UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number 1-34761
Autobytel Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
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33-0711569
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
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18872 MacArthur Boulevard, Suite 200
Irvine, California 92612-1400
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number,
including area code
(949) 225-4500
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.001 per share
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The Nasdaq Capital Market
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Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the
Securities
Act. Yes
☐
No
☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or
Section 15(d) of the
Act. Yes
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No
☒
Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past
90 days. Yes
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No
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Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Website, if
any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (section 232.405 of
this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such
files). Yes
☒
No
☐
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
☒
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the
Act). Yes
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No
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Based
on the closing sale price of $13.87 for our common stock on The
Nasdaq Capital Market on June 30, 2016, the aggregate market
value of outstanding shares of common stock held by non-affiliates
was approximately $125 million.
As
of March 6, 2017, 11,021,490 shares of our common stock were
outstanding.
Documents Incorporated by Reference
Portions of our Definitive Proxy Statement for the 2017 Annual
Meeting, expected to be filed within 120 days of our fiscal year
end, are incorporated by reference into Part III of this Annual
Report on Form 10-K.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016
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FORWARD-LOOKING STATEMENTS
The Securities and Exchange Commission
(“
SEC
”) encourages companies to disclose
forward-looking information so that investors can better understand
a company’s future prospects and make informed investment
decisions. This Annual Report on Form 10-K and our proxy statement,
parts of which are incorporated herein by reference, contain such
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as
“anticipates,” “could,”
“may,” “estimates,”
“expects,” “projects,”
“intends,” “pending,” “plans,”
“believes,” “will” and words of similar
substance, or the negative of those words, used in connection with
any discussion of future operations or financial performance
identify forward-looking statements. In particular, statements
regarding expectations and opportunities, new product expectations
and capabilities, and our outlook regarding our performance and
growth are forward-looking statements. This Annual Report on Form
10-K also contains statements regarding plans, goals and
objectives. There is no assurance that we will be able to carry out
our plans or achieve our goals and objectives or that we will be
able to do so successfully on a profitable basis. These
forward-looking statements are just predictions and involve risks
and uncertainties, many of which are beyond our control, and actual
results may differ materially from these statements. Factors that
could cause actual results to differ materially from those
reflected in forward-looking statements include but are not limited
to, those discussed in “Item 1A. Risk Factors,”
and “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.” Investors are
urged not to place undue reliance on forward-looking statements.
Forward-looking statements speak only as of the date on which they
were made. Except as may be required by law, we do not undertake
any obligation, and expressly disclaim any obligation, to update or
alter any forward-looking statements, whether as a result of new
information, future events or otherwise. All forward-looking
statements contained herein are qualified in their entirety by the
foregoing cautionary statements.
Item 1.
Business
Autobytel Inc. was incorporated in 1996 under the
laws of the State of Delaware. Unless specified otherwise, as used
in this Annual Report on Form 10-K, the terms
“
we
,” “
us
,” “
our
,” the “
Company
” or “
Autobytel
” refer to Autobytel Inc. and its
subsidiaries.
Overview
We are an automotive marketing services company
that assists automotive retail dealers (“
Dealers
”) and automotive manufacturers
(“
Manufacturers
”)
market and sell new and used vehicles to consumers through our
programs for online lead referrals (“
Leads
”), Dealer marketing products and services,
online advertising, consumer traffic referral programs and mobile
products. Our consumer-facing automotive websites
(“
Company
Websites
”), including our
flagship website Autobytel.com
®
,
provide consumers with information and tools to aid them with their
automotive purchase decisions and the ability to submit inquiries
requesting Dealers to contact the consumers regarding purchasing or
leasing vehicles. Our AutoWeb pay-per-click advertising
marketplace program (“
AutoWeb
Program
”) uses
proprietary technology to refer in-market consumer traffic to
Dealers and Manufacturer websites. The Company’s
mission for consumers is to be “Your Lifetime Automotive
Advisor”
®
by engaging consumers throughout the
entire lifecycle of their automotive needs.
Available Information
Our corporate website is located at
www.autobytel.com
.
Information on our website is not incorporated by reference in this
Annual Report on Form 10-K. At or through the Investor Relations
section of our website we make available free of charge our annual
reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and all amendments to these reports as soon as
practicable after this material is electronically filed with or
furnished to the SEC and The Nasdaq Stock Market. Our Code of
Conduct and Ethics is available at the Corporate Governance link of
the Investor Relations section of our website, and a copy of the
code may also be obtained, free of charge, by writing to the
Corporate Secretary, Autobytel Inc., 18872 MacArthur Boulevard,
Suite 200, Irvine, California 92612-1400.
Significant Business Developments
On December 19, 2016, Autobytel and Car.com, Inc.,
a wholly owned subsidiary of Autobytel (“
Car.com
”), entered into an Asset Purchase and Sale
Agreement, by and among Autobytel, Car.com, and Internet Brands,
Inc., a Delaware corporation (“
Internet
Brands
”), pursuant to
which Internet Brands acquired substantially all of the assets of
Autobytel’s automotive specialty finance leads group operated
under Car.com. The specialty finance leads program was designed to
provide consumers who may not be able to secure loans through
conventional lending sources the opportunity to obtain vehicle
financing and other services from Dealers or financial institutions
offering vehicle financing to these consumers. The transaction was
completed effective as of December 31, 2016. The transaction
consideration consisted of $3.2 million in cash paid at closing of
the transaction and $1.6 million to be paid over a five year period
pursuant to a Transitional License and Linking Agreement. Revenues
from the specialty finance leads group accounted for 4%, 5% and 7%
of total revenues in 2016, 2015 and 2014, respectively. The Company
recorded a gain on sale of approximately $2.2 million in connection
with the transaction in 2016. See Note 10 of the “Notes to
Consolidated Financial Statements” in Part II, Item 8,
Financial Statements and Supplementary Data of this Annual Report
on Form 10-K.
Industry
Background
We believe that consumers engaged in the vehicle purchasing process
have adopted the internet, primarily because the internet is one of
the best methods to easily find the information necessary to make
informed buying decisions. Additionally, the internet is a primary
tool for consumers to begin communicating with local Dealers
regarding vehicle pricing, availability, options and financing.
J.D. Power and Associates reported in 2016 that 79% of automotive
consumer buyers surveyed use third party websites for vehicle
research. In addition, we believe that many Dealers and all major
Manufacturers that market their vehicles in the U.S. use the
internet as an efficient way to reach consumers through marketing
programs.
According to Automotive News, U.S. light vehicle sales were 17.5
million in 2016, flat from 17.5 million vehicles sold in
2015. J.D. Power / LMC Automotive are forecasting 2017
U.S. total light vehicle sales and retail light-vehicle sales at
17.6 million and 14.1 million, respectively. J.D. Power
reported continuing trends of elevated inventories and increased
incentive levels. We believe an increase in automotive incentives
should result in increased use of the internet by consumers engaged
in the vehicle purchasing process and increased submission of Leads
by consumers in 2017.
Products and
Services
Leads are internally-generated from our Company
Websites (“
Internally-Generated
Leads
”) or acquired from
third parties (“
Non-Internally-Generated
Leads
”) that generate
Leads from their websites (“
Non-Company
Websites
”). We sell
Internally-Generated Leads and Non-Internally-Generated Leads
directly to Dealers and indirectly to Dealers through a wholesale
market consisting of Manufacturers and other third parties in the
automotive Lead distribution industry. Our AutoWeb
Program links consumers to Dealers and Manufacturer websites when
the consumers click on advertisements on Company Websites as well
as websites operated by third parties that have contracted with the
Company as publishers under the AutoWeb Program. In addition to our
Lead and AutoWeb programs, we also offer Dealers and Manufacturers
other products and services, including our iControl by
Autobytel
®
,
WebLeads+, Email Manager, Payment Pro
®
,
TextShield
®
,
SaleMove and Lead Call products and services, to assist them in
capturing online, in-market customers and selling more vehicles by
improving conversion of Leads to sale
transactions.
Lead Programs
We
provide Dealers and Manufacturers with opportunities to market
their vehicles efficiently to potential vehicle
buyers. Dealers participate in our Lead programs, and
Manufacturers participate in our Lead programs, our display
advertising programs and our direct marketing programs, reaching
consumers that are in the market to acquire a
vehicle. For consumers, we provide, at no cost to the
consumer, an easy way to obtain valuable information to assist them
in their vehicle shopping process. Leads may be submitted by
consumers through our Company Websites or through Non-Company
Websites. For consumers using our Company Websites, we provide
research information, including vehicle specification data, safety
data, pricing data, photos, videos, regional rebate and incentive
data, and additional tools, such as the compare and configuration
tools, to assist them in this process. We also provide
additional content on our Company Websites, including our database
of articles, such as consumer and professional reviews, and other
analyses. Additional automotive information is also
available on our Company Websites to assist consumers with specific
vehicle research, such as the trade-in value of their current
vehicle.
New Vehicle Lead Program
.
Our Lead program for new vehicles allows consumers
to submit requests for pricing and availability of specific makes
and models. A new vehicle Lead provides information
regarding the make and model of a vehicle, and may also include
additional data regarding the consumer’s needs, including any
vehicle trade-in, whether the consumer wishes to lease or buy, and
other options that are important to the vehicle acquisition
decision. A Lead will usually also include the consumer’s
name, phone number and email address and may include a postal
address.
Our Leads are subject to quality verification that is designed to
maintain the high quality of our Leads and increase the Lead buy
rates for our Lead customers. Quality verification includes the
validation of name, phone number, email address and postal address.
Our quality verification also involves proprietary systems as well
as arrangements with third party vendors specializing in customer
validation. After a Lead has been subjected to quality
verification, if we have placement coverage for the Lead within our
own Dealer network, we send the Lead to Dealers that sell the type
of vehicle requested in the consumer’s geographic area. We
also send an email message to the consumer with the Dealer’s
name and phone number, and if the Dealer has a dedicated internet
manager, the name of that manager. Dealers contact the consumer
with a price quote and availability information for the requested
vehicle. In addition to sales of Leads directly to Dealers in our
network, we also sell Leads wholesale to Manufacturers for delivery
to their Dealers and to third parties that have placement coverage
for the Lead with their own customers.
Dealers participate in our retail new vehicle Lead program by
entering into contracts directly with us or through major Dealer
groups. Generally, our Dealer contracts may be terminated by either
party on 30 days’ notice and are non-exclusive. The majority
of our retail new vehicle Lead revenues consists of either a
monthly subscription or a per-Lead fee paid by Dealers in our
network; however, under our pay-per-sale program, we offer a
limited number of Dealers in states where we are permitted to
charge on a per transaction basis the opportunity to pay a flat per
transaction fee for a Lead that results in a vehicle sale. We
reserve the right to adjust our fees to retail Dealers upon 30
days’ prior notice at any time during the term of the
contract. Manufacturers (directly or through their marketing
agencies) and other third parties participate in our wholesale new
vehicle Lead programs generally by entering into agreements where
either party has the right to terminate upon prior notice, with the
length of time for the notice varying by contract. Revenues from
retail new vehicle Leads accounted for 22%, 27% and 32% of total
revenues in 2016, 2015 and 2014, respectively. Revenues from
wholesale Leads accounted for 46%, 47% and 44% of total revenues in
2016, 2015 and 2014, respectively.
We measure Lead quality by the conversion of Leads
to actual vehicle sales, which we refer to as the “buy
rate.” Buy rate is the percentage of the consumers submitting
Leads that we delivered to our customers represented by the number
of these consumers who purchased vehicles within ninety days of the
date of the Lead submission. We rely on detailed feedback
from Manufacturers and wholesale customers to confirm the
performance of our Leads.
Our Manufacturer and
wholesale customers each match the Leads we deliver to our
customers against vehicle sales to provide us with information
about vehicle purchases by the consumers who submitted Leads that
we delivered to these customers.
Autobytel also obtain vehicle registration
data from a third party provider. This information, together with
our internal analysis allows us to estimate the buy rates for the
consumers who submitted the Internally-Generated Leads and
Non-Internally Generated Leads that we delivered to our customers,
and based on these estimates, to estimate an industry average buy
rate. Based on the most current information and our internal
analysis, we have estimated that, on average, consumers who submit
Internally-Generated Leads that we deliver to our customers have an
estimated buy rate of approximately
17%. Buy rates that individual
Dealers may achieve can be impacted by factors such as the strength
of processes and procedures within the dealership to manage
communications and follow up with consumers.
In
addition, we report a number of key metrics to our customers,
allowing them to gain a better understanding of the revenue
opportunities that they may realize by acquiring Leads from
us. We can now optimize the mix of Leads we deliver to
our customers based on multiple sources of quality measurements.
Also, by reporting the buying behavior of potential consumers, the
findings also can help shape improvements to online Lead
management, online advertising and dealership sales process
training. By providing actionable data, we are now
placing useful information in the hands of our
customers.
During
2016, we continued to focus our Dealer acquisition and retention
strategies on dealerships to which we could deliver a higher
percentage of our Internally-Generated Leads. We believe
this will result in increased vehicle sales for our Dealers and
ultimately stronger relationships with us because, based on our
evaluation of the performance data and information
discussed above, we believe our Internally-Generated Leads are
of high quality.
Used Vehicle Lead Program
.
Our used vehicle Lead program allows
consumers to search for used vehicles according to specific search
parameters, such as the price, make, model, mileage, year and
location of the vehicle. The consumer is able to locate and display
the description, price and, if available, digital images of
vehicles that satisfy the consumer’s search
parameters. The consumer can then submit a Lead for
additional information regarding a specific vehicle that we then
deliver to the Dealer offering the vehicle. In addition to sending
Leads directly to Dealers through our Lead delivery system,
consumers may choose to contact the Dealer using a toll free number
posted next to the vehicle search results. We charge each Dealer
that participates in the used Vehicle Lead program a monthly
subscription or per Lead fee. Revenues from used vehicle
Leads accounted for 10%, 11% and 12% of total revenues in 2016,
2015 and 2014, respectively.
Other Dealer Products and Services
In
addition to Lead and AutoWeb programs, we also offer products and
services that assist Dealers in connecting with in-market consumers
and closing vehicle sales.
iControl by
Autobytel
®
iControl
by Autobytel
®
is our proprietary technology that
allows Dealers many options to filter and control the volume and
source of their Leads.
iControl by Autobytel
®
can be controlled at the dealership
(or by a representative of Autobytel on behalf of the dealership),
at the Dealer group level from a web-based, easy-to-use console
that makes it quick and simple for dealerships to change their Lead
acquisition strategy to adjust for inventory conditions at their
stores and broader industry patterns (such as changes in gas
prices or changes in consumer demand). From the console,
dealerships can easily contract or expand territories and increase,
restrict or block specific models and Lead web sources, making it
much easier to target inventory challenges and focus marketing
resources more efficiently.
We currently have over one-half of our new vehicle
Dealers participating in our iControl by
Autobytel
®
product.
WebLeads+
.
Designed to work in connection with a Dealer’s participation
in our Lead programs, WebLeads+ offers a Dealer multiple coupon
options that display relevant marketing messages to consumers
visiting the Dealer’s website. When a Dealer uses
WebLeads+
,
consumers visiting the Dealer’s website are
encouraged to take action in two ways. First, while
interacting with the Dealer website, a consumer is presented with a
customized special offer formatted for easy Lead submission. If a
vehicle quote is requested, the Lead goes directly into the
dealership management tool so a salesperson can promptly address
the customer’s questions. Second, if the consumer
leaves the Dealer’s website but remains online, the
WebLeads+
product
keeps the coupon active in a new browser,
providing the Dealer a repeat branding opportunity and giving the
consumer an easy way to re-engage with the Dealer’s website
through submission of a Lead. The additional Leads
generated by the coupons are seamlessly integrated into our
Extranet tool.
Email
Manager and Lead Call
. Email
Manager provides, on behalf of the Dealers, timely and relevant
follow up emails to consumers who have submitted Leads on scheduled
intervals following a consumer’s Lead
submission. After submission of a Lead, Lead Call
provides a live phone call to the consumer on behalf of the Dealer
and schedules an appointment for the consumer to visit the
dealership regarding the specific vehicle the consumer inquired
about.
Payment
Pro
®
.
Payment Pro
®
is a Dealer website conversion tool
based on a third party product that offers consumers real-time
online monthly payment information based on an instant
qualification process. The payments are based on the
consumer’s credit, the actual vehicle being researched and
the Dealer finance rates without requiring the consumer to provide
personal information, such as date of birth or social security
number. The Lead goes directly into the dealership management tool
so that a salesperson can promptly address the consumer’s
inquiry.
Mobile
Products and Services.
We
provide Dealers and Manufacturers mobile technologies that
facilitate communication between Dealers and car buyers on smart
phones and tablets at the time, place and in a manner preferred by
many consumers. At the center of this platform is
Autobytel’s unique TextShield® product that offers
Dealers the ability to connect with consumers using text
communication via a secure platform that protects the
consumer’s privacy. In addition, we offer Dealers
mobile websites designed to drive consumer engagement with Dealers
as well as mobile apps, text message marketing and the ability for
consumers to send information to their mobile devices using our
“send to phone” product.
SaleMove.
Our arrangement with SaleMove, Inc.
(“
SaleMove
”) allows Autobytel to provide the
automotive industry with innovative technology for enhancing
communications with consumers. SaleMove’s
technology allows Dealers and Manufacturers to enhance the online
shopping experience by interacting with consumers in real time
using the method most comfortable to them including live video,
audio and text based chat or by phone helping Dealers improve the
online car shopping experience for their
customers. Autobytel is providing the tools necessary to
capture the opportunities being created as online shopping becomes
increasingly popular with in-market car buyers.
Advertising Programs
Our Company Websites attract an audience of
prospective automotive buyers that advertisers can target through
display advertising. A primary way advertisers use our Company
Websites to reach consumers is through vehicle content
targeting
.
This allows automotive marketers to reach
consumers while they are researching one of our comprehensive
automotive segments such as mini-vans or SUVs and offer
Manufacturers sponsorship opportunities to assist in their efforts
both in terms of customer retention and conquest strategies. Our
Company Websites also offer Manufacturers the opportunity to
feature their makes and models within highly contextual content.
Through their advertising placements, Manufacturers can direct
consumers to their respective websites for further information. We
believe this transfer of consumers from our Company Websites to
Manufacturer sites is the most significant action measured by
Manufacturers in evaluating our performance and value for the
Manufacturer’s marketing programs. Through our agreement with
Jumpstart Automotive Group (“
Jumpstart
”), Jumpstart sells our fixed placement
advertising across our Company Websites to automotive advertisers.
Jumpstart currently reaches approximately 27 million unique
visitors per month and works with every major automotive
Manufacturer across its portfolio of digital
publishers. We also offer a direct marketing platform
that enables Manufacturers to selectively target in-market
consumers during the often-extended vehicle shopping process.
Designed to keep a specific automotive brand in consideration, our
direct marketing programs allow automotive marketers to deliver
specific communication through either email or direct mail formats
to in-market consumers during their purchase
cycle.
Our
AutoWeb product is our pay-per-click advertising marketplace
program. The AutoWeb Program utilizes proprietary technology to
offer consumers who are shopping targeted offers based on make,
model and geographic location. As these consumers are conducting
research on one of Autobytel’s consumer facing websites or on
the site of one of our network of automotive publishers, they are
presented with relevant offers on a timely basis and, upon the
consumer clicking on the displayed advertisement, are sent to the
appropriate website location of one of our Dealer, Manufacturer or
advertising customers. The AutoWeb network of publisher websites
reaches and engages with millions of potential car buyers each
month, and we believe it provides high intent, quality traffic that
Dealers and other customers cannot typically reach through their
own marketing efforts. The AutoWeb solution is flexible and in
addition to driving traffic to a vehicle detail page, it can also
send website traffic to new vehicle sales, service, used vehicles
or to any other department where a customer wants to engage with
in-market consumers. In addition, we believe that the AutoWeb
solution can be used to conquest competitive shoppers who are
researching another brand more effectively than can typically be
done using other search engines. Advertisers only pay for the
clicks they receive, and are able to structure campaigns with
flexible budgets and no long-term commitments in order to manage
spend versus key performance indicators. Ongoing feedback from our
customers is that this traffic provides excellent time-on-site,
below-average bounce rates, higher-than-average page views and is a
valuable tool to help Dealers sell more vehicles.
Advertising
revenues, including direct marketing, accounted for 16%, 8% and 4%
of total revenues in 2016, 2015 and 2014,
respectively.
Strategy
Our
goal is to garner a larger share of the billions of dollars spent
annually by Dealers and Manufacturers on automotive marketing
services. We plan to achieve this objective through the
following principal strategies:
Increasing The Supply of High-Quality Leads
. High-quality Leads are those Leads that result
in high transaction (i.e., purchase) closing rates for our Dealer
customers. Internally-Generated Leads are generally
higher quality than Non-Internally-Generated Leads and increase the
overall quality of our Lead portfolio. Non-Internally-Generated
Leads are of varying quality depending on the source of these
Leads. We plan to increase the supply of high-quality Leads
generated to sell to our customers primarily
by:
●
I
ncreasing
traffic acquisition activities for our Company
Websites
.
Traffic to our Company Websites is monetized
primarily though the creation of Leads that are delivered to our
Dealer and Manufacturer customers to help them market and sell new
and used vehicles, and through the sale of advertising space on our
Company Websites. We plan to increase the traffic to our Company
Websites through effective SEO and SEM traffic acquisition
activities and enhancements to our Company
Websites.
|
o
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SEO and SEM
traffic acquisition activities
.
Traffic to our Company Websites is obtained through a variety of
sources and methods, including direct navigation to our Company
Websites, natural search (search engine optimization or
“
SEO
”, which is the practice of optimizing
keywords in website content to drive traffic to a website), paid
search (search engine marketing, or “
SEM
,” which is the practice of bidding on
keywords on search engines to drive traffic to a website), direct
marketing and partnering with other website publishers that provide
links to our websites. Our goal is that over time, paid
traffic such as SEM will be balanced by greater visitation from
direct navigation and SEO, which we expect to result in increased
Lead volumes and gross profit margins.
|
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o
|
Continuing
to enhance the quality and user experience of our Company
Websites
.
We continuously make enhancements to
our Company Websites, including enhancements of the design and
functionality of our Company Websites. These
enhancements are intended to position our Company Websites as
comprehensive best in class destinations for automotive purchase
research by consumers. By doing so, we believe we will increase the
volume of our Internally-Generated Leads.
|
●
Increasing
the conversion rate of visitors to Leads on our Company
Websites
. Through
increased SEO and SEM activities and significant content, tools and
user interface enhancements to our websites, we believe we will be
able to increase the number of website visits and improve website
“engagement,” and thereby increase the conversion of
page views into Leads. We believe that an increased
conversion rate of page views into Leads could result in higher
revenue per visitor.
●
Relationships with Suppliers of High-Quality
Non-Internally-Generated Leads
. We plan to continue to develop
and maintain strong relationships only with suppliers of
Non-Internally-Generated Leads that consistently provide high
quality Leads.
Increasing Leads Sales to our Customers
. Our principal source of revenue comes from sales
of Leads to our retail and wholesale Lead customers. Our goal is to
increase sales of Leads to our customers primarily
by:
●
Increasing
Lead Sales to Retail Dealers
.
Sales
of Leads to our Dealer network constitute a significant source of
our revenues. Our goal is to continue to increase the
number of Leads sold to our retail Dealer customers
by:
o
increasing
the quality of the Leads sold to our Dealers,
o
increasing
the number of Dealers in our Dealer network,
o
reducing
Dealer churn in our Dealer network,
o
providing
customizable Lead programs to meet our Dealers’ unique
marketing requirements,
o
providing
additional value added marketing services that help Dealers more
effectively utilize the internet to market and sell new and used
vehicles,
o
increasing
overall Dealer satisfaction by improving all aspects of our
services,
o
increasing
the size of our retail Dealer footprint,
o
focusing
on higher revenue Dealers that are more cost-effective to support,
and
o
enhancing
our internal Lead generation activities by leveraging our expanded
retail lead coverage.
●
I
ncreasing
Lead Sales to Wholesale Customers.
We currently have
agreements to sell Leads to 31 Manufacturer Lead programs,
including all mainstream Manufacturers with the exception of one
luxury brand that has yet to launch a Lead
program. Demonstrating how important third-party leads
are to Manufacturers, over the past three years several major
Manufacturers, including two major Japanese manufacturers, launched
corporate Lead programs for the first time. Others have
completely re-launched their programs and some have changed
business rules, pricing or coverage in order to be able to purchase
more of Autobytel’s high quality, organic
Leads.
Continuing to develop the AutoWeb targeted pay-per-click
marketplace for online automotive advertisers and
publishers
.
Our
merger with AutoWeb allowed us to become the first automotive
publisher to benefit from AutoWeb’s pay-per-click platform
that uses proprietary technology and a unique pay-per-click
business model to analyze web traffic and adjust advertiser costs
accordingly based on traffic quality. This traffic
network is targeted to attract high-intent, high-volume publishers
and is intended to allow them to monetize traffic that has
previously been under-monetized. In-market car shoppers
are presented with highly relevant display advertisements and
benefit from an online experience that delivers information that
consumers use in making their car buying
decisions. Manufacturers benefit from this high-quality
traffic from serious in-market car buyers. Our AutoWeb
program enables Manufacturers and Dealers to optimize their
advertising by driving traffic to appropriate areas of their Tier 1
(Manufacturer national advertising), Tier 2 (Manufacturer and
advertising associations regional advertising) and Tier 3 (Dealer)
websites.
Moving
forward we believe that Manufacturers and Dealers will continue to
see the measureable attribution from this click traffic and will
reallocate marketing spend from traditional channels into this
emerging medium. We also plan to grow the size of this addressable
marketplace by adding high-quality and high volume automotive
publishers to our network, by targeting in market consumers on a
variety of social media platforms and by continuing to optimize
this advertising platform on our consumer facing websites, whose
traffic we believe will continue to scale. In addition, we believe
that the flexibility of our solution combined with high quality
traffic with automotive purchase intent may allow us to increase
the amount charged per click as the network grows and as the level
of attribution from this marketplace is understood by advertising
partners.
Increasing Display Advertising Revenues
.
As traffic to, and time spent on, our
Company Websites by consumers increases, we will seek to increase
our advertising revenues. Through our agreement with
Jumpstart we benefit from Jumpstart's relationships with every
major automotive Manufacturer and/or its advertising agencies
by increasing revenue for our traditional display
advertising. It is our belief that if the volume of our
traffic continues to increase, advertisers will recognize this
increased value by agreeing to purchase additional advertising
space available on our Company Websites. Additionally,
we believe that our AutoWeb program provides an opportunity to
increase Autobytel advertising revenue through additional
monetization opportunities for our existing and growing
traffic.
Focusing on Mobile Products
.
As
consumers increasingly engage with Internet content using mobile
devices, Autobytel will continue to focus on advanced mobile
technologies that facilitate communication between Dealers and
consumers on smart phones and tablets at the time, place, and in a
manner preferred by many consumers. This focus on
the mobile platform is a core part of our strategy moving forward
regarding lead generation, automotive research, website advertising
and traffic generation.
In
addition, we will continue to focus on making mobile tools
available to Dealer and Manufacturer customers. Texting
is increasingly becoming the communication method of choice for
many consumers and Autobytel’s unique TextShield®
platform offers Dealers the ability to connect with consumers using
text communication via a secure platform that protects the
consumer’s privacy. In addition, this platform
offers much of the same oversite and control that is available in
traditional email Lead Management Systems and is essentially a Lead
Management System for text. We plan to integrate this technology
into our consumer facing websites, lead generation and advertising
campaigns so that we can continue to facilitate communication
between consumers and Dealers utilizing whatever mobile
communication platform they choose.
Continuing to Expand our Products and Services
.
We
gather significant amounts of data on consumer intent as it relates
to purchasing vehicles. We intend to use these data to
create products and services, including direct business database
offerings, that we believe will ultimately help Manufacturers and
Dealers market and sell more new and used vehicles. Our
objective is to generate revenues from this asset in the most
effective and efficient ways possible.
Strategic Acquisitions,
Investments and Alliances
.
Our
goal is to grow and advance our business. We may do so, in part,
through strategic acquisitions, investments and alliances. We
continue to review strategic opportunities that may provide
opportunities for growth. We believe that strategic acquisitions,
investments and alliances may allow us to increase market share,
benefit from advancements in technology and strengthen our business
operations by enhancing our product and service
offerings.
Our ability to implement the foregoing strategies and plans is
subject to risks and uncertainties, many of which are beyond our
control. Accordingly, there is no assurance that we will
successfully implement our strategies and plans. See
“Item 1A. Risk Factors” of this Annual Report on Form
10-K.
Seasonality
Our
quarterly revenues and operating results have fluctuated in the
past and may fluctuate in the future due to various factors,
including consumer buying trends, changing economic conditions,
Manufacturer incentive programs and actual or threatened severe
weather events. Excluding the effect of acquisitions in
2015, Lead volume is typically highest in summer (third quarter)
and winter (first quarter) months, followed by spring (second
quarter) and fall (fourth quarter) months.
Intellectual Property
Our intellectual property includes patents and
patent applications related to our innovations, products and
services; trademarks related to our brands, products and services;
copyrights in software and creative content; trade secrets; and
other intellectual property rights and licenses of various kinds.
We seek to protect our intellectual property assets through patent,
copyright, trade secret, trademark and other laws and through
contractual provisions. We enter into confidentiality and invention
assignment agreements with our employees and contractors, and
non-disclosure agreements with third parties with whom we conduct
business in order to secure our proprietary rights and additionally
limit access to, and disclosure of, our proprietary
information. We have registered trademarks with the
United States Patent and Trademark Office, including Autobytel,
Autobytel.com, MyGarage, Your Lifetime Automotive
Advisor
®
,
iControl by Autobytel
®
,
TextShield
®
,
Payment Pro
®
,
AutoWeb
®
,
AutoWeb.com
®
and the global highway logo. We have
also been issued patents related to methods and systems for
managing a Lead in data center systems and a method and system for
managing Leads and routing them to one or more destinations. We
cannot provide any assurances that any of our patents will be
enforceable by us in litigation.
Additional
information regarding certain risks related to our intellectual
property is included in Part I, Item 1A “Risk
Factors” of this Annual Report on
Form 10-K.
Competition
In
the automotive-related Lead marketing services and advertising
marketplace we compete for Dealer and Manufacturer
customers. Competition with respect to our core Lead
referral programs continued to be impacted by changing industry
conditions in 2016. We continue to compete with several companies
that maintain business models similar to ours, some with greater
resources. In addition, competition has increased from larger
competitors that traditionally have competed only in the used
vehicle market. Dealers continue to invest in their
proprietary websites and traffic acquisition activities, and we
expect this trend to continue as Dealers strive to own and control
more Lead generating assets under their captive
brands. Additionally, all major Manufacturers that
market their vehicles in the U.S. have their own websites that
market their vehicles direct to consumers and generate Leads for
delivery direct to the Manufacturers’ Dealers.
We
believe that third party Leads have been the standard in our
industry for many years. However, we continue to observe new
and emerging business models, including pay-per-sale and consumer
pay models, relating to the generation and delivery of
Leads. From time to time, new products and services are
introduced that take the focus away from third party Lead
generation, which we believe is a profitable way to sell
vehicles to in-market buyers. Dealers and Manufacturers
may decide to pull back on their third party
Lead programs to test these new approaches.
In
the display advertising marketplace, we compete with major internet
portals, transaction based websites, automotive related companies,
numerous lifestyle websites and emerging entrants in the relatively
new automotive click revenue medium. We also compete with
traditional marketing channels such as print, radio and
television.
In the
pay-per-click advertising marketplace, we compete with established
search engine providers as well as with a growing number of digital
marketing platforms focused on generating dealership website
traffic from inventory listings and social media campaigns. In
addition, some industry providers who have historically specialized
in inventory aggregation or on providing SEM agency services to
Dealers are now expanding into the area of website traffic
generation.
Customers
We
have a concentration of credit risk with our automotive industry
related accounts receivable balances, particularly with Urban
Science Applications (which represents several Manufacturer
programs), General Motors and Ford Direct. During 2016,
approximately 28% of our total revenues were derived from these
three customers, and approximately 36% or $12.6 million of gross
accounts receivable related to these three customers at December
31, 2016. In 2016, Urban Science Applications accounted
for 16% and 19% of total revenues and accounts receivable as of
December 31, 2016, respectively.
Operations and Technology
We
believe that our future success is significantly dependent upon our
ability to continue to deliver high-performance, reliable and
comprehensive websites, enhance consumer and Dealer product and
service offerings, maintain the highest levels of information
privacy and ensure transactional security. Our Company Websites are
hosted at secure third-party data center facilities and public
cloud providers. These data centers and public cloud systems
include redundant power infrastructure, redundant network
connectivity, fire detection and suppression systems and security
systems to prevent unauthorized access. Our network and computer
systems are built on industry standard technology.
System
enhancements are primarily intended to accommodate increased
traffic across our Company Websites, improve the speed in which
Leads and advertisements are processed and introduce new and
enhanced products and services. System enhancements entail the
implementation of sophisticated new technology and system
processes. We plan to continue to make investments in technology as
we believe appropriate.
Government Regulation
We
are subject to laws and regulations generally applicable to
providers of advertising and commerce over the internet, including
federal and state laws and regulations governing data security and
privacy; voice, email and text messaging communications with
consumers; unfair and deceptive acts and practices; advertising;
contests, sweepstakes and promotions; and content regulation. For
additional important information related to government regulation
of our business, including governmental regulations relating to the
marketing and sale of automobiles, see the information set forth in
Part I, Item 1A“Risk Factors” of this Annual
Report on Form 10-K.
Employees
As
of March 6, 2017, we had 254 employees. None of our
employees are represented by labor unions.
The risks described below are not the only risks
that we face. The following risks as well as risks and
uncertainties not currently known to us or that we currently deem
to be immaterial may materially and adversely affect our business,
results of operations, financial condition, earnings per share,
cash flow or the trading price of our stock, individually and
collectively referred to in these Risk Factors as our
“
financial
performance
.” See also the discussion
of “Forward-Looking Statements” immediately preceding
Part I of this Annual Report on Form 10-K.
We may be unable to increase Lead revenues and could suffer a
decline in revenues due to dealer attrition.
We
derive more than 94% of our Lead revenues from Lead fees paid by
Dealers and Manufacturers participating in our Lead programs. Our
ability to increase revenues from sales of Leads is dependent on a
mix of interrelated factors that include increasing Vehicle Lead
revenues by attracting and retaining Dealers and Manufacturers,
increasing the number of high quality Leads we sell to Dealers and
Manufacturers, and improving margins by increasing the number of
Internally-Generated Leads that we sell to our customers. We are
also focused on higher revenue Dealers that are more cost-effective
to support. Our sales strategy is intended to result in more
profitable relationships with our Dealers both in terms of cost to
supply Leads and to support the Dealers. Dealer churn impacts
our revenues, and if our sales strategy does not mitigate the loss
in revenues by maintaining the overall number of Leads sold by
increasing sales to other Dealers or Manufacturers while
maintaining the overall margins we receive from the Leads sold, our
revenues would decrease. We cannot provide any assurances that we
will be able to prevent Dealer attrition or to offset the revenues
lost due to Dealer attrition by other means, and our failure to do
so could materially and adversely affect our financial
performance.
We may lose customers or quality Lead supplies to our
competitors.
Our
ability to provide increased numbers of high-quality Leads to our
customers is dependent on increasing the number of
Internally-Generated Leads and acquiring high-quality
Non-Internally-Generated Leads from third parties. Originating
Internally-Generated Leads is dependent on our ability to increase
consumer traffic to our Company Websites by providing secure and
easy to use websites with relevant and quality content for
consumers and increasing visibility of our brands to consumers and
by our SEM activities. We compete for Dealer and Manufacturer
customers and for acquisition of Non-Internally-Generated Leads
with companies that maintain automotive Lead referral businesses
that are very similar to ours. Several of these competitors are
larger than us and may have greater financial resources than we
have. If we lose customers or quality Lead supply volume to our
competitors, or if our pricing or cost to acquire Leads is
impacted, our financial performance will be materially and
adversely impacted.
Our financial performance could be materially and adversely
affected by changes in Internet search engine algorithms and
dynamics
.
We
use Google to generate a significant portion of the traffic to our
websites, and, to a lesser extent, we use other search engines and
meta-search websites to generate traffic to our websites,
principally through pay-per-click advertising campaigns. The
pricing and operating dynamics on these search engines can
experience rapid change commercially, technically and
competitively. For example, Google frequently updates and changes
the logic that determines the placement and display of results of a
consumer's search, such that the placement of links to our websites
can be negatively affected and our costs to improve or maintain our
placement in search results can increase.
We are affected by general economic and market conditions, and, in
particular, conditions in the automotive industry.
Our
financial performance is affected by general economic and market
factors, conditions in the automotive industry, and the market for
automotive marketing services, including, but not limited to, the
following:
●
The
effect of unemployment on the number of vehicle
purchasers;
●
Pricing
and purchase incentives for vehicles;
●
The
expectation that consumers will be purchasing fewer vehicles
overall during their lifetime as a result of better quality
vehicles and longer warranties;
●
The
impact of fuel prices on demand for the number and types of
vehicles;
●
Increases
or decreases in the number of retail Dealers or in the number of
Manufacturers and other wholesale customers in our customer
base;
●
Volatility
in spending by Manufacturers and others in their marketing budgets
and allocations;
●
The
competitive impact of consolidation in the online automotive
referral industry; and
●
The
effect of changes in transportation policy, including the potential
increase of public transportation options.
We may acquire other companies, and there are many risks associated
with acquisitions.
As
part of our business strategy we evaluate potential acquisitions
that we believe will complement or enhance our existing business.
We currently do not have any definitive agreements to acquire any
company or business, and we may not be able to identify or complete
any acquisition in the future. Acquisitions involve
numerous risks that include the following, any of which could
materially and adversely affect our financial
performance:
●
We
may not fully realize all of the anticipated benefits of an
acquisition or may not realize them in the timeframe expected,
including due to acquisitions where we expand into product and
service offerings or enter or expand into markets in which we are
not experienced.
●
In
order to complete acquisitions, we may issue common stock or
securities convertible into or exercisable for common stock,
potentially creating dilution for existing stockholders. Issuance
of equity securities may also restrict utilization of net operating
loss carryforwards because of an annual limitation due to ownership
change limitations under the Internal Revenue Code.
●
We
may borrow to finance acquisitions, and the amount and terms of any
potential future acquisition-related or other borrowings may not be
favorable to the Company and could affect our liquidity and
financial condition.
●
Acquisitions
may result in significant costs and expenses and charges to
earnings, including those related to severance pay, early
retirement costs, employee benefit costs, goodwill and asset
impairment charges, charges from the elimination of duplicative
facilities and contracts, assumed litigation and other liabilities,
legal, accounting and financial advisory fees, and required
payments to executive officers and key employees under retention
plans.
●
Our
due diligence process may fail to identify significant issues with
an acquired company that may result in unexpected or increased
costs, expenses or liabilities that could make an acquisition less
profitable or unprofitable.
●
The
failure to further our strategic objectives that may require us to
expend additional resources to develop products, services and
technology internally.
●
An
announced business combination and investment transaction may not
close timely or at all, which may cause our financial results to
differ from expectations in a given quarter.
●
Business
combination and investment transactions may lead to litigation that
can be costly to defend or settle, even if no actual liability
exists.
●
Integration
of acquisitions are often complex, time-consuming and expensive and
if not successfully integrated could materially and adversely
affect our financial performance. The challenges involved with
integration of acquisitions include:
●
Diversion
of management attention to assimilating the acquired business from
other business operations and concerns.
●
Integration
of management information and accounting systems of the acquired
business into our systems, and the failure to fully realize all of
the anticipated benefits of an acquisition.
●
Difficulties
in assimilating the operations and personnel of an acquired
business into our own business.
●
Difficulties
in integrating management information and accounting systems of an
acquired business into our current systems.
●
Convincing
our customers and suppliers and the customers and suppliers of the
acquired business that the transaction will not diminish client
service standards or business focus and that they should not defer
purchasing decisions or switch to other suppliers.
●
Consolidating
and rationalizing corporate IT infrastructure, which may include
multiple legacy systems from various acquisitions and integrating
software code and business processes.
●
Persuading
employees that business cultures are compatible, maintaining
employee morale, retaining key employees and integrating employees
into the Company.
●
Coordinating
and combining administrative, manufacturing, research and
development and other operations, subsidiaries, facilities and
relationships with third parties in accordance with local laws and
other obligations while maintaining adequate standards, controls
and procedures.
●
Managing
integration issues shortly after or pending the completion of other
independent transactions.
Concentration of
credit risk and risks due to significant customers could materially
and adversely affect our financial performance
.
Financial
instruments that potentially subject us to concentrations of credit
risk consist primarily of cash and cash equivalents, investments
and accounts receivable. Cash and cash equivalents are primarily
maintained with two financial institutions in the United States.
Deposits held by banks exceed the amount of insurance provided for
such deposits. Generally these deposits may be redeemed upon
demand. Accounts receivable are primarily derived from fees billed
to Dealers and Manufacturers. We have a concentration of credit
risk with our automotive industry related accounts receivable
balances, particularly with Urban Science Applications (which
represents several Manufacturer programs), General Motors and Ford
Direct. During 2016 approximately 28% of the Company’s total
revenues were derived from these customers, and approximately 36%
or $12.6 million of gross accounts receivable are receivable from
them at December 31, 2016. In 2016, Urban Science Applications
accounted for 16% and 19% of total revenues and accounts receivable
as of December 31, 2016, respectively. No collateral is
required to support our accounts receivables, and we maintain an
allowance for bad debts for potential credit losses. If
there is a decline in the general economic environment that
negatively affects the financial condition of our customers or an
increase in the number of customers that are dissatisfied with
their services, additional estimated allowances for bad debts and
customer credits may be required, and the adverse impact on our
financial performance could be material.
We depend on Manufacturers through our third party sales channel
for a significant amount of our advertising revenues, and we may
not be able to maintain or grow these relationships.
We
depend on Manufacturers through our third party sales channel for a
significant amount of our advertising revenues. A decline in the
level of advertising on our websites, reductions in advertising
rates or any significant failure to develop additional sources of
advertising would cause our advertising revenues to decline, which
could have a material adverse effect on our financial performance.
We periodically negotiate revisions to existing agreements and
these revisions could decrease our advertising revenues in future
periods and a number of our advertising agreements with
Manufacturers may be terminated at any time without cause. We may
not be able to maintain our relationship with Manufacturers on
favorable terms or find alternative comparable relationships
capable of replacing advertising revenues on terms satisfactory to
us. If we cannot do so, our advertising revenues would decline,
which could have a material adverse effect on our financial
performance.
Our
ability to maintain and add to our relationships with advertisers
and thereby increase advertising revenues is dependent on our
ability to attract consumers and acquire traffic to our Company
Websites and monetize that traffic at profitable margins with
advertisers. Our consumer facing websites compete with offerings
from the major internet portals, transaction based sites,
automotive-related verticals (websites with content that is
primarily automotive in nature) and numerous lifestyle websites.
Our advertising business is characterized by minimal barriers to
entry, and new competitors may be able to launch competitive
services at relatively low costs. If our Company Websites do not
provide a compelling, differentiated user experience, we may lose
visitors to competing sites, and if our website traffic declines,
we may lose relevance to our major advertisers who may reduce or
eliminate their advertising buys from us, which could have a
material and adverse effect on our financial
performance.
Uncertainty exists in the application of various laws and
regulations to our business. New laws or regulations applicable to
our business, or expansion or interpretation of existing laws and
regulations to apply to our business, could subject us to
licensing, claims, judgments and remedies, including monetary
liabilities and limitations on our business practices, and could
increase administrative costs or materially and adversely affect
our financial performance.
We
operate in a regulatory climate in which there is uncertainty as to
the application of various laws and regulations to our
business. Our business could be significantly affected
by different interpretations or applications of existing laws or
regulations, future laws or regulations, or actions or rulings by
judicial or regulatory authorities. Our operations may
be subjected to adoption, expansion or interpretation of various
laws and regulations, and compliance with these laws and
regulations may require us to obtain licenses at an undeterminable
and possibly significant initial and annual expense. These
additional expenditures may increase future overhead, thereby
potentially reducing our future results of operations. There can be
no assurances that future laws or regulations or interpretations or
expansions of existing laws or regulations will not impose
requirements on internet commerce that could substantially impair
the growth of e-commerce and adversely affect our financial
performance. The adoption of additional laws or regulations may
decrease the popularity or impede the expansion of e-commerce and
internet marketing, restrict our present business practices,
require us to implement costly compliance procedures or expose us
and/or our customers to potential liability.
We
may be deemed to “operate” or “do business”
in states where our customers conduct their business, resulting in
regulatory action. If any state licensing laws were determined to
be applicable to us, and if we are required to be licensed and we
are unable to do so, or we are otherwise unable to comply with laws
or regulations, we could be subject to fines or other penalties or
be compelled to discontinue operations in those
states. In the event any state’s regulatory
requirements impose state specific requirements on us or include us
within an industry-specific regulatory scheme, we may be required
to modify our marketing programs in that state in a manner that may
undermine the program’s attractiveness to consumers or
Dealers. In the alternative, if we determine that the licensing and
related requirements are overly burdensome, we may elect to
terminate operations in that state. In each case, our financial
performance could be materially and adversely
affected. We have identified below areas of government
regulation, which if changed or interpreted to apply to our
business, we believe could be costly for us.
Automotive
Dealer/ Broker and Vehicle Advertising Laws.
All states comprehensively regulate vehicle sales
and lease transactions, including strict licensure requirements for
Dealers (and, in some states, brokers) and vehicle advertising.
Most of these laws and regulations, we believe, specifically
address only traditional vehicle purchase and lease transactions,
not internet-based Lead referral programs such as our programs. If
we determine that the licensing or other regulatory requirements in
a given state are applicable to us or to a particular marketing
services program, we may elect to obtain required licenses and
comply with applicable regulatory requirements. However,
if licensing or other regulatory requirements are overly
burdensome, we may elect to terminate operations or particular
marketing services programs in that state or elect to not operate
or introduce particular marketing services programs in that state.
In some states we have modified our marketing programs or pricing
models to reduce uncertainty regarding our compliance with local
laws. As we introduce new services, we may need to incur additional
costs associated with additional licensing regulations and
regulatory requirements.
Financial
Broker and Consumer Credit Laws
. We provide a connection through our websites
that allows consumers to obtain finance information and, through
our display and pay-per-click advertising programs, to be referred
to Dealer, Manufacturer and potential lender websites. All online
applications for quotes are completed on the respective third
party’s websites. We receive marketing fees from financial
institutions and Dealers in connection with this marketing
activity. We do not demand nor do we receive any fees from
consumers for these services. In the event states require us to be
licensed as a financial broker or finder, we may be unable to
comply with a state’s laws or regulations, or we could be
required to incur significant fees and expenses to obtain any
financial broker required license and comply with regulatory
requirements. In addition, the Dodd-Frank Wall Street
Reform and Consumer Protection Act established a new consumer
financial protection bureau with broad regulatory powers, which
could lead to regulation of our advertising business directly or
indirectly through regulation of automotive finance companies and
other financial institutions.
Insurance
Broker Laws.
We provide links
on our websites and referrals from call centers enabling consumers
to be referred to third parties to receive quotes for insurance
from such third parties. All online applications for quotes are
completed on the respective insurance carriers’ or other
third party websites, and all applications for quotes obtained
through call center referrals are conducted by the insurance
carrier or other third party. We receive marketing fees from
participants in connection with this marketing activity. We do not
receive any premiums from consumers nor do we charge consumers fees
for our services.
Changes in the taxation of internet commerce may result in
increased costs
.
Because
our business is dependent on the internet, the adoption of new
local, state or federal tax laws or regulations or new
interpretations of existing laws or regulations by governmental
authorities may subject us to additional local, state or federal
sales, use or income taxes and could decrease the growth of
internet usage or marketing or the acceptance of internet commerce
which could, in turn, decrease the demand for our services and
increase our costs. As a result, our financial
performance could be materially and adversely affected. Tax
authorities in a number of states are currently reviewing and
re-evaluating the tax treatment of companies engaged in internet
commerce, including the application of sales taxes to internet
marketing businesses similar to ours. We accrue for tax
contingencies based upon our estimate of the taxes ultimately
expected to be paid, which we update over time as more information
becomes available, new legislation or rules are adopted or taxing
authorities interpret their existing statutes and rules to apply to
internet commerce, including internet marketing businesses similar
to ours. The amounts ultimately paid in resolution of reviews
or audits by taxing authorities could differ materially from the
amounts we have accrued and result in additional tax expense, and
our financial performance could be materially and adversely
affected.
Data Security and Privacy Risks
Our
business is subject to various laws, rules and regulations relating
to data security and privacy. New data security and privacy laws,
rules and regulations may be adopted regarding the internet or
other online services that could limit our business flexibility or
cause us to incur higher compliance costs. In each case,
our financial performance could be materially and adversely
affected. We have identified below some of these risks
that we believe could materially and adversely affect our financial
performance.
Anti-spam
laws, rules and regulations.
Various state and federal laws, rules and
regulations regulate email communications and internet advertising
and restrict or prohibit unsolicited email (commonly known as
“spam”). These laws, rules or regulations may adversely
affect our ability to market our services to consumers in a
cost-effective manner. The federal Controlling the Assault of
Non-Solicited Pornography and Marketing Act of 2003
(“
CAN-SPAM
”) imposes complex and often burdensome
requirements in connection with sending commercial emails. In
addition, state laws regulating the sending of commercial emails,
including California’s law regulating the sending of
commercial emails, to the extent found to not be preempted by
CAN-SPAM, may impose requirements or conditions more restrictive
than CAN-SPAM. Violation of these laws, rules or regulations may
result in monetary fines or penalties or damage to our
reputation.
Data
privacy laws, rules and regulations.
Various laws, rules and regulations govern the
collection, use, retention, sharing and security of data that we
receive from our users, advertisers and affiliates. In addition, we
have and post on our website our own privacy policies and practices
concerning the collection, use and disclosure of user data and
personal information. Any failure, or perceived failure, by us to
comply with our posted privacy policies, Federal Trade Commission
requirements or orders or other federal or state privacy or
consumer protection-related laws, regulations or industry
self-regulatory principles could result in proceedings or actions
against us by governmental entities or others. Further, failure or
perceived failure by us to comply with our policies, applicable
requirements or industry self-regulatory principles related to the
collection, use, sharing or security of personal information or
other privacy-related matters could result in a loss of user
confidence in us, damage to our brands, and ultimately in a loss of
users, advertisers or Lead referral and advertising affiliates. We
cannot predict whether new legislation or regulations concerning
data privacy and retention issues related to our business will be
adopted, or if adopted, whether they could impose requirements that
may result in a decrease in our user registrations and materially
and adversely affect our financial
performance. Proposals that have or are currently being
considered include restrictions relating to the collection and use
of data and information obtained through the tracking of internet
use, including the possible implementation of a “Do Not
Track” list, that would allow internet users to opt-out of
such tracking.
Security
risks associated with online Leads collection and referral,
advertising and e-commerce risks associated with other online fraud
and scams.
A
significant issue for online businesses like ours is the secure
transmission of confidential and personal information over public
networks. Concerns over the security of transactions conducted on
the internet, consumer identity theft and user privacy issues have
been significant barriers to growth in consumer use of the
internet, online advertising and e-commerce. Despite our
implementation of security measures, our computer systems or those
of our vendors may be susceptible to electronic or physical
computer break-ins, viruses and other disruptive harms and security
breaches. Advances in computer capabilities, new discoveries in the
field of cryptography or other developments may specifically
compromise our security measures. Because the techniques used to
obtain unauthorized access, disable or degrade service, or sabotage
systems change frequently and often are not recognized until
launched against a target, we may be unable to anticipate these
techniques or to implement adequate preventative measures on a
timely basis. Any perceived or actual unauthorized disclosure of
personally identifiable information regarding website visitors,
whether through breach of our network by an unauthorized party,
employee theft or misuse, or otherwise, could harm our reputation
and brands, substantially impair our ability to attract and retain
our audiences, or subject us to claims or litigation arising from
damages suffered by consumers. If consumers experience identity
theft after using any of our websites, we may be exposed to
liability, adverse publicity and damage to our reputation. To the
extent that identity theft gives rise to reluctance to use our
websites or a decline in consumer confidence in financial
transactions over the internet, our business could be adversely
affected. Alleged or actual breaches of the network of one of our
business partners or competitors whom consumers associate with us
could also harm our reputation and brands. In addition, we could
incur significant costs in complying with the multitude of state,
federal and foreign laws regarding the unauthorized disclosure of
personal information. For example, California law requires
companies to inform individuals of any security breaches that
result in their personal information being stolen. Because our
success depends on the acceptance of online services and
e-commerce, we may incur significant costs to protect against the
threat of security breaches or to alleviate problems caused by
those breaches. Internet fraud has been increasing over the past
few years, and the Company has experienced fraudulent use of our
name and trademarks on websites in connection with the purported
sale of vehicles offered on third party websites, with payments to
be handled through an online escrow service purported to be owned
and operated by the Company. These fraudulent online
transactions and scams, should they continue to increase in
prevalence, could affect our reputation with consumers and give
rise to claims by consumers for funds transferred to the fraudulent
accounts, which could materially and adversely affect our financial
performance.
We
are insured for some, but not all, of the foregoing
risks. Even for those risks for which we are insured and
have coverage under the terms and conditions of the applicable
policies, there are no assurances given that the coverage limits
would be sufficient to cover all costs, liabilities or losses we
might incur or experience.
Telemarketing
Risks.
We are
subject to various federal and state laws, rules, regulations and
orders regarding telemarketing and privacy, including restrictions
on the use of unsolicited emails and restrictions on marketing
activities conducted through the use of telephonic communications
(including text messaging to mobile telephones). Our financial
performance could be adversely affected by newly-adopted or amended
laws, rules, regulations and orders relating to telemarketing and
increased enforcement of such laws, rules, regulations or orders by
governmental agencies or by private litigants. One example of
regulatory changes that may affect our financial performance are
the regulations under the Telephone Consumer Protection Act
(“
TCPA
”). Regulations adopted by the Federal
Communications Commission under the TCPA require the prior express
written consent of the called party before a caller can initiate
telemarketing calls (i) to wireless numbers (including text
messaging) using an automatic telephone dialing system or an
artificial or prerecorded voice; or (ii) to residential lines using
an artificial or prerecorded voice. Failure to comply with the TCPA
can result in significant penalties, including statutory
damages. Our efforts to comply with these regulations
may negatively affect conversion rates of leads, and thus, our
revenue or profitability.
Technology Risks
Our
business is dependent on keeping pace with advances in technology.
If we are unable to keep pace with advances in technology,
consumers may stop using our services and our revenues will
decrease. If we are required to invest substantial amounts in
technology, our financial performance will be adversely
impacted.
The
internet and electronic commerce markets are characterized by rapid
technological change, changes in user and customer requirements,
frequent new service and product introductions embodying new
technologies, including mobile internet applications, and the
emergence of new industry standards and practices that could render
our existing websites and technology obsolete. These market
characteristics are intensified by the emerging nature of the
market and the fact that many companies are expected to introduce
new internet products and services in the near future. If we are
unable to adapt to changing technologies, our financial performance
could be materially and adversely affected. Our performance will
depend, in part, on our ability to continue to enhance our existing
services, develop new technology that addresses the increasingly
sophisticated and varied needs of our prospective customers,
license leading technologies and respond to technological advances
and emerging industry standards and practices on a timely and
cost-effective basis. The development of our websites, mobile
applications and other proprietary technology entails significant
technical and business risks. We may not be successful in using new
technologies effectively or adapting our websites or other
proprietary technology to customer requirements or to emerging
industry standards. In addition, if we are required to invest
substantial amounts in technology in order to keep pace with
technological advances, our financial performance could be
materially and adversely affected.
Interruptions
or failures in our information technology platforms, communication
systems or security systems could materially and adversely affect
our financial performance.
Our information technology and communications
systems are susceptible to outages and interruptions due to fire,
flood, earthquake, power loss, telecommunications failures, cyber
attacks, terrorist attacks, failure of redundant systems and
disaster recovery plans and similar events. Such outages and
interruptions could damage our reputation and harm our operating
results. Despite our network security measures, our
information technology platforms are vulnerable to computer
viruses, worms, physical and electronic break-ins, sabotage and
similar disruptions from unauthorized tampering, as well as
coordinated denial-of-service attacks. We do not have multiple site
capacity for all of our services. In the event of delays or
disruptions to services we rely on third party providers to perform
disaster recovery planning and services on our behalf. We are
vulnerable to extended failures to the extent that planning and
services are not adequate to meet our continued technology
platform, communication or security systems’
needs. We rely on third party providers for our primary
and secondary internet connections. Our co-location service and
public cloud services that provide infrastructure and platform
services, environmental and power support for our technology
platforms, communication systems and security systems are received
from third party providers. We have little or no control over these
third party providers. Any disruption of the services they provide
us or any failure of these third party providers to effectively
design and implement sufficient security systems or plan for
increases in capacity could, in turn, cause delays or disruptions
in our services. We are insured for some, but not all, of these
events. Even for those events for which we are insured
and have coverage under the terms and conditions of the applicable
policies, there are no assurances given that the coverage limits
would be sufficient to cover all losses we might incur or
experience.
We are
exposed to risks associated with overseas operations and
outsourcing.
We
currently maintain website, software development and operations in
Guatemala and receive software development and maintenance services
for some of our systems from contractors located in
Pakistan. These overseas operations and contractor
arrangements are subject to many inherent risks, including but not
limited to:
These risks can significantly impact our overseas operations and
outsourcing. Increases in the cost, or disruptions, of such
operations and outsourcing, could materially and adversely affect
our financial performance. In addition, we are subject
to certain anti-corruption laws, including the U.S. Foreign Corrupt
Practices Act, in addition to the laws of the foreign countries in
which we operate. If we or any of our employees or agents violates
these laws, we could become subject to sanctions or significant
penalties that could negatively affect our reputation and financial
performance.
Securities Market Risks
The public
market for our common stock may be volatile, especially because
market prices for internet-related and technology stocks have often
been unrelated to operating
performance.
Our
common stock is currently listed on The Nasdaq Capital Market under
the symbol “ABTL,” but we cannot assure that an active
trading market will be sustained or that the market price of the
common stock will not decline. The stock market in general
periodically experiences significant price fluctuations. The market
price of our common stock is likely to be highly volatile and could
be subject to wide fluctuations in response to factors such
as:
●
Actual
or anticipated variations in our quarterly operating
results;
●
Historical
and anticipated operating metrics such as the number of
participating Dealers, volume of Lead deliveries to Dealers, the
number of visitors to Company Websites and the frequency with which
they interact with Company Websites;
●
Announcements
of new product or service offerings;
●
Technological
innovations;
●
Concentration
of holdings in our common stock resulting in low public float for
our shares;
●
Decisions
by holders of large blocks of our stock to sell their holdings on
accelerated time schedules, including by reason of their decision
to liquidate investment funds that hold our stock;
●
Limited
analyst coverage of the Company;
●
Competitive
developments, including actions by Manufacturers;
●
Changes
in financial estimates by securities analysts or our failure to
meet such estimates;
●
Conditions
and trends in the internet, electronic commerce and automotive
industries;
●
Adoption
of new accounting standards affecting the technology or automotive
industry;
●
Rumors,
whether or not accurate, about us, our industry or possible
transactions or other events;
●
The
impact of open market repurchases of our common stock;
and
●
General
market or economic conditions and other factors.
Further,
the stock markets, and in particular The Nasdaq Capital Market,
have experienced price and volume fluctuations that have
particularly affected the market prices of equity securities of
many technology companies and have often been unrelated or
disproportionate to the operating performance of those companies.
These broad market factors have affected and may adversely affect
the market price of our common stock. In addition, general
economic, political and market conditions, such as recessions,
interest rates, energy prices, international currency fluctuations,
terrorist acts, political revolutions, military actions or wars,
may adversely affect the market price of our common stock. In the
past, following periods of volatility in the market price of a
company’s securities, securities class action litigation has
often been instituted against companies with publicly traded
securities. This litigation could result in substantial costs and a
diversion of management’s attention and resources, which
would have a material adverse effect on our financial
performance.
Our common stock could be delisted
from The Nasdaq Capital Market if we are not able to satisfy
continued listing requirements, in which case the price of our
common stock and our ability to raise additional capital
and issue equity-based compensation may be adversely affected, and
the ability to buy and sell our stock may be less orderly and
efficient.
For our common stock to continue to be listed on
The Nasdaq Capital Market, the Company must satisfy various
continued listing requirements established by
The
Nasdaq Stock Market LLC. In the event the Company were not able to
satisfy these continued listing requirements, we expect that our
common stock would be quoted on an over-the-counter market.
These markets are generally considered to be less efficient and
less broad than The Nasdaq Capital Market. Investors may be
reluctant to invest in the common stock if it is not listed
on
The Nasdaq Capital Market or another stock
exchange. Delisting of our common stock could have a material
adverse effect on the price of our common stock and would also
eliminate our ability to rely on the preemption of state securities
registration and qualification requirements afforded by Section 18
of the Securities Act of 1933 for “covered securities.”
The loss of this preemption could result in higher costs for
capital raising, could limit resale of our stock in some states,
and could adversely impact our ability to issue equity-based
compensation to Company
employees.
No assurances can be given that the Company will
continue to be able to meet the continued listing requirements for
listing of our common stock on The Nasdaq Capital
Market.
A
significant number of additional shares of our common stock may be
issued upon the exercise or conversion of existing securities,
which issuances may depress the market price of our common
stock
.
In connection with
our acquisition of Autoweb, we issued 168,007 shares of Series B
Junior Participating Convertible Preferred Stock (“Series B
Preferred Stock”) and warrants to purchase up to 148,240
shares of Series B Preferred Stock. The shares of Series B
Preferred Stock are convertible, subject to certain limitations,
into ten shares of common stock. All shares of Series B Preferred
Stock will be automatically converted into common stock upon
stockholder approval. In addition, in connection with the
acquisition of AutoUSA, we issued warrants to purchase 69,930
shares of common stock and a convertible subordinated promissory
note for $1.0 million that may be converted into shares of common
stock at a conversion price of $16.34 per share. The issuance of
shares of common stock upon conversion of the Series BPreferred
Stock, exercise of the AutoUSA Warrants and conversion of the
AutoUSA Note will dilute the proportionate ownership and voting
power of existing security holders. In addition the market price of
our common stock may be depressed by the issuance or resales of the
shares of common stock acquired upon exercise or conversion. See
Note 3 of the “Notes to Consolidated Financial
Statements” in Part II, Item 8, Financial Statements and
Supplementary Data of this Annual Report on Form
10-K.
Risks Associated with Litigation
Misappropriation
or infringement of our intellectual property and proprietary
rights, enforcement actions to protect our intellectual property
and claims from third parties relating to intellectual property
could materially and adversely affect our financial
performance.
Litigation regarding intellectual property
rights is common in the internet and technology industries. We
expect that internet technologies and software products and
services may be increasingly subject to third party infringement
claims as the number of competitors in our industry segment grows
and the functionality of products in different industry segments
overlaps.
Our
ability to compete depends upon our proprietary systems and
technology. While we rely on trademark, trade secret,
patent and copyright law, confidentiality agreements and technical
measures to protect our proprietary rights, we believe that the
technical and creative skills of our personnel,
continued
development of our proprietary systems and technology, brand name
recognition and reliable website maintenance are more essential in
establishing and maintaining a leadership position and
strengthening our brands. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy
aspects of our services or to obtain and use information that we
regard as proprietary. Policing unauthorized use of our proprietary
rights is difficult and may be expensive. We have no assurance that
the steps taken by us will prevent misappropriation of technology
or that the agreements entered into for that purpose will be
enforceable. Effective trademark, service mark, patent, copyright
and trade secret protection may not be available when our products
and services are made available online. In addition, if litigation
becomes necessary to enforce or protect our intellectual property
rights or to defend against claims of infringement or invalidity,
this litigation, even if successful, could result in substantial
costs and diversion of resources and management
attention. We also have no assurances that our products
and services do not infringe on the intellectual property rights of
third parties. Claims of infringement, even if unsuccessful, could
result in substantial costs and diversion of resources and
management attention. If we are not successful, we may be subject
to preliminary and permanent injunctive relief and monetary damages
which may be trebled in the case willful
infringements.
Our
financial performance could be adversely affected by actions of
third parties that could subject us to
litigation.
We could face
liability for information retrieved or obtained from or transmitted
over the internet by third parties and liability for products sold
over the internet by third parties. We could be exposed to
liability with respect to third party information that may be
accessible through our websites, links or vehicle review
services
.
These claims might, for example, be made for
defamation, negligence, patent, copyright or trademark
infringement, personal injury, breach of contract, unfair
competition, false advertising, invasion of privacy or other legal
theories based on the nature, content or copying of these
materials. These claims might assert, among other things that, by
directly or indirectly providing links to websites operated by
third parties we should be liable for copyright or trademark
infringement or other wrongful actions by such third parties
through those websites. It is also possible that, if any third
party content provided on our websites contains errors, consumers
could make claims against us for losses incurred in reliance on
such information. Any claims could result in costly litigation,
divert management’s attention and resources, cause delays in
releasing new or upgrading existing services or require us to enter
into royalty or licensing agreements.
We also enter into agreements with
other companies under which any revenues that results from the
purchase or use of services through direct links to or from our
websites or on our websites is shared. In addition,
we
acquire personal information and data in the form of Leads
purchased from third party websites involving consumers who
submitted personally identifiable information and data to the third
parties and not directly to us. These arrangements may expose us to
additional legal risks and uncertainties, including disputes with
these parties regarding revenue sharing, local, state
and
federal
government regulation and potential liabilities to consumers of
these services, even if we do not provide the services ourselves or
have direct contact with the consumer.
These liabilities can include liability for
violations by these third parties of laws, rules and regulations,
including those related to data security and privacy laws and
regulations; unsolicited email, text messaging, telephone or
wireless voice marketing; and licensing. We have no assurance that
any indemnification provided to us in our agreements with these
third parties, if available, will be adequate.
Our
financial performance could be materially and adversely affected by
other litigation.
From time to time, we are involved in
litigation or legal matters not related to intellectual property
rights and arising from the normal course of our business
activities. The actions filed against us and other litigation or
legal matters, even if not meritorious, could result in substantial
costs and diversion of resources and management attention and an
adverse outcome in litigation could materially and adversely affect
our financial performance. Our liability insurance may not cover
all potential claims to which we are exposed and may not be
adequate to indemnify us for all liability that may be imposed. Any
imposition of liability that is not covered by insurance or is in
excess of our insurance coverage could have a material adverse
effect on our financial performance.
Our certificate of incorporation and bylaws, tax benefit
preservation plan and Delaware law contain provisions that could
discourage a third party from acquiring us or limit the price third
parties are willing to pay for our stock.
Provisions
of our amended and restated certificate of incorporation and bylaws
relating to our corporate governance and provisions in our Tax
Benefit Preservation Plan could make it difficult for a third party
to acquire us, and could discourage a third party from attempting
to acquire control of us. These provisions could limit the price
that some investors might be willing to pay in the future for
shares of our common stock and may have the effect of delaying or
preventing a change in control. The issuance of preferred stock
also could decrease the amount of earnings and assets available for
distribution to the holders of common stock or could adversely
affect the rights and powers, including voting rights, of the
holders of the common stock.
Our
amended and restated certificate of incorporation allows us to
issue preferred stock with rights senior to those of the common
stock without any further vote or action by the stockholders. Our
amended and restated certificate of incorporation also provides
that the board of directors is divided into three classes, which
may have the effect of delaying or preventing changes in control or
change in our management because less than a majority of the board
of directors are up for election at each annual meeting. In
addition, provisions in our amended and restated certificate of
incorporation and bylaws:
●
Require
that actions to be taken by our stockholders may be taken only at
an annual or special meeting of our stockholders and not by written
consent;
●
Specify
that special meetings of our stockholders can be called only by our
board of directors, a committee of the board of directors, the
Chairman of our board of directors or our President;
●
Establish
advance notice procedures for stockholders to submit nominations of
candidates for election to our board of directors and other
proposals to be brought before a stockholders meeting;
●
Provide
that our bylaws may be amended by our board of directors without
stockholder approval;
●
Allow
our board of directors to establish the size of our board of
directors;
●
Provide
that vacancies on our board of directors or newly created
directorships resulting from an increase in the number of our
directors may be filled only by a majority of directors then in
office, even though less than a quorum; and
●
Do
not give the holders of our common stock cumulative voting rights
with respect to the election of directors.
These
provisions could make it more difficult for stockholders to effect
corporate actions such as a merger, asset sale or other change of
control of us.
Under our Tax Benefit Preservation Plan, rights to
purchase capital stock of the Company (“
Rights
”) have been distributed as a dividend at
the rate of five Rights for each share of common
stock. Each Right entitles its holder, upon triggering
of the Rights, to purchase one one-hundredth of a share of Series A
Junior Participating Preferred Stock of the Company at a price of
$75.00 (as such price may be adjusted under the Tax Benefit
Preservation Plan) or, in certain circumstances, to instead acquire
shares of common stock. The Rights will convert into a right to
acquire common stock or other capital stock of the Company in
certain circumstances and subject to certain
exceptions. The Rights will be triggered upon the
acquisition of 4.90% or more of the Company’s outstanding
common stock or future acquisitions by any existing holders of
4.90% or more of the Company’s outstanding common stock. If a
person or group acquires 4.90% or more of our common stock, all
Rights holders, except the acquirer, will be entitled to acquire at
the then exercise price of a Right that number of shares of our
common stock which, at the time, has a market value of two times
the exercise price of the Right. The Tax Benefit
Preservation Plan authorizes our board of directors to exercise
discretionary authority to deem a person acquiring common stock in
excess of 4.90% not to be an “Acquiring Person” under
the Tax Benefit Preservation Plan, and thereby not trigger the
Rights, if the Board finds that the beneficial ownership of the
shares by the person acquiring the shares will not be likely
to directly or indirectly limit the availability to the Company of
the net operating loss carryovers and other tax attributes that the
plan is intended to preserve or is otherwise in the best
interests of the Company.
We
are also subject to Section 203 of the Delaware General
Corporation Law. In general, the statute prohibits a publicly-held
Delaware corporation from engaging in a “business
combination” with an “interested stockholder” for
a period of three years after the date of the transaction in which
the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. For purposes of
Section 203, a “business combination” includes a
merger, asset sale or other transaction resulting in a financial
benefit to the interested stockholder, and an “interested
stockholder” is a person who, together with affiliates and
associates, owns or did own 15% or more of the corporation’s
voting stock. Section 203 could discourage a third party from
attempting to acquire control of us.
If our internal controls and procedures fail, our financial
condition, results of operations and cash flow could be materially
and adversely affected.
Management is responsible for establishing and
maintaining adequate internal control over financial reporting. Our
internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles. In making its assessment of the effectiveness of our
internal control over financial reporting as of December 31,
2016, management used the criteria described in Internal
Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission
(“
COSO
”).
A material weakness is a control deficiency, or combination of
control deficiencies, that results in a more than remote likelihood
that a material misstatement of the annual or interim financial
statements will not be prevented or detected.
Management
determined that we had no material weaknesses in our internal
control over financial reporting as of December 31, 2016. Our
internal controls may not prevent all potential errors and fraud,
because any control system, no matter how well designed, can only
provide reasonable and not absolute assurance that the objectives
of the control system will be achieved. We have had material
weaknesses in our internal control over financial reporting in the
past and there is no assurance that we will not have one or more
material weaknesses in the future resulting from failure of our
internal controls and procedures.
Our
ability to report our financial results on a timely and accurate
basis could be adversely affected by a failure in our internal
control over financial reporting. If our financial statements are
not fairly presented, investors may not have an accurate
understanding of our operating results and financial condition. If
our financial statements are not timely filed with the SEC, we
could be delisted from The Nasdaq Capital Market. If either or both
of these events occur, it could have a material adverse effect on
our ability to operate our business and the market price of our
common stock. In addition, a failure in our internal control over
financial reporting could materially and adversely affect our
financial performance.
If we lose our key personnel or are unable to attract, train and
retain additional highly qualified sales, marketing, managerial and
technical personnel, our business may suffer.
Our
future success depends on our ability to identify, hire, train and
retain highly qualified sales, marketing, managerial and technical
personnel. In addition, as we introduce new services we may
need to hire additional personnel. We may not be able to attract,
assimilate or retain such personnel in the future. The inability to
attract and retain the necessary managerial, technical, sales and
marketing personnel could have a material adverse effect on our
business, results of operations and financial
condition.
Our
business and operations are substantially dependent on the
performance of our executive officers and key
employees. Each of these executive officers would be
difficult to replace. There is no guarantee that these or any
of our other executive officers and key employees will remain
employed with us. The loss of the services of one or more of our
executive officers or key employees could have a material adverse
effect on our business, results of operations and financial
condition.
Unresolved Staff Comments
Not
applicable.
Our
headquarters are located in Irvine, California. Our headquarters
consist of approximately 40,000 square feet of leased office space
under a lease that expires in July 2017, with two extension
options of one-year each (subject to the landlord’s right to
terminate the second extension option in the event the premises are
to be redeveloped). We are in the process of evaluating a move of
our headquarters to new office space located near our current
headquarters, and we are currently in negotiations for potential
new office space. Our SEM operations located in Tampa, Florida are
in leased office space that consists of approximately 2,800 square
feet under a lease that currently provides for its expiration in
April 2017. Our Tampa SEM operations will be moving in or about
April 2017 to new leased office space in Tampa, Florida consisting
of approximately 13,000 square feet under a lease that expires
seven years after we first occupy the space. Our website
development operations located in Guatemala City, Guatemala occupy
approximately 10,000 square feet of leased office space under
leases that expire in March 2020. We also maintain SEM, direct
marketing and software development operations in Cambridge,
Massachusetts that occupy approximately 5,500 square feet of leased
office space under a lease that expires in November 2017.We believe
that our existing facilities are adequate to meet our needs and
that existing needs and future growth can be accommodated by
leasing alternative or additional space.
From
time to time, we may be involved in litigation matters arising from
the normal course of our business activities. Such
litigation, even if not meritorious, could result in substantial
costs and diversion of resources and management attention, and an
adverse outcome in litigation could materially adversely affect our
business, results of operations, financial
condition, cash flows, earnings per share and stock
price.
Item 4.
Mine Safe
t
y Disclosures
Not
applicable.
Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
Our
common stock, par value $0.001 per share, is listed on The Nasdaq
Capital Market and trades under the symbol “ABTL.” The
following table sets forth, for the calendar quarters indicated,
the range of high and low sales prices of our common
stock:
|
|
|
2015
|
|
|
First
Quarter
|
$
14.78
|
$
9.07
|
Second
Quarter
|
$
17.97
|
$
12.68
|
Third
Quarter
|
$
19.79
|
$
14.93
|
Fourth
Quarter
|
$
24.57
|
$
16.30
|
|
|
|
2016
|
|
|
First
Quarter
|
$
21.01
|
$
14.56
|
Second
Quarter
|
$
18.74
|
$
12.34
|
Third
Quarter
|
$
17.80
|
$
13.49
|
Fourth
Quarter
|
$
18.28
|
$
11.04
|
As
of March 6, 2017, there were 220 holders of record of our common
stock. We have never declared or paid any cash dividends on our
common stock and we do not expect to pay any cash dividends in the
foreseeable future. Payment of any future dividends will
depend on our earnings, cash flows and financial condition and will
be subject to legal and contractual restrictions. As of
March 6, 2017, our common stock closing price was $12.85 per
share.
Performance Graph
The
following graph shows a comparison of cumulative total stockholder
returns for our common stock, the NASDAQ Composite, the S&P
Automobile Manufacturers Index, and the S&P Smallcap 600
Automotive Retail Index. The comparisons reflected in
the graph and table below are not intended to predict the future
performance of our stock and may not be indicative of our future
performance. The data regarding our common stock assume
an investment in our common stock at the closing price of $3.50 per
share of our common stock on December 30, 2011
.
|
|
|
12/11
|
12/12
|
12/13
|
12/14
|
12/15
|
12/16
|
Autobytel
|
$
100.00
|
$
113.71
|
$
432.29
|
$
311.43
|
$
644.57
|
$
384.29
|
NASDAQ
Composite
|
100.00
|
116.41
|
165.47
|
188.69
|
200.32
|
216.54
|
S&P
Automobile Manufacturers
|
100.00
|
122.60
|
159.50
|
154.73
|
151.44
|
150.43
|
S&P
Smallcap 600 Automotive Retail
|
100.00
|
126.19
|
184.37
|
225.83
|
226.79
|
213.60
|
The
tables below set forth our selected consolidated financial
data. We prepared this information using the
consolidated financial statements of Autobytel for the five years
ended December 31, 2016. Certain amounts in the selected
consolidated financial data have been reclassified to conform to
the current year presentation. You should read
these selected consolidated financial data together with the
Consolidated Financial Statements and related Notes to the
Consolidated Financial Statements contained in this Annual Report
on Form 10-K and also Item 7, “Management’s Discussion
and Analysis of Financial Condition and Results of
Operations.”
|
|
|
|
|
|
|
|
|
(Amounts in thousands, except per-share data)
|
RESULTS
OF OPERATIONS:
|
|
|
|
|
|
Total
revenues
|
$
156,684
|
$
133,226
|
$
106,278
|
$
78,361
|
$
66,802
|
Income
from continuing operations
|
$
3,871
|
$
4,646
|
$
3,411
|
$
38,144
|
$
1,387
|
Net
income
|
$
3,871
|
$
4,646
|
$
3,411
|
$
38,144
|
$
1,387
|
Basic
earnings per common share
|
$
0.36
|
$
0.47
|
$
0.38
|
$
4.29
|
$
0.15
|
Diluted
earnings per common share
|
$
0.29
|
$
0.37
|
$
0.32
|
$
3.61
|
$
0.15
|
Weighted
average diluted shares
|
13,303
|
12,662
|
11,212
|
10,616
|
9,204
|
(1)
Net
income in 2013 included a one-time benefit of $35.5 million in
connection with the release of a valuation allowance against
deferred tax assets.
|
|
|
|
|
|
|
|
|
|
FINANCIAL
POSITION (1):
|
|
|
|
|
|
Cash
and cash equivalents
|
$
38,512
|
$
23,993
|
$
20,747
|
$
18,930
|
$
15,296
|
Total
assets
|
$
165,281
|
$
153,588
|
$
104,749
|
$
88,193
|
$
40,767
|
Non-current
liabilities
|
$
16,500
|
$
21,750
|
$
11,061
|
$
10,450
|
$
5,620
|
Accumulated
deficit
|
$
(230,424
)
|
$
(234,295
)
|
$
(238,941
)
|
$
(242,352
)
|
$
(280,496
)
|
Stockholders’
equity
|
$
119,609
|
$
108,201
|
$
69,258
|
$
64,828
|
$
25,765
|
(1)
See
Part II, Item 7, “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and
“Notes to the Consolidated Financial Statements” in
Part II, Item 8, of this Annual Report on Form 10-K for information
regarding business combinations and other items that may affect
comparability.
Item 7.
M
anagement’s Discussion and
Analysis of Financial Condition and Results of
Operations
You
should read the following discussion of our results of operations
and financial condition in conjunction with the “Risk
Factors” included in Part I, Item 1A and our
Consolidated Financial Statements and related Notes thereto
included in Part II, Item 8 of this Annual Report on
Form 10-K. See also the discussion of
“Forward-Looking Statements” immediately preceding Part
I of this Annual Report on Form 10-K.
For the year ended December 31, 2016, our
business, results of operations and financial condition were
affected and may continue to be affected in the future by the
events that occurred during or subsequent to year end that are
described in Part I, Item 1 “Business –
Significant
Business Developments”
of
this Annual report on Form 10-K.
Results of Operations
The
following table sets forth our results of operations as a
percentage of total revenues:
|
|
|
|
|
|
Revenues:
|
|
|
|
Lead
fees
|
83.4
%
|
90.6
%
|
94.8
%
|
Advertising
|
15.6
|
7.9
|
3.9
|
Other
revenues
|
1.0
|
1.5
|
1.3
|
Total
revenues
|
100.0
|
100.0
|
100.0
|
Cost
of revenues
|
63.0
|
61.2
|
60.7
|
Gross
margin
|
37.0
|
38.8
|
39.3
|
Operating
expenses:
|
|
|
|
Sales
and marketing
|
11.6
|
12.0
|
13.5
|
Technology
support
|
8.9
|
8.8
|
7.5
|
General
and administrative
|
9.4
|
9.9
|
10.9
|
Depreciation
and amortization
|
3.2
|
2.3
|
1.7
|
Litigation
settlements
|
—
|
(0.1
)
|
(0.1
)
|
Total
operating expenses
|
33.1
|
32.9
|
33.5
|
Operating
income
|
3.9
|
5.8
|
5.8
|
Interest
and other income (expense), net
|
0.4
|
0.2
|
(0.7
)
|
Income
tax provision
|
1.8
|
2.5
|
1.9
|
Net
income
|
2.5
%
|
3.5
%
|
3.2
%
|
Revenues
by groups of similar services and gross profits are as follows
(dollars in thousands):
|
|
Years Ended
December 31,
|
|
|
2016 vs. 2015
Change
|
|
2015 vs. 2014
Change
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
$
|
|
|
|
%
|
|
$
|
|
|
|
%
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lead
fees
|
|
$
|
130,684
|
|
|
$
|
120,678
|
|
|
$
|
100,744
|
|
|
$
|
10,006
|
|
|
|
8
|
%
|
|
$
|
19,934
|
|
|
|
20
|
%
|
Advertising
|
|
|
24,508
|
|
|
|
10,534
|
|
|
|
4,171
|
|
|
|
13,974
|
|
|
|
133
|
|
|
|
6,363
|
|
|
|
153
|
|
Other
revenues
|
|
|
1,492
|
|
|
|
2,014
|
|
|
|
1,363
|
|
|
|
(522
|
)
|
|
|
(26
|
)
|
|
|
651
|
|
|
|
48
|
|
Total
revenues
|
|
|
156,684
|
|
|
|
133,226
|
|
|
|
106,278
|
|
|
|
23,458
|
|
|
|
18
|
|
|
|
26,948
|
|
|
|
25
|
|
Cost
of revenues
|
|
|
98,771
|
|
|
|
81,586
|
|
|
|
64,465
|
|
|
|
17,185
|
|
|
|
21
|
|
|
|
17,121
|
|
|
|
27
|
|
Gross
profit
|
|
$
|
57,913
|
|
|
$
|
51,640
|
|
|
$
|
41,813
|
|
|
$
|
6,273
|
|
|
|
12
|
%
|
|
$
|
9,827
|
|
|
|
24
|
%
|
2016 Compared to 2015
Lead fees.
Lead fees increased $10.0 million or 8% in 2016
compared to 2015. The increase in Lead fees was primarily due to
increased lead volume associated with the acquisitions of Dealix
Corporation and Autotegrity, Inc. (collectively,
“
Dealix/Autotegrity
”)
in May 2015.
Advertising.
The
$14.0 million or 133% increase in advertising revenues in 2016
compared to 2015 was primarily due to an increase in click revenue
as a result of both increased click volume and pricing. Increased
click volume is a result of increased investments in traffic
acquisition activity.
Other
revenues.
Other
revenues decreased $0.5 million or 26% in 2016 compared to
2015. The decrease in other revenues was primarily due
to the discontinuation of a Manufacturer’s brand using other
non-Lead products.
Cost of Revenues.
Cost of revenues consists of Lead and
traffic acquisition costs and other costs. Lead and traffic
acquisition costs consist of payments made to our third party Lead
providers, including internet portals and online automotive
information providers, as well as search engine marketing
(“
SEM
”) costs. Other cost of revenues consists of
fees paid to third parties for data and content, including search
engine optimization (“
SEO
”) activity, included on our properties,
connectivity costs, development costs related to our websites,
compensation related expense and technology license fees, server
equipment depreciation and technology amortization directly related
to the Company Websites. SEM, sometimes referred to as paid search
marketing, is the practice of bidding on keywords on search engines
to drive traffic to a website.
The
$17.2 million or 21% increase in cost of revenues in 2016 compared
to 2015 was primarily due to increased lead volume from the
Dealix/Autotegrity acquisition in May 2015 together with increased
intangible amortization costs from both the Dealix/Autotegrity and
AutoWeb acquisitions, and an increased investment in additional
traffic acquisition methodologies.
2015 Compared to 2014
Lead fees.
Lead fees increased $19.9 million or 20% in 2015
compared to 2014. The increase in Lead fees was primarily due to
the higher lead volume associated with the increase in incremental
and overlapping Dealers from the Dealix/Autotegrity acquisition in
May 2015 paired with increased spend by certain OEM/wholesale
partners.
Advertising.
The
$6.4 million or 153% increase in advertising revenues in 2015
compared to 2014 was primarily due to increases in click revenue
coupled with increased revenue associated with higher page views as
well as increased direct marketing revenue.
Other
revenues.
Other
revenues increased $0.7 million or 48% in 2015 compared to
2014. The increase in other revenues was due to an
increase in mobile product sales as a result of our acquisition of
substantially all of the assets of Advanced Mobile, LLC and
Advanced Mobile Solutions Worldwide, Inc. (collectively,
“
Advanced
Mobile
”).
Cost of Revenues.
The $17.1 million or 27% increase in
cost of revenues in 2015 compared to 2014 was primarily due to a
corresponding increase in revenue as a result of the
Dealix/Autotegrity acquisition in May 2015.
Operating
expenses were as follows (dollars in thousands):
|
|
Years Ended December 31,
|
|
|
2016 vs. 2015
Change
|
|
2015 vs. 2014
Change
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
$
|
|
|
|
%
|
|
$
|
|
|
|
%
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
and marketing
|
|
$
|
18,118
|
|
|
$
|
15,956
|
|
|
$
|
14,404
|
|
|
$
|
2,162
|
|
|
|
14
|
%
|
|
$
|
1,552
|
|
|
|
11
|
%
|
Technology
support
|
|
|
13,986
|
|
|
|
11,740
|
|
|
|
8,014
|
|
|
|
2,246
|
|
|
|
19
|
|
|
|
3,726
|
|
|
|
46
|
|
General
and administrative
|
|
|
14,663
|
|
|
|
13,189
|
|
|
|
11,538
|
|
|
|
1,474
|
|
|
|
11
|
|
|
|
1,651
|
|
|
|
14
|
|
Depreciation
and amortization
|
|
|
5,068
|
|
|
|
3,106
|
|
|
|
1,858
|
|
|
|
1,962
|
|
|
|
63
|
|
|
|
1,248
|
|
|
|
67
|
|
Litigation
settlements
|
|
|
(50
|
)
|
|
|
(108
|
)
|
|
|
(143
|
)
|
|
|
58
|
|
|
|
(54
|
)
|
|
|
35
|
|
|
|
(24
|
)
|
Total
operating expenses
|
|
$
|
51,785
|
|
|
$
|
43,883
|
|
|
$
|
35,671
|
|
|
$
|
7,902
|
|
|
|
18
|
%
|
|
$
|
8,212
|
|
|
|
23
|
%
|
2016 Compared to 2015
Sales and Marketing.
Sales and marketing expense includes
costs for developing our brand, personnel costs, and other costs
associated with Dealer sales, website advertising, Dealer support
and bad debt expense.
Sales
and marketing expense for the year ended December 31, 2016
increased by $2.2 million or 14% compared to the prior year, due to
increased headcount related costs associated with the
Dealix/Autotegrity and AutoWeb acquisitions coupled with severance
expense of $0.6 million and accelerated stock compensation expense
of $0.3 million associated with the termination of two executive
officers.
Technology
Support.
Technology
support includes compensation, benefits, software licenses and
other direct costs incurred by the Company to enhance, manage,
maintain, support, monitor and operate the Company's websites and
related technologies, and to operate the Company's internal
technology infrastructure.
Technology
support expense for the year ended December 31, 2016 increased by
$2.2 million or 19% compared to the prior year, primarily due to
increased headcount related costs associated with the
Dealix/Autotegrity and AutoWeb acquisitions coupled with severance
expense of $0.3 million and accelerated stock compensation expense
of $0.2 million associated with the termination of an executive
officer.
General and
Administrative.
General and
administrative expense consists of certain executive, financial,
human resources, legal and facilities personnel expenses and costs
related to being a publicly-traded company.
General
and administrative expense for the year ended December 31,
2016 increased by $1.5 million or 11% compared to the prior year.
The increase was due to increased headcount costs and facility
fees, offset with a reduction in professional fees all associated
with the Dealix/Autotegrity and AutoWeb acquisitions, together with
$0.3 million in severance expense and $0.2 million in accelerated
stock compensation expense for a terminated executive
officer.
Depreciation and
Amortization.
Depreciation and amortization expense for the year
ended December 31, 2016 increased $2.0 million or 63% from the year
ended December 31, 2015 primarily due to the addition of intangible
assets associated with the Dealix/Autotegrity and AutoWeb
acquisitions.
Litigation
Settlements
.
Payments
received primarily from 2010 settlements of patent infringement
claims against third parties relating to the third parties’
methods of Lead delivery for 2016 were $50,000 compared to $108,000
in 2015. We also paid $41,000 related to settlement of claims
alleged under the
Controlling the Assault of Non-Solicited
Pornography And Marketing Act of 2003
inherited in connection with the acquisition of
Dealix/Autotegrity in 2016.
Interest and Other Income
(Expense), net.
Interest and
other income was $0.6 million for the year ended December 31, 2016
compared to interest and other income of $0.3 million for the year
ended December 31, 2015. Interest expense was $0.9
million and $0.8 million for the years ended December 31, 2016 and
2015, respectively. The year ended December 31, 2016
also included gain on disposal of the finance leads product of $2.2
million offset by a $0.8 million reserve related to our investment
in GoMoto, Inc (“
GoMoto
’).
Income tax
provision.
Income
tax expense was $2.8 million for the year ended December 31, 2016
compared to income tax expense of $3.4 million for the year ended
December 31, 2015. The Company’s effective tax
rate of 42.1% for the year ended December 31, 2016 differed from
the federal statutory rate principally as a result of deferred tax
asset adjustments and state income taxes and permanent
non-deductible tax items. The Company’s effective
tax rate of 42.5% for the year ended December 31, 2015 differed
from the federal statutory rate principally as a result of deferred
tax asset adjustments and state income taxes.
2015 Compared to 2014
Sales and Marketing.
Sales and marketing expense for the
year ended December 31, 2015 increased by $1.6 million or 11%
compared to the prior year, due to increased headcount related
costs associated with the Dealix/Autotegrity acquisition in May
2015 coupled with increased marketing costs.
Technology
Support.
Technology
support expense for the year ended December 31, 2015 increased by
$3.7 million or 46% compared to the prior year, primarily due to an
increase in headcount related costs associated with the
Dealix/Autotegrity acquisition in May 2015.
General and
Administrative.
General and
administrative expense for the year ended December 31, 2015
increased by $1.7 million or 14% compared to the prior year. The
increase was due to increased professional fees associated with the
Dealix/Autotegrity acquisition in May 2015 and AutoWeb
acquisition in October 2015.
Depreciation and
Amortization.
Depreciation and amortization expense for the year
ended December 31, 2015 increased $1.2 million or 67% from the year
ended December 31, 2014 primarily due to the addition of intangible
assets associated with the Dealix/Autotegrity and AutoWeb
acquisitions.
Litigation
Settlements
. Litigation
settlements decreased to $108,000 for the year ended December 31,
2015 compared to $143,000 for the year ended December 31,
2014. These payments primarily relate to a settlement of
patent infringement claims against third parties relating to the
third party’s method of Lead delivery.
Interest and Other Income
(Expense), net.
Interest and
other income was $0.3 million for the year ended December 31, 2015
compared to interest and other expense of $0.7 million for the year
ended December 31, 2014. Interest expense was $0.8
million and $0.7 million for the years ended December 31, 2015 and
2014, respectively. The year ended December 31, 2015
included $0.6 million related to a gain on investment recognized
from the acquisition of AutoWeb and $0.5 million related to the
Company’s recovery of short-swing profits from a stockholder
pursuant to Section 16(b) of the Securities Exchange Act of
1934.
Income tax
provision.
Income
tax expense was $3.4 million for the year ended December 31, 2015
compared to income tax expense of $2.0 million for the year ended
December 31, 2014. The Company’s effective tax
rate of 42.5% for the year ended December 31, 2015 differed from
the federal statutory rate principally as a result of deferred tax
asset adjustments and state income taxes and permanent
non-deductible tax items. The Company’s effective
tax rate of 37.4% for the year ended December 31, 2014 differed
from the federal statutory rate principally as a result of deferred
tax asset adjustments and state income taxes.
Segment Information
We
conduct our business within one business segment, which is defined
as providing automotive marketing services. Our
operations are aggregated into a single reportable operating
segment based upon similar economic and operating characteristics
as well as similar markets.
Liquidity and Capital Resources
The
table below sets forth a summary of our cash flow for the years
ended December 31, 2016, 2015 and 2014 (dollars in
thousands):
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
$
18,242
|
$
12,200
|
$
7,890
|
Net
cash used in investing activities
|
(2,774
)
|
(28,105
)
|
(12,548
)
|
Net
cash (used in) provided by financing activities
|
(949
)
|
19,151
|
6,475
|
Our
principal sources of liquidity are our cash and cash equivalents
and accounts receivable balances. Our cash and cash equivalents
totaled $38.5 million as of December 31, 2016 compared to
$24.0 million as of December 31, 2015.
On
June 7, 2012, the Company announced that its board of directors had
authorized the Company to repurchase up to $2.0 million of Company
common stock, and on September 17, 2014 the Company announced that
the board of directors had approved the repurchase of up to an
additional $1.0 million of Company common stock. The authorization
may be increased or otherwise modified, renewed, suspended or
terminated by the Company at any time, without prior notice. We may
repurchase common stock from time to time on the open market or in
private transactions. Shares repurchased under this
program have been retired and returned to the status of authorized
and unissued shares. We funded repurchases and anticipate that we
would fund future repurchases through the use of available cash.
The repurchase authorization does not obligate the Company to
repurchase any particular number of shares. The timing and actual
number of repurchases of additional shares, if any, under the
Company’s stock repurchase program will depend upon a variety
of factors, including price, market conditions, release of
quarterly and annual earnings and other legal, regulatory and
corporate considerations at the Company's sole discretion. The
impact of repurchases on the Tax Benefit Preservation Plan and on
the Company’s use of its net operating loss carryovers and
other tax attributes if the Company were to experience an
“ownership change,” as defined in Section 382 of the
Internal Revenue Code is also a factor that the Company considers
in connection with share repurchases. No repurchases were made in
2016. As of December 31, 2016, approximately $1.2
million remained available for the repurchase of Company common
stock under this program.
On June 1, 2016, the Company entered into a Fourth
Amendment to Loan Agreement (“
Credit Facility
Amendment
”) with MUFG
Union Bank, N.A., formerly Union Bank, N.A.
(“
Union Bank
”), amending the Company’s existing
Loan Agreement with Union Bank initially entered into on February
26, 2013, as amended on September 10, 2013, January 13, 2014 and
May 20, 2015 (the existing Loan Agreement, as amended to date, is
referred to collectively as the “
Credit Facility
Agreement
”). The Credit Facility Agreement
provided for a $9.0 million term loan (“
Term Loan 1
”). The Credit Facility Amendment
provides for (i) a $15.0 million term loan
(“
Term
Loan 2
”); (ii) the
amendment of certain financial covenants in the Credit Facility
Agreement; and (iii) amendments to the Company’s existing
$8.0 million working capital revolving line of credit
(“
Revolving
Loan
”).
Term Loan 1 is amortized over a period of four
years, with fixed quarterly principal payments of $562,500.
Borrowings under Term Loan 1 bear interest at either (i) the
bank’s Reference Rate (prime rate) minus 0.50% or (ii) the
London Interbank Offering Rate (“
LIBOR
”) plus 2.50%, at the option of the Company.
Interest under Term Loan 1 adjusts (i) at the end of each LIBOR
rate period (1, 2, 3, 6 or 12 months terms) selected by the
Company, if the LIBOR rate is selected; or (ii) with changes in
Union Bank’s Reference Rate, if the Reference Rate is
selected. Borrowings under Term Loan 1 are secured by a
first priority security interest on all of the Company’s
personal property (including, but not limited to, accounts
receivable) and proceeds thereof. Term Loan 1 matures on December
31, 2017. Borrowing under Term Loan 1 was limited to use
for the acquisition of AutoUSA, and the Company drew down the
entire $9.0 million of Term Loan 1, together with $1.0 million
under the Revolving Loan, in financing this
acquisition. The outstanding balance of Term Loan 1 as
of December 31, 2016 was $2.8 million.
Term
Loan 2 is amortized over a period of five years, with fixed
quarterly principal payments of $750,000. Borrowings under Term
Loan 2 bear interest at either (i) LIBOR plus 3.00% or (ii) the
bank’s Reference Rate (prime rate), at the option of the
Company. Borrowings under the Revolving Loan bear interest at
either (i) the LIBOR plus 2.50% or (ii) the bank’s Reference
Rate (prime rate) minus 0.50%, at the option of the Company.
Interest under both Term Loan 2 and the Revolving Loan adjust (i)
at the end of each LIBOR rate period (1, 2, 3, 6 or 12 months
terms) selected by the Company, if the LIBOR rate is selected; or
(ii) with changes in Union Bank’s Reference Rate, if the
Reference Rate is selected. The Company paid an upfront fee of
0.10% of the Term Loan 2 principal amount upon drawing upon Term
Loan 2 and also pays a commitment fee of 0.10% per year on the
unused portion of the Revolving Loan, payable quarterly in arrears.
Borrowings under Term Loan 2 and the Revolving Loan are secured by
a first priority security interest on all of the Company’s
personal property (including, but not limited to, accounts
receivable) and proceeds thereof. Term Loan 2 matures June 30,
2020, and the maturity date of the Revolving Loan was extended
from March 31, 2017 to April 30, 2018. Borrowings under the
Revolving Loan may be used as a source to finance working capital,
capital expenditures, acquisitions and stock buybacks and for other
general corporate purposes. Borrowing under Term Loan 2 was limited
to use for the acquisition of Dealix/Autotegrity, and the Company
drew down the entire $15.0 million of Term Loan 2, together with
$2.75 million under the Revolving Loan and $6.76 million from
available cash on hand, in financing this
acquisition. The outstanding balances of Term Loan 2 and
the Revolving Loan as of December 31, 2016 were $11.3 million and
$8.0 million, respectively.
The
Credit Facility Agreement contains certain customary affirmative
and negative covenants and restrictive and financial covenants,
including that the Company maintain specified levels of minimum
consolidated liquidity and quarterly and annual earnings before
interest, taxes and depreciation and amortization, which the
Company was in compliance with as of December 31,
2016.
We
believe our current cash and cash equivalent balances together with
anticipated cash flows from operations will be sufficient to
satisfy our working capital and capital expenditure requirements
for at least the next 12 months.
Net Cash Provided by Operating
Activities.
Net cash
provided by operating activities in 2016 of $18.2 million resulted
primarily from net income of $3.9 million, adjustments for non-cash
charges of to earnings of $13.4 million and an increase in working
capital.
Net cash provided by operating
activities in 2015 of $12.2 million resulted primarily from net
income of $4.6 million, as adjusted for non-cash charges to
earnings, offset by a decrease in working capital, primarily from a
decrease in accrued expenses and other liabilities of $1.4
million.
Net Cash Used in Investing
Activities.
Net cash
used in investing activities of $2.8 million in 2016 primarily
consisted of a $0.4 million investment in GoMoto, a $0.3 million in
a short-term investment and $2.1 million in purchases of property
and equipment and expenditures related to capitalized internal use
software.
Net
cash used in investing activities of $28.1 million in 2015
primarily consisted of $25.0 million used to acquire
Dealix/Autotegrity, a $0.4 million investment in GoMoto and $2.7
million in purchases of property and equipment and expenditures
related to capitalized internal use software.
Net Cash (Used in) Provided by
Financing Activities.
Net cash
used in financing activities of $0.9 million in 2016 consisted of
payments on term loan borrowings of $3.9 million. Stock
options for 386,001 shares of the Company’s common stock were
exercised in the year ended December 31, 2016 resulting in $3.1
million of cash
inflow.
Net cash provided by financing activities of $19.2
million in 2015 consisted of borrowings of
$15.0 million and $2.8 million against the Term
Loan and Revolving Loan, respectively, to fund the purchase of
Dealix/Autotegrity in the year ended December 31,
2015. Stock options for 145,979 shares of the
Company’s common stock were exercised in the year ended
December 31, 2015 resulting in $1.2 million of cash
inflow. Payments of $3.8 million were made
against the Term Loan borrowings in the year ended December 31,
2015. We also received $1.9 million of proceeds related
to the exercise of the Cyber Warrant by Auto Holdings and $2.1
million related to the acquisition of AutoWeb.
Contractual Obligations
The
following table provides aggregated information about our
outstanding contractual obligations as of December 31, 2016
(in thousands):
|
|
|
|
|
|
Long-term
Debt Obligations (a)
|
$
23,063
|
$
6,563
|
$
15,000
|
$
1,500
|
$
—
|
Operating
Lease Obligations (b)
|
5,414
|
1,767
|
1,669
|
961
|
1,017
|
Total
|
$
28,477
|
$
8,330
|
$
16,669
|
$
2,461
|
$
1,017
|
(a)
Long-term
debt obligations as defined by FASB Topic, “Debt,” and
disclosed in Note 5 and 6 of the consolidated
financial statements included in Part II, Item 8 of this Annual
Report on Form 10-K.
(b)
Operating
lease obligations as defined by FASB Topic, “Accounting for
Leases,” and disclosed in Note 5 of the consolidated
financial statements included in Part II, Item 8 of this
Annual Report on Form 10-K.
Off-Balance Sheet Arrangements
We
do not have any material off-balance sheet
arrangements.
Critical
Accounting Policies and Estimates
We prepare our financial statements in conformity
with accounting principles generally accepted in the United States
of America (“
U.S. GAAP
”), which require us to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. We believe the
following critical accounting policies, among others, require
significant judgment in determining estimates and assumptions used
in the preparation of our consolidated financial
statements. Accordingly, actual results could differ
materially from our estimates. To the extent that there are
material differences between these estimates and our actual
results, our financial condition or results of operations may be
affected. For a detailed discussion of the application of these and
other accounting policies, see Note 2 of the “Notes to
Consolidated Financial Statements” in Part II, Item 8
“Financial Statements and Supplementary Data” of this
Annual Report on Form 10-K.
Revenue Recognition.
Leads consist of vehicle buying Leads
for new and used vehicles and finance request fees. Fees
paid by Dealers and Manufacturers participating in our Lead
programs are comprised of monthly transaction and/or subscription
fees. Advertising revenues represent fees for display
advertising on our websites.
We
recognize revenues when evidence of an arrangement exists, pricing
is fixed and determinable, collection is reasonably assured, and
delivery or performance of service has occurred. Leads are
generally recognized as revenues in the period the service is
provided. Advertising revenues are generally recognized in the
period the advertisements are displayed on our websites. Fees
billed prior to providing services are deferred, as they do not
satisfy all U.S. GAAP revenue recognition criteria. Deferred
revenues are recognized as revenue over the periods services are
provided.
Investments
. We make strategic
investments because we believe that they may allow us to
increase market share, benefit from advancements in technology and
strengthen our business operations by enhancing our product and
service offerings.
Allowances for Bad Debt and
Customer Credits.
We
estimate and record allowances for potential bad debts and customer
credits based on factors such as the write-off percentages, the
current business environment and known concerns within our accounts
receivable balances.
The
allowance for bad debts is our estimate of bad debt expense that
could result from the inability or refusal of our customers to pay
for our services. Additions to the estimated allowance for bad
debts are recorded as an increase in sales and marketing expenses
and are based on factors such as historical write-off percentages,
the current business environment and the known concerns within the
current aging of accounts receivable. Reductions in the estimated
allowance for bad debts due to subsequent cash recoveries are
recorded as a decrease in sales and marketing expenses. As specific
bad debts are identified, they are written-off against the
previously established estimated allowance for bad debts and have
no impact on operating expenses.
The
allowance for customer credits is our estimate of adjustments for
services that do not meet our customers’ requirements.
Additions to the estimated allowance for customer credits are
recorded as a reduction in revenues and are based on historical
experience of: (i) the amount of credits issued; (ii) the
length of time after services are rendered that the credits are
issued; (iii) other factors known at the time; and (iv) future
expectations. Reductions in the estimated allowance for customer
credits are recorded as an increase in revenues. As specific
customer credits are identified, they are written-off against the
previously established estimated allowance for customer credits and
have no impact on revenues.
If
there is a decline in the general economic environment that
negatively affects the financial condition of our customers or an
increase in the number of customers that are dissatisfied with our
services, additional estimated allowances for bad debts and
customer credits may be required and the impact on our business,
results of operations or financial condition could be
material. We generally do not require collateral to
support our accounts receivables.
Contingencies.
From
time to time we may be subject to proceedings, lawsuits and other
claims. We assess the likelihood of any adverse judgments or
outcomes of these matters as well as potential ranges of probable
losses. We record a loss contingency when an unfavorable outcome is
probable and the amount of the loss can be reasonably estimated.
The amount of allowances required, if any, for these contingencies
is determined after analysis of each individual case. The amount of
allowances may change in the future if there are new material
developments in each matter.
Fair Value of Financial
Instruments.
We record our
financial assets and liabilities at fair value, which is defined
under the applicable accounting standards as the exchange price
that would be received for an asset or paid to transfer a liability
(an exit price) in the principal or most advantageous market for
the asset or liability in an orderly transaction between market
participants on the measure date. We use valuation
techniques to measure fair value, maximizing the use of observable
outputs and minimizing the use of unobservable
inputs. The standard describes a fair value hierarchy
based on three levels of inputs, of which the first two are
considered observable and the last unobservable, that may be used
to measure fair value which are the following:
Level
1 – Quoted prices in active markets for identical assets or
liabilities.
Level
2 – Inputs other than Level 1 that are observable, either
directly or indirectly, such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or
liabilities.
Level
3 – Inputs include management’s best estimate of what
market participants would use in pricing the asset or liability at
the measurement date. The inputs are unobservable in the
market and significant to the instrument’s
valuation.
Cash
equivalents, accounts receivable, net of allowance, accounts
payable and accrued liabilities, are carried at cost, which
management believes approximates fair value because of the
short-term maturity of these instruments.
Our
investments at December 31, 2016 and 2015 consist primarily of
investments in SaleMove and GoMoto and are accounted for under the
cost method. Although there is no established market for these
investments, we evaluated the investments for impairment by
comparing them to an estimated fair value and determined that there
is no impairment.
The following table presents the Company’s investment
activity for 2016 and 2015(dollars in thousands):
|
|
|
|
|
|
|
|
Description
|
|
|
|
|
|
|
|
Balance
at December 31, 2014
|
$
—
|
$
150
|
$
3,880
|
Total
gains, realized or unrealized
|
—
|
—
|
636
|
Purchases,
(sales), issuances and (settlements), net
|
375
|
(150
)
|
(3,836
)
|
Balance
at December 31, 2015
|
375
|
—
|
680
|
Purchases,
(sales), issuances and (settlements), net
|
(375
)
|
750
|
—
|
Balance
at December 31, 2016
|
—
|
750
|
680
|
Reserve
for notes receivable
|
—
|
(750
)
|
—
|
Net
balance at December 31, 2016
|
$
—
|
$
—
|
$
680
|
The
Company recorded a reserve against the current notes receivable
related to GoMoto as of December 31, 2016 because the Company
believes the amounts may not be recoverable.
Variable Interest
Entities.
We have an
investment in an entity that is considered a variable interest
entity (“
VIE
”)
under U.S. GAAP. We have concluded that our investment
in SaleMove qualifies as a variable interest and SaleMove is a VIE.
VIEs are legal entities in which the equity investors do not have
sufficient equity at risk for the entity to independently finance
its activities or the collective holders do not have the power
through voting or similar rights to direct the activities of the
entity that most significantly impacts its economic performance,
the obligation to absorb the expected losses of the entity, or the
right to receive expected residual returns of the entity.
Consolidation of a VIE is considered appropriate if a reporting
entity is the primary beneficiary, the party that has both
significant influence and control over the VIE. Management
periodically performs a qualitative analysis to determine if the
Company is the primary beneficiary of a VIE. This analysis includes
review of the VIEs’ capital structures, contractual terms,
and primary activities, including the Company’s ability to
direct the activities of the VIEs and obligations to absorb losses,
or the right to receive benefits, significant to the
VIEs. Additionally, changes in our various equity
investments have in the past resulted in a reconsideration
event
Based
on our analysis, Autobytel is not the primary beneficiary of
SaleMove. Accordingly, SaleMove does not meet the criteria for
consolidation. The SaleMove Advances are classified as an other
long-term asset on the consolidated balance sheet as of December
31, 2016. The carrying value and maximum potential loss
exposure from SaleMove totaled $0.6 million and $0.7 million as of
December 31, 2016 and 2015, respectively.
Property and
Equipment.
Property
and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is provided using the straight-line
method over the estimated useful lives of the respective assets,
generally three years. Amortization of leasehold improvements is
provided using the straight-line method over the shorter of the
remaining lease term or the estimated useful lives of the
improvements. Repair and maintenance costs are charged to operating
expenses as incurred. Gains or losses resulting from the retirement
or sale of property and equipment are recorded as operating income
or expenses, respectively.
Capitalized Internal Use
Software and Website Development
Costs.
We capitalize
costs to develop internal use software in accordance with the
Internal-Use Software and the Website Development Costs Topics,
which require the capitalization of external and internal computer
software costs and website development costs, respectively,
incurred during the application development stage. The application
development stage is characterized by software design and
configuration activities, coding, testing and installation.
Training and maintenance costs are expensed as incurred while
upgrades and enhancements are capitalized if it is probable that
such expenditures will result in additional functionality.
Capitalized internal use software development costs are amortized
using the straight-line method over an estimated useful life of
three years. Capitalized website development costs, once placed in
service are amortized using the straight-line method over the
estimated useful lives of the related websites.
Share-Based Compensation
Expense.
We account for
our share-based compensation using the fair value method in
accordance with the Stock Compensation Topic of the
Codification. Under these provisions, we recognize
share-based compensation net of an estimated forfeiture rate and
therefore only recognize compensation cost for those shares
expected to vest over the service period of the award. The
fair value of each stock option award is estimated on the date of
grant using the Black-Scholes option pricing model based on the
underlying common stock closing price as of the date of grant, the
expected term, expected stock price volatility and expected
risk-free interest rates.
Calculating
share-based compensation expense requires the input of highly
subjective assumptions, including the expected term of the
share-based awards, expected stock price volatility and expected
pre-vesting option forfeitures. We estimate the expected life
of options granted based on historical experience, which we believe
is representative of future behavior. We estimate the
volatility of the price of our common stock at the date of grant
based on historical volatility of the price of our common stock for
a period equal to the expected term of the awards. We have
used historical volatility because we have a limited number of
options traded on our common stock to support the use of an implied
volatility or a combination of both historical and implied
volatility. The assumptions used in calculating the fair value of
share-based awards represent our best estimates, but these
estimates involve inherent uncertainties and the application of
management judgment. As a result, if factors change and we use
different assumptions, our share-based compensation expense could
be materially different in the future. In addition, we are
required to estimate the expected forfeiture rate and only
recognize expense for those shares expected to vest. We
estimate the forfeiture rate based on historical experience of our
share-based awards that are granted, exercised or
cancelled. If our actual forfeiture rate is materially
different from our estimate, the share-based compensation expense
could be significantly different from what we have recorded in the
current period.
Income Taxes.
We account for income taxes under the
liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date. We record a valuation allowance, if
necessary, to reduce deferred tax assets to an amount we believe is
more likely than not to be realized.
As
of December 31, 2016, we had $0.5 million of unrecognized tax
benefits. There was a reduction of $0.1 million of
uncertain tax positions due to the settlement of a prior period tax
position during the current period. Our policy is to recognize
interest and penalties accrued on any unrecognized tax benefits as
a component of income tax expense. As of December 31, 2016, we
did not accrue interest associated with our unrecognized tax
benefits, and no interest expense was recognized in
2016.
Goodwill.
Goodwill
represents the excess of the purchase price for business
acquisitions over the fair value of identifiable assets and
liabilities acquired. We evaluate the carrying value of enterprise
goodwill for impairment. Testing for impairment of goodwill is a
two-step process. The first step requires us to compare the
enterprise’s carrying value to its fair value. If the fair
value is less than the carrying value, enterprise goodwill is
potentially impaired and we then complete the second step to
measure the impairment loss, if any. The second step requires the
calculation of the implied fair value of goodwill by deducting the
fair value of all tangible and intangible net assets from the fair
value of the reporting unit. If the implied fair value of goodwill
is less than the carrying amount of enterprise goodwill, an
impairment loss is recognized equal to the difference. We evaluate
enterprise goodwill, at a minimum, on an annual basis in the fourth
quarter of each year or whenever events or changes in circumstances
suggest that the carrying amount of goodwill may be
impaired. During 2015 we recognized $22.0 million in
goodwill related to the acquisitions of Dealix/Autotegrity and
AutoWeb. As of December 31, 2016, we adjusted goodwill
by $82,000 as a result of purchase price allocation adjustments and
no goodwill impairment was recorded during the
year.
Impairment of Long-Lived
Assets and Intangible Assets.
We periodically review long-lived assets to
determine if there is any impairment of these assets. We assess the
impairment of these assets, or the need to accelerate amortization,
whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. Our judgments regarding the
existence of impairment indicators are based on legal factors,
market conditions and operational performance of our long-lived
assets and other intangibles. Future events could cause us to
conclude that impairment indicators exist and that the assets
should be reviewed to determine their fair value. We assess the
assets for impairment based on the estimated future undiscounted
cash flows expected to result from the use of the assets and their
eventual disposition. If the carrying amount of an asset exceeds
its estimated future undiscounted cash flows, an impairment loss is
recorded for the excess of the asset’s carrying amount over
its fair value. Fair value is generally determined based on a
valuation process that provides an estimate of a fair value of
these assets using a discounted cash flow model, which includes
many assumptions and estimates. Once the valuation is determined,
we will write-down these assets to their determined fair value, if
necessary. Any write-downs could have a material adverse effect on
our financial condition and results of operations. We did not
record any impairment of long-lived assets in 2016, 2015 and
2014.
Indefinite-lived intangible
assets
. Indefinite-lived
intangible assets consists of a domain name, which was acquired as
part of the Dealix/Autotegrity acquisition in 2015, which is tested
for impairment annually, or more frequently if an event occurs or
circumstances changes that would indicate that impairment may
exist. When evaluating indefinite-lived intangible assets for
impairment, we may first perform a qualitative analysis to
determine whether it is more likely than not that the
indefinite-lived intangible assets is impaired. If we do not
perform the qualitative assessment, or if we determine that it is
more likely than not that the fair value of the indefinite-lived
intangible asset exceeds its carrying amount, we will calculate the
estimated fair value of the indefinite-lived intangible asset. Fair
value is the price a willing buyer would pay for the
indefinite-lived intangible asset and is typically calculated using
an income approach. If the carrying amount of the indefinite-lived
intangible asset exceeds the estimated fair value, an impairment
charge is recorded to reduce the carrying value to the estimated
fair value. We did not record any impairment of indefinite-lived
intangible assets in 2016 and 2015.
Recent Accounting Pronouncements
Accounting Standards
Codification 606 “Revenue from Contracts with
Customers.”
In
May 2014, Accounting Standards Update (“
ASU
”) No. 2014-09, “Revenue from
Contracts with Customers (Topic 606)” was
issued. This ASU requires an entity to recognize the
amount of revenue to which it expects to be entitled for the
transfer of promised goods or services to customers. The standard
will replace most existing revenue recognition guidance in U.S.
GAAP when it becomes effective. Early application is not
permitted. The standard permits the use of either the retrospective
or cumulative effect transition method. In August 2015,
the Financial Accounting Standards Board voted to defer the
effective date and it is now effective for public entities for
annual periods ending after December 15, 2017. Early adoption
of the standard is permitted. This update permits the use of either
the retrospective or cumulative effect transition method.
In April 2016, ASU No. 2016-10, “Identifying
Performance Obligations and Licensing” was
issued. This ASU clarifies 1) the identification of
performance obligations and, 2) licensing implementation guidance
as it relates to Topic 606, Revenue from Contracts with
Customers. The amendments in this ASU affect the
guidance in ASU 2014-09, which is effective for public entities for
annual periods ending after December 15, 2017. In May 2016, ASU No.
2016-12, “Narrow-Scope Improvements and Practical
Expedients” was issued. This ASU addresses certain
issues as it relates to assessing collectability, presentation of
sales taxes, noncash consideration, and completed contracts and
contract modifications at transition as it relates to Topic 606,
Revenue from Contracts with Customers. The amendments in
this ASU affect the guidance in ASU 2014-09, which is effective for
public entities for annual periods beginning after December 15,
2017. The Company is continuing to evaluate the effect this
guidance will have on the consolidated financial statements and
related disclosures.
Accounting Standards
Codification 740 “Income
Taxes.”
In November 2015, ASU No. 2015-17,
“Balance Sheet Classification of Deferred Taxes” was
issued. This ASU requires that deferred tax liabilities
and assets be classified as noncurrent in a classified statement of
financial position. The amendments in this update apply
to all entities that present a classified statement of financial
position. The amendments in this ASU are effective for
fiscal years beginning after December 15, 2016, including interim
periods within those fiscal years.
Once adopted, the Company
will reclassify $4.7 million of current deferred tax assets to
long-term deferred tax assets
.
Accounting Standards
Codification 842
“Leases.”
In February 2016, ASU No. 2016-02, “Leases
(Topic 842)” was issued. This ASU will require
lessees to recognize on the balance sheet the assets and
liabilities for the rights and obligations created by those leases
of terms more than 12 months. The ASU will require both
capital and operating leases to be recognized on the balance
sheet. Qualitative and quantitative disclosures will
also be required to help investors and other financial statement
users better understand the amount, timing and uncertainty of cash
flows arising from leases. The ASU will take effect for
public companies for fiscal years, and interim periods within those
fiscal years, beginning after December 15, 2018. The
Company continues to assess whether this ASU will be material to
the consolidated financial statements.
Accounting Standards
Codification 323 “Investments-Equity Method and Joint
Ventures.”
In
March 2016, ASU No. 2016-07, “Simplifying the Transition to
the Equity Method of Accounting” was issued. This
ASU eliminates the requirement that when an investment qualifies
for use of the equity method as a result of an increase in the
level of ownership interest or degree of influence, an investor
must adjust the investment, results of operations, and retained
earnings retroactively on a step-by-step basis as if the equity
method had been in effect during all previous periods that the
investment was held. The amendments require that the
equity method investor add the cost of acquiring the additional
interest in the investee to the current basis of the
investor’s previously held interest and adopt the equity
method of accounting as of the date the investment becomes
qualified for equity method accounting. Thus, upon
qualifying for the equity method of accounting, no retroactive
adjustment of the investment is required. The amendments
in this ASU are effective for all entities for fiscal years, and
interim periods within those fiscal years, beginning after December
15, 2016. The Company does not believe this ASU will have a
material effect on the consolidated financial
statements.
Accounting Standards
Codification 718 “Compensation-Stock
Compensation.”
In March 2016, ASU No. 2016-09,
“Improvements to Employee Share-Based Payment
Accounting” was issued. This ASU provides for
areas of simplification for several aspects of the accounting for
share-based payment transactions, including the income tax
consequences, classification of awards as either equity or
liabilities, and classification on the statement of cash
flows. The amendments in this ASU are effective for
annual periods beginning after December 15, 2016, and interim
periods within those annual
periods.
Once adopted, the Company will recognize $1.9
million of deferred tax assets relating to unrealized stock option
benefits, resulting in a cumulative $1.9 million adjustment to
retained earnings . The new guidance increases income
statement volatility by requiring all excess tax benefits and
deficits to be recognized in “Income taxes,” and
treated as discrete items in the period in which they occur.
The Company believes this ASU may have a material effect on the
consolidated financial statements.
Accounting Standards
Codification 230 “Statement of Cash
Flows.”
In
August 2016, ASU No. 2016-15, “Classification of Certain Cash
Receipts and Cash Payments” was issued. This ASU
provides guidance on eight specific cash flow issues with the
objective of reducing the existing diversity in practice for those
issues. The amendments in this ASU are effective for
annual periods beginning after December 15, 2017, and interim
periods within those annual periods. The Company does
not believe this ASU will have a material effect on the
consolidated financial statements.
Accounting Standards
Codification 810
“Consolidation.”
In October 2016, ASU No. 2016-17, “Interests
Held through Related Parties That Are Under Common Control”
was issued. This ASU amends the consolidation guidance
on how a reporting entity that is the single decision maker of a
VIE should treat indirect interests in the entity held through
related parties that are under common control with the reporting
entity when determining whether it is the primary beneficiary of
that VIE. The amendments in this ASU are effective for
annual periods beginning after December 15, 2016, and interim
periods within those annual periods. The Company does
not believe this ASU will have a material effect on the
consolidated financial statements.
Accounting Standards
Codification 205-40 “Presentation of Financial Statements
– Going Concern.”
In August 2014, ASU No. 2014-15, “Disclosure
of Uncertainties about an Entities Ability to Continue as a Going
Concern” was issued. This ASU provides guidance in
GAAP about management’s responsibility to evaluate whether
there is substantial doubt about an entity’s ability to
continue as a going concern and to provide related footnote
disclosures. The amendments in this ASU are effective
for annual periods ending after December 15, 2016, and for annual
and interim periods thereafter. The Company adopted this
ASU for the year ended December 31, 2016. This ASU did
not have a material effect on the consolidated financial
statements.
Item 7A.
Quantitative and Qualitative
Disclosures about Market Risk
The
Company does not use financial instruments for
trading. Our primary exposure to market risk is interest
rate sensitivity related to our Credit Facility
Agreement. The effect of a hypothetical 10% change in
interest rates would have increased our interest expense by $81,000
in the year ended December 31, 2016.
Item 8.
Financial
Statements and Supplementary
D
ata
Our
Consolidated Balance Sheets as of December 31, 2016 and 2015
and our Consolidated Statements of Income and Comprehensive Income,
Stockholders’ Equity and Cash Flows for each of the years in
the three-year period ended December 31, 2016, together with
the report of our independent registered public accounting firm,
begin on page F-1 of this Annual Report on Form 10-K and are
incorporated herein by reference.
Item 9.
Changes
in and Disagreements with Accountants on Accounting and Financial
D
isclosure
None.
Item 9A.
Controls and
Procedures
Disclosure Controls and Procedures
We have established and maintain disclosure
controls and procedures that are designed to ensure that material
information relating to the Company and its subsidiaries required
to be disclosed by us in the reports that are filed under the
Securities Exchange Act of 1934, as amended
(“
Exchange Act
”), is recorded, processed, summarized and
reported in the time periods specified in the SEC’s rules and
forms, and that this information is accumulated and communicated to
our management, including our chief executive officer and chief
financial officer, as appropriate to allow timely decisions
regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognized that any
controls and procedures, no matter how well designed and operated,
can provide only a reasonable assurance of achieving the desired
control objectives, and management was necessarily required to
apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
Under
the supervision and with the participation of our management,
including our chief executive officer and chief financial officer,
we conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures as of
December 31, 2016. Based on this evaluation, the chief
executive officer and chief financial officer concluded that the
Company’s disclosure controls and procedures were effective
as of December 31, 2016.
Management’s Report on Internal Control Over Financial
Reporting
Our management is responsible for establishing and
maintaining adequate internal control over financial reporting, as
such term is defined in Rules 13a-15(f) under the Exchange Act.
Under the supervision and with the participation of management,
including the Company’s chief executive officer and chief
financial officer, management conducted an evaluation of the
effectiveness of the Company’s internal control over
financial reporting as of December 31, 2016. Because of its
inherent limitations, internal control over financial reporting may
not prevent or detect misstatements or fraud. In making this
assessment, management used the criteria set forth in the framework
issued by the COSO entitled
Internal
Control—Integrated Framework (2013)
. Based on this evaluation, management has
concluded that the Company’s internal control over financial
reporting was effective as of December 31, 2016. Management
reviewed the results of its assessment with the audit committee of
the board of directors.
Changes in Internal Control Over Financial Reporting
There
have been no changes in internal controls over financial reporting
identified in connection with the evaluation required by paragraph
(d) of Rules 13a-15 of the Exchange Act that have occurred during
the fourth quarter of fiscal year 2016 that have materially
affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
The
effectiveness of the Company’s internal control over
financial reporting as of December 31, 2016 has been audited by
Moss Adams LLP, the Company’s independent registered public
accounting firm, as stated in their report, which is included
below.
Item 9B.
Other
Information
Not
applicable.
Information called for by the Items included under this Part III is
incorporated by reference to the sections listed below of our
definitive Proxy Statement for our 2017 Annual Meeting of
Stockholders that will be filed not later than 120 days after
December 31, 2016 (“
2017 Proxy
Statement
”).
Item 10
D
irectors, Executive
Officers and Corporate Governance
The
information called for by this Item 10 is incorporated by reference
to the following sections of the 2017 Proxy Statement:
“Proposal 1-Nomination and Election of Directors;”
“Board of Directors;” “Executive Officers;”
“Section 16(a) Beneficial Ownership Reporting
Compliance;” and the following paragraphs under the section
“Corporate Governance Matters” “--Committees of
the Board of Directors—Audit Committee,” and
“--Code of Conduct and Ethics.”
The
information called for in this Item 11 is incorporated by reference
to the following sections of the 2017 Proxy Statement:
“Executive Compensation,” “Corporate Governance
Matters--Compensation Committee Interlocks and Insider
Participation” and “--Board’s Role in Oversight
of Risk,” and “Executive Compensation--Compensation
Discussion and Analysis” and “--Compensation Committee
Report.”
Item 12
S
ecurity Ownership of Certain
Beneficial Owners and Management and Related Stockholder
Matters
The
information called for in this Item 12 is incorporated by reference
to the following sections of the 2017 Proxy Statement:
“Security Ownership of Certain Beneficial Owners and
Management” and “Executive Compensation-- Equity
Compensation Plans.”
Item 13
Certain
R
elationships and Related Transactions, and
Director Independence
The
information called for in this Item 13 is incorporated by reference
to the following sections of the 2017 Proxy Statement:
“Corporate Governance Matters--Certain Relationships and
Related Party Transactions” and “--Director
Independence.”
Item 14
P
rincipal Accountant Fees
and Services
The
information called for in this Item 14 is incorporated by reference
to the following sections of the 2017 Proxy Statement:
“Independent Registered Public Accounting Firm and Audit
Committee Report--Principal Accountant Fees and Services,”
“--Audit Fees,” “--Audit Related Fees,”
“--All Other Fees,” and “--Pre-Approval Policy
for Services.”
Item 15.
E
xhibits and Financial
Statement Schedules
(a) The following documents are filed as a part of this Annual
Report on Form 10-K:
(1)
Financial Statements:
|
|
Page
|
|
Index
|
|
|
F-1
|
|
Report
of Independent Registered Public Accounting Firm
|
|
|
F-2
|
|
Consolidated
Balance Sheets
|
|
|
F-3
|
|
Consolidated
Statements of Income and Comprehensive Income
|
|
|
F-4
|
|
Consolidated
Statements of Stockholders’ Equity
|
|
|
F-5
|
|
Consolidated
Statements of Cash Flows
|
|
|
F-6
|
|
Notes
to Consolidated Financial Statements
|
|
|
F-7
|
|
(2)
Financial Statement Schedules:
Schedule II-
Valuation Qualifying Accounts
|
|
|
F-28
|
|
All other schedules have been omitted since
the required information is presented in the financial statements
and the related notes or is not applicable.
The
exhibits filed or furnished as part of this Annual Report on Form
10-K are listed in the Exhibit Index immediately preceding such
exhibits, which Exhibit Index is incorporated herein by
reference.
None
Pursuant
to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized, on the 9th day of March, 2017.
|
AUTOBYTEL INC.
|
|
|
|
|
|
|
By:
|
/s/ JEFFREY H. COATS
|
|
|
|
Jeffrey H. Coats
|
|
|
|
President, Chief Executive Officer and Director
|
|
POWER OF ATTORNEY
KNOW
ALL PERSONS BY THESE PRESENTS, that each of Autobytel Inc., a
Delaware corporation, and the undersigned Directors and Officers of
Autobytel Inc. hereby constitute and appoint Jeffrey H. Coats,
Kimberly Boren or Glenn E. Fuller as its or his true and lawful
attorneys-in-fact and agents, for it or him and in its or his name,
place and stead, in any and all capacities, with full power to act
alone, to sign any and all amendments to this report, and to file
each such amendment to this report, with all exhibits thereto, and
any and all documents in connection therewith, with the Securities
and Exchange Commission, hereby granting unto said
attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite
and necessary to be done in connection therewith, as fully to all
intents and purposes as it or he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them may lawfully do or cause to be done by
virtue hereof.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates
indicated.
Signature
|
Title
|
Date
|
|
|
|
|
|
/s/ MICHAEL J.
FUCHS
Michael J. Fuchs
|
Chairman
of the Board and Director
|
March 9, 2017
|
|
|
|
|
|
/s/ JEFFREY
H. COATS
Jeffrey H. Coats
|
President,
Chief Executive Officer and Director (Principal Executive
Officer)
|
March 9, 2017
|
|
|
|
|
|
/s/ KIMBERLY
BOREN
Kimberly Boren
|
Executive
Vice President and Chief Financial Officer (Principal Financial
Officer)
|
March 9, 2017
|
|
|
|
|
|
/s/ WESLEY
OZIMA
Wesley Ozima
|
Senior
Vice President and Controller (Principal
Accounting
Officer)
|
March 9, 2017
|
|
|
|
|
|
/s/ MICHAEL
A. CARPENTER
Michael A. Carpenter
|
Director
|
March 9, 2017
|
|
|
|
|
|
/s/ MARK
N. KAPLAN
Mark N. Kaplan
|
Director
|
March 9, 2017
|
|
|
|
|
|
/s/ ROBERT
J. MYLOD, JR.
Robert J. Mylod, Jr.
|
Director
|
March 9, 2017
|
|
|
|
|
|
/s/ JEFFREY
M. STIBEL
Jeffrey M. Stibel
|
Director
|
March 9, 2017
|
|
|
|
|
|
/s/ MATIAS
DE TEZANOS
Matias de Tezanos
|
Director
|
March 9, 2017
|
|
|
|
|
|
/s/ JANET
M. THOMPSON
Janet M. Thompson
|
Director
|
March 9, 2017
|
|
|
|
|
|
/s/ JOSE
VARGAS
Jose Vargas
|
Director
|
March 9, 2017
|
|
AUTOBYTEL INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
Page
|
|
|
|
|
F-2
|
|
|
|
|
F-3
|
|
|
|
|
F-4
|
|
|
|
|
F-5
|
|
|
|
|
F-6
|
|
|
|
|
F-7
|
|
R
EPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Autobytel Inc.
We have audited the accompanying consolidated balance sheets of
Autobytel Inc. (the “Company”) as of December 31, 2016
and 2015, and the related consolidated statements of income and
comprehensive income, stockholders’ equity, and cash flows
for each of the three years in the period ended December 31, 2016.
We also have audited the Company’s internal control over
financial reporting as of December 31, 2016, based on criteria
established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Company’s management is responsible for these
consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment
of the effectiveness of internal control over financial reporting,
included in the accompanying Management Report on Internal Control
over Financial Reporting appearing under Item 9A. Our
responsibility is to express an opinion on these consolidated
financial statements and an opinion on the Company’s internal
control over financial reporting based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial
statements are free of material misstatement and whether effective
internal control over financial reporting was maintained in all
material respects. Our audits of the consolidated financial
statements included examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall consolidated financial statement presentation. Our audit of
internal control over financial reporting included obtaining an
understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable
basis for our opinions.
A company’s internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures
of the company are being made only in accordance with
authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Autobytel Inc. as of December 31, 2016 and
2015, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended December 31,
2016, in conformity with accounting principles generally accepted
in the United States of America. Also in our opinion, Autobytel
Inc. maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2016, based on
criteria established in Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
/s/ MOSS ADAMS LLP
Los Angeles, CA
March 9, 2017
AUTOBYTEL INC.
CONSOLIDATED
B
ALANCE SHEETS
(in thousands, except per-share and share data)
|
|
|
Assets
|
|
|
Current
assets:
|
|
|
Cash
and cash equivalents
|
$
38,512
|
$
23,993
|
Short-term
investment
|
251
|
—
|
Accounts
receivable, net of allowances for bad debts and customer credits of
$1,015 and $1,045 at December 31, 2016 and 2015,
respectively
|
33,634
|
28,091
|
Deferred
tax asset
|
4,669
|
3,642
|
Prepaid
expenses and other current assets
|
901
|
1,276
|
Total
current assets
|
77,967
|
57,002
|
Property
and equipment, net
|
4,430
|
4,296
|
Investments
|
680
|
680
|
Intangible
assets, net
|
23,783
|
29,515
|
Goodwill
|
42,821
|
42,903
|
Long-term
deferred tax asset
|
14,799
|
17,820
|
Other
assets
|
801
|
1,372
|
Total
assets
|
$
165,281
|
$
153,588
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$
9,764
|
$
7,643
|
Accrued
employee-related benefits
|
4,530
|
3,945
|
Other
accrued expenses and other current liabilities
|
8,315
|
6,799
|
Current
portion of term loan payable
|
6,563
|
5,250
|
Total
current liabilities
|
29,172
|
23,637
|
Convertible
note payable
|
1,000
|
1,000
|
Long-term
portion of term loan payable
|
7,500
|
12,750
|
Borrowings
under revolving credit facility
|
8,000
|
8,000
|
Total
liabilities
|
45,672
|
45,387
|
Commitments
and contingencies (Note 7)
|
|
|
Stockholders’
equity:
|
|
|
Preferred
stock, $0.001 par value; 11,445,187 shares authorized
|
|
|
Series A Preferred stock, none issued and
outstanding
|
—
|
—
|
Series B Preferred stock, 168,007 shares issued
and outstanding
|
—
|
—
|
Common
stock, $0.001 par value; 55,000,000 shares authorized; 11,012,625
and 10,626,624 shares issued and outstanding at December 31,
2016 and 2015, respectively
|
11
|
11
|
Additional
paid-in capital
|
350,022
|
342,485
|
Accumulated
deficit
|
(230,424
)
|
(234,295
)
|
Total
stockholders’ equity
|
119,609
|
108,201
|
Total
liabilities and stockholders’ equity
|
$
165,281
|
$
153,588
|
The accompanying notes are an integral part of these consolidated
financial statements.
AUTOBYTEL
INC.
CONSOLIDATED STATEMENTS OF INCOME AND
C
OMPREHENSIVE INCOME
(in thousands, except per-share data)
|
|
|
|
|
|
Revenues:
|
|
|
|
Lead
fees
|
$
130,684
|
$
120,678
|
$
100,744
|
Advertising
|
24,508
|
10,534
|
4,171
|
Other
revenues
|
1,492
|
2,014
|
1,363
|
Total
revenues
|
156,684
|
133,226
|
106,278
|
Cost
of revenues
|
98,771
|
81,586
|
64,465
|
Gross
profit
|
57,913
|
51,640
|
41,813
|
Operating
expenses:
|
|
|
|
Sales
and marketing
|
18,118
|
15,956
|
14,404
|
Technology
support
|
13,986
|
11,740
|
8,014
|
General
and administrative
|
14,663
|
13,189
|
11,538
|
Depreciation
and amortization
|
5,068
|
3,106
|
1,858
|
Litigation
settlements
|
(50
)
|
(108
)
|
(143
)
|
Total
operating expenses
|
51,785
|
43,883
|
35,671
|
Operating
income
|
6,128
|
7,757
|
6,142
|
Interest
and other income (expense), net
|
558
|
322
|
(694
)
|
Income
before income tax provision
|
6,686
|
8,079
|
5,448
|
Income
tax provision
|
2,815
|
3,433
|
2,037
|
Net
income and comprehensive income
|
$
3,871
|
$
4,646
|
$
3,411
|
|
|
|
|
Basic
earnings per common share
|
$
0.36
|
$
0.47
|
$
0.38
|
Diluted
earnings per common share
|
$
0.29
|
$
0.37
|
$
0.32
|
The accompanying notes are an integral part of these consolidated
financial statements.
AUTOBYTEL INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
E
QUITY
(in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
Additional
Paid-In-Capital
|
|
Total
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2013
|
8,909,737
|
$
9
|
-
|
$
-
|
$
307,171
|
$
(242,352
)
|
$
64,828
|
Share-based
compensation
|
-
|
-
|
-
|
-
|
1,426
|
-
|
1,426
|
Issuance
of common stock upon exercise of stock options
|
134,668
|
-
|
-
|
-
|
562
|
-
|
562
|
Issuance
of warrants
|
-
|
-
|
-
|
-
|
510
|
-
|
510
|
Premium
on convertible note
|
-
|
-
|
-
|
-
|
300
|
-
|
300
|
Repurchase
of common stock
|
(164,028
)
|
-
|
-
|
-
|
(1,779
)
|
-
|
(1,779
)
|
Net
income
|
-
|
-
|
-
|
-
|
-
|
3,411
|
3,411
|
Balance
at December 31, 2014
|
8,880,377
|
9
|
-
|
-
|
308,190
|
(238,941
)
|
69,258
|
Share-based
compensation
|
-
|
-
|
-
|
-
|
2,563
|
-
|
2,563
|
Issuance
of common stock upon exercise of stock options
|
145,979
|
-
|
-
|
-
|
1,197
|
-
|
1,197
|
Issuance
of AutoWeb warrants
|
-
|
-
|
-
|
-
|
2,542
|
-
|
2,542
|
Issuance
of AutoWeb preferred shares
|
-
|
-
|
168,007
|
-
|
21,133
|
-
|
21,133
|
Issuance
of restricted stock
|
125,000
|
-
|
-
|
-
|
-
|
-
|
-
|
Exercise
of warrants
|
400,000
|
1
|
-
|
-
|
1,860
|
-
|
1,861
|
Conversion
of note payable
|
1,075,268
|
1
|
-
|
-
|
5,000
|
-
|
5,001
|
Net
income
|
-
|
-
|
-
|
-
|
-
|
4,646
|
4,646
|
Balance
at December 31, 2015
|
10,626,624
|
11
|
168,007
|
-
|
342,485
|
(234,295
)
|
108,201
|
Share-based
compensation
|
-
|
-
|
-
|
-
|
4,486
|
-
|
4,486
|
Issuance
of common stock upon exercise of stock options
|
386,001
|
-
|
-
|
-
|
3,051
|
-
|
3,051
|
Net
income
|
-
|
-
|
-
|
-
|
|
3,871
|
3,871
|
Balance
at December 31, 2016
|
11,012,625
|
$
11
|
168,007
|
$
-
|
$
350,022
|
$
(230,424
)
|
$
119,609
|
The accompanying notes are an integral part of these consolidated
financial statements.
AUTOBYTEL INC.
CONSOLIDATED STATEMENTS OF
C
ASH
FLOWS
(in thousands)
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
Net
income
|
$
3,871
|
$
4,646
|
$
3,411
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
and amortization
|
7,303
|
4,021
|
2,227
|
Provision
for bad debt
|
344
|
379
|
354
|
Provision
for customer credits
|
592
|
803
|
1,037
|
Share-based
compensation
|
4,412
|
2,557
|
1,421
|
Write-down
of assets
|
115
|
—
|
—
|
Gain
on sale of business
|
(2,183
)
|
—
|
—
|
(Gain)/loss
on long-term strategic investment
|
777
|
(636
)
|
—
|
Change
in deferred tax assets
|
1,994
|
2,996
|
1,758
|
Changes
in assets and liabilities:
|
|
|
|
Accounts
receivable
|
(3,229
)
|
(381
)
|
(2,590
)
|
Prepaid
expenses and other current assets
|
(402
)
|
(121
)
|
(261
)
|
Other
non-current assets
|
946
|
147
|
(625
)
|
Accounts
payable
|
2,121
|
(586
)
|
137
|
Accrued
expenses and other current liabilities
|
1,581
|
(1,352
)
|
1,847
|
Non-current
liabilities
|
—
|
(273
)
|
(826
)
|
Net
cash provided by operating activities
|
18,242
|
12,200
|
7,890
|
Cash
flows from investing activities:
|
|
|
|
Purchase
of AutoUSA
|
—
|
—
|
(10,044
)
|
Purchase
of Dealix/Autotegrity
|
—
|
(25,011
)
|
—
|
Investment
in AutoWeb
|
—
|
—
|
(880
)
|
Investment
in SaleMove
|
—
|
—
|
(400
)
|
Investment
in GoMoto
|
(375
)
|
(375
)
|
(100
)
|
Investment
in short-term investment
|
(251
)
|
—
|
—
|
Purchases
of property and equipment
|
(2,148
)
|
(2,719
)
|
(1,124
)
|
Net
cash used in investing activities
|
(2,774
)
|
(28,105
)
|
(12,548
)
|
Cash
flows from financing activities:
|
|
|
|
Repurchase
of common stock
|
—
|
—
|
(1,779
)
|
Borrowings
under credit facility
|
—
|
2,750
|
1,000
|
Borrowings
under term loan
|
—
|
15,000
|
9,000
|
Payments
on term loan borrowings
|
(3,937
)
|
(3,750
)
|
(2,250
)
|
Net
proceeds from stock option exercises
|
3,051
|
1,197
|
567
|
Proceeds
from exercise of warrants
|
—
|
1,860
|
—
|
Proceeds
from issuance of preferred shares
|
—
|
2,132
|
—
|
Payment
of contingent fee arrangement
|
(63
)
|
(38
)
|
(63
)
|
Net
cash (used in) provided by financing activities
|
(949
)
|
19,151
|
6,475
|
Net
increase in cash and cash equivalents
|
14,519
|
3,246
|
1,817
|
Cash
and cash equivalents, beginning of period
|
23,993
|
20,747
|
18,930
|
Cash
and cash equivalents, end of period
|
$
38,512
|
$
23,993
|
$
20,747
|
Supplemental
disclosure of cash flow information:
|
|
|
|
Cash
paid for income taxes
|
$
760
|
$
552
|
$
355
|
Cash
paid for interest
|
$
717
|
$
884
|
$
697
|
|
|
|
|
Supplemental
schedule of non-cash investing and financing
activities:
|
|
|
|
Purchase
of AutoWeb
|
$
—
|
$
21,543
|
$
—
|
Conversion
of Cyber Note
|
$
—
|
$
5,000
|
$
—
|
Sale
of specialty finance leads product
|
$
3,168
|
$
—
|
$
—
|
The accompanying notes are an integral part of these consolidated
financial statements.
AUTOBYTEL INC.
N
OTES TO CONSOLIDATED FINANCIAL
STATEMENTS
1.
Organization and Operations of Autobytel
Autobytel Inc. (“
Autobytel
” or the “
Company
”) is an automotive marketing services
company that assists automotive retail dealers
(“
Dealers
”) and automotive manufacturers
(“
Manufacturers
”)
market and sell new and used vehicles through its programs for
online lead referrals (“
Leads
”), Dealer marketing products and services,
online advertising and consumer traffic referral
programs and mobile products.
The Company’s consumer-facing automotive
websites (“
Company
Websites
”), including its
flagship website Autobytel.com®, provide consumers with
information and tools to aid them with their automotive purchase
decisions and the ability to submit inquiries requesting Dealers to
contact the consumers regarding purchasing or leasing vehicles
(“
Leads
”). The Company’s mission for
consumers is to be “Your Lifetime Automotive
Advisor®” by engaging consumers throughout the entire
lifecycle of their automotive needs.
The
Company was incorporated in Delaware on May 17, 1996. Its
principal corporate offices are located in Irvine, California. The
Company’s common stock is listed on The Nasdaq Capital Market
under the symbol ABTL.
On December 19, 2016, Autobytel and Car.com, Inc.,
a wholly owned subsidiary of Autobytel (“
Car.com
”), entered into an Asset Purchase and Sale
Agreement, by and among Autobytel, Car.com, and Internet Brands,
Inc., a Delaware corporation (“
Internet
Brands
”), in which
Internet Brands acquired substantially all of the assets of the
automotive specialty finance leads group of Car.com. The
transaction was completed effective as of December 31, 2016. The
transaction consideration consisted of $3.2 million in cash and
$1.6 million to be paid over a five year period pursuant to a
Transitional License and Linking Agreement. The Company recorded a
gain on sale of approximately $2.2 million in connection with the
transaction in the fourth quarter of 2016. See Note 10.
On October 1, 2015 (“
AutoWeb Merger
Date
”), Autobytel entered
into and consummated an Agreement and Plan of Merger by and among
Autobytel, New Horizon Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Autobytel
(“
Merger Sub
”), AutoWeb, Inc., a Delaware corporation
(“
AutoWeb
”), and Jose Vargas, in his capacity as
Stockholder Representative. On the AutoWeb Merger Date,
Merger Sub merged with and into AutoWeb, with AutoWeb continuing as
the surviving corporation and as a wholly owned subsidiary of
Autobytel. AutoWeb was a privately-owned company
providing an automotive search engine that enables Manufacturers
and Dealers to optimize advertising campaigns and reach
highly-targeted car buyers through an auction-based click
marketplace. Prior to the acquisition, the Company
previously owned approximately 15% of the outstanding shares of
AutoWeb, on a fully converted and diluted basis, and accounted for
the investment on the cost basis. See Note
3.
On May 21, 2015 (“
Dealix/Autotegrity Acquisition
Date
”), Autobytel and CDK
Global, LLC, a Delaware limited liability company
(“
CDK
”), entered into and consummated a Stock
Purchase Agreement in which Autobytel acquired all of the issued
and outstanding shares of common stock in Dealix Corporation, a
California corporation and subsidiary of CDK, and Autotegrity,
Inc., a Delaware corporation and subsidiary of CDK (collectively,
“
Dealix/Autotegrity
”). Dealix
Corporation provides new and used car Leads to automotive
dealerships, Dealer groups and Manufacturers, and Autotegrity, Inc.
is a consumer Leads acquisition and analytics
business. See Note 3.
On April 27, 2015, Auto Holdings Ltd.
(“
Auto
Holdings
”) acquired from
Cyber Ventures, Inc. and Autotropolis, Inc. the $5.0 million
convertible subordinated promissory note and the warrant to
purchase 400,000 shares of Autobytel common stock issued by the
Company to Cyber Ventures and Autotropolis in September 2010 in
connection with Autobytel’s acquisition of substantially all
of the assets of Cyber Ventures and Autotropolis (collectively
referred to as “
Cyber
”). Concurrent with the
acquisition of the Cyber convertible note
(“
Cyber Note
”) and warrant (“
Cyber
Warrant
”), Auto Holdings
converted the Cyber Note and fully exercised the Cyber Warrant at
its conversion price of $4.65 per share. As required
under the terms of the conversion for the Cyber Note, Autobytel
issued 1,075,268 shares of its common stock and under the terms of
exercise for the Cyber Warrant, it issued an additional 400,000
shares of its common stock.
On January 13, 2014 (“
AutoUSA Acquisition
Date
”), Autobytel,
AutoNation, Inc., a Delaware corporation
(“
Seller
Parent
”), and
AutoNationDirect.com, Inc., a Delaware corporation and subsidiary
of Seller Parent (“
Seller
”), entered into and consummated a
Membership Interest Purchase Agreement in which Autobytel acquired
all of the issued and outstanding membership interests in AutoUSA,
LLC, a Delaware limited liability company and a subsidiary of
Seller (“
AutoUSA
”). AutoUSA was a competitor to
the Company and at the time of the acquisition was a (i) lead
aggregator purchasing internet-generated automotive consumer leads
from third parties and reselling those consumer leads to automotive
dealers; and (ii) reseller of third party products and services to
automotive Dealers. See Note 3.
2.
Summary of Significant Accounting Policies
Basis of
Presentation
. The
accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries. All intercompany
transactions and balances have been eliminated in
consolidation. Certain prior year amounts have been
reclassified for consistency with the current period
presentation. These reclassifications had no effect on
the reported results of operations.
Use of Estimates in the
Preparation of Financial Statements.
The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America (“
U.S. GAAP
”) requires the Company to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant
estimates include, but are not limited to, allowances for bad debts
and customer credits, useful lives of depreciable assets and
capitalized software costs, long-lived asset impairments, goodwill
and purchased intangible asset valuations, accrued liabilities,
contingent payment provisions, debt valuation and valuation
allowance for deferred tax assets, warrant valuation and
stock-based compensation expense. Actual results could differ from
those estimates.
Cash and Cash
Equivalents.
For
purposes of the Consolidated Balance Sheets and the Consolidated
Statements of Cash Flows, the Company considers all highly liquid
investments with an original maturity of 90 days or less at the
date of purchase to be cash equivalents. Cash and cash equivalents
represent amounts held by the Company for use by the Company
and are recorded at cost, which approximates fair
value.
Investments.
In
September 2013, the Company entered into a Convertible Note
Purchase Agreement with SaleMove in which Autobytel invested
$150,000 in SaleMove in the form of an interest bearing,
convertible promissory note. In November 2014, the Company
invested an additional $400,000 in SaleMove in the form of an
interest bearing, convertible promissory note. Upon
closing of a preferred stock financing by SaleMove in July 2015,
these two notes were converted in accordance with their terms into
an aggregate of 190,997 Series A Preferred Stock, which shares are
classified as a long-term investment on the consolidated balance
sheet as of December 31, 2016.
In
October 2013, the Company entered into a Reseller Agreement with
SaleMove to become a reseller of SaleMove’s technology for
enhancing communications with
consumers. SaleMove’s technology allows Dealers
and Manufacturers to enhance the online shopping experience by
interacting with consumers in real-time, including live video,
audio and text-based chat or by phone. The Company and SaleMove
will equally share in revenues from automotive-related sales of the
SaleMove products and services. In connection with this reseller
arrangement, the Company advanced to SaleMove $1.0
million to fund SaleMove’s 50% share of various product
development, marketing and sales costs and expenses, with the
advanced funds to be recovered by the Company from SaleMove’s
share of sales revenue. As of December 31, 2016, the net
advances due from SaleMove totaled $552,000 and are classified as
an other long-term asset on the consolidated balance
sheet.
In December 2014, the Company entered
into a Series Seed Preferred Stock Purchase Agreement with GoMoto
in which the Company paid $100,000 for 317,460 shares of Series
Seed Preferred Stock, $0.001 par value per share. The
$100,000 investment in GoMoto was recorded at cost because the
Company does not have significant influence over
GoMoto. In October 2015 and May 2016, the Company
invested an additional $375,000 and $375,000, respectively, in
GoMoto in the form of convertible promissory notes
(“
GoMoto Notes
”). As of December 31, 2016, the
Company recorded a reserve of $0.8 million related to the GoMoto
Notes and related interest receivable because the Company believes
the amounts may not be recoverable.
Accounts
Receivable.
Credit
is extended to customers based on an evaluation of the
customer’s financial condition, and when credit is extended,
collateral is generally not required. Interest is not normally
charged on receivables.
Allowances for Bad Debts and
Customer Credits.
The allowance for bad debts is an estimate of bad
debt expense that could result from the inability or refusal of
customers to pay for services. Additions to the estimated allowance
for bad debts are recorded to sales and marketing expenses and are
based on factors such as historical write-off percentages, the
current business environment and known concerns within the current
aging of accounts receivable. Reductions in the estimated allowance
for bad debts due to subsequent cash recoveries are recorded as a
decrease in sales and marketing expenses. As specific bad debts are
identified, they are written-off against the previously established
estimated allowance for bad debts with no impact on operating
expenses.
The
allowance for customer credits is an estimate of adjustments for
services that do not meet the customer requirements. Additions to
the estimated allowance for customer credits are recorded as a
reduction of revenues and are based on the Company’s
historical experience of: (i) the amount of credits issued;
(ii) the length of time after services are rendered that the
credits are issued; (iii) other factors known at the time; and
(iv) future expectations. Reductions in the estimated allowance for
customer credits are recorded as an increase in revenues. As
specific customer credits are identified, they are written-off
against the previously established estimated allowance for customer
credits with no impact on revenues.
If
there is a decline in the general economic environment that
negatively affects the financial condition of the Company’s
customers or an increase in the number of customers that are
dissatisfied with their services, additional estimated allowances
for bad debts and customer credits may be required, and the impact
on the Company’s business, results of operations, financial
condition, earnings per share, cash flow or the trading price of
our stock could be material.
Contingencies.
From
time to time the Company may be subject to proceedings, lawsuits
and other claims. The Company assesses the likelihood of
any adverse judgments or outcomes of these matters as well as
potential ranges of probable losses. The Company records a loss
contingency when an unfavorable outcome is probable and the amount
of the loss can be reasonably estimated. The amount of allowances
required, if any, for these contingencies is determined after
analysis of each individual case. The amount of allowances may
change in the future if there are new material developments in each
matter. Gain contingencies are not recorded until all
elements necessary to realize the revenue are present. Any legal
fees incurred in connection with a contingency are expensed as
incurred.
Fair Value of Financial
Instruments.
The
Company records its financial assets and liabilities at fair value,
which is defined under the applicable accounting standards as the
exchange price that would be received for an asset or paid to
transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly
transaction between market participants on the measure
date. The Company uses valuation techniques to measure
fair value, maximizing the use of observable outputs and minimizing
the use of unobservable inputs. The standard describes a
fair value hierarchy based on three levels of inputs, of which the
first two are considered observable and the last unobservable, that
may be used to measure fair value which are the
following:
Level
1 – Quoted prices in active markets for identical assets or
liabilities.
Level
2 – Inputs other than Level 1 that are observable, either
directly or indirectly, such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or
liabilities.
Level
3 – Inputs include management’s best estimate of what
market participants would use in pricing the asset or liability at
the measurement date. The inputs are unobservable in the
market and significant to the instrument’s
valuation.
Cash
equivalents, accounts receivable, net of allowance, accounts
payable and accrued liabilities, are carried at cost, which
management believes approximates fair value because of the
short-term maturity of these instruments.
The
Company’s investments at December 31, 2016 and 2015 consist
primarily of investments in SaleMove and GoMoto and are accounted
for under the cost method. Although there is no established market
for these investments, we evaluated the investments for impairment
by comparing them to an estimated fair value and determined that
there is no impairment.
Variable Interest
Entities.
The
Company has an investment in an entity that is considered a
variable interest entity (“
VIE
”) under U.S.
GAAP. The Company has concluded that their investment in
SaleMove qualifies as a variable interest and SaleMove is a VIE.
VIEs are legal entities in which the equity investors do not have
sufficient equity at risk for the entity to independently finance
its activities or the collective holders do not have the power
through voting or similar rights to direct the activities of the
entity that most significantly impacts its economic performance,
the obligation to absorb the expected losses of the entity, or the
right to receive expected residual returns of the entity.
Consolidation of a VIE is considered appropriate if a reporting
entity is the primary beneficiary, the party that has both
significant influence and control over the VIE. Management
periodically performs a qualitative analysis to determine if the
Company is the primary beneficiary of a VIE. This analysis includes
review of the VIEs’ capital structures, contractual terms,
and primary activities, including the Company’s ability to
direct the activities of the VIEs and obligations to absorb losses,
or the right to receive benefits, significant to the
VIEs. Additionally, changes in our various equity
investments have in the past resulted in a reconsideration
event.
Based
on Autobytel’s analysis for the periods presented in this
report, it is not the primary beneficiary of SaleMove. Accordingly,
SaleMove does not meet the criteria for consolidation.
The SaleMove Advances are classified as an other long-term asset on
the consolidated balance sheet as of December 31, 2016 and December
31, 2015. The carrying value and maximum potential loss
exposure from SaleMove totaled $0.6 million as of December 31,
2016, and $0.7 million as of December 31, 2015.
Concentration of Credit Risk
and Risks Due to Significant
Customers.
Financial
instruments that potentially subject the Company to concentrations
of credit risk consist primarily of cash and cash equivalents,
investments and accounts receivable. Cash and cash equivalents are
primarily maintained with two financial institutions in the United
States. Deposits held by banks exceed the amount of insurance
provided for such deposits. Generally these deposits may be
redeemed upon demand. Accounts receivable are primarily derived
from fees billed to automotive Dealers and automotive
Manufacturers.
The
Company has a concentration of credit risk with its automotive
industry related accounts receivable balances, particularly with
Urban Science Applications (which represents several Manufacturer
programs), General Motors and Ford Direct. During 2016,
approximately 28% of the Company’s total revenues were
derived from these three customers, and approximately 36% or $12.6
million of gross accounts receivable related to these three
customers at December 31, 2016. In 2016, Urban Science
Applications accounted for 16% and 19% of total revenues and total
accounts receivable as of December 31, 2016,
respectively.
During
2015, approximately 28% of the Company’s total revenues were
derived from Urban Science Applications, General Motors and Ford
Direct, and approximately 37% or $10.7 million of gross accounts
receivable related to these three customers at December 31,
2015. In 2015, Urban Science Applications accounted for
16% of total revenues and accounts receivable as of December 31,
2015, respectively.
Property and
Equipment.
Property
and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is provided using the straight-line
method over the estimated useful lives of the respective assets,
generally three years. Amortization of leasehold improvements is
provided using the straight-line method over the shorter of the
remaining lease term or the estimated useful lives of the
improvements. Repair and maintenance costs are charged to operating
expenses as incurred. Gains or losses resulting from the retirement
or sale of property and equipment are recorded as operating income
or expenses, respectively.
Operating
Leases.
The Company
leases office space and certain office equipment under operating
lease agreements which expire on various dates through 2024, with
options to renew on expiration of the original lease
terms.
Reimbursed
tenant improvements are considered in determining straight-line
rent expense and are amortized over the shorter of their estimated
useful lives or the lease term. The lease term begins on the date
of initial possession of the leased property for purposes of
recognizing rent expense on a straight-line basis over the term of
the lease. Lease renewal periods are considered on a lease-by-lease
basis and are generally not included in the initial lease
term.
Capitalized Internal Use
Software and Website Development
Costs.
The Company
capitalizes costs to develop internal use software in accordance
with the Internal-Use Software and the Website Development Costs
Topics, which require the capitalization of external and internal
computer software costs and website development costs,
respectively, incurred during the application development stage.
The application development stage is characterized by software
design and configuration activities, coding, testing and
installation. Training and maintenance costs are expensed as
incurred while upgrades and enhancements are capitalized if it is
probable that such expenditures will result in additional
functionality. Capitalized internal use software development costs
are amortized using the straight-line method over an estimated
useful life of three to five years. Capitalized website development
costs, once placed in service, are amortized using the
straight-line method over the estimated useful life of the related
websites. The Company capitalized $1.7 million, $1.5
million and $0.6 million of such costs for the years ended December
31, 2016, 2015 and 2014, respectively.
Impairment of Long-Lived
Assets and Intangible Assets.
The Company periodically reviews long-lived assets
to determine if there is any impairment of these assets. The
Company assesses the impairment of these assets, or the need to
accelerate amortization, whenever events or changes in
circumstances indicate that the carrying value may not be
recoverable. Judgments regarding the existence of impairment
indicators are based on legal factors, market conditions and
operational performance of the long-lived assets and other
intangibles. Future events could cause the Company to conclude that
impairment indicators exist and that the assets should be reviewed
to determine their fair value. The Company assesses the assets for
impairment based on the estimated future undiscounted cash flows
expected to result from the use of the assets and their eventual
disposition. If the carrying amount of an asset exceeds its
estimated future undiscounted cash flows, an impairment loss is
recorded for the excess of the asset’s carrying amount over
its fair value. Fair value is generally determined based on a
valuation process that provides an estimate of a fair value of
these assets using a discounted cash flow model, which includes
many assumptions and estimates. Once the valuation is determined,
the Company would write-down these assets to their determined fair
value, if necessary. Any write-down could have a material adverse
effect on the Company’s financial condition and results of
operations. The Company did not record any impairment of long-lived
assets in 2016, 2015 and 2014.
Indefinite-lived intangible
assets
. Indefinite-lived
intangible assets consists of a domain name, which was acquired as
part of the Dealix/Autotegrity acquisition in 2015, which is tested
for impairment annually, or more frequently if an event occurs or
circumstances changes that would indicate that impairment may
exist. When evaluating indefinite-lived intangible assets for
impairment, we may first perform a qualitative analysis to
determine whether it is more likely than not that the
indefinite-lived intangible assets is impaired. If we do not
perform the qualitative assessment, or if we determine that it is
more likely than not that the fair value of the indefinite-lived
intangible asset exceeds its carrying amount, we will calculate the
estimated fair value of the indefinite-lived intangible asset. Fair
value is the price a willing buyer would pay for the
indefinite-lived intangible asset and is typically calculated using
an income approach. If the carrying amount of the indefinite-lived
intangible asset exceeds the estimated fair value, an impairment
charge is recorded to reduce the carrying value to the estimated
fair value. We did not record any impairment of indefinite-lived
intangible assets in 2016 and 2015.
Goodwill.
Goodwill
represents the excess of the purchase price for business
acquisitions over the fair value of identifiable assets and
liabilities acquired. The Company evaluates the carrying value of
enterprise goodwill for impairment. Testing for impairment of
goodwill is a two-step process. The first step requires the Company
to compare the enterprise’s carrying value to its fair value.
If the fair value is less than the carrying value, enterprise
goodwill is potentially impaired and the Company then completes the
second step to measure the impairment loss, if any. The second step
requires the calculation of the implied fair value of goodwill by
deducting the fair value of all tangible and intangible net assets
from the fair value of the reporting unit. If the implied fair
value of goodwill is less than the carrying amount of enterprise
goodwill, an impairment loss is recognized equal to the difference.
The Company evaluates enterprise goodwill, at a minimum, on an
annual basis, in the fourth quarter of each year or whenever events
or changes in circumstances suggest that the carrying amount of
goodwill may be impaired.
Revenue
Recognition.
Lead
fees consist of fees from the sale of Leads for new and used
vehicles and Leads for vehicle financing. Fees paid by
customers participating in the Company’s Lead programs are
comprised of monthly transaction and/or subscription
fees. Advertising revenues represent fees for display
advertising on Company’s Websites.
The
Company recognizes revenues when evidence of an arrangement exists,
pricing is fixed and determinable, collection is reasonably assured
and delivery or performance of service has occurred. Lead fees are
generally recognized as revenues in the period the service is
provided. Advertising revenues are generally recognized in the
period the advertisements are displayed on Company Websites. Fees
billed prior to providing services are deferred, as they do not
satisfy all U.S. GAAP revenue recognition criteria. Deferred
revenues are recognized as revenue over the periods services are
provided.
Cost of Revenues.
Cost of revenues consists of Lead and
traffic acquisition costs and other cost of revenues. Lead and
traffic acquisition costs consist of payments made to the
Company’s Lead providers, including internet portals and
on-line automotive information providers. Other cost of revenues
consists of search engine marketing (“
SEM
”) and fees paid to third parties for data
and content, including search engine optimization
(“
SEO
”) activity, included on the Company’s
properties, connectivity costs and development costs related to the
Company Websites, compensation related expense and technology
license fees, server equipment depreciation and technology
amortization directly related to Company Websites. SEM,
sometimes referred to as paid search marketing, is the practice of
bidding on keywords on search engines to drive traffic to a
website.
Income
Taxes.
The Company
accounts for income taxes under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to temporary differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. The Company
records a valuation allowance, if necessary, to reduce deferred tax
assets to an amount it believes is more likely than not to be
realized.
Computation of Basic and
Diluted Net Earnings per Share.
Basic net earnings per share is computed using the
weighted average number of common shares outstanding during the
period. Diluted net earnings per share is computed using
the weighted average number of common shares, and if dilutive,
potential common shares outstanding, as determined under the
treasury stock and if-converted method, during the period.
Potential common shares consist of common shares issuable upon the
exercise of stock options, common shares issuable upon the exercise
of warrants described below and common shares issuable upon
conversion of the shares described in Note 3.
The
following are the share amounts utilized to compute the basic and
diluted net earnings per share for the years ended
December 31:
|
|
|
|
Basic
Shares:
|
|
|
|
Weighted
average common shares outstanding
|
10,673,015
|
9,907,066
|
8,998,035
|
Weighted
average common shares repurchased
|
—
|
—
|
(18,138
)
|
Basic
Shares
|
10,673,015
|
9,907,066
|
8,979,897
|
|
|
|
|
Diluted
Shares:
|
|
|
|
Basic
Shares
|
10,673,015
|
9,907,066
|
8,979,897
|
Weighted
average dilutive securities
|
2,630,194
|
2,755,258
|
2,232,011
|
Dilutive
Shares
|
13,303,209
|
12,662,324
|
11,211,908
|
For
the years ended December 31, 2016 and 2015, weighted average
dilutive securities included dilutive options, warrants and
convertible preferred shares. For the year ended
December 31, 2014, weighted average dilutive securities included
dilutive options, warrants and convertible debt.
Potentially
dilutive securities representing approximately 1.9 million,
1.4 million and 1.1 million shares of common stock for the
years ended December 31, 2016, 2015 and 2014, respectively,
were excluded from the computation of diluted income per share for
these periods because their effect would have been
anti-dilutive.
Share-Based
Compensation.
The
Company grants restricted stock and stock option awards (the
“
Awards
”) under several of its share-based
compensation Plans (the “
Plans
”), that are more fully described in Note
9. The Company recognizes share-based compensation based
on the Awards’ fair value, net of estimated forfeitures on a
straight line basis over the requisite service periods, which is
generally over the awards’ respective vesting period, or on
an accelerated basis over the estimated performance periods for
options with performance conditions.
Restricted
stock fair value is measured on the grant date based on the quoted
market price of the Company’s common stock, and the stock
option fair value is estimated on the grant date using the
Black-Scholes option pricing model based on the underlying common
stock closing price as of the date of grant, the expected term,
stock price volatility and risk-free interest rates.
Business Segment.
The Company conducts its business
within the United States and within one business segment which is
defined as providing automotive and marketing
services. The Company’s operations are aggregated
into a single reportable operating segment based upon similar
economic and operating characteristics as well as similar
markets.
Advertising
Expense.
Advertising
costs are expensed in the period incurred and the majority of
advertising expense is recorded in sales and marketing expense.
Advertising expense in the years ended December 31, 2016, 2015 and
2014 was $1.4 million, $2.0 million and $1.6 million,
respectively.
Recent
Accounting Pronouncements
Accounting Standards
Codification 606 “Revenue from Contracts with
Customers.”
In
May 2014, Accounting Standards Update (“
ASU
”) No. 2014-09, “Revenue from
Contracts with Customers (Topic 606)” was
issued. This ASU requires an entity to recognize the
amount of revenue to which it expects to be entitled for the
transfer of promised goods or services to customers. The standard
will replace most existing revenue recognition guidance in U.S.
GAAP when it becomes effective. Early application is not
permitted. The standard permits the use of either the retrospective
or cumulative effect transition method. In August 2015,
the Financial Accounting Standards Board voted to defer the
effective date and it is now effective for public entities for
annual periods ending after December 15, 2017. Early adoption
of the standard is permitted. This update permits the use of either
the retrospective or cumulative effect transition method.
In April 2016, ASU No. 2016-10, “Identifying
Performance Obligations and Licensing” was
issued. This ASU clarifies 1) the identification of
performance obligations and, 2) licensing implementation guidance
as it relates to Topic 606, Revenue from Contracts with
Customers. The amendments in this ASU affect the
guidance in ASU 2014-09, which is effective for public entities for
annual periods ending after December 15, 2017. In May 2016, ASU No.
2016-12, “Narrow-Scope Improvements and Practical
Expedients” was issued. This ASU addresses certain
issues as it relates to assessing collectability, presentation of
sales taxes, noncash consideration, and completed contracts and
contract modifications at transition as it relates to Topic 606,
Revenue from Contracts with Customers. The amendments in
this ASU affect the guidance in ASU 2014-09, which is effective for
public entities for annual periods beginning after December 15,
2017. The Company is continuing to evaluate the effect this
guidance will have on the consolidated financial statements and
related disclosures.
Accounting Standards
Codification 740 “Income
Taxes.”
In November 2015, ASU No. 2015-17,
“Balance Sheet Classification of Deferred Taxes” was
issued. This ASU requires that deferred tax liabilities
and assets be classified as noncurrent in a classified statement of
financial position. The amendments in this update apply
to all entities that present a classified statement of financial
position. The amendments in this ASU are effective for
fiscal years beginning after December 15, 2016, including interim
periods within those fiscal years.
Once adopted, the Company
will reclassify $4.7 million of current deferred tax assets to
long-term deferred tax assets
.
Accounting Standards
Codification 842
“Leases.”
In February 2016, ASU No. 2016-02, “Leases
(Topic 842)” was issued. This ASU will require
lessees to recognize on the balance sheet the assets and
liabilities for the rights and obligations created by those leases
of terms more than 12 months. The ASU will require both
capital and operating leases to be recognized on the balance
sheet. Qualitative and quantitative disclosures will
also be required to help investors and other financial statement
users better understand the amount, timing and uncertainty of cash
flows arising from leases. The ASU will take effect for
public companies for fiscal years, and interim periods within those
fiscal years, beginning after December 15, 2018. The
Company continues to assess whether this ASU will be material to
the consolidated financial statements.
Accounting Standards
Codification 323 “Investments-Equity Method and Joint
Ventures.”
In
March 2016, ASU No. 2016-07, “Simplifying the Transition to
the Equity Method of Accounting” was issued. This
ASU eliminates the requirement that when an investment qualifies
for use of the equity method as a result of an increase in the
level of ownership interest or degree of influence, an investor
must adjust the investment, results of operations, and retained
earnings retroactively on a step-by-step basis as if the equity
method had been in effect during all previous periods that the
investment was held. The amendments require that the
equity method investor add the cost of acquiring the additional
interest in the investee to the current basis of the
investor’s previously held interest and adopt the equity
method of accounting as of the date the investment becomes
qualified for equity method accounting. Thus, upon
qualifying for the equity method of accounting, no retroactive
adjustment of the investment is required. The amendments
in this ASU are effective for all entities for fiscal years, and
interim periods within those fiscal years, beginning after December
15, 2016. The Company does not believe this ASU will have a
material effect on the consolidated financial
statements.
Accounting Standards
Codification 718 “Compensation-Stock
Compensation.”
In March 2016, ASU No. 2016-09,
“Improvements to Employee Share-Based Payment
Accounting” was issued. This ASU provides for
areas of simplification for several aspects of the accounting for
share-based payment transactions, including the income tax
consequences, classification of awards as either equity or
liabilities, and classification on the statement of cash
flows. The amendments in this ASU are effective for
annual periods beginning after December 15, 2016, and interim
periods within those annual periods.
Once
adopted, the Company will recognize $1.9 million of deferred tax
assets relating to unrealized stock option benefits, resulting in a
cumulative $1.9 million adjustment to retained earnings . The
new guidance increases income statement volatility by requiring all
excess tax benefits and deficits to be recognized in “Income
taxes,” and treated as discrete items in the period in which
they occur. The Company believes this ASU may have a material
effect on the consolidated financial
statements.
Accounting Standards
Codification 230 “Statement of Cash
Flows.”
In
August 2016, ASU No. 2016-15, “Classification of Certain Cash
Receipts and Cash Payments” was issued. This ASU
provides guidance on eight specific cash flow issues with the
objective of reducing the existing diversity in practice for those
issues. The amendments in this ASU are effective for
annual periods beginning after December 15, 2017, and interim
periods within those annual periods. Early adoption is
permitted in any interim or annual period. The Company
does not believe this ASU will have a material effect on the
consolidated financial statements.
Accounting Standards
Codification 810
“Consolidation.”
In October 2016, ASU No. 2016-17, “Interests
Held through Related Parties That Are Under Common Control”
was issued. This ASU amends the consolidation guidance
on how a reporting entity that is the single decision maker of a
VIE should treat indirect interests in the entity held through
related parties that are under common control with the reporting
entity when determining whether it is the primary beneficiary of
that VIE. The amendments in this ASU are effective for
annual periods beginning after December 15, 2016, and interim
periods within those annual periods. The Company
does not believe this ASU will have a material effect on the
consolidated financial statements.
Accounting Standards
Codification 205-40 “Presentation of Financial Statements
– Going Concern.”
In August 2014, ASU No. 2014-15, “Disclosure
of Uncertainties about an Entities Ability to Continue as a Going
Concern” was issued. This ASU provides guidance in
GAAP about management’s responsibility to evaluate whether
there is substantial doubt about an entity’s ability to
continue as a going concern and to provide related footnote
disclosures. The amendments in this ASU are effective
for annual periods ending after December 15, 2016, and for annual
and interim periods thereafter. The Company adopted this
ASU for the year ended December 31, 2016. This ASU did
not have a material effect on the consolidated financial
statements.
Acquisition of AutoWeb
On
the AutoWeb Merger Date, Merger Sub merged with and into AutoWeb,
with AutoWeb continuing as the surviving corporation and as a
wholly owned subsidiary of Autobytel.
The AutoWeb Merger Date fair value of the
consideration transferred totaled $23.8 million consisting of (i)
168,007 newly issued shares of Series B Junior Participating
Convertible Preferred Stock, par value $0.001 per share, of
Autobytel (“
Series B Preferred
Stock
”); (ii) warrants to
purchase up to 148,240 shares of Series B Preferred Stock
“
AutoWeb
Warrant
”), at an exercise
price of $184.47 (reflecting 10 times the $16.77 closing price of a
share of the Company’s common stock, $0.001 par value per
share (“
Common Stock
”), plus a ten percent (10%) premium); and
(iii) $0.3 million in cash to cancel vested, in-the-money options
to acquire shares of AutoWeb common stock. As a result
of accounting for the transaction as a business combination
achieved in stages, the Company also recorded $0.6 million as a
gain to the pre-merger investment in AutoWeb. The
results of operations of AutoWeb have been included in the
Company’s results of operations since the AutoWeb Merger
Date.
|
|
Series
B Preferred Stock
|
$
20,989
|
Series
B Preferred warrants to purchase 148,240 shares of Series B
Preferred Stock
|
2,542
|
Cash
|
279
|
Fair
value of prior ownership in AutoWeb
|
4,016
|
|
$
27,826
|
The
shares of Series B Preferred Stock are convertible, subject to
certain limitations, into ten (10) shares of Common
Stock. All shares will be automatically converted upon
stockholder approval.
The AutoWeb Warrant was valued at $1.72 per share
underlying the warrant for a total value of $2.5
million. The Company used a Monte Carlo simulation model
to determine the value of the AutoWeb Warrant. Key
assumptions used by the Company’s outside valuation
consultants in valuing the AutoWeb Warrant are as follows:
risk-free rate of 1.9%, stock price volatility of 74.0% and a term
of 7.0 years. The AutoWeb Warrant becomes exercisable on
October 1, 2018, subject to the following vesting conditions: (i)
with respect to the first one-third (1/3) of the warrant shares, if
at any time after the issuance date of the AutoWeb Warrant and
prior to the expiration date of the AutoWeb Warrant the weighted
average closing price of the Common Stock for the preceding 30
trading days (adjusted for any stock splits, stock dividends,
reverse stock splits or combinations of the Common Stock occurring
after the issuance date) (“
Weighted Average Closing
Price
”) is at or above
$30.00; (ii) with respect to the second one-third (1/3) of the
warrant shares, if at any time after the issuance date of the
AutoWeb Warrant and prior to the expiration date the Weighted
Average Closing Price is at or above $37.50; and (iii) with respect
to the last one-third (1/3) of the warrant shares, if at any time
after the issuance date of the AutoWeb Warrant and prior to the
expiration date the Weighted Average Closing Price is at or above
$45.00. The AutoWeb Warrant expires on October 1,
2022.
The
following table summarizes the fair values of the assets acquired
and liabilities assumed as of the AutoWeb Merger
Date.
|
|
Net
identifiable assets acquired:
|
|
Total
tangible assets acquired
|
$
4,456
|
Total
liabilities assumed
|
543
|
Net
identifiable assets acquired
|
3,913
|
|
|
Definite-lived
intangible assets acquired
|
17,690
|
Goodwill
|
5,954
|
|
$
27,557
|
The
fair value of the acquired intangible assets was determined using
the below valuation approaches. In estimating the fair value of the
acquired intangible assets, the Company utilized the valuation
methodology determined to be most appropriate for the individual
intangible asset being valued as described below. The intangible
assets related to the AutoWeb acquisition include the
following:
|
|
|
Estimated
Useful Life
(1)
|
|
|
|
|
|
|
|
|
Customer
relationships
|
Excess
of earnings
(2)
|
$
7,470
|
4
|
Trademark/trade
names
|
Relief
from Royalty
(3)
|
2,600
|
6
|
Developed
technology
|
Excess
of earnings
(4)
|
7,620
|
7
|
Total
purchased intangible assets
|
|
$
17,690
|
|
(1)
|
Determination of the estimated useful lives of the individual
categories of purchased intangible assets was based on the nature
of the applicable intangible asset and the expected future cash
flows to be derived from such intangible asset. Amortization of
intangible assets with definite lives is recognized over the
shorter of the respective life of the agreement or the period of
time the assets are expected to contribute to future cash
flows.
|
|
(2)
|
The excess of earnings method estimates a purchased intangible
asset's value based on the present value of the prospective net
cash flows (or excess earnings) attributable to it. The value
attributed to these intangibles was based on projected net cash
inflows from existing contracts or relationships.
|
|
(3)
|
The relief from royalty method is an earnings approach which
assesses the royalty savings an entity realizes since it owns the
asset and isn’t required to pay a third party a license fee
for its use.
|
|
(4)
|
The excess of earnings method estimates a purchased intangible
asset's value based on the present value of the prospective net
cash flows (or excess earnings) attributable to it. The method
takes into account technological and economic obsolescence of the
technology.
|
|
Additionally,
in connection with the acquisition of AutoWeb, the Company entered
into non-compete agreements with key executives of Auto
Web. The fair value of the AutoWeb non-compete
agreements was $270,000 and was derived by calculating the
difference between the present value of the Company’s
forecasted cash flows with the agreements in place and without the
agreements in place. The Company will amortize the value
of the AutoWeb non-compete agreement over two years.
Some
of the more significant estimates and assumptions inherent in the
estimate of the fair value of the identifiable purchased intangible
assets include all assumptions associated with forecasting cash
flows and profitability. The primary assumptions used for the
determination of the preliminary fair value of the purchased
intangible assets were generally based upon the discounted present
value of anticipated cash flows. Estimated years of projected
earnings generally follow the range of estimated remaining useful
lives for each intangible asset class.
The
goodwill recognized of $6.0 million was attributable primarily to
expected synergies and the assembled workforce of
AutoWeb. The Company incurred approximately $1.1 million
of acquisition-related costs related to the AutoWeb
acquisition.
Acquisition of Dealix/Autotegrity
On
the Dealix/Autotegrity Acquisition Date, Autobytel acquired all of
the issued and outstanding shares of common stock of Dealix and
Autotegrity. Dealix provides new and used car leads to
automotive dealerships, Dealer groups and Manufacturers, and
Autotegrity is a consumer leads acquisition and analytics
business. The Company acquired Dealix/Autotegrity to
further expand its reach and influence in the industry by
increasing its Dealer network.
The
Dealix/Autotegrity Acquisition Date fair value of the consideration
transferred totaled $25.0 million in cash (plus a working capital
adjustment of $11,000). The results of operations of
Dealix/Autotegrity have been included in the Company’s
results of operations since the Dealix/Autotegrity Acquisition
Date.
The
following table summarizes the estimated fair values of the assets
acquired and liabilities assumed as of the Dealix/Autotegrity
Acquisition Date. During the year ended December 31,
2016, the Company made adjustments to the purchase price allocation
due to changes in accounts receivable and sales tax payable
acquired.
|
|
Net
identifiable assets acquired:
|
|
Total
tangible assets acquired
|
$
9,778
|
Total
liabilities assumed
|
2,520
|
Net
identifiable assets acquired
|
7,258
|
|
|
Definite-lived
intangible assets acquired
|
7,655
|
Indefinite-lived
intangible assets acquired
|
2,200
|
Goodwill
|
7,358
|
|
$
24,471
|
The
fair value of the acquired intangible assets was determined using
the below valuation approaches. In estimating the fair value of the
acquired intangible assets, the Company utilized the valuation
methodology determined to be most appropriate for the individual
intangible asset being valued as described below. The intangible
assets related to the Dealix/Autotegrity acquisition include the
following:
|
|
|
Estimated
Useful Life
(1)
|
|
|
|
|
|
|
|
|
Customer
relationships
|
Excess
of earnings
(2)
|
$
7,020
|
10
|
Trademark/trade
names – Autotegrity
|
Relief
from Royalty
(3)
|
120
|
3
|
Trademark/trade
names – UsedCars.com
|
Relief
from Royalty
(3)
|
2,200
|
|
Developed
technology
|
Cost
Approach
(4)
|
515
|
3
|
Total
purchased intangible assets
|
|
$
9,855
|
|
(1)
|
Determination of the estimated useful lives of the individual
categories of purchased intangible assets was based on the nature
of the applicable intangible asset and the expected future cash
flows to be derived from such intangible asset. Amortization of
intangible assets with definite lives is recognized over the
shorter of the respective life of the agreement or the period of
time the assets are expected to contribute to future cash
flows.
|
|
(2)
|
The excess of earnings method estimates a purchased intangible
asset's value based on the present value of the prospective net
cash flows (or excess earnings) attributable to it. The value
attributed to these intangibles was based on projected net cash
inflows from existing contracts or relationships.
|
|
(3)
|
The relief from royalty method is an earnings approach which
assesses the royalty savings an entity realizes since it owns the
asset and isn’t required to pay a third party a license fee
for its use.
|
|
(4)
|
The cost approach estimates the cost required to repurchase or
reproduce the intangible assets. The method takes into account
technological and economic obsolescence of the
technology.
|
|
Additionally,
in connection with the acquisition of Dealix/Autotegrity, the
Company entered into non-compete agreements with CDK and a key
executive of Dealix/Autotegrity. The fair value of the
non-compete agreements with CDK and the key executive from
Dealix/Autotegrity was $0.5 million and $40,000,
respectively, and was derived by calculating the difference between
the present value of the Company’s forecasted cash flows with
the agreements in place and without the agreements in
place. The Company will amortize the value of the
non-compete agreement with CDK and the key executive from
Dealix/Autotegrity over two and one year(s),
respectively.
Some
of the more significant estimates and assumptions inherent in the
estimate of the fair value of the identifiable purchased intangible
assets include all assumptions associated with forecasting cash
flows and profitability. The primary assumptions used for the
determination of the preliminary fair value of the purchased
intangible assets were generally based upon the discounted present
value of anticipated cash flows. Estimated years of projected
earnings generally follow the range of estimated remaining useful
lives for each intangible asset class.
The
goodwill recognized of $7.3 million was attributable primarily to
expected synergies and the assembled workforce of
Dealix/Autotegrity. The Company incurred approximately
$1.7 million of acquisition-related costs related to the
Dealix/Autotegrity acquisition.
Acquisition of AutoUSA
On
the AutoUSA Acquisition Date, Autobytel acquired all of the issued
and outstanding membership interests in AutoUSA. The Company
acquired AutoUSA to expand its reach and influence in the industry
by increasing its Dealer network.
The
AutoUSA Acquisition Date fair value of the consideration
transferred totaled $11.9 million, which consisted of the
following:
|
|
Cash
(including a working capital adjustment of $44)
|
$
10,044
|
Convertible
subordinated promissory note
|
1,300
|
Warrant
to purchase Company common stock
|
510
|
|
$
11,854
|
As part of the consideration paid for the
acquisition, the Company issued a convertible subordinated
promissory note for $1.0 million (“
AutoUSA Note
”)
to the Seller. The fair value of the AutoUSA Note as of the
AutoUSA Acquisition Date was $1.3 million. This valuation was
estimated using a binomial option pricing method. Key
assumptions used by the Company's outside valuation
consultants in valuing the AutoUSA Note include a market yield of
1.6% and stock price volatility of 65.0%. As the AutoUSA Note
was issued with a substantial premium, the Company recorded the
premium as additional paid-in capital. Interest is payable at
an annual interest rate of 6% in quarterly installments. The
entire outstanding balance of the AutoUSA Note is to be paid in
full on January 31, 2019. At any time after January 31, 2017,
the holder of the AutoUSA Note may convert all or any part, but at
least 30,600 shares, of the then outstanding and unpaid principal
of the AutoUSA Note into fully paid shares of the Company's common
stock at a conversion price of $16.34 per share (as adjusted for
stock splits, stock dividends, combinations and other similar
events). The right to convert the AutoUSA Note into common
stock of the Company is accelerated in the event of a change in
control of the Company. In the event of default, the entire
unpaid balance of the AutoUSA Note will become immediately due and
payable and will bear interest at the lower of 8% per year and the
highest legal rate permissible under applicable
law.
The warrant to purchase 69,930 shares of Company
common stock issued in connection with the acquisition
("
AutoUSA Warrant
")
was valued as of the AutoUSA Acquisition Date at $7.35 per share
for a total value of $0.5 million. The Company used an option
pricing model to determine the value of the AutoUSA Warrant.
Key assumptions used by the Company's outside valuation consultants
in valuing the AutoUSA Warrant are as follows: risk-free rate of
1.6%, stock price volatility of 65.0% and a term of 5.0
years. The AutoUSA Warrant was valued based on long-term
stock price volatilities of the Company. The exercise price
of the AutoUSA Warrant is $14.30 per share (as adjusted for stock
splits, stock dividends, combinations and other similar
events). The AutoUSA Warrant becomes exercisable on the third
anniversary of the issuance date and expires on the fifth
anniversary of the issuance date. The right to exercise the
AutoUSA Warrant is accelerated in the event of a change in control
of the Company.
The
following table summarizes the fair values of the assets acquired
and liabilities assumed as of December 31, 2015.
|
|
Net
identifiable assets acquired
|
$
758
|
Long-lived
intangible assets acquired
|
3,660
|
Goodwill
|
7,346
|
|
$
11,764
|
The
preliminary fair value of the acquired intangible assets was
determined using the below valuation approaches. In estimating the
preliminary fair value of the acquired intangible assets, the
Company utilized the valuation methodology determined to be most
appropriate for the individual intangible asset being valued as
described below. The acquired intangible assets include the
following:
|
|
|
Estimated
Useful Life (1)
|
|
|
|
|
|
|
|
|
Customer
relationships
|
Excess
of earnings(2)
|
$
2,660
|
5
|
Trademark/trade
names
|
Relief
from Royalty(3)
|
1,000
|
5
|
Total
purchased intangible assets
|
|
$
3,660
|
|
(1)
|
Determination of the estimated useful lives of the individual
categories of purchased intangible assets was based on the nature
of the applicable intangible asset and the expected future cash
flows to be derived from such intangible asset. Amortization of
intangible assets with definite lives are recognized over the
shorter of the respective lives of the agreement or the period of
time the assets are expected to contribute to future cash
flows.
|
(2)
|
The excess of earnings method estimates a purchased intangible
asset's value based on the present value of the prospective net
cash flows (or excess earnings) attributable to it. The value
attributed to these intangibles was based on projected net cash
inflows from existing contracts or relationships.
|
(3)
|
The relief from royalty method is an earnings approach which
assesses the royalty savings an entity realizes since it owns the
asset and isn’t required to pay a third party a license fee
for its use.
|
Additionally,
in connection with the acquisition of AutoUSA, the Company entered
into a non-compete agreement with a key executive of
AutoUSA. The fair value of the AutoUSA non-compete
agreement was $90,000 and was derived by calculating the difference
between the present value of the Company’s forecasted cash
flows with the agreement in place and without the agreement in
place. The Company will amortize the value of the
AutoUSA non-compete agreement over two years.
Some
of the more significant estimates and assumptions inherent in the
estimate of the fair value of the identifiable purchased intangible
assets include all assumptions associated with forecasting cash
flows and profitability. The primary assumptions used for the
determination of the preliminary fair value of the purchased
intangible assets were generally based upon the discounted present
value of anticipated cash flows. Estimated years of projected
earnings generally follow the range of estimated remaining useful
lives for each intangible asset class.
The
goodwill recognized of $7.3 million is attributable primarily to
expected synergies and the assembled workforce of AutoUSA.
The full amount is expected to be amortizable for income tax
purposes.
The
Company incurred approximately $1.1 million of acquisition-related
costs related to AutoUSA in 2014, all of which were
expensed.
4.
Investments
Investments.
The
Company’s investments at December 31, 2016 and 2015 consist
primarily of investments in SaleMove and GoMoto and are recorded at
cost.
The
following table presents the Company’s investment activity
for 2016 and 2015 (in thousands):
|
|
|
|
|
|
|
|
Description
|
|
|
|
|
|
|
|
Balance
at December 31, 2014
|
$
—
|
$
150
|
$
3,880
|
Total
gains, realized or unrealized
|
—
|
—
|
636
|
Purchases,
(sales), issuances and (settlements), net
|
375
|
(150
)
|
(3,836
)
|
Balance
at December 31, 2015
|
375
|
—
|
680
|
Purchases,
(sales), issuances and (settlements), net
|
(375
)
|
750
|
—
|
Balance
at December 31, 2016
|
—
|
750
|
680
|
Reserve
for notes receivable
|
—
|
(750
)
|
—
|
Net
balance at December 31, 2016
|
$
—
|
$
—
|
$
680
|
In
September 2013, the Company entered into a Convertible Note
Purchase Agreement with SaleMove in which Autobytel invested
$150,000 in SaleMove in the form of an interest bearing,
convertible promissory note. In November 2014, the Company
invested an additional $400,000 in SaleMove in the form of an
interest bearing, convertible promissory note. Upon
closing of a preferred stock financing by SaleMove in July 2015,
these two notes were converted in accordance with their terms into
an aggregate of 190,997 Series A Preferred Stock, which shares are
classified as a long-term investment on the consolidated balance
sheet as of December 31, 2016.
In
October 2013, the Company entered into a Reseller Agreement with
SaleMove to become a reseller of SaleMove’s technology for
enhancing communications with
consumers. SaleMove’s technology allows Dealers
and Manufacturers to enhance the online shopping experience by
interacting with consumers in real-time, including live video,
audio and text-based chat or by phone. The Company and SaleMove
equally share in revenues from automotive-related sales of the
SaleMove products and services. In connection with this reseller
arrangement, the Company advanced to SaleMove $1.0
million to fund SaleMove’s 50% share of various product
development, marketing and sales costs and expenses, with the
advanced funds to be recovered by the Company from SaleMove’s
share of sales revenue. SaleMove advances are repaid to
the Company from SaleMove’s share of net revenues from the
Reseller Agreement. As of December 31, 2016, the net
advances due from SaleMove totaled $552,000.
In December 2014, the Company entered
into a Series Seed Preferred Stock Purchase Agreement with GoMoto
in which the Company paid $100,000 for 317,460 shares of Series
Seed Preferred Stock, $0.001 par value per share. The
$100,000 investment in GoMoto was recorded at cost because the
Company does not have significant influence over
GoMoto. In October 2015 and May 2016, the Company
invested an additional $375,000 and $375,000 for each period in
GoMoto in the form of convertible promissory notes
(“
GoMoto Notes
”). The GoMoto Notes accrued
interest at an annual rate of 4.0% and are due and payable in full
on or after October 28, 2017 upon demand or at GoMoto’s
option ten days’ written notice unless converted prior to the
maturity date. As of December 31, 2016, the Company
recorded a reserve of $0.8 million related to the GoMoto Notes and
related interest receivable because the Company believes the
amounts may not be recoverable.
5.
Selected Balance Sheet Accounts
Property and Equipment
Property
and equipment consists of the following:
|
|
|
|
|
|
|
Computer
software and hardware
|
$
12,027
|
$
12,998
|
Capitalized
internal use software
|
5,359
|
2,743
|
Furniture
and equipment
|
1,332
|
1,419
|
Leasehold
improvements
|
1,139
|
1,424
|
|
19,857
|
18,584
|
Less—Accumulated
depreciation and amortization
|
(15,427
)
|
(14,288
)
|
Property
and Equipment, net
|
$
4,430
|
$
4,296
|
As
of December 31, 2016 and 2015, capitalized internal use
software, net of amortization, was $2.7 million and $2.1 million,
respectively. Depreciation and amortization expense
related to property and equipment was $1.6 million for the year
ended December 31, 2016. Of this amount, $0.7
million was recorded in cost of revenues and $0.8 million was
recorded in operating expenses for the year ended December 31,
2016. Depreciation and amortization expense related to property and
equipment was $1.0 million for the year ended December 31,
2015. Of this amount, $0.4 million was recorded in cost
of revenues and $0.6 million was recorded in operating expenses for
the year ended December 31, 2015.
Intangible
Assets.
The Company
amortizes specifically identified definite-lived intangible assets
using the straight-line method over the estimated useful lives of
the assets. The Company’s intangible assets will
be amortized over the following estimated useful lives (in
thousands):
|
|
|
|
Intangible
Asset
|
|
|
|
|
|
|
|
Trademarks/trade
names/licenses/domains
|
3
– 6 years
|
$
9,294
|
$
(6,756
)
|
$
2,538
|
$
9,294
|
$
(6,071
)
|
$
3,223
|
Tradename
|
Indefinite
|
2,200
|
—
|
2,200
|
2,200
|
—
|
2,200
|
Software
and publications
|
3
years
|
1,300
|
(1,300
)
|
—
|
1,300
|
(1,300
)
|
—
|
Customer
relationships
|
2 -
10 years
|
19,563
|
(7,454
)
|
12,109
|
19,563
|
(4,341
)
|
15,222
|
Employment/non-compete
agreements
|
1-5
years
|
1,510
|
(1,273
)
|
237
|
1,510
|
(849
)
|
661
|
Developed
technology
|
5-7
years
|
8,955
|
(2,256
)
|
6,699
|
8,955
|
(746
)
|
8,209
|
|
$
42,822
|
$
(19,039
)
|
$
23,783
|
$
42,822
|
$
(13,307
)
|
$
29,515
|
Amortization
expense is included in “Depreciation and amortization”
in the Statements of Income. Amortization expense was
$5.7 million, $3.0 million and $1.5 million in 2016, 2015 and 2014,
respectively. Amortization expense for intangible assets for the
next five years is as follows:
Year
|
|
|
|
|
|
2017
|
$
5,366
|
2018
|
5,028
|
2019
|
3,655
|
2020
|
2,224
|
2021
|
2,116
|
|
$
18,389
|
Goodwill.
Goodwill
represents the excess of the purchase price over the fair value of
net assets acquired. Goodwill is not amortized and is
assessed annually for impairment or whenever events or
circumstances indicate that the carrying value of such assets may
not be recoverable. The Company did not record any
impairment related to goodwill as of December 31, 2016 and
2015. As of December 31, 2016 and 2015, goodwill
consisted of the following:
|
|
Goodwill
as of December 31, 2014
|
$
20,948
|
Acquisition
of Dealix/Autotegrity
|
11,215
|
Acquisition
of AutoWeb
|
10,740
|
Goodwill
as of December 31, 2015
|
42,903
|
Purchase
price allocation adjustments from Dealix/Autotegrity
acquisition
|
(82
)
|
Goodwill
as December 31, 2016
|
$
42,821
|
During the year ended December
31, 2016, the Company made adjustments to the Dealix/Autotegrity
purchase price allocation due to changes in accounts receivable and
sales tax payable acquired, and adjusted goodwill
accordingly.
Accrued Expenses and Other Current Liabilities
As
of December 31, 2016 and 2015, accrued expenses and other
current liabilities consisted of the following:
|
|
|
|
|
|
|
Accrued
employee-related benefits
|
$
4,530
|
$
3,945
|
Other
accrued expenses and other current liabilities:
|
|
|
Other
accrued expenses
|
7,278
|
5,751
|
Amounts
due to customers
|
466
|
486
|
Other
current liabilities
|
571
|
562
|
Total
other accrued expenses and other current liabilities
|
8,315
|
6,799
|
|
|
|
Total
accrued expenses and other current liabilities
|
$
12,845
|
$
10,744
|
Convertible Notes
Payable
. In
connection with the acquisition of Cyber, the Company issued the
Cyber Note to the sellers. The fair value of the Cyber
Note as of the Cyber Acquisition Date was $5.9
million. This valuation was estimated using a binomial
option pricing method. Key assumptions used by the
Company's outside valuation consultants in valuing the Cyber Note
included a market yield of 15.0% and stock price volatility of
77.5%. As the Cyber Note was issued with a substantial
premium, the Company recorded the premium as additional paid-in
capital. Interest is payable at an annual interest rate
of 6% in quarterly installments. The Cyber Note was
acquired by Auto Holdings and was converted into 1,075,268 shares
of Company common stock on April 27, 2015, as discussed in Note
1. Upon conversion of the Cyber Note, the Company
removed the liability from the Consolidated Balance
Sheet.
In
connection with the acquisition of AutoUSA, the Company issued the
AutoUSA Note to the Seller. For information concerning the
fair value of the AutoUSA Note, see Note 3.
6.
Credit Facility
On June 1, 2016, the Company entered into a Fourth
Amendment to Loan Agreement (“
Credit Facility
Amendment
”) with MUFG
Union Bank, N.A., formerly Union Bank, N.A.
(“
Union Bank
”), amending the Company’s existing
Loan Agreement with Union Bank initially entered into on February
26, 2013, as amended on September 10, 2013, January 13, 2014 and
May 20, 2015 (the existing Loan Agreement, as amended to date, is
referred to collectively as the “
Credit Facility
Agreement
”). The Credit Facility Agreement
provided for a $9.0 million term loan (“
Term Loan 1
”). The Credit Facility Amendment
provides for (i) a $15.0 million term loan
(“
Term
Loan 2
”); (ii) the
amendment of certain financial covenants in the Credit Facility
Agreement; and (iii) amendments to the Company’s existing
$8.0 million working capital revolving line of credit
(“
Revolving
Loan
”).
Term Loan 1 is amortized over a period of four
years, with fixed quarterly principal payments of $562,500.
Borrowings under Term Loan 1 bear interest at either (i) the
bank’s Reference Rate (prime rate) minus 0.50% or (ii) the
London Interbank Offering Rate (“
LIBOR
”) plus 2.50%, at the option of the Company.
Interest under Term Loan 1 adjusts (i) at the end of each LIBOR
rate period (1, 2, 3, 6 or 12 months terms) selected by the
Company, if the LIBOR rate is selected; or (ii) with changes in
Union Bank’s Reference Rate, if the Reference Rate is
selected. Borrowings under Term Loan 1 are secured by a
first priority security interest on all of the Company’s
personal property (including, but not limited to, accounts
receivable) and proceeds thereof. Term Loan 1 matures on December
31, 2017. Borrowing under Term Loan 1 was limited to use
for the acquisition of AutoUSA, and the Company drew down the
entire $9.0 million of Term Loan 1, together with $1.0 million
under the Revolving Loan, in financing this
acquisition. The outstanding balance of Term Loan 1 as
of December 31, 2016 was $2.8 million.
Term
Loan 2 is amortized over a period of five years, with fixed
quarterly principal payments of $750,000. Borrowings under Term
Loan 2 bear interest at either (i) LIBOR plus 3.00% or (ii) the
bank’s Reference Rate (prime rate), at the option of the
Company. Borrowings under the Revolving Loan bear interest at
either (i) the LIBOR plus 2.50% or (ii) the bank’s Reference
Rate (prime rate) minus 0.50%, at the option of the Company.
Interest under both Term Loan 2 and the Revolving Loan adjust (i)
at the end of each LIBOR rate period (1, 2, 3, 6 or 12 months
terms) selected by the Company, if the LIBOR rate is selected; or
(ii) with changes in Union Bank’s Reference Rate, if the
Reference Rate is selected. The Company paid an upfront fee of
0.10% of the Term Loan 2 principal amount upon drawing upon Term
Loan 2 and also pays a commitment fee of 0.10% per year on the
unused portion of the Revolving Loan, payable quarterly in arrears.
Borrowings under Term Loan 2 and the Revolving Loan are secured by
a first priority security interest on all of the Company’s
personal property (including, but not limited to, accounts
receivable) and proceeds thereof. Term Loan 2 matures June 30,
2020, and the maturity date of the Revolving Loan was extended
from March 31, 2017 to April 30, 2018. Borrowings under the
Revolving Loan may be used as a source to finance working capital,
capital expenditures, acquisitions and stock buybacks and for other
general corporate purposes. Borrowing under Term Loan 2 was limited
to use for the acquisition of Dealix/Autotegrity, and the Company
drew down the entire $15.0 million of Term Loan 2, together with
$2.75 million under the Revolving Loan and $6.76 million from
available cash on hand, in financing this
acquisition. The outstanding balances of Term Loan 2 and
the Revolving Loan as of December 31, 2016 were $11.3 million and
$8.0 million, respectively.
The
Credit Facility Agreement contains certain customary affirmative
and negative covenants and restrictive and financial covenants,
including that the Company maintain specified levels of minimum
consolidated liquidity and quarterly and annual earnings before
interest, taxes and depreciation and amortization, which the
Company was in compliance with as of December 31,
2016.
7.
Commitments and Contingencies
Operating Leases
The
Company leases its facilities and certain office equipment under
operating leases which expire on various dates through
2024. The Company’s future minimum lease payments
on leases with non-cancelable terms in excess of one year were as
follows (in thousands):
Years Ending December 31,
|
|
2017
|
$
1,767
|
2018
|
1,004
|
2019
|
665
|
2020
|
515
|
2021
|
446
|
Thereafter
|
1,017
|
|
$
5,414
|
Rent
expense included in operating expenses was $2.0 million, $1.2
million and $0.7 million for the years ended December 31,
2016, 2015 and 2014, respectively.
Employment Agreements
The
Company has employment agreements and retention agreements with
certain key employees. A number of these agreements require
severance payments, continuation of certain insurance benefits and
acceleration of vesting of stock options in the event of a
termination of employment without cause or for good
reason.
Litigation
From
time to time, the Company may be involved in litigation matters
arising from the normal course of its business
activities. Such litigation, even if not meritorious,
could result in substantial costs and diversion of resources and
management attention, and an adverse outcome in litigation could
materially adversely affect its business, results of operations,
financial condition and cash flows.
8.
Retirement Savings Plan
The Company has a retirement savings plan which
qualifies as a deferred salary arrangement under
Section 401(k) of the Internal Revenue Code of 1986, as
amended (“
IRC
”) (the “
401(k) Plan
”). The 401(k) Plan covers all
employees of the Company who are over 21 years of age and is
effective on the first day of the month following date of hire.
Under the 401(k) Plan, participating employees are allowed to defer
up to 100% of their pretax salaries not to exceed the maximum IRC
deferral amount. The Company contributions to the 401(k) Plan are
discretionary. The Company contribution in the years ended December
31, 2016, 2015 and 2014 was $0.4 million, $0.4 million and $0.2
million, respectively.
9.
Stockholders’ Equity
Stock-Based Incentive Plans
The Company has established several plans that
provide for stock-based awards (“
Awards
”) primarily in the form of stock options
and restricted stock awards (“
RSAs
”). Certain of these plans provide for
awards to employees, the Company’s Board of Directors and
independent consultants. The Awards were granted under the 1998
Stock Option Plan, the 1999 Stock Option Plan, the 1999 Employee
and Acquisition Related Stock Option Plan, the 2000 Stock Option
Plan, the Amended and Restated 2001 Restricted Stock and Option
Plan, the 2004 Restricted Stock and Option Plan, the 2006
Inducement Stock Option Plan, 2010 Equity Incentive Plan and the
2014 Amended and Restated Equity Incentive Plan. As of
June 19, 2014, awards may only be granted under the 2014 Equity
Incentive Plan. An aggregate of 1.5 million shares
of Company common stock are reserved for future issuance under the
2014 Amended and Restated Equity Incentive Plan at
December 31, 2016.
In addition to Awards under the foregoing plans,
(i) during the year ended December 31, 2015, the Company granted
40,000 inducement stock options (“
2015 Inducement
Options
”) to a new
employee; (ii) during the year ended December 31, 2014 in
connection with the acquisition of AutoUSA, the Company granted
40,000 performance-based inducement stock options
(“
2014
AutoUSA Inducement Options
”) to a new employee; and (iii) during the
year ended December 31, 2013 in connection with the acquisition of
Advanced Mobile, the Company granted 88,641 performance-based
inducement stock options (“
2013 Advanced Mobile Inducement
Options
”) to a new
employee. The 2013 Advanced Mobile Inducement Options
were allocated in three equal grants of 29,547 options each, with
the actual amount of each grant that may be awarded being
determined based upon the revenues and gross profit achievement of
the Autobytel Mobile business for the years 2014, 2015 and 2016,
respectively.
Share-based
compensation expense is included in costs and expenses in the
Consolidated Statements of Income and Comprehensive Income
as follows:
|
|
|
|
|
|
|
|
Share-based
compensation expense:
|
|
|
|
Cost
of revenues
|
$
67
|
$
150
|
$
69
|
Sales
and marketing
|
1,777
|
713
|
544
|
Technology
support
|
601
|
518
|
251
|
General
and administrative
|
1,982
|
1,185
|
562
|
Share-based
compensation expense
|
4,427
|
2,566
|
1,426
|
|
|
|
|
Amount
capitalized to internal use software
|
15
|
9
|
5
|
|
|
|
|
Total
share-based compensation expense
|
$
4,412
|
$
2,557
|
$
1,421
|
As
of December 31, 2016, December 31, 2015 and December 31, 2014,
there was approximately $4.9 million, $2.9 million and $2.3
million, respectively, of unrecognized compensation expense related
to unvested stock options. This expense is expected to be
recognized over a weighted average period of approximately 2.1
years.
Stock Options
The
fair value of stock options is estimated on the grant date using
the Black-Scholes option pricing model based on the underlying
common stock closing price as of the date of grant, the expected
term, stock price volatility and risk-free interest rates. The
expected risk-free interest rate is based on United States treasury
yield for a term consistent with the expected life of the stock
option in effect at the time of grant. Expected volatility is based
on the Company’s historical experience for a period equal to
the expected life. The Company has used historical volatility
because it has limited or no options traded on its common stock to
support the use of an implied volatility or a combination of both
historical and implied volatility. The Company estimates the
expected life of options granted based on historical experience,
which it believes is representative of future
behavior. The dividend yield is not considered in the
option-pricing formula since the Company has not paid dividends in
the past and has no current plans to do so in the future. The
estimated forfeiture rate used is based on historical experience
and is adjusted based on actual experience.
The
Company grants its options at exercise prices that are not less
than the fair market value of the Company’s common stock on
the date of grant. Stock options generally have a seven or ten year
maximum contractual term and generally vest one-third on the first
anniversary of the grant date and ratably over twenty-four months,
thereafter. The vesting of certain stock options is accelerated
under certain conditions, including upon a change in control of the
Company, termination without cause of an employee and voluntary
termination by an employee with good reason.
Awards
granted under the Company’s stock option plans, the 2013
Advanced Mobile Inducement Options, 2014 AutoUSA Inducement Options
and 2015 Inducement Options were estimated to have a weighted
average grant date fair value per share of $7.04, $5.73 and $6.86
for the years ended December 31, 2016, 2015 and 2014,
respectively, based on the Black-Scholes option-pricing model on
the date of grant using the following weighted average
assumptions:
|
|
|
|
|
|
Expected
volatility
|
58
%
|
56
%
|
56
%
|
Expected
risk-free interest rate
|
1.2
%
|
1.3
%
|
1.4
%
|
Expected
life (years)
|
4.4
|
4.4
|
4.3
|
A
summary of the Company’s outstanding stock options as of
December 31, 2016, and changes during the year then ended is
presented below:
|
|
Weighted
Average
Exercise Price
per Share
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
Outstanding
at December 31, 2015
|
2,351,941
|
$
8.70
|
4.2
|
|
Granted
|
933,900
|
16.29
|
|
|
Exercised
|
(386,001
)
|
7.91
|
|
|
Forfeited
or expired
|
(157,309
)
|
12.76
|
|
|
Outstanding
at December 31, 2016
|
2,742,531
|
$
11.15
|
4.3
|
$
10,215
|
Vested
and expected to vest at December 31, 2016
|
2,637,620
|
$
10.97
|
4.2
|
$
10,177
|
Exercisable
at December 31, 2016
|
1,719,255
|
$
8.49
|
3.2
|
$
9,876
|
Service-Based
Options.
During the
years ended December 31, 2016, 2015 and 2014, the Company granted
833,900, 606,750 and 473,750 service-based stock options, which had
weighted average grant date fair values of $7.71, $5.73 and $6.92,
respectively.
Performance-Based
Options.
During the
year ended December 31, 2014, the Company granted the 2014 AutoUSA
Inducement Options, which had a weighted average grant date fair
value of $6.08, using a Black-Scholes option pricing model and
weighted average exercise price of $13.62. The 2014
AutoUSA Inducement Options are subject to two vesting requirements
and conditions: (i) level of achievement of performance goals based
on revenue and gross margin of the Company’s retail dealer
services group for 2014 and (ii) service vesting. Based
on the performance of the Company’s retail dealer services
group for 2014, all 40,000 of the 2014 AutoUSA Inducement Options
were awarded under the performance vesting conditions, with
one-third of these options vested on January 21, 2015 and the
remainder vesting ratably over twenty four months from that date
thereafter.
During
the year ended December 31, 2013, the Company also granted the 2013
Advanced Mobile Inducement Options, which had a weighted average
grant date fair value of $3.21, using a Black-Scholes option
pricing model and weighted average exercise price of
$7.17. The 2013 Advanced Mobile Inducement Options are
subject to two vesting requirements and conditions: (i) percentage
achievement of 2014, 2015 and 2016 revenues and gross profit goals
for the Autobytel Mobile business and (ii) time
vesting. Of the 29,547 2013 Advanced Mobile Inducement
Options originally granted and allocated to the 2014 revenues and
gross profit performance of the Autobytel Mobile business, 2,955 of
these options were awarded based on the revenues and gross profit
achieved by the business for 2014. The remaining 26,592 of the 2013
Advanced Mobile Inducement Options allocated to 2014 performance
were canceled. Of the 29,547 2013 Advanced Mobile
Inducement Options originally granted and allocated to the 2015
revenues and gross profit performance of the Autobytel Mobile
business, 2,955 of these options were awarded based on the revenues
and gross profit achieved by the business for 2015. The remaining
26,592 of the 2013 Advanced Mobile Inducement Options allocated to
2015 performance were canceled. Of the 29,547 2013 Advanced Mobile
Inducement Options originally granted and allocated to the 2016
revenues and gross profit performance of the Autobytel Mobile
business, 2,955 of these options were awarded based on the revenues
and gross profit achieved by the business for 2016. The remaining
26,592 of the 2013 Advanced Mobile Inducement Options allocated to
2016 performance were canceled.
Market Condition
Options.
On January 21, 2016,
the Company granted 100,000 stock options to its chief executive
officer with an exercise price of $17.09 and grant date fair value
of $1.47 per option, using a Monte Carlo simulation model
(“
CEO
Market Condition Options
”). The CEO Market Condition
Options were previously valued at $2.94 per option but were
revalued when the requisite stockholder approval for the
Company’s Amended and Restated 2014 Equity Incentive Plan was
obtained in June 2016. The CEO Market Condition Options are subject
to both stock price-based and service-based vesting requirements
that must be satisfied for the CEO Market Condition Options to vest
and become exercisable. The CEO Market Condition Options provide
that the stock price-based vesting condition will be met (i) with
respect to the first one-third (1/3) of the CEO Market Condition
Options, if at any time after the grant date and prior to the
expiration date of the CEO Market Condition Options the weighted
average closing price of the Company’s common stock on The
Nasdaq Capital Market for the preceding thirty (30) trading days
(adjusted for any stock splits, stock dividends, reverse stock
splits or combinations occurring after the issuance date)
(“
Weighted Average Closing
Price
”) is at or above
$30.00; (ii) with respect to the second one-third (1/3) of the CEO
Market Condition Options, if at any time after the grant date and
prior to the expiration date the Weighted Average Closing Price is
at or above $37.50; and (iii) with respect to the last one-third
(1/3) of the CEO Market Condition Options, if at any time after the
grant date and prior to the expiration date the Weighted Average
Closing Price is at or above $45.00. With respect to any of the CEO
Market Condition Options for which the stock price-based
requirements are met, these options are also subject to the
following service-based vesting schedule: (i) thirty-three and
one-third percent (33 1/3%) of these options will vest and become
exercisable on January 21, 2017 and (ii) one thirty-sixth (1/36th)
of these options will vest and become exercisable on each
successive monthly anniversary thereafter for the following
twenty-four months ending on January 21, 2019.
Restricted Stock
Awards.
The Company
granted an aggregate of 125,000 restricted stock awards
(“
RSAs
”) on April 23, 2015 in connection with the
promotion of one of its executive officers. Of the
125,000 RSAs, 25,000 were service-based (“
Service-Based RSA
Award
”) and the
forfeiture restrictions lapse with respect to one-third of the
restricted stock on each of the first, second and third
anniversaries of the date of the award. The
Service-Based RSA Award had a fair market value of $15.37 per
share. This executive officer was also awarded
100,000 shares of the Company’s common stock in the form of
performance-based restricted stock (“
Performance-Based RSA
Award
”). The
Performance-Based RSA Award had a fair market value of $5.23 per
share. The shares are subject to forfeiture upon the
earlier of (such earliest date being referred to as the
“
Termination
Date
”) (i) a termination
of the executive officer’s employment with the Company; (ii)
March 31, 2018; and (iii) other events of forfeiture set forth in
the award agreement, subject to the following: (i) the forfeiture
restrictions with respect to 50,000 of the restricted shares will
lapse if any time prior to the Termination Date the weighted
average closing price of the Company’s common stock for the
preceding 30 trading days is at or above $30.00 per share, and (ii)
the forfeiture restrictions with respect to any of the restricted
shares that remain subject to forfeiture restrictions will lapse if
any time prior to the Termination Date the weighted average closing
price of the Company’s common stock for the preceding 30
trading days is at or above $45.00 per share. None of
the forfeiture restrictions had lapsed during
2016.
Stock option
exercises
. During 2016, 386,001
options were exercised, with an aggregate weighted average exercise
price of $7.91. During 2015, 145,979 options were exercised, with
an aggregate weighted average exercise price of
$8.19. During 2014, 134,668 options were exercised, with
an aggregate weighted average exercise price of $4.18. The
total intrinsic value of options exercised during 2016, 2015 and
2014 was $3.2 million, $1.9 million and $1.3 million,
respectively.
Tax Benefit Preservation Plan
The Company’s Tax Benefit Preservation Plan
dated as of May 26, 2010 between Autobytel and Computershare Trust
Company, N.A., as rights agent, as amended by Amendment No. 1 to
Tax Benefit Preservation Plan dated as of April 14, 2014
(collectively, the “
Tax Benefit Preservation
Plan
”) was adopted by the
Company’s Board of Directors to protect stockholder value by
preserving the Company’s net operating loss carryovers and
other tax attributes that the Tax Benefit Preservation Plan is
intended to preserve (“
Tax Benefits
”). Under the Tax Benefit
Preservation Plan, rights to purchase capital stock of the Company
(“
Rights
”) have been distributed as a dividend at
the rate of five Rights for each share of common
stock. Each Right entitles its holder, upon triggering
of the Rights, to purchase one one-hundredth of a share of Series A
Junior Participating Preferred Stock of the Company at a price of
$75.00 (as such price may be adjusted under the Tax Benefit
Preservation Plan) or, in certain circumstances, to instead acquire
shares of common stock. The Rights will convert into a right to
acquire common stock or other capital stock of the Company in
certain circumstances and subject to certain
exceptions. The Rights will be triggered upon the
acquisition of 4.9% or more of the Company’s outstanding
common stock or future acquisitions by any existing holder of 4.9%
or more of the Company’s outstanding common stock. If a
person or group acquires 4.9% or more of the Company’s common
stock, all rights holders, except the acquirer, will be entitled to
acquire, at the then exercise price of a Right, that number of
shares of the Company common stock which, at the time, has a market
value of two times the exercise price of the Right. The Rights will
expire upon the earliest of: (i) the close of business on May
26, 2017 unless that date is advanced or extended, (ii) the
time at which the Rights are redeemed or exchanged under the Tax
Benefit Preservation Plan, (iii) the repeal of
Section 382 or any successor statute if the Board determines
that the Tax Benefit Preservation Plan is no longer necessary for
the preservation of the Company’s Tax Benefits, (iv) the
beginning of a taxable year of the Company to which the Board
determines that no Tax Benefits may be carried forward, or (v) such
time as the Board determines that a limitation on the use of the
Tax Benefits under Section 382 would no longer be material to the
Company. The Tax Benefit Preservation Plan was reapproved by the
Company’s stockholders at the Company’s 2014 Annual
Meeting of Stockholders.
Series B Preferred Stock
On
the AutoWeb Merger Date, the Company issued the Series B Preferred
Stock. The shares of Series B Preferred Stock are
convertible, subject to certain limitations, into 10 shares of
Common Stock (with such conversion ratio subject to adjustment as
set forth in the certificate of designations for the Series B
Preferred Stock). All shares of Series B Preferred Stock will
be automatically converted if stockholder approval required by
Section 5635 of The Nasdaq Stock Market continued listing rules is
obtained. The Series B Preferred Stock was valued at $124.93
per share on the AutoWeb Merger Date, which was based on ten times
the closing price of the Company’s stock on September 30,
2015, discounted using a discount rate of 25.5%.
Warrant
On September 17, 2010 (“
Cyber
Acquisition
Date
”), the Company
acquired substantially all of the assets of
Cyber. In connection with the acquisition of
Cyber, the Company issued to the sellers the Cyber Warrant. The
Cyber Warrant was valued at $3.15 per share on the Cyber
Acquisition Date using an option pricing model with the following
key assumptions: risk-free rate of 2.3%, stock price volatility of
77.5% and a term of 8.04 years. The Cyber Warrant was
valued based on historical stock price volatilities of the Company
and comparable public companies as of the Cyber Acquisition
Date. The exercise price of the Cyber Warrant was $4.65
per share (as adjusted for stock splits, stock dividends,
combinations and other similar events). The Cyber
Warrant was acquired by Auto Holdings and exercised on April 27,
2015, as discussed in Note 1. Based upon the terms of
exercise of the Cyber Warrant, the Company issued 400,000 shares of
Company Common stock and received approximately $1.9 million in
cash.
The
AutoUSA Warrant issued in connection with the acquisition described
in Note 3 was valued at $7.35 per share for a total value of $0.5
million. The Company used an option pricing model to
determine the value of the AutoUSA Warrant. Key
assumptions used in valuing the AutoUSA Warrant are as follows:
risk-free rate of 1.6%, stock price volatility of 65.0% and a term
of 5.0 years. The AutoUSA Warrant was valued based on
long-term stock price volatilities of the Company. The
exercise price of the AutoUSA Warrant is $14.30 per share (as
adjusted for stock splits, stock dividends, combinations and other
similar events). The AutoUSA Warrant becomes exercisable
on January 13, 2017 and expires on January 13, 2019. The
right to exercise the AutoUSA Warrant is accelerated in the event
of a change in control of the Company.
The AutoWeb Warrant issued in connection with the
acquisition described in Note 3 was valued at $1.72 per share for a
total value of $2.5 million. The Company used an option
pricing model to determine the value of the AutoWeb
Warrant. Key assumptions used in valuing the AutoWeb
Warrant are as follows: risk-free rate of 1.9%, stock price
volatility of 74.0% and a term of 7.0 years. The AutoWeb
Warrant was valued based on long-term stock price volatilities of
the Company’s Common Stock. The exercise price of
the AutoWeb Warrant is $184.47 per share (as adjusted for stock
splits, stock dividends, combinations and other similar
events). The AutoWeb Warrant becomes exercisable on
October 1, 2018, subject to the following vesting conditions: (i)
with respect to the first one-third (1/3) of the warrant shares, if
at any time after the issuance date of the AutoWeb Warrant and
prior to the expiration date of the AutoWeb Warrant the weighted
average closing price of the Common Stock for the preceding 30
trading days (adjusted for any stock splits, stock dividends,
reverse stock splits or combinations of the Common Stock occurring
after the issuance date) (“
Weighted Average Closing
Price
”) is at or above
$30.00; (ii) with respect to the second one-third (1/3) of the
warrant shares, if at any time after the issuance date of the
AutoWeb Warrant and prior to the expiration date the Weighted
Average Closing Price is at or above $37.50; and (iii) with respect
to the last one-third (1/3) of the warrant shares, if at any time
after the issuance date of the AutoWeb Warrant and prior to the
expiration date the Weighted Average Closing Price is at or above
$45.00. The AutoWeb Warrant expires on October 1,
2022.
Shares Reserved for Future Issuance
The
Company had the following shares of common stock reserved for
future issuance upon the exercise or issuance of equity instruments
as of December 31, 2016:
|
|
Stock
options outstanding
|
2,742,531
|
Authorized
for future grants under stock-based incentive plans
|
1,470,155
|
Reserved
for conversion of preferred shares issued in relation to
AutoWeb
|
1,680,070
|
Reserved
for exercise of warrants
|
1,552,330
|
Reserved
for conversion of promissory notes
|
61,200
|
Total
|
7,506,286
|
10.
Disposal of Specialty Finance Leads Product
On December 19, 2016, Autobytel and Car.com
entered into an Asset Purchase and Sale Agreement, by and among
Autobytel, Car.com, and Internet Brands, in which Internet Brands
acquired substantially all of the assets of the automotive
specialty finance leads group of Car.com
(“
Acquired
Group
”). The transaction
was completed effective as of December 31, 2016. The transaction
consideration consisted of $3.2 million in cash paid at closing and
$1.6 million to be paid over a five year period pursuant to a
Transitional License and Linking Agreement
(“
License
Agreement
”). The Company
recorded a gain on sale of approximately $2.2 million in connection
with the transaction in 2016.
In
connection with the transaction, Internet Brands, Car.com and
Autobytel entered into an agreement pursuant to which Car.com and
Autobytel will provide to Internet Brands certain transition
services and arrangements. Pursuant to the License Agreement, (i)
Internet Brands will pay Autobytel $1.6 million in fees over the
five-year term of the License Agreement, and (ii) Car.com will (1)
grant Internet Brands a limited, non-exclusive, non-transferable
license to use the Car.com logo and name solely for sales and
marketing purposes in Internet Brand’s automotive specialty
finance leads business; and (2) provide certain redirect linking of
consumer traffic from the Acquired Group’s current specialty
finance leads application forms to a landing page designated by
Internet Brands.
The
disposal of the automotive specialty finance leads product did not
qualify for presentation and disclosure as a discontinued operation
because it did not represent a strategic shift that had or will
have a major effect on the Company’s operations. The pretax
profit of the finance leads product for 2016, 2015 and 2014 was
$0.3 million, $0.4 million and $0.7 million,
respectively.
Income
tax expense from continuing operations consists of the following
for the years ended December 31:
|
|
|
|
|
|
|
Current:
|
|
|
|
Federal
|
$
244
|
$
212
|
$
129
|
State
|
508
|
226
|
150
|
Foreign
|
69
|
—
|
—
|
|
821
|
438
|
279
|
Deferred:
|
|
|
|
Federal
|
1,726
|
2,997
|
1,714
|
State
|
1,040
|
586
|
385
|
Foreign
|
—
|
—
|
—
|
|
2,766
|
3,583
|
2,099
|
|
|
|
|
Valuation
allowance release
|
(772
)
|
(588
)
|
(341
)
|
|
|
|
|
Total
income tax expense (benefit)
|
$
2,815
|
$
3,433
|
$
2,037
|
The
reconciliations of the U.S. federal statutory rate to the effective
income tax rate for the years ended December 31, 2016, 2015
and 2014 are as follows:
|
|
|
|
Tax
provision at U.S. federal statutory rates
|
34.0
%
|
34.0
%
|
34.0
%
|
State
income taxes net of federal benefit
|
3.1
|
2.3
|
2.6
|
Deferred
tax asset adjustments – NOL related
|
16.1
|
6.8
|
6.4
|
Non-deductible
permanent items
|
—
|
0.7
|
0.4
|
Acquisition
costs
|
—
|
7.0
|
—
|
Other
|
0.4
|
(1.0
)
|
0.3
|
Change
in valuation allowance
|
(11.5
)
|
(7.3
)
|
(6.3
)
|
Effective
income tax rate
|
42.1
%
|
42.5
%
|
37.4
%
|
Deferred
income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company’s deferred
taxes as of December 31, 2016 and 2015 are as
follows:
|
|
|
|
|
Deferred
tax assets:
|
|
|
Allowance
for doubtful accounts
|
$
381
|
$
394
|
Accrued
liabilities
|
1,596
|
1,266
|
Net
operating loss carry-forwards
|
25,563
|
31,325
|
Fixed
assets
|
—
|
16
|
Intangible
assets
|
—
|
—
|
Share-based
compensation expense
|
3,225
|
2,422
|
Other
|
1,191
|
613
|
Total
gross deferred tax assets
|
31,956
|
36,036
|
Valuation
allowance
|
(4,656
)
|
(5,427
)
|
|
27,300
|
30,609
|
|
|
|
Deferred
tax liabilities:
|
|
|
Fixed
assets
|
(114
)
|
—
|
Intangible
assets
|
(7,698
)
|
(9,147
)
|
Unremitted
foreign earnings
|
(20
)
|
—
|
Total
gross deferred tax liabilities
|
(7,832
)
|
(9,147
)
|
Net
deferred tax assets
|
$
19,468
|
$
21,462
|
During 2016, management assessed the available
positive and negative evidence to estimate if sufficient future
taxable income will be generated to utilize the existing deferred
tax assets. Significant pieces of objective positive
evidence evaluated were the cumulative earnings generated over the
three-year period ended December 31, 2016 and the Company’s
strong future earnings projections. Based on this
evaluation, as of December 31, 2016, the Company reversed $0.8
million of its valuation allowance. We believe, however,
that it is more likely than not that $0.1 million in state net
operating loss carryforwards will not be
realized. Accordingly, a valuation allowance has been
maintained on these state net operating losses. In
addition, included in the net operating loss carry-forward deferred
tax asset above is approximately $13.5 million of federal deferred
tax assets attributable to excess stock option
deductions. Due to a provision within ASC Topic 718,
Compensation – Stock Compensation (“
ASC 718
”) concerning when tax benefits related to
excess stock option deductions can be credited to paid-in-capital,
the related valuation allowance of $4.6 million cannot be reversed,
even if the facts and circumstances indicate that it is more likely
than not that the deferred tax asset can be
realized. The valuation allowance will only be reversed
as the related deferred tax asset is applied to reduce taxes
payable. The Company follows ASC 740 ordering to
determine when such NOL has been realized.
At December 31, 2016, the Company had federal
and state net operating loss carry-forwards
(“
NOLs
”) of approximately $75.8 million and $30.5
million, respectively. The federal NOLs expire through
2035 as follows (in millions):
2025
|
$
5.9
|
2026
|
25.5
|
2027
|
15.5
|
2028
|
5.2
|
2029
|
7.7
|
2030
|
10.6
|
2031
|
1.3
|
2032
|
—
|
2033
|
0.1
|
2034
|
2.5
|
2035
|
1.5
|
|
$
75.8
|
The
state NOLs expire through 2035 as follows (in
millions):
2017
|
$
3.1
|
2028
|
2.7
|
2029
|
5.8
|
2030
|
11.0
|
2034
|
2.0
|
2035
|
0.8
|
California
NOLs
|
25.4
|
Other
State NOLs
|
5.1
|
Total
State NOLs
|
$
30.5
|
Utilization
of the net operating loss and tax credit carry-forwards may be
subject to a substantial annual limitation due to ownership change
limitations that may have occurred or that could occur in the
future, as required by Section 382 of the IRC, as well as similar
state provisions. These ownership changes may limit the amount of
NOLs and research and development credit carry-forwards that can be
utilized annually to offset future taxable income and tax,
respectively. A Section 382 ownership change occurred in
2006 and any changes have been reflected in the NOLs presented
above as of December 31, 2016. As a result of an
acquisition in 2001, approximately $9.9 million of the NOLs are
subject to an annual limitation of approximately $0.5 million per
year.
The
federal and state NOLs begin to expire in 2025 and 2017,
respectively. Approximately $10.8 million and $5.0 million,
respectively, of the federal and state NOLs were incurred by
subsidiaries prior to the date of the Company’s acquisition
of such subsidiaries. The Company established a valuation allowance
of $4.1 million at the date of acquisitions related to these
subsidiaries. During 2013, the valuation allowance has been
reversed. The tax benefits associated with the
realization of such NOLs will be credited to the provision for
income taxes. In addition, federal NOLs of approximately $13.5
million relate to stock option deductions. Therefore, once the
stock option deductions reduce income taxes payable in the future
in accordance with ASC 718, approximately $4.6 million will be
credited to stockholders’ equity rather than to income tax
benefit.
At
December 31, 2016, deferred tax assets exclude approximately
$1.7 million and $0.4 million of tax-effected federal and state
NOLs pertaining to tax deductions from stock-based compensation.
Upon future realization of these benefits, the Company expects to
increase additional paid-in capital and reduce income taxes
payable. The benefit of excess stock option deductions is not
recorded until such time that the deductions reduce income taxes
payable. For purposes of determining when the stock options reduce
income taxes payable, the Company has adopted the “with and
without” approach whereby the Company considers NOLs arising
from continuing operations prior to NOLs attributable to excess
stock option deductions.
At
December 31, 2016, the Company has federal and state research and
development tax credit carry-forwards of $0.3 million and $0.2
million, respectively. The federal credits begin to
expire in 2021. The state credits do not
expire.
As
of December 31, 2016 and 2015, the Company had unrecognized tax
benefits of approximately $0.5 million and $0.5 million,
respectively, all of which, if subsequently recognized, would have
affected the Company’s tax rate. A reconciliation
of the beginning and ending amount of unrecognized tax benefits is
as follows:
|
|
|
|
|
Balance
at January 1,
|
$
527
|
$
636
|
Reductions
based on tax positions related to prior years and
settlements
|
(63
)
|
—
|
Reductions
based on the lapse of the statutes of limitations
|
—
|
(109
)
|
Balance
at December 31,
|
$
464
|
$
527
|
The
Company is subject to taxation in the United States and various
foreign and state jurisdictions. In general, the Company is no
longer subject to U.S. federal and state income tax examinations
for years prior to 2012 (except for the use of tax losses generated
prior to 2012 that may be used to offset taxable income in
subsequent years). The Company does not anticipate a significant
change to the total amount of unrecognized tax benefits within the
next twelve months.
The
Company’s policy is to recognize interest and penalties
accrued on any unrecognized tax benefits as a component of income
tax expense. The Company accrued $0 and $10,000 of interest,
respectively, associated with its unrecognized tax benefits in the
years ended December 31, 2016 and 2015.
12.
Quarterly Financial Data
(Unaudited)
Below
is a summary table of the Company’s quarterly data for the
years ended December 31, 2016 and December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per-share amounts)
|
Total
net revenues
|
$
40,378
|
$
43,911
|
$
36,148
|
$
36,247
|
$
36,421
|
$
40,175
|
$
30,387
|
$
26,243
|
Gross
profit
|
$
14,601
|
$
15,755
|
$
13,921
|
$
13,635
|
$
14,474
|
$
15,297
|
$
11,770
|
$
10,098
|
Net
income (loss)
|
$
1,378
|
$
2,738
|
$
430
|
$
(676
)
|
$
1,386
|
$
1,615
|
$
871
|
$
773
|
Basic
earnings (loss) per share
|
$
0.13
|
$
0.26
|
$
0.04
|
$
(0.06
)
|
$
0.13
|
$
0.16
|
$
0.09
|
$
0.09
|
Diluted
earnings (loss) per share
|
$
0.10
|
$
0.21
|
$
0.03
|
$
(0.06
)
|
$
0.10
|
$
0.14
|
$
0.08
|
$
0.07
|
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
|
|
|
|
|
|
|
|
|
Allowance
for bad debts:
|
|
|
|
Beginning
balance
|
$
605
|
$
490
|
$
294
|
Additions
|
344
|
379
|
354
|
Write-offs
|
(306
)
|
(264
)
|
(158
)
|
Ending
balance
|
$
643
|
$
605
|
$
490
|
Allowance
for customer credits:
|
|
|
|
Beginning
balance
|
$
439
|
$
280
|
$
111
|
Additions
|
592
|
803
|
1,037
|
Write-offs
|
(660
)
|
(644
)
|
(868
)
|
Ending
balance
|
$
371
|
$
439
|
$
280
|
Tax
valuation allowance:
|
|
|
|
Beginning
balance
|
$
5,427
|
$
6,015
|
$
6,356
|
Charged
(credited) to tax expense
|
(771
)
|
(588
)
|
(341
)
|
Ending
balance
|
$
4,656
|
$
5,427
|
$
6,015
|
EXHIBIT INDEX
Number
|
Description
|
|
|
|
|
2.1‡
|
Membership Interest Purchase
Agreement dated as of January 13, 2014 by and among Autobytel,
AutoNation, Inc., a Delaware corporation, and AutoNationDirect.com,
Inc., a Delaware corporation, which is incorporated herein by
reference to Exhibit 2.1 to the Current Report on Form 8-K filed
with the SEC on January 17, 2014 (SEC File No. 001-34761)
(“
January 2014 Form
8-K
”)
|
|
|
|
2.2 ‡
|
Stock Purchase Agreement dated as of May 21, 2015 by and among
Autobytel, CDK Global, LLC, a Delaware limited liability company,
Dealix Corporation, a California corporation, and Autotegrity,
Inc., a Delaware corporation incorporated by reference to Exhibit
2.1 to the Current Report on Form 8-K filed with the SEC on May 27,
2015 (SEC File No. 001-34761) (“
May 2015 Form
8-K
”)
|
|
|
|
|
2.3 ‡
|
Agreement and Plan of Merger dated as of October 1, 2015 by and
among Autobytel, New Horizon Acquisition Corp., a Delaware
corporation, AutoWeb, Inc., a Delaware corporation, and José
Vargas, which is incorporated by reference to Exhibit 2.1 to the
Current Report on Form 8-K filed with the SEC on October 6, 2015
(SEC File No. 001-34761) (“
October 2015
Form 8-K
”)
|
|
|
|
|
2.4‡
|
Asset Purchase and Sale Agreement dated as of December 19, 2016 by
and among Autobytel, Car.com, Inc., a Delaware corporation, and
Internet Brands, Inc., a Delaware corporation, incorporated by
reference to Exhibit 2.1 to the Current Report on Form 8-K filed
with the SEC on
December 21, 2016
(SEC File No. 001-34761)
(“
December 2016 Form
8-K
”)
|
|
|
|
|
3.1
|
Fifth Amended and Restated Certificate of Incorporation of
Autobytel (formerly Autobytel.com Inc.) certified by the Secretary
of State of Delaware (filed December 14, 1998), as amended by
Certificate of Amendment dated March 1, 1999, Second Certificate of
Amendment of the Fifth Amended and Restated Certificate of
Incorporation of Autobytel dated July 22, 1999, Third Certificate
of Amendment of the Fifth Amended and Restated Certificate of
Incorporation of Autobytel dated August 14, 2001, Certificate of
Designation of Series A Junior Participating Preferred Stock dated
July 30, 2004, and Amended Certificate of Designation of Series A
Junior Participating Preferred Stock dated April 24, 2009, which
are incorporated herein by reference to Exhibit 3.1 to the
Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2009 filed with the SEC on April 24, 2009 (SEC File No.
000-22239); Fourth Certificate of Amendment to Fifth Amended and
Restated Certificate of Incorporation of Autobytel dated July 10,
2012, which is incorporated herein by reference to Exhibit 3.1 to
the Current Report on Form 8-K filed with the SEC on July 12, 2012;
and Fifth Certificate of Amendment to Fifth Amended and Restated
Certificate of Incorporation of Autobytel dated July 3, 2013, which
is incorporated herein by reference to Exhibit 3.3 to the Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2013
filed with the SEC on August 1, 2013 (SEC File No. 001-34761); and
Certificate of Designations of Series B Junior Participating
Convertible Preferred Stock of Autobytel dated October 1, 2015,
which is incorporated herein by reference to Exhibit 3.1 to the
October 2015 Form 8-K
|
|
|
|
|
3.2
|
Fifth Amended and Restated Bylaws of Autobytel dated October 1,
2015, which is incorporated herein by reference to Exhibit 3.2 to
the October 2015 Form 8-K
|
|
|
|
|
4.1
|
Form of Common Stock Certificate of Autobytel, which is
incorporated herein by reference to Exhibit 4.1 to the Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
2001 filed with the SEC on November 14, 2001 (SEC File No.
000-22239)
|
|
|
|
|
4.2
|
Tax Benefit Preservation Plan dated as of May 26, 2010 between
Autobytel and Computershare Trust Company, N.A., as rights agent,
together with the following exhibits thereto: Exhibit A –
Form of Right Certificate; and Exhibit B – Summary of Rights
to Purchase Shares of Preferred Stock of Autobytel, which is
incorporated herein by reference to Exhibit 4.1 to the Current
Report on Form 8-K filed with the SEC on June 2, 2010 (SEC File No.
000-22239), as amended by Amendment No. 1 to Tax Benefit
Preservation Plan dated as of April 14, 2014, between Autobytel and
Computershare Trust Company, N.A., as rights agent, which is
incorporated herein by reference to Exhibit 4.1 to the Current
Report on Form 8-K filed with the SEC on April 16, 2014 (SEC File
No. 001-34761)
|
|
|
|
|
4.3
|
Certificate of Adjustment Under Section 11(m) of the Tax Benefit
Preservation Plan, which is incorporated herein by reference to
Exhibit 4.3 to the Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2012 filed with the SEC on November 8,
2012 (SEC File No. 001-34761)
|
|
|
|
|
10.1■
|
Autobytel.com Inc. 1998 Stock Option Plan, which is incorporated
herein by reference to Exhibit 10.8 to Amendment No. 1 to S-1
Registration Statement,
as amended by Amendment No. 1 dated
September 22, 1999, which is incorporated herein by reference to
Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1999 filed with the SEC on November 12,
1999 (SEC File No. 000-22239) and
Amendment No. 2 dated December 5, 2001, which is
incorporated herein by reference to Exhibit (d)(5) to Schedule TO
filed with the SEC on December 14, 2001 (SEC File No. 005-58067)
(“
Schedule TO
”);
and Form of Stock Option
Agreement pursuant to Autobytel.com Inc. 1998 Stock Option Plan,
which is incorporated herein by reference to Exhibit (d)(14) to the
Schedule TO
|
|
|
|
|
10.2■
|
Autobytel.com Inc. 1999 Stock Option Plan, which is incorporated
herein by reference to Exhibit 10.30 to Amendment No. 1 to S-1
Registration Statement, as amended by Amendment No. 1 dated
September 22, 1999, which is incorporated herein by reference to
Exhibit 10.1 to Form 10-Q for the quarterly period ended September
30, 1999 filed with the SEC on November 12, 1999 (SEC
File No. 000-22239);
and Amendment No. 2 to the
Autobytel.com Inc. 1999 Stock Option Plan, which is incorporated
herein by reference to Exhibit (d)(8) to the Schedule TO; Form of
Stock Option Agreement pursuant to Autobytel.com Inc. 1999 Stock
Option Plan, which is
incorporated
herein by reference to Exhibit (d)(15) to the Schedule TO; Form of
Performance Stock Option Agreement pursuant to Autobytel.com Inc.
1999 Stock Option Plan, which is incorporated herein by reference
to Exhibit (d)(18) to the Schedule TO;
and Form of Outside
Director Stock Option Agreement pursuant to the Autobytel.com Inc.
1999 Stock Option Plan, which is incorporated herein by reference
to Exhibit 10.1 to the Current Report on Form 8-K filed with the
SEC on November 3, 2004 (SEC File No. 000-22239)
(“
November 2004 Form
8-K
”)
|
|
|
|
|
10.3■
|
Autobytel.com Inc. 1999 Employee and Acquisition Related Stock
Option Plan, which is incorporated herein by reference to Exhibit
10.1 to the Registration Statement on Form S-8 filed
with the SEC on November 1, 1999 (SEC File No.
333-90045),
as amended by Amendment No. 1 to the
Autobytel.com Inc. 1999 Employee and Acquisition Related Stock
Option Plan, which is incorporated herein by reference to Exhibit
(d)(10) to the Schedule TO
and
Amendment No. 2 to the Autobytel.com Inc. 1999 Employee and
Acquisition Related Stock Option Plan dated May 1, 2009, which is
incorporated herein by reference to Exhibit 10.86 to the Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2009
filed with the SEC on July 24, 2009 (SEC File No. 000-22239)
(“
Second Quarter 2009 Form
10-Q
”); and
Form
of Stock Option Agreement pursuant to Autobytel.com Inc. 1999
Employee and Acquisition Related Stock Option Plan, which is
incorporated herein by reference to Exhibit (d)(16) to the Schedule
TO
|
|
|
|
|
10.4■
|
Form of Employee Stock Option Agreement pursuant to the
Autobytel.com Inc. 1998 Stock Option Plan
, the Autobytel.com
Inc. 1999 Employee and Acquisition Related Stock Option Plan and
the Autobytel.com Inc. 1999 Stock Option Plan,
which is incorporated herein by reference to
Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC
on October 3, 2008 (SEC File No. 000-22239)
(“
October 2008 Form
8-K
”)
|
|
|
|
|
10.5■
|
Autobytel.com Inc. 2000 Stock Option Plan, which is incorporated
herein by reference to Exhibit 99.1 to the Registration Statement
on Form S-8 filed with the SEC on June 15, 2000 (SEC File No.
333-39396),
as amended by Amendment No. 1 to the
Autobytel.com Inc. 2000 Stock Option Plan, which is incorporated
herein by reference to Exhibit (d)(12) to the Schedule
TO
, Amendment No. 2 to the
Autobytel.com Inc. 2000 Stock Option Plan, which is incorporated
herein by reference to Exhibit 10.46 to the Annual Report on Form
10-K for the Year Ended December 31, 2001 filed with the SEC on
March 22, 2002 (SEC File No. 000-22239)
and Amendment No. 3
to the Autobytel.com Inc. 2000 Stock Option Plan dated May 1, 2009,
which is incorporated herein by reference to Exhibit 10.87 to the
Second Quarter 2009 Form 10-Q; and Form of Stock Option Agreement
pursuant to Autobytel.com Inc
. 2000
Stock Option Plan, which is incorporated herein by reference to
Exhibit (d)(17) to the Schedule TO
|
|
|
|
|
10.6■
|
Autobytel Inc. Amended and Restated 2001 Restricted Stock and
Option Plan, which is incorporated herein by reference to Exhibit
4.7 to the Post-Effective Amendment to Registration Statement on
Form S-8 filed with the SEC on July 31, 2003 (SEC
File No. 333-67692),
as amended by Amendment No. 1 to the
Autobytel Inc. Amended and Restated 2001 Restricted Stock and
Option Plan dated May 1, 2009, which is incorporated herein by
reference to Exhibit 10.88 to the Second Quarter 2009 Form 10-Q;
and Form of Restricted Stock Award
Agreement under the Autobytel Inc. Amended and Restated 2001
Restricted Stock and Option Plan, which is incorporated herein by
reference to Exhibit 10.1 to the October 2008 Form 8-K (SEC File
No. 000-22239)
|
|
|
|
|
10.7■
|
Form of Employee Stock Option Agreement under the Autobytel Inc.
Amended and Restated 2001 Restricted Stock and Option Plan, which
is incorporated herein by reference to Exhibit 10.8 to the Annual
Report on Form 10-K for the Year Ended December 31, 2014 filed with
the SEC on February 26, 2015 (SEC File No. 001-34761)
|
|
|
|
|
10.8■
|
Autobytel Inc. 2004 Restricted Stock and Option Plan, which is
incorporated herein by reference to Exhibit 4.8 to the Registration
Statement on Form S-8 filed with the SEC on June 28, 2004 (SEC
File No. 333-116930) (“
2004 Form
S-8
”),
as amended
by Amendment No. 1 to the Autobytel Inc. 2004 Restricted Stock and
Option Plan dated May 1, 2009, which is incorporated herein by
reference to Exhibit 10.89 to the Second Quarter 2009 Form 10-Q;
Form of Employee Stock Option
Agreement pursuant to the Autobytel Inc. 2004 Restricted Stock and
Option Plan, which is incorporated herein by reference to Exhibit
4.9 to the 2004 Form S-8;
Form of Outside Director Stock
Option Agreement pursuant to the Autobytel Inc. 2004 Restricted
Stock and Option Plan, which is incorporated herein by reference to
Exhibit 10.2 to the November 2004 Form 8-K; Form of Stock Option
Agreement pursuant to the Autobytel Inc. 2004 Restricted Stock and
Option Plan, which is incorporated herein by reference to Exhibit
10.65 to the Annual Report on Form 10-K for the Year Ended December
31, 2004 filed with the SEC on May 31, 2005 (SEC File No.
000-22239); Form of Outside Director Stock Option Agreement
pursuant to the 2004 Restricted Stock and Option Plan, which is
incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed with the SEC on September 14, 2005 (SEC
File No. 000-22239) (“
September 2005 Form 8-K
”);
and Form of Letter Agreement (amending
certain stock option agreements with Outside Directors), which is
incorporated herein by reference to Exhibit 10.2 to the September
2005 Form 8-K
|
|
|
|
|
10.9■
|
Autobytel Inc. 2006 Inducement Stock Option Plan, which is
incorporated herein by reference to Exhibit 4.9 to the Registration
Statement on Form S-8 filed with the SEC on June 16, 2006
(SEC File No. 333-135076)
(“
2006 Form S-8
”), as amended by
Amendment No. 1 to the Autobytel Inc. 2006 Inducement Stock Option
Plan dated May 1, 2009, which is incorporated herein by reference
to Exhibit 10.90 to the Second Quarter 2009 Form 10-Q; and Form of
Employee Inducement Stock Option Agreement, which is incorporated
herein by reference to Exhibit 4.10 to the 2006 Form
S-8
|
|
|
|
|
10.10■
|
Autobytel Inc. 2010 Equity Incentive Plan, which is incorporated
herein by reference to Exhibit 10.2 to the Current Report on Form
8-K filed with the SEC on June 25, 2010 (SEC File No.
001-34761
); Form of Employee Stock Option Award Agreement
pursuant to the Autobytel Inc. 2010 Equity Incentive Plan, which is
incorporated herein by reference to Exhibit 10.58 to the Annual
Report on Form 10-K for the Year Ended December 31, 2011 filed with
the SEC on March 1, 2012 (SEC File No. 001-34761)
(“
2011 Form
10-K
”); Form of 2013 Performance-Based Stock Option
Award Agreement pursuant to the Autobytel Inc. 2010 Equity
Incentive Plan, which is incorporated herein by reference to
Exhibit 10.79 to the Annual Report on Form 10-K for the Year Ended
December 31, 2012 filed with the SEC on February 28, 2013 (SEC File
No. 001-34761) (“
2012 Form
10-K
”); Form of 2012 Performance-Based Stock Option
Award Agreement pursuant to the Autobytel Inc. 2010 Equity
Incentive Plan, which is incorporated herein by reference to
Exhibit 10.59 to the 2011 Form 10-K; Form of Non-Employee Director
Stock Option Award Agreement pursuant to the Autobytel Inc. 2010
Equity Incentive Plan, which is incorporated herein by reference to
Exhibit 10.60 to the 2011 Form 10-K; and Form of (Management)
Employee Stock Option Award Agreement pursuant to the Autobytel
Inc. 2010 Equity Incentive Plan, which is incorporated herein by
reference to Exhibit 10.61 to the 2011 Form 10-K
|
|
|
|
|
10.11■
|
Autobytel Inc. 2014 Equity Incentive Plan, which is incorporated
herein by reference to Exhibit 10.1 to the Current Report on Form
8-K filed with the SEC on June 23, 2014 (SEC File No. 001-34761),
as amended and restated by the Autobytel Inc. Amended and Restated
2014 Equity Incentive Plan, which is incorporated herein by
reference to Exhibit 10.1 to the Current Report on Form 8-K filed
with the SEC on June 23, 2016 (SEC File No. 001-34761);
and
Form of Stock Option Award Agreement pursuant to the Autobytel Inc.
Amended and Restated 2014 Equity Incentive Plan, which is
incorporated herein by reference to Exhibit 10.3 to the Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2016
filed with the SEC on August 4, 2016 (SEC File No.
001-34761)
|
|
|
|
|
10.12■
|
Letter Agreement dated October 10, 2006 between Autobytel and Glenn
E. Fuller
, as amended by Memorandum dated April 18, 2008,
Memorandum dated as of December 8, 2008, and Memorandum dated as of
March 1, 2009, which are incorporated herein by reference to
Exhibit 10.77 to the Annual Report on Form 10-K for the Year Ended
December 31, 2008 filed with the SEC on March 13, 2009 (SEC File
No. 000-22239) (“
2008 Form
10-K
”)
|
|
|
|
|
10.13■*
|
Memorandum dated January 31, 2017, amending Letter Agreement dated
October 10, 2006 between Autobytel and Glenn E.
Fuller
|
|
|
|
|
10.14■
|
Amended and Restated Severance Agreement dated as of September 29,
2008 between Autobytel and Glenn E. Fuller, which is incorporated
herein by reference to Exhibit 10.4 to the October 2008 Form
8-K
, as amended by Amendment No. 1 dated December 14, 2012,
which is incorporated herein by reference to Exhibit 10.73 to the
2012 Form 10-K
|
|
|
|
|
10.15■
|
Letter Agreement dated August 6, 2004 between Autobytel and Wesley
Ozima,
as amended by Memorandum dated March 1, 2009, which
are incorporated herein by reference to Exhibit 10.81 to the 2008
Form 10-K
|
|
|
|
|
10.16 ■*
|
Memorandums dated January 22, 2016 and January 31, 2017, amending
Letter Agreement dated August 6, 2004 between Autobytel and Wesley
Ozima
|
|
|
|
|
10.17■
|
Amended and Restated Severance Agreement dated as of
November 15, 2008 between Autobytel and Wesley Ozima, which is
incorporated herein by reference to Exhibit 10.82 to the 2008 Form
10-K,
as amended by Amendment No. 1 dated October 16, 2012,
which is incorporated herein by reference to Exhibit 10.74 to the
2012 Form 10-K
|
|
|
|
|
10.18■
|
Autobytel Inc. 2000 Stock Option Plan, Stock Option Award Agreement
dated effective as of April 3, 2009 between Autobytel and Jeffrey
H. Coats, which is incorporated herein by reference to
Exhibit
10.92
to the Second Quarter 2009 Form
10-Q
|
|
|
|
|
10.19■
|
Autobytel Inc. Amended and Restated 2001 Restricted Stock and
Option Plan, Stock Option Award Agreement dated effective as of
April 3, 2009 between Autobytel and Jeffrey H. Coats, which is
incorporated herein by reference to Exhibit
10.93
to the Second Quarter 2009 Form
10-Q
|
|
|
|
|
10.20■
|
Autobytel Inc. 2004 Restricted Stock and Option Plan, Stock Option
Award Agreement dated effective as of April 3, 2009 between
Autobytel and Jeffrey H. Coats, which is incorporated herein by
reference to Exhibit
10.94
to
the Second Quarter 2009 Form 10-Q
|
|
|
|
|
10.21■
|
Second
Amended and Restated Employment Agreement dated as of April 3, 2014
between Autobytel and Jeffrey H. Coats, which is incorporated by
reference to Exhibit 99.1 to the Current Report on Form 8-K filed
with the SEC on April 8, 2014 (SEC File No. 001-34761), as amended
by Amendment No. 1 dated January 21, 2016, incorporated by
reference to Exhibit 10.1 to th
e
Current Report on Form 8-K filed with the SEC January 27, 2016 (SEC
File No. 001-34761) (“
January 2016 Form
8-K
”); and as amended by
Amendment No. 2 dated September 21, 2016, which is incorporated
herein by reference to Exhibit 10.3 to the Form 8-K filed with the
SEC on
September 26, 2016 (SEC File No. 001-34761)
(
“
September 2016 Form
8-K
”
)
|
|
|
|
|
10.22■
|
Autobytel Inc. Amended and Restated 2014 Equity Incentive Plan,
Employee Stock Option Award Agreement dated as of January 21, 2016
between Autobytel and Jeffrey H. Coats, which is incorporated
herein by reference to Exhibit
10.2
to the January 2016 Form 8-K
|
|
|
|
|
10.23■
|
Autobytel Inc. Amended and Restated 2014 Equity Incentive Plan,
Employee Stock Option Award Agreement dated as of January 21, 2016
between Autobytel and Jeffrey H. Coats, which is incorporated
herein by reference to Exhibit
10.3
to the January 2016 Form 8-K
|
|
|
|
|
10.24■
|
Form of Amended and Restated Indemnification Agreement between
Autobytel and its directors and officers, which is incorporated
herein by reference to Exhibit 99.1 to the Current Report on Form
8-K filed with the SEC on July 22, 2010 (SEC File No.
001-34761)
|
|
|
|
|
10.25■
|
Form of Indemnification Agreement between Autobytel and its
directors and officers, incorporated herein by reference to Exhibit
10.24 to the Annual Report on Form 10-K for the Year Ended December
31, 2015 filed with the SEC on March 10, 2016 (SEC File No.
001-34761) (“
2015 Form
10-K
”)
|
|
|
|
|
10.26■
|
Letter
Agreement dated March 9, 2010 between Autobytel and Kimberly Boren,
as amended by Memorandum dated December 21, 2010 and Memorandum
dated as of December 1, 2011, which is incorporated herein by
reference to Exhibit 10.73 to the 2011 Form 10-K, as amended by
Memorandum dated September 21, 2016, which is incorporated herein
by reference to Exhibit 10.4 to the September 2016 Form
8-K
|
|
|
|
|
10.27■
|
Amended and Restated Severance Benefits Agreement dated as of
February 25, 2011 between Autobytel and Kimberly Boren, which is
incorporated herein by reference to Exhibit 10.74 to the 2011 Form
10-K,
as amended by Amendment No. 1 dated November 14, 2012,
which is incorporated herein by reference to Exhibit 10.70 to the
2012 Form 10-K
|
|
|
|
|
10.28■
|
Letter Agreement dated May 21, 2007 between Autobytel and John
Steerman, as amended by Memorandum dated March 20, 2009, Memorandum
dated September 30, 2009 and Memorandum dated December 1, 2011,
which are incorporated herein by reference to Exhibit 10.77 to the
2011 Form 10-K
|
|
|
|
|
10.29■*
|
Memorandum dated January 22, 2016, amending Letter Agreement dated
May 21, 2007 between Autobytel and John Steerman
|
|
|
|
|
10.30■
|
Severance Agreement dated as of October 1, 2009 between Autobytel
and John Steerman, which is incorporated herein by reference to
Exhibit 10.78 to the 2011 Form 10-K, as amended by Amendment No. 1
dated September 19, 2012, which is incorporated herein by reference
to Exhibit 10.75 to the 2012 Form 10-K, and Amendment No. 2 dated
November 7, 2012, which is incorporated herein by reference to
Exhibit 10.76 to the 2012 Form 10-K
|
|
|
|
|
10.31
‡
|
Transitional
License and Linking Agreement, made as of January 1, 2017, by and
among Internet Brands, Inc., a Delaware corporation, Car.com, Inc.,
a Delaware corporation, and Autobytel, which is incorporated herein
by reference to Exhibit 10.1 to the
Current Report on Form 8-K filed with the SEC on
January 6, 2017 (SEC File No. 001-34761)
|
|
|
|
|
10.32
|
Lease Agreement dated April 6, 1997 between The Provider Fund
Partners, The Colton Company (n/k/a: GFE MacArthur Investments,
LLC, as successor-in-interest to The Provider Fund Partners, The
Colton Company) and Autobytel
(
“
Irvine Lease
”), as amended by Amendment No. 12 to Irvine
Lease dated February 6, 2009, Amendment No. 13 to Irvine Lease
dated March 5, 2009, and Amendment No. 14 to Irvine Lease dated
November 29, 2010, which are incorporated herein by reference to
Exhibit 10.79 to the 2011 Form 10-K, Amendment No. 15 to Irvine
Lease dated October 31, 2012, which is incorporated herein by
reference to Exhibit 10.69 to the 2012 Form 10-K, and as amended by
Amendment No. 16 dated August 7, 2015, which is incorporated herein
by reference to Exhibit 10.32 to the 2015 Form
10-K
|
|
|
|
|
10.33*
|
Contract for Lease and Deposit dated June 1, 2016 between AW GUA,
Limitada, and Mertech, Sociedad Anonima, for office No.
1101
|
|
|
|
|
10.34*
|
Contract for Lease and Deposit dated June 1, 2016 between AW GUA,
Limitada, and Mertech, Sociedad Anonima, for office No.
1102
|
|
|
|
|
10.35*
|
Office Lease dated December 9, 2015 between Rivergate Tower Owner,
LLC, a Delaware limited liability company, and Autobytel, as
amended by the First Amendment of Lease dated November 21,
2016
|
|
|
|
|
10.36
|
Convertible Subordinated Promissory Note dated as of January 13,
2014 (Principal Amount $1,000,000.00) issued by Autobytel to
AutoNationDirect.com, Inc., a Delaware corporation, which is
incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed with the SEC January 17, 2014 (SEC File
No. 001-34761) (“
January 2014 Form
8-K
”)
|
|
|
|
|
10.37
|
Warrant to Purchase 69,930 Shares of Autobytel Common Stock dated
as of January 13, 2014 issued by Autobytel to AutoNationDirect.com,
Inc., a Delaware corporation, which is incorporated herein by
reference to Exhibit 10.2 to the January 2014 Form 8-K
|
|
|
|
|
10.38
|
Shareholder Registration Rights Agreement dated as of January 13,
2014 by and between Autobytel and AutoNationDirect.com, Inc., a
Delaware corporation, which is incorporated herein by reference to
Exhibit 10.3 to the January 2014 Form 8-K
|
|
|
|
|
10.39
|
Form of Warrant to Purchase Series B Junior Participating
Convertible Preferred Stock dated as of October 1, 2015 issued by
Autobytel to the persons listed on Schedule A thereto, which is
incorporated herein by reference to Exhibit 10.1 to the October
2015 Form 8-K
|
|
|
|
|
10.40
|
Amended and Restated Stockholder Agreement dated as of October 1,
2015 by and among Autobytel, Auto Holdings Ltd., a British Virgin
Islands business company, Manatee Ventures Inc., a British Virgin
Islands business company, Galeb3 Inc., a Florida
corporation, Matías de Tezanos, and José Vargas, and the
other parties set forth on the signature pages thereto, which is
incorporated herein by reference to Exhibit 10.2 to the October
2015 Form 8-K, as amended by Second Amended and Restated
Stockholder Agreement dated as of October 19, 2016, which is
incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed with the SEC on October 21, 2016 (SEC File
No. 001-34761) (“
October 2016 Form
8-K
”), as amended by
Third Amended and Restated Stockholder Agreement dated as of
November 30, 2016, which is incorporated herein by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC
on December 2, 2016, and as amended by Fourth Amended and Restated
Stockholder Agreement dated as of March 1, 2017, which is
incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed with the SEC on March 2, 2017 (SEC File
No. 001-34761)
|
|
|
|
|
10.41
|
Autobytel Inc. Amended and Restated 2014 Equity Incentive Plan,
Stock Option Award Agreement dated as of September 21, 2016 between
Autobytel and José Vargas, which is incorporated herein by
reference to Exhibit 10.2 to the October 2016 Form 8-K
|
|
|
|
|
10.42■
|
Employment Offer Letter dated February 23, 2016 between Autobytel
and José Vargas, incorporated by reference to Exhibit 10.54 to
the 2015 Form 10-K
|
|
|
|
|
10.43■
|
Restricted Stock Award Agreement dated as of April 23, 2015 between
Autobytel and William Ferriolo pursuant to Autobytel Inc. 2014
Equity Incentive Plan, which is incorporated herein by reference to
Exhibit 10.3 to the Current Report on Form 8-K filed with the SEC
on April 29, 2015 (SEC File No. 001-34761)
(“
April 2015 Form
8-K
”)
|
|
|
|
|
10.44■
|
Restricted Stock Award Agreement dated as of April 23, 2015 between
Autobytel and William Ferriolo pursuant to Autobytel Inc. 2014
Equity Incentive Plan, which is incorporated herein by reference to
Exhibit 10.4 to the April 2015 Form 8-K
|
|
|
|
|
10.45■
|
Amended and Restated Letter Agreement dated as of April 23, 2015
between Autobytel and William Ferriolo, incorporated by reference
to Exhibit 10.5 to the April 2015 Form 8-K, as amended by Amendment
No. 1 dated January 22, 2016, incorporated by reference to Exhibit
10.4 to the January 2016 Form 8-K and, as amended by Amendment No.
2 dated December 15, 2016, which is incorporated herein by
reference to Exhibit 10.1 to the December 2016 Form
8-K
|
|
|
|
|
10.46■
|
Severance Benefits Agreement dated as of September 17, 2010 between
Autobytel and William Ferriolo, which is incorporated herein by
reference to Exhibit 10.76 to the 2011 Form 10-K, as amended by
Amendment No. 1 dated November 30, 2012, which is incorporated
herein by reference to Exhibit 10.77 to the 2012 Form
10-K
|
|
|
|
|
10.47■*
|
Employment Offer Letter Agreement dated September 17, 2010 between
Autobytel and Ralph Smith, as amended by Memorandum dated January
1, 2013, Memorandum dated July 1, 2013, and Memorandum dated
January 28, 2016
|
|
|
|
|
10.48■*
|
Amended and Restated Severance Benefits Agreement dated July 1,
2013 between Autobytel and Ralph Smith
|
|
|
|
|
10.49■*
|
Employment Offer Letter dated February 14, 2014 between Autobytel
and Taren Peng, as amended by Memorandum dated January 31,
2017
|
|
|
|
|
10.50■*
|
Severance Benefits Agreement dated August 25, 2014 between
Autobytel and Taren Peng
|
|
|
|
|
10.51■*
|
Amended and Restated Letter Agreement dated April 24, 2013 between
Autobytel and John Skocilic Jr., as amended by Memorandum dated
January 22, 2016 and Memorandum dated January 31, 2017
|
|
|
|
|
10.52■
|
Amended and Restated Severance Benefits Agreement dated May 1, 2013
between Autobytel and John Skocilic Jr., which is incorporated
herein by reference to Exhibit 10.49 to the 2015 Form
10-K
|
|
21.1*
|
Subsidiaries of Autobytel Inc.
|
|
|
23.1*
|
Consent of Independent Registered Public Accounting Firm, Moss
Adams LLP
|
|
|
24.1*
|
Power of Attorney (included in the signature page
hereto)
|
|
|
31.1*
|
Chief Executive Officer Section 302 Certification of Periodic
Report dated March 9, 2017
|
|
|
31.2*
|
Chief Financial Officer Section 302 Certification of Periodic
Report dated March 9, 2017
|
|
|
32.1*
|
Chief Executive Officer and Chief Financial Officer Section 906
Certification of Periodic Report dated March 9, 2017
|
|
|
101.INS††
|
XBRL
Instance Document
|
|
|
101.SCH††
|
XBRL
Taxonomy Extension Schema Document
|
|
|
101.CAL††
|
XBRL
Taxonomy Calculation Linkbase Document
|
|
|
101.DEF††
|
XBRL
Taxonomy Extension Definition Document
|
|
|
101.LAB††
|
XBRL
Taxonomy Label Linkbase Document
|
|
|
101.PRE††
|
XBRL
Taxonomy Presentation Linkbase Document
|
*
|
Filed
herewith.
|
|
|
■
|
Management Contract or
Compensatory Plan or Arrangement.
|
|
|
‡
|
Certain schedules in this Exhibit have been
omitted in accordance with Item 601(b)(2) of Regulation
S-K. Autobytel Inc. will furnish supplementally a copy
of any omitted schedule or exhibit to the Securities and Exchange
Commission upon request; provided, however, that Autobytel Inc. may
request confidential treatment pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended, for any schedule or
exhibit so furnished.
|
|
|
††
|
Furnished with this
report. In accordance with Rule 406T of Regulation S-T,
the information in these exhibits shall not be deemed to be
“filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to liability
under that section, and shall not be incorporated by reference into
any registration statement or other document filed under the
Securities Act of 1933, as amended, except as expressly set forth
by specific reference in such filing.
|
|
|
Exhibit 10.13
|
Autobytel
Inc.
Human
Resources Department
18872
MacArthur Blvd, Suite 200
Irvine,
CA 92612-1400
Voice:
(949) 225-4572
|
January 31, 2017
FROM:
Jeff
Coats – President and CEO
RE: Salary Increase
It is a
pleasure to inform you of your salary increase. Following is a
summary of your salary increase.
Position:
|
EVP, Chief Legal
and Administrative Officer and Secretary
|
New
Semi-monthly
Rate:
|
$
13,343.75 ($320,250
Approximate Annually)
|
Effective
Date:
|
January 1,
2017
|
Your
salary increase is conditioned upon your acceptance of the
foregoing modifications to the terms and conditions of your
employment with Autobytel Inc. If you accept these modifications to
the terms of your employment, please acknowledge your acceptance in
the space provided below.
As a
reminder, your employment is at will and not for a specified term
and may be terminated by the Company or you at any time, with or
without cause or good reason and with or without prior, advance
notice. This “at-will” employment status will remain in
effect throughout the term of your employment by the Company and
cannot be modified except by a written amendment to this promotion
letter that is executed by both parties (which in the case of the
Company, must be executed by the Company’s Chief Legal
Officer) and that expressly negates the “at-will”
employment status.
Please
feel free to call if you have any questions.
Autobytel Inc.
By:
/s/ Jeff
Coats
President
and CEO
Accepted
and Agreed:
/s/ Glenn
Fuller
Glenn
Fuller
Exhibit
10.16
|
H
uman Resources
Department
18872
MacArthur Blvd, Suite 200
Irvine,
CA 92612-1400
Voice:
(949) 225-4572
|
DATE:
|
January
22, 2016
|
TO:
|
Wesley
Ozima
|
FROM:
|
Glenn
Fuller – EVP, Chief Legal and Administrative Officer and
Secretary
|
CC:
|
Kimberly
Boren - SVP, Chief Financial Officer
|
RE:
|
Compensation
Adjustment
|
It is a
pleasure to inform you of your compensation adjustment. Following
is a summary of your employment new compensation.
Position:
|
VP,
Controller
|
Semi-monthly
Rate:
|
$8,154.17 ($195,700
Approximate Annually)
|
Effective
Date:
|
January 1,
2016
|
|
|
Annual
Incentive
|
|
Opportunity:
|
You shall be
eligible to participate in annual incentive compensation plans, if
any, that may be adopted by the Company from time to time and that
are afforded generally to persons employed by the Company at your
employment level and position, geographic location and applicable
department or operations within the Company (subject to the terms
and conditions of any such annual incentive compensation plans).
Should such an annual incentive compensation plan be adopted for
any annual period, your target annual incentive compensation
opportunity will be as established by the Company in its sole
discretion for each annual period, which may be up to 35% your
annualized rate (i.e., X Semi-monthly Rate) based on achievement of
objectives specified by the Company each annual incentive
compensation period (which may include Company-wide performance
objectives; divisional, department or operations performance
objectives and/or individual performance objectives, allocated
between and among such performance objectives as the Company may
determine) and subject to adjustment by the Company based on the
Company’s evaluation and review of your overall individual
job performance in the sole discretion of the Company. Specific
annual incentive compensation plan details, target incentive
compensation opportunity and objectives for each annual
compensation plan period will be established each year. Awards
under annual incentive plans may be prorated by the Company in its
discretion for a variety of factors, including time employed by the
Company during the year, adjustments in base compensation or target
award percentage changes during the year, and unpaid time off. You
understand that the Company’s annual incentive compensation
plans, their structure and components, specific target incentive
compensation opportunities and objectives, the achievement of
objectives and the determination of actual awards and payouts, if
any, thereunder are subject to the sole discretion of the Company.
Awards, if any, under any annual incentive compensation plan shall
only be earned by you, an payable to you, if you remain actively
employed by the Company through the date on which award payouts are
made by the Company under the applicable annual incentive
compensation plan. You will not earn any such award if your
employment ends for any reason prior to that date.
|
Your
compensation adjustment is conditioned upon your acceptance of the
foregoing modifications to the terms and conditions of your
employment with Autobytel Inc. If you accept these modifications to
the terms of your employment, please acknowledge your acceptance in
the space provided below.
As a
reminder, your employment is at will and not for a specified term
and may be terminated by the Company or you at any time, with or
without cause or good reason and with or without prior, advance
notice. This “at-will” employment status will remain in
effect throughout the term of your employment by the Company and
cannot be modified except by a written amendment to this promotion
letter that is executed by both parties (which in the case of the
Company, must be executed by the Company’s Chief Legal
Officer) and that expressly negates the “at-will”
employment status.
Please
feel free to call if you have any questions.
Autobytel Inc.
By:
/s/
Glenn
Fuller
Glenn
Fuller
EVP,
Chief Legal and Administrative Officer and Secretary
Accepted
and Agreed:
/s/ Wesley
Ozima
Wesley
Ozima
|
A
utobytel
Inc.
Human
Resources Department
18872
MacArthur Blvd, Suite 200
Irvine,
CA 92612-1400
Voice:
(949) 225-4572
|
January 31, 2017
FROM:
Glenn
Fuller – EVP, Chief Legal and Administrative Officer and
Secretary
RE: Promotion
It is a
pleasure to inform you of your promotion. Following is a summary of
your promotion.
New
Position:
|
SVP,
Controller
|
New
Semi-monthly
Rate:
|
$8,561.88 ($205,485
Approximate Annually)
|
Effective
Date:
|
January 1,
2017
|
|
|
Annual
Incentive
|
|
Compensation:
|
You shall be
eligible to participate in annual incentive compensation plans, if
any, that may be adopted by the Company from time to time and that
are afforded generally to persons employed by the Company at your
employment level and position, geographic location and applicable
department or operations within the Company (subject to the terms
and conditions of any such annual incentive compensation plans).
Should such an annual incentive compensation plan be adopted for
any annual period, your target annual incentive compensation
opportunity will be as established by the Company for each annual
period, which may be up to
50%
of your annualized rate
(i.e., 2080 X Semi-monthly Rate) based on achievement of objectives
specified by the Company each annual incentive compensation period
(which may include Company-wide performance objectives; divisional,
department or operations performance objectives and/or individual
performance objectives, allocated between and among such
performance objectives as the Company may determine) and subject to
adjustment by the Company based on the Company’s evaluation
and review of your overall individual job performance in the sole
discretion of the Company. Specific annual incentive compensation
plan details, target incentive compensation opportunity and
objectives for each annual compensation plan period will be
established each year. Awards under annual incentive plans may be
prorated by the Company in its discretion for a variety of factors,
including time employed by the Company during the year, adjustments
in base compensation or target award percentage changes during the
year, and unpaid time off. You understand that the Company’s
annual incentive compensation plans, their structure and
components, specific target incentive compensation opportunities
and objectives, the achievement of objectives and the determination
of actual awards and payouts, if any, thereunder are subject to the
sole discretion of the Company. Awards, if any, under any annual
incentive compensation plan shall only be earned by you, an payable
to you, if you remain actively employed by the Company through the
date on which award payouts are made by the Company under the
applicable annual incentive compensation plan. You will not earn
any such award if your employment ends for any reason prior to that
date.
|
|
|
Your
promotion is conditioned upon your acceptance of the foregoing
modifications to the terms and conditions of your employment with
Autobytel Inc. If you accept these modifications to the terms of
your employment, please acknowledge your acceptance in the space
provided below.
Please
feel free to call if you have any questions.
Autobytel Inc.
By:
/s/
Glenn
Fuller
Glenn
Fuller
EVP,
Chief Legal and Administrative Officer and Secretary
Accepted
and Agreed:
/s/ Wesley
Ozima
Wesley
Ozima
Exhibit 10.29
|
Autobytel
Inc.
Human
Resources Department
18872
MacArthur Blvd, Suite 200
Irvine,
CA 92612-1400
Voice:
(949) 225-4572
|
DATE:
|
January
22, 2016
|
TO:
|
John
D. Steerman
|
FROM:
|
Glenn
Fuller – EVP, Chief Legal and Administrative Officer and
Secretary
|
CC:
|
Jose
Vargas - EVP, Chief Revenue Officer
|
RE:
|
Promotion
|
It is a
pleasure to inform you of your promotion to EVP, Mobile, Lead
Operations & Product Dev at Autobytel Inc. In this position you
will report to Jose Vargas - EVP, Chief Revenue Officer. Following
is a summary of your adjustment in your compensation associated
with your promotion.
New
Position:
|
EVP, Mobile, Lead
Operations & Product Development
|
Semi-monthly
Rate:
|
$12,125.00
($291,000 Approximate Annually)
|
Effective
Date:
|
January 1,
2016
|
|
|
Annual
Incentive
|
|
Opportunity:
|
You shall be
eligible to participate in annual incentive compensation plans, if
any, that may be adopted by the Company from time to time and that
are afforded generally to persons employed by the Company at your
employment level and position, geographic location and applicable
department or operations within the Company (subject to the terms
and conditions of any such annual incentive compensation plans).
Should such an annual incentive compensation plan be adopted for
any annual period, your target annual incentive compensation
opportunity will be as established by the Company in its sole
discretion for each annual period, which may be up to 60% your
annualized rate (i.e., X Semi-monthly Rate) based on achievement of
objectives specified by the Company each annual incentive
compensation period (which may include Company-wide performance
objectives; divisional, department or operations performance
objectives and/or individual performance objectives, allocated
between and among such performance objectives as the Company may
determine) and subject to adjustment by the Company based on the
Company’s evaluation and review of your overall individual
job performance in the sole discretion of the Company. Specific
annual incentive compensation plan details, target incentive
compensation opportunity and objectives for each annual
compensation plan period will be established each year. Awards
under annual incentive plans may be prorated by the Company in its
discretion for a variety of factors, including time employed by the
Company during the year, adjustments in base compensation or target
award percentage changes during the year, and unpaid time off. You
understand that the Company’s annual incentive compensation
plans, their structure and components, specific target incentive
compensation opportunities and objectives, the achievement of
objectives and the determination of actual awards and payouts, if
any, thereunder are subject to the sole discretion of the Company.
Awards, if any, under any annual incentive compensation plan shall
only be earned by you, an payable to you, if you remain actively
employed by the Company through the date on which award payouts are
made by the Company under the applicable annual incentive
compensation plan. You will not earn any such award if your
employment ends for any reason prior to that date.
|
Your
promotion is conditioned upon your acceptance of the foregoing
modifications to the terms and conditions of your employment with
Autobytel Inc. If you accept these modifications to the terms of
your employment, please acknowledge your acceptance in the space
provided below.
As a
reminder, your employment is at will and not for a specified term
and may be terminated by the Company or you at any time, with or
without cause or good reason and with or without prior, advance
notice. This “at-will” employment status will remain in
effect throughout the term of your employment by the Company and
cannot be modified except by a written amendment to this promotion
letter that is executed by both parties (which in the case of the
Company, must be executed by the Company’s Chief Legal
Officer) and that expressly negates the “at-will”
employment status.
Please
feel free to call if you have any questions.
Autobytel Inc.
By:
/s/Glenn
Fuller
Glenn
Fuller
EVP,
Chief Legal and Administrative Officer and Secretary
Accepted
and Agreed:
/s/ John D.
Steerman
John D.
Steerman
Exhibit
10.33
NUMBER EIGHT (08).
LEASE AGREEMENT AND
BOND
. At the City of Guatemala, this first day of June 2016,
before me,
Manuel Humberto
JUÁREZ OLIVA,
notary, personally appeared:
of the
first part,
MERTECH, SOCIEDAD
ANÓNIMA
, represented herein by Mr.
Alejandro CORONADO CASTRO,
[Personal
Information Redacted]. Mr. CACERES LÓPEZ acts as CEO and legal
representative of the Company, as shown with the notarized
certificate authorized herein on October 4, 2011 by Juan Carlos
PARADA GARCÍA, Notary. Such appointment is duly registered in
the General Corporate Business Register of Guatemala under number
364417, folio 772, volume 291 of Business Assistants; hereinafter
referred to as "the Lessor";
and of
the second part,
AW GUA,
LIMITADA
, represented herein by its legal representative,
Mr.
Julio Domingo GONZÁLEZ
ARRIVILLAGA,
[Personal
Information Redacted]
. He acts as
CEO AND LEGAL REPRESENTATIVE
of such
entity, as shown with the notarial certificate of his appointment,
authorized herein March 28, 2016 by Andres Diego Gabriel Pokus
Alvarez, Notary, registered in the General Corporate Business
Register of Guatemala under number 474246, folio 720, and volume
401 of Business Assistants; hereinafter simply referred to as "the
Lessee";
and of
the third party, Mr.
Matías
Rodrigo DE TEZANOS POSSE,
[Personal
Information Redacted]
, hereinafter referred to as "the Guarantor". All
parties hereto as a whole may be hereinafter referred to as "the
Parties".
I do
hereby CERTIFY:
A) The
representations exercised hereunder are adequate in my opinion and
under the law for the execution of this lease; and,
B) The
parties hereto declare to be of the personal identity data
established in the premises, that this is their free act and deed,
and hereby enter into the following
LEASE AGREEMENT AND BOND
:
ONE.
Mr.
Alejandro CORONADO CASTRO,
as CEO and
legal representative of
MERTECH,
SOCIEDAD ANÓNIMA,
declares that the Company he
represents, is the owner of unit number 1101-T2, 11
th
floor, Tower 2,
Design Center Building, Diagonal 6, 12-42 zona 10, Guatemala City.
Moreover, Mr.
Alejandro CORONADO
CASTRO
hereby declares that the company he represents is
owner of the following parking spaces: Parking space S2-118;
parking space S2-119; parking space S2-120; parking space S2-121;
parking space S2-122; parking space S2-123; parking space S2-124;
parking space S2-125; parking space S2-126; parking space S2-127;
parking space S2-128; and parking space S2-129; all located in the
second structural floor, or basement S2 of such Building. These
properties are subject to the Horizontal Property Regime of the
Building, which AW GUATEMALA, LIMITADA, through its legal
representative, claims to know.
TWO.
Mr.
Alejandro CORONADO CASTRO
states that
the company he represents,
MERTECH,
SOCIEDAD ANÓNIMA
hereby leases to
AW GUA, LIMITADA
, all real property
identified in Section 1 above. The lease includes everything that
by issue of fact and law is applicable to the real property hereto.
These properties are registered in the Real Estate Record Office,
Central Zone, under the following numbers:
a
)
Property
6873, folio 373, and volume 174E of Horizontal Property of
Guatemala;
b
)
Property
6033, folio 33, and volume 173E of Horizontal Property of
Guatemala;
c
)
Property
6034, folio 34, and volume 173E of Horizontal Property of
Guatemala;
d
)
Property
6035, folio 35, and volume 173E of Horizontal Property of
Guatemala;
e
)
Property
6036, folio 36, and volume 173E of Horizontal Property of
Guatemala;
f
)
Property
6037, folio 37, and volume 173E of Horizontal Property of
Guatemala;
g
)
Property
6038, folio 38, and volume 173E of Horizontal Property of
Guatemala;
h
)
Property
6039, folio 39, and volume 173E of Horizontal Property of
Guatemala;
i
)
Property
6040, folio 40, and volume 173E of Horizontal Property of
Guatemala;
j
)
Property
6041, folio 41, and volume 173E of Horizontal Property of
Guatemala;
k
)
Property
6042, folio 42, and volume 173E of Horizontal Property of
Guatemala;
l
)
Property
6043, folio 43, and volume 173E of Horizontal Property of
Guatemala;
m)
Property 6044,
folio 44, and volume 173E of Horizontal Property of
Guatemala.
After
being forewarned by the undersigned notary, Mr.
Alejandro CORONADO CASTRO
hereby
expressly declares that the premises leased hereunder are free and
clear of any liens or limitations that may affect the rights of the
Lessee, beyond the condominium regime such properties are subject
to, and which the Lessee has previously known.
THREE.
The lease is subject by the will
of the parties, to the provisions provided for in Section 1 hereof,
and the following:
A)
TERM:
The
term of the lease shall be three years, nine months, and thirty
days, compulsory for both parties, and shall commence June 1, 2016,
and shall expire March 31, 2020. Such term may be renewed,
provided, however, the parties may decide to renew it ninety days
prior to the expiration date, which shall be confirmed by an
exchange of letters. If the exchange of letters does not occur, it
shall be understood that the term has expired, and no act of the
Lessor or the Lessee shall be regarded as a manifestation of the
willingness to renew the lease. If the Lessee wishes to accelerate
the original term or its renewals, it must give notice to the
Lessor at least ninety days in advance. If the notice is not given,
the Lessee must pay the equivalent of one month's rent, as damages.
At the end of the term and its renewals, the Lessee must return the
property to the Lessor in the same conditions as received, and
clean. The parties hereto mutually agree that the Lessor shall be
granted the power to dispose of the real property referred to
above, and, therefore, may partially or totally assign the rights
arising from this lease, without prior approval by the Lessee, and
shall inform the new assignee or buyer, the conditions and scope of
this lease, to fully comply with the same.
B.
RENT:
The monthly rent agreed shall be
FOUR THOUSAND NINE HUNDRED SIXTY US DOLLARS AND
SIXTY-NINE CENTS (US$ 4,960.69)
, Value Added Tax (VAT)
included. Maintenance fee is not included therein, and shall be
paid by the Lessee to the Design Center Building Administration,
which as of this date is ONE THOUSAND ONE HUNDRED AND FIFTY US
DOLLARS AND EIGHTY-THREE CENTS (US$ 1,150.83). The parties further
agree that payment of rent shall be as follows:
I)
During the first
twelve months, payment of rent shall be the amount already
established, payable in US Dollars.
II)
Effective February
2, 2017, the rent shall be increased five percent (5%) annually,
and thereafter, every year.
III)
The amount
established as rent is exclusively for this concept, and,
therefore, the Lessee shall not make any discount to such amount,
not to have paid any other expenses. The Lessee shall pay all
utilities purchased for use in the leased premises; therefore, the
Lessor shall not in any way be held responsible for such payments.
On the other hand, the Lessor shall be fully responsible for the
payment of any extraordinary fees that may be charged by the
Administration of the Design Center Building, so that at no time
can the full use of the leased property by the Lessee be at
risk.
IV)
The rent must be
paid promptly within the first five (5) days of each calendar
month, or next business day, without collection or request, at the
place indicated by the Lessor, unless a different payment procedure
is mutually agreed, such as a deposit made to the bank account the
Lessor.
V)
The delay in the
payment of the rent will generate the payment of interest arrears
of two percent per month on the amount owed, which must be made
together with the payment of the outstanding rent.
C)
USE:
The
unit shall be used as office by the Lessee, and Lessee shall not
change its use, nor misrepresent it in such a way as to violate the
use of said property according to the regime of condominium to
which it is subject.
D)
UTILITIES:
The Lessee shall be the sole responsible for the utilities
purchased for its use in the management of the leased property and
shall hold the Lessee harmless of any claim or action that may
arise in connection with the collection thereof.
E)
CONDITION OF THE
PROPERTY:
The property is delivered to the Lessee in good
working conditions according to its use. The Lessee shall return
such property to the Lessor in the same conditions, including
inventory of furniture and equipment which is already known by the
parties.
F)
PROHIBITIONS:
The Lessee shall not, besides from changing the use of the
premises, as established above, maintain in the leased premises any
prohibited, explosive, corrosive or salty materials, or any other
that may cause damage to the premises; and, generally, violate the
rules of coexistence applicable to such premises under the
condominium regime.
G.
REPAIRS, CHANGES OR
IMPROVEMENTS
: The Lessee shall bear the cost of repairs to
real property arising from deterioration not caused by wear and
tear, provided that such deterioration is produced under its
responsibility, which shall be verified.
H.
ENTRY TO THE
PROPERTY BY THE LESSOR
: It is agreed that the Lessee shall
allow the entry to the leased premises to the Lessor, when
necessary, only if justified.
I.
GUARANTOR
:
Mr.
Matías Rodrigo DE TEZANOS
POSSE
hereby becomes guarantor of the Lessee for each and
every one of the obligations included herein, and those established
under the law, jointly and severally, during the term of this lease
and its renewals, until the actual return of the
property.
J.
AUTHORIZATION TO
SUB-LEASE AND ASSIGN
: The Parties agree that the Lessee is
expressly authorized to sub-lease partially or totally the leased
premises, as well as to assign in any way the rights derived
herefrom, provided that the intention of such acts is informed to
the Lessor, and Lessor, except legitimate objection for clearly
justified reasons, must give its consent and appear stating its
approval in any public instruments that are necessary to execute
the sublease or assignment of rights and its registration in the
Real Estate Record Office, Central Zone.
FOUR.
The Lessee has paid Lessor
ELEVEN THOUSAND SIX HUNDRED AND
FORTY-ONE US DOLLARS (US$ 11,641.00)
as security deposit, to
be used to pay any outstanding sums for repair of any damage caused
to the leased premises, wear and tear excluded. If this amount is
not enough to pay the repairs established herein, the balance shall
be paid by the Lessee. On the other hand, if there were no
outstanding expenses and no damage has been caused, the Lessor will
return this amount to the Lessee. The settlement of this security
deposit and repayment of the amount shall be made no later than
thirty days after the property has been vacated and delivered to
the Lessor.
FIVE.
DEFAULT
:
Failure to pay one or more rents as well as breach of the
obligations agreed upon and derived from this lease shall entitle
the Lessor to terminate this lease and request the immediate
vacancy of the real property.
SIX.
The Parties hereto declare that
they waive their jurisdiction and submit to the courts of competent
jurisdiction of the State of Guatemala, and give the following
address for services of notices:
I)
For Lessee and
Guarantor:
The
address of the leased premises
16
calle 9-23 zona 14
Guatemala City,
Guatemala
And any
communication, subpoena or summons served at such addresses shall
be regarded as correct, unless they give written notice to the
Lessor of any change.
SEVEN.
EXPRESS CONCLUSIVE
DECISIONS:
Lessor shall terminate this lease and require its
immediate vacancy upon the breach of any of the obligations by the
Lessee, particularly the non-payment of a single rent, as
agreed.
EIGHT.
DOCUMENT ON WHICH
DIRECT ENFORCEMENT CAN BE OBTAINED:
The Parties agree that
all outstanding debts that are not paid out of court shall be
charged by summary proceedings for collection, accepting as good
and accurate any accounts submitted, and the respective obligations
as due and payable.
NINE.
In the above terms, the parties
hereto accept the content hereof. I, a Notary, do hereby
CERTIFY:
a) All the above;
b) having seen the personal ID's of the parties hereto; c) that I
have seen
the appointments
exercised by the agents of the parties hereto, which are adequate
under the law and in my opinion for the execution hereof; d) that I
have seen the instrument establishing the ownership of the leased
real property, consisting of a certified copy of public instrument
number 81, authorized at the City of Guatemala, the 30
th
day of October 2015
by Franz CASTELLANOS VÁSQUEZ, Notary; e) I have forewarned the
parties hereto of the object, validity and legal effects of this
lease agreement; and, f) by appointment and after due reading of
the whole to the parties hereto, and duly informed of its content,
object, validity and other legal effects and obligation of
registration, have hereunto accepted, ratified and set their
hands.
By:
/s/Alejandro Coronado
Castro
Alejandro Coronado
Castro
By:
/s/Julio Domingo Gonzalez
Arrivillaga
Julio
Domingo Gonzalez Arrivillaga
By:
/s/Matías Rodrigo de Tezanos
Posse
Matías Rodrigo
de Tezanos Posse
(NOTARY
SEAL)
By:
/s/Manuel Humberto Juarez
Oliva
Manuel
Humberto Juarez Oliva
Attorney at Law and
Notary
THIS IS A CERTIFIED COPY
of public
instrument number
EIGHT (8)
,
authorized at the City of Guatemala by the undersigned Notary on
June 1, 2016, which is five pages long of a photocopy paper, which
are a true copy of the original, which I do hereby certify as were
developed today before me; and this last page to which
one-Q.0.50-quetzal revenue stamp has been affixed, bearing number
1264739. This document is not subject to any other tax, as the
Value-Added Tax shall be paid by monthly invoices of the lease
agreement, which to be delivered to
AW GUA, LIMITADA,
I have hereunto
numbered, issued, and set my hand and seal at the City of
Guatemala, this 10
th
day of June 2016.
WITNESS MY HAND.
(NOTARY
SEAL)
By:
/s/Manuel Humberto Juarez
Oliva
Manuel
Humberto
Juarez
Oliva
Attorney at Law and
Notary
REAL
ESTATE RECORD OFFICE
Guatemala,
Central America
EXPLANATION
Verifying
Code: 6F22B54952A19851
The
registrations made, word by word, read as follows:
Registration number 16S100316415
Real
rights. Ownership. Registration number 5. Property 6873, folio 373,
and volume 174E of Horizontal Property Guatemala. Mertech, Sociedad
Anónima leases this property and those indicated at the end of
the copy to AW GUA, LIMITADA, for 3 years, 9 months and 30 days for
both parties, from 1 June 2016. The rent was negotiated at US $
4,960.69 per month, value-added tax not included. During the first
twelve months, the rent will be in the amount already established.
As of February 2017, the rent will be increased by 5% annually, and
thereafter every year. The term will expire on March 31, 2020.
Indenture number 8, authorized on June 1, 2016 by Manuel Humberto
JUÁREZ OLIVA, Notary.
Document filed June
22, 2016 at 14:13:08 hours, entered this and its electronic copy
with number: 16R108142391. Guatemala, June 24, 2016
Fees
Q.2,812.00 – Clerk I03 Carlos PÉREZ.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant Inspector
- Real Estate Record Office
Registration number 16S100316419
Real
rights. Ownership. Registration number 5. Property 6033, folio 33,
and volume 173E of Horizontal Property Guatemala. Mertech, Sociedad
Anónima leases to AW GUA LIMITADA this property and those
indicated at the end of the copy, for 3 years, 9 months and 30 days
for both parties, from 1 June 2016. The rent was negotiated at US $
4,960.69 per month, value-added tax not included. During the first
twelve months, the payment of the rent will be in the amount
already established. As of February 2017, the rent will be
increased by 5% annually, and thereafter every year. The term will
expire on March 31, 2020. Indenture number 8, authorized on June 1,
2016 by Manuel Humberto JUÁREZ OLIVA, Notary.
Document filed June
22, 2016 at 14:13:08 hours, entered this and its electronic copy
with number: 16R108142391. Guatemala, June 24, 2016
Fees
Q.50.00 – Clerk I03 Carlos PÉREZ.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant Inspector
- Real Estate Record Office
Registration number 16S100316421
Real
rights. Ownership. Registration number 5. Property 6034, folio 34,
and volume 173E of Horizontal Property Guatemala. Mertech, Sociedad
Anónima leases to AW GUA LIMITADA this property and those
indicated at the end of the copy, for 3 years, 9 months and 30 days
for both parties, from 1 June 2016. The rent was negotiated at US $
4,960.69 per month, value-added tax not included. During the first
twelve months, the payment of the rent will be in the amount
already established. As of February 2017, the rent will be
increased by 5% annually, and thereafter every year. The term will
expire on March 31, 2020. Indenture number 8, authorized on June 1,
2016 by Manuel Humberto JUÁREZ OLIVA, Notary.
Document filed June
22, 2016 at 14:13:08 hours, entered this and its electronic copy
with number: 16R108142391. Guatemala, June 24, 2016
Fees
Q.50.00 – Clerk I03 Carlos PÉREZ.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant Inspector
- Real Estate Record Office
Registration number 16S100316423
Real
rights. Ownership. Registration number 5. Property 6035, folio 35,
and volume 173E of Horizontal Property Guatemala. Mertech, Sociedad
Anónima leases to AW GUA LIMITADA this property and those
indicated at the end of the copy, for 3 years, 9 months and 30 days
for both parties, from 1 June 2016. The rent was negotiated at US $
4,960.69 per month, value-added tax not included. During the first
twelve months, the payment of the rent will be in the amount
already established. As of February 2017, the rent will be
increased by 5% annually, and thereafter every year. The term will
expire on March 31, 2020. Indenture number 8, authorized on June 1,
2016 by Manuel Humberto JUÁREZ OLIVA, Notary.
Document filed June
22, 2016 at 14:13:08 hours, entered this and its electronic copy
with number: 16R108142391. Guatemala, June 24, 2016
Fees
Q.50.00 – Clerk I03 Carlos PÉREZ.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant Inspector
- Real Estate Record Office
Registration number 16S100316425
Real
rights. Ownership. Registration number 5. Property 6037, folio 37,
and volume 173E of Horizontal Property Guatemala. Mertech, Sociedad
Anónima leases to AW GUA LIMITADA this property and those
indicated at the end of the copy, for 3 years, 9 months and 30 days
for both parties, from 1 June 2016. The rent was negotiated at US $
4,960.69 per month, value-added tax not included. During the first
twelve months, the payment of the rent will be in the amount
already established. As of February 2017, the rent will be
increased by 5% annually, and thereafter every year. The term will
expire on March 31, 2020. Indenture number 8, authorized on June 1,
2016 by Manuel Humberto JUÁREZ OLIVA, Notary.
Document filed June
22, 2016 at 14:13:08 hours, entered this and its electronic copy
with number: 16R108142391. Guatemala, June 24, 2016
Fees
Q.50.00 – Clerk I03 Carlos PÉREZ.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant Inspector
- Real Estate Record Office
Registration number 16S100316426
Real
rights. Ownership. Registration number 5. Property 6038, folio 38,
and volume 173E of Horizontal Property Guatemala. Mertech, Sociedad
Anónima leases to AW GUA LIMITADA this property and those
indicated at the end of the copy, for 3 years, 9 months and 30 days
for both parties, from 1 June 2016. The rent was negotiated at US $
4,960.69 per month, value-added tax not included. During the first
twelve months, the payment of the rent will be in the amount
already established. As of February 2017, the rent will be
increased by 5% annually, and thereafter every year. The term will
expire on March 31, 2020. Indenture number 8, authorized on June 1,
2016 by Manuel Humberto JUÁREZ OLIVA, Notary.
Document filed June
22, 2016 at 14:13:08 hours, entered this and its electronic copy
with number: 16R108142391. Guatemala, June 24, 2016
Fees
Q.50.00 – Clerk I03 Carlos PÉREZ.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant Inspector
- Real Estate Record Office
Registration number 16S100316429
Real
rights. Ownership. Registration number 5. Property 6039, folio 39,
and volume 173E of Horizontal Property Guatemala. Mertech, Sociedad
Anónima leases to AW GUA LIMITADA this property and those
indicated at the end of the copy, for 3 years, 9 months and 30 days
for both parties, from 1 June 2016. The rent was negotiated at US $
4,960.69 per month, value-added tax not included. During the first
twelve months, the payment of the rent will be in the amount
already established. As of February 2017, the rent will be
increased by 5% annually, and thereafter every year. The term will
expire on March 31, 2020. Indenture number 8, authorized on June 1,
2016 by Manuel Humberto JUÁREZ OLIVA, Notary.
Document filed June
22, 2016 at 14:13:08 hours, entered this and its electronic copy
with number: 16R108142391. Guatemala, June 24, 2016
Fees
Q.50.00 – Clerk I03 Carlos PÉREZ.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant Inspector
- Real Estate Record Office
Registration number 16S100316432
Real
rights. Ownership. Registration number 5. Property 6040, folio 40,
and volume 173E of Horizontal Property Guatemala. Mertech, Sociedad
Anónima leases to AW GUA LIMITADA this property and those
indicated at the end of the copy, for 3 years, 9 months and 30 days
for both parties, from 1 June 2016. The rent was negotiated at US $
4,960.69 per month, value-added tax not included. During the first
twelve months, the payment of the rent will be in the amount
already established. As of February 2017, the rent will be
increased by 5% annually, and thereafter every year. The term will
expire on March 31, 2020. Indenture number 8, authorized on June 1,
2016 by Manuel Humberto JUÁREZ OLIVA, Notary.
Document filed June
22, 2016 at 14:13:08 hours, entered this and its electronic copy
with number: 16R108142391. Guatemala, June 24, 2016
Fees
Q.50.00 – Clerk I03 Carlos PÉREZ.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant Inspector
- Real Estate Record Office
Registration number 16S100316433
Real
rights. Ownership. Registration number 5. Property 6041, folio 41,
and volume 173E of Horizontal Property Guatemala. Mertech, Sociedad
Anónima leases to AW GUA LIMITADA this property and those
indicated at the end of the copy, for 3 years, 9 months and 30 days
for both parties, from 1 June 2016. The rent was negotiated at US $
4,960.69 per month, value-added tax not included. During the first
twelve months, the payment of the rent will be in the amount
already established. As of February 2017, the rent will be
increased by 5% annually, and thereafter every year. The term will
expire on March 31, 2020. Indenture number 8, authorized on June 1,
2016 by Manuel Humberto JUÁREZ OLIVA, Notary.
Document filed June
22, 2016 at 14:13:08 hours, entered this and its electronic copy
with number: 16R108142391. Guatemala, June 24, 2016
Fees
Q.50.00 – Clerk I03 Carlos PÉREZ.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant Inspector
- Real Estate Record Office
Registration number 16S100316437
Real
rights. Ownership. Registration number 5. Property 6042 folio 42,
and volume 173E of Horizontal Property Guatemala. Mertech, Sociedad
Anónima leases to AW GUA LIMITADA this property and those
indicated at the end of the copy, for 3 years, 9 months and 30 days
for both parties, from 1 June 2016. The rent was negotiated at US $
4,960.69 per month, value-added tax not included. During the first
twelve months, the payment of the rent will be in the amount
already established. As of February 2017, the rent will be
increased by 5% annually, and thereafter every year. The term will
expire on March 31, 2020. Indenture number 8, authorized on June 1,
2016 by Manuel Humberto JUÁREZ OLIVA, Notary.
Document filed June
22, 2016 at 14:13:08 hours, entered this and its electronic copy
with number: 16R108142391. Guatemala, June 24, 2016
Fees
Q.50.00 – Clerk I03 Carlos PÉREZ.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant Inspector
- Real Estate Record Office
Registration number 16S100316438
Real
rights. Ownership. Registration number 5. Property 6043, folio 43,
and volume 173E of Horizontal Property Guatemala. Mertech, Sociedad
Anónima leases to AW GUA LIMITADA this property and those
indicated at the end of the copy, for 3 years, 9 months and 30 days
for both parties, from 1 June 2016. The rent was negotiated at US $
4,960.69 per month, value-added tax not included. During the first
twelve months, the payment of the rent will be in the amount
already established. As of February 2017, the rent will be
increased by 5% annually, and thereafter every year. The term will
expire on March 31, 2020. Indenture number 8, authorized on June 1,
2016 by Manuel Humberto JUÁREZ OLIVA, Notary.
Document filed June
22, 2016 at 14:13:08 hours, entered this and its electronic copy
with number: 16R108142391. Guatemala, June 24, 2016
Fees
Q.50.00 – Clerk I03 Carlos PÉREZ.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant Inspector
- Real Estate Record Office
Registration number 16S100316440
Real
rights. Ownership. Registration number 5. Property 6044, folio 44,
and volume 173E of Horizontal Property Guatemala. Mertech, Sociedad
Anónima leases to AW GUA LIMITADA this property and those
indicated at the end of the copy, for 3 years, 9 months and 30 days
for both parties, from 1 June 2016. The rent was negotiated at US $
4,960.69 per month, value-added tax not included. During the first
twelve months, the payment of the rent will be in the amount
already established. As of February 2017, the rent will be
increased by 5% annually, and thereafter every year. The term will
expire on March 31, 2020. Indenture number 8, authorized on June 1,
2016 by Manuel Humberto JUÁREZ OLIVA, Notary.
Document filed June
22, 2016 at 14:13:08 hours, entered this and its electronic copy
with number: 16R108142391. Guatemala, June 24, 2016
Fees
Q.50.00 – Clerk I03 Carlos PÉREZ.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant Inspector
- Real Estate Record Office
End of
registry entries
Total
fees: Q.3,412.00. Explanation recorded in seven (7) pages.
Guatemala City, June 27, 2016.
This
registration does not validate any void acts or agreements
according to the laws. Article 1146, decree law 106 Civil
Code.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant Inspector
- Real Estate Record Office
Exhibit 10.34
NUMBER TEN (10).
LEASE AGREEMENT AND
BOND
. At the City of Guatemala, this first day of June 2016,
before me,
Manuel Humberto
JUÁREZ OLIVA,
notary, personally appeared:
of the
first part,
MERTECH, SOCIEDAD
ANÓNIMA
, represented herein by Mr.
Alejandro CORONADO CASTRO,
[Personal
Information Redacted]. Mr. CACERES LÓPEZ acts as CEO and legal
representative of the Company, as shown with the notarized
certificate authorized herein on October 4, 2011 by Juan Carlos
PARADA GARCÍA, Notary. Such appointment is duly registered in
the General Corporate Business Register of Guatemala under number
364417, folio 772, volume 291 of Business Assistants; hereinafter
referred to as "the Lessor";
and of
the second part,
AW GUA,
LIMITADA
, represented herein by its legal representative,
Mr.
Julio Domingo GONZÁLEZ
ARRIVILLAGA,
[Personal
Information Redacted]
. He acts as
CEO AND LEGAL REPRESENTATIVE
of such
entity, as shown with the notarial certificate of his appointment,
authorized herein March 28, 2016 by Andres Diego Gabriel Pokus
Alvarez, Notary, registered in the General Corporate Business
Register of Guatemala under number 474246, folio 720, and volume
401 of Business Assistants; hereinafter simply referred to as "the
Lessee";
and of
the third party, Mr.
Matías
Rodrigo DE TEZANOS POSSE,
[Personal
Information Redacted]
, hereinafter referred to as "the Guarantor". All
parties hereto as a whole may be hereinafter referred to as "the
Parties".
I do
hereby
CERTIFY:
A) The
representation exercised hereunder is adequate in my opinion and
under the law for the execution of this lease; and,
B) The
parties hereto declare to be of the personal identity data
established in the premises, that this is their free act and deed,
and hereby enter into the following
LEASE AGREEMENT AND BOND
:
ONE.
Mr.
Alejandro CORONADO CASTRO,
as CEO and
legal representative of
MERTECH,
SOCIEDAD ANÓNIMA,
declares that the Company he
represents, is the owner of unit number 1101-T2, 11
th
floor, Tower 2,
Design Center Building, Diagonal 6, 12-42 zona 10, Guatemala City.
Moreover, Mr.
Alejandro CORONADO
CASTRO
hereby declares that the company he represents is
also owner of the following parking spaces: Parking space S2-137;
parking space S2-138; parking space S2-139; parking space S2-140;
parking space S2-141; all located in the second structural floor,
or basement S2 of such Building. These properties are subject to
the Horizontal Property Regime of the Building, which AW GUATEMALA,
LIMITADA, through its legal representative, claims to
know.
TWO.
Mr.
Alejandro CORONADO CASTRO
states that
the company he represents,
MERTECH,
SOCIEDAD ANÓNIMA
hereby leases to
AW GUA, LIMITADA
, all real property
identified in Section 1 above. The lease includes everything that
by issue of fact and law is applicable to the real property hereto.
These properties are registered in the Real Estate Record Office,
Central Zone, under the following numbers:
a)
Property 6874, folio 374, and volume 174E of Horizontal Property of
Guatemala;
b)
Property 6052, folio 52, and volume 173E of Horizontal Property of
Guatemala;
c)
Property 6053, folio 53, and volume 173E of Horizontal Property of
Guatemala;
d)
Property 6054, folio 54, and volume 173E of Horizontal Property of
Guatemala;
e)
Property 6055, folio 55, and volume 173E of Horizontal Property of
Guatemala;
f)
Property 6056, folio 56, and volume 173E of Horizontal Property of
Guatemala.
After
being forewarned by the undersigned notary, Mr.
Alejandro CORONADO CASTRO
hereby
expressly declares that the premises leased hereunder are free and
clear of any liens or limitations that may affect the rights of the
Lessee, beyond the condominium regime such properties are subject
to, and which the Lessee has previously known.
THREE.
The lease is subject by the will
of the parties, to the provisions provided for in Section 1 hereof,
and the following:
A)
TERM:
The
term of the lease shall be three years, nine months, and thirty
days, compulsory for both parties, and shall commence June 1, 2016,
and shall expire March 31, 2020. Such term may be renewed,
provided, however, the parties may decide to renew it ninety days
prior to the expiration date, which shall be confirmed by an
exchange of letters. If the exchange of letters does not occur, it
shall be understood that the term has expired, and no act of the
Lessor or the Lessee shall be regarded as a manifestation of the
willingness to renew the lease. If the Lessee wishes to accelerate
the original term or its renewals, it must give notice to the
Lessor at least ninety days in advance. If the notice is not given,
the Lessee must pay the equivalent of one month's rent, as damages.
At the end of the term and its renewals, the Lessee must return the
property to the Lessor in the same conditions as received, and
clean. The parties hereto mutually agree that the Lessor shall be
granted the power to dispose of the real property referred to
above, and, therefore, may partially or totally assign the rights
arising from this lease, without prior approval by the Lessee, and
shall inform the new assignee or buyer, the conditions and scope of
this lease, to fully comply with the same.
B.
RENT
:
The monthly rent agreed shall be
ONE THOUSAND NINE HUNDRED EIGHTY-ONE US DOLLARS
AND FIFTY-EIGHT CENTS (US$ 1,981.58)
, Value Added Tax (VAT)
included. Maintenance fee is not included therein, and shall be
paid by the Lessee to the Design Center Building Administration,
which as of this date is THREE HUNDRED AND EIGHTY US DOLLARS AND
EIGHTY-TWO CENTS (US$ 380.82). The parties further agree that
payment of rent shall be as follows:
I)
During the first
twelve months, payment of rent shall be the amount already
established, payable in US Dollars.
II)
Effective February
2, 2017, the rent shall be increased five percent (5%) annually,
and thereafter, every year.
III)
The amount
established as rent is exclusively for this concept, and,
therefore, the Lessee shall not make any discount to such amount,
not to have paid any other expenses. The Lessee shall pay all
utilities purchased for use in the leased premises; therefore, the
Lessor shall not in any way be held responsible for such payments.
On the other hand, the Lessor shall be fully responsible for the
payment of any extraordinary fees that may be charged by the
Administration of the Design Center Building, so that at no time
can the full use of the leased property by the Lessee be at
risk.
IV)
The rent must be
paid promptly within the first five (5) days of each calendar
month, or next business day, without collection or request, at the
place indicated by the Lessor, unless a different payment procedure
is mutually agreed, such as a deposit made to the bank account the
Lessor.
V)
The delay in the
payment of the rent will generate the payment of interest arrears
of two percent per month on the amount owed, which must be made
together with the payment of the outstanding rent.
C)
USE:
The
unit shall be used as office by the Lessee, and Lessee shall not
change its use, nor misrepresent it in such a way as to violate the
use of said property according to the regime of condominium to
which it is subject.
D)
UTILITIES:
The Lessee shall be the sole responsible for the utilities
purchased for its use in the management of the leased property and
shall hold the Lessee harmless of any claim or action that may
arise in connection with the collection thereof.
E)
CONDITION OF THE
PROPERTY:
The property is delivered to the Lessee in good
working conditions according to its use. The Lessee shall return
such property to the Lessor in the same conditions, including
inventory of furniture and equipment which is already known by the
parties.
F)
PROHIBITIONS:
The Lessee shall not, besides from changing the use of the
premises, as established above, maintain in the leased premises any
prohibited, explosive, corrosive or salty materials, or any other
that may cause damage to the premises; and, generally, violate the
rules of coexistence applicable to such premises under the
condominium regime.
G.
REPAIRS, CHANGES OR
IMPROVEMENTS
: The Lessee shall bear the cost of repairs to
real property arising from deterioration not caused by wear and
tear, provided that such deterioration is produced under its
responsibility, which shall be verified.
H.
ENTRY TO THE
PROPERTY BY THE LESSOR
: It is agreed that the Lessee shall
allow the entry to the leased premises to the Lessor, when
necessary, only if justified.
I.
GUARANTOR
:
Mr.
Matías Rodrigo DE TEZANOS
POSSE
hereby becomes guarantor of the Lessee for each and
every one of the obligations included herein, and those established
under the law, jointly and severally, during the term of this lease
and its renewals, until the actual return of the
property.
J.
AUTHORIZATION TO
SUB-LEASE AND ASSIGN:
The Parties agree that the Lessee is
expressly authorized to sub-lease partially or totally the leased
premises, as well as to assign in any way the rights derived
herefrom, provided that the intention of such acts is informed to
the Lessor, and Lessor, except legitimate objection for clearly
justified reasons, must give its consent and appear stating its
approval in any public instruments that are necessary to execute
the sublease or assignment of rights and its registration in the
Real Estate Record Office, Central Zone.
FOUR.
The Lessee has paid Lessor
FOUR THOUSAND FIVE HUNDRED US
DOLLARS (US$ 4,500.00)
as security deposit, to be used to
pay any outstanding sums for repair of any damage caused to the
leased premises, wear and tear excluded. If this amount is not
enough to pay the repairs established herein, the balance shall be
paid by the Lessee. On the other hand, if there were no outstanding
expenses and no damage has been caused, the Lessor will return this
amount to the Lessee. The settlement of this security deposit and
repayment of the amount shall be made no later than thirty days
after the property has been vacated and delivered to the
Lessor.
FIVE.
DEFAULT
:
Failure to pay one or more rents as well as breach of the
obligations agreed upon and derived from this lease shall entitle
the Lessor to terminate this lease and request the immediate
vacancy of the real property.
SIX.
The Parties hereto declare that
they waive their jurisdiction and submit to the courts of competent
jurisdiction of the State of Guatemala, and give the following
address for services of notices:
I)
For Lessee and
Guarantor:
The
address of the leased premises
16
calle 9-23 zona 14
Guatemala City,
Guatemala
And any
communication, subpoena or summons served at such addresses shall
be regarded as correct, unless they give written notice to the
Lessor of any change.
SEVEN.
EXPRESS CONCLUSIVE
DECISIONS:
Lessor shall terminate this lease and require its
immediate vacancy upon the breach of any of the obligations by the
Lessee, particularly the non-payment of a single rent, as
agreed.
EIGHT.
DOCUMENT ON WHICH
DIRECT ENFORCEMENT CAN BE OBTAINED:
The Parties agree that
all outstanding debts that are not paid out of court shall be
charged by summary proceedings for collection, accepting as good
and accurate any accounts submitted, and the respective obligations
as due and payable.
NINE.
In the above terms, the parties
hereto accept the content hereof. I, a Notary, do hereby
CERTIFY:
a) All the above;
b) having seen the personal ID's of the parties hereto; c) that I
have seen
the appointments
exercised by the agents of the parties hereto, which are adequate
under the law and in my opinion for the execution hereof; d) that I
have seen the instrument establishing the ownership of the leased
real property, consisting of a certified copy of public instrument
number 81, authorized at the City of Guatemala, the 30
th
day of October 2015
by Franz CASTELLANOS VÁSQUEZ, Notary; e) I have forewarned the
parties hereto of the object, validity and legal effects of this
lease agreement; and, f) by appointment and after due reading of
the whole to the parties hereto, and duly informed of its content,
object, validity and other legal effects and obligation of
registration, have hereunto accepted, ratified and set their
hands.
By:
/s/Alejandro Coronado
Castro
Alejandro Coronado
Castro
By:
/s/Julio Domingo Gonzalez
Arrivillaga
Julio
Domingo Gonzalez Arrivillaga
By:
/s/Matías Rodrigo de Tezanos
Posse
Matías Rodrigo
de Tezanos Posse
(NOTARY
SEAL)
By:
/s/Manuel Humberto Juarez
Oliva
Manuel
Humberto
Juarez
Oliva
Attorney at Law and
Notary
THIS IS A CERTIFIED COPY
of public instrument number
TEN (10)
, authorized at the
City of Guatemala by the undersigned Notary on June 1, 2016, which
is four pages long of a photocopy paper, which are a true copy of
the original, which I do hereby certify as were developed today
before me; and this last page to which one-Q.0.50-quetzal revenue
stamp has been affixed, bearing number 1264739. This document is
not subject to any other tax, as the Value-Added Tax shall be paid
by monthly invoices of the lease agreement, which to be delivered
to
AW GUA, LIMITADA,
I have
hereunto numbered, issued, and set my hand and seal at the City of
Guatemala, this 10
th
day of June 2016.
WITNESS MY HAND.
(NOTARY
SEAL)
By:
/s/Manuel Humberto Juarez
Oliva
Manuel
Humberto
Juarez
Oliva
Attorney
at Law and Notary
REAL ESTATE RECORD OFFICE
Guatemala, Central America
EXPLANATION
Verifying Code: 6F22B54822J22860
The registrations made, word by word, read as follows:
Registration number 16S100315674
Filed
June 22, 2016 at 14:08:32 hours. Document number and electronic
copy: 16R108142377. The registration of the properties intended to
be leased is hereby suspended, as currently they have a mortgage
with a bank; for this reason, the consent of such bank is necessary
to register this lease. Article 1128 and 836 of the Civil Code.
Fees Q25.00. Done in Guatemala, June 24, 2016.
Clerk
I03 Carlos PÉREZ.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant
Inspector - Real Estate Record Office
End of
registry entries
Total
fees: Q.25.00. Explanation recorded in one (1) page. Guatemala
City, June 27, 2016.
This
registration does not validate any void acts or agreements
according to the laws. Article 1146, decree law 106 Civil
Code.
(REAL
ESTATE RECORD OFFICE SEAL)
By:
/s/Orlando
Alya
Assistant
Inspector - Real Estate Record Office
Exhibit 10.35
State of Florida:
County of Hillsborough:
OFFICE LEASE
THIS LEASE
(this "Lease"), made this
9
day of December,
2015, by and between
Rivergate
Tower Owner, LLC
, a Delaware limited liability company
("Landlord"), and
Autobytel
Inc.
, a Delaware corporation ("Tenant"), provides as
follows:
1.
BASIC DEFINITIONS AND PROVISIONS.
The
following basic definitions and provisions apply to this
Lease:
a.
Premises
.
|
Rentable
Square Feet:
|
8,724
|
|
Suite:
|
C400
and C500
|
|
Building:
|
Rivergate
Tower
|
|
Street
Address:
|
400
North Ashley Drive
|
|
City/County:
|
Tampa,
Hillsborough
|
|
State/Zip
Code:
|
Florida
33602
|
b.
Term.
|
Number
of Months:
|
Eighty-four
(84) months
|
|
Commencement
Date:
|
The
earlier of (i) the date Tenant commences business operations in the
Premises, or (ii) the date the Tenant Improvements (as defined in
the Work Letter) are substantially complete, which Commencement
Date is anticipated to be January 1, 2016
|
|
Expiration
Date:
|
The
last day of the eighty-fourth (84
th
) full calendar
month following the Commencement Date
|
c.
Permitted
Use.
|
General
office purposes
|
d.
Occupancy
Limitation.
|
No more
than five (5) persons per one thousand (1,000) rentable
square feet.
|
e.
Base Rent.
The Base Rent for the Term
is payable in monthly installments on the 1
st
day of each month
in accordance with the following Base Rent Schedule:
FROM MONTH
|
THROUGH MONTH
|
RENTABLE SQUARE FEET
|
ANNUAL BASE RENT PER RENTABLE SQUARE FOOT*
|
ANNUAL BASE RENT*
|
MONTHLY BASE RENT*
|
Commencement
Date
|
12
|
8,724
|
$28.25
|
$246,453.00
|
$20,537.75
|
13
|
24
|
8,724
|
$29.17
|
$254,479.08
|
$21,206.59
|
25
|
36
|
8,724
|
$30.12
|
$262,766.88
|
$21,897.24
|
37
|
48
|
8,724
|
$31.09
|
$271,229.16
|
$22,602.43
|
49
|
60
|
8,724
|
$32.11
|
$280,127.64
|
$23,343.97
|
61
|
72
|
8,724
|
$33.15
|
$289,200.60
|
$24,100.05
|
73
|
84
|
8,724
|
$34.23
|
$298,622.52
|
$24,885.21
|
*
Plus applicable State of Florida Sales Tax
The
above Base Rent schedule does not include operating expense pass
through adjustments to be computed annually in accordance with
Lease Addendum Number Two attached hereto.
f.
Rent
Payment Address.
|
Rivergate
Tower Owner LLC
℅
Banyan Street Capital
One
Independent Drive, Suite 1850
Jacksonville,
Florida 32202
|
|
Tax
ID#: 47-4419479
|
g.
Security
Deposit.
|
$53,254.35
|
h.
Business
Hours.
|
8:00
A.M. to 6:00 P.M. Monday through Friday (excluding National and
State Holidays).
|
i.
Electrical
Service.
|
No more
than three (3) watts for convenience outlets per each rentable
square foot contained in the Premises.
|
j.
After
Hours HVAC Rate.
|
Current
charge of $45.00 per hour, per zone, with a minimum of two
(2) hours per occurrence.
|
k.
Parking.
|
Unreserved;
not to exceed 1.5 spaces per each 1,000 rentable square feet
contained in the Premises.
|
l.
Construction
SupervisionFee.
|
The
Construction Supervision Fee for alterations made subsequent to the
Commencement Date shall be four percent (4%) of the cost of the
work to be performed. The Construction Supervision Fee for Tenant
Improvements is set forth in the Work Letter attached hereto as
Lease Addendum Number One.
|
m.
Notice
Addresses.
|
|
LANDLORD:
|
Rivergate
Tower Owner, LLC
c/o
Banyan
Street Capital
80 SW
8
th
Street, Suite 2200
Miami,
Florida 33130
Attn:
Managing Director
|
with a
copy to:
|
Rivergate
Tower Owner, LLC
|
|
c/o
Banyan Street Capital
|
|
80 SW
8
th
Street, Suite 2200
|
|
Miami,
Florida 33130
|
|
Attn:
Notice Department
|
TENANT:
|
Autobytel
Inc.
400
North Ashley Drive, Suite C400
Tampa,
Florida 33602
|
with a
copy to:
|
Autobytel
Inc.
|
|
18872
MacArthur Blvd., Suite 200
|
|
Irvine,
California 92612
|
|
Attn:
Chief Legal Officer
Email:
glennf@autobytel.com
|
n.
Broker(s).
|
|
(Tenant)
|
Coolidge
Commercial and Residential Real Estate
|
|
1765
West Fletcher Avenue
Tampa,
Florida 33612
|
(Landlord)
|
Cushman
& Wakefield
4301
Anchor Plaza Parkway, Suite 400
|
|
Tampa,
Florida 33634
|
|
|
2.
LEASED
PREMISES.
a.
Premises.
Landlord leases to Tenant and
Tenant leases from Landlord the Premises identified in
Section 1a and as more particularly shown on
Exhibit A
, attached
hereto.
b.
Rentable Square Foot Determination.
The
parties acknowledge that all square foot measurements are
approximate and agree that the square footage figures in
Section 1a shall be conclusive for all purposes with respect
to this Lease.
c.
Common Areas.
The common areas of the
Building generally include space that is not included in portions
of the Building set aside for leasing to tenants or reserved for
Landlord's exclusive use, including entrances, hallways, lobbies,
elevators, restrooms, parking areas, walkways and plazas (the
"Common Areas"). Tenant shall have non-exclusive access to the
Common Areas. Landlord has the exclusive right to
(i) designate the Common Areas, (ii) change the
designation of any Common Area and otherwise modify the Common
Areas, and (iii) permit special use of the Common Areas,
including temporary exclusive use for special occasions; provided
that in exercising the foregoing rights, Tenant's rights under this
Lease shall not be materially diminished and Tenant's obligations
shall not be materially increased. Tenant shall not interfere with
the rights of others to use the Common Areas. All use of the Common
Areas shall be subject to the reasonable rules and regulations
promulgated by Landlord from time to time.
3.
TERM
.
a.
Commencement and Expiration Dates.
The
Lease Term commences on the Commencement Date and expires on the
Expiration Date, as set forth in Section 1b.
b.
Adjustments to Commencement Date.
The
Commencement Date shall be adjusted as follows:
i.
If Tenant requests
possession of the Premises prior to the Commencement Date, and
Landlord consents, the Commencement Date shall be the date of
delivery of possession. Subject to any express abatement or free
rent periods set forth in this Lease, all rent and other
obligations under this Lease shall begin on the date of delivery of
possession, but the Expiration Date shall remain the
same.
ii.
If Landlord, for
any reason, cannot deliver possession of the Premises to Tenant on
the Commencement Date determined in accordance with
Section 1b, then the Commencement Date, Expiration Date, and
all other dates that may be affected by their change, shall be
revised to conform to the date of Landlord's delivery of possession
of the Premises to Tenant. Any such delay shall not relieve Tenant
of its obligations under this Lease, and neither Landlord nor
Landlord's agents shall be liable to Tenant for any loss or damage
resulting from the delay in delivery of possession; provided,
however, that Tenant shall have no obligation to pay any Rent prior
to the date of Landlord's delivery of possession of the Premises to
Tenant in accordance with the terms of this Lease. Any delays to
the extent resulting from force majeure or caused by Tenant are
hereinafter referred to as "Excused Delays".
c.
Delivery of Possession.
Unless
otherwise specified in the Work Letter, if any, attached as Lease
Addendum Number One, "delivery of possession" of the Premises shall
mean the earlier of: (i) the date Landlord has the Premises
ready for occupancy by Tenant as evidenced by a permanent or
temporary Certificate of Occupancy issued by proper governmental
authority, or (ii) the date Landlord could have had the
Premises ready had there been no Excused Delays attributable to
Tenant.
d.
Adjustment of Expiration Date.
If the
Expiration Date does not occur on the last day of a calendar month,
then Landlord shall extend the Term by the number of days necessary
to cause the Expiration Date to occur on the last day of the last
calendar month of the Term. Tenant shall pay Base Rent and
Additional Rent for such additional days at the same rate payable
for the portion of the last calendar month immediately preceding
such extension.
e.
Right to Occupy.
Tenant shall not
occupy the Premises until Tenant has complied with all of the
following requirements to the extent applicable under the terms of
this Lease: (i) delivery of all certificates of insurance,
(ii) payment of Security Deposit, and (iii) if Tenant is
an entity, receipt of a good standing certificate from the State
where it was organized and a certificate of authority to do
business in the State in which the Premises are located (if
different). Tenant's failure to comply with these (or any other
conditions precedent to occupancy under the terms of this Lease)
shall not delay the Commencement Date.
f.
Commencement Agreement.
The
Commencement Date, Term, and Expiration Date may be set forth in a
Commencement Agreement similar in form to
Exhibit C,
attached hereto, to be
prepared by Landlord and, subject to Tenant’s review and
reasonable approval, executed by the parties.
4.
USE.
a.
Permitted Use.
The Premises may be used
only for general office purposes in connection with Tenant's
Permitted Use as defined in Section 1c and in accordance with
the Occupancy Limitation as set forth in
Section 1d.
b.
Prohibited Uses.
Tenant shall not use
the Premises:
i.
In any manner that
constitutes a nuisance or trespass;
ii.
In any manner which
increases any insurance premiums, or makes such insurance
unavailable to Landlord on the Building; provided that, in the
event of an increase in Landlord's insurance premiums which results
from Tenant's use of the Premises, Landlord may elect to permit the
use and charge Tenant for the increase in premiums, and Tenant's
failure to pay Landlord, within thirty (30) days of demand, the
amount of such increase shall be an event of default;
iii.
In any manner that
creates unusual demands for electricity, heating or air
conditioning; or
iv.
For any purpose
except the Permitted Use, unless consented to by Landlord in
writing.
c.
Prohibited Equipment in Premises.
Tenant shall not install any equipment in the Premises that places
unusual demands on the electrical, heating or air conditioning
systems (collectively, "High Demand Equipment") without Landlord's
prior written consent. No such consent will be given if Landlord
determines, in its opinion, that such equipment may not be safely
used in the Premises or that electrical service is not adequate to
support the equipment. Landlord's consent may be conditioned,
without limitation, upon separate metering of the High Demand
Equipment and Tenant's payment of all engineering, equipment,
installation, maintenance, removal and restoration costs and
utility charges associated with the High Demand Equipment and the
separate meter. If High Demand Equipment used in the Premises by
Tenant affect the temperature otherwise maintained by the heating
and air conditioning system, Landlord shall have the right to
install supplemental air conditioning units in the Premises with
the cost of purchase, engineering, installation, operation and
maintenance of the units to be paid by Tenant. All costs and
expenses relating to High Demand Equipment and Landlord's
administrative costs (such as reading meters and calculating
invoices) shall be Additional Rent, payable by Tenant upon
demand.
5.
RENT.
a.
Payment Obligations.
Tenant shall pay
Base Rent and Additional Rent (collectively, "Rent") on or before
the first day of each calendar month during the Term, as
follows:
i.
Rent payments shall
be sent to the Rent Payment Address set forth in
Section 1f.
ii.
Rent shall be paid
without previous demand or notice and without set off or deduction.
Tenant's obligation to pay Rent under this Lease is completely
separate and independent from any of Landlord's obligations under
this Lease.
iii.
If the Term
commences on a day other than the first day of a calendar month,
then Rent for such month shall be (i) prorated for the period
between the Commencement Date and the last day of the month in
which the Commencement Date falls, and (ii) due and payable on
the Commencement Date.
iv.
Without limiting
the default remedies to which Landlord is entitled as provided
under
the terms of this
Lease, for each Base Rent payment Landlord receives after the fifth
(5th) day of the month and each Additional Rent payment
Landlord receives after its due date, Landlord shall be entitled to
a late charge in the amount of five percent (5%) of such Rent
due.
v.
Without limiting
the default remedies to which Landlord is entitled as provided
under
the terms of this
Lease, if Landlord presents Tenant's check to any bank and Tenant
has insufficient funds to pay for such check, then Landlord shall
be entitled to the maximum lawful bad check fee or five percent
(5%) of the amount of such check, whichever amount is
less.
b.
Base Rent
.
Tenant shall pay Base Rent as set
forth in Section 1e.
c.
Additional Rent
.
In addition to Base Rent, Tenant shall
pay as Rent all sums and charges due and payable by Tenant under
this Lease (collectively "Additional Rent"), including, but not
limited to, the following:
i.
Tenant's
Proportionate Share of the increase in Landlord's Operating
Expenses as set forth in Lease Addendum Number Two;
and
ii.
Any sales or use
tax imposed on rents collected by Landlord or any tax on rents in
lieu of ad valorem taxes on the Building, even though laws imposing
such taxes attempt to require Landlord to pay the same; provided,
however, if any such sales or use tax are imposed on Landlord and
Landlord is prohibited by applicable law from collecting the amount
of such tax from Tenant as Additional Rent, then Landlord, upon
sixty (60) days prior notice to Tenant, may terminate this
Lease; provided further, that Tenant may, within ten (10) days
after receipt of Landlord’s notice of termination, negate
such termination by entering into an amendment to this Lease
increasing the Base Rent by an amount sufficient to offset the
additional tax burden on Landlord such that the net effect of the
amendment is to permit Landlord to receive the same amount of Rent
that Landlord would have received had there been no sales or use
tax imposed on rents collected by Landlord or any tax on rents in
lieu of ad valorem taxes on the Building.
6.
SECURITY DEPOSIT
.
a.
Amount of Deposit.
Tenant shall deposit
with Landlord a Security Deposit within ten (10) days
following the date of this Lease in the amount set forth in
Section 1g, which sum Landlord shall retain as security for
the performance by Tenant of each of its obligations hereunder. The
Security Deposit shall not bear interest.
b.
Application of Deposit.
If Tenant at
any time fails to perform any of its obligations under this Lease,
including its Rent or other payment obligations, its restoration
obligations, or its insurance and indemnity obligations, then
Landlord may, at its option, apply the Security Deposit (or any
portion) to cure Tenant's default or to pay for damages caused by
Tenant's default. If the Lease has been terminated, then Landlord
may apply the Security Deposit (or any portion) against the damages
incurred as a consequence of Tenant's breach. The application of
the Security Deposit shall not limit Landlord's remedies for
default under the terms of this Lease. If Landlord depletes the
Security Deposit, in whole or in part, prior to the Expiration Date
or any termination of this Lease, then Tenant shall restore
immediately the amount so used by Landlord.
c.
Refund of Deposit.
Unless Landlord uses
the Security Deposit to cure a default of Tenant, to pay damages
for Tenant's breach of the Lease, or to restore the Premises to the
condition to which Tenant is required to leave the Premises upon
the expiration or any termination of the Lease, then Landlord
shall, within thirty (30) days after the Expiration Date or
any termination of this Lease, refund to Tenant any funds remaining
in the Security Deposit. Tenant may not credit the Security Deposit
against any month's Rent.
7.
SERVICES BY LANDLORD
.
a.
Base Services.
Landlord shall cause to
be furnished to the Building, or as applicable, the Premises, in
common with other tenants the following services:
i.
Water (if available
from city mains) for drinking, lavatory and toilet
purposes.
ii.
Electricity (if
available from the utility supplier) for the building standard
fluorescent lighting and for the operation of general office
machines, such as electric typewriters, desk top computers,
dictating equipment, adding machines and calculators, and general
service non-production type office copy machines; provided that
Landlord shall have no obligation to provide more than the amount
of power for convenience outlets and the number of electrical
circuits as set forth in Section 1i.
iii.
Building standard
fluorescent lighting composed of 2' x 4' fixtures; Tenant shall
service, replace and maintain at its own expense any incandescent
fixtures, table lamps, or lighting other than the Building standard
fluorescent light, and any dimmers or lighting controls other than
controls for the Building standard fluorescent
lighting.
iv.
Heating and air
conditioning for the reasonably comfortable use and occupancy of
the Premises during Business Hours as set forth in Section 1h,
and at no additional cost to Tenant, from 8:00 A.M. to 1:00 P.M. on
Saturday so long as Landlord receives written request from Tenant
no later than 2:00 P.M. on the immediately prior Friday; provided
that, heating and cooling conforming to any governmental regulation
prescribing limitations thereon shall be deemed to comply with this
service.
v.
Janitorial services
five (5) days a week (excluding National and State holidays)
after Business Hours.
vi.
A reasonable
pro-rata share of the unreserved parking spaces of the Building,
not to exceed the Parking specified in Section 1k, for use by
Tenant's employees and visitors in common with the other tenants
and their employees and visitors.
vii.
After Business
Hours, weekend and holiday heating and air conditioning at the
After Hours HVAC rate set forth in Section 1j, with such
charges subject to commercially reasonable annual increases as
determined by Landlord.
b.
Landlord's Maintenance.
Landlord shall
make all repairs and replacements to the Building (including
Building fixtures and equipment), Common Areas and Building
Standard Improvements in the Premises, except for repairs and
replacements that Tenant must make under Section 8. Landlord's
maintenance shall include the roof, foundation, exterior walls,
interior structural walls, all structural components, and all
Building systems, such as mechanical, electrical, HVAC, and
plumbing. Repairs or replacements shall be made within a reasonable
time (depending on the nature of the repair or replacement needed)
after receiving notice from Tenant or Landlord having actual
knowledge of the need for a repair or replacement.
c.
No Abatement.
Except as expressly set
forth in this Section 7c, there shall be no abatement or reduction
of Rent by reason of any of the foregoing services not being
continuously provided to Tenant. Landlord shall have the right to
shut down the Building systems (including electricity and HVAC
systems) for required maintenance and safety inspections, and in
cases of emergency. Notwithstanding the foregoing sentence, except
in the event of a Casualty as provided for in Section 19 of this
Lease, in the event of an interruption of any service set forth in
Section 7a(i) through 7a(iv) that results directly from the gross
negligence or willful misconduct of Landlord, its employees or
agents, and continues for more than five (5) consecutive business
days after Landlord’s receipt of written notice from Tenant
of such interruption (the “Initial Interruption
Period”), and which results in the Premises, or a portion
thereof, becoming untenantable, Rent shall be abated in an
equitable and just proportion relative to such interruption from
the expiration of the Initial Interruption Period until restoration
of such service.
d.
Tenant's Obligation to Report Defects.
Tenant shall report to Landlord, as soon as reasonably possible
under the circumstances, any defective condition in or about the
Premises actually known to Tenant, and if such defect is not so
reported and such failure to promptly report results in additional
damage to the Premises or the Building that could have been
prevented or mitigated but for Tenant’s failure to notify
Landlord, Tenant shall be liable for the additional amount of
damage to the Premises and/or the Building resulting from
Tenant’s failure or delay in notification. For purposes of
this Section 7d, "actually known to Tenant" shall mean the
actual knowledge, without any duty to inquire or investigate, of
any employees of Tenant at the management level or higher;
provided, however, that nothing herein shall create any personal
liability for any such employees.
e.
Limitation on Landlord's Liability.
Landlord shall not be liable to Tenant for any damage caused to
Tenant and its property due to the Building or any part or
appurtenance thereof being improperly constructed or being or
becoming out of repair, or arising from the leaking of gas, water,
sewer or steam pipes, or from problems with electrical
service.
8.
TENANT'S ACCEPTANCE AND MAINTENANCE OF
PREMISES
.
a.
Acceptance of Premises.
Subject to the
terms of the attached Work Letter, if any, Tenant's occupancy of
the Premises is Tenant's representation to Landlord that
(i) Tenant has examined and inspected the Premises,
(ii) finds the Premises to be as represented by Landlord and
satisfactory for Tenant's intended use, and (iii) constitutes
Tenant's acceptance of the Premises "as is". Landlord makes no
representation or warranty as to the condition of the Premises
except as may be specifically set forth in the Work
Letter.
b.
Move-In Obligations.
Tenant shall
schedule its move-in with the Landlord's Property Manager. Unless
otherwise approved by Landlord's Property Manager, move-in shall
not take place during Business Hours. During Tenant's move-in, a
representative of Tenant must be on-site with Tenant's moving
company to insure proper treatment of the Building and the
Premises. Elevators, entrances, hallways and other Common Areas
must remain in use for the general public during Business Hours.
Any specialized use of elevators or other Common Areas must be
coordinated with Landlord's Property Manager. Tenant must properly
dispose of all packing material and refuse in accordance with the
Rules and Regulations. Any damage or destruction to the Building or
the Premises due to moving will be the sole responsibility of
Tenant.
c.
Tenant's Maintenance.
Tenant shall:
(i) keep the Premises and fixtures in good order;
(ii) make repairs and replacements to the Premises or Building
needed because of Tenant's misuse or negligence; (iii) repair
and replace Non-Standard Improvements, including any special
equipment or decorative treatments, installed by or at Tenant's
request that serve the Premises (unless the Lease is ended because
of casualty loss or condemnation); and (iv) not commit
waste.
d.
Alterations to Premises.
Tenant shall
make no alterations to the Premises without obtaining the prior
written consent of Landlord to such alterations, which consent
shall not be unreasonably withheld or delayed; provided, however,
Landlord may withhold its consent in its sole and absolute
discretion with respect to any alterations which may affect the
structural components of the Building or Building systems or which
can be seen from outside the Premises. If Tenant requests such
alterations, then Tenant shall provide Landlord's Property Manager
with a complete set of construction drawings. Landlord may impose,
as a condition of its consent to all alterations to the Premises,
such requirements as Landlord in its reasonable discretion may deem
desirable, including, but not limited to, the requirement that
Tenant utilize only contractors, materials, mechanics and
materialmen reasonably approved by Landlord; provided, however,
Landlord may impose such requirements as Landlord may determine, in
its sole and absolute discretion, with respect to any work
affecting the structural components of the Building or Building
systems (including designating specific contractors to perform such
work). Tenant shall construct such alterations in conformance with
any and all applicable laws. All work with respect to any
alterations must be done in a good and workmanlike manner and
diligently prosecuted to completion. In performing the work of any
such alterations, Tenant shall have the work performed in such
manner as not to obstruct access to the Building or the Common
Areas for any other tenant of the Building, and as not to obstruct
the business of Landlord or other tenants of the Building. With
respect to all alterations performed after the Commencement Date,
Tenant shall pay a Construction Supervision Fee in the amount set
forth in Section 1l. of this Lease.
e.
Restoration of Premises.
At the
expiration or earlier termination of this Lease, Tenant shall
(i) deliver each and every part of the Premises in as good
repair and condition as existed at the Commencement Date, ordinary
wear and tear, repairs which are expressly made the responsibility
of Landlord hereunder and damage by casualty excepted, and
(ii) restore the Premises at Tenant's sole expense to the same
condition as existed at the Commencement Date and as thereafter
improved by Landlord and/or Tenant, ordinary wear and tear, repairs
which are expressly made the responsibility of Landlord hereunder
and damage by casualty excepted. If Tenant has required or
installed Non-Standard Improvements, so long as Landlord has
notified Tenant in writing that such improvements constitute
Non-Standard Improvements at the time Tenant requests Landlord's
consent to such improvements, such Non-Standard Improvements shall
be removed as part of Tenant's restoration obligation. Tenant shall
repair any damage caused by Tenant’s removal of any
Non-Standard Improvements. The term "Non-Standard Improvements"
means such items as (i) High Demand Equipment and separate
meters, (ii) all wiring and cabling from the point of origin
to the termination point, (iii) raised floors for computer or
communications systems, (iv) telephone equipment, security
systems, and UPS systems, (iv) equipment racks,
(v) alterations installed by or at the request of Tenant after
the Commencement Date, and (vi) any other improvements that
are not part of the Building Standard Improvements.
f.
Landlord's Performance of Tenant's
Obligations.
If Tenant does not perform its maintenance or
restoration obligations in a timely manner, commencing the same
within five (5) days after receipt of notice from Landlord
specifying the work needed, and thereafter diligently and
continuously pursuing the work until completion, then Landlord
shall have the right, but not the obligation, to perform such work.
Any amounts expended by Landlord on such maintenance or restoration
shall be Additional Rent to be paid by Tenant to Landlord within
thirty (30) days after demand. Notwithstanding the foregoing,
Tenant's maintenance and restoration obligations are not contingent
upon Landlord first notifying Tenant of the specific work needed to
be performed.
g.
Construction Liens.
Tenant shall have
no power to cause or permit any lien, mortgage or other encumbrance
upon the reversionary or other estate of Landlord, or any interest
of Landlord in the Premises. NO CONSTRUCTION LIENS OR OTHER LIENS
FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED TO THE PREMISES
SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO THE
PREMISES OR THE BUILDING. Tenant shall keep the Premises and the
Building free from any liens arising out of any work performed,
materials furnished, or obligations incurred by or on behalf of
Tenant. Should any lien or claim of lien be filed against the
Premises or the Building by reason of any act or omission of Tenant
or any of Tenant's agents, employees, contractors or
representatives, then Tenant shall cause the same to be canceled
and discharged of record by bond or otherwise within ten
(10) days after the filing thereof. Should Tenant fail to
discharge the lien within ten (10) days, then Landlord may
discharge the lien. The amount paid by Landlord to discharge the
lien (whether directly or by bond), plus all administrative and
legal costs incurred by Landlord, shall be Additional Rent payable
on demand. The remedies provided herein shall be in addition to all
other remedies available to Landlord under this Lease or
otherwise.
h
.
TENANT
SHALL NOTIFY ANY CONTRACTOR PERFORMING ANY CONSTRUCTION WORK IN THE
PREMISES ON BEHALF OF TENANT THAT THIS LEASE SPECIFICALLY PROVIDES
THAT THE INTEREST OF LANDLORD IN THE PREMISES SHALL NOT BE SUBJECT
TO LIENS FOR IMPROVEMENTS MADE BY TENANT, AND NO MECHANIC'S LIEN OR
OTHER LIEN FOR ANY SUCH LABOR, SERVICES, MATERIALS, SUPPLIES,
MACHINERY, FIXTURES OR EQUIPMENT SHALL ATTACH TO OR AFFECT THE
STATE OR INTEREST OF LANDLORD IN AND TO THE PREMISES, THE BUILDING,
OR ANY PORTION THEREOF. IN ADDITION, LANDLORD SHALL HAVE THE RIGHT
TO POST AND KEEP POSTED AT ALL REASONABLE TIMES ON THE PREMISES ANY
NOTICES WHICH LANDLORD SHALL BE REQUIRED SO TO POST FOR THE
PROTECTION OF LANDLORD AND THE PREMISES FROM ANY SUCH
LIEN
. TENANT AGREES TO PROMPTLY
EXECUTE SUCH INSTRUMENTS IN RECORDABLE FORM IN ACCORDANCE WITH THE
TERMS AND PROVISIONS OF FLORIDA STATUTE SECTION
713.10.
9.
PROPERTY OF TENANT
.
a.
Property Taxes.
Tenant shall pay when
due all taxes levied or assessed upon Tenant's equipment, fixtures,
furniture, leasehold improvements and personal property located in
the Premises.
b.
Removal.
Provided Tenant is not in
default, Tenant may remove all fixtures and equipment which it has
placed in the Premises; provided, however, Tenant must repair all
damages caused by such removal. If Tenant does not remove its
property from the Premises upon the expiration or earlier
termination (for whatever cause) of this Lease, such property shall
be deemed abandoned by Tenant, and Landlord may dispose of the same
in whatever manner Landlord may elect without any liability to
Tenant.
10.
SIGNS.
Tenant may not erect, install or
display any sign or advertising material upon the exterior of the
Building or Premises (including any exterior doors, walls or
windows) without the prior written consent of Landlord, which
consent may be withheld in Landlord's sole discretion. Door and
directory signage shall be provided and installed by the Landlord
in accordance with Building standards at Tenant's
expense.
11.
ACCESS TO PREMISES
.
a.
Tenant's Access.
Tenant, and its
agents, employees, invitees, and guests, shall have access to the
Premises and reasonable ingress and egress to and from common and
public areas of the Building twenty-four (24) hours a day,
seven (7) days a week; provided, however, Landlord by
reasonable regulation may control such access for the comfort,
convenience, safety and protection of all tenants in the Building,
or as needed for making repairs and alterations. Tenant shall be
responsible for providing access to the Premises to its agents,
employees, invitees and guests after Business Hours and on weekends
and holidays, but in no event shall Tenant's use of and access to
the Premises during non-business hours compromise the security of
the Building.
b.
Landlord's Access.
Landlord shall have
the right, at all reasonable times and upon reasonable oral notice,
either itself or through its authorized agents, to enter the
Premises (i) to make repairs, alterations or changes as
Landlord is obligated or permitted to make under the terms of this
Lease, (ii) to inspect the Premises, mechanical systems and
electrical devices, and (iii) to show the Premises to
prospective mortgagees and purchasers. Landlord will attempt to
minimize disruption to Tenant's business when accessing the
Premises pursuant to this Section 11b. Within one hundred eighty
(180) days prior to the Expiration Date, Landlord shall have
the right, either itself or through its authorized agents, to enter
the Premises at all reasonable times to show prospective
tenants.
c.
Emergency Access.
Landlord shall have
the right to enter the Premises at any time without notice in the
event of an emergency.
12.
TENANT'S COMPLIANCE
.
a.
Laws.
Tenant shall comply with all
applicable laws, ordinances and regulations affecting the Premises,
whether now existing or hereafter enacted.
b.
Rules and Regulations.
Tenant shall
comply with the Rules and Regulations attached hereto as
Exhibit B
. The Rules
and Regulations may be modified from time to time by Landlord,
effective as of the date delivered to Tenant or posted on the
Premises, provided such rules are uniformly applicable to all
tenants in the Building. Any conflict between this Lease and the
Rules and Regulations shall be governed by the terms of this
Lease.
13.
ADA COMPLIANCE
.
a.
Tenant's Compliance.
Tenant, at
Tenant's sole expense, shall comply with all laws, rules, orders,
ordinances, directions, regulations and requirements of federal,
state, county and municipal authorities now or hereafter in force,
which shall impose any duty upon Landlord or Tenant with respect to
the use or occupation of the Premises or alteration of the Premises
to accommodate persons with special needs, including using all
reasonable efforts to comply with The Americans With Disabilities
Act (the "ADA").
b.
Landlord's Compliance.
Landlord, at
Landlord's sole expense, shall use commercially reasonable efforts
to comply with the requirements of the ADA as it applies to the
Common Areas and restrooms of the Building. Landlord represents and
warrants to Tenant that, as of the Commencement Date, the Premises
shall comply with the ADA in effect as of the Commencement Date as
evidenced by the issuance of a permanent or temporary certificate
of occupancy by the applicable governmental body. Except as set
forth in the preceding sentence, Landlord shall have no
responsibility for ADA compliance with respect to the Premises.
Landlord shall not be required to make changes to the Common Areas
or restrooms of the Building to comply with ADA standards adopted
after construction of the Building unless specifically required to
do so by law.
c.
ADA Notices.
If Tenant receives any
notices alleging a violation of ADA relating to any portion of the
Building or Premises (including any governmental or regulatory
actions or investigations regarding non-compliance with ADA), then
Tenant shall notify Landlord in writing within ten (10) days
of such notice and provide Landlord with copies of any such
notice.
14.
INSURANCE REQUIREMENTS
.
a.
Tenant's Liability Insurance.
Throughout the Term, Tenant, at its sole cost and expense, shall
keep or cause to be kept for the mutual benefit of Landlord,
Landlord's Property Manager (presently Banyan Street Realty
Services, and its affiliates), and Tenant, Commercial General
Liability Insurance (1986 ISO Form or its equivalent) with a
combined single limit, each occurrence and general aggregate-per
location of at least Two Million and No/100 Dollars
($2,000,000.00), which policy shall insure against liability of
Tenant, arising out of and in connection with Tenant's use of the
Premises, and which shall insure the indemnity provisions contained
in this Lease. Not more frequently than once every three
(3) years, Landlord may require the limits to be increased to
commercially reasonable levels if in its reasonable judgment (or
that of its mortgagee) the coverage is insufficient.
b.
Tenant's Property Insurance.
Tenant
shall also carry the equivalent of ISO Special Form Property
Insurance on Tenant's Property for full replacement value and with
coinsurance waived. For purposes of this provision, the term
"Tenant's Property" shall mean Tenant's personal property and
fixtures, and any Non-Standard Improvements to the Premises. Tenant
shall neither have, nor make, any claim against Landlord for any
loss or damage to the Tenant's Property, regardless of the cause of
the loss or damage.
c.
Certificates of Insurance.
Prior to
taking possession of the Premises, and annually thereafter, Tenant
shall deliver to Landlord certificates or other evidence of
insurance satisfactory to Landlord. If Tenant fails to provide
Landlord with such certificates or other evidence of insurance
coverage, Landlord may obtain such coverage and the cost of such
coverage shall be Additional Rent payable by Tenant upon
demand.
d.
Insurance Policy Requirements.
Tenant's
insurance policies required by this Lease shall: (i) be issued
by insurance companies licensed to do business in the state in
which the Premises are located with a general policyholder's
ratings of at least A- and a financial rating of at least VI in the
most current Best's Insurance Reports available on the Commencement
Date, or if the Best's ratings are changed or discontinued, the
parties shall agree to a comparable method of rating insurance
companies; (ii) include Landlord as an additional insured as
its interest may appear [other landlords or tenants may be added as
additional insureds in a blanket policy]; (iii) provide that
the insurance not be canceled, be non-renewed or have coverage
materially reduced unless thirty (30) days advance notice is
given to Tenant, and Tenant shall promptly provide a copy of any
such advance notice received by Tenant within five (5) business
days of Tenant's receipt of same; (iv) be primary policies and
non-contributing with any insurance that Landlord may carry;
(v) provide that any loss shall be payable notwithstanding any
act or gross negligence of Landlord or Tenant which might otherwise
result in a forfeiture thereunder of such insurance or the amount
of proceeds payable; (vi) have no deductible exceeding Ten
Thousand and No/100 Dollars ($10,000.00), unless approved in
writing by Landlord; and (vii) be maintained during the entire
Term and any extension terms.
e.
Landlord's Property Insurance.
Landlord
shall keep the Building, including the improvements (but excluding
Tenant's Property), insured against damage and destruction by
perils insured by the equivalent of ISO Special Form Property
Insurance in the amount of the full replacement value of the
Building.
f.
Mutual Waiver of Subrogation.
Anything
in this Lease to the contrary notwithstanding, Landlord hereby
releases and waives unto Tenant (including all partners,
stockholders, officers, directors, employees and agents thereof),
its successors and assigns, and Tenant hereby releases and waives
unto Landlord (including all partners, stockholders, officers,
directors, employees and agents thereof), its successors and
assigns, all rights to claim damages for any injury, loss, cost or
damage to persons or to the Premises or any other casualty, as long
as the amount of such injury, loss, cost or damage has been paid
either to Landlord, Tenant, or any other person, firm or
corporation, under the terms of any property, general liability, or
other policy of insurance, to the extent such releases or waivers
are permitted under applicable law. As respects all policies of
insurance carried or maintained pursuant to this Lease and to the
extent permitted under such policies, Tenant and Landlord each
waive the insurance carriers' rights of subrogation.
g.
Worker's Compensation Insurance
. Tenant
shall also carry a worker's compensation insurance policy with
applicable statutory limits, and employers liability insurance with
limits of not less than One Million and No/100 Dollars
($1,000,000.00).
h.
Automobile Liability Insurance
. Tenant
shall also carry automobile liability insurance with single limit
coverage of at least One Million and No/100 Dollars ($1,000,000.00)
for all owned, leased/hired or non-owned vehicles, if
any.
15.
INDEMNITY.
Subject to the insurance
requirements, releases and mutual waivers of subrogation set forth
in this Lease, Tenant and Landlord agree as follows:
a.
Tenant’s Indemnity.
Tenant shall
indemnify and hold Landlord harmless from and against any and all
claims, damages, losses, liabilities, lawsuits, costs and expenses
(including reasonable attorneys' fees at all tribunal levels) to
the extent arising out of or related to (i) any activity,
work, or other thing done, permitted or suffered by Tenant in or
about the Premises or the Building, contractors, servants or agents
in or about the Building, except to the extent arising out of or
related to (a) any gross negligence and willful misconduct of
Landlord or any officer, agent, employee, contractor, or servant of
Landlord or by any invitee or guest of Landlord with the expressed
invitation of Landlord, it being understood and agreed that other
tenants of the Building are not Landlord’s invitees or
guests, or (b) any act or omission of any other third party not
affiliated with Tenant, (ii) any breach or default by Tenant
in the performance of any of its obligations under this Lease which
continues beyond applicable notice and cure periods, or
(iii) any act or neglect of Tenant, or any officer, agent,
employee, contractor, servant, invitee or guest of Tenant. If any
such action is brought against Landlord, then Tenant, upon notice
from Landlord, shall defend the same through counsel selected by
Landlord's insurer, or other counsel reasonably acceptable to
Landlord. The provisions of this Section shall survive the
termination of this Lease.
b.
Landlord’s Indemnity.
Landlord
shall indemnify and hold Tenant and its officers, directors,
shareholders, partners, agents and employees harmless from and
against any and all claims, damages, losses, liabilities, lawsuits,
costs and expenses (including reasonable attorneys' fees at all
tribunal levels) to the extent arising out of or related to any
gross negligence or willful misconduct of Landlord or any officer,
agent, employee, contractor, servant, invitee or guest of Landlord.
If any such action is brought against Tenant, then Landlord, upon
notice from Tenant, shall defend the same through counsel selected
by Tenant’s insurer, or other counsel reasonably acceptable
to Tenant. The provisions of this Section shall survive the
termination of this Lease.
16.
QUIET ENJOYMENT.
Tenant shall have quiet
enjoyment and possession of the Premises provided Tenant promptly
and fully complies with all of its obligations under this Lease. No
action of Landlord or other tenants working in other space in the
Building, or in repairing or restoring the Premises, shall be
deemed a breach of this covenant, nor shall such action give to
Tenant any right to modify this Lease either as to Term, Rent
payables or other obligations to be performed.
17.
SUBORDINATION; ATTORNMENT; NON-DISTURBANCE; AND
ESTOPPEL CERTIFICATE
.
a.
Subordination and Attornment.
This
Lease and all rights of Tenant hereunder are and shall be subject
and subordinate at all times and in all respects to the mortgage of
Landlord's interest in the Building and the Premises. Such
subordination and the agreement of Tenant to attorn to Landlord's
mortgagee in the event that such mortgagee succeeds as the owner of
the Landlord's interest in the Building and the Premises shall be
self operative, and no further instrument shall be required to
create, perfect or preserve the superior right or lien of any such
mortgage. Notwithstanding the foregoing, Tenant agrees to execute
within ten (10) days after request to do so from Landlord or
its mortgagee an agreement:
i.
Making this Lease
superior or subordinate to the interests of the
mortgagee;
ii.
Agreeing to attorn
to the mortgagee;
iii.
Giving the
mortgagee notice of, and a reasonable opportunity (which shall in
no event be less than thirty (30) days after notice thereof is
delivered to mortgagee) to cure any Landlord default and agreeing
to accept such cure if effected by the mortgagee;
iv.
Permitting the
mortgagee (or other purchaser at any foreclosure sale), and its
successors and assigns, on acquiring Landlord's interest in the
Premises and the Lease, to become substitute Landlord hereunder,
with liability only for such Landlord obligations as accrue after
Landlord's interest is so acquired;
v.
Agreeing to attorn
to any successor Landlord; and
vi.
Containing such
other agreements and covenants on Tenant's part as Landlord's
mortgagee may reasonably request.
b.
Non-Disturbance.
In the event of
foreclosure of such mortgage, Tenant shall not be disturbed in its
possession of the Premises so long as Tenant is not in default
under this Lease and, subsequent to such foreclosure, Tenant
attorns to the party acquiring title by virtue of the foreclosure,
and this Lease shall continue in full force and effect as a direct
lease, in accordance with its terms, between the successor Landlord
and Tenant.
c.
Estoppel Certificates.
Tenant agrees to
execute within ten (10) business days after request, and as
often as requested, estoppel certificates confirming any factual
matter requested by Landlord which is true and is within Tenant's
knowledge regarding this Lease, and the Premises, including but not
limited to: (i) the date of occupancy, (ii) Expiration
Date, (iii) the amount of Rent due and date to which Rent is
paid, (iii) whether Tenant has any defense or offsets to the
enforcement of this Lease or the Rent payable, (iv) any
default or breach by Landlord, and (v) whether this Lease,
together with any modifications or amendments, is in full force and
effect. Tenant shall attach to such estoppel certificate copies of
any modifications or amendments to the Lease.
18.
ASSIGNMENT –
SUBLEASE
.
a.
Landlord Consent.
Tenant may not assign
or encumber this Lease or its interest in the Premises arising
under this Lease, and may not sublet all or any part of the
Premises without first obtaining the written consent of Landlord,
which consent shall not be withheld unreasonably. Factors which
Landlord may consider in deciding whether to consent to an
assignment or sublease include (without limitation), (i) the
creditworthiness of the assignee or sublessee, (ii) the
proposed use of the Premises, (iii) whether there is other
vacant space in the Building, (iv) whether the assignee or
sublessee will vacate other space owned by Landlord,
(v) whether Landlord is negotiating with the proposed
sublessee or assignee for a lease of other space owned by Landlord,
and (vi) any renovations to the Premises or special services
required by the assignee or sublessee. Landlord will not consent to
an assignment or sublease that might result in a use that conflicts
with the rights of any existing tenant. One consent shall not be
the basis for any further consent.
b.
Definition of Assignment.
For the
purpose of this Section 18, the word "assignment" shall be
defined and deemed to include the following: (i) if Tenant is
a partnership, the withdrawal or change, whether voluntary,
involuntary or by operation of law, of partners owning thirty
percent (30%) or more of the partnership, or the dissolution of the
partnership; (ii) if Tenant consists of more than one person,
an assignment, whether voluntary, involuntary, or by operation of
law, by one person to one of the other persons that is a Tenant;
(iii) if Tenant is a corporation, any dissolution or
reorganization of Tenant, or the sale or other transfer of a
controlling percentage (hereafter defined) of capital stock of
Tenant other than to a wholly owned subsidiary or the sale of
fifty-one percent (51%) in value of the assets of Tenant;
(iv) if Tenant is a limited liability company, the change of
members whose interest in the company is fifty percent (50%) or
more. The phrase "controlling percentage" means the ownership of,
and the right to vote, stock possessing at least fifty-one percent
(51%) of the total combined voting power of all classes of Tenant's
capital stock issued, outstanding and entitled to vote for the
election of directors, or such lesser percentage as is required to
provide actual control over the affairs of the corporation; except
that, if the Tenant is a publicly traded company, public trades or
sales of the Tenant's stock on a national stock exchange shall not
be considered an assignment hereunder even if the aggregate of the
trades of sales exceeds fifty percent (50%) of the capital stock of
the company.
c.
Permitted Assignments/Subleases.
Notwithstanding the foregoing, Tenant may assign this Lease or
sublease part or all of the Premises without Landlord's consent to:
(i) any corporation, limited liability company, or partnership
that controls, is controlled by, or is under common control with,
Tenant; or (ii) any corporation or limited liability company
resulting from the merger or consolidation with Tenant or to any
entity that acquires all of Tenant's assets as a going concern of
the business that is being conducted on the Premises (each such
transfer shall be referred to herein as a "Permitted Transfer");
provided however, the assignor remains liable under the Lease and
the assignee or sublessee is a bona fide entity and assumes the
obligations of Tenant, is as creditworthy as the Tenant, and
continues the same Permitted Use as provided under
Section 4.
d.
Notice to Landlord.
Landlord must be
given prior written notice of every assignment or subletting, and,
except with respect to a Permitted Transfer, failure to do so shall
be a default hereunder; provided, however, failure to provide
Landlord with written notice of a Permitted Transfer within thirty
(30) days after the effective date of such transfer shall
constitute a default under this Lease.
e.
Prohibited Assignments/Subleases.
In no
event shall this Lease be assignable by operation of any law, and
Tenant's rights hereunder may not become and shall not be listed by
Tenant as an asset under any bankruptcy, insolvency or
reorganization proceedings. Acceptance of Rent by Landlord after
any non-permitted assignment or sublease shall not constitute
approval thereof by Landlord.
f.
Limitation on Rights of
Assignee/Sublessee.
Any assignment or sublease for which
Landlord's consent is required shall not include the right to
exercise any options to renew the Lease Term, expand the Premises,
or similar options, unless specifically provided for in the
consent.
g.
Tenant Not Released.
No assignment or
sublease shall release Tenant of any of its obligations under this
Lease.
h.
Landlord's Right to Collect Sublease Rents
upon Tenant Default.
If the Premises (or any portion) is
sublet and Tenant defaults under its obligations to Landlord, then
Landlord is authorized, at its option, to collect all sublease
rents directly from the Sublessee. Tenant hereby assigns the right
to collect the sublease rents to Landlord in the event of Tenant
default. The collection of sublease rents by Landlord shall not
relieve Tenant of its obligations under this Lease, nor shall it
create a contractual relationship between Sublessee and Landlord or
give Sublessee any greater estate or right to the Premises than
contained in its Sublease.
i.
Excess Rents.
If Tenant assigns this
Lease or subleases all or part of the Premises at a rental rate
that exceeds the rentals paid to Landlord, then fifty percent (50%)
of any "Transfer Premium" (as that term is defined below) received
by Tenant from such transferee shall be paid over to Landlord by
Tenant. "Transfer Premium" shall mean all rent or additional rent
payable by such transferee in excess of the Base Rent and
Additional Rent payable by Tenant under this Lease on a per
rentable square foot basis if less than all of the Premises is
transferred, after deducting the reasonable expenses incurred by
Tenant for (i) any reasonable changes, alterations and improvements
to the Premises in connection with the assignment or sublease (but
only to the extent approved by Landlord), and (ii) any reasonable
brokerage commissions, marketing costs and attorneys' fees in
connection with the assignment or sublease.
j.
Landlord's Fees.
Tenant shall reimburse
Landlord for Landlord's reasonable out-of-pocket attorneys' fees in
connection with any assignment or sublease transaction for which
consent is required or requested by Tenant, not to exceed three
thousand dollars ($3,000.00). If Landlord assists Tenant in finding
an assignee or subtenant, Landlord shall be paid a reasonable fee
for such assistance.
k.
Unauthorized Assignment or Sublease.
Any unauthorized assignment or sublease shall constitute a default
under the terms of this Lease. In addition to its other remedies
for default, Landlord may elect to increase Base Rent to 150% of
the Base Rent reserved under the terms of this Lease.
19.
DAMAGES TO PREMISES
.
a.
Landlord's Restoration Obligations.
If
the Building or Premises are damaged by fire or other casualty
(collectively "Casualty"), then Landlord shall repair and restore
the Premises to substantially the same condition of the Premises
immediately prior to such Casualty, subject to the following terms
and conditions:
i.
The casualty must
be insured under Landlord's insurance policies, and Landlord's
obligation is limited to the extent of the insurance proceeds
received by Landlord. Landlord's duty to repair and restore the
Premises shall not begin until receipt of the insurance
proceeds.
ii.
Landlord's
lender(s) must permit the insurance proceeds to be used for such
repair and restoration.
iii.
Landlord shall have
no obligation to repair and restore Tenant's trade fixtures,
decorations, signs, contents, or any Non-Standard Improvements to
the Premises.
b.
Termination of Lease by Landlord.
Landlord shall have the option of terminating the Lease if:
(i) the Premises are rendered wholly untenantable;
(ii) the Premises are damaged in whole or in part as a result
of a risk which is not covered by Landlord's insurance policies;
(iii) Landlord's lender does not permit a sufficient amount of
the insurance proceeds to be used for restoration purposes;
(iv) the Premises are damaged in whole or in part during the
last two years of the Term; or (v) the Building containing the
Premises is damaged (whether or not the Premises are damaged) to an
extent of fifty percent (50%) or more of the fair market value
thereof. If Landlord elects to terminate this Lease, then it shall
give notice of the termination to Tenant within sixty
(60) days after the date of the Casualty. Tenant shall vacate
and surrender the Premises to Landlord within fifteen
(15) days after receipt of the notice of
termination.
c.
Termination of Lease by Tenant.
Tenant
shall have the option of terminating the Lease if:
(i) Landlord has failed to substantially restore the damaged
Building or Premises within one hundred eighty (180) days of
the Casualty (the "Restoration Period"), the Restoration
Period being subject to extension for any force majeure delays; and
(ii) Tenant gives Landlord notice of the termination within
fifteen (15) days after the end of the Restoration Period (as
extended by any force majeure delays). If Landlord is delayed by
force majeure, then Landlord must provide Tenant with notice of the
delays within fifteen (15) days of the force majeure event
stating the reason for the delays and a good faith estimate of the
length of the delays.
d.
Tenant's Restoration Obligations.
Unless terminated, the Lease shall remain in full force and effect,
and Tenant shall promptly repair, restore, or replace Tenant's
trade fixtures, decorations, signs, contents, and any Non-Standard
Improvements to the Premises. All repair, restoration or
replacement shall be at least to the same condition as existed
prior to the Casualty. The proceeds of all insurance carried by
Tenant on its property shall be held in trust by Tenant for the
purposes of such repair, restoration, or replacement.
e.
Rent Abatement.
If the Premises are
rendered wholly untenantable by the Casualty, then the Rent payable
by Tenant shall be fully abated. If the Premises are only partially
damaged, then Tenant shall continue the operation of Tenant's
business in any part not damaged to the extent reasonably
practicable from the standpoint of prudent business management, and
Rent and other charges shall be abated proportionately to the
portion of the Premises rendered untenantable. The abatement shall
be from the date of the Casualty until the Premises have been
substantially repaired and restored, or until Tenant's business
operations are restored in the entire Premises, whichever shall
first occur. However, if the Casualty is caused by the negligence
or other wrongful conduct of Tenant or of Tenant's subtenants,
licensees, contractors, or invitees, or their respective agents or
employees, there shall be no abatement of Rent.
f.
Waiver of Claims.
The abatement of the
Rent set forth above is Tenant's exclusive remedy against Landlord
in the event of a Casualty. Tenant hereby waives all claims against
Landlord for any compensation or damage for loss of use of the
whole or any part of the Premises and/or for any inconvenience or
annoyance occasioned by any Casualty and any resulting damage,
destruction, repair, or restoration.
20.
EMINENT DOMAIN
.
a.
Effect on Lease.
If all of the Premises
are taken under the power of eminent domain (or by conveyance in
lieu thereof), then this Lease shall terminate as of the date
possession is taken by the condemnor, and Rent shall be adjusted
between Landlord and Tenant as of such date. If only a portion of
the Premises is taken and Tenant can continue use of the remainder,
then this Lease will not terminate, but Rent shall abate in a just
and proportionate amount to the loss of use occasioned by the
taking.
b.
Right to Condemnation Award.
Landlord
shall be entitled to receive and retain the entire condemnation
award for the taking of the Building and Premises. Tenant shall
have no right or claim against Landlord for any part of any award
received by Landlord for the taking. Tenant shall have no right or
claim for any alleged value of the unexpired portion of this Lease,
or its leasehold estate, or for costs of removal, relocation,
business interruption expense or any other damages arising out of
such taking. Tenant, however, shall not be prevented from making a
claim against the condemning party (but not against Landlord) for
any moving expenses, loss of profits, or taking of Tenant's
personal property (other than its leasehold estate) to which Tenant
may be entitled; provided that any such award shall not reduce the
amount of the award otherwise payable to Landlord for the taking of
the Building and Premises.
21.
ENVIRONMENTAL COMPLIANCE
.
a.
Environmental Laws.
The term "
Environmental Laws" shall mean all now existing or hereafter
enacted or issued statutes, laws, rules, ordinances, orders,
permits and regulations of all state, federal, local and other
governmental and regulatory authorities, agencies and bodies
applicable to the Premises, pertaining to environmental matters or
regulating, prohibiting or otherwise having to do with asbestos and
all other toxic, radioactive, or hazardous wastes or materials
including, but not limited to, the Federal Clean Air Act, the
Federal Water Pollution Control Act, and the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
from time to time amended.
b.
Tenant's Responsibility
. Tenant
covenants and agrees that it will keep and maintain the Premises at
all times in compliance with Environmental Laws. Tenant shall not
(either with or without negligence) cause or permit the escape,
disposal or release of any biologically active or other hazardous
substances, or materials on the Property. Tenant shall not allow
the storage or use of such hazardous substances or materials in any
manner not sanctioned by law or in compliance with the highest
standards prevailing in the industry for the storage and use of
such hazardous substances or materials, nor allow to be brought
onto the Property any such hazardous substances or materials except
to use in the ordinary course of Tenant's business, and then only
after written notice is given to Landlord of the identity of such
hazardous substances or materials. No such notice shall be
required, however, for commercially reasonable amounts of ordinary
office supplies and janitorial supplies. Tenant shall execute
affidavits, representations and the like, from time to time, at
Landlord's request, concerning Tenant's actual knowledge and belief
regarding the presence of hazardous substances and/or materials on
the Premises.
c.
Tenant's Liability
. Tenant shall hold
Landlord free, harmless, and indemnified from any penalty, fine,
claim, demand, liability, cost, or charge whatsoever which Landlord
shall incur, or which Landlord would otherwise incur, by reason of
Tenant's failure to comply with this Section 21 including, but
not limited to: (i) the cost of full remediation of any
contamination to bring the Property into the same condition as
prior to the Commencement Date and into full compliance with all
Environmental Laws; (ii) the reasonable cost of all
appropriate tests and examinations of the Premises to confirm that
the Premises and any other contaminated areas have been remediated
and brought into compliance with all Environmental Laws; and
(iii) the reasonable fees and expenses of Landlord's
attorneys, engineers, and consultants incurred by Landlord in
enforcing and confirming compliance with this
Section 21.
d.
Limitation on Tenant's Liability.
Tenant's obligations under this Section 21 shall not apply to
any condition or matter constituting a violation of any
Environmental Laws: (i) which existed prior to the
commencement of Tenant's use or occupancy of the Premises;
(ii) which was not caused, in whole or in part, by Tenant or
Tenant's agents, employees, officers, partners, contractors or
invitees; or (iii) to the extent such violation is caused by,
or results from the acts or neglects of Landlord or Landlord's
agents, employees, officers, partners, contractors, guests, or
invitees.
e.
Inspections by Landlord
. Landlord and
its engineers, technicians, and consultants (collectively,
"Auditors") may, from time to time as Landlord deems appropriate,
conduct periodic tests and examinations (collectively, "Audits") of
the Premises to confirm and monitor Tenant's compliance with this
Section 21. Such Audits shall be conducted in such a manner as
to minimize the interference with Tenant's Permitted Use; however
in all cases, the Audits shall be of such nature and scope as shall
be reasonably required by then existing technology to confirm
Tenant's compliance with this Section 21. Tenant shall fully
cooperate with Landlord and its Auditors in the conduct of such
Audits. The cost of such Audits shall be paid by Landlord unless an
Audit shall disclose a material failure of Tenant to comply with
this Section 21, in which case, the cost of such Audit, and
the cost of all subsequent Audits made during the Term (provided
that either (i) any such subsequent audits bear a reasonable
connection to Tenant's original material failure to comply with
this Section 21 disclosed by Landlord's audit or (ii) Landlord
reasonably believes Tenant to otherwise have materially failed to
comply with this Section 21 prior to any such subsequent audit) and
within thirty (30) days thereafter (not to exceed two
(2) such Audits per calendar year), shall be paid for on
demand by Tenant.
f.
Property.
For the purposes of this
Section 21, the term "Property" shall include the Premises,
Building, all Common Areas, the real estate upon which the Building
is located; all personal property (including that owned by Tenant);
and the soil, ground water, and surface water of the real estate
upon which the Building is located.
g.
Tenant's Liability After Termination of
Lease
. The covenants contained in this Section 21 shall
survive the expiration or termination of this Lease, and shall
continue for so long as Landlord and its successors and assigns may
be subject to any expense, liability, charge, penalty, or
obligation against which Tenant has agreed to indemnify Landlord
under this Section 21.
22.
DEFAULT
.
a.
Tenant's Default.
Tenant shall be in
default under this Lease if Tenant:
i.
Fails to pay when
due any Base Rent, Additional Rent, or any other sum of money which
Tenant is obligated to pay, as provided in this Lease, where such
failure continues for five (5) business days after written notice
thereof from Landlord to Tenant;
ii.
Breaches any other
agreement, covenant or obligation in this Lease and such breach is
not remedied within fifteen (15) days after Landlord gives
Tenant notice specifying the breach, or if such breach cannot, with
reasonable diligence, be cured within fifteen (15) days,
Tenant does not commence curing within fifteen (15) days and
with reasonable diligence completely cure the breach within a
reasonable period of time after the notice, provided, however, such
period of time shall not exceed sixty (60) days after such
notice by Landlord;
iii.
Files any petition
or action for relief under any creditor's law (including
bankruptcy, reorganization, or similar action), either in state or
federal court, or has such a petition or action filed against it
which is not stayed or vacated within sixty (60) days after
filing; or
iv.
Makes any transfer
in fraud of creditors as defined in Section 548 of the United
States Bankruptcy Code (11 U.S.C. 548, as amended or replaced), has
a receiver appointed for its assets (and the appointment is not
stayed or vacated within thirty (30) days), or makes an
assignment for benefit of creditors.
b.
Landlord's Remedies.
In the event of a
Tenant default, Landlord at its option may do one or more of the
following:
i.
Terminate this
Lease and recover all damages caused by Tenant's breach, including
consequential damages for lost future rent;
ii.
Repossess the
Premises, with or without terminating, and relet the Premises at
such amount as Landlord deems reasonable;
iii.
Declare the entire
remaining Base Rent and Additional Rent immediately due and
payable, such amount to be discounted to its present value at a
discount rate equal to the U.S. Treasury Bill or Note rate
with the closest maturity to the remaining term of the Lease as
selected by Landlord;
iv.
Bring action for
recovery of all amounts due from Tenant;
v.
Seize and hold any
personal property of Tenant located in the Premises and assert
against the same a lien for monies due Landlord; or
vi.
Pursue any
other remedy available in law or equity.
c.
Landlord's Expenses; Attorneys Fees.
In
the event of Tenant default that results in a termination of this
Lease or in a termination of Tenant’s possession of the
Premises, all reasonable expenses of Landlord in repairing,
restoring, or altering the Premises for reletting as general office
space, together with leasing fees and all other expenses in seeking
and obtaining a new Tenant, shall be charged to and be a liability
of Tenant. Landlord's reasonable attorneys' fees in pursuing any of
the foregoing remedies, or in collecting any Rent or Additional
Rent due by Tenant hereunder, shall be paid by Tenant.
d.
Remedies Cumulative.
All rights and
remedies of Landlord are cumulative, and the exercise of any one
shall not be an election excluding Landlord at any other time from
exercise of a different or inconsistent remedy. No exercise by
Landlord of any right or remedy granted herein shall constitute or
effect a termination of this Lease unless Landlord shall so elect
by notice delivered to Tenant. The failure of Landlord to exercise
its rights in connection with this Lease or any breach or violation
of any term, or any subsequent breach of the same or any other
term, covenant or condition herein contained shall not be a waiver
of such term, covenant or condition or any subsequent breach of the
same or any other covenant or condition herein
contained.
e.
No Accord and Satisfaction.
No
acceptance by Landlord of a lesser sum than the Rent, Additional
Rent and other sums then due shall be deemed to be other than on
account of the earliest installment of such payments due, nor shall
any endorsement or statement on any check or any letter
accompanying any check or payment be deemed as accord and
satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such
installment or pursue any other remedy provided in this
Lease.
f.
No Reinstatement.
No payment of money
by Tenant to Landlord after the expiration or termination of this
Lease shall reinstate or extend the Term, or make ineffective any
notice of termination given to Tenant prior to the payment of such
money. After the service of notice or the commencement of a suit,
or after final judgment granting Landlord possession of the
Premises, Landlord may receive and collect any sums due under this
Lease, and the payment thereof shall not make ineffective any
notice or in any manner affect any pending suit or any judgment
previously obtained.
g.
Summary Ejectment.
Tenant agrees that
in addition to all other rights and remedies Landlord may obtain an
order for summary ejectment from any court of competent
jurisdiction without prejudice to Landlord's rights to otherwise
collect rents or breach of contract damages from
Tenant.
23.
MULTIPLE DEFAULTS
.
a.
Loss of Option Rights.
Tenant
acknowledges that any rights or options of first refusal, or to
extend the Term, to expand the size of the Premises, to purchase
the Premises or the Building, or other similar rights or options
which have been granted to Tenant under this Lease are conditioned
upon the prompt and diligent performance of the terms of this Lease
by Tenant. Accordingly, should Tenant default under this Lease on
three (3) or more occasions during any twelve (12) month
period, in addition to all other remedies available to Landlord,
all such rights and options shall automatically, and without
further action on the part of any party, expire and be of no
further force and effect.
b.
Increased Security Deposit.
Should
Tenant default in the payment of Base Rent, Additional Rent, or any
other sums payable by Tenant under this Lease on three (3) or
more occasions during any twelve (12) month period, regardless
of whether Landlord permits such default to be cured, then, in
addition to all other remedies otherwise available to Landlord,
Tenant shall, within ten (10) days after demand by Landlord,
post a Security Deposit in, or increase the existing Security
Deposit to, a sum equal to three (3) months' installments of
Base Rent. The Security Deposit shall be governed by the terms of
this Lease.
c.
Effect on Notice Rights and Cure
Periods.
Should Tenant default under this Lease on three
(3) or more occasions during any twelve (12) month
period, in addition to all other remedies available to Landlord,
any notice requirements or cure periods otherwise set forth in this
Lease with respect to a default by Tenant shall not
apply.
24.
BANKRUPTCY
.
a.
Trustee's Rights.
Landlord and Tenant
understand that, notwithstanding contrary terms in this Lease, a
trustee or debtor in possession under the United States Bankruptcy
Code, as amended, (the "Code") may have certain rights to assume or
assign this Lease. This Lease shall not be construed to give the
trustee or debtor in possession any rights greater than the minimum
rights granted under the Code.
b.
Adequate Assurance.
Landlord and Tenant
acknowledge that, pursuant to the Code, Landlord is entitled to
adequate assurances of future performance of the provisions of this
Lease. The parties agree that the term "adequate assurance" shall
include at least the following:
i.
In order to assure
Landlord that any proposed assignee will have the resources with
which to pay all Rent payable pursuant to the provisions of this
Lease, any proposed assignee must have, as demonstrated to
Landlord's satisfaction, a net worth (as defined in accordance with
generally accepted accounting principles consistently applied) of
not less than the net worth of Tenant on the Effective Date (as
hereinafter defined), increased by seven percent (7%), compounded
annually, for each year from the Effective Date through the date of
the proposed assignment. It is understood and agreed that the
financial condition and resources of Tenant were a material
inducement to Landlord in entering into this Lease.
ii.
Any proposed
assignee must have been engaged in the conduct of business for the
five (5) years prior to any such proposed assignment, which
business does not violate the Use provisions under Section 4
above, and such proposed assignee shall continue to engage in the
Permitted Use under Section 4. It is understood that
Landlord's asset will be substantially impaired if the trustee in
bankruptcy or any assignee of this Lease makes any use of the
Premises other than the Permitted Use.
c.
Assumption of Lease Obligations.
Any
proposed assignee of this Lease must assume and agree to be
personally bound by the provisions of this Lease.
25.
NOTICES
.
a.
Addresses.
All notices, demands and
requests by Landlord or Tenant shall be sent to the Notice
Addresses set forth in Section 1n, or to such other address as
a party may specify by duly given notice.
b.
Form; Delivery; Receipt.
ALL NOTICES, DEMANDS AND REQUESTS WHICH MAY BE
GIVEN OR WHICH ARE REQUIRED TO BE GIVEN BY EITHER PARTY TO THE
OTHER MUST BE IN WRITING UNLESS OTHERWISE SPECIFIED.
Notices, demands or requests shall be deemed to have been properly
given for all purposes if (i) delivered against a written
receipt of delivery, (ii) mailed by express, registered or
certified mail of the United States Postal Service, return receipt
requested, postage prepaid, or (iii) delivered to a nationally
recognized overnight courier service for next business day delivery
to the receiving party's address as set forth above. Each such
notice, demand or request shall be deemed to have been received
upon the earlier of the actual receipt or refusal by the addressee
or three (3) business days after deposit thereof at any main
or branch United States post office if sent in accordance with
subsection (ii) above, and the next business day after deposit
thereof with the courier if sent pursuant to subsection
(iii) above.
c.
Address Changes.
The parties shall
notify the other of any change in address, which notification must
be at least fifteen (15) days in advance of it being
effective.
d.
Notice by Legal Counsel.
Notices may be
given on behalf of any party by such party's legal
counsel.
26.
HOLDING OVER
. If Tenant holds over after
the Expiration Date or other termination of this Lease, such
holding over shall not be a renewal of this Lease but shall be
deemed to create a tenancy-at-sufferance. Tenant shall continue to
be bound by all of the terms and conditions of this Lease, except
that during such tenancy-at-sufferance Tenant shall pay to Landlord
(A) the greater of (i) one hundred fifty percent (150%)
of the monthly Base Rent Landlord is then charging new tenants for
space in the Building, or (ii) one hundred fifty percent
(150%) of the Base Rent payable hereunder during the last month of
the Term, and (B) any and all Operating Expenses and other
forms of Additional Rent payable under this Lease. The increased
Rent during such holding over is intended to compensate Landlord
partially for losses, damages and expenses, including frustrating
and delaying Landlord's ability to secure a replacement tenant.
Tenant shall indemnify, defend and hold Landlord harmless from and
against any claim, damage, loss, liability, judgment, suit,
disbursement or expense (including consequential damages and
reasonable attorneys' fees and disbursements) (collectively,
"Claims") resulting from failure to surrender possession upon the
Expiration Date or sooner termination of the Term, including any
Claims made by any succeeding tenant, and such obligations shall
survive the expiration or sooner termination of this
Lease.
27.
INTENTIONALLY OMITTED
.
28.
BROKER'S COMMISSIONS
. Landlord and
Tenant each represents and warrants to the other party that it has
not dealt with any real estate broker, finder or other person with
respect to this Lease in any manner, except the Broker(s)
identified in Section 1n
.
Landlord shall pay only any
commissions or fees that are payable to the above-named Broker(s)
or finder(s) with respect to this Lease pursuant to Landlord's
separate agreement with such Broker(s) or finder(s). Each party
shall indemnify and hold the other party harmless from any and all
damages resulting from claims by any broker(s), finder(s) or other
person (including, without limitation, any substitute or
replacement broker claiming to have been engaged in the future),
other than the Broker(s) identified in Section 1n, claiming to
have dealt with the indemnifying party in connection with this
Lease or any amendment or extension hereto, or which may result in
Tenant leasing other or enlarged space from Landlord. The
provisions of this paragraph shall survive the termination of this
Lease.
29.
MISCELLANEOUS
.
a.
No Agency.
Tenant is not, may not
become, and shall never represent itself to be an agent of
Landlord, and Tenant acknowledges that Landlord's title to the
Building is paramount, and that it can do nothing to affect or
impair Landlord's title.
b.
Force Majeure.
The term "force majeure"
means: fire, flood, extreme weather, labor disputes, strike,
lock-out, riot, terrorist act, government interference (including
regulation, appropriation or rationing), unusual delay in
governmental permitting, unusual delay in deliveries or
unavailability of materials, unavoidable casualties, Act of God, or
other causes beyond Landlord's reasonable control.
c.
Building Standard Improvements.
The
term "Building Standard Improvements" shall mean the standards for
normal construction of general office space within the Building as
specified by Landlord, including design and construction standards,
electrical load factors, materials, fixtures and
finishes.
d.
Limitation on Damages.
Notwithstanding
any other provisions in this Lease, Landlord shall not be liable to
Tenant for any special, consequential, incidental or punitive
damages.
e.
Satisfaction of Judgments Against
Landlord.
If Landlord, or its employees, officers,
directors, stockholders or partners are ordered to pay Tenant a
money judgment because of Landlord's default under this Lease, said
money judgment may only be enforced against and satisfied out of:
(i) Landlord's interest in the Building in which the Premises
are located including the rental income and proceeds from sale; and
(ii) any insurance or condemnation proceeds received because
of damage or condemnation to, or of, said Building that are
available for use by Landlord. No other assets of Landlord or said
other parties exculpated by the preceding sentence shall be liable
for, or subject to, any such money judgment.
f.
Interest.
Should Tenant fail to pay any
amount due to Landlord within 30 days of the date such amount is
due (whether Base Rent, Additional Rent, or any other payment
obligation), then the amount due shall begin accruing interest at
the rate of 18% per annum, compounded monthly, or the highest
permissible rate under applicable usury law, whichever is less,
until paid.
g.
Legal Costs.
Should either party
prevail in any legal proceedings against the other party for breach
of any provision in this Lease, then the non-prevailing party shall
be liable for the costs and expenses of the prevailing party,
including its reasonable attorneys' fees (at all tribunal levels).
Landlord shall also be entitled to recover reasonable attorneys'
fees and disbursements incurred in connection with a Tenant default
hereunder which does not result in the commencement of any action
or proceeding.
h.
Communications Compliance.
Tenant
acknowledges and agrees that any and all telephone and
telecommunication services desired by Tenant shall be ordered and
utilized at the sole expense of Tenant. Unless Landlord requests
otherwise or consents in writing, all of Tenant's
telecommunications equipment shall be located and remain solely in
the Premises in accordance with rules and regulations adopted by
Landlord from time to time. Landlord shall not have any
responsibility for the maintenance of Tenant's telecommunications
equipment, including wiring; nor for any wiring or other
infrastructure to which Tenant's telecommunications equipment may
be connected. Tenant agrees that, to the extent any
telecommunications service is interrupted, curtailed or
discontinued, Landlord shall have no obligation or liability with
respect thereto. Landlord shall have the right, upon reasonable
prior oral or written notice to Tenant, to interrupt or turn off
telecommunications facilities in the event of emergency or as
necessary in connection with repairs to the Building or
installation of telecommunications equipment for other tenants of
the Building. In the event that Tenant wishes at any time to
utilize the services of a telephone or telecommunications provider
whose equipment is not then servicing the Building, the provider
shall not be permitted to install its lines or other equipment
within the Building without first securing the prior written
approval of Landlord. Landlord's approval may be conditioned in
such a manner so as to protect Landlord's financial interests, the
interest of the Building, and the other tenants therein. The
refusal of Landlord to grant its approval to any prospective
telecommunications provider shall not be deemed a default or breach
by Landlord of its obligation under this Lease. The provision of
this paragraph may be enforced solely by Tenant and Landlord, are
not for the benefit of any other party, and specifically but
without limitation, no telephone or telecommunications provider
shall be deemed a third party beneficiary of this Lease. Tenant
shall not utilize any wireless communications equipment (other than
usual and customary cellular telephones), including antennae and
satellite receiver dishes, within the Premises or the Building,
without Landlord's prior written consent. Landlord's consent may be
conditioned in such a manner so as to protect Landlord's financial
interests, the interests of the Building, and the other tenants
therein. At Landlord's option, Tenant may be required to remove any
and all telecommunications equipment (including wireless equipment)
installed in the Premises or elsewhere in or on the Building by or
on behalf of Tenant, including wiring, or other facilities for
telecommunications transmittal prior to the expiration or
termination of the Lease and at Tenant's sole cost.
i.
Sale of Premises or Building.
Landlord
may sell the Premises or the Building without affecting the
obligations of Tenant hereunder; upon the sale of the Premises or
the Building, Landlord shall be relieved of all responsibility for
the Premises and shall be released from any liability thereafter
accruing under this Lease.
j.
Time of the Essence.
Time is of the
essence in the performance of all obligations under the terms of
this Lease.
k.
Transfer of Security Deposit.
If any
Security Deposit or prepaid Rent has been paid by Tenant, Landlord
may transfer the Security Deposit or prepaid Rent to Landlord's
successor and upon such transfer, Landlord shall be released from
any liability for return of the Security Deposit or prepaid
Rent.
l.
Tender of Premises.
The delivery of a
key or other such tender of possession of the Premises to Landlord
or to an employee of Landlord shall not operate as a termination of
this Lease or a surrender of the Premises unless requested in
writing by Landlord.
m.
Tenant's Financial Statements.
If at
any time Tenant is not a publicly traded company, within ten (10)
days after written request by Landlord, Tenant agrees to furnish to
Landlord copies of Tenant's most recent annual, quarterly and
monthly financial statements, audited if available. The financial
statements shall be prepared in accordance with generally accepted
accounting principles, consistently applied. The financial
statements shall include a balance sheet and a statement of profit
and loss, and the annual financial statement shall also include a
statement of changes in financial position and appropriate
explanatory notes. Landlord may deliver the financial statements to
any prospective or existing mortgagee or purchaser of the Building.
All such financial statements will be delivered to any such
mortgagee or purchaser in confidence and shall only be used for
purposes of evaluating the financial strength of
Tenant.
n.
Recordation.
This Lease may not be
recorded without Landlord's prior written consent, but Tenant
agrees, upon the request of Landlord, to execute a memorandum
hereof for recording purposes.
o.
Partial Invalidity.
The invalidity of
any portion of this Lease shall not invalidate the remaining
portions of the Lease.
p.
Binding Effect.
This Lease shall be
binding upon the respective parties hereto, and upon their heirs,
executors, successors and assigns.
q.
Entire Agreement.
This Lease supersedes
and cancels all prior negotiations between the parties, and no
changes shall be effective unless in writing signed by both
parties. Tenant acknowledges and agrees that it has not relied upon
any statements, representations, agreements or warranties except
those expressed in this Lease, and that this Lease contains the
entire agreement of the parties hereto with respect to the subject
matter hereof.
r.
Good Standing.
If requested by
Landlord, Tenant shall furnish appropriate legal documentation
evidencing the valid existence in good standing of Tenant, and the
authority of any person signing this Lease to act for the Tenant.
If Tenant signs as a corporation, each of the persons executing
this Lease on behalf of Tenant does hereby covenant and warrant
that Tenant is a duly authorized and existing corporation, that
Tenant has and is qualified to do business in the State in which
the Premises are located, that the corporation has a full right and
authority to enter into this Lease and that each of the persons
signing on behalf of the corporation is authorized to do
so.
s.
Terminology.
The singular shall include
the plural, and the masculine, feminine or neuter includes the
other.
t.
Headings.
Headings of sections are for
convenience only and shall not be considered in construing the
meaning of the contents of such section.
u.
Choice of Law.
This Lease shall be
interpreted and enforced in accordance with the laws of the State
in which the Premises are located.
v.
Effective Date.
The submission of this
Lease to Tenant for review does not constitute a reservation of or
option for the Premises, and this Lease shall become effective as a
contract only upon the execution and delivery by both Landlord and
Tenant. The date of execution shall be entered on the top of the
first page of this Lease by Landlord, and shall be the date on
which the last party signed the Lease, or as otherwise may be
specifically agreed by both parties. Such date, once inserted,
shall be established as the final day of ratification by all
parties to this Lease, and shall be the date for use throughout
this Lease as the "Effective Date".
w.
Jury Trial Waiver.
Landlord and Tenant
each hereby irrevocably, knowingly and voluntarily waive trial by
jury in any action, proceeding or counterclaim brought by either of
the parties against the other or their successors in respect to any
matter arising out of or in connection with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of
the Premises, and/or any claim for injury or damage, or any
emergency or statutory remedy.
x.
Approval
. Tenant acknowledges and
agrees that Landlord's lender(s)/mortgagee(s) may require approval
of the terms and conditions of this Lease prior to Landlord's
execution and that Landlord's execution of this Lease is subject to
and contingent upon such lender(s)/mortgagee(s) approval.
Accordingly, prior to the execution and delivery of a definitive
agreement, this Lease, and the terms and conditions contained
herein remain subject to change and no contract will be deemed to
be entered into unless and until Landlord and Tenant execute and
deliver a definitive lease document.
30.
RADON
. The following notification is
provided pursuant to Section 404.056(5), Florida Statutes
(2014): "Radon is a naturally occurring radioactive gas that, when
it has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time.
Levels of radon that exceed federal and state guidelines have been
found in buildings in Florida. Additional information regarding
radon gas and radon testing may be obtained from your county health
department."
31.
ADDENDA AND EXHIBITS.
If any addenda are
noted below, such addenda are incorporated herein and made a part
of this Lease.
a.
Lease
Addendum Number One – "Work Letter"
b.
Lease
Addendum Number Two – "Additional Rent - Operating Expense
Pass Throughs"
c.
Lease
Addendum Number Three - "Renewal Options"
d.
Lease
Addendum Number Four – "Rights of First Offer"
e.
Exhibit A
– Premises
f.
Exhibit B
– Rules and Regulations
g.
Exhibit C
– Commencement Agreement
[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]
IN
WITNESS WHEREOF, Landlord and Tenant have executed this Lease in
three (3) originals, to be effective as of the Effective
Date.
WITNESSES
/s/ D. Michael
Beck
Printed
Name: D. Michael Beck
/s/ Ella M.
Peterson
Printed
Name: Ella M. Peterson
|
"TENANT"
Autobytel Inc.,
a
Delaware corporation
By:
/s/
Glenn E. Fuller
Name: Glenn
E. Fuller
Title: EVP,
Chief Legal and Administrative Officer and Secretary
|
WITNESSES
/s/Zac
Gruber
Printed
Name: Zac Gruber
/s/ Kate
King
Printed
Name: Kate King
|
"LANDLORD"
Rivergate Tower Owner, LLC
,
a
Delaware limited liability company
By:
/s/
Lorri Dunne
Name: Lorri
Dunne
Title: Authorized
Signatory
|
LEASE ADDENDUM NUMBER ONE [ALLOWANCE]
WORK LETTER
This
Lease Addendum Number One (this "Work Letter") sets forth the
rights and obligations of Landlord and Tenant with respect to space
planning, engineering, final workshop drawings, and the
construction and installation of any improvements to the Premises
to be completed before the Commencement Date (the "Tenant
Improvements"). This Work Letter contemplates that the performance
of this work will proceed in four stages in accordance with the
following schedule: (i) preparation of a space plan;
(ii) final design and engineering and preparation of final
plans and working drawings; (iii) preparation by the
Contractor (as hereinafter defined) of an estimate of the
additional cost of the initial Tenant Improvements;
(iv) submission and approval of plans by appropriate
governmental authorities and construction and installation of the
Tenant Improvements by the Commencement Date.
In
consideration of the mutual covenants hereinafter contained,
Landlord and Tenant do mutually agree to the
following:
1.
Allowance.
Landlord agrees to provide an allowance of up to $25.00 per
rentable square foot, to design, engineer, install, supply and
otherwise to construct the Tenant Improvements in the Premises,
that when completed, will become a part of the Building (the
"Allowance"). Tenant acknowledges and agrees that the Allowance
shall be used only for the Tenant Improvements. In the event that
the cost of the Tenant Improvements exceeds the Allowance amount,
Tenant shall be fully responsible for the payment of all such
excess costs in connection with the Tenant Improvements. In the
event that the cost of the Tenant Improvements is less than the
Allowance amount, any difference shall be retained by Landlord.
Notwithstanding anything to the contrary contained in this Work
Letter or the Lease, Landlord shall be solely responsible for any
and all expenses related to the construction of the improvements
set forth on Schedule 1 attached to this Work Letter and such
expenses shall not be applied against or reduce the
Allowance.
2.
Space Planning,
Design and Working Drawings.
On Tenant's behalf, Landlord
shall select architects and engineers (collectively, "Architect"),
who will do the following at Tenant's expense (which expense may be
deducted from the Allowance):
a.
Attend a reasonable
number of meetings with Tenant and Landlord's agent to define
Tenant's requirements. The Architect shall provide one complete
space plan. Tenant shall approve such space plan, in writing,
within ten (10) days after receipt of the space
plan.
b.
Complete
construction drawings for Tenant's partition layout, reflected
ceiling grid, telephone and electrical outlets, keying, and finish
schedule.
c.
Complete building
standard mechanical plans where necessary (for installation of air
conditioning system and duct work, and heating and electrical
facilities) for the work to be done in the Premises.
d.
All plans and
working drawings for the construction and completion of the
Premises (the "Plans") shall be subject to Landlord's prior written
approval. Any changes or modifications Tenant desires to make to
the Plans shall also be subject to Landlord's prior approval.
Landlord agrees that it will not unreasonably withhold its approval
of the Plans, or of any changes or modifications thereof; provided,
however, Landlord shall have sole and absolute discretion to
approve or disapprove any improvements that will be visible to the
exterior of the Premises, or which may affect the structural
integrity of the Building. Any approval of the Plans by Landlord
shall not constitute approval of any Excused Delays caused by
Tenant and shall not be deemed a waiver of any rights or remedies
that may arise as a result of such Excused Delays. Landlord may
condition its approval of the Plans if: (i) the Plans require
design elements or materials that would cause Landlord to deliver
the Premises to Tenant after the scheduled Commencement Date, or
(ii) the estimated cost for any improvements under the Plan is
more than the Allowance unless Tenant pays fifty percent (50%) of
such overage simultaneously with any approval by Landlord and fifty
percent (50%) when due.
3.
Tenant
Plan Delivery Date
.
a.
Tenant acknowledges
that the Architect is acting on behalf of the Tenant and that
Tenant (not Landlord) is responsible for the timely completion of
the Plans.
b.
Tenant covenants
and agrees to deliver to Landlord the final Plans for the Tenant
Improvements on or before the date that is ten (10) days after the
Effective Date (the "Tenant Plan Delivery Date"). Time is of the
essence in the delivery of the final Plans. It is vital that the
final Plans be delivered to Landlord by the Tenant Plan Delivery
Date in order to allow Landlord sufficient time to review such
Plans, to discuss with Tenant any changes therein which Landlord
believes to be necessary or desirable, to enable the Contractor to
prepare an estimate of the cost of the Tenant Improvements, to
obtain required permits, and to substantially complete the Tenant
Improvements within the time frame provided in the
Lease.
4.
Work
and Materials at Tenant's Expense.
Landlord shall submit the
improvement work to one or more licensed contractors to bid for the
Tenant Improvement work (Tenant being entitled to select one
contractor to participate in such bidding process). On Tenant's
behalf, Landlord, using its reasonable discretion, shall select,
from the contractors submitting a bid, the contractor (the
"Contractor") to construct and install the Tenant Improvements in
accordance with the Plans (the "Work") at Tenant's expense (which
expense may be deducted from the Allowance). For the avoidance of
doubt, Tenant understands, acknowledges, and agrees that Landlord
shall not be required to select as the Contractor the contractor
selected by Tenant to participate in the bidding
process.
Tenant agrees
that the Contractor may be an affiliate of Landlord, provided that
the affiliate’s cost for completing the Work (including the
affiliate’s general conditions, overhead and profit) does
not, in the aggregate, exceed the competitive cost of the Work had
the Contractor not been an affiliate of Landlord. Landlord shall
coordinate and facilitate all communications between Tenant and the
Contractor.
a.
Prior to commencing
any Work, Landlord shall submit to Tenant in writing the cost of
the Work, which shall include (i) the Contractor's cost for
completing the Work (including the Contractor's general conditions,
overhead and profit) and (ii) a Construction Supervision Fee
of four percent (4%) of the cost of the Work to be paid to Landlord
to manage and oversee the work to be done on Tenant's behalf.
Tenant shall have five (5) business days to review and approve
the cost of the Work. Landlord shall not authorize the Contractor
to proceed with the Work until the cost is mutually agreed upon and
approved in writing and delivered to Landlord.
b.
Any changes in the
approved cost of the Work shall be by written change order signed
by the Tenant. Tenant agrees to process change orders in a timely
fashion. Tenant acknowledges that the following items may result in
change orders:
i.
Municipal or other
governmental inspectors require changes to the Premises such as
additional exit lights, fire damper or whatever other changes they
may require. In such event, Landlord will notify the Tenant of the
required changes, but the cost of such changes and any delay
associated with such changes shall be the responsibility of the
Tenant.
ii.
Tenant makes
changes to the Plans or requests additional work. Tenant will be
notified of the cost and any delays that would result from the
change by a change order signed by Tenant before the changes are
implemented. Any delays caused by such changes shall not delay the
Commencement Date of the Lease.
iii.
Any
errors or omissions in the Plans or specifications which require
changes. Landlord will notify the Tenant of the required changes,
but the cost of such changes and any delay associated with such
changes shall be the responsibility of the Tenant, and shall not
delay the Commencement Date of the Lease.
iv.
Materials are not
readily available, require quick ship charges, or require
substitution.
v.
The upfit schedule
requires express review to get permits, which will increase the
costs of the permitting process.
c.
All Work performed
in connection with the construction of the Tenant Improvements
shall be performed (i) in a good and workmanlike manner,
(ii) in accordance with all applicable laws and regulations
and with the final approved Plans, (iii) utilizing Building
Standard (as hereinafter defined) materials and finishes designated
by Landlord. Tenant understands, acknowledges and agrees that
notwithstanding anything to the contrary, Landlord may require
(a) the Contractor (and its subcontractors) to purchase
materials and finishes for the performance of the Work through
Landlord's preferred vendor(s) provided the cost of such materials
and finishes does not, in the aggregate, exceed the competitive
cost of the same materials and finishes not purchased from
Landlord's preferred vendor(s), and (b) specific vendors to
perform portions of the Work affecting Building systems. The term
"Building Standard" shall mean the type, brand, grade, or quality
of materials and finishes Landlord designates from time to time to
be used in the Building or, as the case may be, the exclusive type,
brand, grade, or quality of materials and finishes to be used in
the Building.
5.
Signage and
Keys.
Landlord shall provide the following in accordance
with Building standards at Tenant's expense (which expense may be
deducted from the Allowance): (i) door and directory signage;
(ii) suite and Building keys or entry cards.
6.
Commencement
Date
.
a.
The Commencement
Date shall be the date when the work to be performed by Landlord is
substantially completed, excluding items of work and adjustment of
equipment and fixtures that can be completed after the Premises are
occupied without causing material interference with Tenant's use of
the Premises (collectively, "Punch List Items"), and the Landlord
delivers possession of the Premises to Tenant in accordance with
Section 3 of the Lease.
b.
Notwithstanding the
foregoing, if Landlord shall be delayed in delivering possession of
the Premises as a result of:
i.
Tenant's failure to
approve the space plan within the time specified;
ii.
Tenant's
failure to furnish to Landlord the final Plans on or before the
Tenant Plan Delivery Date;
iii.
Tenant's
failure to approve Landlord's cost estimates within the time
specified;
iv.
Tenant's failure to
timely respond to change orders;
v.
Tenant's changes in
the Tenant Improvements or the Plans (notwithstanding Landlord's
approval of any such
changes);
vi.
Tenant's request
for changes in or modifications to the Plans subsequent to the
Tenant Plan Delivery Date;
vii.
Inability
to obtain materials, finishes or installations requested by Tenant
that are not part of the Building Standard
Improvements;
viii.
The
performance of any work by any person, firm or corporation employed
or retained by Tenant;
ix.
Any other act or
omission by Tenant or its agents, representatives, and/or
employees; or
x.
A force majeure
event;
then,
in any such event, for purposes of determining the Commencement
Date, the Premises shall be deemed to have been delivered to Tenant
on the date that Landlord and Architect reasonably determine that
the Premises would have been substantially completed and ready for
delivery if such delay or delays had not occurred.
7.
Tenant Improvement
Expenses in Excess of the Allowance.
Tenant agrees to pay to
Landlord, promptly upon being billed therefor, all costs and
expenses in excess of the Allowance incurred in connection with the
Tenant Improvements. If unpaid within thirty (30) days after
receipt of invoice, then the outstanding balance shall accrue at
the rate of one percent (1%) per month until paid in
full.
8.
Repairs and
Corrections.
Tenant, at its sole cost and expense, shall
repair or correct any defective work or materials installed by
Tenant or any contractor other than the Contractor selected by
Landlord, or any work or materials that prove defective as a result
of any act or omission of Tenant or any of its employees, agents,
invitees, licensees, subtenants, customers, clients, or
guests.
9.
Inspection of
Premises; Possession by Tenant.
Prior to taking possession
of the Premises, Tenant and Landlord shall inspect the Premises and
Tenant shall give Landlord written notice of any Punch List Items.
Tenant's possession of the Premises constitutes acknowledgment by
Tenant that the Premises are in good condition and that all work
and materials provided by Landlord are satisfactory as of such date
of delivery of possession, except as to (i) any Punch List
Items, (ii) latent defects, and (iii) any equipment that
is used seasonally if Tenant takes possession of the Premises
during a season when such equipment is not in use.
10.
Access During
Construction.
During construction of the Tenant Improvements
and with prior approval of Landlord, Tenant shall be permitted
reasonable access to the Premises for the purposes of taking
measurements, making plans, installing trade fixtures, and doing
such other work as may be appropriate or desirable to enable Tenant
to assume possession of and operate in the Premises; provided,
however, that such access does not interfere with or delay
construction work on the Premises. Prior to any such entry, Tenant
shall comply with all insurance provisions of the Lease. Tenant
agrees to indemnify, defend, and hold Landlord harmless from and
against any suits, claims, damages, costs, expenses and liabilities
asserted against or incurred by Landlord or the property as a
result of Tenant accessing the Premises during construction of the
Tenant Improvements.
SCHEDULE 1 TO LEASE ADDENDUM NUMBER ONE [ALLOWANCE]
LEASE ADDENDUM NUMBER TWO [BASE YEAR]
ADDITIONAL RENT - OPERATING EXPENSE PASS THROUGHS
For the
calendar year commencing on January 1
ST
of the first
calendar year after the Base Year (as hereinafter
defined)
and for each
calendar year thereafter, Tenant shall pay to Landlord as
Additional Rent, Tenant's Proportionate Share of any increase in
Operating Expenses (as hereinafter defined) incurred by Landlord's
operation or maintenance of the Building over the Operating
Expenses incurred by Landlord during calendar year 2016 (the "Base
Year"). Tenant's Proportionate Share shall be calculated by
dividing the 8,724 rentable square feet of the Premises by the
515,965 net rentable square feet of the Building, which equals
1.70%. If during any calendar year (including, without limitation,
the Base Year) the occupancy of the rentable area of the Building
is less than 95% full, then any variable components of Operating
Expenses (as hereinafter defined) will be adjusted for such
calendar year at a rate of 95% occupancy.
As used
herein, the term "Operating Expenses" shall mean direct costs of
operation, repair and maintenance as determined by standard
accounting practices, including, but not limited to ad valorem real
and personal property taxes, hazard and liability insurance
premiums, utilities, heat, air conditioning, janitorial service,
labor, materials, supplies, equipment and tools, permits, licenses,
inspection fees, management fees (but not including the cost of
management personnel above the level of property manager), and
Common Area expenses; provided, however, the term "Operating
Expenses" shall not include depreciation on the Building or
equipment therein, interest, executive salaries, real estate
brokers' commissions, or other expenses that do not relate to the
operation of the Building. Furthermore, "Operating Expenses" shall
not include the costs of capital repairs, replacements,
alterations, improvements and equipment, except "Operating
Expenses" may include the amortized portion of any Includable
Capital Expenditure (as defined below), to be amortized over the
useful life of such Includable Capital Expenditure on a straight
line basis together with interest thereon at the actual interest
rate incurred by Landlord (or, in the event Landlord has paid cash
for such capital expenditure, at an imputed interest rate equal to
eight percent (8%). "Includable Capital Expenditures" means the
costs of capital repairs, replacements, alterations, improvements
and equipment: (i) required to comply with laws that are first
enacted after the Commencement Date; (ii) performed primarily
to reduce current or future Operating Expenses or otherwise improve
the operating efficiency of the Building; or (iii) due to
normal wear and tear. The annual statement of Operating Expenses
shall be accounted for and reported in accordance with generally
accepted accounting principles (the "Annual Statement"). Landlord
may use related or affiliated entities to provide services or
furnish materials for the Building if the rates or fees charged by
such entities are competitive with those charged by unrelated or
unaffiliated entities with respect to similar buildings in the
Tampa, Florida area for the same services or
materials.
Notwithstanding
anything herein to the contrary, Controllable Operating Expenses
(defined as total Operating Expenses less those expenses related to
property taxes and assessments, insurance, debris removal,
utilities, and fuel surcharges) shall not increase by more than
seven percent (7%) annually on a cumulative compound basis over the
actual Controllable Operating Expenses for the Base
Year.
For the
calendar year commencing on January 1
st
of the first
calendar year after the Base Year and for each calendar year
thereafter during the Term, Landlord shall estimate the amount the
Operating Expenses shall increase for such calendar year above the
Operating Expenses incurred during the Base Year. Landlord shall
send to Tenant a written statement of the amount of Tenant's
Proportionate Share of any estimated increase in Operating Expenses
and Tenant shall pay to Landlord, monthly as Additional Rent,
Tenant's Proportionate Share of such increase in Operating
Expenses. Within ninety (90) days after the end of each
calendar year, Landlord shall send a copy of the Annual Statement
to Tenant. Pursuant to the Annual Statement, Tenant shall pay to
Landlord Additional Rent in a lump sum as owed or Landlord shall
adjust Tenant's Rent payments if Landlord owes Tenant a credit,
such payment or adjustment to be made within thirty (30) days
after the Annual Statement is received by Tenant. After the
Expiration Date, Landlord shall send Tenant the final Annual
Statement for the Term, and Tenant shall pay to Landlord Additional
Rent as owed or if Landlord owes Tenant a credit, then Landlord
shall pay Tenant a refund, such payment or refund to be made within
thirty (30) days after the Annual Statement is received by
Tenant. If this Lease expires or terminates on a day other than
December 31
st
, then Additional
Rent shall be prorated on a 365-day calendar year (or 366 if a leap
year).
Tenant
shall have the right to examine and review Landlord's books and
records pertaining to Operating Expenses (“Tenant's
Review”), at Tenant’s expense, one time during each
calendar year provided that (i) Tenant provides Landlord with
written notice of its election to conduct Tenant’s Review no
later than three (3) months following Tenant's receipt of the
Annual Statement and completes Tenant’s Review within sixty
(60) days after giving such notice; (ii) there is no event of
default under the Lease as of the date that Tenant delivers such
notice or any default that occurs during Tenant’s Review
after the giving of notice and that is not cured or in the process
of being cured within any applicable cure periods, provided,
however, that Tenant shall lose the right to perform Tenant’s
Review if such default is not cured during the applicable cure
period; (iii) Tenant fully and promptly pays all Rent, including
Tenant's Proportionate Share of Operating Expenses as billed by
Landlord pending the outcome of Tenant’s Review; (iv)
Tenant's Review is conducted by a qualified employee of Tenant or
by an accounting firm engaged by Tenant on a non-contingency fee
basis, and full and complete copy of the results of Tenant’s
Review is provided to Landlord; (v) Tenant and the person(s)
conducting Tenant’s Review agree that they will not divulge
the contents of Landlord’s books and records or the result of
their examination to any other person, including any other tenant
in the Building other than Tenant’s attorneys, accountants,
employees and consultants who have need of the information for
purposes of administering this Lease for Tenant or as otherwise
required by law or in connection with legal proceedings against
Landlord. Tenant shall not be entitled to challenge
Landlord’s calculation of Operating Expenses in any year(s)
prior to the year for which Tenant’s Review is being
conducted, all such Operating Expenses to be deemed final and
binding on the parties once Tenant’s Review for that year has
been conducted or Tenant’s right to conduct Tenant’s
Review for such year has lapsed. Tenant's Review shall be conducted
at Landlord's office where the accounting records are maintained
during Landlord's normal business hours. In the event that
Tenant’s Review demonstrates that Landlord has overstated
Operating Expenses, Landlord shall reimburse Tenant for any
overpayment of Tenant's Proportionate Share of such Operating
Expenses within thirty (30) days of Landlord’s receipt of
reasonably sufficient documentation of such overstatement from
Tenant; provided, however, that Tenant’s Review must be
completed within the time frames set forth in (i) above or Landlord
shall have no obligation to reimburse Tenant for any overstatement
of Operating Expenses for that year then under review. In the event
that Tenant’s Review demonstrates that Landlord has
overstated Operating Expenses by more than seven and one-half
percent (7.5%) of the actual Operating Expenses owed by Tenant,
Landlord shall reimburse Tenant for the reasonable out of pocket
costs Tenant paid to unrelated third parties for the performance of
Tenant’s Review; provided, however, Landlord shall not be
obligated to reimburse Tenant for more than $5,000 of expenses with
respect to any one Tenant’s Review. In the event that
Tenant’s Review demonstrates that Landlord has understated
Operating Expenses, Tenant shall promptly reimburse Landlord for
any underpayment of Tenant's Proportionate Share of such Operating
Expenses.
ADDENDUM NUMBER THREE
RENEWAL OPTIONS
1.
Option to Renew.
Tenant shall have the
right and option to renew the Lease (a "Renewal Option") for two
(2) additional periods of five (5) years (each a “Renewal
Lease Term”); provided, however, such Renewal Option is
contingent upon the following: (i) Tenant is not in default at the
time Tenant gives Landlord notice of Tenant’s intention to
exercise the Renewal Option; (ii) upon the Expiration Date or the
expiration of any Renewal Lease Term, Tenant has no outstanding
default; (iii) no event has occurred that upon notice or the
passage of time would constitute a default; (iv) Tenant is not
disqualified by multiple defaults as provided in Section 23 of the
Lease; and (v) Tenant (or a transferee (other than a sublessee
subleasing fifty percent (50%) or more of the Premises) pursuant to
a Permitted Transfer) is occupying and actively conducting business
from the entirety of the Premises. Following the expiration of the
Renewal Lease Term, Tenant shall have no further right to renew the
Lease pursuant to this Addendum Number Three.
2.
Exercise of Option.
Tenant shall
exercise each Renewal Option by giving Landlord written notice at
least nine (9) months prior to the Expiration Date of the Lease
Term or the expiration of any Renewal Lease Term. If Tenant fails
to deliver such written notice to Landlord prior to such nine (9)
month period, then Tenant shall forfeit the Renewal Option. If
Tenant exercises any Renewal Option, then during the Renewal Lease
Term, Landlord’s and Tenant’s respective rights, duties
and obligations shall be governed by the terms and conditions of
the Lease. Time is of the essence in exercising the Renewal
Option.
3.
Term
. If Tenant exercises any Renewal
Option, then during the Renewal Lease Term, all references to the
term “Term”, as used in the Lease, shall mean the
“Renewal Lease Term”.
4.
Termination of Renewal Option on Transfer by
Tenant.
Except with respect to a Permitted Transfer, in the
event Landlord consents to an assignment or sublease by Tenant,
then all Renewal Options shall automatically terminate unless
otherwise agreed in writing by Landlord.
5.
Base Rent for Renewal Lease Term.
The
Base Rent for the Renewal Lease Term shall be the Fair Market
Rental Rate, determined as follows:
Definition
. The term
"
Fair Market Rental
Rate
" shall mean the market rental rate for the time period
such determination is being made for office space in office
buildings in the Tampa downtown area ("Area") of comparable quality
and condition to the Building and for space of equivalent quality,
size, utility, and location. Such determination shall take into
account all relevant factors, including, without limitation, the
following matters: the credit standing of Tenant; the length of the
term; expense stops; the fact that Landlord will experience no
vacancy period and that Tenant will not suffer the costs and
business interruption associated with moving its offices and
negotiating a new lease; construction allowances and other tenant
concessions that would be available to tenants comparable to Tenant
in the Area (such as moving expense allowance, free rent periods,
and lease assumptions and take-over provisions, if any, but
specifically excluding the value of improvements installed in the
Premises at Tenant's cost), and whether adjustments are then being
made in determining the rental rates for renewals in the Area
because of concessions being offered by Landlord to Tenant (or the
lack thereof for the Renewal Lease Term in question). For purposes
of such calculation, it will be assumed that Landlord is paying a
representative of Tenant a brokerage commission in connection with
the Renewal Lease Term, based on the then current market
rates.
Determination
. So long as
Tenant properly exercised its Renewal Option pursuant to Section 2
above, Landlord shall, within thirty (30) days after receipt of
written request from Tenant for the determination of the Fair
Market Rental Rate (which request must be delivered no earlier than
twelve (12) months and no later than nine (9) months prior to the
Expiration Date of the Lease Term or the expiration of any Renewal
Lease Term), deliver to Tenant notice of the Fair Market Rental
Rate (the "FMRR Notice") for the Premises for the Renewal Lease
Term in question. If Tenant disagrees with Landlord's assessment of
the Fair Market Rental Rate specified in a FMRR Notice, then it
shall so notify Landlord in writing within ten (10) business days
after delivery of such FMRR Notice (the “FMRR
Response”). If Tenant fails to timely deliver the FMRR
Response, the rate set forth in the FRMM Notice shall be the Fair
Market Rental Rate. If Tenant timely delivers the FMRR Response,
then Landlord and Tenant shall meet to attempt to determine the
Fair Market Rental Rate. If Tenant and Landlord are unable to agree
on such Fair Market Rental Rate within ten (10) business days after
delivery of the FMRR Response, then Landlord and Tenant shall each
appoint an independent real estate broker with at least five (5)
years' commercial real estate leasing experience in the Area
market. The two brokers shall then, within ten (10) days after
their designation, select an independent third broker with like
qualifications. If the two brokers are unable to agree on the third
broker within such ten (10) day period, either Landlord or Tenant,
by giving five (5) days prior notice thereof to the other, may
apply to the then presiding Clerk of Court of Hillsborough County
for selection of a third broker who meets the qualifications stated
above. Within twenty (20) business days after the selection of the
third broker, a majority of the brokers shall determine the Fair
Market Rental Rate. If a majority of the brokers is unable to agree
upon the Fair Market Rental Rate by such time, then the two (2)
closest broker values shall be averaged and the average will be the
Fair Market Rental Rate. Tenant and Landlord shall each bear the
entire cost of the broker selected by it and shall share equally
the cost of the third broker
.
Administration
. If Tenant has
exercised the Renewal Option and the Fair Market Rental Rate for
the Renewal Lease Term has not been determined in accordance with
this Addendum Number Three by the time that Rent for the Renewal
Lease Term is to commence in accordance with the terms hereof, then
Tenant shall pay Rent for the Renewal Lease Term based on the Fair
Market Rental Rate proposed by Landlord pursuant to the FMRR Notice
until such time as the Fair Market Rental Rate has been so
determined, at which time appropriate cash adjustments shall be
made between Landlord and Tenant such that Tenant is charged Rent
based on the Fair Market Rental Rate (as finally determined
pursuant to this Addendum Number Three) for the Renewal Lease Term
during the interval in question.
ADDENDUM NUMBER FOUR
RIGHT
OF FIRST OFFER
Provided (i) this
Lease is in full force and effect and Tenant is not in default
hereunder beyond any applicable notice and cure period at the time
Landlord gives the First Offer Notice (as hereinafter defined),
(ii) no event has occurred that upon notice or the passage of time
would constitute a default, (iii) Tenant (or transferee (other than
a sublessee subleasing fifty percent (50%) or more of the Premises)
pursuant to a Permitted Transfer) is occupying and actively
conducting business from the entirety of the Premises, and (iv)
Tenant is not disqualified by multiple defaults as provided in
Section 23 of the Lease, then in the event any space located on the
second (2
nd
) and third
(3
rd
)
floors of the 5-Story Pavilion Building more particularly described
in Exhibit “D” attached to the Lease (the “First
Offer Space”) becomes available during the Term or any
Renewal Lease Term, Landlord shall, subject to offers to any
existing tenants but prior to leasing said available First Offer
Space to another tenant, first offer said available First Offer
Space to Tenant by providing written notice to Tenant (the
“First Offer Notice”) of its opportunity to lease the
available First Offer Space on the terms and conditions contained
in the First Offer Notice; provided, however, Tenant shall be
required to lease the entire available First Offer Space identified
in the First Offer Notice. Notwithstanding anything contained
herein, no First Offer Space shall be deemed to come available if
such First Offer Space is assigned or subleased by the current
tenant of the First Offer Space, leased again by the current tenant
of the space by way of renegotiation of its lease terms, leased
again by the current tenant pursuant to a right to renew or extend
its lease which right exists as of the Effective Date of the Lease,
or if such space is not vacant, or is subject to a specific
expansion right (existing as of the Effective Date of this Lease)
of another tenant in the Building. In the event such First Offer
Notice is made, Tenant shall have ten (10) business days from
receipt of the First Offer Notice to exercise this right of first
offer and lease the entire amount of First Offer Space identified
in the First Offer Notice. In the event Tenant has timely notified
Landlord of its decision to exercise this right of first offer,
Landlord and Tenant shall execute an agreement or amendment to the
Lease embodying substantially the same terms as those in the First
Offer Notice. In the event Tenant has timely notified Landlord of
its decision not to exercise this right of first offer, or has
failed to timely make its election, Landlord may market and/or
lease the space on terms and conditions acceptable to Landlord in
its sole discretion; provided, however, that in the event that
Landlord does not lease the First Offer Space within twelve (12)
months after Landlord's delivery of its First Offer Notice,
Landlord shall be obligated to comply once again with this Addendum
in favor of Tenant.
EXHIBIT A
PREMISES
EXHIBIT B
RULES AND REGULATIONS
1.
Access to Building
. On Saturdays,
Sundays, legal holidays and weekdays between the hours of 6:00 P.M.
and 8:00 A.M., access to the Building and/or to the halls,
corridors, elevators or stairways in the Building may be restricted
and access shall be gained by use of a key or electronic card to
the outside doors of the Buildings. Landlord may from time to time
establish security controls for the purpose of regulating access to
the Building. Tenant shall be responsible for providing access to
the Premises for its agents, employees, invitees and guests at
times access is restricted, and shall comply with all such security
regulations so established.
2.
Protecting Premises
. The last member of
Tenant to leave the Premises shall close and securely lock all
doors or other means of entry to the Premises and shut off all
lights and equipment in the Premises.
3.
Building Directories
. Any directories
for the Building in the form selected by Landlord shall be used
exclusively for the display of the name and location of tenants.
Any additional names and/or name change requested by Tenant to be
displayed in the directories must be approved by Landlord and, if
approved, will be provided at the sole expense of
Tenant.
4.
Large Articles
. Furniture, freight and
other large or heavy articles may be brought into the Building only
at times and in the manner designated by Landlord and always at
Tenant's sole responsibility. All damage done to the Building, its
furnishings, fixtures or equipment by moving or maintaining such
furniture, freight or articles shall be repaired at Tenant's
expense.
5.
Signs
. Tenant shall not paint, display,
inscribe, maintain or affix any sign, placard, picture,
advertisement, name, notice, lettering or direction on any part of
the outside or inside of the Building, or on any part of the inside
of the Premises which can be seen from the outside of the Premises,
including windows and doors, without the written consent of
Landlord, and then only such name or names or matter and in such
color, size, style, character and material as shall be first
approved by Landlord in writing. Landlord, without notice to
Tenant, reserves the right to remove, at Tenant's expense, all
matters other than that provided for above.
6.
Compliance with Laws
. Tenant shall
comply with all applicable laws, ordinances, governmental orders or
regulations and applicable orders or directions from any public
office or body having jurisdiction, whether now existing or
hereinafter enacted with respect to the Premises and the use or
occupancy thereof. Tenant shall not make or permit any use of the
Premises which directly or indirectly is forbidden by law,
ordinance, governmental regulations or order or direction of
applicable public authority, which may be dangerous to persons or
property or which may constitute a nuisance to other
tenants.
7.
Hazardous Materials
. Tenant shall not
use or permit to be brought into the Premises or the Building any
flammable oils or fluids, or any explosive or other articles deemed
hazardous to persons or property, or do or permit to be done any
act or thing which will invalidate, or which, if brought in, would
be in conflict with any insurance policy covering the Building or
its operation, or the Premises, or any part of either, and will not
do or permit to be done anything in or upon the Premises, or bring
or keep anything therein, which shall not comply with all rules,
orders, regulations or requirements of any organization, bureau,
department or body having jurisdiction with respect thereto (and
Tenant shall at all times comply with all such rules, orders,
regulations or requirements), or which shall increase the rate of
insurance on the Building, its appurtenances, contents or
operation.
8.
Defacing Premises and Overloading
.
Tenant shall not place anything or allow anything to be placed in
the Premises near the glass of any door, partition, wall or window
that may be unsightly from outside the Premises. Tenant shall not
place or permit to be placed any article of any kind on any window
ledge or on the exterior walls; blinds, shades, awnings or other
forms of inside or outside window ventilators or similar devices
shall not be placed in or about the outside windows in the Premises
except to the extent that the character, shape, color, material and
make thereof is approved by Landlord. Tenant shall not do any
painting or decorating in the Premises or install any floor
coverings in the Premises or make, paint, cut or drill into, or in
any way deface any part of the Premises or Building without in each
instance obtaining the prior written consent of Landlord. Tenant
shall not overload any floor or part thereof in the Premises, or
any facility in the Building or any public corridors or elevators
therein by bringing in or removing any large or heavy articles and
Landlord may direct and control the location of safes, files, and
all other heavy articles and, if considered necessary by Landlord
may require Tenant at its expense to supply whatever supplementary
supports necessary to properly distribute the weight.
9.
Obstruction of Public Areas
. Tenant
shall not, whether temporarily, accidentally or otherwise, allow
anything to remain in, place or store anything in, or obstruct in
any way, any sidewalk, court, hall, passageway, entrance, or
shipping area. Tenant shall lend its full cooperation to keep such
areas free from all obstruction and in a clean and sightly
condition, and move all supplies, furniture and equipment as soon
as received directly to the Premises, and shall move all such items
and waste (other than waste customarily removed by Building
employees) that are at any time being taken from the Premises
directly to the areas designated for disposal. All courts,
passageways, entrances, exits, elevators, escalators, stairways,
corridors, halls and roofs are not for the use of the general
public and Landlord shall in all cases retain the right to control
and prevent access thereto by all persons whose presence, in the
judgment of Landlord, shall be prejudicial to the safety,
character, reputation and interest of the Building and its tenants;
provided, however, that nothing herein contained shall be construed
to prevent such access to persons with whom Tenant deals within the
normal course of Tenant's business so long as such persons are not
engaged in illegal activities.
10.
Keys, Locks, and Access Cards
. To the
extent applicable, Tenant shall be provided, at no additional
charge, a reasonable number of after hour access cards or keys not
to exceed five (5) per each one thousand (1,000) rentable
square feet contained in the Premises upon commencement. Tenant
shall pay Landlord a fee in the amount of $10.00 or $25.00 per
additional card/key or replacement card/key, respectively. Tenant
shall not attach, or permit to be attached, additional locks or
similar devices to any door or window, change existing locks or the
mechanism thereof, or make or permit to be made any keys for any
door other than those provided by Landlord. Upon termination of
this Lease or of Tenant's possession, Tenant shall immediately
surrender all cards/keys to the Premises.
11.
Communications or Utility Connections
.
If Tenant desires signal, alarm or other utility or similar service
connections installed or changed, then Tenant shall not install or
change the same without the approval of Landlord, and then only
under direction of Landlord and at Tenant's expense. Tenant shall
not install in the Premises any equipment which requires a greater
than normal amount of electrical current for the permitted use
without the advance written consent of Landlord. Tenant shall
ascertain from Landlord the maximum amount of load or demand for or
use of electrical current which can safely be permitted in the
Premises, taking into account the capacity of the electric wiring
in the Building and the Premises and the needs of other tenants in
the Building, and Tenant shall not in any event connect a greater
load than that which is safe.
12.
Office of the Building
. Service
requirements of Tenant will be attended to only upon application at
the office of Landlord or its Property Manager. Employees of
Landlord shall not perform, and Tenant shall not engage them to do
any work outside of their duties unless specifically authorized by
Landlord.
13.
Restrooms
. The restrooms, toilets,
urinals, vanities and the other apparatus shall not be used for any
purpose other than that for which they were constructed, and no
foreign substance of any kind whatsoever shall be thrown therein.
The expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the Tenant whom, or whose
employees or invitees, shall have caused it.
14.
Intoxication
. Landlord reserves the
right to exclude or expel from the Building any person who, in the
judgment of Landlord, is intoxicated, or under the influence of
liquor or drugs, or who in any way violates any of the Rules and
Regulations of the Building.
15.
Nuisances and Certain Other Prohibited
Uses
. Tenant shall not (a) install or operate any
internal combustion engine, boiler, machinery, refrigerating,
heating or air conditioning apparatus in or about the Premises;
(b) engage in any mechanical business, or in any service in or
about the Premises or Building, except those ordinarily embraced
within the Permitted Use as specified in Section 1c of the
Lease; (c) use the Premises for housing, lodging, or sleeping
purposes; (d) prepare or warm food in the Premises or permit
food to be brought into the Premises for consumption therein
(heating coffee and individual lunches of employees excepted)
except by express permission of Landlord; (e) place any radio
or television antennae on the roof or on or in any part of the
inside or outside of the Building other than the inside of the
Premises, or place a musical or sound producing instrument or
device inside or outside the Premises which may be heard outside
the Premises; (f) use any power source for the operation of
any equipment or device other than dry cell batteries or
electricity; (g) operate any electrical device from which may
emanate waves that could interfere with or impair radio or
television broadcasting or reception from or in the Building or
elsewhere; (h) bring or permit to be in the Building any
bicycle, other vehicle, dog (except in the company of a blind
person), other animal or bird; (i) make or permit any
objectionable noise or odor to emanate from the Premises;
(j) disturb, harass, solicit or canvass any occupant of the
Building; (k) do anything in or about the Premises which could
be a nuisance or tend to injure the reputation of the Building;
(i) allow any firearms in the Building or the Premises except
as approved by Landlord in writing.
16.
Solicitation
. Tenant shall not canvass
other tenants in the Building to solicit business or contributions
and shall not exhibit, sell or offer to sell, use, rent or exchange
any products or services in or from the Premises unless ordinarily
embraced within the Tenant's Permitted Use as specified in
Section 1c of the Lease.
17.
Energy Conservation
. Tenant shall not
waste electricity, water, heat or air conditioning and agrees to
cooperate fully with Landlord to insure the most effective
operation of the Building's heating and air conditioning, and shall
not allow the adjustment (except by Landlord's authorized Building
personnel) of any controls.
18.
Building Security
. At all times other
than normal business hours the exterior Building doors and suite
entry door(s) must be kept locked to assist in security. Problems
in Building and suite security should be directed to
Landlord
.
19.
Parking
. Parking is in designated
parking areas only. There shall be no vehicles in "no parking"
zones or at curbs. Handicapped spaces are for handicapped persons
only and the Police Department will ticket unauthorized
(unidentified) cars in handicapped spaces. Landlord reserves the
right to remove vehicles that do not comply with the Lease or these
Rules and Regulations and Tenant shall indemnify and hold harmless
Landlord from its reasonable exercise of these rights with respect
to the vehicles of Tenant and its employees, agents and
invitees.
20.
Janitorial Service
. The janitorial staff
will remove all trash from trashcans. Any container or boxes left
in hallways or apparently discarded unless clearly and
conspicuously labeled DO NOT REMOVE may be removed without
liability to Tenant. Any large volume of trash resulting from
delivery of furniture, equipment, etc., should be removed by the
delivery company, Tenant, or Landlord at Tenant's expense.
Janitorial service will be provided after hours five (5) days
a week. All requests for trash removal other than normal janitorial
services should be directed to Landlord
.
21.
Construction
. Tenant shall make no
structural or interior alterations of the Premises. All structural
and nonstructural alterations and modifications to the Premises
shall be coordinated through Landlord as outlined in the Lease.
Completed construction drawings of the requested changes are to be
submitted to Landlord or its designated agent for pricing and
construction supervision.
EXHIBIT C
COMMENCEMENT
AGREEMENT
This
COMMENCEMENT AGREEMENT (the "Commencement Agreement"), made and
entered into as of this _______ day of ________________, 201__, by
and between
______________________________________
,
a
Delaware limited liability company ("Landlord") and
______________________________________
,
a __________________ ("Tenant");
W
I T N E S S E T H:
WHEREAS, Tenant and
Landlord entered into that certain Lease Agreement dated
___________________ (the "Lease"), for space designated as Suite
________, comprising approximately ___________ rentable square
feet, in the ______________________ Building, located at
___________________________________________, City of _____________,
County of _______________, State of _______________;
and
WHEREAS, the
parties desire to establish the Commencement Date and Expiration
Date as set forth below,
NOW,
THEREFORE, in consideration of the mutual and reciprocal promises
herein contained, Tenant and Landlord hereby agree that said Lease
hereinafter described be, and the same is hereby modified in the
following particulars:
1. The
term of the Lease by and between Landlord and Tenant actually
commenced on ___________________ (the "Commencement Date"). The
initial term of said Lease shall terminate on ___________________
(the "Expiration Date"). Section 1b, entitled "Term", and all
references to the Commencement Date and Expiration Date in the
Lease are hereby amended.
2. Except
as modified and amended by this Commencement Agreement, the Lease
shall remain in full force and effect.
IN
WITNESS WHEREOF, Landlord and Tenant have caused this Agreement to
be duly executed, as of the day and year first above
written
.
LANDLORD:
|
TENANT:
|
_____________________________________
_____________________________________
_____________________________________
_____________________________________
|
TENANT
[NOT FOR EXECUTION]
|
By:
________________________________________________
|
By:
________________________________________________
|
EXHIBIT D
FIRST OFFER SPACE
FIRST AMENDMENT OF LEASE
THIS FIRST AMENDMENT OF LEASE
(“First Amendment”), is entered into this
21
day of November, 2016 (the
“First Amendment Effective Date”), by and between
RIVERGATE TOWER OWNER, LLC
,
a Delaware limited liability company (“Landlord”), and
AUTOBYTEL INC.
, a Delaware
corporation (“Tenant”).
R E C I T A L S :
WHEREAS
, Landlord and Tenant entered
into that certain Office Lease dated December 9, 2015 (the
“Lease”), for the premises located in Suites C400 and
C500 (the “Original Premises”) consisting of 8,724
rentable square feet, in the building located at 400 North Ashley
Drive, Tampa, Florida, 33602 (“Building”);
and
WHEREAS
, Landlord and Tenant desire to
modify the Lease so that the Premises is relocated from the
Original Premises to the 2
nd
and 3
rd
Floor Bi-Level
Suites of the Building consisting of 13,162 rentable square
feet;
NOW THEREFORE
, for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged by both parties, Landlord and Tenant agree to amend
the Lease as follows:
1.
Recitals
.
The Recitals set forth above are true and correct and are
incorporated as if fully set forth herein.
2.
Definitions
.
Capitalized terms shall have the meaning ascribed to such terms in
the Lease unless otherwise defined herein.
3.
New
Premises
. As used in this First Amendment, the term
“New Premises” shall mean the 2
nd
and 3
rd
Floor Bi-Level
Suites in the Building consisting of 13,162 rentable square feet.
The New Premises is shown on Exhibit A attached hereto. Effective
upon the First Amendment Effective Date, Section 1a of the Lease
shall be amended to provide that the term “Premises”
shall mean the New Premises as described in this Section 3 of this
First Amendment and shown on Exhibit A attached hereto. Exhibit A
of the Lease shall be deleted in its entirety and replaced with
Exhibit A attached hereto.
4.
Term.
Effective upon the First Amendment Effective Date, Section 1b of
the Lease shall be amended to provide that the Commencement Date
shall mean the earlier of (i) the date Tenant commences business
operations in the Premises, or (ii) the date the Tenant
Improvements (as defined in the Work Letter) are substantially
complete, which Commencement Date is anticipated to be December 1,
2016.
5.
Base Rent Schedule.
Effective upon the First Amendment Effective Date, Section 1e of
the Lease shall be deleted in its entirety and replaced with the
following:
“e.
Base Rent
. The Base Rent
for the Term is payable in monthly installments on the
1
st
day of
each month in accordance with the following Base Rent
Schedule:
FROM MONTH
|
THROUGH MONTH
|
RENTABLE SQUARE FEET
|
ANNUAL BASE RENT PER RENTABLE SQUARE FOOT*
|
ANNUAL BASE RENT*
|
MONTHLY BASE RENT*
|
Commencement
Date
|
12
|
13,162
|
$30.00
|
$394,860.00
|
$32,905.00
|
13
|
24
|
13,162
|
$30.98
|
$407,758.76
|
$33,979.90
|
25
|
36
|
13,162
|
$31.99
|
$421,052.38
|
$35,087.70
|
37
|
48
|
13,162
|
$33.03
|
$434,740.86
|
$36,228.41
|
49
|
60
|
13,162
|
$34.10
|
$448.824.20
|
$37,402.02
|
61
|
72
|
13,162
|
$35.21
|
$463,434.02
|
$38,619.50
|
73
|
84
|
13,162
|
$36.35
|
$478,438.70
|
$39,869.89
|
*
Plus applicable State of Florida Sales Tax
The
above Base Rent schedule does not include operating expense pass
through adjustments to be computed annually in accordance with
Lease Addendum Number Two attached hereto. Provided that no default
exists at the time of the abatement provided below, Tenant’s
monthly installments of Base Rent shall be abated for a two (2)
month period (the “Abated Rent”), with such abatement
commencing on the Commencement Date and continuing up through the
date that is two (2) months thereafter (the “Abatement
Period”). The principal amount of the Abated Rent shall be
amortized evenly over the initial Term. So long as no uncured event
of default occurs under the Lease, then upon Landlord’s
receipt of the final monthly installment of Rent, Tenant shall have
no liability to Landlord for the repayment of any portion of the
Abated Rent. In the event of an uncured default, then in addition
to all of Landlord’s other remedies available under the
Lease, Tenant shall also become immediately liable to Landlord for
the unamortized portion of the Abated Rent existing as of the date
of such uncured event of default.”
6.
Proportionate
Share.
Effective upon the First Amendment Effective Date,
the first paragraph of Lease Addendum No. 2 to the Lease shall be
amended to reflect an increase in Tenant’s Proportionate
Share from 1.70% to 2.55% as determined by dividing the 13,162
rentable square feet of the New Premises by the 515,965 net
rentable square feet of the Building.
7.
Work
Letter.
Effective upon the First Amendment Effective Date,
Lease Addendum Number One [Allowance] shall be deleted in its
entirety and replaced with Lease Addendum Number One attached
hereto as Exhibit B.
8.
Inapplicable
Provisions
. Effective upon the First Amendment Effective
Date, Lease Addendum Number Four (Right of First Offer) and Exhibit
D to the Lease (First Offer Space) are hereby deleted in their
entireties and are of no further force and effect.
9
.
Brokers
.
Tenant represents and warrants that it has neither consulted nor
negotiated with any broker or finder with respect to the New
Premises or this First Amendment. Tenant agrees to indemnify,
protect, defend, and save Landlord harmless from and against any
claims for fees or commissions, including, but not limited to,
attorneys’ fees incurred in connection with the defense of
any such claim, from anyone with whom Tenant has dealt in
connection with the New Premises and/or this First
Amendment.
10
.
Counterparts
and Signatures
. This First Amendment may be executed in
multiple counterparts but such multiple counterparts shall
constitute a single agreement. Signatures of this First Amendment
that are transmitted by either or both electronic or telephonic
means (including, without limitation, facsimile, email, and .pdf
format) are valid for all purposes.
11
.
Ratification
.
The Lease remains in full force and effect except as expressly
modified by this First Amendment and is ratified and confirmed. If
there is a conflict between the terms of the Lease and this First
Amendment, the terms of this First Amendment shall control. Tenant
further acknowledges that it has no claims, counterclaims, defenses
or setoffs against Landlord, Landlord’s managing member or
Landlord’s property manager arising in connection with the
Lease or Tenant’s occupancy of the Premises, including,
without limitation, in connection with any amounts paid by Tenant
to Landlord, throughout the Term of the Lease.
[Signature
Page Follows.]
IN
WITNESS WHEREOF, Landlord and Tenant have executed this First
Amendment in three originals, all as of the day and year first
above written.
WITNESSES
/s/ D. Michael
Beck
Printed
Name: D. Michael
Beck
/s/Ella M.
Peterson
Printed
Name: Ella M.
Peterson
|
AUTOBYTEL INC.
,
a
Delaware corporation
By:
/s/
Glenn E. Fuller
Name: Glenn
E.
Fuller
Title: Executive
Vice President, Chief Legal and Administrative Officer and
Secretary
“TENANT”
|
WITNESSES
/s/Kate
King
Printed
Name: Kate
King
/s/ Roger M.
Smoek
Printed
Name: Roger M.
Smoek
|
RIVERGATE TOWER OWNER, LLC
,
a
Delaware limited liability company
By:
/s/Lorri
Dunne
Name: Lorri
Dunne
Title: Authorized
Signatory
“LANDLORD”
|
|
|
EXHIBIT A
THE NEW PREMISES
EXHIBIT B
LEASE ADDENDUM NUMBER ONE
WORK LETTER
This
Lease Addendum Number One (this "Work Letter") sets forth the
rights and obligations of Landlord and Tenant with respect to the
construction and installation of any improvements to the Premises
to be completed before the Commencement Date (the "Tenant
Improvements") excluding Landlord’s obligations to complete
the construction of the Premises as set forth below. Tenant
acknowledges and agrees that the Premises is currently being
completed on a “spec” basis.
In
consideration of the mutual covenants hereinafter contained,
Landlord and Tenant do mutually agree to the
following:
11.
Premises
.
Landlord is leasing the Premises to Tenant, and Tenant accepts the
Premises from Landlord in its “AS IS” condition.
Notwithstanding the foregoing, Landlord agrees to complete the
construction of the Premises using Building Standard (as
hereinafter defined) materials on a “spec” basis in
accordance with the specifications attached hereto as Schedule 1
(the “Specifications”).
12
.
Work
and Materials at Tenant's Expense.
a.
Any improvements
requested by Tenant that are not a part of, or are otherwise
inconsistent with, the Specifications shall be at Tenant’s
sole cost and expense and shall be subject to Landlord’s
prior written approval. Tenant agrees to pay to Landlord, promptly
upon receipt of any invoice, for all costs and expenses incurred
for any improvements that are not a part of, or are otherwise
inconsistent with, the Specifications, plus a Construction
Supervision Fee equal to four percent (4%) of such total costs and
expenses in exchange for Landlord providing construction management
services. If unpaid within ten (10) days after receipt of invoice,
then the outstanding balance shall accrue at the rate of one
percent (1%) per month until paid in full.
b.
Tenant understands,
acknowledges and agrees that notwithstanding anything to the
contrary, Landlord may require (a) any contractor (and its
subcontractors) to purchase materials and finishes for the
performance of the Tenant Improvements through Landlord's preferred
vendor(s) provided the cost of such materials and finishes does
not, in the aggregate, exceed the competitive cost of the same
materials and finishes not purchased from Landlord's preferred
vendor(s), and (b) specific vendors to perform portions of the
Tenant Improvements affecting Building systems. The term "Building
Standard" shall mean the type, brand, grade, or quality of
materials and finishes Landlord designates from time to time to be
used in the Building or, as the case may be, the exclusive type,
brand, grade, or quality of materials and finishes to be used in
the Building.
13.
Signage and
Keys.
Landlord shall provide the following in accordance
with Building standards at Tenant's expense: (i) door and
directory signage; (ii) suite and Building keys or entry
cards.
14
.
Commencement
Date
.
a.
The Commencement
Date shall be the date when the work to be performed by Landlord is
substantially completed, excluding items of work and adjustment of
equipment and fixtures that can be completed after the Premises are
occupied without causing material interference with Tenant's use of
the Premises (collectively, "Punch List Items"), and the Landlord
delivers possession of the Premises to Tenant in accordance with
Section 3 of the Lease.
b.
Notwithstanding the
foregoing, if Landlord shall be delayed in delivering possession of
the Premises as a result of:
i.
Tenant's request
for changes in or modifications to the Tenant Improvements or the
Specifications (notwithstanding Landlord's approval of any such
changes);
ii.
Inability to obtain
materials, finishes or installations requested by
Tenant;
iii.
The
performance of any work by any person, firm or corporation employed
or retained by Tenant;
iv.
Any other act or
omission by Tenant or its agents, representatives, and/or
employees; or
v.
A force majeure
event;
then,
in any such event, for purposes of determining the Commencement
Date, the Premises shall be deemed to have been delivered to Tenant
on the date that Landlord reasonably determines that the Premises
would have been substantially completed and ready for delivery if
such delay or delays had not occurred.
15.
Repairs and
Corrections.
Tenant, at its sole cost and expense, shall
repair or correct any defective work or materials installed by
Tenant or any contractor other than the contractor selected by
Landlord, or any work or materials that prove defective as a result
of any act or omission of Tenant or any of its employees, agents,
invitees, licensees, subtenants, customers, clients, or
guests.
16.
Inspection of
Premises; Possession by Tenant.
Prior to taking possession
of the Premises, Tenant and Landlord shall inspect the Premises and
Tenant shall give Landlord written notice of any Punch List Items.
Tenant's possession of the Premises constitutes acknowledgment by
Tenant that the Premises are in good condition and that all work
and materials provided by Landlord are satisfactory as of such date
of delivery of possession, except as to (i) any Punch List
Items, (ii) latent defects, and (iii) any equipment that
is used seasonally if Tenant takes possession of the Premises
during a season when such equipment is not in use.
17.
Access During
Construction.
During construction of the Tenant Improvements
and with prior approval of Landlord, Tenant shall be permitted
reasonable access to the Premises for the purposes of taking
measurements, making plans, installing trade fixtures, and doing
such other work as may be appropriate or desirable to enable Tenant
to assume possession of and operate in the Premises; provided,
however, that such access does not interfere with or delay
construction work on the Premises. Prior to any such entry, Tenant
shall comply with all insurance provisions of the Lease. Tenant
agrees to indemnify, defend, and hold Landlord harmless from and
against any suits, claims, damages, costs, expenses and liabilities
asserted against or incurred by Landlord or the property as a
result of Tenant accessing the Premises during construction of the
Tenant Improvements.
[The
remainder of this page is intentionally left blank.]
SCHEDULE 1 TO LEASE ADDENDUM NUMBER ONE
Exhibit 10.47
|
Glenn
E. Fuller
Executive Vice President, Chief Legal and Administrative
Officer and Secretary
Direct Line: 949.862.1392
Facsimile: 949.797.0484
glennf@autobytel.com
|
Effective
as of September 17, 2010
Ralph
Smith
[Personal
Residence Address Redacted]
Re
: Offer of Employment
Dear
Ralph:
This
letter confirms the terms and conditions upon which Autobytel Inc.,
a Delaware corporation (“
Company
”) is offering employment
to you. Note that this offer of employment and your employment by
the Company is contingent upon various conditions and requirements
that must be completed prior to commencement of employment, which
conditions and requirements are set forth below.
1.
Employment
.
(a)
Effective as of the date you commence employment with the Company
(“
Commencement
Date
”), which date is anticipated to be September 17,
2010, the Company will employ you as Manager, Search Engine
Marketing. In such capacity, you will report to such person as may
be designated by the Company from time to time.
(b)
Your employment is at will and not for a specified term and may be
terminated by the Company or you at any time, with or without cause
or good reason and with or without prior, advance notice. This
“at-will” employment status will remain in effect
throughout the term of your employment by the Company and cannot be
modified except by a written amendment to this offer letter that is
executed by both parties (which in the case of the Company, must be
executed by the Company’s Chief Legal Officer) and that
expressly negates the “at-will” employment
status.
(c) You
will be governed by all Company policies and procedures, as such
policies and procedures may exist from time to time, generally
applicable to all Company employees.
(d)
Upon termination of your employment by either party, whether with
or without cause or good reason, you will be entitled to receive
only that portion of your compensation, benefits, reimbursable
expenses and other payments and benefits required by applicable law
or by the Company’s compensation or benefit plans, policies
or agreements in which you participate and pursuant to which you
are entitled to receive the compensation or benefits thereunder
under the circumstances of and at the time of such termination
(subject to and payable in accordance with the terms and conditions
of such plans, policies or agreements). You agree to assist and
cooperate (including, but not limited to, providing information to
the Company and/or testifying in a proceeding) in the investigation
and handling of any internal investigation, legislative matter, or
actual or threatened court action, arbitration, administrative
proceeding, or other claim involving any matter that arose during
the period of your employment. You shall be reimbursed for
reasonable expenses actually incurred in the course of rendering
such assistance and cooperation. Your agreement to assist and
cooperate shall not affect in any way the content of information or
testimony provided by you.
2.
Compensation,
Benefits and Expenses
.
(a) As
compensation for the services to be rendered by you pursuant to
this agreement, the Company hereby agrees to pay you at a
Semi-Monthly Rate equal to Two Thousand Seven Hundred Eight Dollars
and Thirty-Four Cents ($2,708.34). The Semi-Monthly Rate shall be
paid in accordance with the normal payroll practices of the
Company.
(b) You
may participate in commission plans that may be adopted by the
Company for you from time to time. Should such a commission plan be
adopted for any period, your target commission opportunity,
specific objectives and commission plan details will be set forth
in a written commission plan and furnished to you. If your
participation in any commission plan is less than a full Plan Term,
your award for that Plan Term may be prorated for the period of
time you were employed during the applicable Plan Term in the
discretion of the Company. You understand that commission plans,
their structure and components, specific target commission
opportunities and objectives, and the achievement of objectives and
payouts, if any, thereunder are subject to the Company’s sole
discretion. You understand that commission plans may be modified,
amended or terminated at any time by the Company.
(c)
Subject to approval by the Company’s Board of Directors or a
committee thereof, it is anticipated that upon commencement of
employment you may be granted options to acquire shares of the
Company’s common stock. The number of shares, exercise price,
vesting, exercise, termination and other terms and conditions of
these options shall be governed by and subject to the terms and
conditions of the applicable stock option plan and stock option
award agreement. The granting and exercise of such options are also
subject to compliance with applicable federal and state securities
laws.
(d) You shall
be entitled to participate in such ordinary and customary benefits
plans afforded generally to persons employed by the Company at your
level (subject to the terms and conditions of such benefit plans,
your making of any required employee contributions required for
your participation in such benefits, your ability to qualify for
and satisfy the requirements of such benefits plans).
(e) You
are solely responsible for the payment of any tax liability that
may result from any compensation, payments or benefits that you
receive from the Company. The Company shall have the right to
deduct or withhold from the compensation due to you hereunder any
and all sums required by applicable federal, state, local or other
laws, rules or regulations, including, without limitation federal
and state income taxes, social security or FICA taxes, and state
unemployment taxes, now applicable or that may be enacted and
become applicable during your employment by the
Company.
3.
Pre-Hire Conditions
and Requirements
. You have previously submitted an
Application for Employment and a Consent to Conduct a Background
Check. This offer of employment and your employment by the Company
is contingent upon various conditions and requirements for new
hires that must be completed prior to commencement of employment.
These conditions and requirements include, among other things, the
following:
(i)
Successful completion of the Company’s background
check.
(ii)
Your execution and delivery of this offer letter together with the
Company’s Employee Confidentiality and Non-Compete Agreement
and Mutual Agreement to Arbitrate, the forms of which accompany
this offer letter and which are hereby incorporated herein by
reference. Please sign this offer letter and these other documents
and return the signed original documents to me.
(iii)
Your execution and delivery of your acknowledgment and agreement to
the Company’s Employee Handbook, Securities Trading Policy,
Code of Conduct and Ethics for Employees, Officer and Directors,
and Sexual Harassment Policy. Upon your acceptance of this offer
letter, you will be provided instructions how to access online,
sign and return these documents.
(iv)
Your compliance with all applicable federal and state laws, rules,
regulation and orders, including (1) your execution and delivery of
an I-9 Employment Eligibility Verification together with complying
verification documents; and (2) your execution and delivery of a
W-4 Employee’s Withholding Allowance Certificate. Upon your
acceptance of this offer letter, you will be provided instructions
how to access online, sign and return these documents.
The
documents referenced in Sections 3(ii), (iii) and (iv) above are
referred to herein as the “
Standard Employee
Documents
.”
4.
Prior Employment
Requirements or Obligations
. The Company requires that you
comply with all terms and conditions of any employment or other
agreements or legal obligations or requirements you may have with
or owe to your current or former employers. In particular, the
Company requires that you comply with the terms and conditions of
any confidentiality or non-disclosure agreements, policies or other
obligations You may owe your former employers, and Employee shall
not disclose to the Company or provide the Company with copies of
any confidential or proprietary information or trade secrets of any
former employer. The Company expects that you will comply with any
notification requirements relating to the termination of your
employment with your current employer and will adjust the
anticipated Commencement Date accordingly to accommodate any
required notice period. By execution below, you represent and
warrant to Company that your employment with the Company will not
violate the terms and conditions of any agreement entered into by
you prior to your employment with Company.
5.
Amendments and
Waivers
. This agreement may be amended, modified,
superseded, or cancelled, and the terms and conditions hereof may
be waived, only by a written instrument signed by the parties
hereto or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any
right, power, or privilege hereunder will operate as a waiver
thereof, nor will any waiver on the part of any party of any right
hereunder, nor any single or partial exercise of any rights
hereunder, preclude any other or further exercise thereof or the
exercise of any other right hereunder.
6.
Notices
. Any
notice required or permitted under this agreement will be
considered to be effective in the case of (i) certified mail, when
sent postage prepaid and addressed to the party for whom it is
intended at its address of record, three (3) days after deposit in
the mail; (ii) by courier or messenger service, upon receipt by
recipient as indicated on the courier's receipt; or (iii) upon
receipt of an Electronic Transmission by the party that is the
intended recipient of the Electronic Transmission. The record
addresses, facsimile numbers of record, and electronic mail
addresses of record for you are set forth on the signature page to
this agreement and for the Company as set forth in the letterhead
above and may be changed from time to time by notice from the
changing party to the other party pursuant to the provisions of
this Section 6. For purposes of this Section 6, "
Electronic Transmission
” means a
communication (i) delivered by facsimile, telecommunication or
electronic mail when directed to the facsimile number of record or
electronic mail address of record, respectively, which the intended
recipient has provided to the other party for sending notices
pursuant to this Agreement and (ii) that creates a record of
delivery and receipt that is capable of retention, retrieval, and
review, and that may thereafter be rendered into clearly legible
tangible form.
7.
Choice of
Law
. This agreement, its construction and the determination
of any rights, duties or remedies of the parties arising out of or
relating to this agreement will be governed by, enforced under and
construed in accordance with the laws of the State of Florida,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws of such state.
8.
Severability
.
Each term, covenant, condition, or provision of this agreement will
be viewed as separate and distinct, and in the event that any such
term, covenant, condition or provision will be deemed to be invalid
or unenforceable, the arbitrator or court finding such invalidity
or unenforceability will modify or reform this agreement to give as
much effect as possible to the terms and provisions of this
agreement. Any term or provision which cannot be so modified or
reformed will be deleted and the remaining terms and provisions
will continue in full force and effect.
9.
Interpretation
.
Every provision of this agreement is the result of full
negotiations between the parties, both of whom have either been
represented by counsel throughout or otherwise been given an
opportunity to seek the aid of counsel. No provision of this
agreement shall be construed in favor of or against any of the
parties hereto by reason of the extent to which any such party or
its counsel participated in the drafting thereof. Captions and
headings of sections contained in this agreement are for
convenience only and shall not control the meaning, effect, or
construction of this agreement. Time periods used in this Agreement
shall mean calendar periods unless otherwise expressly
indicated.
10.
Entire
Agreement
. This Agreement, together with the Standard
Employee Documents, is intended to be the final, complete and
exclusive agreement between the parties relating to the employment
of you by the Company and all prior or contemporaneous
understandings, representations and statements, oral or written,
are merged herein. No modification, waiver, amendment, discharge or
change of this agreement shall be valid unless the same is in
writing and signed by the party against which the enforcement
thereof is or may be sought.
11.
Counterparts;
Facsimile or PDF Signature
. This agreement may be executed
in counterparts, each of which will be deemed an original hereof
and all of which together will constitute one and the same
instrument. This agreement maybe executed by facsimile or PDF
signature by either party and such signature shall be deemed
binding for all purposes hereof, without delivery of an original
signature being thereafter required.
This
offer shall expire seven (7) calendar days from the date of this
offer letter. Should you wish to accept this offer and its terms
and conditions, please confirm your understanding of, agreement to,
and acceptance of the foregoing by signing and returning to the
undersigned the duplicate copy of this offer letter enclosed
herewith.
|
Autobytel Inc., a
Delaware corporation
|
|
|
|
|
By:
|
/s/ Glenn E.
Fuller
Glenn E.
Fuller
EVP, Chief Legal
and Administrative
Officer and
Secretary
|
Accepted
and Agreed
as of
the date
first
written above:
/s/ Ralph Smith
Ralph
Smith
[Personal
Residence Address Redacted]
|
Autobytel
Inc.
Human
Resources Department
18872
MacArthur Boulevard, Suite 200
Irvine,
CA 92612-1400
Voice: (949)
225-4572
|
DATE:
|
Effective
as of January 1, 2013
|
TO:
|
Ralph
Smith
|
FROM:
|
Glenn
Fuller – EVP, Chief Legal and Administrative Officer and
Secretary
|
CC:
|
William
Ferriolo – SVP, Consumer Acquisition
|
RE:
|
Promotion
|
It is a
pleasure to inform you of your promotion to Sr. Director, Search
Engine Marketing at Autobytel Inc. In this position you will
continue to report to William Ferriolo, Senior Vice President,
Consumer Acquisition. Following is a summary of your
promotion.
New
Position:
|
Sr. Director,
Search Engine Marketing
|
Semi-monthly
Rate:
|
$5,000 ($120,000
Approximate Annually)
|
Effective
Date:
|
January 1,
2013
|
Annual
Incentive
Opportunity:
|
You shall be
entitled to participate in annual incentive compensation plans, if
any, that may be adopted by the Company from time to time and that
are afforded generally to persons employed by the Company at your
position level (subject to the terms and conditions of any such
annual incentive compensation plans). Should such an annual
incentive compensation plan be adopted for any annual period, your
target annual incentive compensation opportunity will be as
established by the Company for each annual period, which may be up
to 20% of your annualized rate (i.e., 24 X Semi-monthly Rate) based
on achievement of objectives specified by the Company each annual
incentive compensation period (which may include Company-wide
performance objectives, divisional or department performance
objectives and/or individual performance objectives, allocated
between and among such performance objectives as the Company may
determine). Specific annual incentive compensation plan details,
target incentive compensation opportunity and objectives for each
annual compensation plan period will be established each year.
Awards under annual incentive plans may be prorated for a variety
of factors, including time employed by the Company during the year,
adjustments in base compensation or target award percentage changes
during the year, and unpaid leaves. You understand that the
Company’s annual incentive compensation plans, their
structure and components, specific target incentive compensation
opportunities and objectives, the achievement of objectives and the
determination of actual awards and payouts, if any, thereunder are
subject to the sole discretion of the Company’s Board of
Directors, or a committee thereof.
|
Your
promotion is conditioned upon your acceptance of the foregoing
modifications to the terms and conditions of your employment with
Autobytel Inc. If you accept these modifications to the terms of
your employment, please acknowledge your acceptance in the space
provided below.
As a
reminder, your employment is at will and not for a specified term
and may be terminated by the Company or you at any time, with or
without cause or good reason and with or without prior, advance
notice. This “at-will” employment status will remain in
effect throughout the term of your employment by the Company and
cannot be modified except by a written amendment to this promotion
letter that is executed by both parties (which in the case of the
Company, must be executed by the Company’s Chief Legal
Officer) and that expressly negates the “at-will”
employment status.
Please
feel free to call if you have any questions.
Autobytel Inc.
/s/ Glenn Fuller
Glenn
Fuller
EVP,
Chief Legal and Administrative Officer and Secretary
Accepted
and Agreed:
/s/ Ralph Smith
Ralph
Smith
|
Autobytel
Inc.
Human Resources
Department
18872
MacArthur Boulevard, Suite 200
Irvine,
CA 92612-1400
Voice:
(949) 225-4572
|
DATE:
|
Effective
as of July 1, 2013
|
TO:
|
Ralph
Smith
|
FROM:
|
Glenn
Fuller – EVP, Chief Legal and Administrative Officer and
Secretary
|
CC:
|
William
Ferriolo – SVP, Consumer Acquisition
|
RE:
|
Promotion
|
It is a
pleasure to inform you of your promotion to Vice President,
Consumer Acquisitions at Autobytel Inc. In this position you will
continue to report to William Ferriolo, Senior Vice President,
Consumer Acquisitions. Following is a summary of your
promotion.
New
Position:
|
Vice President,
Consumer Acquisitions
|
Semi-monthly
Rate:
|
$5,208.34 ($125,000
Approximate Annually)
|
Effective
Date:
|
July 1,
2013
|
Annual
Incentive
|
|
Opportunity:
|
Y
ou shall be
entitled to participate in annual incentive compensation plans, if
any, that may be adopted by the Company from time to time and that
are afforded generally to persons employed by the Company at your
position level (subject to the terms and conditions of any such
annual incentive compensation plans). Should such an annual
incentive compensation plan be adopted for any annual period, your
target annual incentive compensation opportunity will be as
established by the Company for each annual period, which may be up
to 30% of your annualized rate (i.e., 24 X Semi-monthly Rate) based
on achievement of objectives specified by the Company each annual
incentive compensation period (which may include Company-wide
performance objectives, divisional or department performance
objectives and/or individual performance objectives, allocated
between and among such performance objectives as the Company may
determine). Specific annual incentive compensation plan details,
target incentive compensation opportunity and objectives for each
annual compensation plan period will be established each year.
Awards under annual incentive plans may be prorated for a variety
of factors, including time employed by the Company during the year,
adjustments in base compensation or target award percentage changes
during the year, and unpaid leaves. You understand that the
Company’s annual incentive compensation plans, their
structure and components, specific target incentive compensation
opportunities and objectives, the achievement of objectives and the
determination of actual awards and payouts, if any, thereunder are
subject to the sole discretion of the Company’s Board of
Directors, or a committee thereof.
|
Your
promotion is conditioned upon your acceptance of the foregoing
modifications to the terms and conditions of your employment with
Autobytel Inc. If you accept these modifications to the terms of
your employment, please acknowledge your acceptance in the space
provided below.
As a
reminder, your employment is at will and not for a specified term
and may be terminated by the Company or you at any time, with or
without cause or good reason and with or without prior, advance
notice. This “at-will” employment status will remain in
effect throughout the term of your employment by the Company and
cannot be modified except by a written amendment to this promotion
letter that is executed by both parties (which in the case of the
Company, must be executed by the Company’s Chief Legal
Officer) and that expressly negates the “at-will”
employment status.
Please
feel free to call if you have any questions.
Autobytel Inc.
/s/Glenn Fuller
Glenn
Fuller
EVP,
Chief Legal and Administrative Officer and Secretary
Accepted
and Agreed:
/s/Ralph Smith
Ralph
Smith
|
Autobytel
Inc.
Human
Resources Department
18872
MacArthur Boulevard, Suite 200
Irvine,
CA 92612-1400
Voice:
(949) 225-4572
|
DATE:
|
January
28, 2016
|
TO:
|
Ralph
Smith
|
FROM:
|
Glenn
Fuller – EVP, Chief Legal and Administrative Officer and
Secretary
|
CC:
|
William
Ferriolo - EVP, Chief Business Officer
|
RE:
|
Annual
Incentive Compensation Target
|
It is a
pleasure to inform you of your annual incentive compensation
target. Following is a summary of your new employment
compensation.
Position:
|
VP, Consumer
Acquisition
|
Semi-monthly
Rate:
|
$7,708.34 ($185,000
Approximate Annually)
|
Effective
Date:
|
January 1,
2016
|
Annual
Incentive
|
|
Opportunity:
|
You shall be
eligible to participate in annual incentive compensation plans, if
any, that may be adopted by the Company from time to time and that
are afforded generally to persons employed by the Company at your
employment level and position, geographic location and applicable
department or operations within the Company (subject to the terms
and conditions of any such annual incentive compensation plans).
Should such an annual incentive compensation plan be adopted for
any annual period, your target annual incentive compensation
opportunity will be as established by the Company in its sole
discretion for each annual period, which may be up to 35% your
annualized rate (i.e., X Semi-monthly Rate) based on achievement of
objectives specified by the Company each annual incentive
compensation period (which may include Company-wide performance
objectives; divisional, department or operations performance
objectives and/or individual performance objectives, allocated
between and among such performance objectives as the Company may
determine) and subject to adjustment by the Company based on the
Company’s evaluation and review of your overall individual
job performance in the sole discretion of the Company. Specific
annual incentive compensation plan details, target incentive
compensation opportunity and objectives for each annual
compensation plan period will be established each year. Awards
under annual incentive plans may be prorated by the Company in its
discretion for a variety of factors, including time employed by the
Company during the year, adjustments in base compensation or target
award percentage changes during the year, and unpaid time off. You
understand that the Company’s annual incentive compensation
plans, their structure and components, specific target incentive
compensation opportunities and objectives, the achievement of
objectives and the determination of actual awards and payouts, if
any, thereunder are subject to the sole discretion of the Company.
Awards, if any, under any annual incentive compensation plan shall
only be earned by you, an payable to you, if you remain actively
employed by the Company through the date on which award payouts are
made by the Company under the applicable annual incentive
compensation plan. You will not earn any such award if your
employment ends for any reason prior to that date.
|
Your
annual incentive compensation change is conditioned upon your
acceptance of the foregoing modifications to the terms and
conditions of your employment with Autobytel Inc. If you accept
these modifications to the terms of your employment, please
acknowledge your acceptance in the space provided
below.
As a
reminder, your employment is at will and not for a specified term
and may be terminated by the Company or you at any time, with or
without cause or good reason and with or without prior, advance
notice. This “at-will” employment status will remain in
effect throughout the term of your employment by the Company and
cannot be modified except by a written amendment to this promotion
letter that is executed by both parties (which in the case of the
Company, must be executed by the Company’s Chief Legal
Officer) and that expressly negates the “at-will”
employment status.
Please
feel free to call if you have any questions.
Autobytel
Inc.
By:
/s/ Glenn
Fuller
Glenn
Fuller
EVP,
Chief Legal and Administrative Officer and Secretary
Accepted and
Agreed:
/s/ Ralph Smith
Ralph
Smith
Exhibit 10.48
AUTOBYTEL
INC.
AMENDED
AND RESTATED
SEVERANCE
BENEFITS AGREEMENT
This
Amended and Restated Severance Benefits Agreement
(“
Agreement
”)
entered into effective as of July 1, 2013 (“
Effective Date
”) between Autobytel
Inc., a Delaware corporation (“
Autobytel
” or
“Company”
) and Ralph Smith
(“
Employee
”).
Background
The
Company and Employee have previously entered into a Severance
Benefits Agreement dated as of March 31, 2013 (“
Prior Severance Agreement
”). In
connection with Employee’s promotion as a Vice President of
the Company, Autobytel has determined that it is in its best
interests to provide Employee with certain severance benefits to
encourage Employee’s continued employment with, and
dedication to the business of, the Company.
In
consideration of the foregoing and other good and valuable
consideration, receipt of which is hereby acknowledged, the Parties
hereby agree as follows.
1.
Definitions
.
For purposes of this Agreement, the terms below that begin with
initial capital letters within this Agreement shall have the
specially defined meanings set forth below (unless the context
clearly indicates a different meaning).
(a)
“
409A Suspension Period
”
shall have the meaning set forth in Section 3.
(b)
“
Arbitration Agreement
”
means that certain Mutual Agreement to Arbitrate dated as of
November 29, 2012 entered into by and between the Company and
Employee.
(c)
“
Cause
” shall mean the
termination of the Employee’s employment by the Company as a
result of any one or more of the following:
(i)
any conviction of,
or pleading of nolo contendre by, the Employee for any
felony;
(ii)
any
willful misconduct of the Employee which has a materially injurious
effect on the business or reputation of the Company;
(iii)
the
gross dishonesty of the Employee in any way that adversely affects
the Company; or
(iv)
a
material failure to consistently discharge Employee’s
employment duties to the Company which failure continues for thirty
(30) days following written notice from the Company detailing the
area or areas of such failure, other than such failure resulting
from Employee’s Disability.
For
purposes of this definition of Cause, no act or failure to act, on
the part of the Employee, shall be considered “willful”
if it is done, or omitted to be done, by the Employee in good faith
or with reasonable belief that Employee’s action or omission
was in the best interest of the Company. Employee shall have the
opportunity to cure any such acts or omissions (other than clauses
(i) and (iii) above) within thirty (30) days of the
Employee’s receipt of a written notice from the Company
notifying Employee that, in the opinion of the Company,
“Cause” exists to terminate Employee’s
employment.
(d)
“
Change of Control
” shall
mean any of the following events:
(i)
When
any “person” as defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and 14(d) thereof
(including a “group” as defined in Section 13(d) of the
Exchange Act, but excluding the Company, any Subsidiary or any
employee benefit plan sponsored or maintained by the Company or any
Subsidiary (including any trustee of such plan acting as trustee)),
directly or indirectly, becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act, as amended from
time to time), of securities of the Company representing 50% or
more of the combined voting power of the Company’s then
outstanding securities.
(ii)
When the individuals who, as of the
Effective Date, constitute the Board (“
Incumbent
Board
”), cease for any
reason to constitute at least a majority of the Board; provided
however, that any individual becoming a director subsequent to such
date, whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall, for purposes of this section, be counted as a member of the
Incumbent Board in determining whether the Incumbent Board
constitutes a majority of the Board.
(iii)
Consummation of a reorganization,
merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company or the acquisition
of assets of another corporation (a “
Business
Combination
”), in each
case, unless, following such Business
Combination:
(1)
all or substantially all of the individuals and entities who were
the beneficial owners of the then outstanding shares of common
stock of the Company and the beneficial owners of the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than fifty percent (50%) of the then
outstanding shares of common stock and the combined voting power of
the then outstanding securities entitled to vote generally in the
election of directors, respectively, as the case may be, of the
corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company’s assets either directly or indirectly or through one
or more subsidiaries); and
(2)
no person (excluding any employee benefit plan or related trust of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, fifty
percent (50%) or more of the then outstanding shares of common
stock of the corporation resulting from such Business Combination
or the combined voting power of such corporation except to the
extent that such ownership existed prior to the Business
Combination.
(iv) Approval by the stockholders of the Company
of a complete liquidation or dissolution of the
Company
.
(e)
“
COBRA
” shall mean the
Consolidated Omnibus Budget Reconciliation Act, as amended, and the
rules and regulations promulgated thereunder.
(f)
“
Code
” shall mean the
Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
(g)
“
Company
” means Autobytel,
and upon any assignment to and assumption of this Agreement by any
Successor Company, shall mean such Successor Company.
(h)
“
Disability
” shall mean
the inability of the Employee to perform Employee’s duties to
the Company on account of physical or mental illness or incapacity
for a period of one-hundred twenty (120) consecutive calendar days,
or for a period of one hundred eighty (180) calendar days, whether
or not consecutive, during any three hundred sixty-five (365) day
period.
(i)
“
Employee’s
Position
” means Employee’s position as the Vice
President, Consumer Acquisitions of the Company.
(j)
“
Employee’s Primary
Location
” means Autobytel’s headquarters located
at 12950 Racetrack Rd, Suite 220, Tampa, Florida
33626.
(k)
“
Good Reason
” means any
act, decision or omission by the Company that: (A) materially
modifies, reduces, changes, or restricts Employee’s base
salary as in existence as of the Effective Date or as of the date
prior to any such change, whichever is more beneficial for Employee
at the time of the act, decision, or omission by the Company; (B)
materially
modifies, reduces, changes, or restricts the Employee’s
Health and Welfare Benefits as a whole as in existence as of the
Effective Date hereof or as of the date prior to any such change,
whichever are more beneficial for Employee at the time of the act,
decision, or omission by the Company; (C) materially modifies,
reduces, changes, or restricts the Employee’s authority,
duties, or responsibilities commensurate with the Employee’s
Position but excluding the effects of any reductions in force other
than the Employee’s own termination; (D) relocates the
Employee’s primary place of employment without
Employee’s consent from Employee’s Primary Location to
any other location in excess of a forty (40) mile radius from the
Employee’s Primary Location other than on a temporary basis
or requires any such relocation as a condition to continued
employment by Company; (E) constitutes a failure or refusal by any
Company Successor to assume this Agreement; or (F) involves or
results in any material failure by the Company to comply with any
provision of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of written notice
thereof given by the Employee. Notwithstanding the foregoing, no
event shall constitute “Good Reason” unless (i) the
Employee first provides written notice to the Company within ninety
(90) days of the event(s) alleged to constitute Good Reason, with
such notice specifying the grounds that are alleged to constitute
Good Reason, and (ii) the Company fails to cure such a material
breach to the reasonable satisfaction of the Employee within thirty
(30) days after Company’s receipt of such written
notice.
(l)
“
Health and Welfare
Benefits
” means all Company medical, dental, vision,
life and disability plans in which Employee
participates.
(m)
“
Separation from Service
”
or “
Separates from
Service
” shall mean Employee’s termination of
employment, as determined in accordance with Treas. Reg. §
1.409A-1(h). Employee shall be considered to have experienced a
termination of employment when the facts and circumstances indicate
that Employee and the Company reasonably anticipate that either (i)
no further services will be performed for the Company after a
certain date, or (ii) that the level of bona fide services Employee
will perform for the Company after such date (whether as an
employee or as an independent contractor) will permanently decrease
to no more than twenty percent (20%) of the average level of bona
fide services performed by Employee (whether as an employee or
independent contractor) over the immediately preceding thirty-six
(36) month period (or the full period of services to the Company if
Employee has been providing services to the Company for less than
thirty six (36) months). If Employee is on military leave, sick
leave, or other bona fide leave of absence, the employment
relationship between Employee and the Company shall be treated as
continuing intact, provided that the period of such leave does not
exceed six months, or if longer, so long as Employee retains a
right to reemployment with the Company under an applicable statute
or by contract. If the period of a military leave, sick leave, or
other bona fide leave of absence exceeds six months and Employee
does not retain a right to reemployment under an applicable statute
or by contract, the employment relationship shall be considered to
be terminated for purposes of this Agreement as of the first day
immediately following the end of such six-month period. In applying
the provisions of this section, a leave of absence shall be
considered a bona fide leave of absence only if there is a
reasonable expectation that Employee will return to perform
services for the Company. For purposes of determining whether
Employee has incurred a Separation from Service, the Company shall
include the Company and any entity that would be considered a
single employer with the Company under Code Section 414(b) or
414(c).
(n)
“
Severance Period
” shall
equal nine (9) months.
(o)
“
Successor Company
” means
any successor to Autobytel or its assets by reason of any Change of
Control.
(p)
“
Termination Without
Cause
” means termination of Employee’s
employment with the Company (i) by the Company (a) for any reason
other than (1) death, (2) Disability or (3) those reasons expressly
set forth in the definition of “Cause,” (b) for no
reason at all, or (c) in connection with or as a result of a Change
of Control; provided, however, that a termination of
Employee’s employment with the Company in connection with a
Change of Control shall not constitute a Termination Without Cause
if Employee is offered employment with the Successor Company under
terms and conditions, including position, salary and other
compensation, and benefits, that would not provide Employee the
right to terminate Employee’s employment for Good
Reason.
2.
Severance Benefits
and Conditions
.
(a)
In the event of (i)
Termination Without Cause by the Company, or (ii) the termination
of Employee’s employment with the Company by Employee for
Good Reason within 30 days following the earlier of (1) the
Company’s failure to cure within the 30-day period set forth
in the definition of Good Reason, and (2) the Company’s
notice to Employee that it will not cure the event giving rise to
such termination for Good Reason, then (A) Employee shall receive
upon such termination a lump sum amount equal to the number of
months constituting the Severance Period at the time of termination
times the Employee’s monthly base salary (determined as the
Employee’s highest monthly base salary paid to Employee while
employed by the Company; base salary does not include any bonus,
commissions or other incentive payments or compensation); (B)
subject to Section 2(b) below, Employee shall be entitled to a
continuation of all Health and Welfare Benefits for Employee and,
if applicable, Employee’s eligible dependents during the
Severance Period at the time they would have been provided or paid
had the Employee remained an employee of Company during the
Severance Period and at the levels provided prior to the event
giving rise to a termination; and (C) the Company shall make
available to Employee career transition services at a level and
with a provider selected by the Company in accordance with Section
2(g) below.
(b)
(i) With respect to
Health and Welfare Benefits that are eligible for continuation
coverage under COBRA, in the event the Company is unable to
continue Employee’s and Employee’s eligible
dependents’ (assuming such dependents were covered by
Autobytel at the time of termination) participation under the
Company’s then existing insurance policies for such Health
and Welfare Benefits, Employee may elect to obtain coverage for
such Health and Welfare Benefits either by (1) electing COBRA
continuation benefits for Employee and Employee’s eligible
dependents; (2) obtaining individual coverage for Employee and
Employee’s eligible dependents (if Employee and
Employee’s eligible dependents qualify for individual
coverage); or (3) electing coverage as eligible dependents under
another person’s group coverage (if Employee and
Employee’s eligible dependents qualify for such dependent
coverage), or any combination of the foregoing alternatives.
Employee may also initially elect COBRA continuation benefits and
later change to individual coverage or dependent coverage for
Employee or any eligible dependent of Employee, but Employee
understands that if continuation of Health and Welfare Benefits
under COBRA is not initially selected by Employee or is later
terminated by Employee, Employee will not be able to return to
continuation coverage under COBRA. The Company shall pay directly
or reimburse to Employee the monthly premiums for the benefits or
coverage selected by Employee, with such payment or reimbursement
not to exceed the monthly premiums the Company would have paid
assuming Employee elected continuation of benefits under COBRA. The
Company’s obligation to pay or reimburse for the Health and
Welfare Benefits covered by this Section 2(b)(i) shall terminate
upon the earlier of (i) the end of the Severance Period; and (ii)
Employee’s employment by an employer that provides Employee
and Employee’s eligible dependents with group coverage
substantially similar to the Health and Welfare Benefits provided
to Employee and Employee’s eligible dependents at the time of
the termination of Employee’s employment with the Company,
provided that Employee and Employee’s eligible dependents are
eligible for participation in such group coverage.
(ii)
With respect to Health and Welfare Benefits that are not eligible
for continuation coverage under COBRA, in the event the Company is
unable to continue Employee’s participation under the
Company’s then existing insurance policies for such Health
and Welfare Benefits, Employee may elect to obtain coverage for
such Health and Welfare Benefits either by (1) obtaining individual
coverage for Employee (if Employee qualifies for individual
coverage); or (2) electing coverage as an eligible dependent under
another person’s group coverage (if Employee qualifies for
such dependent coverage), or any combination of the foregoing
alternatives. The Company shall pay directly or reimburse to
Employee the monthly premiums for the benefits or coverage selected
by Employee, with such payment or reimbursement not to exceed the
monthly premiums the Company paid for such Health and Welfare
Benefits at the time of termination of Employee’s employment
with the Company. The Company’s obligation to pay or
reimburse for the Health and Welfare Benefits covered by this
Section 2(b)(ii) shall terminate upon the earlier of (i) the end of
the Severance Period; and (ii) Employee’s employment by an
employer that provides Employee with group coverage substantially
similar to the Health and Welfare Benefits provided to Employee at
the time of the termination of Employee’s employment with the
Company, provided that Employee is eligible for participation in
such group coverage. Employee acknowledges and agrees that the
Company shall not be obligated to provide any Health and Welfare
Benefits covered by this Section 2(b)(ii) for Employee if Employee
does not qualify for coverage under the Company’s existing
insurance policies for such Health and Welfare Benefits, for
individual coverage, or for dependent coverage.
(c) The
payments and benefits set forth in Sections 2(a) and 2(b) are
conditioned upon and shall be provided to Employee only if (i)
Employee has executed and delivered to the Company a Separation and
Release Agreement in favor of the Company and Releasees, which
agreement shall be substantially in the form attached hereto as
Exhibit A (“
Release
”) no later than the
expiration of the applicable period of time allowed for Employee to
consider the Release as set forth in Section 17 of the Release
(“
Release Consideration
Period
”); (ii) Employee has not revoked the Release
prior to the expiration of the applicable revocation period set
forth in Section 17 of the Release (“
Release Revocation Period
”); and
(iii) the Release has become effective and non-revocable no later
than the cumulative period of time represented by the sum of the
maximum Release Consideration Period and the maximum Release
Revocation Period. No payments or benefits set forth in Sections
2(a) or 2(b) shall be due or payable to, or provided to, Employee
if the Release has not become effective and non-revocable in
accordance with the requirements of this Section 2(c).
(d) Upon
satisfaction of the conditions set forth in Section 2(c), but
subject to the last sentence of this Section 2(d), all payments
under Section 2(a)(A) shall be made to Employee within five (5)
business days after the Release becomes effective and non-revocable
in accordance with its terms. In any case, the payment under
Section 2(a)(A) shall be made no later than two and one-half months
after the end of the calendar year in which Employee’s
Separation from Service occurs, provided that the Release shall
have become effective and non-revocable in compliance with Section
2(c) prior to expiration of such two and one-half month period. If
the period of time covered by the entire allowed Release
Consideration Period, the entire Revocation Period and the entire
five business day period described above in this Section 2(d)
(considering such periods consecutively) begins in one calendar
year and ends in the following calendar year, all payments under
Section 2(a)(A) shall be made to Employee on the first business day
of such following calendar year which is five (5) or more business
days after the date on which the Release became effective and
non-revocable in accordance with its terms.
(e) In
addition to the payments and benefits under Sections 2(a) and 2(b),
to the extent required by applicable law or the Company’s
incentive or other compensation plans applicable to Employee, if
any, upon any termination of Employee’s employment Employee
shall receive (i) any amounts earned and due and owing to Employee
as of the termination date with respect to any base salary,
incentive compensation or commissions; and (ii) any other payments
required by applicable law (including payments with respect to
accrued and unused vacation time). Payments required under this
Section 2(e) are not conditioned upon Employee’s signing the
Release and shall be made within the time period(s) required by
applicable law.
(f) All
payments and benefits under this Section 2 are subject to legally
required federal, state and local payroll deductions and
withholdings.
(g) To
receive career transition services, Employee must contact the
service provider no later than 30 days after the Release becomes
effective.
(h) Other
than the payments and benefits provided for in this Section 2,
Employee shall not be entitled to any additional payments or
benefits from the Company resulting from a termination of
Employee’s employment with the Company.
3.
Taxes
. All
payments made pursuant to this Agreement will be subject to
withholding of applicable taxes. Notwithstanding the foregoing, and
except as otherwise specifically provided elsewhere in this
Agreement, Employee is solely responsible and liable for the
satisfaction of any federal, state, province or local taxes that
may arise with respect to this Agreement (including any taxes and
interest arising under Section 409A of the Code). Neither the
Company nor any of its employees, directors, or service providers
shall have any obligation whatsoever to pay such taxes or interest,
to prevent Employee from incurring them, or to mitigate or protect
Employee from any such tax or interest liabilities. Notwithstanding
anything in this Agreement to the contrary, if any amounts that
become due under this Agreement on account of Employee’s
termination of employment constitute “nonqualified deferred
compensation” within the meaning of Section 409A of the Code,
payment of such amounts shall not commence until Employee incurs a
Separation from Service. If, at the time of Employee’s
Separation from Service under this Agreement, Employee is a
“specified employee” (within the meaning of Section
409A of the Code), any amounts that constitute “nonqualified
deferred compensation” within the meaning of Section 409A of
the Code that become payable to Employee on account of
Employee’s Separation from Service (including any amounts
payable pursuant to the preceding sentence) will not be paid until
after the end of the sixth calendar month beginning after
Employee’s Separation from Service (“
409A Suspension Period
”). Within
14 calendar days after the end of the 409A Suspension Period,
Employee shall be paid a lump sum payment, without interest, in
cash equal to any payments delayed because of the preceding
sentence. Thereafter, Employee shall receive any remaining benefits
as if there had not been an earlier delay. With respect to the
reimbursement of expenses to which Employee is entitled under this
Agreement, if any, or the provision of in-kind benefits to Employee
as specified under this Agreement, if any, such reimbursement of
expenses or provision of in-kind benefits shall be subject to the
following conditions: (i) the expenses eligible for
reimbursement or the amount of in-kind benefits provided in one
taxable year shall not affect the expenses eligible for
reimbursement or the amount of in-kind benefits provided in any
other taxable year, except for any medical reimbursement
arrangement providing for the reimbursement of expenses referred to
in Section 105(b) of the Code, solely to the extent that the
arrangement provides for a limit on the amount of expenses that may
be reimbursed under such arrangement over some or all of the period
in which the reimbursement arrangement remains in effect;
(ii) the reimbursement of an eligible expense shall be made no
later than the end of the calendar year after the calendar year in
which such expense was incurred; (iii) the right to
reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit; and (iv) the right to
reimbursement or provision of in-kind benefits shall not apply to
any expenses incurred or benefits to be provided beyond the last
day of the second taxable year following the year in which
Employee's Separation from Service occurred.
4.
Arbitration
.
Any controversy or claim arising out of, or related to, this
Agreement, or the breach thereof, shall be governed by the terms of
the Arbitration Agreement, which is incorporated herein by
reference.
5.
Entire
Agreement
. All oral or written agreements or representations
express or implied, with respect to the subject matter of this
Agreement are set forth in this Agreement. This Agreement contains
the entire integrated understanding between the parties hereto and
supersedes any prior employment, severance, or change-in-control
protective agreement or other agreement, plan or arrangement
between the Company or any predecessor and Employee. No provision
of this Agreement shall be interpreted to mean that Employee is
subject to receiving fewer benefits than those available to
Employee without reference to this Agreement. The Parties
acknowledge and agree that the Prior Severance Agreement is hereby
terminated and shall have no further force or effect.
6.
Notices
.
Except as otherwise provided in this Agreement, any notice,
approval, consent, waiver or other communication required or
permitted to be given or to be served upon any person in connection
with this Agreement shall be in writing. Such notice shall be
personally served, sent by fax or cable, or sent prepaid by either
registered or certified mail with return receipt requested or
Federal Express and shall be deemed given (i) if personally served
or by Federal Express, when delivered to the person to whom such
notice is addressed, (ii) if given by fax or cable, when sent, or
(iii) if given by mail, two (2) business days following deposit in
the United States mail. Any notice given by fax or cable shall be
confirmed in writing, by overnight mail or Federal Express within
forty-eight (48) hours after being sent. Such notices shall be
addressed to the party to whom such notice is to be given at the
party’s address set forth below or as such party shall
otherwise direct.
If to
the Company:
Autobytel
Inc.
18872
MacArthur Boulevard, Suite 200
Irvine,
California, 92612-1400
Facsimile: (949)
862-1323
Attn:
Chief Legal Officer
If to
the Employee:
To
Employee’s latest home address on file with the
Company
7.
No Waiver
.
No waiver, by conduct or otherwise, by any party of any term,
provision, or condition of this Agreement, shall be deemed or
construed as a further or continuing waiver of any such term,
provision, or condition nor as a waiver of a similar or dissimilar
condition or provision at the same time or at any prior or
subsequent time.
8.
Amendment to this
Agreement
. No modification, waiver, amendment, discharge or
change of this Agreement, shall be valid unless the same is in
writing and signed by the party against whom enforcement of such
modification, waiver amendment, discharge, or change is or may be
sought.
9.
Non-Disclosure
.
Unless required by applicable law, rule, regulation or order or to
enforce this Agreement, Employee shall not disclose the existence
of this Agreement or the underlying terms to any third party,
including without limitation, any former, present or future
employee of the Company, other than to Employee’s immediate
family who have a need to know such matters or to Employee’s
tax or legal advisors who have a need to know such matters. If
Employee does disclose this Agreement or any of its terms to any of
Employee’s immediate family or tax or legal advisors, then
Employee will inform them that they also must keep the existence of
this Agreement and its terms confidential. The Company may disclose
the existence or terms of the Agreement and its terms and may file
this Agreement as an exhibit to its public filings if it is
required to due so under applicable law, rule, regulation or
order.
10.
Enforceability;
Severability
. If any provision of this Agreement shall be
invalid or unenforceable, in whole or in part, such provision shall
be deemed to be modified or restricted to the extent and in the
manner necessary to render the same valid and enforceable, or shall
be deemed excised from this Agreement, as the case may require, and
this Agreement shall be construed and enforced to the maximum
extent permitted by law as if such provision had been originally
incorporated herein as so modified or restricted, or as if such
provision had not been originally incorporated herein, as the case
may be.
11.
Governing
Law
. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida without giving
effect to such State’s choice of law rules. This Agreement is
deemed to be entered into entirely in the State of Florida. This
Agreement shall not be strictly construed for or against either
party.
12.
No Third Party
Beneficiaries
. Except as otherwise set forth in this
Agreement, nothing contained in this Agreement is intended or shall
be construed to create rights running to the benefit of any third
party.
13.
Successors of the
Company
. The rights and obligations of the Company under
this Agreement shall inure to the benefit of, and shall be binding
upon, the successors and assigns of the Company, including any
Successor Company. This Agreement shall be assignable by the
Company in the event of a merger or similar transaction in which
the Company is not the surviving entity, or a sale of all or
substantially all of the Company’s assets.
14.
Rights
Cumulative
. The rights under this Agreement, or by law or
equity, shall be cumulative and may be exercised at any time and
from time to time. No failure by any party to exercise, and no
delay in exercising, any rights shall be construed or deemed to be
a waiver thereof, nor shall any single or partial exercise by any
party preclude any other or future exercise thereof or the exercise
of any other right.
15.
No Right or
Obligation of Employment
. Employee acknowledges and agrees
that nothing in this Agreement shall confer upon Employee any right
with respect to continuation of employment by the Company, nor
shall it interfere in any way with Employee’s right or the
Company’s right to terminate Employee’s employment at
any time, with or without Cause.
16.
Interpretation
.
Every provision of this Agreement is the result of full
negotiations between the parties, both of whom have either been
represented by counsel throughout or otherwise been given an
opportunity to seek the aid of counsel. Each party hereto further
agrees and acknowledges that it is sophisticated in legal affairs
and has reviewed this Agreement in detail. Accordingly, no
provision of this Agreement shall be construed in favor of or
against any of the parties hereto by reason of the extent to which
any such party or its counsel participated in the drafting thereof.
Captions and headings of sections contained in this Agreement are
for convenience only and shall not control the meaning, effect, or
construction of this Agreement. Time periods used in this Agreement
shall mean calendar periods unless otherwise expressly
indicated.
17.
Legal and Tax
Advice
. Employee acknowledges that: (i) the Company has
encouraged Employee to consult with an attorney and/or tax advisor
of Employee’s choosing (and at Employee’s own cost and
expense) in connection with this Agreement, and (ii) Employee is
not relying upon the Company for, and the Company has not provided,
legal or tax advice to Employee in connection with this Agreement.
It is the responsibility of Employee to seek independent tax and
legal advice with regard to the tax treatment of this Agreement and
the payments and benefits that may be made or provided under this
Agreement and any other related matters. Employee acknowledges that
Employee has had a reasonable opportunity to seek and consider
advice from Employee’s counsel and tax advisors.
18.
Counterparts
.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which shall
constitute one instrument. The parties agree that facsimile copies
of signatures shall be deemed originals for all purposes hereof and
that a party may produce such copies, without the need to produce
original signatures, to prove the existence of this Agreement in
any proceeding brought hereunder.
IN WITNESS WHEREOF,
the Company and
Employee have executed and entered into this Agreement effective as
of the date first shown above.
AUTOBYTEL
INC.
By:
/s/ Glenn E.
Fuller
Glenn
E. Fuller
Executive Vice
President, Chief Legal and
Administrative
Officer and Secretary
EMPLOYEE
/s/Ralph
Smith
Ralph
Smith
EXHIBIT A
SEPARATION AND RELEASE AGREEMENT
It is
hereby agreed by and between you, Ralph Smith (for yourself, your
spouse, family, agents and attorneys) (jointly, “
You
” or “
Employee
”), and Autobytel Inc.,
its predecessors, successors, affiliates, directors, employees,
shareholders, fiduciaries, insurers, employees and agents (jointly,
the “
Company
”),
as follows:
1.
Separation of
Employment
. You acknowledge that your employment with the
Company ended effective [_______], 201[__] (“
Employment Termination Date
”), and
that You will perform no further duties, functions or services for
the Company subsequent to the Employment Termination Date. You have
resigned or hereby resign from all officer and director positions
You held with the Company or any of its subsidiaries effective as
of the Employment Termination Date. This Separation and Release
Agreement (“
Release
”) is entered into in
connection with that certain Amended and Restated Severance
Benefits Agreement dated effective as of July 1, 2013 by and
between the Company and Employee (“
Severance Benefits
Agreement
”).
2.
Release
Consideration
. In exchange for your promises and obligations
in this Release and the Severance Benefits Agreement, including the
release of claims set forth below, if You sign and do not revoke
this Release and this Release becomes effective, the Company will
pay You the amounts, and will provide the benefits, due to You
under the Severance Benefits Agreement, minus legally required
federal, state and local payroll deductions and withholdings.
Payment of any monetary amount provided for in this Section 2 will
be made within the time periods required by the Severance Benefits
Agreement (except for payments or benefits that will be paid or
provided over time as provided therein) and, if no time is
specified, within 5 business days after this Release becomes
effective.
3.
Acknowledgement of
Receipt of Amounts Due
. You acknowledge and agree that You
have received all, and that the Company does not owe You any
additional, payments, benefits or other compensation as a result of
your employment with the Company or your separation from employment
with the Company, including, but not limited to, wages,
commissions, bonuses, vacation pay, severance pay, expenses, fees,
or other compensation or payments of any kind or nature, other than
those amounts or benefits, if any, payable or to be provided to You
after the date hereof pursuant to the Severance Benefits Agreement
after this Release becomes effective.
4.
Return of Company
Property
. You represent and warrant that You have returned
to the Company any and all documents, software, equipment
(including, but not limited to, computers and computer-related
items), and all other materials or other things in your possession,
custody, or control which are the property of the Company,
including, but not limited to, Company identification, keys,
computers, cell phones, and the like, wherever such items may have
been located; as well as all copies (in whatever form thereof) of
all materials relating to your employment, or obtained or created
in the course of your employment with the Company. You hereby
represent that, other than those materials You have returned to the
Company pursuant to this Section 4, You have not copied or caused
to be copied, and have not transferred or printed-out or caused to
be transferred or printed-out, any software, computer disks,
e-mails or other documents other than those documents generally
available to the public, or retained any other materials
originating with or belonging to the Company. You further represent
that You have not retained in your possession, custody or control,
any software, documents or other materials in machine or other
readable form, which are the property of the Company, originated
with the Company, or were obtained or created in the course of or
relate to your employment with the Company.
5.
Confidentiality and
Non-Solicitation/Interference
.
(a) You
shall keep confidential, and shall not hereafter use or disclose to
any person, firm, corporation, governmental agency, or other
entity, in whole or in part, at any time in the future, any trade
secret, proprietary information, or confidential information of the
Company, including, but not limited to, information relating to
trade secrets, processes, methods, pricing strategies, customer
lists, marketing plans, product introductions, advertising or
promotional programs, sales, financial results, financial records
and reports, regulatory matters and compliance, and other
confidential matters, except as required by law and as necessary
for compliance purposes. These obligations are in addition to the
obligations set forth in any confidentiality or non-disclosure
agreement between You and the Company, including, without
limitation, that certain Employee Confidentiality Agreement dated
as of [_______], [__], which shall remain binding on You after the
Employment Termination Date.
(b)
Unless required by applicable law, rule, regulation or order or to
enforce this Agreement, Employee shall not disclose the existence
of the Severance Benefits Agreement or this Release or the
underlying terms to any third party, including without limitation,
any former, present or future employee of the Company, other than
to Employee’s immediate family who have a need to know such
matters or to Employee’s tax or legal advisors who have a
need to know such matters. If Employee does disclose this Release,
the Severance Benefits Agreement or any of their respective terms
to any of Employee’s immediate family or tax or legal
advisors, then Employee will inform them that they also must keep
the existence of this Release, the Severance Benefits Agreement and
their respective terms confidential. The Company may disclose the
existence or terms of this Release, the Severance Benefits
Agreement and their respective terms and may file this Release and
the Severance Benefits Agreement as exhibits to its public filings
if it is required to due so under applicable law, rule, regulation
or order.
(c) For
a period of one (1) year immediately following this Release
becoming effective, You agree that You will not interfere with
Company’s business by soliciting an employee to leave
Company’s employ, or by inducing a consultant or vendor to
sever its relationship with Company. You may not, at any time, use
the Company’s trade secrets to solicit business from any
source, including the Company’s customers or clients. This
Section 5(c) is not intended to, and shall not, prevent You from
lawful competition with the Company. You represent and warrant that
You have not engaged in any of the foregoing activities prior to
the effective date of this Release.
6.
Nondisparagement
.
You agree that neither You nor anyone acting on your behalf or at
your direction will disparage, denigrate, defame, criticize, impugn
or otherwise damage or assail the reputation or integrity of the
Company to any third party and in particular to any current or
former employee, officer, director, contractor, supplier, customer,
or client of the Company or prospective or actual purchaser of the
equity interests of the Company or its business or
assets.
7.
Unconditional
General Release of Claims
.
(a)
In consideration for the payment and benefits provided for in
Section 2, and notwithstanding the provisions of Section 1542 of
the Civil Code of California, You unconditionally release and
forever discharge the Company, and the Company’s current,
former, and future controlling shareholders, subsidiaries,
affiliates, related companies, predecessor companies, divisions,
directors, trustees, officers, employees, agents, attorneys,
successors, and assigns (and the current, former, and future
controlling shareholders, directors, trustees, officers, employees,
agents, and attorneys of any such subsidiaries, affiliates, related
companies, predecessor companies, and divisions) (all of the
foregoing released persons or entities being referred to herein as
“
Releasees
”),
from any and all claims, complaints, demands, actions, suits,
causes of action, obligations, damages and liabilities of whatever
kind or nature, whether known or unknown, based on any act,
omission, event, occurrence, or nonoccurrence from the beginning of
time to the date of execution of this Release, including, but not
limited to, claims that arise out of or in any way relate to your
employment or your separation from employment with the
Company.
(b) You
acknowledge and agree that the foregoing unconditional and general
release includes, but is not limited to, (i) any claims for salary,
bonuses, commissions, equity, compensation (except as specified in
this Agreement), wages, penalties, premiums, severance pay,
vacation pay or any benefits under the Employee Retirement Income
Security Act of 1974, as amended;(ii) any claims of harassment,
retaliation or discrimination; (iii) any claims based on any
federal, state or governmental constitution, statute, regulation or
ordinance, including, without limitation, Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act, the Americans With Disabilities
Act, Section 1981 of the Civil Rights Act of 1866, the California
Fair Employment and Housing Act, the California Family Rights Act,
the Family and Medical Leave Act, the California Constitution, the
California Labor Code, the California Industrial Welfare Commission
Wage Orders, the California Government Code, the Worker Adjustment
and Retraining Notification Act; (iv) whistleblower claims, claims
of breach of implied or express contract, breach of promise,
misrepresentation, negligence, fraud, estoppel, defamation,
infliction of emotional distress, violation of public policy,
wrongful or constructive discharge, or any other employment-related
tort, and any claims for costs, fees, or other expenses, including
attorneys’ fees; and (v) any other aspect of your employment
or the termination of your employment.
(c)
For the purpose of implementing a full and complete release, You
expressly acknowledge and agree that this Release resolves all
claims You may have against the Company and the Releasees as of the
date of this Release, including but limited to claims that You did
not know or suspect to exist in your favor at the time of the
execution of this Release. You expressly waive any and all rights
which You may have under the provisions of Section 1542 of the
California Civil Code or any similar state or federal statute.
Section 1542 provides as follows:
“A general
release does not extend to claims which the creditor does not know
or suspect to exist in his or her favor at the time of executing
the release, which if known by him or her must have materially
affected his or her settlement with the debtor.”
(d)
This Release will not waive the Employee’s rights to
indemnification under the Company’s certificate of
incorporation or by-laws or, if applicable, any written agreement
between the Company and the Employee, or under applicable
law.
(e)
You
hereby certify that
You have not experienced a job-related illness or injury for which
You have not already filed a claim.
(f)
This general release does not waive or release rights or claims
arising after You sign this Release.
8.
Covenant Not to
Sue
.
A
“covenant not to sue” is a promise not to sue in court.
This covenant differs from a general release of claims in that,
besides waiving and releasing the claims covered by this Release,
You represent and warrant that You have not filed, and agree that
You will not file, or cause to be filed or maintained, any judicial
complaint, lawsuit or demand for arbitration involving any claims
You have released in this Release, and You agree to withdraw any
judicial complaints, lawsuits or demands for arbitration You have
filed, or were filed on your behalf, prior to the effective date of
this Release. Still, You may sue to enforce this Release. You agree
if You breach this covenant, then You must pay the legal expenses
incurred by incurred by any Releasee in defending against your
suit, including reasonable attorneys’ fees, or, at the
Company’s option, return everything paid to You under this
Agreement. In that event, the Company shall be excused from making
any further payments or continuing any other benefits otherwise
owed to You under paragraph 2 of this Agreement. Furthermore, You
give up all rights to individual damages in connection with any
administrative or court proceeding with respect to your employment
with or termination of employment from, the Company. You also agree
that if You are awarded money damages, You will assign your right
and interest to such money damages (i) in connection with an
administrative charge, to the relevant administrative agency; and
(ii) in connection with a lawsuit or demand for arbitration, to the
Company.
9.
Cooperation With
Company
. You agree to assist and cooperate (including, but
not limited to, providing information to the Company and/or
testifying truthfully in a proceeding) in the investigation and
handling of any internal investigation, governmental matter, or
actual or threatened court action, arbitration, administrative
proceeding, or other claim involving any matter that arose during
the period of your employment. You shall be reimbursed for
reasonable expenses actually incurred in the course of rendering
such assistance and cooperation. Your agreement to assist and
cooperate shall not affect in any way the content of information or
testimony provided by You.
10.
No
Reemployment
.
You
acknowledge and agree that the Company has no obligation to employ
You or offer You employment in the future and You shall have no
recourse against the Company if it refuses to employ You or offer
You employment. If You do seek re-employment, then this Release
shall constitute sufficient cause for the Company to refuse to
re-employ You. Notwithstanding the foregoing, the Company has the
right to offer to re-employ You in the future if, in its sole
discretion, it chooses to do so.
11.
No Admission of
Liability
. This Release does not constitute an admission
that the Company or any other Releasee has violated any law, rule,
regulation, contractual right or any other duty or
obligation.
12.
Severability
.
Should any provision of this Release be declared or be determined
by any court or arbitrator to be illegal or invalid, the validity
of the remaining parts, terms, or provisions shall not be affected,
and said illegal or invalid part, term, or provision shall be
deemed not to be part of this Release.
13.
Governing
Law
. This Release is made and entered into in the State of
Florida and shall in all respects be interpreted, enforced, and
governed under the law of that state, without reference to conflict
of law provisions thereof.
14.
Interpretation
.
The language of all parts in this Release shall be construed as a
whole, according to fair meaning, and not strictly for or against
any party. The captions and headings contained in this Agreement
are for convenience only and shall not control the meaning, effect,
or construction of this Agreement.
15.
Knowing and
Voluntary Agreement
. You have carefully reviewed this
Release and understand the terms and conditions it contains. By
entering into this Release, You are giving up potentially valuable
legal rights. You specifically acknowledge that You are waiving and
releasing any rights You may have under the ADEA. You acknowledge
that the consideration given for this waiver and release is in
addition to anything of value to which You were already entitled.
You acknowledge that You are signing this Release knowingly and
voluntarily and intend to be bound legally by its
terms.
16.
Entire
Agreement
. You hereby acknowledge that no promise or
inducement has been offered to You, except as expressly stated in
this Release and in the Severance Benefits Agreement, and You are
relying upon none. This Release and the Severance Benefits
Agreement represent the entire agreement between You and the
Company with respect to the subject matter hereof, and supersede
any other written or oral understandings between the parties
pertaining to the subject matter hereof and may only be amended or
modified with the prior written consent of You and the
Company.
17.
Period for Review
and Consideration/Revocation Rights
.
[
Alternative
1 for Section 17 if Employee is NOT age 40 or over at time of
separation from employment
]
You
understand that You have seven (7) days after this Release has been
delivered to You by the Company to decide whether to sign this
Release, although You may sign this Release at any time within the
seven (7) day period. If You do sign it, You also understand that
You will have an additional three (3) days after the date You
deliver this signed Release to the Company and to change your mind
and revoke this Release, in which case a written notice of
revocation must be delivered to the Company’s Chief Legal
Officer, Autobytel Inc., 18872 MacArthur Blvd. Suite 200, Irvine,
California 92612-1400, on or before the third (3
rd
) day after your
delivery of this signed Release to the Company (or on the next
business day if the third calendar day is not a business day). You
understand that this Release will not become effective or
enforceable until after that three (3) day period has passed. If
You revoke this Release, this Release shall not be effective or
enforceable as to any rights You may have under this Release. In
the event that You revoke this Release, You will not be entitled to
the payments and benefits specified in Paragraph 2.
[
Alternative
2 for Section 17 if Employee is age 40 or over at time of
separation from employment, separation from employment is NOT in
connection with a group separation, and ADEA Claims are being
released
]
You
understand that You have twenty-one (21) days after this Release
has been delivered to You by the Company to decide whether to sign
this Release, although You may sign this Release at any time within
the twenty-one (21) day period. If You do sign it, You also
understand that You will have an additional seven (7) days after
the date You deliver this signed Release to the Company and to
change your mind and revoke this Release, in which case a written
notice of revocation must be delivered to the Company’s Chief
Legal Officer, Autobytel Inc., 18872 MacArthur Blvd. Suite 200,
Irvine, California 92612-1400, on or before the seventh (7th) day
after your delivery of this signed Release to the Company (or on
the next business day if the seventh calendar day is not a business
day). You understand that this Release will not become effective or
enforceable until after that seven (7) day period has passed. If
You revoke this Release, this Release shall not be effective or
enforceable as to any rights You may have under this Release. In
the event that You revoke this Release, You will not be entitled to
the payments and benefits specified in Paragraph 2.
[
Alternative
3 for Section 17 if Employee is age 40 or over at time of
separation from employment, separation from employment IS in
connection with a group termination, and ADEA Claims are being
released
]
(a) You
understand that You have forty-five (45) days after this Release
has been delivered to You by the Company to decide whether to sign
this Release, although You may sign this Release at any time within
the forty-five (45) day period. If You do sign it, You also
understand that You will have an additional seven (7)
days after You sign to change your
mind and revoke the Agreement, in which case a written notice of
revocation must be delivered to the Company’s Chief Legal
Officer, Autobytel Inc., 18872 MacArthur Blvd. Suite 200, Irvine,
California 92612-1400, on or before the seventh (7th) day after
your delivery of this signed Release to the Company (or on the next
business day if the seventh calendar day is not a business day).
You understand that this Release will not become effective or
enforceable until after that seven (7) day period has passed. If
You revoke this Release, this Release shall not be effective or
enforceable as to any rights You may have under this Release. In
the event that You revoke this Release, You will not be entitled to
the payments and benefits specified in Paragraph 2.
(b) You
acknowledge that You have received the group information of
employees included in the Company’s ____________ group
termination program, the eligibility factors for participation in
the program, and the time limits for participation in the program.
You also acknowledge that You have received lists of the ages and
job titles of employees eligible or selected for the program and
employees not eligible or selected for the group termination
program. This information is set forth on Appendix A attached
hereto and incorporated herein by reference.
18.
Advice of Attorney
and Tax Advisor
. Employee acknowledges that: (i) the Company
has advised Employee to consult with an attorney and/or tax advisor
of Employee’s choosing (and at Employee’s own cost and
expense) before executing this Release, and (ii) Employee is not
relying upon the Company for, and the Company has not provided,
legal or tax advice to Employee in connection with this Release. It
is the responsibility of Employee to seek independent tax and legal
advice with regard to the tax treatment of this Release and the
payments and benefits that may be made or provided under this
Release and any other related matters. Employee acknowledges that
Employee has had a reasonable opportunity to seek and consider
advice from Employee’s attorney and tax
advisors.
PLEASE
READ CAREFULLY. THIS RELEASE INCLUDES A GENERAL RELEASE OF ALL
CLAIMS, KNOWN AND UNKNOWN. YOU MAY NOT MAKE ANY CHANGES TO THE
TERMS OF THIS RELEASE THAT ARE NOT AGREED UPON BY THE COMPANY IN
WRITING. ANY CHANGES SHALL CONSTITUTE A REJECTION OF THIS RELEASE
BY EMPLOYEE.
Dated:_____________,
201_
|
_____________________________________
|
|
Ralph Smith
|
|
|
D
ated
:_____________,
201_
|
Autobytel
Inc.
|
|
|
|
By:
__________________________________
|
|
[Officer’s Name]
|
|
[Title]
|
|
Glenn
E. Fuller
Executive Vice President, Chief Legal and Administrative
Officer and Secretary
Direct Line: 949.862.1392
Facsimile:
949.797.0484
glennf@autobytel.com
|
February
14, 2014
Taren
Peng
[Personal
Residence Address Redacted]
Re:
Offer of Employment
Dear
Taren:
This
letter confirms the terms and conditions upon which Autobytel Inc.,
a Delaware corporation (“
Company
”) is offering employment
to you. Note that this offer of employment and your employment by
the Company is contingent upon various conditions and requirements
that must be completed prior to commencement of employment, which
conditions and requirements are set forth below.
1.
Employment
.
(a) Effective
as of the date you commence employment with the Company
(“
Commencement
Date
”), which date is anticipated to be March 10,
2014, the Company will employ you as VP, Website and Mobile
Development. In such capacity, you will report to the
Company’s SVP, Technology or such other person as may be
designated by the Company from time to time.
(b) Your
employment is at will and not for a specified term and may be
terminated by the Company or you at any time, with or without cause
or good reason and with or without prior, advance notice. This
“at-will” employment status will remain in effect
throughout the term of your employment by the Company and cannot be
modified except by a written amendment to this offer letter that is
executed by both parties (which in the case of the Company, must be
executed by the Company’s Chief Legal Officer) and that
expressly negates the “at-will” employment
status.
(c) Upon
termination of your employment by either party, whether with or
without cause or good reason, you will be entitled to receive only
that portion of your compensation, benefits, reimbursable expenses
and other payments and benefits required by applicable law or by
the Company’s compensation or benefit plans, policies or
agreements in which you participate and pursuant to which you are
entitled to receive the compensation or benefits thereunder under
the circumstances of and at the time of such termination (subject
to and payable in accordance with the terms and conditions of such
plans, policies or agreements). You agree to assist and cooperate
(including, but not limited to, providing information to the
Company and/or testifying in a proceeding) in the investigation and
handling of any internal investigation, legislative matter, or
actual or threatened court action, arbitration, administrative
proceeding, or other claim involving any matter that arose during
the period of your employment. You shall be reimbursed for
reasonable expenses actually incurred in the course of rendering
such assistance and cooperation. Your agreement to assist and
cooperate shall not affect in any way the content of information or
testimony provided by you.
2.
Compensation,
Benefits and Expenses
.
(a)
As compensation for the services to be rendered
by you pursuant to this agreement, the Company hereby agrees to pay
you at a Semi-monthly Rate equal to Eight Thousand Three Hundred
Thirty-three Dollars and Thirty-four Cents ($8,333.34). The
Semi-monthly Rate shall be paid in accordance with the normal
payroll practices of the Company.
(b)
You shall be entitled to participate in annual
incentive compensation plans, if any, that may be adopted by the
Company from time to time and that are afforded generally to
persons employed by the Company at your position level (subject to
the terms and conditions of any such annual incentive compensation
plans). Should such an annual incentive compensation plan be
adopted for any annual period, your target annual incentive
compensation opportunity will be as established by the Company for
each annual period, which may be up to 25% of your annualized rate
(i.e., 24 X Semi-monthly Rate) based on achievement of objectives
specified by the Company each annual incentive compensation period
(which may include Company-wide performance objectives, divisional
or department performance objectives and/or individual performance
objectives, allocated between and among such performance objectives
as the Company may determine). Specific annual incentive
compensation plan details, target incentive compensation
opportunity and objectives for each annual compensation plan period
will be established each year. Awards under annual incentive plans
may be prorated for a variety of factors, including time employed
by the Company during the year, adjustments in base compensation or
target award percentage changes during the year, and unpaid leaves.
You understand that the Company’s annual incentive
compensation plans, their structure and components, specific target
incentive compensation opportunities and objectives, the
achievement of objectives and the determination of actual awards
and payouts, if any, thereunder are subject to the sole discretion
of the Company’s Board of Directors, or a committee
thereof.
(c)
Upon commencement of your employment with the
Company, the Company hereby agrees to pay you a sign-on bonus in
the amount of Fifteen Thousand Dollars ($15,000) to be paid in the
payroll cycle following your employment commencement
date.
(d)
Subject to approval by the Company’s Board
of Directors or a committee thereof, it is anticipated that upon
commencement of employment you will be granted options to acquire
shares of the Company’s common stock. The number of shares,
exercise price, vesting, exercise, termination and other terms and
conditions of these options shall be governed by and subject to the
terms and conditions of the applicable stock option plan and stock
option award agreement. The granting and exercise of such options
are also subject to compliance with applicable federal and state
securities laws.
(e)
You shall be entitled to participate in such
ordinary and customary benefits plans afforded generally to persons
employed by the Company at your level (subject to the terms and
conditions of such benefit plans, your making of any required
employee contributions required for your participation in such
benefits, your ability to qualify for and satisfy the requirements
of such benefits plans).
(f)
You are solely responsible for the payment of
any tax liability that may result from any compensation, payments
or benefits that you receive from the Company. The Company shall
have the right to deduct or withhold from the compensation due to
you hereunder any and all sums required by applicable federal,
state, local or other laws, rules or regulations, including,
without limitation federal and state income taxes, social security
or FICA taxes, and state unemployment taxes, now applicable or that
may be enacted and become applicable during your employment by the
Company.
3.
Pre-Hire Conditions
and Requirements
.
You
have previously submitted an Application for Employment and a
Consent to Conduct a Background Check. This offer of employment and
your employment by the Company is contingent upon various
conditions and requirements for new hires that must be completed
prior to commencement of employment. These conditions and
requirements include, among other things, the
following:
(i)
Successful
completion of the Company’s background check.
(ii)
Your
execution and delivery of this offer letter together with the
Company’s Employee
Confidentiality
Agreement and Mutual Agreement to Arbitrate, the forms of which
accompany this offer letter and which are hereby incorporated
herein by reference. Please sign this offer letter and these other
documents and return the signed original documents to
me.
(iii)
Your execution and
delivery of your acknowledgment and agreement to the
Company’s
Employee
Handbook and the various policies included therein, Securities
Trading Policy, Code of Conduct and Ethics. Upon your acceptance of
this offer letter, you will be provided instructions how to access
online, sign and return these documents.
(iv)
Your compliance
with all applicable federal and state laws, rules, regulation and
orders,
including
(1) your execution and delivery of an I-9 Employment Eligibility
Verification together with complying verification documents; and
(2) your execution and delivery of a W-4 Employee’s
Withholding Allowance Certificate. Upon your acceptance of this
offer letter, you will be provided instructions how to access
online, sign and return these documents.
The
documents referenced in Sections 3(ii), (iii) and (iv) above are
referred to herein as the “
Standard Employee
Documents
.”
4.
Prior
Employment Requirements or Obligations
. The Company requires
that you comply with all terms and conditions of any employment or
other agreements or legal obligations or requirements you may have
with or owe to your current or former employers. In particular, the
Company requires that you comply with the terms and conditions of
any confidentiality or non-disclosure agreements, policies or other
obligations You may owe your former employers, and Employee shall
not disclose to the Company or provide the Company with copies of
any confidential or proprietary information or trade secrets of any
former employer. The Company expects that you will comply with any
notification requirements relating to the termination of your
employment with your current employer and will adjust the
anticipated Commencement Date accordingly to accommodate any
required notice period.
5.
Amendments
and Waivers
. This agreement may be amended, modified,
superseded, or cancelled, and the terms and conditions hereof may
be waived, only by a written instrument signed by the parties
hereto or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any
right, power, or privilege hereunder will operate as a waiver
thereof, nor will any waiver on the part of any party of any right
hereunder, nor any single or partial exercise of any rights
hereunder, preclude any other or further exercise thereof or the
exercise of any other right hereunder.
6.
Notices
.
Any notice required or permitted under this agreement will be
considered to be effective in the case of (i) certified mail, when
sent postage prepaid and addressed to the party for whom it is
intended at its address of record, three (3) days after deposit in
the mail; (ii) by courier or messenger service, upon receipt by
recipient as indicated on the courier's receipt; or (iii) upon
receipt of an Electronic Transmission by the party that is the
intended recipient of the Electronic Transmission. The record
addresses, facsimile numbers of record, and electronic mail
addresses of record for you are set forth on the signature page to
this agreement and for the Company as set forth in the letterhead
above and may be changed from time to time by notice from the
changing party to the other party pursuant to the provisions of
this Section 6. For purposes of this Section 6, "
Electronic Transmission
” means a
communication (i) delivered by facsimile, telecommunication or
electronic mail when directed to the facsimile number of record or
electronic mail address of record, respectively, which the intended
recipient has provided to the other party for sending notices
pursuant to this Agreement and (ii) that creates a record of
delivery and receipt that is capable of retention, retrieval, and
review, and that may thereafter be rendered into clearly legible
tangible form.
7.
Choice
of Law
. This agreement, its construction and the
determination of any rights, duties or remedies of the parties
arising out of or relating to this agreement will be governed by,
enforced under and construed in accordance with the laws of the
State of California, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws of such
state.
8.
Severability
.
Each term, covenant, condition, or provision of this agreement will
be viewed as separate and distinct, and in the event that any such
term, covenant, condition or provision will be deemed to be invalid
or unenforceable, the arbitrator or court finding such invalidity
or unenforceability will modify or reform this agreement to give as
much effect as possible to the terms and provisions of this
agreement. Any term or provision which cannot be so modified or
reformed will be deleted and the remaining terms and provisions
will continue in full force and effect.
9.
Interpretation
.
Every provision of this agreement is the result of full
negotiations between the parties, both of whom have either been
represented by counsel throughout or otherwise been given an
opportunity to seek the aid of counsel. No provision of this
agreement shall be construed in favor of or against any of the
parties hereto by reason of the extent to which any such party or
its counsel participated in the drafting thereof. Captions and
headings of sections contained in this agreement are for
convenience only and shall not control the meaning, effect, or
construction of this agreement. Time periods used in this Agreement
shall mean calendar periods unless otherwise expressly
indicated.
10.
Entire
Agreement
. This Agreement, together with the Standard
Employee Documents, is intended to be the final, complete and
exclusive agreement between the parties relating to the employment
of you by the Company and all prior or contemporaneous
understandings, representations and statements, oral or written,
are merged herein. No modification, waiver, amendment, discharge or
change of this agreement shall be valid unless the same is in
writing and signed by the party against which the enforcement
thereof is or may be sought.
11.
Counterparts;
Facsimile or PDF Signature
. This agreement may be executed
in counterparts, each of which will be deemed an original hereof
and all of which together will constitute one and the same
instrument. This agreement maybe executed by facsimile or PDF
signature by either party and such signature shall be deemed
binding for all purposes hereof, without delivery of an original
signature being thereafter required.
This
offer shall expire seven (7) calendar days from the date of this
offer letter. Should you wish to accept this offer and its terms
and conditions, please confirm your understanding of, agreement to,
and acceptance of the foregoing by signing and returning to the
undersigned the duplicate copy of this offer letter enclosed
herewith.
Autobytel Inc., a
Delaware corporation
By:
/s/ Glenn E.
Fuller
Glenn E. Fuller
EVP, Chief Legal and
Administrative
Officer and
Secretary
Accepted
and Agreed
as of
the date
first
written above:
/s/
Taren
Peng
Taren
Peng
[Personal
Residence Address Redacted]
|
Autobytel Inc.
Human
Resources Department
18872
MacArthur Blvd, Suite 200
Irvine,
CA 92612-1400
Voice:
(949) 225-4572
|
January
31, 2017
TO:
|
Taren
Peng
|
|
|
FROM:
|
Glenn
Fuller – EVP, Chief Legal and Administrative Officer and
Secretary
|
|
|
RE:
|
Promotion
|
It is a
pleasure to inform you of your promotion. Following is a summary of
your promotion.
New
Position:
|
SVP,
Technology
|
New
Semi-monthly
Rate:
|
$9,375.01 ($225,000
Approximate Annually)
|
Effective
Date:
|
January 1,
2017
|
Annual
Incentive
|
|
Compensation:
|
You shall be
eligible to participate in annual incentive compensation plans, if
any, that may be adopted by the Company from time to time and that
are afforded generally to persons employed by the Company at your
employment level and position, geographic location and applicable
department or operations within the Company (subject to the terms
and conditions of any such annual incentive compensation plans).
Should such an annual incentive compensation plan be adopted for
any annual period, your target annual incentive compensation
opportunity will be as established by the Company for each annual
period, which may be up to
50
% of your annualized rate
(i.e., 24 X Semi-monthly Rate) based on achievement of objectives
specified by the Company each annual incentive compensation period
(which may include Company-wide performance objectives; divisional,
department or operations performance objectives and/or individual
performance objectives, allocated between and among such
performance objectives as the Company may determine) and subject to
adjustment by the Company based on the Company’s evaluation
and review of your overall individual job performance in the sole
discretion of the Company. Specific annual incentive compensation
plan details, target incentive compensation opportunity and
objectives for each annual compensation plan period will be
established each year. Awards under annual incentive plans may be
prorated by the Company in its discretion for a variety of factors,
including time employed by the Company during the year, adjustments
in base compensation or target award percentage changes during the
year, and unpaid time off. You understand that the Company’s
annual incentive compensation plans, their structure and
components, specific target incentive compensation opportunities
and objectives, the achievement of objectives and the determination
of actual awards and payouts, if any, thereunder are subject to the
sole discretion of the Company. Awards, if any, under any annual
incentive compensation plan shall only be earned by you, an payable
to you, if you remain actively employed by the Company through the
date on which award payouts are made by the Company under the
applicable annual incentive compensation plan. You will not earn
any such award if your employment ends for any reason prior to that
date.
|
Your
promotion is conditioned upon your acceptance of the foregoing
modifications to the terms and conditions of your employment with
Autobytel Inc. If you accept these modifications to the terms of
your employment, please acknowledge your acceptance in the space
provided below.
Please
feel free to call if you have any questions.
Autobytel Inc.
Glenn
Fuller
EVP,
Chief Legal and Administrative Officer and Secretary
Accepted
and Agreed:
/s/ Taren
Peng
Taren
Peng
Exhibit 10.50
AUTOBYTEL
INC.
SEVERANCE
BENEFITS AGREEMENT
This
Severance Benefits Agreement (“
Agreement
”) entered into effective
as of August 25, 2014 (“
Effective Date
”) between Autobytel
Inc., a Delaware corporation (“
Autobytel
” or
“Company”
), and Taren Peng
(“
Employee
”).
Background
Autobytel has
determined that it is in its best interests to provide Employee
with certain severance benefits to encourage Employee’s
continued employment with, and dedication to the business of, the
Company.
In
consideration of the foregoing and other good and valuable
consideration, receipt of which is hereby acknowledged, the Parties
hereby agree as follows.
1.
Definitions
.
For purposes of this Agreement, the terms below that begin with
initial capital letters within this Agreement shall have the
specially defined meanings set forth below (unless the context
clearly indicates a different meaning).
(a)
“
409A Suspension Period
”
shall have the meaning set forth in Section 3.
(b)
“
Arbitration Agreement
”
means that certain Mutual Agreement to Arbitrate dated as of March
10, 2014 entered into by and between the Company and
Employee.
(c)
“
Cause
” shall mean the
termination of the Employee’s employment by the Company as a
result of any one or more of the following:
(i)
any conviction of,
or pleading of nolo contendre by, the Employee for any
felony;
(ii)
any
willful misconduct of the Employee which has a materially injurious
effect on the business or reputation of the Company;
(iii)
the
gross dishonesty of the Employee in any way that adversely affects
the Company; or
(iv)
a
material failure to consistently discharge Employee’s
employment duties to the Company which failure continues for thirty
(30) days following written notice from the Company detailing the
area or areas of such failure, other than such failure resulting
from Employee’s Disability.
For
purposes of this definition of Cause, no act or failure to act, on
the part of the Employee, shall be considered “willful”
if it is done, or omitted to be done, by the Employee in good faith
or with reasonable belief that Employee’s action or omission
was in the best interest of the Company. Employee shall have the
opportunity to cure any such acts or omissions (other than clauses
(i) and (iii) above) within thirty (30) days of the
Employee’s receipt of a written notice from the Company
notifying Employee that, in the opinion of the Company,
“Cause” exists to terminate Employee’s
employment.
(d)
“
Change of Control
” shall
mean any of the following events:
(i)
When any “person” as defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and 14(d) thereof
(including a “group” as defined in Section 13(d) of the
Exchange Act, but excluding the Company, any Subsidiary or any
employee benefit plan sponsored or maintained by the Company or any
Subsidiary (including any trustee of such plan acting as trustee)),
directly or indirectly, becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act, as amended from
time to time), of securities of the Company representing 50% or
more of the combined voting power of the Company’s then
outstanding securities.
(ii) When the individuals who, as of the Effective
Date, constitute the Board (“
Incumbent
Board
”), cease for any
reason to constitute at least a majority of the Board; provided
however, that any individual becoming a director subsequent to such
date, whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall, for purposes of this section, be counted as a member of the
Incumbent Board in determining whether the Incumbent Board
constitutes a majority of the Board.
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially
all of the assets of the Company or the acquisition of assets of
another corporation (a “
Business
Combination
”), in each
case, unless, following such Business
Combination:
(1)
all or substantially all of the individuals and entities who were
the beneficial owners of the then outstanding shares of common
stock of the Company and the beneficial owners of the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than fifty percent (50%) of the then
outstanding shares of common stock and the combined voting power of
the then outstanding securities entitled to vote generally in the
election of directors, respectively, as the case may be, of the
corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company’s assets either directly or indirectly or through one
or more subsidiaries); and
(2)
no person (excluding any employee benefit plan or related trust of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, fifty
percent (50%) or more of the then outstanding shares of common
stock of the corporation resulting from such Business Combination
or the combined voting power of such corporation except to the
extent that such ownership existed prior to the Business
Combination.
(iv) Approval by the stockholders of the Company
of a complete liquidation or dissolution of the
Company
.
(e)
“
COBRA
” shall mean the
Consolidated Omnibus Budget Reconciliation Act, as amended, and the
rules and regulations promulgated thereunder.
(f)
“
Code
” shall mean the
Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
(g)
“
Company
” means Autobytel,
and upon any assignment to and assumption of this Agreement by any
Successor Company, shall mean such Successor Company.
(h)
“
Disability
” shall mean
the inability of the Employee to perform Employee’s duties to
the Company on account of physical or mental illness or incapacity
for a period of one-hundred twenty (120) consecutive calendar days,
or for a period of one hundred eighty (180) calendar days, whether
or not consecutive, during any three hundred sixty-five (365) day
period.
(i)
“
Employee’s
Position
” means Employee’s position as the Vice
President, Website and Mobile Development of the
Company.
(j)
“
Employee’s Primary Work
Location
” means Autobytel’s headquarters located
at 18872 MacArthur Boulevard, Suite 200, Irvine, California,
92612-1400.
(k)
“
Good Reason
” means any
act, decision or omission by the Company that: (A) materially
modifies, reduces, changes, or restricts Employee’s base
salary as in existence as of the Effective Date or as of the date
prior to any such change, whichever is more beneficial for Employee
at the time of the act, decision, or omission by the Company; (B)
materially
modifies, reduces, changes, or restricts the Employee’s
Health and Welfare Benefits as a whole as in existence as of the
Effective Date hereof or as of the date prior to any such change,
whichever are more beneficial for Employee at the time of the act,
decision, or omission by the Company; (C) materially modifies,
reduces, changes, or restricts the Employee’s authority,
duties, or responsibilities commensurate with the Employee’s
Position but excluding the effects of any reductions in force other
than the Employee’s own termination; (D) relocates the
Employee’s primary place of employment without
Employee’s consent from Employee’s Primary Work
Location to any other location in excess of a fifty (50) mile
radius from the Employee’s Primary Work Location other than
on a temporary basis or requires any such relocation as a condition
to continued employment by Company; (E) constitutes a failure or
refusal by any Company Successor to assume this Agreement; or (F)
involves or results in any material failure by the Company to
comply with any provision of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after
receipt of written notice thereof given by the Employee.
Notwithstanding the foregoing, no event shall constitute
“Good Reason” unless (i) the Employee first provides
written notice to the Company within ninety (90) days of the
event(s) alleged to constitute Good Reason, with such notice
specifying the grounds that are alleged to constitute Good Reason,
and (ii) the Company fails to cure such a material breach to the
reasonable satisfaction of the Employee within thirty (30) days
after Company’s receipt of such written notice.
(l)
“
Health and Welfare
Benefits
” means all Company medical, dental, vision,
life and disability plans in which Employee
participates.
(m)
“
Separation from Service
”
or “
Separates from
Service
” shall mean Employee’s termination of
employment, as determined in accordance with Treas. Reg. §
1.409A-1(h). Employee shall be considered to have experienced a
termination of employment when the facts and circumstances indicate
that Employee and the Company reasonably anticipate that either (i)
no further services will be performed for the Company after a
certain date, or (ii) that the level of bona fide services Employee
will perform for the Company after such date (whether as an
employee or as an independent contractor) will permanently decrease
to no more than twenty percent (20%) of the average level of bona
fide services performed by Employee (whether as an employee or
independent contractor) over the immediately preceding thirty-six
(36) month period (or the full period of services to the Company if
Employee has been providing services to the Company for less than
thirty six (36) months). If Employee is on military leave, sick
leave, or other bona fide leave of absence, the employment
relationship between Employee and the Company shall be treated as
continuing intact, provided that the period of such leave does not
exceed six months, or if longer, so long as Employee retains a
right to reemployment with the Company under an applicable statute
or by contract. If the period of a military leave, sick leave, or
other bona fide leave of absence exceeds six months and Employee
does not retain a right to reemployment under an applicable statute
or by contract, the employment relationship shall be considered to
be terminated for purposes of this Agreement as of the first day
immediately following the end of such six-month period. In applying
the provisions of this section, a leave of absence shall be
considered a bona fide leave of absence only if there is a
reasonable expectation that Employee will return to perform
services for the Company. For purposes of determining whether
Employee has incurred a Separation from Service, the Company shall
include the Company and any entity that would be considered a
single employer with the Company under Code Section 414(b) or
414(c).
(n)
“
Severance Period
” shall
equal nine (9) months.
(o)
“
Successor Company
” means
any successor to Autobytel or its assets by reason of any Change of
Control.
(p)
“
Termination Without
Cause
” means termination of Employee’s
employment with the Company (i) by the Company (a) for any reason
other than (1) death, (2) Disability or (3) those reasons expressly
set forth in the definition of “Cause,” (b) for no
reason at all, or (c) in connection with or as a result of a Change
of Control; provided, however, that a termination of
Employee’s employment with the Company in connection with a
Change of Control shall not constitute a Termination Without Cause
if Employee is offered employment with the Successor Company under
terms and conditions, including position, salary and other
compensation, and benefits, that would not provide Employee the
right to terminate Employee’s employment for Good
Reason.
2.
Severance Benefits
and Conditions
.
(a)
In the event of (i)
Termination Without Cause by the Company, or (ii) the termination
of Employee’s employment with the Company by Employee for
Good Reason within 30 days following the earlier of (1) the
Company’s failure to cure within the 30-day period set forth
in the definition of Good Reason, and (2) the Company’s
notice to Employee that it will not cure the event giving rise to
such termination for Good Reason, then (A) Employee shall receive
upon such termination a lump sum amount equal to the number of
months constituting the Severance Period at the time of termination
times the Employee’s monthly base salary (determined as the
Employee’s highest monthly base salary paid to Employee while
employed by the Company; base salary does not include any bonus,
commissions or other incentive payments or compensation); (B)
subject to Section 2(b) below, Employee shall be entitled to a
continuation of all Health and Welfare Benefits for Employee and,
if applicable, Employee’s eligible dependents during the
Severance Period at the time they would have been provided or paid
had the Employee remained an employee of Company during the
Severance Period and at the levels provided prior to the event
giving rise to a termination; and (C) the Company shall make
available to Employee career transition services at a level and
with a provider selected by the Company in accordance with Section
2(g) below.
(b)
(i) With respect to
Health and Welfare Benefits that are eligible for continuation
coverage under COBRA, in the event the Company is unable to
continue Employee’s and Employee’s eligible
dependents’ (assuming such dependents were covered by
Autobytel at the time of termination) participation under the
Company’s then existing insurance policies for such Health
and Welfare Benefits, Employee may elect to obtain coverage for
such Health and Welfare Benefits either by (1) electing COBRA
continuation benefits for Employee and Employee’s eligible
dependents; (2) obtaining individual coverage for Employee and
Employee’s eligible dependents (if Employee and
Employee’s eligible dependents qualify for individual
coverage); or (3) electing coverage as eligible dependents under
another person’s group coverage (if Employee and
Employee’s eligible dependents qualify for such dependent
coverage), or any combination of the foregoing alternatives.
Employee may also initially elect COBRA continuation benefits and
later change to individual coverage or dependent coverage for
Employee or any eligible dependent of Employee, but Employee
understands that if continuation of Health and Welfare Benefits
under COBRA is not initially selected by Employee or is later
terminated by Employee, Employee will not be able to return to
continuation coverage under COBRA. The Company shall pay directly
or reimburse to Employee the monthly premiums for the benefits or
coverage selected by Employee, with such payment or reimbursement
not to exceed the monthly premiums the Company would have paid
assuming Employee elected continuation of benefits under COBRA. The
Company’s obligation to pay or reimburse for the Health and
Welfare Benefits covered by this Section 2(b)(i) shall terminate
upon the earlier of (i) the end of the Severance Period; and (ii)
Employee’s employment by an employer that provides Employee
and Employee’s eligible dependents with group coverage
substantially similar to the Health and Welfare Benefits provided
to Employee and Employee’s eligible dependents at the time of
the termination of Employee’s employment with the Company,
provided that Employee and Employee’s eligible dependents are
eligible for participation in such group coverage.
(ii)
With respect to Health and Welfare Benefits that are not eligible
for continuation coverage under COBRA, in the event the Company is
unable to continue Employee’s participation under the
Company’s then existing insurance policies for such Health
and Welfare Benefits, Employee may elect to obtain coverage for
such Health and Welfare Benefits either by (1) obtaining individual
coverage for Employee (if Employee qualifies for individual
coverage); or (2) electing coverage as an eligible dependent under
another person’s group coverage (if Employee qualifies for
such dependent coverage), or any combination of the foregoing
alternatives. The Company shall pay directly or reimburse to
Employee the monthly premiums for the benefits or coverage selected
by Employee, with such payment or reimbursement not to exceed the
monthly premiums the Company paid for such Health and Welfare
Benefits at the time of termination of Employee’s employment
with the Company. The Company’s obligation to pay or
reimburse for the Health and Welfare Benefits covered by this
Section 2(b)(ii) shall terminate upon the earlier of (i) the end of
the Severance Period; and (ii) Employee’s employment by an
employer that provides Employee with group coverage substantially
similar to the Health and Welfare Benefits provided to Employee at
the time of the termination of Employee’s employment with the
Company, provided that Employee is eligible for participation in
such group coverage. Employee acknowledges and agrees that the
Company shall not be obligated to provide any Health and Welfare
Benefits covered by this Section 2(b)(ii) for Employee if Employee
does not qualify for coverage under the Company’s existing
insurance policies for such Health and Welfare Benefits, for
individual coverage, or for dependent coverage.
(c) The
payments and benefits set forth in Sections 2(a) and 2(b) are
conditioned upon and shall be provided to Employee only if (i)
Employee has executed and delivered to the Company a Separation and
Release Agreement in favor of the Company and Releasees, which
agreement shall be substantially in the form attached hereto as
Exhibit A (“
Release
”) no later than the
expiration of the applicable period of time allowed for Employee to
consider the Release as set forth in Section 17 of the Release
(“
Release Consideration
Period
”); (ii) Employee has not revoked the Release
prior to the expiration of the applicable revocation period set
forth in Section 17 of the Release (“
Release Revocation Period
”); and
(iii) the Release has become effective and non-revocable no later
than the cumulative period of time represented by the sum of the
maximum Release Consideration Period and the maximum Release
Revocation Period. No payments or benefits set forth in Sections
2(a) or 2(b) shall be due or payable to, or provided to, Employee
if the Release has not become effective and non-revocable in
accordance with the requirements of this Section 2(c).
(d)
Upon satisfaction of the conditions set forth in Section 2(c), but
subject to the last sentence of this Section 2(d), all payments
under Section 2(a)(A) shall be made to Employee within five (5)
business days after the Release becomes effective and non-revocable
in accordance with its terms. In any case, the payment under
Section 2(a)(A) shall be made no later than two and one-half months
after the end of the calendar year in which Employee’s
Separation from Service occurs, provided that the Release shall
have become effective and non-revocable in compliance with Section
2(c) prior to expiration of such two and one-half month period. If
the period of time covered by the entire allowed Release
Consideration Period, the entire Revocation Period and the entire
five business day period described above in this Section 2(d)
(considering such periods consecutively) begins in one calendar
year and ends in the following calendar year, all payments under
Section 2(a)(A) shall be made to Employee on the first business day
of such following calendar year which is five (5) or more business
days after the date on which the Release became effective and
non-revocable in accordance with its terms.
(e) In
addition to the payments and benefits under Sections 2(a) and 2(b),
to the extent required by applicable law or the Company’s
incentive or other compensation plans applicable to Employee, if
any, upon any termination of Employee’s employment Employee
shall receive (i) any amounts earned and due and owing to Employee
as of the termination date with respect to any base salary,
incentive compensation or commissions; and (ii) any other payments
required by applicable law (including payments with respect to
accrued and unused vacation time). Payments required under this
Section 2(e) are not conditioned upon Employee’s signing the
Release and shall be made within the time period(s) required by
applicable law.
(f) All
payments and benefits under this Section 2 are subject to legally
required federal, state and local payroll deductions and
withholdings.
(g) To
receive career transition services, Employee must contact the
service provider no later than 30 days after the Release becomes
effective.
(h)
Other than the payments and benefits provided for in this Section
2, Employee shall not be entitled to any additional payments or
benefits from the Company resulting from a termination of
Employee’s employment with the Company.
3.
Taxes
. All
payments made pursuant to this Agreement will be subject to
withholding of applicable taxes. Notwithstanding the foregoing, and
except as otherwise specifically provided elsewhere in this
Agreement, Employee is solely responsible and liable for the
satisfaction of any federal, state, province or local taxes that
may arise with respect to this Agreement (including any taxes and
interest arising under Section 409A of the Code). Neither the
Company nor any of its employees, directors, or service providers
shall have any obligation whatsoever to pay such taxes or interest,
to prevent Employee from incurring them, or to mitigate or protect
Employee from any such tax or interest liabilities. Notwithstanding
anything in this Agreement to the contrary, if any amounts that
become due under this Agreement on account of Employee’s
termination of employment constitute “nonqualified deferred
compensation” within the meaning of Section 409A of the Code,
payment of such amounts shall not commence until Employee incurs a
Separation from Service. If, at the time of Employee’s
Separation from Service under this Agreement, Employee is a
“specified employee” (within the meaning of Section
409A of the Code), any amounts that constitute “nonqualified
deferred compensation” within the meaning of Section 409A of
the Code that become payable to Employee on account of
Employee’s Separation from Service (including any amounts
payable pursuant to the preceding sentence) will not be paid until
after the end of the sixth calendar month beginning after
Employee’s Separation from Service (“
409A Suspension Period
”). Within
14 calendar days after the end of the 409A Suspension Period,
Employee shall be paid a lump sum payment, without interest, in
cash equal to any payments delayed because of the preceding
sentence. Thereafter, Employee shall receive any remaining benefits
as if there had not been an earlier delay. With respect to the
reimbursement of expenses to which Employee is entitled under this
Agreement, if any, or the provision of in-kind benefits to Employee
as specified under this Agreement, if any, such reimbursement of
expenses or provision of in-kind benefits shall be subject to the
following conditions: (i) the expenses eligible for
reimbursement or the amount of in-kind benefits provided in one
taxable year shall not affect the expenses eligible for
reimbursement or the amount of in-kind benefits provided in any
other taxable year, except for any medical reimbursement
arrangement providing for the reimbursement of expenses referred to
in Section 105(b) of the Code, solely to the extent that the
arrangement provides for a limit on the amount of expenses that may
be reimbursed under such arrangement over some or all of the period
in which the reimbursement arrangement remains in effect;
(ii) the reimbursement of an eligible expense shall be made no
later than the end of the calendar year after the calendar year in
which such expense was incurred; (iii) the right to
reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit; and (iv) the right to
reimbursement or provision of in-kind benefits shall not apply to
any expenses incurred or benefits to be provided beyond the last
day of the second taxable year following the year in which
Employee's Separation from Service occurred.
4.
Arbitration
.
Any controversy or claim arising out of, or related to, this
Agreement, or the breach thereof, shall be governed by the terms of
the Arbitration Agreement, which is incorporated herein by
reference.
5.
Entire
Agreement
. All oral or written agreements or representations
express or implied, with respect to the subject matter of this
Agreement are set forth in this Agreement. This Agreement contains
the entire integrated understanding between the parties hereto and
supersedes any prior employment, severance, or change-in-control
protective agreement or other agreement, plan or arrangement
between the Company or any predecessor and Employee. No provision
of this Agreement shall be interpreted to mean that Employee is
subject to receiving fewer benefits than those available to
Employee without reference to this Agreement. The Parties
acknowledge and agree that the Prior Severance Agreement is hereby
terminated and shall have no further force or effect.
6.
Notices
.
Except as otherwise provided in this Agreement, any notice,
approval, consent, waiver or other communication required or
permitted to be given or to be served upon any person in connection
with this Agreement shall be in writing. Such notice shall be
personally served, sent by fax or cable, or sent prepaid by either
registered or certified mail with return receipt requested or
Federal Express and shall be deemed given (i) if personally served
or by Federal Express, when delivered to the person to whom such
notice is addressed, (ii) if given by fax or cable, when sent, or
(iii) if given by mail, two (2) business days following deposit in
the United States mail. Any notice given by fax or cable shall be
confirmed in writing, by overnight mail or Federal Express within
forty-eight (48) hours after being sent. Such notices shall be
addressed to the party to whom such notice is to be given at the
party’s address set forth below or as such party shall
otherwise direct.
If to
the Company:
Autobytel
Inc.
18872
MacArthur Boulevard, Suite 200
Irvine,
California, 92612-1400
Facsimile: (949)
862-1323
Attn: Chief Legal Officer
If to
the Employee:
To
Employee’s latest home address on file with the
Company
7.
No Waiver
.
No waiver, by conduct or otherwise, by any party of any term,
provision, or condition of this Agreement, shall be deemed or
construed as a further or continuing waiver of any such term,
provision, or condition nor as a waiver of a similar or dissimilar
condition or provision at the same time or at any prior or
subsequent time.
8.
Amendment to this
Agreement
. No modification, waiver, amendment, discharge or
change of this Agreement, shall be valid unless the same is in
writing and signed by the party against whom enforcement of such
modification, waiver amendment, discharge, or change is or may be
sought.
9.
Non-Disclosure
.
Unless required by applicable law, rule, regulation or order or to
enforce this Agreement, Employee shall not disclose the existence
of this Agreement or the underlying terms to any third party,
including without limitation, any former, present or future
employee of the Company, other than to Employee’s immediate
family who have a need to know such matters or to Employee’s
tax or legal advisors who have a need to know such matters. If
Employee does disclose this Agreement or any of its terms to any of
Employee’s immediate family or tax or legal advisors, then
Employee will inform them that they also must keep the existence of
this Agreement and its terms confidential. The Company may disclose
the existence or terms of the Agreement and its terms and may file
this Agreement as an exhibit to its public filings if it is
required to due so under applicable law, rule, regulation or
order.
10.
Enforceability;
Severability
. If any provision of this Agreement shall be
invalid or unenforceable, in whole or in part, such provision shall
be deemed to be modified or restricted to the extent and in the
manner necessary to render the same valid and enforceable, or shall
be deemed excised from this Agreement, as the case may require, and
this Agreement shall be construed and enforced to the maximum
extent permitted by law as if such provision had been originally
incorporated herein as so modified or restricted, or as if such
provision had not been originally incorporated herein, as the case
may be.
11.
Governing
Law
. This Agreement shall be construed and enforced in
accordance with the laws of the State of California without giving
effect to such State’s choice of law rules. This Agreement is
deemed to be entered into entirely in the State of California. This
Agreement shall not be strictly construed for or against either
party.
12.
No Third Party
Beneficiaries
. Except as otherwise set forth in this
Agreement, nothing contained in this Agreement is intended or shall
be construed to create rights running to the benefit of any third
party.
13.
Successors of the
Company
. The rights and obligations of the Company under
this Agreement shall inure to the benefit of, and shall be binding
upon, the successors and assigns of the Company, including any
Successor Company. This Agreement shall be assignable by the
Company in the event of a merger or similar transaction in which
the Company is not the surviving entity, or a sale of all or
substantially all of the Company’s assets.
14.
Rights
Cumulative
. The rights under this Agreement, or by law or
equity, shall be cumulative and may be exercised at any time and
from time to time. No failure by any party to exercise, and no
delay in exercising, any rights shall be construed or deemed to be
a waiver thereof, nor shall any single or partial exercise by any
party preclude any other or future exercise thereof or the exercise
of any other right.
15.
No Right or
Obligation of Employment
. Employee acknowledges and agrees
that nothing in this Agreement shall confer upon Employee any right
with respect to continuation of employment by the Company, nor
shall it interfere in any way with Employee’s right or the
Company’s right to terminate Employee’s employment at
any time, with or without Cause.
16.
Interpretation
.
Every provision of this Agreement is the result of full
negotiations between the parties, both of whom have either been
represented by counsel throughout or otherwise been given an
opportunity to seek the aid of counsel. Each party hereto further
agrees and acknowledges that it is sophisticated in legal affairs
and has reviewed this Agreement in detail. Accordingly, no
provision of this Agreement shall be construed in favor of or
against any of the parties hereto by reason of the extent to which
any such party or its counsel participated in the drafting thereof.
Captions and headings of sections contained in this Agreement are
for convenience only and shall not control the meaning, effect, or
construction of this Agreement. Time periods used in this Agreement
shall mean calendar periods unless otherwise expressly
indicated.
17.
Legal and Tax
Advice
. Employee acknowledges that: (i) the Company has
encouraged Employee to consult with an attorney and/or tax advisor
of Employee’s choosing (and at Employee’s own cost and
expense) in connection with this Agreement, and (ii) Employee is
not relying upon the Company for, and the Company has not provided,
legal or tax advice to Employee in connection with this Agreement.
It is the responsibility of Employee to seek independent tax and
legal advice with regard to the tax treatment of this Agreement and
the payments and benefits that may be made or provided under this
Agreement and any other related matters. Employee acknowledges that
Employee has had a reasonable opportunity to seek and consider
advice from Employee’s counsel and tax advisors.
18.
Counterparts
.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which shall
constitute one instrument. The parties agree that facsimile copies
of signatures shall be deemed originals for all purposes hereof and
that a party may produce such copies, without the need to produce
original signatures, to prove the existence of this Agreement in
any proceeding brought hereunder.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF,
the Company and
Employee have executed and entered into this Agreement effective as
of the date first shown above.
AUTOBYTEL
INC.
By:
/s/ Glenn E.
Fuller
Glenn
E. Fuller
Executive Vice
President, Chief Legal and
Administrative
Officer and Secretary
EMPLOYEE
/s/ Taren
Peng
.
Taren
Peng
EXHIBIT A
SEPARATION AND RELEASE AGREEMENT
It is
hereby agreed by and between you, Taren Peng (for yourself, your
spouse, family, agents and attorneys) (jointly, “
You
” or “
Employee
”), and Autobytel Inc.,
its predecessors, successors, affiliates, directors, employees,
shareholders, fiduciaries, insurers, employees and agents (jointly,
the “
Company
”),
as follows:
1.
Separation of
Employment
. You acknowledge that your employment with the
Company ended effective [_______], 201[__] (“
Employment Termination Date
”), and
that You will perform no further duties, functions or services for
the Company subsequent to the Employment Termination Date. You have
resigned or hereby resign from all officer and director positions
You held with the Company or any of its subsidiaries effective as
of the Employment Termination Date. This Separation and Release
Agreement (“
Release
”) is entered into in
connection with that certain Severance Benefits Agreement dated
effective as of August 25, 2014 by and between the Company and
Employee (“
Severance Benefits
Agreement
”).
2.
Release
Consideration
. In exchange for your promises and obligations
in this Release and the Severance Benefits Agreement, including the
release of claims set forth below, if You sign and do not revoke
this Release and this Release becomes effective, the Company will
pay You the amounts, and will provide the benefits, due to You
under the Severance Benefits Agreement, minus legally required
federal, state and local payroll deductions and withholdings.
Payment of any monetary amount provided for in this Section 2 will
be made within the time periods required by the Severance Benefits
Agreement (except for payments or benefits that will be paid or
provided over time as provided therein) and, if no time is
specified, within 5 business days after this Release becomes
effective.
3.
Acknowledgement of
Receipt of Amounts Due
. You acknowledge and agree that You
have received all, and that the Company does not owe You any
additional, payments, benefits or other compensation as a result of
your employment with the Company or your separation from employment
with the Company, including, but not limited to, wages,
commissions, bonuses, vacation pay, severance pay, expenses, fees,
or other compensation or payments of any kind or nature, other than
those amounts or benefits, if any, payable or to be provided to You
after the date hereof pursuant to the Severance Benefits Agreement
after this Release becomes effective.
4.
Return of Company
Property
. You represent and warrant that You have returned
to the Company any and all documents, software, equipment
(including, but not limited to, computers and computer-related
items), and all other materials or other things in your possession,
custody, or control which are the property of the Company,
including, but not limited to, Company identification, keys,
computers, cell phones, and the like, wherever such items may have
been located; as well as all copies (in whatever form thereof) of
all materials relating to your employment, or obtained or created
in the course of your employment with the Company. You hereby
represent that, other than those materials You have returned to the
Company pursuant to this Section 4, You have not copied or caused
to be copied, and have not transferred or printed-out or caused to
be transferred or printed-out, any software, computer disks,
e-mails or other documents other than those documents generally
available to the public, or retained any other materials
originating with or belonging to the Company. You further represent
that You have not retained in your possession, custody or control,
any software, documents or other materials in machine or other
readable form, which are the property of the Company, originated
with the Company, or were obtained or created in the course of or
relate to your employment with the Company.
5.
Confidentiality and
Non-Solicitation/Interference
.
(a) You
shall keep confidential, and shall not hereafter use or disclose to
any person, firm, corporation, governmental agency, or other
entity, in whole or in part, at any time in the future, any trade
secret, proprietary information, or confidential information of the
Company, including, but not limited to, information relating to
trade secrets, processes, methods, pricing strategies, customer
lists, marketing plans, product introductions, advertising or
promotional programs, sales, financial results, financial records
and reports, regulatory matters and compliance, and other
confidential matters, except as required by law and as necessary
for compliance purposes. These obligations are in addition to the
obligations set forth in any confidentiality or non-disclosure
agreement between You and the Company, including, without
limitation, that certain Employee Confidentiality Agreement dated
as of [_______], [__], which shall remain binding on You after the
Employment Termination Date.
(b)
Unless required by applicable law, rule, regulation or order or to
enforce this Agreement, Employee shall not disclose the existence
of the Severance Benefits Agreement or this Release or the
underlying terms to any third party, including without limitation,
any former, present or future employee of the Company, other than
to Employee’s immediate family who have a need to know such
matters or to Employee’s tax or legal advisors who have a
need to know such matters. If Employee does disclose this Release,
the Severance Benefits Agreement or any of their respective terms
to any of Employee’s immediate family or tax or legal
advisors, then Employee will inform them that they also must keep
the existence of this Release, the Severance Benefits Agreement and
their respective terms confidential. The Company may disclose the
existence or terms of this Release, the Severance Benefits
Agreement and their respective terms and may file this Release and
the Severance Benefits Agreement as exhibits to its public filings
if it is required to due so under applicable law, rule, regulation
or order.
(c) For
a period of one (1) year immediately following this Release
becoming effective, You agree that You will not interfere with
Company’s business by soliciting an employee to leave
Company’s employ, or by inducing a consultant or vendor to
sever its relationship with Company. You may not, at any time, use
the Company’s trade secrets to solicit business from any
source, including the Company’s customers or clients. This
Section 5(c) is not intended to, and shall not, prevent You from
lawful competition with the Company. You represent and warrant that
You have not engaged in any of the foregoing activities prior to
the effective date of this Release.
6.
Nondisparagement
.
You agree that neither You nor anyone acting on your behalf or at
your direction will disparage, denigrate, defame, criticize, impugn
or otherwise damage or assail the reputation or integrity of the
Company to any third party and in particular to any current or
former employee, officer, director, contractor, supplier, customer,
or client of the Company or prospective or actual purchaser of the
equity interests of the Company or its business or
assets.
7.
Unconditional
General Release of Claims
.
(a) In
consideration for the payment and benefits provided for in Section
2, and notwithstanding the provisions of Section 1542 of the Civil
Code of California, You unconditionally release and forever
discharge the Company, and the Company’s current, former, and
future controlling shareholders, subsidiaries, affiliates, related
companies, predecessor companies, divisions, directors, trustees,
officers, employees, agents, attorneys, successors, and assigns
(and the current, former, and future controlling shareholders,
directors, trustees, officers, employees, agents, and attorneys of
any such subsidiaries, affiliates, related companies, predecessor
companies, and divisions) (all of the foregoing released persons or
entities being referred to herein as “
Releasees
”), from any and all
claims, complaints, demands, actions, suits, causes of action,
obligations, damages and liabilities of whatever kind or nature,
whether known or unknown, based on any act, omission, event,
occurrence, or nonoccurrence from the beginning of time to the date
of execution of this Release, including, but not limited to, claims
that arise out of or in any way relate to your employment or your
separation from employment with the Company.
(b) You
acknowledge and agree that the foregoing unconditional and general
release includes, but is not limited to, (i) any claims for salary,
bonuses, commissions, equity, compensation (except as specified in
this Agreement), wages, penalties, premiums, severance pay,
vacation pay or any benefits under the Employee Retirement Income
Security Act of 1974, as amended; (ii) any claims of harassment,
retaliation or discrimination; (iii) any claims based on any
federal, state or governmental constitution, statute, regulation or
ordinance, including, without limitation, Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act, the Americans With Disabilities
Act, Section 1981 of the Civil Rights Act of 1866, the California
Fair Employment and Housing Act, the California Family Rights Act,
the Family and Medical Leave Act, the California Constitution, the
California Labor Code, the California Industrial Welfare Commission
Wage Orders, the California Government Code, the Worker Adjustment
and Retraining Notification Act; (iv) whistleblower claims, claims
of breach of implied or express contract, breach of promise,
misrepresentation, negligence, fraud, estoppel, defamation,
infliction of emotional distress, violation of public policy,
wrongful or constructive discharge, or any other employment-related
tort, and any claims for costs, fees, or other expenses, including
attorneys’ fees; and (v) any other aspect of your employment
or the termination of your employment.
(c) For
the purpose of implementing a full and complete release, You
expressly acknowledge and agree that this Release resolves all
claims You may have against the Company and the Releasees as of the
date of this Release, including but limited to claims that You did
not know or suspect to exist in your favor at the time of the
execution of this Release. You expressly waive any and all rights
which You may have under the provisions of Section 1542 of the
California Civil Code or any similar state or federal statute.
Section 1542 provides as follows:
“A general
release does not extend to claims which the creditor does not know
or suspect to exist in his or her favor at the time of executing
the release, which if known by him or her must have materially
affected his or her settlement with the debtor.”
(d)
This Release will not waive the Employee’s rights to
indemnification under the Company’s certificate of
incorporation or by-laws or, if applicable, any written agreement
between the Company and the Employee, or under applicable
law.
(e)
You
hereby certify that
You have not experienced a job-related illness or injury for which
You have not already filed a claim.
(f)
This general release does not waive or release rights or claims
arising after You sign this Release.
8.
Covenant Not to
Sue
.
A
“covenant not to sue” is a promise not to sue in court.
This covenant differs from a general release of claims in that,
besides waiving and releasing the claims covered by this Release,
You represent and warrant that You have not filed, and agree that
You will not file, or cause to be filed or maintained, any judicial
complaint, lawsuit or demand for arbitration involving any claims
You have released in this Release, and You agree to withdraw any
judicial complaints, lawsuits or demands for arbitration You have
filed, or were filed on your behalf, prior to the effective date of
this Release. Still, You may sue to enforce this Release. You agree
if You breach this covenant, then You must pay the legal expenses
incurred by incurred by any Releasee in defending against your
suit, including reasonable attorneys’ fees, or, at the
Company’s option, return everything paid to You under this
Agreement. In that event, the Company shall be excused from making
any further payments or continuing any other benefits otherwise
owed to You under paragraph 2 of this Agreement. Furthermore, You
give up all rights to individual damages in connection with any
administrative or court proceeding with respect to your employment
with or termination of employment from, the Company. You also agree
that if You are awarded money damages, You will assign your right
and interest to such money damages (i) in connection with an
administrative charge, to the relevant administrative agency; and
(ii) in connection with a lawsuit or demand for arbitration, to the
Company.
9.
Cooperation With
Company
. You agree to assist and cooperate (including, but
not limited to, providing information to the Company and/or
testifying truthfully in a proceeding) in the investigation and
handling of any internal investigation, governmental matter, or
actual or threatened court action, arbitration, administrative
proceeding, or other claim involving any matter that arose during
the period of your employment. You shall be reimbursed for
reasonable expenses actually incurred in the course of rendering
such assistance and cooperation. Your agreement to assist and
cooperate shall not affect in any way the content of information or
testimony provided by You.
10.
No
Reemployment
.
You
acknowledge and agree that the Company has no obligation to employ
You or offer You employment in the future and You shall have no
recourse against the Company if it refuses to employ You or offer
You employment. If You do seek re-employment, then this Release
shall constitute sufficient cause for the Company to refuse to
re-employ You. Notwithstanding the foregoing, the Company has the
right to offer to re-employ You in the future if, in its sole
discretion, it chooses to do so.
11.
No Admission of
Liability
. This Release does not constitute an admission
that the Company or any other Releasee has violated any law, rule,
regulation, contractual right or any other duty or
obligation.
12.
Severability
.
Should any provision of this Release be declared or be determined
by any court or arbitrator to be illegal or invalid, the validity
of the remaining parts, terms, or provisions shall not be affected,
and said illegal or invalid part, term, or provision shall be
deemed not to be part of this Release.
13.
Governing
Law
. This Release is made and entered into in the State of
California and shall in all respects be interpreted, enforced, and
governed under the law of that state, without reference to conflict
of law provisions thereof.
14.
Interpretation
.
The language of all parts in this Release shall be construed as a
whole, according to fair meaning, and not strictly for or against
any party. The captions and headings contained in this Agreement
are for convenience only and shall not control the meaning, effect,
or construction of this Agreement.
15.
Knowing and
Voluntary Agreement
. You have carefully reviewed this
Release and understand the terms and conditions it contains. By
entering into this Release, You are giving up potentially valuable
legal rights. You specifically acknowledge that You are waiving and
releasing any rights You may have under the ADEA. You acknowledge
that the consideration given for this waiver and release is in
addition to anything of value to which You were already entitled.
You acknowledge that You are signing this Release knowingly and
voluntarily and intend to be bound legally by its
terms.
16.
Entire
Agreement
. You hereby acknowledge that no promise or
inducement has been offered to You, except as expressly stated in
this Release and in the Severance Benefits Agreement, and You are
relying upon none. This Release and the Severance Benefits
Agreement represent the entire agreement between You and the
Company with respect to the subject matter hereof, and supersede
any other written or oral understandings between the parties
pertaining to the subject matter hereof and may only be amended or
modified with the prior written consent of You and the
Company.
17.
Period for Review
and Consideration/Revocation Rights
.
[
Alternative
1 for Section 17 if Employee is NOT age 40 or over at time of
separation from employment
]
You
understand that You have seven (7) days after this Release has been
delivered to You by the Company to decide whether to sign this
Release, although You may sign this Release at any time within the
seven (7) day period. If You do sign it, You also understand that
You will have an additional three (3) days after the date You
deliver this signed Release to the Company and to change your mind
and revoke this Release, in which case a written notice of
revocation must be delivered to the Company’s Chief Legal
Officer, Autobytel Inc., 18872 MacArthur Blvd. Suite 200, Irvine,
California 92612-1400, on or before the third (3
rd
) day after your
delivery of this signed Release to the Company (or on the next
business day if the third calendar day is not a business day). You
understand that this Release will not become effective or
enforceable until after that three (3) day period has passed. If
You revoke this Release, this Release shall not be effective or
enforceable as to any rights You may have under this Release. In
the event that You revoke this Release, You will not be entitled to
the payments and benefits specified in Paragraph 2.
[
Alternative
2 for Section 17 if Employee is age 40 or over at time of
separation from employment, separation from employment is NOT in
connection with a group separation, and ADEA Claims are being
released
]
You
understand that You have twenty-one (21) days after this Release
has been delivered to You by the Company to decide whether to sign
this Release, although You may sign this Release at any time within
the twenty-one (21) day period. If You do sign it, You also
understand that You will have an additional seven (7) days after
the date You deliver this signed Release to the Company and to
change your mind and revoke this Release, in which case a written
notice of revocation must be delivered to the Company’s Chief
Legal Officer, Autobytel Inc., 18872 MacArthur Blvd. Suite 200,
Irvine, California 92612-1400, on or before the seventh (7th) day
after your delivery of this signed Release to the Company (or on
the next business day if the seventh calendar day is not a business
day). You understand that this Release will not become effective or
enforceable until after that seven (7) day period has passed. If
You revoke this Release, this Release shall not be effective or
enforceable as to any rights You may have under this Release. In
the event that You revoke this Release, You will not be entitled to
the payments and benefits specified in Paragraph 2.
[
Alternative
3 for Section 17 if Employee is age 40 or over at time of
separation from employment, separation from employment IS in
connection with a group termination, and ADEA Claims are being
released
]
(a) You
understand that You have forty-five (45) days after this Release
has been delivered to You by the Company to decide whether to sign
this Release, although You may sign this Release at any time within
the forty-five (45) day period. If You do sign it, You also
understand that You will have an additional seven (7)
days after You sign to change your
mind and revoke the Agreement, in which case a written notice of
revocation must be delivered to the Company’s Chief Legal
Officer, Autobytel Inc., 18872 MacArthur Blvd. Suite 200, Irvine,
California 92612-1400, on or before the seventh (7th) day after
your delivery of this signed Release to the Company (or on the next
business day if the seventh calendar day is not a business day).
You understand that this Release will not become effective or
enforceable until after that seven (7) day period has passed. If
You revoke this Release, this Release shall not be effective or
enforceable as to any rights You may have under this Release. In
the event that You revoke this Release, You will not be entitled to
the payments and benefits specified in Paragraph 2.
(b) You
acknowledge that You have received the group information of
employees included in the Company’s ____________ group
termination program, the eligibility factors for participation in
the program, and the time limits for participation in the program.
You also acknowledge that You have received lists of the ages and
job titles of employees eligible or selected for the program and
employees not eligible or selected for the group termination
program. This information is set forth on Appendix A attached
hereto and incorporated herein by reference.
18.
Advice of Attorney
and Tax Advisor
. Employee acknowledges that: (i) the Company
has advised Employee to consult with an attorney and/or tax advisor
of Employee’s choosing (and at Employee’s own cost and
expense) before executing this Release, and (ii) Employee is not
relying upon the Company for, and the Company has not provided,
legal or tax advice to Employee in connection with this Release. It
is the responsibility of Employee to seek independent tax and legal
advice with regard to the tax treatment of this Release and the
payments and benefits that may be made or provided under this
Release and any other related matters. Employee acknowledges that
Employee has had a reasonable opportunity to seek and consider
advice from Employee’s attorney and tax
advisors.
PLEASE
READ CAREFULLY. THIS RELEASE INCLUDES A GENERAL RELEASE OF ALL
CLAIMS, KNOWN AND UNKNOWN. YOU MAY NOT MAKE ANY CHANGES TO THE
TERMS OF THIS RELEASE THAT ARE NOT AGREED UPON BY THE COMPANY IN
WRITING. ANY CHANGES SHALL CONSTITUTE A REJECTION OF THIS RELEASE
BY EMPLOYEE.
Dated:_____________,
201_
|
_____________________________________
|
|
Taren
Peng
|
|
|
Dated
:_____________,
201_
|
Autobytel
Inc.
|
|
|
|
By:
__________________________________
|
|
[Officer’s
Name]
|
|
[Title]
|
Exhibit
10.51
|
Glenn
E. Fuller
Executive Vice President, Chief Legal
and
Administrative Officer and Secretary
Direct Line: 949.862.1392
Facsimile: 949.797.0484
glennf@autobytel.com
|
April
24, 2013
John
Skocilic
[Personal
Residence Address Redacted]
Re
: Amended and Restated Employment Agreement
Dear
John:
This
agreement confirms, updates and restates the terms and conditions
upon which you are employed by Autobytel Inc., a Delaware
corporation (“
Company
”), as of May 1, 2013
(“
Amendment Effective
Date
”).
1.
Employment
.
(a) As
of the Amendment Effective Date you are employed as the
Company’s Senior Vice President, Technology. In such
capacity, you will report to the Company’s President and
Chief Executive Officer or such other senior executive officer as
designated by the Company from time to time.
(b) Your
employment is at will and not for a specified term and may be
terminated by the Company or you at any time, with or without cause
or good reason and with or without prior, advance notice. This
“at-will” employment status will remain in effect
throughout the term of your employment by the Company and cannot be
modified except by a written amendment to this offer letter that is
executed by both parties (which in the case of the Company, must be
executed by the Company’s Chief Legal Officer) and that
expressly negates the “at-will” employment
status.
(c) Upon
any termination of your employment by either party, whether with or
without cause or good reason, you will be entitled to receive only
such severance benefits, if any, as are set forth in that certain
Amended and Restated Severance Benefits Agreement dated as of May
1, 2013 between you and the Company (“
Severance Benefits Agreement
”), as
the Severance Benefits Agreement may be further amended, modified
or terminated by agreement of the parties. Receipt of any such
severance benefits is subject to your compliance with the terms and
conditions of the Severance Benefits Agreement. You agree to assist
and cooperate (including, but not limited to, providing information
to the Company and/or testifying in a proceeding) in the
investigation and handling of any internal investigation,
legislative matter, or actual or threatened court action,
arbitration, administrative proceeding, or other claim involving
any matter that arose during the period of your employment.
You shall be reimbursed for reasonable expenses actually incurred
in the course of rendering such assistance and cooperation.
Your agreement to assist and cooperate shall not affect in any way
the content of information or testimony provided by
you.
(d) You
will be governed by and will comply with by Company policies and
procedures, as such policies and procedures may exist from time to
time, generally applicable to all Company employees, including the
Company’s Employee Handbook, Securities Trading Policy, Code
of Conduct and Ethics for Employees, Officer and Directors, and
Sexual Harassment Policy, copies of which you acknowledge have been
provided to you.
2.
Compensation,
Benefits and Expenses
.
(a)
As compensation for the services to be rendered
by you pursuant to this agreement, the Company hereby agrees to pay
you at a Semi-Monthly Rate equal to Eight Thousand Five Hundred
Forty-one Dollars and Sixty-seven Cents ($8,541.67). The
Semi-Monthly Rate shall be paid in accordance with the normal
payroll practices of the Company.
(b)
You shall be entitled to participate in annual
incentive compensation plans, if any, that may be adopted by the
Company from time to time and that are afforded generally to
persons employed by the Company at your position level (subject to
the terms and conditions of any such annual incentive compensation
plans). Should such an annual incentive compensation plan be
adopted for any annual period, your target annual incentive
compensation opportunity will be as established by the Company for
each annual period, which may be up to 55% of your annualized rate
(i.e., 24 X Semi-Monthly Rate) based on achievement of objectives
specified by the Company each annual incentive compensation period
(which may include Company-wide performance objectives, divisional
or department performance objectives, individual performance
objectives and/or subjective performance evaluations, allocated
between and among such performance objectives and evaluations as
the Company may determine in its sole discretion). Specific annual
incentive compensation plan details, target incentive compensation
opportunity and objectives for each annual compensation plan period
will be set forth in written documents provided to you by the
Company. Awards under annual incentive plans may be prorated for a
variety of factors, including time employed by the Company during
the year, adjustments in base compensation or target award
percentage changes during the year, and unpaid leaves. You
understand that the Company’s annual incentive compensation
plans, their structure and components, specific target incentive
compensation opportunities and objectives, and the achievement of
objectives and payouts, if any, thereunder are subject to the sole
discretion of the Company’s Board of Directors, or a
committee thereof.
(c)
You shall be entitled to participate in such
ordinary and customary benefits plans afforded generally to persons
employed by the Company at your level (subject to the terms and
conditions of such benefit plans, your making of any required
employee contributions required for your participation in such
benefits, your ability to qualify for and satisfy the requirements
of such benefits plans).
(d)
You are solely responsible for the payment of
any tax liability that may result from any compensation, payments
or benefits that you receive from the Company. The Company shall
have the right to deduct or withhold from the compensation due to
you hereunder any and all sums required by applicable federal,
state, local or other laws, rules or regulations, including,
without limitation federal and state income taxes, social security
or FICA taxes, and state unemployment taxes, now applicable or that
may be enacted and become applicable during your employment by the
Company.
3.
Other
Employment Documents
. You acknowledge and agree that you
continue to be subject to and bound by the terms and conditions of
the following agreements: (i) Employee Confidentiality Agreement
dated as of June 4, 1998; and (ii) Mutual Agreement to Arbitrate
dated as of July 30, 2010.
4.
Amendments
and Waivers
. This agreement may be amended, modified,
superseded, or cancelled, and the terms and conditions hereof may
be waived, only by a written instrument signed by the parties
hereto (which in the case of the Company, must be executed by the
Company’s Chief Legal Officer) or, in the case of a waiver,
by the party waiving compliance. No delay on the part of any party
in exercising any right, power, or privilege hereunder will operate
as a waiver thereof, nor will any waiver on the part of any party
of any right hereunder, nor any single or partial exercise of any
rights hereunder, preclude any other or further exercise thereof or
the exercise of any other right hereunder.
5.
Notices
. Any
notice required or permitted under this agreement will be
considered to be effective in the case of (i) certified mail, when
sent postage prepaid and addressed to the party for whom it is
intended at its address of record, three (3) days after deposit in
the mail; (ii) by courier or messenger service, upon receipt by
recipient as indicated on the courier's receipt; or (iii) upon
receipt of an Electronic Transmission by the party that is the
intended recipient of the Electronic Transmission. The record
addresses, facsimile numbers of record, and electronic mail
addresses of record for you are set forth on the signature page to
this agreement and for the Company as set forth in the letterhead
above and may be changed from time to time by notice from the
changing party to the other party pursuant to the provisions of
this Section 5. For purposes of this Section 5, "
Electronic Transmission
” means a
communication (i) delivered by facsimile, telecommunication or
electronic mail when directed to the facsimile number of record or
electronic mail address of record, respectively, which the intended
recipient has provided to the other party for sending notices
pursuant to this Agreement and (ii) that creates a record of
delivery and receipt that is capable of retention, retrieval, and
review, and that may thereafter be rendered into clearly legible
tangible form.
6.
Choice
of Law
. This agreement, its construction and the
determination of any rights, duties or remedies of the parties
arising out of or relating to this agreement will be governed by,
enforced under and construed in accordance with the laws of the
State of California, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws of such
state.
7.
Severability
.
Each term, covenant, condition, or provision of this agreement will
be viewed as separate and distinct, and in the event that any such
term, covenant, condition or provision will be deemed to be invalid
or unenforceable, the arbitrator or court finding such invalidity
or unenforceability will modify or reform this agreement to give as
much effect as possible to the terms and provisions of this
agreement. Any term or provision which cannot be so modified or
reformed will be deleted and the remaining terms and provisions
will continue in full force and effect.
8.
Interpretation
.
Every provision of this agreement is the result of full
negotiations between the parties, both of whom have either been
represented by counsel throughout or otherwise been given an
opportunity to seek the aid of counsel. No provision of this
agreement shall be construed in favor of or against any of the
parties hereto by reason of the extent to which any such party or
its counsel participated in the drafting thereof. Captions and
headings of sections contained in this agreement are for
convenience only and shall not control the meaning, effect, or
construction of this agreement. Time periods used in this Agreement
shall mean calendar periods unless otherwise expressly
indicated.
9.
Entire
Agreement
. This agreement, together with the Company
policies and procedures referenced above in Section 1(d) and the
agreements referenced above in Sections 1(c) and 3, is intended to
be the final, complete and exclusive agreement between the parties
relating to your employment by the Company and all prior or
contemporaneous understandings, representations and statements,
oral or written, are merged herein. Without limiting the generality
of the forgoing, this agreement supersedes in its entirety your
Employment Agreement dated as of June 4, 1998, as amended prior to
this agreement. No modification, waiver, amendment, discharge or
change of this agreement shall be valid unless the same is in
writing and signed by the party against which the enforcement
thereof is or may be sought.
10.
Counterparts;
Facsimile or PDF Signature
. This agreement may be executed
in counterparts, each of which will be deemed an original hereof
and all of which together will constitute one and the same
instrument. This agreement maybe executed by facsimile or PDF
signature by either party and such signature shall be deemed
binding for all purposes hereof, without delivery of an original
signature being thereafter required.
Please
confirm your understanding of, agreement to, and acceptance of the
foregoing by signing and returning to the undersigned the duplicate
copy of this offer letter enclosed herewith.
|
Autobytel Inc., a
Delaware corporation
|
|
|
|
|
|
|
|
By:
/
s/Glenn E.
Fuller
|
|
Glenn E. Fuller
|
|
EVP, Chief Legal and
Administrative
|
|
Officer and
Secretary
|
Accepted
and Agreed
as of
the date
first
written above:
/s/ John Skocilic
John
Skocilic
[Personal
Residence Address Redacted]
|
Human
Resources Department
18872
MacArthur Blvd, Suite 200
Irvine,
CA 92612-1400
Voice:
(949) 225-4572
|
DATE:
|
January
22, 2016
|
|
|
TO:
|
John
J Skocilic
|
|
|
FROM:
|
Glenn
Fuller – EVP, Chief Legal and Administrative Officer and
Secretary
|
|
|
CC:
|
Matias
de Tezanos - EVP, Chief Strategy Officer
|
|
|
RE:
|
Promotion
|
It is a
pleasure to inform you of your promotion to EVP, Technology at
Autobytel Inc. In this position you will report to Matias de
Tezanos - EVP, Chief Strategy Officer. Following is a summary of
your adjustment in your compensation associated with your
promotion.
New
Position:
|
EVP,
Technology
|
Semi-monthly
Rate:
|
$10,541.67
($253,000 Approximate Annually)
|
Effective
Date:
|
January 1,
2016
|
Annual
Incentive
|
|
Opportunity:
|
You shall be
eligible to participate in annual incentive compensation plans, if
any, that may be adopted by the Company from time to time and that
are afforded generally to persons employed by the Company at your
employment level and position, geographic location and applicable
department or operations within the Company (subject to the terms
and conditions of any such annual incentive compensation plans).
Should such an annual incentive compensation plan be adopted for
any annual period, your target annual incentive compensation
opportunity will be as established by the Company in its sole
discretion for each annual period, which may be up to 60% your
annualized rate (i.e., X Semi-monthly Rate) based on achievement of
objectives specified by the Company each annual incentive
compensation period (which may include Company-wide performance
objectives; divisional, department or operations performance
objectives and/or individual performance objectives, allocated
between and among such performance objectives as the Company may
determine) and subject to adjustment by the Company based on the
Company’s evaluation and review of your overall individual
job performance in the sole discretion of the Company. Specific
annual incentive compensation plan details, target incentive
compensation opportunity and objectives for each annual
compensation plan period will be established each year. Awards
under annual incentive plans may be prorated by the Company in its
discretion for a variety of factors, including time employed by the
Company during the year, adjustments in base compensation or target
award percentage changes during the year, and unpaid time off. You
understand that the Company’s annual incentive compensation
plans, their structure and components, specific target incentive
compensation opportunities and objectives, the achievement of
objectives and the determination of actual awards and payouts, if
any, thereunder are subject to the sole discretion of the Company.
Awards, if any, under any annual incentive compensation plan shall
only be earned by you, an payable to you, if you remain actively
employed by the Company through the date on which award payouts are
made by the Company under the applicable annual incentive
compensation plan. You will not earn any such award if your
employment ends for any reason prior to that date.
|
Your
promotion is conditioned upon your acceptance of the foregoing
modifications to the terms and conditions of your employment with
Autobytel Inc. If you accept these modifications to the terms of
your employment, please acknowledge your acceptance in the space
provided below.
As a
reminder, your employment is at will and not for a specified term
and may be terminated by the Company or you at any time, with or
without cause or good reason and with or without prior, advance
notice. This “at-will” employment status will remain in
effect throughout the term of your employment by the Company and
cannot be modified except by a written amendment to this promotion
letter that is executed by both parties (which in the case of the
Company, must be executed by the Company’s Chief Legal
Officer) and that expressly negates the “at-will”
employment status.
Please feel free to
call if you have any questions.
Autobytel Inc.
By:
/s/ Glenn E.
Fuller
Glenn
Fuller
EVP,
Chief Legal and Administrative Officer and Secretary
Accepted
and Agreed:
/s/ John J.
Skocilic
John J
Skocilic
|
Human Resources
Department
18872 MacArthur
Blvd, Suite 200
Irvine, CA
92612-1400
Voice: (949)
225-4572
|
January
31, 2017
TO:
|
John
J Skocilic
|
|
|
FROM:
|
Glenn
Fuller – EVP, Chief Legal and Administrative Officer and
Secretary
|
|
|
RE:
|
Promotion
|
It is a
pleasure to inform you of your promotion. Following is a summary of
your promotion.
New
Position:
|
EVP, Chief
Information Officer
|
New
Semi-monthly
Rate:
|
$12,125 ($291,000
Approximate Annually)
|
Effective
Date:
|
January 1,
201
7
|
New
Annual
Incentive
|
|
Compensation:
|
You shall be
eligible to participate in annual incentive compensation plans, if
any, that may be adopted by the Company from time to time and that
are afforded generally to persons employed by the Company at your
employment level and position, geographic location and applicable
department or operations within the Company (subject to the terms
and conditions of any such annual incentive compensation plans).
Should such an annual incentive compensation plan be adopted for
any annual period, your target annual incentive compensation
opportunity will be as established by the Company for each annual
period, which may be up to
60
% of your annualized rate
(i.e., 24 X Semi-monthly Rate) based on achievement of objectives
specified by the Company each annual incentive compensation period
(which may include Company-wide performance objectives; divisional,
department or operations performance objectives and/or individual
performance objectives, allocated between and among such
performance objectives as the Company may determine) and subject to
adjustment by the Company based on the Company’s evaluation
and review of your overall individual job performance in the sole
discretion of the Company. Specific annual incentive compensation
plan details, target incentive compensation opportunity and
objectives for each annual compensation plan period will be
established each year. Awards under annual incentive plans may be
prorated by the Company in its discretion for a variety of factors,
including time employed by the Company during the year, adjustments
in base compensation or target award percentage changes during the
year, and unpaid time off. You understand that the Company’s
annual incentive compensation plans, their structure and
components, specific target incentive compensation opportunities
and objectives, the achievement of objectives and the determination
of actual awards and payouts, if any, thereunder are subject to the
sole discretion of the Company. Awards, if any, under any annual
incentive compensation plan shall only be earned by you, an payable
to you, if you remain actively employed by the Company through the
date on which award payouts are made by the Company under the
applicable annual incentive compensation plan. You will not earn
any such award if your employment ends for any reason prior to that
date.
|
Your
promotion is conditioned upon your acceptance of the foregoing
modifications to the terms and conditions of your employment with
Autobytel Inc. If you accept these modifications to the terms of
your employment, please acknowledge your acceptance in the space
provided below.
Please
feel free to call if you have any questions.
Autobytel Inc.
Glenn
Fuller
EVP,
Chief Legal and Administrative Officer and Secretary
Accepted
and Agreed:
/s/ John J.
Skocilic
John J.
Skocilic
Exhibit 21.1
SUBSIDIARIES OF AUTOBYTEL INC.
Subsidiary Name
|
Jurisdiction of Incorporation
|
Auto-By-Tel Insurance Services, Inc.
|
Delaware
|
Autobytel Dealer Services, Inc.
|
Delaware
|
Autotegrity, Inc.
|
Delaware
|
AutoWeb, Inc.
|
Delaware
|
AW GUA USA, Inc.
|
Delaware
|
Car.com, Inc.
|
Delaware
|
Dealix Corporation
|
California
|
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We consent to the incorporation by reference in the Registration
Statements Form S-3
No
.
333-194187
and Form S-8 No’s. 333-197325,
333-168834, 333-135076, 333-116930, 333-90045, 333-77943,
333-39396, 333-67692, 333-212910 and 333-212911 of our report dated
March 9, 2017 relating to the consolidated financial
statements and schedule and the effectiveness of internal control
over financial reporting of Autobytel Inc., appearing in this
Annual Report (Form 10-K) for the year ended December 31,
2016.
/s/
Moss Adams LLP
Los Angeles, CA
March 9, 2017
Exhibit 31.1
CERTIFICATION
I, Jeffrey H. Coats, certify that:
1.
I
have reviewed this annual report on Form 10-K of Autobytel
Inc.;
2.
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
3.
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
4.
The
registrant’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we
have:
a)
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
b)
Designed
such internal control over financial reporting or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
c)
Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
d)
Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
5.
The
registrant’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a)
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
b)
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: March 9, 2017
|
/s/
Jeffrey H. Coats
|
|
Jeffrey H. Coats
|
|
President and Chief Executive Officer
|
Exhibit 31.2
CERTIFICATION
I, Kimberly Boren, certify that:
1.
I
have reviewed this annual report on Form 10-K of Autobytel
Inc.;
2.
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
3.
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
4.
The
registrant’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we
have:
a)
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
b)
Designed
such internal control over financial reporting or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
c)
Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
d)
Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
5.
The
registrant’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a)
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
b)
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: March 9, 2017
|
/s/
Kimberly Boren
|
|
Kimberly Boren,
|
|
Executive Vice President and
Chief Financial Officer
|
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Autobytel
Inc. (the “
Company
”) on Form 10-K for the period ended
December 31, 2016 (the “
Report
”), we, Jeffrey H. Coats, President and
Chief Executive Officer of the Company, and Kimberly Boren,
Executive Vice President and Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
1.
The
Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2.
The
information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations
of the Company.
|
|
|
/s/
Jeffrey H. Coats
|
|
Jeffrey H. Coats
|
|
President and Chief Executive Officer
|
|
March 9, 2017
|
|
|
|
/s/
Kimberly Boren
|
|
Kimberly Boren
|
|
Executive Vice President and
|
|
Chief Financial Officer
|
|
March 9, 2017
|
A signed original of this written statement
required by Section 906, or other document authenticating,
acknowledging, or otherwise adopting the signatures that appear in
typed form within the electronic version of this written statement
required by Section 906, has been provided to Autobytel Inc.
and will be retained by Autobytel Inc. and furnished to the
Securities and Exchange Commission or its s
taff upon request.