richmond, Virginia in accordance with the rules of the American Arbitration Association then in effect and judgment upon such award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The board of arbitrators shall consist of one arbitrator to be appointed by the Company, one by the Executive, and one by the two arbitrators so chosen. The cost of arbitration shall be allocated between the parties as determined by the arbitrators.
13. Withholding. Anything to the contrary notwithstanding, all payments required to be made by the Company hereunder to the Executive or his estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation.
14. Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions or portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.
15. Titles. Titles to the Sections in this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the title of any Section.
16. Counsel. This Agreement has been prepared in part by counsel to the Company, after full disclosure of its representation of the Company and with the consent and direction of the Executive. The Executive has reviewed the contents of this Agreement and fully understands its terms. The Executive acknowledges that he is fully aware of his right to seek independent advice and the risks in not seeking such independent advice, and that he fully understands the potentially adverse interests of the Company with respect to the this agreement. The Executive further acknowledges that he has been advised of the importance of seeking independent counsel with respect to the tax or other consequences of this Agreement or any matters contemplated by this Agreement or the Executive's employment with the Company. By executing this Agreement, the Executive represents that he has either consulted independent legal counsel or elected, notwithstanding the advisability of seeking such independent legal counsel, not to consult with such independent legal counsel. Each party hereby agrees that in the interpretation or construction of this Agreement, the Agreement shall not be construed against any party on the basis that such party was the drafter of this Agreement or on any other basis.
8 |
17. Amendment of Prior Agreement. The Prior Agreement is hereby amended, restated, terminated and superseded in its entirety and restated herein. Such amendment and restatement is effective upon the execution of this Agreement by the Company and the Executive. Upon such execution, all provisions of, rights granted and covenants made in the Prior Agreement are hereby waived, released and superseded in their entirety and shall have no further force or effect.
[Signature Page Follows]
9 |
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written.
COMPANY: | |
CARLOTZ, INC. | |
/s/ Michael W. Bor | |
By: Michael W. Bor | |
Its: President & Chief Executive Officer | |
EXECUTIVE: | |
/s/ William S. Boland | |
William S. Boland |
10 |
EXECUTION VERSION
CARLOTZ
AMENDED AND RESTATED LOYALTY AGREEMENT
THIS AMENDED AND RESTATED LOYALTY AGREEMENT (this "Agreement") is made as of September 18th, 2017 (the "Effective Date"), by and between CarLotz, Inc., a Delaware corporation (the "CarLotz"), and William S. Boland (the "I" or "me").
WHEREAS, on the date hereof, TRP Capital Partners, LP (or one or more of its affiliates) is investing approximately $12 million in CarLotz (the "Transaction") to facilitate its continued growth, including a store expansion that will enable CarLotz to have a nationwide presence, and has committed to, upon the fulfillment of certain conditions, invest additional capital; and
WHEREAS, as part of the Transaction, I have agreed to enter into this Agreement.
NOW, THEREFORE, in exchange and consideration for (a) my being employed as an employee, officer, director, or independent contractor of (i) CarLotz, (ii) any affiliate of CarLotz, and/or (iii) any entity with respect to which more than 30% of the outstanding shares or other equity interests thereof are owned, directly or indirectly, by CarLotz (each of (i), (ii) or (iii) for whom I am so employed at any time after the date hereof or for any of whose customers I provide services or products within the Restricted Business (as defined below) on behalf of any of (i), (ii) or (iii) at any time after the date hereof, jointly and severally and together with any successors and assignees under Section 14(d) below, the "Company"), and all wages, salary, bonuses, compensation, and benefits associated with my employment as an employee (whether full-time, part-time, or casual), officer, manager, director, or independent contractor of the Company, (b) certain rights (as set forth in my employment agreement with CarLotz) to have a portion of my equity interest in CarLotz redeemed and (c) for other good and valuable consideration, the receipt and sufficiency of which I hereby acknowledge, do hereby agree as follows:
1. Not an Employment Agreement. I agree, understand and acknowledge that this Agreement is not an employment agreement.
2. Confidential Information.
(a) Company Information. I agree at all times during the term of my employment and thereafter, to hold in strictest confidence, and not to use (except for the benefit of the Company to fulfill my obligations to it) or to disclose to any person, firm or corporation without written authorization of the Board of Directors of the Company (the "Board"), any Confidential Information of the Company. I agree that "Confidential Information" means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, any non-public research, product or service plans, products, services, customer lists, investor lists, and customers and investors (including, but not limited to, customers of the Company on whom I called, to whom I rendered services or provided products or with whom I became acquainted during the term of my employment), pricing, costs, markets, summaries, investment strategies, marketing strategies and other strategies, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration, marketing, financial information or other business information obtained by me or disclosed to me by the Company or any other person or entity during the term of and in connection with my employment with the Company either directly or indirectly in writing, orally by drawings, by observation of services, products, systems or other aspects of the Company's business or otherwise.
(b) Former Employer Information. I agree that I will not, during my employment with the Company, improperly use or disclose any proprietary information or trade secrets of any former or concurrent employer or other person or entity and that I will not bring onto the premises of the Company any unpublished or published document containing confidential or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
(c) Inventions.
(i) Inventions Contributed, Retained and Licensed. I hereby contribute, transfer and assign to the Company all of my right, title and interest in and to any and all patents, patents pending, discoveries, copyrights, trademarks, service marks, original works of authorship, developments, inventions, trade secrets, improvements, enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable, which are related to any items, ideas or activities described on Exhibit A (collectively, "Prior Inventions"), except for those Prior Inventions listed on Exhibit B hereto, ownership of which I hereby retain ("Retained Inventions"). I represent that Exhibit B is a complete list of my Retained Inventions that I desire to have specifically excluded from my obligations under this Section. If no items are listed on Exhibit B, I hereby represent that there are no such Retained Inventions. If in the course of my employment with the Company, I incorporate into a Company product, process or service a Retained Invention owned by me or in which I have an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide, unlimited license to make, have made, modify, use and sell such Retained Invention as part of or in connection with such products, process or service.
(ii) Assignment of Future Inventions.
(A) I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and shall contribute, transfer and assign to the Company, or its designee, all my right, title, and interest in and to any and all patents, patents pending, copyrights, trademarks, service marks, discoveries, original works of authorship, developments, inventions, trade secrets, improvements, enhancements, extensions, innovations, designs, intellectual properties or rights of whatsoever kind or nature, both tangible and intangible, including without limitation all goodwill associated with the foregoing, whether or not patentable or copyrightable, under copyright or similar laws, including without limitation all goodwill associated with the foregoing, which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice during the period of time I am in the employ of the Company (collectively referred to as "Inventions"), but excluding Excluded Inventions (as defined in Section 2(c)(ii)(B) below). I further acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of and during the period of my employment with the Company and which are protected by copyright are "works made for hire," as that term is defined in the United States Copyright Act. I shall not knowingly incorporate any invention, original work of authorship, development, improvement, or trade secret owned, in whole or in part, by any third party, into any Invention without the Company's prior written permission.
2 |
(B) Inventions covered by Section 2(c)(ii)(A) above do not include any invention that I develop entirely on my own time and to which all of the following apply: (x) its development did not involve the use of any equipment, supplies, facilities or trade secret or proprietary information of the Company; (y) it is not related to or useful to a Restricted Business; and (z) it does not result from any work performed by me for the Company. In addition, the Inventions covered by Section 2(c)(ii)(A) above do not include any Retained Inventions. The inventions described in this Section 2(c)(ii)(B) are collectively referred to as "Excluded Inventions."
(iii) Maintenance of Records. I agree to keep and maintain adequate and current written records of all Inventions made by me (solely or jointly with others) during the term of and in connection with my employment with the Company. The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company. The records will be available to and remain the sole property of the Company at all times.
(iv) Registrations. I agree to assist the Company, or its designee, at the Company's expense, in every proper way to secure the Company's rights in the Inventions and any copyrights, patents, trademarks, service marks, or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, trademarks, service marks or other intellectual property rights relating thereto. I further agree that my obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of my mental or physical incapacity or for any other reason to secure my signature to apply for or to pursue any application for any United States or foreign patents, copyright, trademarks, service marks, or other intellectual property registrations covering Inventions or original works of authorship assigned to the Company as above, then I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright, trademark, service mark, or other intellectual property registrations contemplated by this Section 2(c)(iv) with the same legal force and effect as if executed by me. THIS POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE.
3 |
(d) Third Party Information. I recognize that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. I agree to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out my work for the Company consistent with the Company's agreement with such third party.
3 Conflicting Employment. Without limiting the application of Section 10 below, I agree that, during the term of my employment with the Company, I will not engage in any other employment, occupation, consulting or other business activity directly related to the Restricted Business without the advance written approval of the Board of the Company. Nor will I engage in any other activities that conflict with the business of the Company. Furthermore, I agree to devote such time as may be necessary to fulfill my obligations to the Company.
4. Returning Company Property. I agree that, at the time of leaving the employ of the Company, I will deliver to the Company (and will not keep in my possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items developed by me or others pursuant to or during my employment with the Company or otherwise belonging to the Company, its successors or assigns. In the event of the termination of my employment, I agree to sign and deliver the "Termination Certification" attached hereto as Exhibit C.
5. Notification of New Employer. In the event that I leave the employ of the Company, I hereby grant consent to notification by the Company to my new employer (whether I am employed as an employee, consultant, independent contractor, director, partner, officer, advisor, executive or manager) about my obligations under this Agreement and delivery by the Company of a copy of this Agreement to any such new employer. For purposes of this Agreement, so long as I am employed by any entity that is a "Company" as defined herein, my employment by the Company shall not be deemed to have terminated or expired.
6. Non-Solicitation. I agree that while I am employed by the Company and (a) in the event I terminate my employment by way of a Voluntary Termination (as defined below) or the Company terminates my employment for Due Cause (as defined below) (either event, a "Fault Event"), for a period of two (2) years immediately following any such termination of my employment with the Company, or (b) in the event of a termination or expiration of my employment with the Company for any other reason, for a period of one (1) year immediately following the termination or expiration of my employment with the Company, I shall not directly or indirectly, either on behalf of myself or any other person or entity, (i) intentionally solicit, induce, recruit or encourage any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company to leave his, her or its employment or engagement with the Company, or attempt to solicit, recruit, or take away any such employees or independent contractors (or induce or encourage any such employee or independent contractor to terminate its employment or engagement with the Company); provided that after termination or expiration of my employment, this provision shall only apply to those employees or independent contractors of the Company who (A) are current employees or independent contracts of the Company and (B) were such at any time within 12 months prior to the date of such termination or expiration, (ii) intentionally interfere in any manner with the contractual or employment relationship between the Company and any employee, independent contractor, Customer (as defined below) or supplier of the Company or cause any such employee, independent contractor, Customer or supplier to cease employment with, cease doing business with or reduce the amount of business it does with the Company; provided that after termination or expiration of my employment, this provision shall apply only to the employees, independent contractors, Customers or suppliers of the Company who (A) are current employees, independent contractors, Customers or suppliers of the Company and (B) were such at any time within 12 months prior to such termination or expiration, (iii) after termination or expiration of my employment, hire or otherwise employ any employee of the Company or independent contractor of the Company who provides services to or on behalf of the Company or who has provided services to or on behalf of the Company at any time during the prior three month period, or (iv) whether as a direct solicitor or provider of such services or products, or in a management or supervisory capacity over others who solicit or provide such services or products, intentionally solicit or provide services or products that fall within the definition of Restricted Business to any Customer of the Company; provided that after the expiration or termination of my employment, this provision shall only apply to those customers of the Company who are current Customers and were Customers at any time within 12 months prior to the termination or expiration of my employment with the Company. "Customer" shall mean those persons or affiliates to which the Company has rendered services or provided products within the last three months that fall within the definition of Restricted Business (including, for the avoidance of doubt, commercial clients of the Company that provide vehicles to the Company in connection with the services provided by the Company). The terms "Due Cause" and "Voluntary Termination" shall have the respective meanings signed to each such term in the Executive Employment Agreement between me and the Company of even date herewith.
4 |
7 Covenants not to Compete. For purposes of this Agreement, the term "Non-Compete Period" shall mean a period from the date hereof until in the case of a Fault Event, two (2) years immediately following the date of termination or expiration of my employment with the Company, or in the event of a termination or expiration for any other reason, for a period of one (1) year immediately following the termination or expiration of my employment with the Company. During the Non-Compete Period, I covenant and agree that I will not, directly or indirectly, (i) own or hold, directly or beneficially, as a shareholder (other than as a shareholder with less than 1% of the outstanding common stock of a publicly traded corporation), option holder, warrant holder, partner, member or other equity or security owner or holder of any company or business that derives revenue from the Restricted Business (as defined below) within the Restricted Area (as defined below), or any company or business controlling, controlled by or under common control with any company or business directly engaged in such Restricted Business within the Restricted Area (any of the foregoing, a "Restricted Company") or (ii) engage or participate as an employee, director, officer, manager, executive, partner, independent contractor, consultant or technical or business advisor (or any foreign equivalents of the foregoing) in the Restricted Activities within the Restricted Area. Nothing in this Section 7 shall preclude me from accepting employment with a multi-division company so long as (x) my employment is not within a division of my new employer that engages in the Restricted Business within the Restricted Area, (y) during the course of such employment, I do not communicate related to Restricted Activities with any division of my new employer engaged in the Restricted Business within the Restricted Area and (z) I do not engage in the Restricted Activities within the Restricted Area.
5 |
(a) For purposes of this Agreement, the terms "Restricted Activities" and "Restricted Business" shall have the meanings given to them in Exhibit D hereto, and the term "Restricted Area" shall have the following meaning: (i) City of Richmond, Virginia, (ii) any municipality wherein the Company operates the Restricted Business if the Company operated such Restricted Business in such location at any time during the 12 months immediately preceding the termination or expiration of my employment, (iii) any municipality wherein the Company operates the Restricted Business or plans to operate the Restricted Business if the Company planned to operate the Restricted Business in such location as of the termination or expiration of my employment, (iv) any municipality wherein an office of the Company is located, in which office I was physically present while rendering services or providing products in behalf of the Company at any time during the 12 months immediately preceding the termination or expiration of my employment, (v) the area within 50 miles of the municipal limits of each of the foregoing and (vi) any other area in the United States of America.
(b) In the event that I intend to associate (whether as an employee, consultant, independent contractor, officer, manager, advisor, partner, executive or director) with any Restricted Company during the Non-Compete Period, I must provide information in writing to the Board relating to the activities proposed to be engaged in by me for such Restricted Company. All such current associations are set forth on Exhibit E to this Agreement. In the event that the Board consents in writing to my engagement in such activity, the engaging in such activity by me shall be conclusively deemed not to be a violation of Section 7 hereof and the Company may not seek its remedies under Section 8 below with respect to my engaging in such activity.
(c) Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be construed to prohibit any activity which cannot reasonably be construed to further in any meaningful way any competition against the Company.
8. Specific Enforcement; Remedies Cumulative; Attorney Fees. I acknowledge that the Company will be irreparably injured if the provisions of Sections 2, 4, 6 and 7 hereof are not specifically enforced and I agree that the terms of such provisions (including without limitation the periods set forth in Sections 6 and 7) are reasonable and appropriate. If I commit or, in the reasonable belief of the Company, threaten to commit a breach of any of the provisions of Sections 2, 4, 6 and 7 hereof, the Company shall have the right and remedy, in addition to and not in limitation of any other remedy that may be available at law or in equity, to have the provisions of Sections 2, 4, 6 and 7 hereof specifically enforced by any court having jurisdiction through immediate injunctive and other equitable relief, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy therefor. Such injunction shall be available without the posting of any bond or other security. Each party agrees to pay to the other party the other party's reasonable attorney's fees and court costs in obtaining, or defending against, the enforcement of, or determining the validity of, this Agreement or any provision hereof, whether in an action, suit, motion or matter brought by me or the Company (or any other person or entity), provided the other party is the prevailing party in such action, suit, motion or matter.
6 |
9. Re-Set of Period for Non-Competition and Non-Solicitation. In the event that a legal or equitable action is commenced with respect to any of the provisions of Section 6 or Section 7 hereof and I have not strictly observed the provisions in such sections with respect to which such action has been commenced then the one-year or two-year periods, as applicable, described in such sections not strictly observed by me shall begin to run anew from the date of any Final Judicial Determination of such legal action. "Final Judicial Determination" shall mean the expiration of time to file any possible appeal from a final judgment in such legal action or, if an appeal is taken, the final determination of the final appellate proceeding and that any failure to do so shall constitute a breach of the provisions hereof.
10. Conflict of Interest Guidelines. I agree to diligently adhere to the Conflict of Interest Guidelines attached as Exhibit F hereto and I agree that if I do not adhere to any of the provisions of such Guidelines, I will be in breach of the provisions hereof.
11. Representations. I agree to execute any proper oath or verify any proper document required to carry out the terms of this Agreement. I represent that my performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any oral or written agreement in conflict herewith and my employment by the Company and my services to the Company will not violate the terms of any oral or written agreement to which I am a party.
12. Company Opportunity. During the term of my employment, I shall submit to the Board all business, commercial and investment opportunities or offers presented to me or of which I become aware which relate to the business of the Company at any time during such term ("Company Opportunities"). Unless approved in advance in writing by the Board, I shall not accept or pursue, directly or indirectly, any Company Opportunities on my own behalf.
13. Cooperation. During the term of my employment and thereafter, I shall cooperate with the Company in any internal investigation, any administrative, regulatory or judicial investigation or proceeding or any dispute with a third party as reasonably requested by the Company (including, without limitation, my being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company's request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information and turning over to the Company all relevant documents which are or may come into my possession, all at times and on schedules that are reasonably consistent with my other permitted activities and commitments). In the event the Company requires my cooperation in accordance with this Section, the Company shall reimburse me solely for reasonable travel expenses (including lodging and meals) upon submission of receipts.
14. General Provisions.
(a) Governing Law; Interpretation; Venue; Waiver of Jury Trial. This Agreement will be governed by the internal substantive laws, but not the choice of law rules, of the Commonwealth of Virginia. Nothing in this Agreement shall be construed to prohibit activity could not be in any way competition with the Company or could not help in any way another company or me to compete with the Company.
7 |
(i) THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE FOLLOWING COURTS IN MATTERS RELATED TO THIS AGREEMENT OR MY EMPLOYMENT WITH THE COMPANY AND AGREE NOT TO COMMENCE ANY SUIT, ACTION OR PROCEEDING RELATING THERETO EXCEPT IN ANY OF SUCH COURTS: THE STATE COURTS OF THE COMMONWEALTH OF VIRGINIA OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA.
(ii) I AGREE TO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY ME, AND I ACKNOWLEDGE THAT, EXCEPT FOR THE COMPANY'S AGREEMENT TO LIKEWISE WAIVE ITS RIGHTS TO A TRIAL BY JURY (WHICH THE COMPANY HEREBY MAKES), COMPANY HAS NOT MADE ANY REPRESENTATIONS OF FACTS TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. I FURTHER ACKNOWLEDGE THAT I HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF MY OWN FREE WILL, AND THAT I HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. I FURTHER ACKNOWLEDGE THAT I HAVE READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF THIS WAIVER AND AS EVIDENCE OF THIS FACT SIGN THIS AGREEMENT BELOW.
(b) Entire Agreement. This Agreement (including the recitals hereto, which are hereby made a binding part of this Agreement, and the Exhibits hereto) sets forth the entire agreement and understanding between the Company and me relating to the subject matter herein and therein and, effective as of the date hereof, merges and supersedes all prior discussions and agreements between the Company and me relating thereto. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the party to be charged.
(c) Severability. If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.
(d) Successors and Assigns. This Agreement will be binding after my death upon my heirs, executors, administrators and other legal representatives, but shall otherwise not be assignable by me. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. The Company may assign this Agreement to any successor to the Company (whether by merger or otherwise) and any corporation or other entity to which the Company may, directly or indirectly, be sold or transfer all or substantially all of its assets and business, in which case the term "Company," as used herein, shall mean such corporation or other successor entity.
8 |
(e) Reformation. If the provisions of this Agreement should ever be adjudicated to exceed the time, geographic, service, product or other limitations permitted by applicable law in any jurisdiction, I agree that such provisions shall be deemed reformed in such jurisdiction so as to continue to apply to the maximum time, geographic, service, product or other limitations permitted by law in such jurisdiction.
(f) Survival. Notwithstanding the expiration of my employment with the Company, either as an employee, officer, director, or independent contractor, my obligations under Sections 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14 hereof shall survive and remain in full force and effect and the Company shall be entitled to equitable relief against me pursuant to the provisions of Section 8.
(g) Notices. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been given when mailed by registered or certified mail, or the next business day if sent for next day delivery by a reputable special courier such as Federal Express or United Parcel Service addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice of hereunder in writing.
If to Company:
406 W. Franklin Street
Richmond, VA 23220
Facsimile: 804 698 2249
Attention: President and Chief Executive Officer
with a copy to (which shall not constitute notice):
McGuireWoods LLP
Gateway Plaza
800 East Canal Street
Richmond, VA 23219-3916
Attn: Bryce D. Jewett III
TRP Capital Partners, LP
2555 Telegraph Road
Bloomfield Hills, MI 48302
Attn: Steve Carrel
Drinker Biddle & Reath LLP
One Logan Square, Suite 2000
Philadelphia, PA 19103
Attn: H. John Michel, Jr.
9 |
If to William S. Boland:
______________________________________
______________________________________
______________________________________
(h) Counterparts. This Agreement may be executed in one or more counterparts, all of which will be considered one and the same agreement.
15. Counsel. This Agreement has been prepared in part by counsel to the Company, after full disclosure of its representation of the Company and with the consent and direction of all parties. I have reviewed the contents of this Agreement and fully understand its terms. I acknowledge that I am fully aware of my right to seek independent advice and the risks in not seeking such independent advice, and that I fully understand the potentially adverse interests of the parties with respect to this Agreement. I further acknowledge that neither the Company nor its Counsel has made representations or given any advice to me with respect to the consequences of this Agreement or any matters contemplated by this Agreement and that I have been advised of the importance of seeking independent counsel with respect to such consequences. By executing this Agreement, I represent that I have, after being advised of the potential conflicts between me and the Company with respect to the future consequences of this Agreement, either consulted independent legal counsel or elected, notwithstanding the advisability of seeking such independent legal counsel, not to consult with such independent legal counsel. I hereby agree at in interpretation or construction of this Agreement, the Agreement shall not be construed against either party on the basis that such party was the drafter of this Agreement or on any other basis.
16. Amendment of Prior Agreement. I acknowledge that the Company and I previously executed that certain Amended and Restated Loyalty Agreement, dated on or about March 28, 2012 (the "Prior Agreement") substantially in the form of this Agreement. I acknowledge and agree that the Prior Agreement is hereby amended, restated, terminated and superseded in its entirety and restated herein. Such amendment and restatement is effective upon the execution of this Agreement by the Company and I and that upon such execution, all provisions of, rights granted and covenants made in the Prior Agreement are hereby waived, released and superseded in their entirety and shall have no further force or effect.
[Signature Page Follows]
10 |
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written.
COMPANY: | |
CARLOTZ, INC. | |
/s/ Michael W. Bor | |
By: Michael W. Bor | |
Its: President & Chief Executive Officer | |
EXECUTIVE: | |
/s/ William S. Boland | |
William S. Boland |
11 |
Exhibit 10.36
EXECUTION VERSION
C O N F I D E N T I A L
SEPARATION AND GENERAL RELEASE AGREEMENT
This SEPARATION AND GENERAL RELEASE AGREEMENT (“Agreement”) is made and entered into by and between CarLotz, Inc. (the “Company”) and William S. Boland (“Executive”). Executive and the Company shall be referred to in this Agreement as the “Parties” or, each separately, a “Party.” This Agreement is dated as of October 21, 2019.
WHEREAS, Executive has been employed by the Company pursuant to an employment agreement, most recently the Amended and Restated Executive Employment Agreement, dated September 18, 2017 (“Employment Agreement”);
WHEREAS, Executive has proposed to voluntarily terminate his employment pursuant to Section 5(f) of the Employment Agreement; and
WHEREAS, Executive wishes to provide transitional services to the Company for a four-month period following the Separation Date (as defined below), and the Company is willing to pay an agreed upon fee for those services.
THEREFORE, for good and valuable mutual consideration, the receipt of which is hereby acknowledged, and fully intending to be legally bound hereby, Executive and the Company agree as follows:
1. Separation Date. Executive’s voluntary separation from employment shall be effective at the close of business on August 31, 2019 (the “Separation Date”). As of the Separation Date, except as set forth in Section 3 of this Agreement, Executive will relinquish and resign from all titles and positions of any nature that Executive holds or has ever held with the Company, its affiliates and subsidiaries, or any other entity with respect to which the Company has requested Executive to perform services, to the extent he ever held such titles and positions.
2. Valuable Consideration. a. If Executive signs this Agreement, and provided that Executive does not breach this Agreement, the Company shall provide the following benefits to Executive:
i. The Company shall provide Executive with continued healthcare coverage consistent with pre-separation elections, subject to the Executive electing continued coverage under COBRA and paying the same employee share that Executive paid pre-separation, until the earlier of (i) September 1, 2020 or (ii) the date the Executive becomes eligible for coverage under a plan offering benefits that are substantially similar, on the whole, to those provided by the Company’s healthcare plans, whether through a new employer or coverage under a spouse’s plan (“Severance Payment”).
ii. The Company shall pay Executive the Consulting Fee for the Consulting Services to be provided by Executive, as specified and defined in Sections 14 through 17 hereof.
b. The Company will allow Executive to retain his 2015 options, vest the remaining 25% effective November 1, 2019 and extend the exercise period to August 31, 2022, the expiration date in the CarLotz, Inc. 2011 Stock Incentive Plan Share Option Agreement dated November 1, 2015 (“Option Agreement”); provided further that if, at a later date, the 2015 options are extended for active Company employees past their expiration date of August 31, 2022, the same extension shall apply to Executive’s options under the Option Agreement.
3. Personal Guarantee of Floor Plan. Executive has provided a personal guarantee (the “Guarantee”) of the floor plan under the Automotive Finance Corporation Demand Promissory Note and Security Agreement entered into by the Company on January 22, 2016 (the “Floor Plan Debt”). The Company will exercise commercially reasonable efforts to secure replacement financing for the Floor Plan Debt that terminates the Guarantee. Under no circumstances will the Company expand or increase the Aggregate Advance Limit, extend the term, or reduce the security or Collateral provided under the Floor Plan Debt, without terminating, in full, the Guarantee (capitalized terms used in this paragraph are defined as set forth in the Floor Plan Debt). Until the Guarantee is terminated in full, (i) the Company shall promptly forward to Executive copies of all notices provided by either party under the Floor Plan Debt; (ii) the Company will provide Executive with monthly statements of the balances under the Floor Plan Debt and (iii) the Executive will retain his seat on the Company’s Board of Directors (the “Board”) as contemplated by the Company’s Amended and Restated Shareholders Agreement, as amended from time to time (the “Shareholders Agreement”).
4. Return of Company Property. Executive shall immediately return all Company property in his possession (e.g., computer, cellular phone, vehicle) except the Microsoft Surface laptops currently used by the Executive.
5. Representations and Warranties. Executive acknowledges, represents and warrants that, other than the payments to be made pursuant to Section 2 above, Executive has received payment in full of all of the compensation, benefits and/or payments of any kind due him from the Company and its affiliates and subsidiaries (or any of them), including all wages, expense reimbursements, bonuses, equity, incentive pay, payments to benefit plans, and any other payment under any other plan, program, practice, promise, or arrangement of the Company and its subsidiaries and affiliates. Executive understands and agrees that, except as provided herein, Executive is not entitled to any additional compensation or benefits from the Company or any of the other Released Parties (as defined below).
6. | Release. |
(a) In consideration of the promises contained herein and intending to be legally bound, Executive, for himself, his heirs, executors, administrators, successors, assigns, and legal and personal representatives, hereby unconditionally and irrevocably remises, releases, and forever discharges the Company; each of its subsidiaries, investors, and any other affiliated or related entities; and each of all such entities’ respective current and former officers, consultants, directors, shareholders, agents, Executives, benefit plans, and attorneys (collectively, the “Company Released Parties”) from any and all claims, causes of action, liabilities, obligations, controversies, damages, lawsuits, debts, demands, costs, charges and/or expenses (including attorneys’ fees and costs) of any nature whatsoever, asserted or unasserted, known or unknown, suspected or unsuspected, that Executive ever had, now has or hereafter may have against the Company or any of the other Company Released Parties that arose at any time regarding any matter up to and including the date Executive signs this Agreement. Without in any way limiting the generality of the foregoing, Executive specifically acknowledges and agrees that the claims released herein include, to the maximum extent permitted by law, (a) all discrimination, retaliation, whistleblower, and wrongful termination claims; (b) all claims arising under any federal, state or local statute, ordinance, or regulation, including but not limited to the Americans with Disabilities Act (“ADA”), the Age Discrimination in Employment Act of 1967 (“ADEA”), Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000, et seq., the Civil Rights Act of 1991, the Civil Rights Act of 1866, 42 U.S.C. § 1981, the Employee Retirement Income Security Act (“ERISA”), the Family Medical Leave Act (“FMLA”); the Virginia Human Rights Act, the Virginians with Disabilities Act, the Virginia Payment of Wage Law, and any other employee-protective law of any jurisdiction that may apply; (c) all claims arising under any agreement or contract; (d) all claims arising under any common law, including any claims for breach of any implied or express contract, wrongful or constructive discharge, defamation, unjust enrichment, or negligent or intentional infliction of emotional distress; and (e) all claims arising out of or relating in any way to Executive’s employment with the Company Released Parties, the termination of that employment, Executive’s compensation arrangements, and all attorneys’ fees and costs. Notwithstanding the foregoing, Executive does not release the Released Parties from any claims (i) that may arise under this Agreement, (ii) that may arise under the ADEA based on events that take place after the date on which Executive signed this Agreement; (iii) that cannot be released as a matter of law; or (iv) of fraud.
- 2 -
(b) Subject to Section 12(a) below, Executive agrees to the fullest extent permitted by law that neither he nor any person or entity on his behalf shall commence, maintain or prosecute any lawsuit, complaint, action or proceeding of any kind against the Company or any of the other Company Released Parties with respect to any claim or potential claim that is released by Section 6(a) above.
(c) In consideration of the promises contained herein and intending to be legally bound, the Company, for itself, its successors, assigns, and legal representatives; each of its subsidiaries, investors, and any other affiliated or related entities; and each of all such entities’ respective current and former officers, consultants, directors, shareholders, agents, executives, benefit plans, and attorneys, hereby unconditionally and irrevocably remises, releases, and forever discharges the Executive and his heirs, executors, administrators, successors, assigns, and legal and personal representatives (collectively, the “Executive Released Parties”) from any and all claims, causes of action, liabilities, obligations, controversies, damages, lawsuits, debts, demands, costs, charges and/or expenses (including attorneys’ fees and costs) of any nature whatsoever, asserted or unasserted, known or unknown, suspected or unsuspected, that Company ever had, now has or hereafter may have against the Executive or any of the other Executive Released Parties that arose at any time regarding any matter up to and including the date Company signs this Agreement. Without in any way limiting the generality of the foregoing, Company specifically acknowledges and agrees that the claims released herein include, to the maximum extent permitted by law, (a) all claims arising under any agreement or contract; (b) all claims arising under any common law, including any claims for breach of any implied or express contract, defamation, unjust enrichment, or negligent or intentional infliction of emotional distress; and (c) all claims arising out of or relating in any way to Executive’s employment with the Company Released Parties, the termination of that employment, Executive’s compensation arrangements, and all attorneys’ fees and costs. Notwithstanding the foregoing, Company does not release the Executive Released Parties from any claims (i) that may arise under this Agreement, (ii) that cannot be released as a matter of law; or (iii) of fraud.
- 3 -
(d) Subject to Section 12(b) below, Company agrees to the fullest extent permitted by law that neither it nor any person or entity on its behalf shall commence, maintain or prosecute any lawsuit, complaint, action or proceeding of any kind against the Executive or any of the other Executive Released Parties with respect to any claim or potential claim that is released by Section 6(c) above.
7. | No Other Claims or Proceedings. |
(a) Executive warrants, covenants, and represents that, as of the date that he signs this Agreement, neither he nor anyone acting on his behalf has made or filed any lawsuit, complaint, charge, action or proceeding against any of the Company Released Parties with any federal, state, or local court, agency or authority, or any other regulatory authority.
(b) The Company warrants, covenants, and represents that, as of the date that it signs this Agreement, neither it nor anyone acting on its behalf has made or filed any lawsuit, complaint, charge, action or proceeding against any of the Executive Released Parties with any federal, state, or local court, agency or authority, or any other regulatory authority.
8. | Non-Disparagement. |
(a) Subject to Section 12(a) below, Executive shall not, at any time in the future, disparage or otherwise make statements, electronic, oral or written, that would adversely affect the reputation of the Company or any of its officers, directors or Executives, including to actual or potential customers of the Company, Company vendors or other business partners, the press, or on social media. Notwithstanding the foregoing, this Section 8(a) shall not prohibit Executive from making truthful statements as required by applicable law (e.g., in response to a subpoena or where otherwise compelled to testify).
(b) Subject to Section 12(b) below, the Company agrees that its officers, directors, and executives shall not, at any time in the future disparage or otherwise make statements, electronic, oral or written, that would adversely affect the reputation of Executive, including to actual or potential business partners, the press, or on social media. Notwithstanding the foregoing, this Section 8(b) shall not prohibit the Company’s officers, directors, and executives from making truthful statements as required by applicable law (e.g., in response to a subpoena or where otherwise compelled to testify).
9. Confidentiality. Except as otherwise required by applicable law and subject to Section 12 below, Executive and the Company shall keep the existence and terms of this Agreement strictly confidential, and each shall not disclose (a) the terms or any information concerning this Agreement or (b) any non-public documents or information concerning the Company (as to Executive) or Executive (as to Company), or their respective non-public business practices or activities, to any person or entity, except that each may disclose the terms of this Agreement to current or future attorneys and tax advisors and trusted advisors, each of whom shall have first agreed to be bound by this confidentiality provision. Furthermore, the Company may disclose the terms of this Agreement to the Company’s Board, Chief Executive Officer, and Human Resources personnel, provided that the Company notifies such persons that the existence and terms of this Agreement are confidential and shall not be disclosed to any person or entity except as otherwise permitted by this Agreement.
- 4 -
10. Breach. Upon the breach of this Agreement by either party, the non-defaulting party shall have the remedies available at law and in equity, and the prevailing party in any effort to enforce or defend any rights hereunder will be entitled to reasonably incurred legal, accounting and similar costs. In the event of any breach hereunder, the non-defaulting party shall deliver a notice and a fifteen (15) day opportunity to cure to the defaulting party.
11. Knowing and Voluntary Waiver. Executive acknowledges that he has been given at least 21 days to consider whether to sign the Agreement; that he has carefully reviewed the Agreement before signing it; and that he enters into this Agreement knowingly and voluntarily. Executive understands and acknowledges that the release and other obligations described in this Agreement are in exchange for consideration that is in addition to anything to which Executive is already entitled and that, by this Section, the Company has advised Executive to consult with an attorney of his choosing prior to executing this Agreement. Executive acknowledges that neither the Company nor any of its Executives, representatives or attorneys have made any representations or promises concerning the terms or effects of this Agreement other than those contained herein.
12. | Non-Interference. |
(a) For clarity, the Company confirms that nothing in this Agreement – including in the Confidentiality, Non-Disparagement, and Release sections – is intended to prevent, impede or interfere with Executive’s right, without notice to the Company, to (a) file a charge or complaint with any governmental agency, including any agency that enforces anti-discrimination, workplace safety, securities, or other laws; (b) communicate with, cooperate with or provide truthful information to any governmental agency, or participate in any government investigation; (c) testify truthfully in any court or administrative proceeding; or (d) receive and retain any monetary award from a government administered whistleblower award program for providing information directly to a government agency. However, Executive understands that by signing this Agreement, he has waived his right to recover any money from the Company or any other Released Parties, other than the Severance Payment.
(b) Nothing in this Agreement – including the Confidentiality, Non-disparagement and Release sections – is intended to prevent, impede or interfere with the Company’s right, without notice to the Executive, to (a) communicate with, cooperate with or provide truthful information to any governmental agency, or participate in any government investigation, or (b) testify truthfully in any court or administrative proceeding.
13. Cooperation. In consideration for the Severance Payment, Executive agrees to cooperate with the Company and its affiliates in connection with (i) information requested by the Company as to matters that he worked on during his employment, and (ii) pending or future litigation, investigations, proceedings or other matters involving the Company, its affiliates and/or their Executives, to the extent concerning or relating to any matter falling within Executive’s knowledge or former area of responsibility, such cooperation to include making himself available for meetings, communications, and other litigation-related events as reasonably requested by the Company. The Company agrees to use reasonable efforts to schedule the need for Executive’s cooperation so as to avoid interfering with his personal and other professional obligations. Executive shall be reimbursed for all reasonable expenses incurred by him in providing such cooperation. The Executive’s obligations under this Section 13 will terminate on December 31, 2020.
- 5 -
14. Consulting Services. From the Separation Date to December 31, 2019, unless extended by mutual written agreement by the Parties or terminated earlier pursuant to Section 16 (the “Consulting Period”), as may be requested by the Company, Executive shall provide certain consulting transitional services, at the direction of the Board, which shall include assisting in the orderly transition of job responsibilities to other or new employees of the Company, on the terms expressly contained herein and on such other terms to be mutually agreed upon by the Parties (the “Consulting Services”). Executive shall perform the Consulting Services in a timely, professional and high-quality manner using his best efforts, but otherwise on his schedule and while working from his desired work location.
15. Consulting Compensation. During the Consulting Period, the Company shall compensate Executive for being available to provide the Consulting Services with a monthly fee of Ten Thousand Dollars ($10,000.00), to be paid monthly in arrears (the “Consulting Payment”). The initial Consulting Payment shall be made within five business days after the Effective Date and shall be with respect to September 2019. Executive acknowledges and agrees that there is adequate consideration, not already owed by the Company, set forth herein and paid by the Company for providing the general release of claims in this Agreement. Executive further acknowledges and agrees that he would not be entitled to such compensation but for his execution of this Agreement. The Company will issue a Form 1099 to Executive in connection with the Consulting Payment.
16. Termination of Consulting Arrangement. The Consulting Period shall terminate immediately, and prior to the end date set forth above in Section 14, upon the occurrence of the earlier of (i) Executive’s death or inability due to physical or mental condition to perform the Consulting Services, (ii) Executive’s material breach of this Agreement or (iii) Executive’s failure to perform the covenants set out in Section 14 hereof, after notice from the Company and the opportunity to cure such performance failure within 15 days.
17. Independent Contractor. Executive agrees and acknowledges that the Consulting Services that he provides will be in the nature of consulting only, that after the Separation Date his relationship with the Company will be as an independent contractor and not an Executive, and that after the Separation Date he shall not be entitled to participate in any Executive benefits or benefit or compensation plans offered by the Company. Executive further agrees and acknowledges that he shall have sole responsibility to pay all of the taxes associated with the Consulting Payment, including any social security taxes, unemployment insurance, state income taxes, federal income taxes and all other local, county, state and federal taxes incurred. Executive agrees to indemnify the Released Parties for any taxes due and owing with respect to the Consulting Payment, as well as any interest, costs, expenses, fees, including all reasonable attorneys’ fees, penalties, or other payments that may be incurred as a result of an allegation that any taxes are due and owing, or were not timely paid, with respect to the Consulting Payment.
- 6 -
18. Interpretation and Governing Law. This Agreement will be governed by and construed according to the laws of the Commonwealth of Virginia, without reference to the choice or conflict of law principles thereof. The Parties irrevocably hereby submit to the exclusive jurisdiction and venue of the state and federal courts located within Virginia in any action or proceeding brought with respect to or in connection with this Agreement.
19. Severability. If any provision of this Agreement under any circumstances is deemed invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction.
20. Headings/Counterparts. The section headings used in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions of this Agreement. This Agreement may be executed in two or more counterparts, and facsimile or emailed signature pages shall be treated the same as those with original signatures.
21. | Entire Agreement; Amendments. |
(a) This Agreement constitutes the entire agreement between Executive and the Company with respect to the subject matter hereof, and it supersedes all prior or contemporaneous agreements or understandings; provided, however, that Executive’s September 18, 2017 Amended and Restated Loyalty Agreement (“Loyalty Agreement”) shall remain in full force and effect and he shall remain bound by any other prior agreements containing post-separation obligations, including as to the non-disclosure and non-use of confidential information belonging to the Company. Amendments to this Agreement shall not be effective unless they are in writing signed by Executive and the President of the Company.
(b) Notwithstanding Section 2 of the Loyalty Agreement, pursuant to the federal Defend Trade Secrets Act of 2016, Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made to Executive’s attorney in relation to a lawsuit for retaliation against Executive for reporting a suspected violation of law; or (c) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
22. Post-Separation Obligations. Executive acknowledges and agrees that he shall continue to be bound by the post-separation restrictions set forth in Sections 2 (Confidential Information), 6 (Non-Solicitation), and 7 (Covenants Not to Compete) of the Loyalty Agreement, and that the Company shall continue to have the right to seek equitable relief against Executive pursuant to Section 8 of the Loyalty Agreement (Specific Enforcement; Remedies Cumulative; Attorney Fees).
- 7 -
23. Section 409A of the Code. It is intended that compensation paid and benefits delivered to Executive pursuant to this Agreement shall be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (collectively, “Section 409A”), and this Agreement should be interpreted and administered in accordance with such intentions. However, the Company does not warrant to Executive that all amounts paid or benefits delivered to him will be exempt from, or paid in compliance with, Section 409A. Executive understands and agrees that he bears the entire risk of any adverse federal, state or local tax consequences and penalty taxes which may result from payment on a basis contrary to the provisions of Section 409A or comparable provisions of any applicable state or local income tax laws. Executive acknowledges that he has been advised to seek the advice of a tax advisor with respect to the tax consequences of all payments pursuant to this Agreement, including any adverse tax consequence under Section 409A and applicable state tax law. In applying Section 409A to amounts paid pursuant to this Agreement, any right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.
24. | Effective Date. |
(a) To accept the terms of the Agreement, Executive must sign this Agreement no later than November 11, 2019 and deliver it to the Company c/o Michael Bor.
(b) Executive may revoke the Agreement during the seven (7) day period immediately following his execution of the Agreement by delivering written notice of revocation to the Company c/o Michael Bor. Assuming no revocation, the Agreement will become final and binding on the Parties on the eighth day following Employee’s execution of this Agreement (“Effective Date”).
25. Attorneys’ Fees. The Executive shall be reimbursed for reasonable attorneys’ fees and costs incurred in connection with the negotiation and drafting of this Agreement, in an amount not to exceed $3,750.00. BY SIGNING THIS AGREEMENT, WILLIAM S. BOLAND ACKNOWLEDGES THAT HE DOES SO VOLUNTARILY AFTER CAREFULLY READING AND FULLY UNDERSTANDING EACH PROVISION AND ALL OF THE EFFECTS OF THIS AGREEMENT, WHICH INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS AND RESTRICTS FUTURE LEGAL ACTION AGAINST CARLOTZ, INC. AND OTHER RELEASED PARTIES.
[SIGNATURES PAGE FOLLOWS]
- 8 -
IN WITNESS WHEREOF, and intending to be legally bound hereby, the Parties have executed this Agreement.
WILLIAM S. BOLAND | CARLOTZ, INC. | ||||
/s/ WILLIAM S. BOLAND | / 10/24/19 | By: | /s/ Michael Bor | /10/21/19 | |
/ Date | Name: | Michael Bor | / Date | ||
Title: | Chief Executive Officer |
Exhibit 10.37
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is entered into as of October 6, 2020 (the "Effective Date") by and between CarLotz, Inc., a Delaware corporation (the "Company"), and William Boland, an individual residing in the Commonwealth of Virginia (the "Contractor").
WHEREAS, the Company requests that the Contractor consult with and provide project-based services for the Company regarding general real estate and new hub logistics.
WHEREAS, the Company and the Contractor desire to enter into this agreement, which defines the respective rights and duties as to the services to be performed hereunder.
NOW, THEREFORE, in consideration of the mutual terms, conditions and covenants hereinafter set forth, the Company and Contractor agree as follows:
1. Services. Beginning on the Effective Date and remaining in effect until the one year anniversary of the Effective Date (the "Termination Date"), the Contractor shall provide the Company with the services, without limitation, listed on Appendix A attached hereto. The parties may extend the Termination Date in increments mutually agreed to between the parties.
2. Contractor Representations and Warranties. The Contractor makes the following representations and warranties to the Company, which representations and warranties shall survive the termination of this Agreement.
2.1 That he is fully authorized and empowered to enter into this Agreement, and that his performance of the obligations under this Agreement will not violate any agreement between the Contractor and any other person, firm or organization or any law or governmental regulation.
2.2 That he is more than eighteen (18) years of age and not otherwise incapacitated at the time of the Agreement, and by his signature below, he consents to a background and driving history check to be performed by the Company.
2.3 That he will bear all ordinary expenses incurred in the performance of this Agreement, including but not limited to, network/internet service fees, and mobile phone fees. Notwithstanding the foregoing, Contractor may continue to use his Company-issued laptop computer and e-mail during the term of this Agreement, and the Company will reimburse Contractor for extraordinary out of pocket expenses incurred by Contractor on the Company's behalf, including, but not limited to reasonable travel expenses, provided Contractor follows the Company's reimbursement policies and such expenses do not exceed $500 without the Company's prior written consent to increase Contractor's reimbursement authority incrementally by $500.
2.4 Contractor will be the Company's primary point of contact for the services to be rendered hereunder, but he may subcontract tasks as he sees fit; provided that Contractor shall be solely responsible for any and all payments made to any such subcontractor(s). Contractor shall remain liable for all actions of his subcontractor(s).
1
3. Company Representations and Warranties. The Company represents and warrants that it is fully authorized and empowered to enter into this Agreement, and that its performance of the obligations under this Agreement will not violate, in any material respect, any agreement between the Company and any other person, firm or organization or any law or governmental regulation.
4. Compensation. The work performed by the Contractor shall be performed for the consideration set forth in Appendix A. The Contractor shall submit an invoice to the Company on a monthly basis for time incurred hereunder, invoiced in arrears. The Company agrees to pay all undisputed invoices within thirty (30) days of receipt.
5. Independent Contractor Status.
5.1 The Contractor shall perform his duties as an independent contractor and not as an employee of the Company. Accordingly, the Contractor and the Company each acknowledge and agree that the Contractor will not be treated as an employee of the Company for purposes of the Federal Insurance Contributions Act, the Social Security Act, the Federal Unemployment Tax Act, federal and state income tax withholding, state unemployment taxes, State Workmen's Compensation Insurance and similar laws covering the employer-employee relationship. The Contractor further acknowledges that he is responsible for the payment of any state or federal income tax and that he understands his responsibilities with respect to the payment of these taxes. Nothing in this Agreement shall establish an agency, partnership, joint venture or employee relationship between the Company, on the one hand, and the Contractor, on the other hand. In addition, the parties agree that by virtue of the Contractor providing the services under this Agreement, the Contractor shall not be entitled to any benefits of the Company, including but not limited to life insurance, death benefits, accident or health insurance, qualified pension or retirement plans or other employee benefits.
5.2 The Contractor shall have no authority to act as agent for, or on behalf of, the Company, or to represent the Company, or bind the Company in any manner.
5.3 The Contractor shall not be entitled to workers' compensation, retirement, insurance or other benefits afforded to employees of the Company.
5.4 As an independent contractor, the Contractor understands and agrees that he is solely responsible for the control and supervision of the means by which the services are performed.
6. Restrictive Covenants.
6.1 Confidentiality. The Contractor shall not, during the time of rendering services to the Company or thereafter, disclose to anyone other than authorized employees of the Company (or persons designated by such duly authorized employees of the Company) or use for the benefit of the Contractor or for any entity other than the Company, any Confidential Information. For purposes of this Agreement, Confidential Information shall mean know-how, trade secrets, client lists, supplier lists, referral source lists, computer software or data of any sort developed or compiled by the Company, algorithms, source or other computer code, requirements and specifications, procedures, security practices, regulatory compliance information, personnel matters, drawings, specifications, instructions, methods, processes, techniques, formulae, costs, profits or margin information, markets, sales, pricing policies, operational methods, plans for future development, data drawings, samples, processes, products, the financial condition, results of operations, business, properties, assets, liabilities, or future prospects of the Company.
2
6.2 Non-Solicitation of Customers. Contractor specifically agrees that during the term of this Agreement and for a period of one (1) year after the termination hereof, for whatever reason, or for a period of one (1) year from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event of a breach by Contractor, whichever is later, Contractor covenants and agrees that Contractor shall not, directly or indirectly, whether as proprietor, stockholder, partner, member, officer, consultant, employee or for the benefit of another, solicit, divert, reduce or otherwise modify or attempt to solicit, divert, reduce or otherwise modify, the business of the clients, suppliers, licensors, licensees, franchisees, customers, accounts or business relations, or prospective clients, suppliers, licensors, licensees, franchisees, customers, accounts or business relations, of the Company's business.
6.3 Non-Solicitation of Employees. Contractor specifically agrees that during the term of this Agreement and for a period of one (1) year after the termination hereof, Contractor shall not, directly or indirectly, whether as proprietor, stockholder, partner, member, officer, consultant, employee or for the benefit of another solicit for employment or hire, assist in the solicitation or hiring, induce of influence, or attempt to induce or influence, any person who was an employee, agent, independent contractor, services vendor, partner, officer, or director of the The Company or any of its affiliates, during the one (1) year period preceding the termination of this Agreement, to terminate his relationship with the Company or any of its affiliates, or to cease providing services to or on behalf of the Company or any of its affiliates, as the case may be.
6.4 Non-Disparagement. Contractor understands and agrees that, as a condition to entering into this Agreement, Contractor will not make any false, disparaging, defamatory or derogatory statements in public or in private regarding the Company or any of its directors, officers, founders, employees, agents, representatives.
6.5 Acknowledgement. Contractor recognizes the provisions of this Section 6 shall survive the termination of this Agreement. Contractor further recognizes that the restrictions contained in this Agreement are of mutual benefit to Contractor and the Company, and are supported by full and adequate consideration, that the restrictions and covenants set forth in this Agreement are reasonable and necessary for the protection of the Company's legitimate business interest and that the Company will suffer irreparable harm in the event of a breach by Contractor of any of the restrictive provisions of this Agreement. Accordingly, the parties agree that in the event of any breach or attempted breach by Contractor of any of the restrictive provisions of this Agreement, the Company shall be entitled to institute and prosecute judicial proceedings with respect to such breach, and to recover such costs, expenses, and reasonable attorneys' fees as may be incurred by the Company in connection with such proceedings. The parties further recognize that because a remedy at law for any breach or attempted or threatened breach by Contractor shall be inadequate, that, in addition to any other relief or damages available, the Company shall be entitled to enjoin Contractor, without requirement of bond, from engaging in any conduct in violation of this Agreement and seek any other injunctive or equitable relief as may be appropriate in case of any such breach or attempted breach.
3
7. Liability.
7.1 Except as expressly provided in Section 2.3, the Company shall not be responsible for any costs incurred by the Contractor, including, without limitation, any fees or other payments due to subcontractor(s).
7.2 The Contractor shall perform the services set out in this Agreement at his own risk.
7.3 EXCEPT WITH RESPECT TO THE PARTIES' INDEMNIFICATION
OBLIGATIONS, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES ARISING FROM OR RELATED TO THIS AGREEMENT, INCLUDING BODILY INJURY, DEATH, LOSS OF REVENUE, OR PROFITS OR OTHER BENEFITS, AND CLAIMS BY ANY THIRD PARTY, EVEN IF THE PARTIES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE FOREGOING LIMITATION APPLIES TO ALL CAUSES OF ACTION IN THE AGGREGATE, INCLUDING WITHOOLTT LIMITATION TO BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY, AND OTHER TORTS.
8. Disclaimer of Warranty.
8.1 THE WARRANTIES CONTAINED HEREIN ARE THE ONLY WARRANTIES MADE BY THE PARTIES HEREUNDER. EACH PARTY MAKES NO OTHER WARRANTY, WHETHER EXPRESS OR IMPLIED, AND EXPRESSLY EXCLUDES AND DISCLAIMS ALL OTHER WARRANTIES.
9. Indemnification.
9.1 The Contractor agrees to indemnify and hold harmless the Company, its affiliates, and its respective officers, shareholders, directors, agents and employees from any and all claims, demands, losses, causes of action, damage, lawsuits, judgments, including reasonable attorneys' fees and costs of litigation, arising out of, or relating to, the Contractor's services under this Agreement.
4
9.2 The Contractor agrees to defend and hold the Company harmless against any and all claims, demands, causes of action, lawsuits, and/or judgments arising out of, or relating to, the Contractor's services under this Agreement, unless expressly stated otherwise by the Company, in writing.
9.3 The Contractor's indemnification obligations hereunder shall survive the termination of this Agreement.
10. Duration, Scope and Severability.
10.1 This Agreement shall take effect immediately and shall remain in full force and effect until the Termination Date, unless the Termination Date is extended by the parties as provided in Section 1 hereof.
10.2 Either party may terminate this Agreement for any reason upon thirty (30) days written notice to the other.
10.3 This Agreement, and any accompanying appendices, duplicates, or copies, constitutes the entire agreement between the Parties with respect to the subject matter of this Agreement, and supersedes all prior negotiations, agreements, representations, and understandings of any kind, whether written or oral, between the Parties, preceding the date of this Agreement.
10.4 This Agreement may be amended only by written agreement duly executed by an authorized representative of each party.
10.5 If any provision or provisions of this Agreement shall be held unenforceable for any reason, then such provision shall be modified to reflect the parties' intention. All remaining provisions of this Agreement shall remain in full force and effect forthe duration of this Agreement.
10.6 No modifications to this Agreement shall be binding upon the Company without the express, written consent of the Company.
10.7 This Agreement shall not be assigned by either party without the express, written consent of the other party.
5
11. Governing Law and Jurisdiction.
11.1 This Agreement shall be governed in all respects by the laws of the Commonwealth of Virginia without regard to its laws or regulations relating to conflicts of laws. In all court proceedings brought in connection with this Agreement, the parties hereto irrevocably consent to non-exclusive personal jurisdiction by, and venue in, the Circuit Court of the County of Henrico, Virginia, and the United States District Court for the Eastern District of Virginia, Richmond Division (to the extent such court has subject matter jurisdiction). Each party waives any right to object to such jurisdiction.
[SIGNATURES APPEAR ON THE NEXT PAGE]
6
IN WITNESS WHEREOF, the parties, intending to be legally bound, have each executed this agreement as of the Effective Date.
CARLOTZ,INC. | ||
By: | /s/ Michael Bor | |
Name:. Michael Bor | ||
Title: CEO | ||
CONTRACTOR: | ||
/s/ William Boland | ||
Name: William Boland |
7
APPENDIX A
Services (see Section 1):
· | Consult with and provide project-based services for the Company regarding: |
o | Working with the Company's outsourced real estate team to source, evaluate, and secure real estate for new Company hub locations |
o | Project management work such as assisting with new location logistics, ordering furniture & assisting with new dealer licenses. |
· | Other matters as assigned by the Company's CEO. |
Compensation (see Section 4):
· | $50/hour for project-based tasks |
8
Exhibit 21.1
SUBSIDIARIES OF CARLOTZ, INC.
The following are the subsidiaries of CarLotz, Inc. as of December 16, 2020:
Subsidiary | Jurisdiction of Organization | |
Orange Grove Fleet Solutions, LLC | Virginia | |
Orange Peel, LLC | Virginia | |
Orange Peel Reinsurance Company, Ltd. | Turks and Caicos Islands, British West Indies | |
Orange Peel Protection Reinsurance, Ltd | Turks and Caicos Islands, British West Indies |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in the Prospectus constituting a part of this Registration Statement on Amendment No. 1 to Form S-4 of our report dated March 27, 2020 (which includes an explanatory paragraph relating to Acamar Partners Acquisition Corp.’s ability to continue as a going concern), relating to the financial statements of Acamar Partners Acquisition Corp., which is contained in that Prospectus. We also consent to the reference to us under the caption “Experts” in the Prospectus.
/s/ WithumSmith+Brown, PC | |
New York, New York | |
December 15, 2020 |
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Registration Statement No. 333-249723 on Form S-4 of our report dated October 29, 2020, relating to the financial statements of CarLotz, Inc. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/DELOITTE & TOUCHE LLP
Detroit, Michigan
December 16, 2020
Exhibit 99.5
December 16, 2020
Acamar Partner Acquisition Corp.
1450 Brickell Avenue, Suite 2130
Miami, Florida 33131
Consent to Reference in Proxy Statement/Prospectus/Consent Solicitation Statement
Acamar Partners Acquisition Corp. (the “Company”) is filing a Registration Statement on Form S-4 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”). In connection therewith, I hereby consent, pursuant to Rule 438 of the Securities Act, to the reference to me in the proxy statement/prospectus/consent solicitation statement included in such Registration Statement as a future member of the board of directors of the Company, such appointment to commence upon the effective time of the merger described in the proxy statement/prospectus/consent solicitation statement.
Sincerely,
/s/ Linda B. Abraham | |
Linda B. Abraham |
Exhibit 99.6
December 16, 2020
Acamar Partner Acquisition Corp.
1450 Brickell Avenue, Suite 2130
Miami, Florida 33131
Consent to Reference in Proxy Statement/Prospectus/Consent Solicitation Statement
Acamar Partners Acquisition Corp. (the “Company”) is filing a Registration Statement on Form S-4 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”). In connection therewith, I hereby consent, pursuant to Rule 438 of the Securities Act, to the reference to me in the proxy statement/prospectus/consent solicitation statement included in such Registration Statement as a future member of the board of directors of the Company, such appointment to commence upon the effective time of the merger described in the proxy statement/prospectus/consent solicitation statement.
Sincerely,
/s/ Sarah M. Kauss | |
Sarah M. Kauss |
Exhibit 99.7
December 16, 2020
Acamar Partner Acquisition Corp.
1450 Brickell Avenue, Suite 2130
Miami, Florida 33131
Consent to Reference in Proxy Statement/Prospectus/Consent Solicitation Statement
Acamar Partners Acquisition Corp. (the “Company”) is filing a Registration Statement on Form S-4 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”). In connection therewith, I hereby consent, pursuant to Rule 438 of the Securities Act, to the reference to me in the proxy statement/prospectus/consent solicitation statement included in such Registration Statement as a future member of the board of directors of the Company, such appointment to commence upon the effective time of the merger described in the proxy statement/prospectus/consent solicitation statement.
Sincerely,
/s/ Kimberly H. Sheehy | |
Kimberly H. Sheehy |
Exhibit 99.8
WRITTEN CONSENT IN LIEU OF A MEETING OF STOCKHOLDERS OF CARLOTZ, INC.
[●], 2021
The undersigned (the “Stockholder”), being a holder of shares of common stock of CarLotz, Inc., a Delaware corporation, (the “Company ”), acting pursuant to Section 228(a) and Section 251 of the General Corporation Law of the State of Delaware (the “DGCL”), does hereby irrevocably consent to the adoption of the following resolutions in lieu of a meeting with respect to all of the shares of common stock held by such Stockholder:
WHEREAS, the Company has proposed to adopt an amendment to its Certificate of Incorporation (the “Pre-Closing Company Charter Amendment”), a copy of which has been provided to the undersigned Stockholder;
WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated as of October 21, 2020 (as amended by Amendment No. 1 thereto, dated as of December 16, 2020, and as may be further amended and/or restated, the “Merger Agreement”), by and among Acamar Partners Acquisition Corp. (the “Acquiror”), Acamar Partners Sub, Inc. (the “Merger Sub”), and the Company, a copy of which has been provided to the undersigned Stockholder (capitalized terms used herein without definition shall have the respective meaning ascribed to them in the Merger Agreement);
WHEREAS, pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation of the Merger, upon the terms and subject to the conditions set forth in the Merger Agreement;
WHEREAS, the board of directors of the Company has unanimously (with the directors designated by TRP Capital Partners, LP having recused themselves with respect to the discussion and voting regarding the Pre-Closing Company Charter Amendment) (i) declared advisable the Merger Agreement and the Transactions (including the Merger and the Pre-Closing Company Charter Amendment) and determined that it is in the best interests of the Company and its stockholders to enter into the Merger Agreement, (ii) approved the Merger Agreement, the Merger, the Pre-Closing Company Charter Amendment and the other Transactions, (iii) resolved to submit the Merger Agreement, the Merger, the Pre-Closing Company Charter Amendment and the other Transactions to the stockholders of the Company for their approval and adoption by written consent and (iv) resolved to recommend the adoption of the Merger Agreement and approval of the Merger, the Pre-Closing Company Charter Amendment and the other Transactions by the stockholders of the Company by written consent;
WHEREAS, the Stockholder is party to that certain First Amended & Restated Shareholders’ Agreement by and among the Company and its stockholders, dated September 18, 2017 (the “Shareholders’ Agreement”);
2
WHEREAS, pursuant to the DGCL, the Company’s Certificate of Incorporation and the Shareholders’ Agreement, the adoption of the Merger Agreement and the approval of the Merger requires the affirmative vote or written consent of (i) the Company Stockholders that hold a majority of the issued and outstanding Company Common Shares and Company Preferred Shares (on an as-converted-to-common basis), voting as a single class, and (ii) the Company Preferred Stockholders that hold a majority of the issued and outstanding Company Preferred Shares, voting as a separate class;
WHEREAS, pursuant to the DGCL, the Company’s Certificate of Incorporation and the Shareholders’ Agreement, the approval of the Pre-Closing Company Charter Amendment requires the affirmative vote or written consent of the Company Stockholders that hold a majority of the issued and outstanding Company Common Shares and Company Preferred Shares (on an as-converted-to-common basis), voting as a single class;
WHEREAS, TRP Capital Partners, LP and each of the Company’s co-founders has entered into a Stockholder Letter Agreement, pursuant to which such stockholders have agreed to vote in favor of the Merger and the Pre-Closing Company Charter Amendment;
WHEREAS, the Merger has been approved by the board of directors of the Company in compliance with the terms of the Shareholders’ Agreement and therefore constitutes an “approved sale” thereunder;
WHEREAS, in connection with an “approved sale” under the Shareholders’ Agreement, the Stockholder has agreed, among other things, to (i) consent to the sale, (ii) waive any dissenters’ or appraisal rights and all other rights with respect to the sale under the DGCL, (iii) provide such documents as may be reasonably requested by the Company’s board of directors in connection with the sale and (iv) take all necessary and desirable actions in connection with the consummation of the sale;
WHEREAS, notwithstanding anything to the contrary in the Shareholders’ Agreement and notwithstanding the Stockholder Letter Agreement, the Merger Agreement makes it a condition to the consummation of the Merger that the Supermajority Approval for the Merger Agreement, the Merger and the Pre-Closing Company Charter Amendment is obtained;
WHEREAS, the Merger Agreement makes it a condition to the consummation of the Merger that each of the Company Affiliate Agreements set forth in Schedule 6.21 to the Merger Agreement (including the Shareholders’ Agreement) be terminated;
WHEREAS, the Company has provided to the Stockholder the definitive registration statement/proxy statement/consent solicitation statement filed on Form S-4 in connection with the Merger, and the Stockholder has reviewed such Form S-4 and all the disclosures therein; and
WHEREAS, the Stockholder has relied and will rely on the Stockholder’s own legal and tax advisors with respect to the legal and tax matters relating to the Merger, the other transactions contemplated by the Merger and the execution and delivery of this written consent.
NOW, THEREFORE, BE IT RESOLVED, that the Merger Agreement is hereby adopted and approved in all respects;
3
RESOLVED FURTHER, that the Merger is hereby approved in all respects;
RESOLVED FURTHER, that the Pre-Closing Company Charter Amendment is hereby approved in all respects;
RESOLVED FURTHER, that, subject to and effective upon the Closing, the Shareholders’ Agreement shall be terminated (to the extent not automatically terminated pursuant to its terms at the Closing) and will be of no further force or effect;
RESOLVED FURTHER, that all the other Transactions and any other matters necessary or reasonably requested by the Company for consummation of the Merger and the other Transactions are hereby adopted and approved in all respects;
RESOLVED FURTHER, that the undersigned Stockholder hereby affirms all of his, her or its agreements and obligations under the Shareholders’ Agreement in relation to an “approved sale” as defined in the Shareholders’ Agreement in connection with the Merger;
RESOLVED FURTHER, that the undersigned Stockholder hereby votes all of the shares of common stock held by such Stockholder in favor of the adoption and approval of the Merger Agreement, the Merger, the Pre-Closing Company Charter Amendment, and the other Transactions;
RESOLVED FURTHER, that this written consent shall automatically terminate and be of no further force or effect upon the valid termination of the Merger Agreement in accordance with its terms; and
RESOLVED FURTHER, that the undersigned Stockholder hereby waives any and all irregularities of notice, with respect to the time and place of meeting, and consents to the transaction of all business represented by this written consent.
[Remainder of Page Intentionally Left Blank]
[Signature page follows.]
5#FL
M?3L*ZE:1J/$LP&5AJ7+U,#&Q_2Q SKKU+^W3
MFY!0\_3V63WTBK50O'T/^?K2M4] =F_EALO$1.TF X_P!VOK80 LV-8\CZ'Y=+4CD+8'ET
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MO5"WS@^$6XNJZ:JR!Q.XDCIMK;=K&;(;DV96*#7;PJL8+IC1%(R$D6 Y# QOMLT8LT:N<^O\1ZL5:G#
M'6V]LC?N/I.M^[\M+4TZ?P;9%9D5)I*]H_\ )<#NFI)E1%,KH/ +A2&(O;GV
M*;NXMXMNN6D:BB!SP/DK5\ND4D4TDT5!@-\O4?/K6$^>GRUHJG=&9Q=+5[?E
MDIMR;7G*G![G1PAV/]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]
M^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW
M7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^
MZ]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7
MO?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z
M]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O
M?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]
MU[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?
MNO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U
M[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?N
MO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[
MW[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO
M=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W
M[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=
M>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[
MKW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>
M]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[K
MW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]
M^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW
M7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^
MZ]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7
MO?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z
M]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O
M?NO=>]^Z]U[W[KW7O?NO=>]^Z]U[W[KW7O?NO=8I%)*$7LI)(%^>1P?]M[L.
MJL,CK%/-3QQLU4\,,0MK,[HD?+ *6,FE>7L!?\^T=Q*$[HB3%4N "&8&DGS^WHQA@;3E#2@\NM4+YS_ ,PS(UN+R&V,5N*M>');
M8VW4--C^XIY8EF@WG-4,K4=-2:)9/'1+/#K,%"_2_
MNI->K@ =]O
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M^]I5(,;@7O?C^GLN:><'#N!]IZ>:( \!T0?>_P SX
RL9N&*1-VQO'L'+956Q2T:!0E/
MFE#*6S-(14@TG!M_3G^@>N[J61&:-W"Z#YGY^AZ?ABT+1J<>M<7Y3_-FGRRR
M8O&YGMFDFI]PX>J8R9&."#Q#;E6K*AI]UR-K+U*FVD#@\_U"=]/<>"#XC_%_
M$?0]/Z4'D/V=4U]B=_;EKJ.F6+=W8*Z:;* ^3/UX!\D5.!;3F7X]//L.;A=7
M/9ID<GV];H :D=(6KWYO)*R)X]W;I134LQ"Y_*J2/*A (6L -@?;,
M%S
_]X]II./Y=-."#GKAQJ*CDCG_>O]A^?:.05:OETR2 >NS&S>@#E_2!
M<@[=J?$8'CC_ #K9%I$