AutoWeb,
Inc.
Employment
Agreement
This
Employment Agreement (“
Agreement
”) entered into effective
as of April 12, 2018 (“
Effective Date
”), between AutoWeb,
Inc., a Delaware corporation (“
AutoWeb
” or “
Company
”), and Jared R. Rowe
(“
Executive
”).
Executive and AutoWeb are sometimes referred to herein individually
as a “
Party
” and
collectively as the “
Parties
.”
Background
AutoWeb
wishes to retain the services of Executive, and Executive wishes to
be employed by the Company on the terms and subject to the
conditions set forth in this Agreement.
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 8.
(b)
“
Arbitration Agreement
” means that
certain Mutual Agreement to Arbitrate dated as of the Effective
Date and entered into by and between AutoWeb and Executive
concurrently with the execution and delivery of this Agreement by
the Parties.
(c)
“
Benefits
” means all Company
medical, dental, vision, life and disability plans in which
Executive participates under Section 4(b).
(d)
“
Board
” means the Company’s
Board of Directors.
(e)
“
Cause
” means the termination of
the Executive’s employment by Company as a result of any one
or more of the following:
(i)
any conviction of,
or pleading of nolo contendre by, the Executive for any felony or
any crime involving moral turpitude;
(ii)
any
willful misconduct of the Executive which has a materially
injurious effect on the business or reputation of the Company and
its affiliates;
(iii)
Executive
engaging in any material act of dishonesty, fraud or
misrepresentation with respect to the Company or its
affiliates
;
(iv)
Executive’s
violation of any federal or state law, rule, regulation or order
applicable to the Company or its business or affiliates, which
results in material harm to the Company, which violation is not
cured within thirty (30) days following written notice from the
Company detailing such violation;
(v)
a material and
continuous failure to perform Executive’s employment duties
and responsibilities 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 Executive’s Disability or ill
health.
For
purposes of this definition of Cause, no act or failure to act, on
the part of the Executive, shall be considered
“willful” if it is done, or omitted to be done, by the
Executive in good faith and with the reasonable belief that
Executive’s action or omission was in the best interests of
the Company.
For
purposes of clarity, Executive’s termination of employment
due to death or Disability is not, by itself, deemed to be a
termination by the Company other than for Cause or a resignation
for Good Reason.
(f
)
“
Change
in Control
” means the occurrence of any one of the
following events:
(i) During
any twenty-four (24) month period, individuals who, as of the
beginning of such period, constitute the Board (“
Incumbent Directors
”) cease for
any reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the beginning of
such period whose election or nomination for election was approved
by a vote of at least a majority of the Incumbent Directors then on
the Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee
for director, without written objection to such nomination) will be
an Incumbent Director;
provided,
however
, that no individual initially elected or nominated
as a director of the Company as a result of an actual or threatened
election contest with respect to directors or as a result of any
other actual or threatened solicitation of proxies by or on behalf
of any person other than the Board will be deemed to be an
Incumbent Director;
(ii) Any
“
person
” (as
such term is defined in the Securities Exchange Act of 1934, as
amended (“
Exchange
Act
”), and as used in Sections 13(d)(3) and 14(d)(2)
of the Exchange Act) is or becomes a “
beneficial owner
” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined
voting power of the Company’s then outstanding securities
eligible to vote for the election of the Board (“
Company Voting Securities
”);
provided, however
, that the
event described in this Section 1(f)(ii) will not be deemed to be a
Change in Control by virtue of any of the following acquisitions:
(1) by the Company or any Subsidiary, (2) by any employee benefit
plan (or related trust) sponsored or maintained by the Company or
any Subsidiary, (3) by any underwriter temporarily holding
securities pursuant to an offering of such securities, (4) pursuant
to a Non-Qualifying Transaction, as defined in Section 1(f)(iii),
or (5) the acquisition of additional stock by any one person, who
owns more than 50% of the total voting power of the stock of the
Company prior to such acquisition; or
(iii) The
consummation of a merger, consolidation, statutory share exchange
or similar form of corporate transaction involving the Company or
any of its Subsidiaries that requires the approval of the
Company’s stockholders, whether for such transaction or the
issuance of securities in the transaction (a “
Business Combination
”), unless
immediately following such Business Combination: (i) more than 50%
of the total voting power of (A) the corporation resulting from
such Business Combination (“
Surviving Corporation
”), or (B) if
applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting
securities eligible to elect directors of the Surviving Corporation
(“
Parent
Corporation
”), is represented by Company Voting
Securities that were outstanding immediately prior to such Business
Combination (or, if applicable, is represented by shares into which
such Company Voting Securities were converted pursuant to such
Business Combination), and such voting power among the holders
thereof is in substantially the same proportion as the voting power
of such Company Voting Securities among the holders thereof
immediately prior to the Business Combination, (ii) no person
(other than any employee benefit plan (or related trust) sponsored
or maintained by the Surviving Corporation or the Parent
Corporation), is or becomes the beneficial owner, directly or
indirectly, of 50% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the
Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (iii) at least a majority of the members
of the board of directors of the Parent Corporation (or, if there
is no Parent Corporation, the Surviving Corporation) following the
consummation of the Business Combination were Incumbent Directors
at the time of the Board’s approval of the execution of the
initial agreement providing for such Business Combination (any
Business Combination which satisfies all of the criteria specified
in (i), (ii) and (iii) above is deemed to be a “
Non-Qualifying Transaction
”);
or
(iv) The
stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company or the consummation of a sale of all
or substantially all of the Company’s assets
provided, however
, that any such event
shall not constitute a Change in Control (“
Liquidation or Asset Sale Event
”)
(i) if immediately following the consummation of such event more
than 50% of the total voting power of (A) the corporation resulting
from such event (“
Acquirer
Corporation
”), or (B) if applicable, the ultimate
parent corporation that directly or indirectly has beneficial
ownership of 100% of the voting securities eligible to elect
directors of the Acquirer Corporation (“
Parent Acquirer Corporation
”), is
represented by Company Voting Securities that were outstanding
immediately prior to such Liquidation or Asset Sale Event (or, if
applicable, is represented by shares into which such Company Voting
Securities were converted pursuant to such Liquidation or Asset
Sale Event); (ii) the transfer is to a person, that owned, directly
or indirectly, 50% or more of the total voting power of the Company
prior to the transfer or to an entity, at least 50% of the total
voting power of which is owned, directly or indirectly, by such a
person.
For
purposes of this definition of Change in Control, the term
“
Subsidiary
”
means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company if, at the relevant time
each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in the chain. For purposes of this definition, the
term “corporation” has the meaning prescribed in
Section 7701(a)(3) of the Code and the regulations thereunder.
Notwithstanding the foregoing, for each payment or benefit pursuant
to this Agreement that constitutes deferred compensation under
Section 409A of the Code, as defined below, and to the extent
required to avoid accelerated taxation and/or tax penalties under
Section 409A of the Code, a Change in Control shall be deemed to
have occurred with respect to such payment or benefit only if a
change in the ownership or effective control of the Company or a
change in ownership of a substantial portion of the assets of the
Company shall also be deemed to have occurred under Section 409A of
the Code.
(g
)
“
COBRA
” means the Consolidated
Omnibus Budget Reconciliation Act, as amended, and the rules and
regulations promulgated thereunder.
(h
)
“
COBRA Continuation Period
” means
the up to eighteen-month COBRA continuation period set forth in
Section 5(b) and Section 5(c).
(i
)
“
Code
” means the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated
thereunder.
(j
)
“
Common Stock
” means the
Company’s common stock, par value $0.001 per
share.
(k
)
“
Disability
” means either (i) the
Participant is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months, or (ii) the Participant is, by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits
for a period of not less than three months under an accident and
health plan of the Company or any Affiliate.
(l
)
“
Employment Term
” The term of this
Agreement is the period commencing with the Effective Date and
ending on the date on which Executive’s employment with the
Company terminates in accordance with this Agreement or
otherwise
.
(m
)
“
Executive’s Primary Work
Location
” means AutoWeb’s headquarters located
at 18872 MacArthur Boulevard, Suite 200, Irvine, California
92612-1400.
(n
)
“
Good Reason
” means any act,
decision or omission by the Company without the Executive’s
consent that: (A) reduces Executive’s Annual Base Salary,
Target Bonus or Travel and Housing Accommodation Monthly Allowance
as in existence as of the date hereof or as of the date prior to
any such change, whichever is more beneficial for Executive at the
time of the act, decision, or omission by the Company; (B)
materially diminishes the Executive’s title, authority,
duties, or responsibilities from the authority, duties or
responsibilities Executive has as the Company’s chief
executive officer; (C) Executive reporting to anyone other than the
Board or, if the Company is acquired, the board of directors of the
ultimate parent of the acquiring company; (D) the failure by a
successor to assume this Agreement; (E) only if Executive has
relocated to the Irvine, California area, either relocates the
Executive’s place of employment from Executive’s
Primary Work Location to any other location in excess of a forty
(40) mile radius from the Executive’s Primary Work Location
or requires any such relocation as a condition to continued
employment by Company or Successor Company; (F) requires Executive
to relocate from Atlanta, GA, or (G) involves or results in any
material breach of this Agreement by the Company or Successor
Company, 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 Executive. Notwithstanding the foregoing, no event shall
constitute “Good Reason” unless (i) the Executive first
provides written notice to the Company within ninety (90) days of
the Executive’s knowledge of 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 event(s) within thirty (30) days after Company’s
receipt of such written notice.
(o)
“
Inducement Stock Option Award
Agreement
” means the Inducement Stock Option Award
Agreement dated as of the Effective Date and entered into by and
between AutoWeb and Executive concurrently with the execution and
delivery of this Agreement by the Parties, which agreement provides
for the grant of options to acquire One Million (1,000,000.00)
shares of Common Stock on the terms and conditions set forth in
such agreement.
(p)
“
Inventions Assignment Agreement
”
means the Inventions Assignment Agreement dated as of the Effective
Date and entered into by and between AutoWeb and Executive
concurrently with the execution and delivery of this Agreement by
the Parties.
(q)
“
Separation from Service
” or
“
Separates from
Service
” shall mean Executive’s termination of
employment, as determined in accordance with Treas. Reg. §
1.409A-1(h). Executive shall be considered to have experienced a
termination of employment when the facts and circumstances indicate
that Executive 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
Executive 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 Executive (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 Executive has been providing services to the Company for
less than thirty six (36) months). If Executive is on military
leave, sick leave, or other bona fide leave of absence, the
employment relationship between Executive 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
Executive 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 Executive 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 paragraph, a leave of
absence shall be considered a bona fide leave of absence only if
there is a reasonable expectation that Executive will return to
perform services for the Company. For purposes of determining
whether Executive 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).
(r)
“
Successor Company
” means any
successor to AutoWeb or substantially all of AutoWeb’s
assets.
(s)
“
Termination Without Cause
” means
termination of Executive’s employment with the Company (i) by
the Company (a) for any reason other than those reasons expressly
set forth in the definition of “Cause,” or (b) for no
reason at all; or (ii) by Executive for Good Reason within thirty
(30) days following the Company’s failure to cure the event
or events that constitute Good Reason; provided, however, that
Executive’s Separation from Service in connection with a
Change in Control shall not constitute a Termination Without Cause
if Executive is offered employment with the Successor Company under
terms and conditions, including position, salary and other
compensation, and benefits, that would not otherwise provide
Executive the right to terminate Executive’s employment for
Good Reason under this Agreement.
(u
)
“
Travel
and Housing Accommodation Monthly Allowance
” means a
monthly allowance of Fifteen Thousand Dollars ($15,000), less
applicable tax withholdings, for Executive’s (i) personal
housing in the Irvine, California area; and (ii) air/ground
travel between Atlanta, Georgia and Irvine,
California.
2
.
Term
of Employment
. This Agreement shall govern Executive’s
employment during the Employment Term. Executive’s employment
is at will and not for a specified term and may be terminated by
the Company or Executive 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 Employment Term and cannot be modified except by a
written amendment to this Agreement that is executed by both
parties (which in the case of the Company, must be executed by the
Company’s Chairman of the Board or Chief Legal Officer) and
that expressly negates the “at-will” employment status.
Subject to the terms and conditions set forth in this Agreement,
Executive may be entitled to severance and other compensation and
benefits upon the occurrence of certain terminations of
Executive’s employment.
3
.
Nature
of Duties
.
(a
)
During
Executive’s employment under this Agreement, Executive shall
be the Company’s President and Chief Executive Officer.
Executive shall have all of the customary powers and duties
associated with such positions, and shall be subject to the
Company’s written policies, procedures, and approval
practices provided to the Executive, including without limitation
hiring and employment policies and codes of conduct and ethics as
in effect from time to time governing executives of the Company.
Executive will perform Executive’s duties faithfully and to
the best of his ability and will devote Executive’s full
business efforts and substantially all of his business time to the
performance of Executive’s duties and responsibilities for
the Company, provided that Executive shall be permitted to (i)
manage Executive’s personal, financial and legal affairs,
(ii) participate in trade associations, (iii) serve on the board of
directors of up to two for-profit organizations, and (iv) serve on
the board of directors of not-for-profit or tax-exempt charitable
organizations, in each case, subject to compliance with this
Agreement and provided that such activities do not materially
interfere with Executive’s performance of Executive’s
duties and responsibilities hereunder. Executive shall report
directly to the Board. Executive’s primary work location will
be at the Executive’s Primary Work Location.
(b
)
Executive
will be appointed to be a Board member effective as of the
Effective Date, and Executive hereby consents to such appointment
and to be a Board member in all Company filings with the Securities
and Exchange Commission or other governmental filings.
The Company shall cause the
nomination of Executive (to the extent that Executive would be up
for election at such time) in connection with any subsequent proxy
statement or information statement pursuant to which the Company
intends to solicit stockholders with respect to the election of
directors and to have the Board recommend in connection with such
subsequent proxy statement or information statement that the
stockholders of the Company vote for the election of Executive.
Notwithstanding the foregoing, the nomination, appointment and
election of Executive to the Board shall be subject to all legal
requirements and the Company’s corporate governance standards
regarding service as a director of the Company. Upon the
termination of Executive’s employment for any reason, unless
otherwise requested by the Board, Executive will be deemed to have
resigned from the Board (and all other positions held at the
Company and its affiliates) voluntarily, without any further
required action by Executive, as of the end of the Employment Term,
and Executive, at the Board’s request, will execute any
documents necessary to reflect Executive’s
resignation.
4
.
Compensation,
Benefits and Expenses
.
(a
)
As
compensation for the services to be rendered by Executive pursuant
to this Agreement, the Company hereby agrees to pay Executive a
base annual salary (“
Base
Annual Salary
”) at a rate equal to Five Hundred Fifty
Thousand Dollars ($550,000.00) during the Employment Term.
Executive’s Base Annual Salary shall be reviewed by the Board
(or the Compensation Committee thereof) at least annually and may
be increased by an amount approved by the Board (or the
Compensation Committee thereof) in its sole discretion, and
Executive agrees that the Company has not made any promises or
guaranty of any increase in Base Annual Salary during the
Employment Term. The Company may not reduce Executive’s Base
Annual Salary during the Employment Term without Executive’s
prior written consent. The Base Annual Salary shall be paid in
substantially equal bimonthly installments, in accordance with the
normal payroll practices of the Company. Executive will not receive
any compensation for Executive’s service as a member of the
Company’s Board or any of its committees.
(b
)
Executive
shall be eligible to receive, at the time and in the form provided
for in the Company’s annual incentive compensation plan, an
annual incentive compensation opportunity targeted at one hundred
percent (100%) of Executive’s Base Annual Salary
(“
Target Bonus
”)
based upon annual performance goals and the achievement of those
goals, as established and determined at least annually (and
consistently with the Company’s most recent proxy statement
disclosure of the standards for providing cash-based incentive
compensation) by the Board or the Compensation Committee of the
Board. Such performance goals may include Company-wide performance
objectives, divisional or departmental performance objectives,
and/or individual performance objectives, as the Board or the
Compensation Committee may determine in its discretion. The Company
may not reduce Executive’s targeted annual incentive
compensation opportunity percentage during the Employment Term
without Executive’s prior written consent. The amount of
annual incentive compensation payments, if any, that may be paid to
Executive will be: (i) determined in the reasonable discretion of
the Board or the Compensation Committee; (ii) paid prior to March
15 of the year following the year for which such bonus is earned,
in accordance with the Company’s normal payroll practices and
be subject to the usual, required tax withholding; and (iii)
subject to Executive’s continued employment with the Company
through December 31 of the year for which the bonus is payable.
Executive’s bonus for calendar year 2018 will equal
Executive’s actual payout under the Company’s 2018
incentive compensation plan based on actual performance for the
entire year (but shall not be less than 75% of Executive’s
Target Bonus) and prorated for the amount of time Executive was
employed by the Company during 2018.
(c
)
The Company
will pay Executive a signing bonus in the amount of Two Hundred
Fifty Thousand Dollars ($250,000.00), less applicable tax
withholdings, (“
Signing
Bonus
”
)
. The
Signing Bonus will be paid to Executive within thirty (30) days of
the Effective Date. If prior to the first anniversary date of the
Effective Date, Executive shall voluntarily terminate
Executive’s employment with the Company without Good Reason
or the Company terminates Executive’s employment with the
Company for Cause, Executive shall repay the pro-rata portion
(determined based on the quotient of the number of days elapsed
since the Effective Date and 365) Signing Bonus to the Company
within thirty (30) days of the effective date of Executive’s
termination of employment.
(d
)
Concurrently
with the execution and delivery of this Agreement by the Parties,
the Parties have entered into the Inducement Stock Option Award
Agreement. Executive will be eligible to receive additional awards
of stock options, restricted stock or other equity pursuant to any
plans or arrangements the Company may have in effect from time to
time. The Board or the Compensation Committee will determine in its
discretion whether Executive will be granted any such equity awards
and the terms of any such award in accordance with the terms of any
applicable plan or arrangement that may be in effect from time to
time and consistent with other grants made by the
Company.
(e
)
Executive
shall be entitled to all ordinary and customary benefits afforded
generally to executive employees of the Company (except to the
extent employee contribution may be required under the
Company’s benefit plans as they may now or hereafter exist),
which shall in no event be less than the benefits generally
afforded to the other executive employees of the Company as of the
date hereof or from time to time, but in any event shall include
any qualified or non-qualified pension, profit sharing and savings
plans, any death benefit and disability benefit plans, life
insurance coverages, any medical, dental, health and welfare plans
or insurance coverages, and any stock purchase programs that are
adopted or maintained by the Company generally for executive
employees of the Company. The Company reserves the right to
terminate or change the benefit plans it offers to Company
executive employees at any time.
(f
)
The Company
shall pay or reimburse Executive for all reasonable business
expenses incurred by Executive while employed under this Agreement
that are submitted in accordance with the Company’s expense
reimbursement policies and procedures. Executive’s business
expenses shall be subject to review and approval by the Chairman of
the Board in accordance with the Company’s expense
reimbursement policies and procedures.
(g
)
Each month,
during the Employment Term, the Company will pay to Executive the
Travel and Housing Accommodation Monthly Allowance. Should
Executive elect to relocate to the Irvine, California area, the
Travel and Housing Accommodation Monthly Allowance will cease and
Company will pay actual moving costs from Atlanta, Georgia to the
Irvine, California area plus actual sales brokerage fees incurred
for the sale of Executive’s residence in Atlanta, Georgia,
such moving and relocation assistance not to exceed Two Hundred
Thousand Dollars ($200,000.00) in the aggregate. It is expressly
understood that at no point during the Employment Term Executive
shall be required to relocate from Atlanta, GA area.
(h
)
Executive
shall be covered by the Company’s directors and officers
insurance policies and directors and officers indemnification
agreements on the same basis as the Company’s other senior
executive officers, as such insurance policies and coverage limits
and conditions and such indemnification agreements may exist from
time to time.
(i
)
The Company
will pay directly to Skadden, Arps, Slate, Meagher & Flom for
reasonable and documented legal fees, not to exceed Fifty Thousand
Dollars ($50,000.00) incurred by Executive in the negotiation and
review of this Agreement, after the Company’s receipt of
appropriate documentation with respect to fees.
(j
)
During the
period commencing on the Effective Date and ending on the day
before the sixtieth day following the Effective Date, Executive
shall have the right to acquire in a direct private placement from
the Company up to One Million Dollars ($1,000,000.00) in shares of
the Company’s common stock, $0.001 per value per share. The
price of the shares shall be the closing price of the
Company’s common stock on The Nasdaq Capital Market on the
date Executive elects to exercise Executive’s right to
purchase the shares, with the purchase of the shares and delivery
of the payment for the shares to be made on the date Executive
notifies the Company of Executive’s exercise of the right to
acquire the shares. The exercise of such right, and the
Company’s obligations to issues the shares shall be subject
to compliance with applicable federal and state securities laws,
rules and regulations, including the availability of applicable
exemptions from registration or qualification, and Executive being
employed by the Company at the time of the issuance of the shares,
and conditioned on various requirements, including
Executive’s entering into a customary Company stockholder
agreement.
5
.
Severance
Benefits and Conditions
. All amounts payable hereunder shall
be subject to reduction for any employment and withholding taxes
that the Company determines are applicable, and shall be subject to
any applicable terms and conditions set forth in this Section 5,
and this Agreement generally, including without limitation Section
8.
(a
)
Termination
Other Than Without Cause
. In the event of Executive’s
Termination for Cause, resignation without Good Reason, death,
Disability, or any reason other than Termination Without Cause,
Executive shall be entitled to receive only the following
(“
Accrued
Amounts
”): (i) any amounts due and owing to Executive
as of Executive’s employment termination date with respect to
any Base Annual Salary, vested and payable bonuses or incentive
payments (including with respect to bonuses for the year preceding
the year of termination which remain unpaid as of the date of
termination), or unreimbursed business expense reimbursements; (ii)
any other payments required by applicable law (including payments
with respect to accrued and unused vacation, personal, sick and
other days); and (iii) any amount accrued and arising from
Executive’s participation in, or benefits accrued under any
employee benefit plans, programs or arrangements, which amounts
shall be payable in accordance with the terms and conditions of
such employee benefit plans, programs or arrangements. In addition,
(1) in case of Executive’s termination due to Disability,
within 30 days of termination, Executive will receive a lump sum
cash payment equal to Executive’s Target Bonus and (2) in
case of Executive’s termination due to death, within 30 days
of termination, Executive’s estate, will receive a lump sum
cash payment equal to Executive’s Base Annual Salary minus
the amount (but not less than zero) equal to the difference between
(i) the amount of life insurance proceeds payable to
Executive’s beneficiaries under Company-provided life
insurance policies and (ii) Executive’s Base Annual
Salary.
(b
)
Termination
Without Cause
. In the event of Executive’s Termination
Without Cause either before a Change in Control or more than
eighteen (18) months after a Change in Control, Executive shall be
entitled to (i) the Accrued Amounts; (ii) continued monthly Base
Annual Salary for twenty-four (24) months following the date of
Executive’s Termination Without Cause, at the rate of monthly
Base Annual Salary in effect immediately beforehand; (iii) for an
eighteen (18) month period, subject to Section 5(d) of this
Agreement, Benefits at the levels in effect before employment
terminates, including Company-paid COBRA premiums for any insurance
that is in effect for Executive and/or Executive’s dependents
before termination of Executive’s employment, and that
Executive elects to continue in accordance with COBRA; and (iv) the
amount of Executive’s annual incentive compensation plan
payout under Section 4(b) for the annual incentive compensation
plan year in which Executive’s date of termination occurred,
based on actual performance for the entire performance period and
prorated for the amount of time Executive was employed by the
Company prior to the date of termination during such plan
year.
(c
)
Termination
Without Cause related to Change in Control
. In the event of
Executive’s Termination Without Cause upon or within eighteen
(18) months after a Change in Control, Executive shall be entitled
to (i) the Accrued Amounts; (ii) a lump sum payment, paid in cash,
equal to two (2) times the sum of (1) Executive’s Base Annual
Salary and (2) Executive’s target annual incentive
compensation opportunity under Section 4(b), at the rate of Base
Annual Salary and the target annual incentive compensation
opportunity in effect immediately before such termination; (iii)
for the eighteen (18) month period following Executive’s
Termination Without Cause, subject to Section 5(d) of this
Agreement, Benefits at the levels in effect before employment
terminates, including Company-paid COBRA premiums for any insurance
that is in effect for Executive and/or Executive’s dependents
before termination of Executive’s employment, and that
Executive elects to continue in accordance with COBRA; and (iv)
Executive’s Target Bonus, at the rate of Base Annual Salary
and the Target Bonus in effect immediately before such termination,
prorated for the amount of time Executive was employed by the
Company prior to the date of termination during such plan
year.
(d
)
Special
Benefits Provisions
.
(i
)
With respect to
Benefits that are eligible for continuation coverage under COBRA,
in the event the Company is unable to continue Executive’s
and Executive’s eligible dependents’ (assuming such
dependents were covered by Company at the time of termination)
participation under the Company’s then existing insurance
policies for such Benefits, Executive may elect to obtain coverage
for such Benefits either by (1) electing COBRA continuation
benefits for Executive and Executive’s eligible dependents;
(2) obtaining individual coverage for Executive and
Executive’s eligible dependents (if Executive and
Executive’s eligible dependents qualify for individual
coverage); or (3) electing coverage as eligible dependents under
another person’s coverage (if Executive and Executive’s
eligible dependents qualify for such dependent coverage), or any
combination of the foregoing alternatives. Executive may also
initially elect COBRA continuation benefits and later change to
individual coverage or dependent coverage for Executive or any
eligible dependent of Executive, but Executive understands that if
continuation of Benefits under COBRA is not initially selected by
Executive or is later terminated by Executive, Executive will not
be able to return to continuation coverage under COBRA. The Company
shall pay directly or reimburse to Executive the monthly premiums
for the benefits or coverage selected by Executive, with such
payment or reimbursement not to exceed the monthly premiums the
Company would pay assuming Executive timely elected continuation of
benefits under COBRA. The Company’s obligation to pay or
reimburse for the Benefits covered by this Section 5(d) shall
terminate upon the earlier of (i) the end of the applicable
Company-paid COBRA Continuation Period; and (ii) Executive’s
employment by an employer that provides Executive and
Executive’s eligible dependents with coverage substantially
similar to such Benefits as provided to Executive and
Executive’s eligible dependents at the time of the
termination of Executive’s employment with the Company,
provided that Executive and Executive’s eligible dependents
are eligible for participation in such coverage.
(ii
)
With respect
to Benefits that are not eligible for continuation coverage under
COBRA, in the event the Company is unable to continue
Executive’s participation under the Company’s then
existing insurance policies for such Benefits, Executive may elect
to obtain coverage for such Benefits either by (1) obtaining
individual coverage for Executive (if Executive qualifies for
individual coverage); or (2) electing coverage as an eligible
dependent under another person’s coverage (if Executive
qualifies for such dependent coverage), or any combination of the
foregoing alternatives; provided that any alternative shall be
available and implemented only (I) in a manner that neither
accelerates nor delays the year in which taxable income arises from
the Benefits, and (II) in accordance with Section 409A of the Code.
The Company shall pay directly or reimburse to Executive the
monthly premiums for the benefits or coverage selected by
Executive, with such payment or reimbursement not to exceed the
monthly premiums the Company paid for such Benefits at the time of
termination of Executive’s employment with the Company. The
Company’s obligation to pay or reimburse for the Benefits
covered by this Section 5(d)(ii) shall terminate upon the earlier
of (i) the end of the applicable COBRA Continuation Period; and
(ii) Executive’s employment by an employer that provides
Executive with coverage substantially similar to such Benefits as
provided to Executive at the time of the termination of
Executive’s employment with the Company, provided that
Executive is eligible for participation in such coverage. Executive
acknowledges and agrees that the Company shall not be obligated to
provide any Benefits covered by this Section 5(d)(ii) for Executive
if Executive does not qualify for coverage under the
Company’s existing insurance policies for such Benefits, for
individual coverage, or for dependent coverage.
(e
)
Timing of Cash
Severance Payments
.
(i
)
Payments of
Accrued Amounts under Sections 5(a), 5(b) and 5(c) shall be made no
later than the payment date required by applicable law or such
earlier time specified in this Agreement.
(ii
)
Subject to
Section 8, the satisfaction of the conditions set forth in Section
5(f), and the following sentences of this Section 5(e)(ii), the
cash monthly Base Annual Salary continuation payments under Section
5(b) shall be made to Executive in substantially equal bimonthly
installments, in accordance with the normal payroll practices of
the Company, as provided in Section 4(a). If the period of time
covered by the entire allowed Release Consideration Period (as
defined in Section 5(f)(ii)) and the entire Release Revocation
Period (as defined in Section 5(f)(ii)) (considering such periods
consecutively) begins in one calendar year and ends in the
following calendar year, the cash monthly Base Annual Salary
continuation payments under Section 5(b)(ii) shall commence with
the first Company payroll payment date of such following calendar
year which is after the date on which the Release became effective
and non-revocable in accordance with its terms. In the event
commencement of the cash monthly Base Annual Salary continuation
payments is delayed as a result of the immediately preceding
sentence, then any cash monthly Base Annual Salary continuation
payments that would otherwise have been payable before the second
tax year but for the immediately preceding sentence, will be
deferred and paid in a lump sum along with the first payment made
in that second tax year.
(iii
)
Subject to
Section 8, the satisfaction of the conditions set forth in Section
5(f), and the last sentence of this Section 5(e)(iii), the lump sum
cash payment under Section 5(c)(ii) and Section 5(c)(iv) shall be
made to Executive within five (5) business days after the Release
(as defined in Section 5(f)(ii)) becomes effective and
non-revocable in accordance with its terms. If the period of time
covered by the entire allowed Release Consideration Period (as
defined in Section 5(f)(ii)), the entire Release Revocation Period
(as defined in Section 5(f)(ii)) and the entire five business day
period described above in this Section 5(e)(iii) (considering such
periods consecutively) begins in one calendar year and ends in the
following calendar year, the lump sum cash payment under Section
5(c)(ii) and Section 5(c)(iv) shall be made to Executive 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.
(iv
)
Subject to
Section 8 and the satisfaction of the conditions set forth in
Section 5(f), cash payments or reimbursements for Benefits under
Section 5(d), if applicable, shall be made to or on behalf of
Executive in monthly installments as provided in Section
5(d).
(v
)
Subject to
Section 8, the satisfaction of the conditions set forth in Section
5(f), and the last sentence of this Section 5(e)(iii), the lump sum
cash payment under Section 5(b), clause (iv) shall be made once the
Company’s board of directors has determined and approved the
payouts, if any, under the Company’s annual incentive
compensation plan for the applicable year and at the same time as
payouts are made to other executive officers of the Company who are
actively employed by the Company at the time. In any case, the lump
sum cash payment under Section 5(b), clause (iv) shall be made no
later than two and one-half months after the end of the calendar
year in which Executive’s Separation from Service occurs,
provided that the Release shall have become effective and
non-revocable in compliance with its terms prior to expiration of
such two and one-half month period. If the period of time covered
by the entire allowed Release Consideration Period (as defined in
Section 5(f)(ii)), the entire Release Revocation Period (as defined
in Section 5(f)(ii)) and the entire five business day period
described above in this Section 5(e)(iii) (considering such periods
consecutively) begins in one calendar year and ends in the
following calendar year, the lump sum cash payment under Section
5(b), clause (iv) shall be made to Executive 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.
(f
)
Conditions on Severance and
Benefits
. The amounts and benefits (other than Accrued
Amounts) that are payable pursuant to Sections 5(b), 5(c) and 5(d)
of this Agreement shall be provided only if:
(i
)
Executive is
compliant, at all times prior to the due date for any payment, with
the terms and conditions set forth in Section 6; and
(ii
)
(A) Executive has
executed and delivered to the Company the Separation Agreement and
Release substantially in the form attached hereto as Exhibit A
(“
Release
”) no
later than the expiration of the applicable period of time allowed
for Executive to consider the Release as set forth in Section 13 of
the Release (“
Release
Consideration Period
”); (B) Executive has not revoked
the Release prior to the expiration of the applicable revocation
period set forth in Section 13 of the Release (“
Release Revocation Period
”); and
(C) 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
5(b), 5(c) or 5(d) shall be due or payable to, or provided to,
Executive if the Release has not become effective and non-revocable
in accordance with the requirements of this Section
5(f)(ii).
(iii
)
If requested
by the Company, Executive shall have participated in an exit
interview with the Company’s Board of Directors or a
committee thereof.
(g
)
Other than the
payments and benefits provided for in this Section 5, Executive
shall not be entitled to any additional amounts from the Company
resulting from a termination of Executive’s employment with
the Company.
6
.
Unauthorized
Disclosure; Non-Solicitation; Proprietary
Rights
.
(a
)
Unauthorized
Disclosure
. Executive agrees and understands that in
Executive’s position with the Company, Executive will be
exposed to and will receive non-public information relating to the
confidential affairs of the Company and its affiliates, including,
without limitation, employee lists and compensation, technical
information, intellectual property, business and marketing plans,
strategies, customer information, software, other information
concerning the products, promotions, development, financing and
expansion plans, business policies and practices of the Company and
other non-public forms of information considered by the Company to
be confidential and in the nature of trade secrets (including,
without limitation, ideas, research and development, know-how,
technical data, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals)
(collectively, “
Confidential
Information
”). Executive agrees that at all times
during Executive’s employment with the Company, except as may
be required for Executive to discharge Executive’s duties as
a director, employee or an officer of the Company, and thereafter,
Executive shall not disclose such Confidential Information, either
directly or indirectly, to any Person without the prior written
consent of the Company and shall not use or attempt to use any such
information in any manner other than in connection with
Executive’s employment with the Company, unless (i) required
by law or court order to disclose such information, in which case
Executive shall provide the Company with written notice of such
requirement as far in advance of such anticipated disclosure as
reasonably possible and use Executive’s best efforts to
consult with the Board prior to such anticipated disclosure; (ii)
during the course of or in connection with any actual or potential
litigation, arbitration, or other proceeding based upon or in
connection with the subject matter of this Agreement or otherwise
related to Executive’s employment with the Company; (iii) as
may be necessary or appropriate to conduct Executive’s duties
hereunder; (iv) such information has become public other than by
reason of a breach by Executive of this Section 6(a); or (v) the
information is generally known to persons involved in the
Company’s trade or business. This confidentiality covenant
has no temporal, geographical or territorial restriction. Upon
termination of Executive’s employment with the Company for
any reason, Executive shall promptly deliver to the Company (or, at
the Company’s option, destroy (and provide a certification of
such destruction)) all property, keys, notes, electronic storage
media, memoranda, writings, lists, files, reports, customer lists,
correspondence, tapes, disks, cards, surveys, maps, logs, machines,
technical data and any other tangible product or document which has
been produced by, received by or otherwise submitted to Executive
during or prior to Executive’s employment with the Company,
and any copies thereof in Executive’s (or capable of being
reduced to Executive’s ) possession, as well as all computers
of the Company provided to Executive;
provided
that nothing in this
Agreement or elsewhere shall prevent Executive from retaining and
utilizing copies of documents relating to Executive’s
employment or personal benefits, entitlements and obligations
(including employment agreements, confidentiality agreements, stock
options award agreements and severance agreements); documents
relating to Executive’s personal tax obligations; the data
and entries from Executive’s contacts and calendar;
Executive’s personal emails; and such other records and
documents as may reasonably be approved by the Company (items
covered by this proviso are referred to herein as the
“
Personal
Documents
”). Executive will not disclose to Company,
use in connection with performance of his duties to the Company, or
induce Company to use any proprietary information or trade secrets
of third parties, in each case, with knowledge and intent and in
violation of any confidentiality restrictions to which he is
subject, unless the Company is specifically authorized by such
third parties to obtain or use such proprietary information or
trade secrets.
(b
)
Non-Solicitation
of Employees
. During Executive’s employment with the
Company (whether during the term or thereafter) and for a period of
twelve (12) months after Executive’s termination of
employment, Executive shall not (other than in connection with
carrying out Executive’s responsibilities for the Company)
directly or indirectly contact, induce or solicit (or assist any
person to contact, induce or solicit) for employment any person who
is then or was an employee of the Company within the six (6) month
period prior to the date of such contact, inducement or
solicitation, provided that nothing in this Section 6(b) shall be
deemed to prohibit Executive from (1) providing advice or
references for any employee, (2) placing advertisements in
newspapers or other media of general circulation advertising
employment opportunities, provided that such advertisements are not
directed or tailored to Company employees, or (3) hiring persons
who respond to such advertisements, provided that they were not
otherwise solicited by Executive in violation of this Section
6(b).
(c
)
Interference
with Business Relationships
. During Executive’s
employment with the Company (whether during the Employment Term or
thereafter) and for a period of twelve (12) months after
Executive’s termination of employment, Executive shall not
(other than in connection with carrying out Executive’s
responsibilities for the Company) directly or indirectly contact,
induce or solicit (or assist any person to contact, induce or
solicit) any customer, client, partner, joint venturer, vendor or
supplier of the Company, or any such person who was within six (6)
months of the date of contact a customer, client, partner, joint
venturer, vendor, or supplier of the Company, to terminate its
relationship or otherwise cease doing business in whole or in part
with the Company, or directly or indirectly interfere with (or
assist any person to interfere with) any material relationship
between the Company and any of its customers, clients, partners,
joint venturers, vendors or suppliers.
(d
)
No
Other Post-Employment Restrictions
. There shall be no
contractual or similar restrictions on Executive’s right to
terminate Executive’s employment with the Company, or on
Executive’s post-employment activities, other than as
expressly set forth in this Agreement, the Release and the
Inventions Assignment Agreement.
(e
)
Permitted
Communications
.
(i
)
An individual may
not be held criminally or civilly liable under any federal or state
trade secret law for the disclosure of a trade secret that: (a) is
made (i) in confidence to a federal, state, or local government
official, either directly or indirectly, or to an attorney; and
(ii) solely for the purpose of reporting or investigating a
suspected violation of law; or (b) is made in a complaint or other
document that is filed under seal in a lawsuit or other proceeding.
Further, an individual who files a lawsuit for retaliation by an
employer for reporting a suspected violation of law may disclose
the employer’s trade secrets to the attorney and use the
trade secret information in the court proceeding if the individual:
(a) files any document containing the trade secret under seal; and
(b) does not disclose the trade secret, except pursuant to court
order.
(ii
)
Executive
understands that nothing contained in this Agreement limits
Executive’s ability to file a charge or complaint with the
Equal Employment Opportunity Commission, the National Labor
Relations Board, the Occupational Safety and Health Administration,
the Securities and Exchange Commission or any other federal, state
or local governmental agency or commission (“
Government Agencies
”). Employee
further understands that this Agreement does not limit
Employee’s ability to communicate with any Government
Agencies or otherwise participate in any investigation or
proceeding that may be conducted by any Government Agency,
including providing documents or other information, without notice
to Company. This Agreement does not limit Executive’s right
to receive an award for information provided to any Government
Agencies.
(f
)
Cooperation
in Proceedings
. Subject to reasonable notice and at
reasonable times not interfering with Executive’s subsequent
employment or other business endeavors, for the first thirty-six
(36) months following Executive’s termination of employment,
Executive agrees to assist and cooperate (including, but not
limited to, providing information to 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
Executive’s employment. Executive shall be reimbursed
for reasonable expenses actually incurred in the course of
rendering such assistance and cooperation (including reasonable
legal fees and travel expenses). Employee’s agreement
to assist and cooperate shall not affect in any way the content of
information or testimony provided by Employee.
(g
)
Injunctive
Relief
. Without limiting the remedies available to the
Company, Executive acknowledges that a breach of any of the
covenants contained in this Section 6 may result in irreparable
injury to the Company for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat
thereof, the Company shall be entitled to seek a temporary
restraining order and/or preliminary or permanent injunction,
without the necessity of proving irreparable harm or injury as a
result of such breach or threatened breach of this Section
6.
7
.
Representations
.
Each party represents and warrants (i) that such party is not
subject to any contract, arrangement, agreement, policy or
understanding, or to any statute, governmental rule or regulation,
that in any way limits such party’s ability to enter into and
fully perform such party’s obligations under this Agreement
(including the agreements the forms of which are appended hereto);
(ii) that such party is able without restrictions to enter into and
fully perform such party’s obligations under this Agreement
(including the agreements of which forms are appended hereto); and
(iii) that, upon the execution and delivery of this Agreement by
both parties, this Agreement shall be such party’s valid and
binding obligation, enforceable against such party in accordance
with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally. The
Company represents and warrants that it is fully authorized by
action of the Board, and by actions of any other Person whose
authorization is required, to enter into this Agreement and to
perform its obligations under it.
8
.
Taxes
.
(a
)
All payments made
pursuant to this Agreement will be subject to withholding of
applicable taxes. The intent of the parties is that the payments
and benefits under this Agreement comply with or be exempt from
Section 409A of the Code and the regulations and guidance
promulgated thereunder (collectively, “Section 409A of the
Code”) and, accordingly, to the maximum extent permitted,
this Agreement shall be interpreted to be in compliance therewith.
Notwithstanding anything in this Agreement to the contrary, any
compensation or benefits payable under this Agreement that is
considered nonqualified deferred compensation under Section 409A of
the Code and is designated under this Agreement as payable upon
Executive’s termination of employment shall be payable only
upon Executive’s Separation from Service. To the extent that
any reimbursements under this Agreement are subject to Section 409A
of the Code, any such reimbursements payable to Executive shall be
paid to Executive no later than December 31 of the year following
the year in which the expense was incurred; provided, that
Executive submits Executive’s reimbursement request promptly
following the date the expense is incurred, the amount of expenses
reimbursed in one year shall not affect the amount eligible for
reimbursement in any subsequent year, other than medical expenses
referred to in Section 105(b) of the Code, and Executive’s
right to reimbursement under this Agreement will not be subject to
liquidation or exchange for another benefit. Executive’s
right to receive any installment payments under this Agreement,
including any continuation salary payments that are payable on
Company payroll dates, shall be treated as a right to receive a
series of separate payments and, accordingly, each such installment
payment shall at all times be considered a separate and distinct
payment as permitted under Section 409A of the Code. Except as
otherwise permitted under Section 409A of the Code, no payment
hereunder shall be accelerated or deferred unless such acceleration
or deferral would not result in additional tax or interest pursuant
to Section 409A of the Code. If, at the time of Executive’s
Separation from Service under this Agreement, Executive 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 Executive on account of
Executive’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
Executive’s Separation from Service (“
409A Suspension Period
”). Within
14 calendar days after the end of the 409A Suspension Period,
Executive shall be paid a lump sum payment in cash equal to any
payments delayed because of the preceding sentence. Thereafter,
Executive shall receive any remaining benefits as if there had not
been an earlier delay. Each payment or benefit payable under this
Agreement is intended to constitute a separate payment for purposes
of Section 409A of the Code
.
(b
)
(i
)
For purposes
of this Section 8(b), the following terms shall have the following
meanings:
(A
)
“
Base
Amount
” means the average
of Executive’s W-2 wages from the Company for the five (5)
calendar years completed immediately prior to the calendar year in
which the Section 280G Event occurred as determined in accordance
with Code Section 280G(b)(3) and the regulations thereunder. Any
W-2 wages for a partial year of employment will be annualized, in
accordance with the frequency which such wages are paid during such
partial year, before inclusion in Base Amount;
(B
)
“
Parachute
Payment
” has the meaning
set forth in Section 280G(b)(2) of the Code;
and
(C
)
“
Section
280G Event
” means a
change in the ownership or effective control of the Company or a
change in the ownership of a substantial portion of the
Company’s assets, within the meaning of Section
280G(b)(2)(A)(i) of Code and the regulations
hereunder.
(ii
)
Notwithstanding anything to the
contrary contained herein, in the event that any payment or benefit
received or to be received by Executive
from
the Company under this Agreement or any other agreement or
arrangement between the Executive and the Company (including, but
not limited to, any stock option rights, stock grants, and other
cash and noncash compensation amounts that are treated as payments
under Section 280G), all as determined on a pre-tax basis
(collectively, “
Payments
”) would constitute a Parachute Payment,
then the Accountants (as defined below) shall promptly calculate
(A) the aggregate after-tax amount of Payments that would be
retained by Executive if the full pre-tax amount of the Payments
(“
Full
Amount
”) were paid to
Executive and Executive paid all applicable taxes imposed on the
Full Amount (including, without limitation, any excise taxes
imposed on such Payments under Code Section 4999) and (B) the
aggregate after-tax amount of Payments that would be retained by
Executive if the pre-tax amount of the Payments paid to Executive
were equal to only 2.99 times Executive’s Base Amount
(“
Reduced
Amount
”) and Executive
paid all applicable taxes imposed on the Reduced Amount (which
taxes would exclude excise taxes under Code Section 4999 because
the Payments would not constitute Parachute Payments as a result of
the aggregate present value of the Payments being limited to 2.99
times Executive’s Base Amount). The Accountants shall
promptly deliver a copy of such calculations to the Company and
Executive. The Company shall then pay to or for the benefit of
Executive whichever of (I) the Full Amount of pre-tax Payments or
(II) the Reduced Amount of pre-tax Payments, would result in
Executive retaining the greater aggregate after-tax amount of
Payments, after taking into account the total taxes that would be
imposed on the Full Amount of pre-tax Payments or the Reduced
Amount of pre-tax Payments, as applicable. The present value of the
Payments will be determined in accordance with the provisions of
Code Section 280G(d)(4) and the regulations
thereunder.
(iii)
Any determination required under this Section 8(b) shall be made in
writing by an independent firms of certified public accountant
selected by the Company (“Accountants”) and approved by
Executive, which approval shall not be unreasonably withheld,
delayed or conditioned. The written determination of the
Accountants so selected and approved shall be delivered promptly to
the Company and Executive and, absent manifest mathematical errors,
shall be conclusive and binding upon Executive and the Company for
all purposes. For purposes of making the calculations required by
this Section 8(b), the Accountants may make reasonable assumptions
and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application
of Sections 280G and 4999 of the Code. The Company and Executive
shall promptly furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to
make a determination under this Section 8(b). The Company shall
bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section
8(b).
(iv
)
If Executive’s Payments are reduced by
reason of this Section 8(b) and it is later established, pursuant
to a final determination of a court, arbitrator or a proceeding
before the Internal Revenue Service or other taxing authority, that
Executive could have received a greater amount of Payments without
resulting in an excise tax under Code Section 4999, then the
Company shall promptly thereafter (but in no event later than the
end of the calendar year in which such determination is rendered)
pay Executive the aggregate additional amount which could have been
paid without resulting in such an excise tax as soon as
practicable, less any employment and withholding taxes that the
Company determines are applicable.
(vi
)
The Company
and Executive agree to cooperate generally and in good faith with
respect to (A) the review and determinations to be undertaken by
the Accountants as set forth in this Section 8(b) and (B) any
audit, claim or other proceeding brought by the Internal Revenue
Service or other taxing authority to review or contest or otherwise
related to the determinations of the Accountants as provided for in
this Section 8(b), including any claim or position taken by the
Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by Executive of any
additional excise tax under Code Section 4999, over and above the
amounts of excise tax established under the procedure set forth in
this Section 8(b).
(v
)
A
ny
reduction in Payments pursuant to this Section 8(b) shall be
effected in the following order (unless Executive, to the extent
permitted without violating Section 409A of the Code and the
regulations thereunder, elects another method of reduction by
written notice to the Company prior to the Section 280G Event):
(A) any cash severance payments, (B) any other cash
amounts payable to Executive, (C) any health and welfare or
similar benefits valued as parachute payments,
(D) acceleration of vesting of any stock options or stock
appreciation rights for which the exercise price exceeds the then
fair market value of the underlying stock, in order of the option
tranches with the largest Section 280G parachute value (as
determined pursuant to the regulations under Section 280G),
(E) acceleration of vesting of any equity award that is not a
stock option or stock appreciation right and (F) acceleration
of vesting of any stock options or stock appreciation rights for
which the exercise price is less than the fair market value of the
underlying stock (a “
spread
”) in such manner as would yield the largest
remaining spread value for Executive as of the date of the Section
280G Event.
9
.
Dispute
Resolution
. 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.
10
.
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, and the
agreements annexed hereto as Exhibit A, contain the entire
understanding between the parties hereto and supersedes any prior
employment or change-in-control protective agreement between the
Company or any predecessor and Executive, except that this
Agreement shall not affect or operate to reduce any benefit or
compensation inuring to Executive of a kind elsewhere. No provision
of this Agreement shall be interpreted to mean that Executive is
subject to receiving fewer benefits than those available to
Executive without reference to this Agreement.
11
.
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 email, 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 email, when sent with
answer-back confirmed, 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.
If to
the Company:
AutoWeb,
Inc.
18872
MacArthur Boulevard
Irvine,
California 92612-1400
Facsimile: (949)
608-3614
Attn:
Executive Vice President, Chief Legal and Administrative Officer
and Secretary
If to
the Executive:
To
Executive’s latest home address on file with the
Company
12
.
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.
13
.
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.
14
.
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 exercised 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.
15
.
Governing
Law
. This Agreement and the relationship of the parties
hereto shall be construed and enforced in accordance with the law
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.
16
.
No
Third Party Beneficiaries
. Except as otherwise set forth in
this Agreement, nothing contained in this Agreement is intended nor
shall be construed to create rights running to the benefit of third
parties.
17
.
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.
18
.
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.
19
.
No
Right or Obligation of Employment
. Executive acknowledges
and agrees that nothing in this Agreement shall confer upon
Executive any right with respect to continuation of employment by
the Company, nor shall it interfere in any way with
Executive’s right or the Company’s right to terminate
Executive’s employment at any time, with or without
Cause.
20
.
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 Party 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 (i.e., days, months, and years) in the
State of California, USA, unless otherwise expressly indicated. The
English language shall apply to any interpretation of this
Agreement. Except as otherwise provided or if the context otherwise
requires, whenever used in this Agreement, (i) any noun or pronoun
shall be deemed to include the plural and the singular as well as
the masculine, feminine, and neuter genders, (ii) the terms
“include,” “includes,” and
“including” shall be deemed to be followed by the
phrase “without limitation,” (iii) the word
“or” shall be inclusive and not exclusive, (iv) all
references to Articles, Sections, subsections, preambles, or
recitals, refer to the Articles, Sections, subsections, preamble,
and recitals of this Agreement, and all references to Schedules
refer to the Schedules attached to this Agreement or delivered with
this Agreement, as appropriate, and all references to Exhibits
refer to the Exhibits attached to this Agreement, each of which is
made a part of this Agreement for all purposes, (v) the terms
“hereunder,” “hereof,”
“hereto,” and words of similar import shall unless
otherwise stated be deemed references to this Agreement as a whole
and not to any particular Article, Section, or other provision
hereof, (vi) the terms “dollars” or “$”
means United States dollars, (vii) reference to any agreement,
document, or instrument means such agreement, document, or
instrument as amended or modified through the date hereof in
accordance with the terms thereof and includes all addenda,
exhibits, and disclosure schedules thereto, (viii) any reference to
any Person includes such Person’s successors and assigns but,
if applicable, only if such successors and assigns are permitted by
this Agreement, and (ix) any reference to any governmental
authority includes any designee thereof or successor thereto. In
the event of any inconsistency between the statements made in the
body of this Agreement and those contained in the Schedules (other
than an express exception to a specifically identified statement),
those in this Agreement shall control. Any disclosures in any
Schedule or in any other transaction document of any information
that is not required under the terms hereof or thereof to be
disclosed herein or therein shall not change or diminish the
disclosure requirements herein or therein.
21
.
Legal
and Tax Advice
. Executive acknowledges that: (i) the Company
has encouraged Executive to consult with an attorney and/or tax
advisor of Executive’s choosing (and at Executive’s own
cost and expense) in connection with this Agreement, and (ii)
Executive is not relying upon the Company for, and the Company has
not provided, legal or tax advice to Executive in connection with
this Agreement. It is the responsibility of Executive 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.
Executive acknowledges that Executive has had a reasonable
opportunity to seek and consider advice from Executive’s
counsel and tax advisors.
22.
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 may be executed by facsimile, PDF
signature, or other electronic means by either Party, and any such
signature shall be deemed originals and binding for all purposes
hereof, without delivery of an original signature being thereafter
required.
THE
PARTIES ACKNOWLEDGE THAT THE COMPANY HAS ADVISED EXECUTIVE TO
OBTAIN INDEPENDENT LEGAL COUNSEL OF EXECUTIVE’S CHOOSING TO
ADVISE EXECUTIVE REGARDING THIS AGREEMENT AND ATTACHED EXHIBITS,
AND THEIR TERMS AND CONDITIONS. EXECUTIVE HAS HAD A REASONABLE
OPPORTUNITY TO SEEK THAT ADVICE AND HAS IN FACT OBTAINED SUCH
ADVICE FROM INDEPENDENT LEGAL COUNSEL SELECTED BY EXECUTIVE.
EXECUTIVE ACKNOWLEDGES THAT THE TERMS OF THIS AGREEMENT ARE FAIR
AND REASONABLE TO EXECUTIVE. BY EXECUTING THIS AGREEMENT, EXECUTIVE
IS CONSENTING TO THE TERMS OF THIS AGREEMENT.
[Remainder of page intentionally left blank; Signature page
follows.]
IN WITNESS WHEREOF,
the Company and
Executive have executed and entered into this Agreement effective
as of the date first shown above.
|
AutoWeb, Inc.
|
|
|
|
|
By:
|
/s/ Michael J.
Fuchs
|
|
|
Michael J.
Fuchs
|
|
|
Chairman of the
Board
|
|
Executive
|
|
|
|
|
By:
|
/s/ Jared R. Rowe
|
|
|
Jared
R. Rowe
|
|
|
|
|
|
|
EXHIBIT
A
SEPARATION
AND RELEASE AGREEMENT
It is
hereby agreed by and between you, Jared R. Rowe (for yourself, your
spouse, family, agents and attorneys) (jointly, “
You
” or “
Executive
”), and AutoWeb, Inc.,
its predecessors, successors, affiliates, directors, employees,
shareholders, fiduciaries, insurers, employees and agents (jointly,
“
Company
”), as
follows:
1.
Separation of
Employment
. You acknowledge that your employment with the
Company ended effective [_______], 20[__] (“
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 Employment Agreement dated effective
as of April 12, 2018 by and between the Company and Executive
(“
Employment
Agreement
”).
2
.
Release
Consideration
. In exchange for your promises and obligations
in this Release and the Employment 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 Employment 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 Employment 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 Employment Agreement after
Your termination of employment.
4
.
Return
of Company Property
. Except for Personal Documents (as
defined in the Employment Agreement), 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 and other than Personal
Documents, 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.
5
.
Confidentiality
and Non-Solicitation/Interference
. You agree that Section 6
of the Employment Agreement remains in effect pursuant to its
terms.
6
.
Nondisparagement
.
You and the Company (solely with respect to its executive officers
and members of the Company’s board of directors) agree that
neither party nor anyone acting on their behalf or at their
direction will disparage, denigrate, defame, criticize, impugn or
otherwise damage or assail the reputation or integrity of the other
party publicly or privately to any third party, including without
limitation (i) to any current or former employee, officer,
director, contractor, supplier, customer, or client; (ii) any
prospective or actual purchaser of the equity interests or business
partner; or (iii) to any person or entity in the automotive
industry, automotive marketing, advertising or other services, or
the automotive press. Nothing in this Section 6 shall preclude any
party from making truthful statements that are reasonably necessary
to comply with applicable law, rule, regulation, order or legal
process, including public disclosure obligations under applicable
federal and state securities laws, rules or regulations or
applicable stock exchange rules, or to defend or enforce their
respective rights under this Release.
7
.
Unconditional
and 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, solely in their capacity as such, 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 “
Company 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, that arise out of or in any way
relate to your employment or your separation from employment with
the Company.
The Company agrees that the
consideration provided by this Agreement represents settlement in
full of all outstanding obligations owed to the Company by You or
your heirs, family members, executors, agents, and assigns
,
solely in their capacity as such,
(collectively, the
“
Executive
Releasees
”), an
d notwithstanding
the provisions of Section 1542 of the Civil Code of California,
Company unconditionally releases and forever discharges You and the
other Executive 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, 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 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, each
party expressly acknowledges and agrees that this Release resolves
all claims either party may have against the other party or the
Company Releasees or Executive Releasees as of the date of this
Release, including but limited to claims that either party did not
know or suspect to exist in such party’s favor at the time of
the execution of this Release. Each party expressly waives any and
all rights which such party 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 Release does not waive or release rights or claims arising
after You sign this Release.
(g)
This Release does not waive any rights of either party under the
Employment Agreement, Inventions Assignment Agreement, any stock
option or other equity award agreements that are intended to
survive, or which are payable after, termination of Your
employment.
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.
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.
10.
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.
11.
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.
12.
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.
13.
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.
14.
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.
15.
Protected
Communications
:
(a)
An individual may
not be held criminally or civilly liable under any federal or state
trade secret law for the disclosure of a trade secret that: (a) is
made (i) in confidence to a federal, state, or local government
official, either directly or indirectly, or to an attorney; and
(ii) solely for the purpose of reporting or investigating a
suspected violation of law;
or (b) is made in a
complaint or other document that is filed under seal in a lawsuit
or other proceeding. Further, an individual who files a lawsuit for
retaliation by an employer for reporting a suspected violation of
law may disclose the employer’s trade secrets to the attorney
and use the trade secret information in the court proceeding if the
individual: (a) files any document containing the trade secret
under seal; and (b) does not disclose the trade secret, except
pursuant to court order.
(b)
You understand that
nothing contained in this Agreement limits your ability to file a
charge or complaint with the U.S. Equal Employment Opportunity
Commission, the National Labor Relations Board, the Occupational
Safety and Health Administration, the Securities and Exchange
Commission or any other federal, state or local governmental agency
or commission (“
Government
Agencies
”). You further understand that this
Agreement does not limit your ability to communicate with any
Government Agencies or otherwise participate in any investigation
or proceeding that may be conducted by any Government Agency,
including providing documents or other information, without notice
to the Company. This Agreement does not limit your right to
receive an award for information provided to any Government
Agencies.
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 Employment Agreement, and You are relying
upon none. This Release and the Employment 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.
Arbitration.
Any controversy or claim arising out or, or related to, this
Release Agreement, or the breach thereof, shall be governed by the
terms of the Arbitration Agreement (as defined in the Employment
Agreement).
18.
Period for Review
and Consideration/Revocation Rights
. 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, AutoWeb,
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 Section 2.
19.
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:
__________________________
By:
______________________
(Officer
Name)
(Title)
AUTOWEB, INC.
Inducement Stock Option Award Agreement
(Non-Qualified Stock Options)
THESE OPTIONS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (“SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE STATE
SECURITIES LAWS WITH RESPECT TO SUCH SECURITY IS THEN IN EFFECT, OR
SUCH REGISTRATION UNDER THE SECURITIES ACT AND OTHER APPLICABLE
SECURITIES LAWS IS NOT REQUIRED DUE TO AVAILABLE EXEMPTIONS FROM
SUCH REGISTRATION. SHOULD THERE BE ANY REASONABLE UNCERTAINTY OR
GOOD FAITH DISAGREEMENT BETWEEN THE COMPANY AND OPTIONEE AS TO THE
AVAILABILITY OF SUCH EXEMPTIONS, THEN OPTIONEE SHALL BE REQUIRED TO
DELIVER TO THE COMPANY AN OPINION OF COUNSEL
(SKILLED IN
SECURITIES MATTERS, SELECTED BY OPTIONEE AND REASONABLY
SATISFACTORY TO THE COMPANY)
IN FORM AND SUBSTANCE
SATISFACTORY TO THE COMPANY THAT SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH AN AVAILABLE
EXEMPTION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES
LAWS.
This
Inducement Stock Option Award Agreement (“
Agreement
”) is entered into
effective as of the Grant Date set forth on the signature page to
this Agreement (“
Grant
Date
”) by and between AutoWeb, Inc., a Delaware
corporation (“
Company
”), and the person set
forth as Optionee on the signature page hereto (“
Optionee
”).
Optionee has not
previously been an employee or director of Company. Company has
determined to offer employment to Optionee, and as an inducement
material to Optionee’s decision to accept such employment
offer, Company determined to grant Optionee the Options under the
terms and conditions set forth herein.
This
Agreement and the stock options granted hereby have not been
granted pursuant to Company’s Amended and Restated 2014
Equity Incentive Plan (“
Plan
”), but certain capitalized
identified herein and not defined herein shall have the same
meanings as defined in the Plan.
This
Agreement is the Inducement Stock Option Award Agreement referred
to in the Employment Agreement (“
Employment Agreement
”) entered
into effective as of April 12, 2018, between the Company and
Optionee.
1.
Grant of
Options
. Subject to Optionee’s commencement of
employment with Company, Company hereby grants to Optionee
non-qualified stock options (“
Options
”) to purchase the number
of shares of common stock of Company, par value $0.001 per share,
set forth on the signature page to this Agreement
(“
Shares
”), at
the exercise price per Share set forth on the signature page to
this Agreement (“
Exercise
Price
”). The Options are not intended to qualify as
incentive stock options under Section 422 of the Code (as such term
is defined in the Plan).
2.
Term of
Options
. Unless the Options terminate earlier pursuant to
the provisions of this Agreement, the Options shall expire on the
seventh (7
th
) anniversary of the
Grant Date (“
Option
Expiration Date
”).
3.
Vesting
. The
Options shall become vested and exercisable in accordance with the
vesting schedule set forth on the signature page to this Agreement.
No installments of the Options shall vest after Optionee’s
termination of employment for any reason.
4.
Exercise of
Options
.
(a)
Manner
of Exercise
. To the extent vested, the Options may be
exercised, in whole or in part, by delivering written notice to
Company in accordance with Section 9(f) in such form as Company may
require from time to time, or at the direction of Company, through
the procedures established with Company’s third party option
administration service. Such notice shall specify the number of
Shares subject to the Options as to which the Options are being
exercised and shall be accompanied by full payment of the Exercise
Price of such Shares in a manner permitted (which the Committee
hereby authorizes if permitted by applicable law, rule, regulation
or order at the time of exercise) under the terms of Section 5.5 of
the Plan (as if these Options had been granted under the Plan)
(including through broker assisted Option exercise), except that
payment in whole or in part in a manner set forth in clauses (ii),
(iii) or (iv) of Section 5.5(b) of the Plan (as if these Options
had been granted under the Plan), may only be made with the consent
of the Committee (as such term is defined in the Plan). The Options
may be exercised only in multiples of whole Shares, and no
fractional Shares shall be issued.
(b)
Issuance
of Shares
. Upon exercise of the Options and payment of the
Exercise Price for the Shares as to which the Options are exercised
and satisfaction of all applicable tax withholding requirements,
Company shall issue to Optionee the applicable number of Shares in
the form of fully paid and nonassessable Shares.
(c)
Withholding
.
No Shares will be issued on exercise of the Options unless and
until Optionee pays to Company, or makes satisfactory arrangements
with Company for payment of, any federal, state, local or foreign
taxes required by law to be withheld in respect of the exercise of
the Options. Optionee may remit withholding payment following
Option exercise through the use of broker assisted Option exercise.
Optionee hereby agrees that Company may withhold from
Optionee’s wages or other remuneration the applicable taxes.
At the discretion of Company, the applicable taxes may be withheld
in kind from the Shares otherwise deliverable to Optionee on
exercise of the Options, up to Optionee’s minimum required
withholding rate or such other rate determined by the Committee
that will not trigger a negative accounting impact.
(d)
Compliance
with Securities Trading Policy
. Shares issued upon exercise
of the Options may only be sold, pledged or otherwise transferred
in compliance with Company’s securities trading policies
generally applicable to officers, directors or employees of Company
as long as Optionee is subject to such securities trading
policy.
(e)
Limitation
on Number of Resales or Transfers of Shares
. The number of
Shares that may be resold or transferred to the public or through
any public securities trading market at any time may not exceed (i)
for any one sale or transfer order, twenty-five percent (25%) of
the Average Daily Volume; and (ii) for all sales or transfer volume
in any calendar week, twenty-five percent (25%) of the Weekly
Volume. For purposes of this Section 4(e), (i) “
Average Daily Volume
” will be
determined once at the beginning of each calendar quarter for
application during such quarter based on an averaging of the daily
volume of sales of Company Common Stock as reported by The NASDAQ
Capital Market (provided that if Company’s Common Stock is
not then listed on The NASDAQ Capital Market, as reported by such
trading market on which the Common Stock is traded) for each
trading day over the 90-trading day period preceding such
determination; and (ii) “
Average Weekly Volume
” is
calculated by multiplying the Average Daily Volume by the number of
trading days in the calendar week preceding the proposed sale or
transfer of Shares.
5.
Termination of
Options
.
(a)
Termination
Upon Expiration of Option Term
. The Options shall terminate
and expire in their entirety on the Option Expiration Date. In no
event may Optionee exercise the Options after the Option Expiration
Date, even if the application of another provision of this Section
5 may result in an extension of the exercise period for the Options
beyond the Option Expiration Date.
(b)
Termination
of Employment
.
(i)
Termination
of Employment Other Than Due to Death, Disability or
Cause
.
(1) Optionee
may exercise the vested portion of the Options for a period of one
hundred and eighty (180) days (but in no event later than the
Option Expiration Date) following any termination of
Optionee’s employment with Company, either by Optionee or
Company, other than in the event of a termination of
Optionee’s employment by Company for Cause, voluntary
termination by Optionee without Good Reason or by reason of
Optionee’s death or Disability. In the event the termination
of Optionee’s employment is by Company without Cause or by
Optionee for Good Reason, the unvested Options shall become fully
vested on the date of termination.
(2) In
the event of a voluntary termination of employment with Company by
Optionee without Good Reason, (i) unvested Options as of the date
of termination shall immediately terminate in their entirety and
shall thereafter not be exercisable to any extent whatsoever; and
(ii) Optionee may exercise any portion of the Options that are
vested as of the date of termination for a period of ninety (90)
days (but in no event later than the Option Expiration Date)
following the date of termination.
(3) To
the extent Optionee is not entitled to exercise the Options at the
date of termination of employment, or if Optionee does not exercise
the Options within the time specified in this Agreement for
post-termination of employment exercises of the Options, the
Options shall terminate.
(4) For
purposes of this Agreement, the terms “
Cause
”, “
Disability
” and
“
Good
Reason
”
shall have the meanings ascribed
to them in the Employment Agreement.
(ii)
Termination
of Employment for Cause
. Upon the termination of
Optionee’s employment by Company for Cause, unless the
Options have earlier terminated, the Options (whether vested or
not) shall immediately terminate in their entirety and shall
thereafter not be exercisable to any extent whatsoever; provided
that Company, in its discretion, may, by written notice to Optionee
given as of the date of termination, authorize Optionee to exercise
any vested portion of the Options for a period of up to thirty (30)
days following Optionee’s termination of employment for
Cause, provided that in no event may Optionee exercise the Options
beyond the Option Expiration Date.
(iii)
Termination
of Optionee’s Employment By Reason of Optionee’s
Death
. In the event Optionee’s employment is
terminated by reason of Optionee’s death, unless the Options
have earlier terminated, the number of unvested Options on the date
of termination that is equal to the lesser of (i) one-third
(1/3
rd
) of
the total number of Options granted under this Agreement; and (ii)
the total number of unvested Options on the date of termination
shall become immediately and fully vested as of the date of such
termination. To the extent vested as of the date of termination,
Options may be exercised at any time within one hundred and eighty
(180) days following the date of termination (but in no event later
than the Option Expiration Date) by Optionee’s executor or
personal representative or the person to whom the Options shall
have been transferred by will or the laws of descent and
distribution, but only to the extent Optionee could exercise the
Options at the date of termination.
(iv)
Termination
of Optionee’s Employment By Reason of Optionee’s
Disability
. In the event Optionee’s employment is
terminated by reason of Optionee’s Disability, unless the
Options have earlier terminated, the number of unvested Options on
the date of termination that is equal to the lesser of (i)
one-third (1/3
rd
) of the total
number of Options granted under this Agreement; and (ii) the total
number of unvested Options on the date of termination shall become
immediately and fully vested as of the date of such termination. In
the event that Optionee ceases to be an employee by reason of
Optionee’s Disability, unless the Options have earlier
terminated, Optionee (or Optionee’s attorney-in-fact,
conservator or other representative on behalf of Optionee) may, but
only within one hundred and eight (180) days following the date of
such termination of employment (and in no event later than the
Option Expiration Date), exercise the Options to the extent
Optionee was otherwise entitled to exercise the Options at the date
of such termination of employment.
(c)
Change
in Control
. In the event of a Change in Control, the effect
of the Change in Control on the Options shall be determined by the
applicable provisions of the Plan (including, without limitation,
Article 11 of the Plan), provided that (i) all Options will vest
upon the occurrence of a Change in Control and any vested Options
(either vested prior to the Change in Control or accelerated by
reason of this Section 5(c)) may be exercised for a period of
twenty-four (24) months after the date of any termination (other
than for Cause) of employment (but in no event later than the
Option Expiration Date); and (ii) any portion of the Options which
vests and becomes exercisable pursuant to this Section 5(c)) as a
result of such Change in Control will (1) vest and become
exercisable on the day prior to the date of the Change in Control
if Optionee is then employed by Company or a Subsidiary and (2) is
subject to provisions of Section 11.2(c) of the Plan. For purposes
of Section 11.2(a) of the Plan, the Options shall not be deemed
assumed or substituted by a successor company (or continued by
Company if it is the ultimate parent entity after the Change in
Control) if the Options are not assumed, substituted or continued
with equity securities of the successor company or Company, as
applicable, that are publicly-traded and listed on an exchange in
the United States and that have voting, dividend and other rights,
preferences and privileges substantially equivalent to the Shares.
Notwithstanding the foregoing provisions of this Section 5(c), if
on the date of the Change in Control the Fair Market Value of one
Share is less than the Exercise Price per Share, then the Options
shall terminate as of the date of the Change in Control except as
otherwise determined by the Committee. For purposes of this Section
5(c), the term “
Change in
Control
” shall have the meaning ascribed to such term
in the Employment Agreement.
(d)
Extension
of Exercise Period
. Notwithstanding any provisions of this
Section 5 to the contrary, if following termination of employment
or service the exercise of the Options or, if in conjunction with
the exercise of the Options, the sale of the Shares acquired on
exercise of the Options, during the post-termination of service
time period set forth in the paragraph of this Section 5 applicable
to the reason for termination of service would, in the
determination of the Company, violate any applicable federal or
state securities laws, rules, regulations or orders (or any Company
policy related thereto), including its securities trading policy),
the running of the applicable period to exercise the Options shall
be tolled for the number of days during the period that the
exercise of the Options or sale of the Shares acquired on exercise
would in the Company’s determination constitute such a
violation;
provided,
however
, that in no event shall the exercisability of the
Options be extended beyond the Option Expiration Date.
(e)
Adjustments
.
The number of Options may be subject to adjustment as provided in
Section 12.2 of the Plan (as if the Options had been granted under
the Plan).
(f)
Other
Governing Agreements or Plans
. The provisions of this
Section 5 regarding the acceleration of vesting of Options and the
extension of the exercise period for Options following a Change in
Control or a termination of Participant’s employment with
Company shall be superseded and governed by the provisions, if any,
of a written employment or severance agreement between Participant
and Company or a severance plan of Company covering Participant,
including a change in control severance agreement or plan, to the
extent such a provision (i) is specifically applicable to option
awards or grants made to Participant and (ii) provides for the
acceleration of Options vesting or for a longer extension period
for the exercise of the Options in the case of a Change in Control
or a particular event of termination of Participant’s
employment with Company (e.g., an event of termination governed by
Section 5(b)(i)) to this Agreement than is provided in the
provision of this Section 5 applicable to a Change in Control or to
the same event of employment termination;
provided, however
, that in no event
shall the exercisability of the Options be extended beyond the
Option Expiration Date.
(g)
Forfeiture
upon Engaging in Detrimental Activities
. If, at any
time within the twelve (12) months after the earlier of (i)
Optionee exercises any portion of the Options; or (ii) the
effective date of any termination of Optionee’s employment by
Company or by Optionee for any reason, Optionee engages in any
willful misconduct during the course of Optionee’s employment
by Company or any Subsidiary that directly results in an accounting
restatement by Company due to material noncompliance by Optionee
with any financial reporting requirement under applicable
securities laws, whether such restatement occurs during or after
Optionee’s employment by Company or any Subsidiary, then (x)
the Options shall terminate effective as of the date on which
Optionee engaged in or engages in that activity or conduct, unless
terminated sooner pursuant to the provisions of this Agreement, and
(y) the amount of any gain realized by Optionee from exercising all
or a portion of the Options at any time following the date that
Optionee engaged in any such activity or conduct or is terminated
for Cause, as determined as of the time of exercise, shall be
forfeited by Optionee and shall be paid by Optionee to Company, and
recoverable by Company, within sixty (60) days following such
termination date of the Options. For purposes of this Section 5(g),
no act or failure to act, on the part of the Executive, shall be
considered “willful” if it is done, or omitted to be
done, by the Executive in good faith and with the reasonable belief
that Executive’s action or omission was in the best interests
of the Company.
(h)
Reservation
of Committee Discretion to Accelerate Option Vesting and Extend
Option Exercise Window
. The Committee reserves the right, in
its sole and absolute discretion, to accelerate the vesting of the
Options and to extend the exercise window for Options that have
vested (either in accordance with the terms of this Agreement or by
discretionary acceleration by the Committee) under circumstances
not otherwise covered by the foregoing provisions of this Section
5; provided that in no event may the Committee extend the exercise
window for Options beyond the Option Expiration Date. The Committee
is under no obligation to exercise any such discretion and may or
may not exercise such discretion on a case-by-case
basis.
6.
Non-Registered
Option and Shares
.
(a)
Restrictions
.
Optionee hereby acknowledges that the Options and any Shares that
may be acquired upon exercise of the Options pursuant hereto are,
as of the date hereof, not registered: (i) under the Securities Act
of 1933, as amended (“
Securities Act
”), on the ground
that the issuance of the Options and the underlying shares is
exempt from registration under Section 4(2) of the Securities Act
as not involving any public offering or, with respect to Options,
because the grant of the Options alone may not constitute an offer
or sale of a security under the Securities Act until such time as
the Options are exercised or exercisable or (ii) under any
applicable state securities law because the grant of the Options
does not involve any public offering or is otherwise exempt under
applicable state securities laws, and (iii) that Company’s
reliance on the Section 4(2) exemption of the Securities Act and
under applicable state securities laws is predicated in part on the
representations hereby made to Company by Optionee. Optionee
represents and warrants that Optionee is acquiring the Options and
will acquire the Shares for investment for Optionee’s own
account, with no present intention of reselling or otherwise
distributing the same. Notwithstanding the foregoing, if Option is
them outstanding, prior to the first anniversary of Grant Date, the
Company shall file a Registration Statement on Form S-8 with
respect to the Shares.
(b)
Resales
.
If, at the time of issuance of Shares upon exercise of the Options,
no registration statement is in effect with respect to such Shares
under applicable provisions of the Securities Act and other
applicable securities laws, Optionee hereby agrees that Optionee
will not sell, transfer, offer, pledge or hypothecate all or any
part of the Shares unless and until Optionee shall first have given
notice to Company describing such sale, transfer, offer, pledge or
hypothecation and there shall be available exemptions from such
registration requirements that exist. Should there be any
reasonable uncertainty or good faith disagreement between Company
and Optionee as to the availability of such exemptions, then
Optionee shall be required to deliver to Company (1) an opinion of
counsel (skilled in securities matters, selected by Optionee and
reasonably satisfactory to Company) in form and substance
satisfactory to Company to the effect that such offer, sale,
transfer, pledge or hypothecation is in compliance with an
available exemption under the Securities Act and other applicable
securities laws, or (2) an interpretative letter from the
Securities and Exchange Commission to the effect that no
enforcement action will be recommended if the proposed offer, sale,
transfer, pledge or hypothecation is made without registration
under the Securities Act. Company may at its election require that
Optionee provide Company with written reconfirmation of
Optionee’s investment intent as set forth in Section 6(a)
with respect to the shares. The shares issued upon exercise of the
Options shall bear a legend reading substantially as
follows:
“THESE SHARES
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (“
SECURITIES
ACT
”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER
APPLICABLE STATE SECURITIES LAWS WITH RESPECT TO SUCH SECURITY IS
THEN IN EFFECT, OR SUCH REGISTRATION UNDER THE SECURITIES ACT AND
OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED DUE TO AVAILABLE
EXEMPTIONS FROM SUCH REGISTRATION. SHOULD THERE BE ANY REASONABLE
UNCERTAINTY OR GOOD FAITH DISAGREEMENT BETWEEN THE COMPANY AND
OPTIONEE AS TO THE AVAILABILITY OF SUCH EXEMPTIONS, THEN OPTIONEE
SHALL BE REQUIRED TO DELIVER TO THE COMPANY AN OPINION OF COUNSEL
(SKILLED IN SECURITIES MATTERS, SELECTED BY OPTIONEE AND REASONABLY
SATISFACTORY TO THE COMPANY) IN FORM AND SUBSTANCE SATISFACTORY TO
THE COMPANY THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION UNDER
THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES
LAWS.”
(c)
Compliance
with Laws
. The exercise of the Option and the issuance of
the Shares upon such exercise shall be subject to compliance by
Company and Optionee with all applicable requirements of law,
rules, regulations or orders relating thereto and with all
applicable rules and regulations of any stock exchange or
securities trading market on which the Shares may be listed for
trading at the end of such exercise and issuance.
(d)
Regulatory
Approvals
. The inability of Company to obtain approval from
any regulatory body having authority deemed by Company to be
necessary to the lawful issuance and sale of any Shares pursuant to
the Options shall relieve Company of any liability with respect to
the nonissuance or sale of the Shares as to which such approval
shall not have been obtained. However, Company shall use its best
efforts to obtain all such applicable approvals.
(a)
No
Rights of Stockholder
. Optionee shall not have any of the
rights of a stockholder with respect to the Shares subject to this
Agreement until such Shares have been issued upon the due exercise
of the Options.
(b)
Nontransferability
of Options
. The Options shall be nontransferable or
assignable except to the extent expressly provided in the Plan (as
if the Options had been granted under the Plan). Notwithstanding
the foregoing, Optionee may by delivering written notice to Company
in a form provided by or otherwise satisfactory to Company,
designate a third party who, in the event of Optionee’s
death, shall thereafter be entitled to exercise the Options.
This Agreement is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
(c)
Severability
.
If any provision of this Agreement shall be held unlawful or
otherwise invalid or unenforceable in whole or in part by a court
of competent jurisdiction, such provision shall (i) be deemed
limited to the extent that such court of competent jurisdiction
deems it lawful, valid and/or enforceable and as so limited shall
remain in full force and effect, and (ii) not affect any other
provision of this Agreement or part thereof, each of which shall
remain in full force and effect.
(d)
Governing
Law, Jurisdiction and Venue
. This Agreement shall be
governed by and interpreted in accordance with the laws of the
State of Delaware other than its conflict of laws principles. The
parties agree that in the event that any suit or proceeding is
brought in connection with this Agreement, such suit or proceeding
shall be brought in the state or federal courts located in New
Castle County, Delaware, and the parties shall submit to the
exclusive jurisdiction of such courts and waive any and all
jurisdictional, venue and inconvenient forum objections to such
courts.
(e)
Headings
.
The headings in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this
Agreement.
(f)
Notices
.
All notices required or permitted under this Agreement shall be in
writing and shall be sufficiently made or given if hand delivered
or mailed by registered or certified mail, postage prepaid. Notice
by mail shall be deemed delivered on the date on which it is
postmarked.
Notices
to Company should be addressed to:
AutoWeb,
Inc.
18872
MacArthur Blvd., Suite 200
Irvine,
CA 92612-1400
Attention: Chief
Legal Officer
Notices
to Optionee should be addressed to Optionee at Optionee’s
address as it appears on Company’s records.
Company
or Optionee may by writing to the other party designate a different
address for notices. If the receiving party consents in advance,
notice may be transmitted and received via telecopy or via such
other electronic transmission mechanism as may be available to the
parties. Such notices shall be deemed delivered when
received.
(g)
Agreement
Not an Employment Contract
. This Agreement is not an
employment or service contract, and nothing in this Agreement or in
the granting of the Options shall be deemed to create in any way
whatsoever any obligation on Optionee’s part to continue as
an employee of Company or any Subsidiary or on the part of Company
or any Subsidiary to continue Optionee’s employment or
service as an employee.
(h)
Counterparts
.
This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original Agreement but all of which, taken
together, shall constitute one and the same Agreement binding on
the parties hereto. The signature of any party hereto to any
counterpart hereof shall be deemed a signature to, and may be
appended to, any other counterpart hereof.
(i)
Administration
.
The Committee shall have the power to interpret this Agreement and
to adopt such rules for the administration, interpretation and
application of this Agreement as are consistent with this Agreement
and to interpret or revoke any such rules. All actions taken and
all interpretations and determinations made by the Committee
(including determinations as to the calculation, satisfaction or
achievement of performance-based vesting requirements, if any, to
which the Options are subject) shall be final and binding upon
Optionee, Company and all other interested persons. No member of
the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to
this Agreement.
(j)
Policies
and Procedures
. Optionee agrees that Company may impose, and
Optionee agrees to be bound by, Company policies and procedures
with respect to the ownership, timing and manner of resales of
shares of Company’s securities, including without limitation,
(i) restrictions on insider trading; (ii) restrictions designed to
delay and/or coordinate the timing and manner of sales by officers,
directors and affiliates of Company following a public offering of
Company's securities; (iii) stock ownership or holding requirements
applicable to officers and/or directors of Company; and (iv) the
required use of a specified brokerage firm for such
resales.
(k)
Entire
Agreement; Modification
. This Agreement contains the entire
agreement between the parties with respect to the subject matter
contained herein and may not be modified except as provided herein
or in a written document signed by each of the parties hereto and
may be rescinded only by a written agreement signed by both
parties.
[Remainder of Page Intentionally Left Blank; Signature Page
Follows]
IN
WITNESS WHEREOF, the parties have executed this Agreement effective
as of the Grant Date.
Grant
Date:
April 12, 2018
Total Options
Awarded:
1,000,000
Exercise Price Per
Share:
$ 3.26
Vesting
Schedule:
Beginning on the
first day of the first calendar month following the calendar month
in which the Grant Date occurred, the Options shall vest in
thirty-six (36) approximately equal monthly installments of whole
Options (i.e., no fractional Options shall vest) on the first day
of each calendar month over thirty-six (36) calendar months
immediately following Grant Date.
Company
AutoWeb, Inc., a
Delaware corporation
By:
/s/ Glenn E.
Fuller
Glenn
E. Fuller, Executive Vice President,
Chief
Legal and Administrative Officer and Secretary
Optionee
/s/ Jared R.
Rowe
Jared
R. Rowe
CONSULTING SERVICES AGREEMENT
This
Consulting Services Agreement (“
Agreement
”) is entered into
effective as of the effective date set forth on the signature page
to this Agreement (“
Effective
Date
”) by and between AutoWeb, Inc., a Delaware
corporation (“
Company
”), and the individual
identified as the consultant on the signature page to this
Agreement (“
Consultant
”).
Background
The
Company is engaged in the business of providing internet marketing
services for the automotive industry. Consultant was formerly
employed by the Company as its President and Chief Executive
Officer until April 12, 2018 (“
Employment Termination Date
”). The
Company wishes to engage Consultant to provide the transition
services described herein on a consulting basis, and Consultant
wishes to be engaged to provide such transition
services.
In
consideration of the covenants and agreements set forth herein, the
parties hereto agree as follows.
ARTICLE I
CONSULTING SERVICES
1.1
Consulting
Services
. The Company hereby engages Consultant to perform
the transition services (“
Consulting Services
”) set forth on
the Consulting Services Schedule attached hereto as Exhibit A
(“
Consulting Services
Schedule
”), and Consultant hereby accepts the
engagement, upon the terms and conditions hereinafter set forth.
The parties acknowledge that in deciding to engage Consultant, the
Company has relied solely on the experience, expertise and
reputation of Consultant. All Consulting Services are to be
provided solely by the Consultant and no other employees of or
contractors for Consultant.
1.2
Term
. The
engagement of Consultant hereunder shall commence effective as of
the Effective Date and shall continue for a period of thirteen (13)
months until the thirteenth month anniversary of the Effective Date
(“
Agreement Expiration
Date
”). This Agreement may be terminated prior to the
Agreement Expiration Date (i) by Consultant for any reason, with or
without cause, upon thirty (30) days prior written notice to
Company; or (ii) by either party by reason of a material breach of
this Agreement by the other party upon thirty (30) days prior
written notice detailing the breach by the breaching party and
breaching party fails to cure such breach within thirty (30) days
following such written notice. The period commencing with the
Effective Date and ending on the earlier of (i) the Agreement
Expiration Date and (ii) the effective date of any termination of
this Agreement by a party prior to the Agreement Expiration Date in
accordance with the provisions of this Section 1.2 is referred to
herein as the “
Consulting
Term
.” The provisions of Sections 1.5, Articles III
and IV shall survive any termination of this
Agreement.
1.3
Standards of Care
and Conduct
. In the performance of the Consulting Services
under this Agreement, Consultant shall adhere to those fiduciary
standards, ethical practices and standards of care and competence
which are customary for professionals rendering consulting and
advisory services of the type provided for in this Agreement. In
performing the Consulting Services, Consultant shall comply with
(i) all applicable laws, rules, regulations and order;
(ii) reasonable instructions and directions from the Company;
and (iii) the Company’s Code of Conduct and other similar
policies. Consultant shall avoid engaging in any consulting,
employment or other business arrangements with third parties that
may constitute or give rise to a conflict of interest with respect
to the Company’s engagement of Consultant or in the provision
of the Consulting Services. Consultant represents and warrants to
the Company that Consultant currently does not have any such
arrangements that constitute or may give rise to a conflict of
interest, and Consultant shall disclose to Company any proposed
arrangements that constitute or may give rise to a conflict of
interest conflicts of interest prior to entering into any such
arrangement. The Company may at its discretion (i) request
Consultant to terminate any arrangement that the Company believes
does or may constitute a conflict of interest for Consultant in
connection with Consultant’s engagement by the Company or in
the performance of the Consulting Services; or (ii) if Consultant
does not terminate such arrangement, terminate this Agreement.
Consultant represents and warrants that Consultant’s entering
into this Agreement and performing the Consulting Services will not
conflict with or constitute a breach of any other agreements or
obligations Consultant has with or to any third party.
1.4
Independent
Contractor
.
(a)
Consultant will perform all Consulting Services as an independent
contractor and not as an employee of the Company. Consultant
acknowledges and agrees that Consultant is a self-employed
independent contractor and that nothing in this Agreement shall be
considered to create an employer-employee relationship between the
Company and Consultant. Consultant is not eligible to receive and
will not receive or participate in any compensation or employee
benefit plans or arrangements of any type in which employees of the
Company may participate, including but not limited to, any (i)
retirement, pension, savings, profit-sharing or other similar plans
or arrangements; (ii) any stock option, stock purchase or other
equity participation plans or arrangements; (iii) any long-term or
short-term bonus or other compensation plans or arrangements; (iv)
sick pay, paid non-working holidays, or paid vacations or leave
days; (v) overtime; (vi) any life, accident, disability, health or
dental insurance or reimbursement plans or arrangements; and (vii)
workers’ compensation. If Consultant is found, by a court of
competent jurisdiction to be an “employee” of the
Company, notwithstanding the foregoing, Consultant voluntarily
waives any and all rights, if any, to all such compensation or
benefits.
(b)
As an independent contractor, Consultant is solely responsible for
the payment of any and all self-employment taxes and/or assessments
imposed on account of the payment of compensation to, or the
performance of the Consulting Services by, Consultant pursuant to
this Agreement, including, without limitation, any state, federal
or foreign unemployment insurance tax, income tax, Social Security
(FICA) payments, and disability insurance taxes. The Company shall
not, by reason of Consultant's status as an independent contractor
and the representations contained herein, make any withholdings or
payments of said taxes or assessments with respect to compensation
paid Consultant hereunder; provided, however, that if required by
law or any governmental agency, the Company shall withhold any such
taxes or assessments from the compensation due Consultant, and any
such withholding shall be for Consultant's account and shall not be
reimbursed by the Company to Consultant. Consultant expressly
agrees to treat any compensation earned under this Agreement as
self-employment income for federal and state tax purposes, and to
make all payments of federal and state income taxes, unemployment
insurance taxes, and disability insurance taxes as, when, and to
the extent the same may become due and payable with respect to such
self-employment compensation earned under this
Agreement.
(c)
Consultant is not an agent of the Company. Unless otherwise
directed by the Company in writing, Consultant is not authorized to
(i) waive any right or to incur, assume, or create any debt,
obligation, contract, or release of any kind whatsoever in the name
or on behalf of the Company or any affiliated entity nor (ii) to
hold Consultant out as an employee or agent of the Company or any
affiliated entity or to make any statement or representation that
Consultant has any such authority.
(d)
Consultant shall maintain adequate general liability, errors and
omissions and other insurance covering Consultant as required by
applicable law, rule or regulation (e.g., workers’
compensation).
(e)
Consultant represents and warrants to the Company that Consultant
is authorized to provide the Consulting Services under applicable
laws, rules and regulations.
(f)
Consultant shall comply with all applicable laws, rules and
regulations in the performance of the Consulting Services, and on
request, Consultant shall furnish the Company with appropriate
assurances or certificates of compliance.
(e)
Consultant shall retain the right to determine the method, details
and means of performing the Consulting Services.
1.5
Indemnification
.
(a) Each
party to this Agreement will defend, indemnify and hold harmless
the other party and each of its parent company, affiliate
companies, officers, directors, employees and agents against and in
respect of any loss, debt, liability, damage, obligation, claim,
demand, fines, penalties, forfeitures, judgment, or settlement of
any nature or kind, known or unknown, liquidated or unliquidated,
including without limitation all reasonable costs and expenses
incurred (legal, accounting or otherwise) (collectively,
“
Damages
”)
arising out of, resulting from or based upon any claim, action or
proceeding by any third party, including any governmental or
regulatory body, alleging facts or circumstances constituting a
breach of the obligations, representations or warranties of the
indemnifying party set forth in this Agreement.
(b) If
a party entitled to indemnification under this Section 1.5 (an
“
Indemnified
Party
”) makes an indemnification request to the other
party, the Indemnified Party shall permit the other party (the
“
Indemnifying
Party
”) to control the defense and disposition or
settlement of the matter at its own expense; provided, however,
that the Indemnifying Party may not enter into any settlement
thereof with the Indemnified Party’s prior written consent
(not to be unreasonably withheld or delayed) unless the Indemnified
Party is fully and unconditionally released from such claims
without any admission of liability and the Indemnified Party is not
subject to any injunctive or other equitable relief or other
obligations. The Indemnified Party shall be permitted to
participate in such defense and represent itself at its own expense
with counsel of its own choosing. The Indemnified Party shall
notify the Indemnifying Party promptly of any claim for which
Indemnifying Party is responsible and shall cooperate with the
Indemnifying Party in every commercially reasonable way to
facilitate defense of any such claim; provided that the Indemnified
Party’s failure to notify Indemnifying Party shall not
diminish Indemnifying Party’s obligations under this Section
1.5 except to the extent that Indemnifying Party is materially
prejudiced as a result of such failure.
ARTICLE II
CONSULTING CONSIDERATION AND EXPENSES
2.1
Consulting
Fees
. In consideration for the performance of the Consulting
Services, Consultant shall receive the fees and other consideration
set forth on the Consulting Services Schedule (“
Consulting
Consideration
”).
2.2
Expenses
.
Except as may otherwise be set forth on the Consulting Services
Schedule, (i) the Consulting Consideration payable to Consultant
include any and all costs, fees and expenses which may be incurred
by Consultant in its performance of the Consulting Services; and
(ii) Consultant shall not be reimbursed for any costs or expenses
unless authorized by the Company in writing in advance of
Consultant incurring the costs, fees or expenses. As to expenses
for which the Company will reimburse Consultant as set forth on the
Consulting Services Schedule, the Company shall pay or reimburse
Consultant for all reasonable and authorized business expenses
incurred by Consultant while engaged under this Agreement so long
as said expenses have been incurred for and promote the business of
the Company and are normally and customarily incurred by
consultants performing similar consulting services in the same or
similar market. As a condition to reimbursement under this Section
2.2, Consultant shall furnish to the Company adequate records and
other documentary evidence required by federal and state statutes
and regulations for the substantiation of each expenditure.
Consultant must submit proper documentation for each such expense
within thirty (30) days after the date that Consultant incurs such
expense, and the Company will reimburse Consultant for all eligible
expenses within thirty (30) days thereafter. Consultant
acknowledges and agrees that failure to furnish the required
documentation may result in the Company denying all or part of the
expense for which reimbursement is sought.
2.3
Payments
.
Payment of Consulting Fees and approved costs and expenses shall be
made on a monthly basis in accordance with the Company’s
customary accounts payable practice.
2.4
Reporting
.
Concurrently with the execution and delivery of this Agreement, the
Consultant has provided Company with a completed IRS Form W-9 for
Consultant. The Company will provide Consultant with an IRS Form
1099 each year reflecting the payments made to Consultant under
this Agreement.
ARTICLE III
CONFIDENTIALITY AND PROPRIETARY RIGHTS
3.1
Confidential
Information
.
(a)
Consultant acknowledges and agrees that the Company has developed
and uses and will develop and use Confidential Information and that
Consultant will have access to and will participate in the creation
or development of Confidential Information in the performance of
the Consulting Services. All Confidential Information shall be and
remain the sole property of the Company notwithstanding that
Consultant may participate in the creation or development of the
Confidential Information. For purposes of this Agreement, the term
“
Confidential
Information
” shall mean all Company business methods,
techniques, plans, and know-how; budgets, financing and accounting
techniques and projections; advertising, proposals, applications,
marketing materials and concepts; customer files and other
non-public information regarding customers; methods for developing
and maintaining business relationships with customers, suppliers,
vendors, and partners; customer and prospect lists; procedure
manuals; employees and personnel information.
(b)
Consultant shall maintain the confidentiality of the Confidential
Information and shall not (i) disclose to any other person or
entity Confidential Information in any manner or for any purpose;
or (ii) use Confidential Information in any manner or for any
purpose which is directly or indirectly in competition with or
injurious or adverse to the Company.
(c)
Upon termination of this Agreement for any reason, Consultant will
promptly surrender to the Company all copies of Confidential
Information in Consultant's possession or under Consultant's
control, whether any such Confidential Information was prepared by
Consultant or by others.
(d)
The obligations of Consultant under this Section 3.1 shall continue
during the term of this Agreement and for a period of five (5)
years after termination of this Agreement; provided that in the
case of Confidential Information constituting trades secrets, the
obligations shall continue for as long as such Confidential
Information remains trade secrets.
3.2
Ownership of
Intellectual Property
.
(a)
(i) All Intellectual Property, whether or not patentable or
copyrightable, made, conceived, written, developed or first reduced
to practice by Consultant, whether solely or jointly with others,
during the period of Consultant's engagement by the Company under
this Agreement or prior to the Effective Date and which result from
the performance of the Consulting Services or similar services
performed for the Company or any predecessor company or business,
shall be the sole and exclusive property of the Company. To the
extent Consultant may retain any interest in any such Intellectual
Property by operation of law or otherwise, Consultant hereby
irrevocably assigns and transfers to the Company all of
Consultant's entire right, title and interest in and to all such
Intellectual Property. All copyrights and copyrightable material
shall be deemed works for hire, and the Company shall have all
right, title and interest in such material, including all moral
rights, and shall be the author thereof for all purposes under
applicable copyright laws. For purposes of this Agreement, the term
“
Intellectual
Property
” shall mean all inventions, improvements,
discoveries, ideas, designs, software, trademarks, trade names,
copyrights and copyrightable subject matter, patents, know-how,
mask works, programs, documents, data, trade secrets and
Confidential Information.
(ii)
Without limiting the generality of the forgoing provisions of this
Section 3.2(a), all articles, documents, reports, manuals,
programs, software or computer programs and components thereof, and
any other deliverables or work products arising from or related to
the Consulting Services or similar services or similar services
performed for the Company or any predecessor company or business
prior to the Effective Date (“
Materials
”) developed or authored
by Consultant for the Company under this Agreement or under the
provision of similar services performed for the Company or any
predecessor company or business prior to the Effective Date, are to
be considered Works Made for Hire as that term is defined in
Section 101 of the Copyright Act (17 U.S.C. §101) and are and
shall be the sole and exclusive property of the Company. Consultant
agrees that any and all proprietary rights to the Materials
developed hereunder or prior to the Effective Date, including, but
not limited to, patent, copyright, trademark and trade secret
rights, to the extent they are available, are the sole and
exclusive property of the Company, free from any claim or retention
of rights thereto on the part of Consultant or any employee or
agent of Consultant, as of the Effective Date of this
Agreement.
(b)
To
the extent that any Materials or Intellectual Property developed,
authored, created or produced under this Agreement or under the
provision of similar services performed for the Company or any
predecessor company or business prior to the Effective Date may not
be considered Works Made for Hire, or to the extent that Section
3.2(a)(i) or Section 3.2(a)(ii), is declared invalid either in
substance or purpose, in whole or in part, Consultant hereby
assigns and agrees to irrevocably assign, transfer, grant, convey
and relinquish exclusively to the Company, any and all of
Consultant’s right, title and interest, including ownership
of copyright and/or patent rights to any material developed by
Consultant under this Agreement or under the provision of similar
services performed for the Company or any predecessor company or
business prior to the Effective Date without consideration beyond
the mutual promises set forth in this Agreement and the payment of
fees as provided for by this Agreement. All right, title and
interest of every kind and nature, whether now known or unknown, in
and to the copyrights, patents, ideas and creations created,
written and developed by either Consultant or the Company in the
course of providing the Consulting Services under and pursuant to
this Agreement or under the provision of similar services performed
for the Company or any predecessor company or business prior to the
Effective Date, shall be the exclusive property of the Company for
any and all purposes and uses, and Consultant shall have no right,
title or interest of any kind or nature in or to such material. As
part of this Agreement, Consultant agrees to do all things
necessary to protect this assignment, including but not limited to,
executing an assignment of Consultant’s copyright and/or
patent interests in the Material and Intellectual Property created,
authored and/or developed pursuant to this Agreement or under the
provision of similar services performed for the Company or any
predecessor company or business prior to the Effective
Date.
(c)
Consultant
represents and warrants that all Materials and Intellectual
Property produced under this Agreement or under the provision of
similar services performed for the Company or any predecessor
company or business prior to the Effective Date were and shall be
of original authorship by Consultant or that Consultant has the
legal right to convey the entire right, title and interest in such
Materials and Intellectual Property as is contemplated by this
Agreement. Consultant further represents and warrants no other
person, firm, corporation or entity has any rights or interest in
the Materials and Intellectual Property Consultant submits or has
submitted to the Company or under the provision of similar services
performed for the Company or any predecessor company or business
prior to the Effective Date. Consultant further warrants that its
execution and performance of this Agreement, including, but not
limited to, the tangible or intangible products produced as a
result of it, shall not infringe upon or violate any patent,
copyright, trade secret or other proprietary right of any third
party and shall not constitute a defamation or invasion of the
right of privacy or publicity.
(d)
Consultant hereby appoints the Company, for the period of
Consultant's engagement by the Company, and for five years
thereafter, as Consultant's attorney-in-fact for the purpose of
executing, in Consultant's name and on Consultant's behalf, such
instruments or other documents as may be necessary to transfer,
confirm and perfect in the Company the rights Consultant has
granted to the Company pursuant to this Section 3.2.
(e)
Consultant will assist the Company to obtain for its own benefit
patents, copyrights and/or trademarks thereon in any and all
jurisdictions as may be designated by the Company, and Consultant
will execute when requested, patent, trademark and/or copyright
applications and assignments thereof to the Company or persons
designated by the Company, and any other lawful documents deemed
necessary by the Company to carry out the purposes of this
Agreement. Consultant will further assist the Company in every way
to enforce any patents, copyrights, trade secrets, and other
intellectual property rights of the Company, including, without
limitation, testifying in any suit or proceeding involving any of
the Intellectual Property or executing any documents deemed
necessary by the Company, all without further consideration, but at
the expense of the Company.
(f)
The obligations and undertakings stated in this Section 3.2 shall
continue beyond the termination of Consultant's engagement by the
Company, but if Consultant is called upon to render such assistance
after the termination of Consultant's engagement, then Consultant
shall be entitled to a reasonable per diem fee in addition to
reimbursement of any out-of-pocket expenses incurred at the request
of the Company.
3.3
Prohibition on
Interference with Relationships
. During the term of this
Agreement and for a period of three (3) years thereafter,
Consultant shall not, directly or indirectly, without the Company's
prior written consent, solicit any person or entity having
contractual or other business relationships with the Company,
including without limitation, any customer or client, lessee,
supplier, business partner or independent contractor, for the
purpose of having such person or entity terminate or modify such
person's or entity's contractual and/or business relationship with
the Company, nor shall Consultant interfere with any of such
contractual or business relationships.
3.4
Prohibition on
Solicitation of Company Employees
. During the term of this
Agreement and for a three (3)-year period following termination or
expiration of this Agreement, Consultant will not directly or
indirectly, without the Company's prior written consent, (i)
solicit or recruit any of the Company's employees to leave the
employ of the Company; or (ii) hire as an employee or engage as an
independent contractor, any employee of the Company.
3.5
Covenants
Reasonable
. The parties hereto agree that the nature and
duration of the covenants set forth in this Article III are
reasonable under the circumstances. In the event any court or
arbitrator determines that the nature of any covenant or the
duration of any covenant, or both, are unreasonable and to that
extent is unenforceable, the parties agree that such covenant shall
remain in full force and effect to the greatest extent and duration
as would not render the covenant unenforceable.
3.6
Cooperation and
Assistance
. Consultant agrees to reasonably 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
Consultant’s period of employment by the Company or during
the Term of this Agreement. Consultant’s agreement to
assist and cooperate shall not affect in any way the content of
information or testimony provided by Consultant.
3.7
Right
to Injunctive and Equitable Relief
. Consultant's obligations
under this Article III are of a special and unique character which
gives them a special value to the Company. The Company cannot be
reasonably or adequately compensated in damages in an action at law
in the event Consultant breaches such obligations. Therefore,
Consultant expressly agrees that the Company shall be entitled to
injunctive and other equitable relief in the event of such breach
in addition to any other rights or remedies which the Company may
possess at law or in equity. The obligations of Consultant and the
rights and remedies of the Company under this Article III are
cumulative and in addition to, and not in lieu of, any obligations,
rights or remedies created by applicable law, including without
limitation, applicable copyright and patent laws and laws relating
to misappropriation or theft of trade secrets or confidential
information.
ARTICLE IV
GENERAL PROVISIONS
4.1
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 the parties are set forth below, for the
Company, or on the Consulting Services Schedule, for Consultant 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
4.1.
If to
the Company:
AutoWeb,
Inc.
18872
MacArthur Blvd., Suite 200
Irvine,
California 92612-1400
Attention: Legal
Department
Facsimile No.:
949.862.1323
If to
Consultant: As set forth on the Consulting Services
Schedule
For
purposes of this Section 4.1, "
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.
4.2
Entire
Agreement
. This Agreement constitutes the entire agreement
of the parties and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings, and negotiations
between the parties with respect to the subject matter hereof.
Notwithstanding the foregoing, this Agreement is not intended by
the parties to supersede, and does not supersede, any prior or
contemporaneous agreements or understandings entered into by the
parties in connection Consultant’s prior employment with the
Company or the termination of such employment, including without
limitation that certain Employee Confidentiality Agreement dated as
of April 26, 2010 between Company and Consultant, that certain
Mutual Agreement To Arbitrate dated April 26, 2010 between Company
and Consultant and that certain Confidential Separation and Release
Agreement dated as of the Effective Date between Company and
Consultant, all of which agreements remain in full force and effect
in accordance with their terms.
4.3
Modifications,
Amendments, Waivers and Extensions
. This Agreement may not
be modified, changed or supplemented, nor may any obligations
hereunder be waived or extensions of time for performance granted,
except by written instrument signed by the party to be charged or
by its agent duly authorized in writing or as otherwise expressly
permitted herein. No waiver of any default or breach of any
agreement or provision herein contained shall be deemed a waiver of
any preceding or succeeding default or breach thereof or of any
other agreement or provision herein contained. No extension of time
for performance of any obligations or acts shall be deemed an
extension of the time for performance of any other obligations or
acts.
4.4
Governing
Law
. This Agreement shall be governed by, interpreted under,
and construed and enforced in accordance with the internal laws,
and not the laws pertaining to conflicts or choice of laws, of the
State of California applicable to agreements made and to be
performed wholly within the State of California.
4.5
Partial
Invalidity
. Any provision of this Agreement which is found
to be invalid or unenforceable by any court in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability, and the invalidity or
unenforceability of such provision shall not affect the validity or
enforceability of the remaining provisions hereof.
4.6
Dispute
Resolution, Forum
.
(a) The
parties consent to and agree that any dispute or claim arising
hereunder shall be submitted to binding arbitration in Orange
County, California,
and
conducted in accordance with the Judicial Arbitration and Mediation
Service (“
JAMS
”)
rules of practice then in effect or such other procedures as the
parties may agree in writing, and the parties expressly waive any
right they may otherwise have to cause any such action or
proceeding to be brought or tried elsewhere. The parties hereunder
further agree that (i) any request for arbitration shall be made in
writing and must be made within a reasonable time after the claim,
dispute or other matter in question has arisen; provided however,
that in no event shall the demand for arbitration be made after the
date that institution of legal or equitable proceedings based on
such claim, dispute or other matter would be barred by the
applicable statue(s) of limitations; (ii) the appointed arbitrator
must be a former or retired judge or attorney at law with at least
ten (10) years experience in commercial matters; (iii) costs and
fees of the arbitrator shall be borne by both parties equally,
unless the arbitrator or arbitrators determine otherwise; (iv)
depositions may be taken and other discovery may be obtained during
such arbitration proceedings to the same extent as authorized in
civil judicial proceedings; and (v) the award or decision of the
arbitrator, which may include equitable relief, shall be final and
judgment may be entered on such award in accordance with applicable
law in any court having jurisdiction over the matter.
(b) TO
THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(c) The
parties acknowledge and agree that money damages may not be a
sufficient remedy for a breach of certain provisions of this
Agreement, including but not limited to, Article III, and
accordingly, a non-breaching party may be entitled to specific
performance and injunctive relief as remedies for such violation.
Accordingly, notwithstanding the other provisions of this Section
4.6, the parties agree that a non-breaching party may seek relief
in a court of competent jurisdiction for the purposes of seeking
equitable relief hereunder, and that such remedies shall not be
deemed to be exclusive remedies for a violation of the terms of
this Agreement but shall be in addition to all other remedies
available to the non-breaching party at law or in
equity.
(d) In
any action, arbitration or other proceeding by which one party
either seeks to enforce its rights under this Agreement or seeks a
declaration of any rights or obligations under this Agreement, the
prevailing party will be entitled to reasonable attorneys’
fees, and subject to Section 4.6(a), reasonable costs and expenses
incurred to resolve such dispute and to enforce any final
judgment.
(e) No
remedy conferred on either party by any of the specific provisions
of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy will be cumulative and will be in
addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise. The
election of one or more remedies by a party will not constitute a
waiver of the right to pursue other available
remedies.
4.7
Interpretation
.
Titles and headings of sections of this Agreement are for
convenience of reference only and shall not affect the construction
of any provision of this Agreement. No provision of this Agreement
shall be construed in favor of or against any party by reason of
the extent to which the party or the party’s counsel
participated in the drafting hereof.
4.8
Assignment
.
This Agreement and the rights, duties, and obligations hereunder
may not be assigned or delegated by any party without the prior
written consent of the other party. Any assignment or delegation of
rights, duties, or obligations hereunder made without the prior
written consent of the other party shall be void and be of no
effect. Notwithstanding the foregoing provisions of this Section
4.8, the Company may assign or delegate its rights, duties and
obligations hereunder to any person or entity controlling,
controlled by, or under common control with the Company or any
person or entity which acquires substantially all of the business
or assets of the Company.
4.9
Successors and
Assigns
. This Agreement and the provisions hereof shall be
binding upon and shall inure to the benefit of each of the parties
and their respective permitted successors and assigns.
4.10
Counterparts
.
This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which taken together shall
constitute but one and the same instrument. Signatures on this
Agreement may be communicated by facsimile or PDF transmission and
shall be binding upon the parties transmitting the
same.
IN
WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year first written above.
Effective
Date: April 13, 2018
Company
AutoWeb,
Inc.
By:
/s/ Glenn E. Fuller
Glenn
E. Fuller
EVP,
Chief Legal and Administrative
Officer
and Secretary
“
Consultant”
Jeffrey
H. Coats
Jeffrey
H. Coats
Exhibit A
Consulting Services Schedule
Consultant Name
:
Jeffrey H.
Coats
Consultant Contact Information
for Notice
Purposes
:
Jeffrey H.
Coats
[Personal
Residence
Address
Redacted]
Consulting Services
: Consultant will make himself available
on an as-needed basis (subject to reasonable notice and at
reasonable times not interfering with Consultant’s subsequent
employment with any new employer), to provide, and will provide,
transition support services for the Company’s chief
executive, governmental reporting, strategic transactions and
investor relation functions and such other related areas as may be
requested by the Company’s Chief Executive Officer or Board
of Directors.
Consulting Time
: The Company and Consultant shall agree in
advance upon the number of hours to be spent by Consultant in the
performance of the Consulting Services, which agreement may be in
the form of a “not to exceed” number of hours during
weekly or monthly periods or hours specified for individual
projects. In no event shall Consultant exceed the agreed upon hours
without Company’s prior written approval.
The
Company and Consultant shall agree in advance upon the number of
hours to be spent by Consultant in the performance of the
Consulting Services, which agreement may be in the form of a
“not to exceed” number of hours during weekly or
monthly periods or hours specified for individual projects. In no
event shall Consultant be required or permitted to perform services
under this Agreement at a level during any monthly period that is
greater than twenty percent (20%) of the average level of service
that Consultant performed for the Company during the 36-month
period immediately preceding the Termination Date. The parties
acknowledge that during the 36-month period immediately preceding
the Termination Date, Consultant worked an average of approximately
60 hours per week for the Company.
Consulting Consideration
: As consideration for the
performance of the commitments and obligations made by Consultant
in this Agreement, the Company and Consultant agree as
follows:
1.
Consulting
Fees
. The Company will pay Consultant a monthly consulting
fee equal to Twenty-two Thousand Nine Hundred Sixteen Dollars
($22,916.00) (“
Monthly
Consulting Fee
”) An amount equal to One Hundred
Thirty-seven Thousand Four Hundred Ninety-six Dollars ($137,496.00)
(“
Prepaid Monthly Consulting
Fee
”), representing the first six months of the
Monthly Consulting Fee (“
Prepaid Fee Period
”), shall be
prepaid to Consultant within five (5) business days of the
Effective Date. If prior to the end of the Prepaid Fee Period,
Consultant or Company terminate this Consulting Agreement in
accordance with the termination provisions of Section 1.2,
Consultant shall repay the amount of the Prepaid Monthly Consulting
Fee that equals the total of the Prepaid Monthly Consulting Fee,
prorated based on the number of days in the Prepaid Fee Period
remaining after the effective date of the termination over the
total number of days in the Prepaid Fee Period.
2.
Stock
Options
.
(a) Any
of the stock options to purchase common stock of the Company listed
below that were awarded to Consultant during Consultant’s
employment by the Company (“
Employment Stock
Options
”)
(b) Any
post-employment termination exercise windows for Employment Stock
Options that are vested as of the end of the Consulting Term shall
be tolled during the Consulting Term and shall not commence running
until the end of the Consulting Term; provided, however, that in no
event will the post-termination exercise windows extend beyond the
original expiration dates of the Employee Stock Options as set
forth in the stock option award agreements for such Employee Stock
Options. Notwithstanding the foregoing, in no event shall any
Employee Stock Options shall be exercisable after the original
expiration dates of the Employee Stock Options as set forth in the
stock option award agreements for such Employee Stock
Options.
(c) The
applicable provisions of the stock option award agreements for the
Employee Stock Options are hereby amended to provide for the
vesting continuation and post-termination exercise window tolling
as set forth in clauses (a) and (b) of this paragraph
2.
Grant Name
|
Grant Date
|
Grant Price
|
Original Options Granted
|
Options Vested as of Employment Termination Date
|
Options Unvested as of Employment Termination Date
|
Original
Post Termination of Employment Exercise Window
|
|
Expire Date
|
11/03/2008 NQ $0.77
00SO
|
11/3/2008
|
$3.85
|
1,000
|
1,000
|
0
|
May
exercise for a period of three (3) months following termination as
a member of the Board
|
|
11/3/2018
|
04/03/2009 NQ $0.35
00SO
|
4/3/2009
|
$1.75
|
63,226
|
30,736
|
0
|
May
exercise for a period of two (2) years following termination
(options will expire prior to 2 year post-term exercise
period)
|
|
4/3/2019
|
04/03/2009 NQ $0.35
01RO
|
4/3/2009
|
$1.75
|
36,775
|
36,775
|
0
|
May
exercise for a period of two (2) years following termination
(options will expire prior to 2 year post-term exercise
period)
|
|
4/3/2019
|
04/03/2009 NQ $0.35
04RO
|
4/3/2009
|
$1.75
|
100,000
|
100,000
|
0
|
May
exercise for a period of two (2) years following termination
(options will expire prior to 2 year post-term exercise
period)
|
|
4/3/2019
|
1/10/12
NQ $0.78 10IP Performance
|
1/10/2012
|
$3.90
|
37,692
|
37,692
|
0
|
May
exercise for a period of 90 days following termination
|
|
1/10/2019
|
1/24/13
NQ $4.00 10IP Performance
|
1/24/2013
|
$4.00
|
22,500
|
22,500
|
0
|
May
exercise for a period of 90 days following termination
|
|
1/24/2020
|
1/21/14
NQ $17.64 10IP
|
1/21/2014
|
$17.64
|
50,000
|
50,000
|
0
|
May
exercise for a period of 90 days following termination
|
|
1/21/2021
|
3/17/14
NQ $14.32 10IP
|
3/17/2014
|
$14.32
|
37,000
|
37,000
|
0
|
May
exercise for a period of 12 months following
termination
|
|
3/17/2021
|
1/23/15
NQ $10.20 2014IP
|
1/23/2015
|
$10.20
|
30,000
|
30,000
|
0
|
May
exercise for a period of 90 days following termination
|
|
1/23/2022
|
1/21/16
NQ $17.09 2014 IP
|
1/21/2016
|
$17.09
|
150,000
|
150,000*
|
0
|
May
exercise for a period of 12 months following
termination
|
|
1/21/2023
|
1/21/16
NQ $17.09 2014 IP - Market Performance
|
1/21/2016
|
$17.09
|
100,000
|
100000*
|
0
|
May
exercise for a period of 12 months following
termination
|
|
1/21/2023
|
*
Options accelerated due to termination without
cause.
Consultant
acknowledges that Consultant shall continue to be governed by and
subject to the Company’s Securities Trading Policy during the
Consulting Term.
Company
Equipment and Use and Access to Company Systems
During
the Term, the Company, in its discretion, may make available to
Consultant a Company-standard laptop computer for use in providing
the Consulting Services. All such Company equipment shall be
returned to the Company at the end of the Term or at any time upon
request by the Company. Consultant agrees that Consultant will
comply with all Company policies and procedures, including those
set forth below, regarding the use of Company equipment and systems
as if Consultant were employed by the Company:
Information Security and Consumer Privacy
The Company has implemented IT Policies and
Procedures to ensure reasonable controls are in place to assure
confidentiality of and to safeguard sensitive and proprietary
information. It is the responsibility of every employee to
understand and follow these IT Policies and Procedures. Any Policy
violations, whether or not resulting in the compromise of sensitive
information or the degradation of computing systems, may be subject
the employee to disciplinary action up to and including termination
of employment,
and
may also be subject the employee to criminal
prosecution.
Company Tools
The Company entrusts employees with the use of
computers, electronic mail, telephones, mail, written
documentation, and similar property. These items are provided to
the
employees to assist with the efficient operations
of the Company. Therefore, all records, files, software, data, and
electronic communications contained in these systems also are the
property of the Company.
Communications Systems
The
Company’s communication systems, including computers,
handheld devices, networks, telephones, voice mail, instant
messaging, and all data, files, and applications, are the property
of the Company. All materials and information created, transmitted
or stored on or through these systems are the property of the
Company, they are not private, and may be accessed by authorized
personnel at any time. Users should not have any expectation of
privacy with respect to such materials and information. Company
communication systems hardware, and any data collected, downloaded
and/or created on Company communication systems as described above
is the exclusive property of the Company and may not be copied or
transmitted to any outside party without prior written management
approval or used for any purpose not directly related to the
business of the Company.
Upon
termination of employment, no employee shall remove any software or
data from Company-owned computers unless the employee’s
supervisor and Human Resources have given authorization. Any
unauthorized access or use of the Company computer or other
communication systems is strictly prohibited.
The
Company reserves the right to assign and/or change
“passwords” and personal codes for voice mail, e-mail,
and computer. The use of passwords to limit access to these systems
is only intended to prevent unauthorized access to these systems
and records. Additionally, these systems are subject to inspection,
search and/or monitoring by Company personnel for any number of
business reasons. Accordingly, these systems and equipment should
not be used to transmit confidential personal
messages.
System Integrity
Because
files or programs introduced from external sources may expose the
Company to malicious software such as viruses, employees are not
permitted to connect personal computing devices to the Company
network, download from the Internet files or software programs
including freeware or shareware, or use personal disks or copies of
software or data in any form on any Company computer without
written authorization from the IT Operations Supervisor or in
accordance with IT Policies and Procedures.
Any employee who introduces a virus into the
Company’s system via use of unauthorized software or data
shall be deemed guilty of gross negligence and/or willful
misconduct and
will be held
responsible for the consequences
(in accordance with applicable law), as well as be
subject to disciplinary action, up to and including termination of
employment.
Employees
are prohibited from using Company communication systems in any way
that may be disruptive, embarrassing or offensive to others,
including, but not limited to, the transmission of sexually
explicit messages or cartoons, ethnic or racial slurs, or anything
that may be construed as harassment or disparagement of others. The
Company’s Policy Against Sexual Harassment and Other
Workplace Harassment applies to e-mail usage and other
communications systems usage.
To
ensure that electronic and telephone communication systems and
business equipment are being used properly and in compliance with
this policy and for other business purposes, the Company, without
notice, may periodically access, display, copy or listen to any
information, files, data, message(s), or communication(s) sent,
received, created, or stored through or in its system(s), at any
time, in accordance with applicable law.
E-mail Etiquette
Employees should
use e-mail to deliver messages in the same professional and
courteous business manner they would other messages and
correspondence.
Internet Usage
Internet Usage includes, without limitation, accessing the World
Wide Web, Instant Messaging, Internet email and chat
rooms.
It is the nature of our business to allow Internet usage in daily
activities. However, access to the Internet is provided for
business purposes. Employees are not to access the Internet for
personal reasons during Company time. Employees found to be abusing
this tool may be disciplined,
up to and including termination of
employment.
The
Company may monitor Internet use, including reviewing the list of
sites accessed by any individual terminal. Your Internet use is not
private. No employee should have any expectation of privacy
regarding Internet usage. The Company reserves the right to inspect
an employee’s computer anytime or to use monitoring software
in order to monitor Internet and computer use.
All
employees are prohibited from accessing or attempting to access any
sites that contain sexual, vulgar, derogatory, harassing or
offensive material. Unauthorized use of the Internet, including
connecting, posting, or downloading sexually-oriented information,
engaging in computer-hacking and related activities, and attempting
to disable or compromise the security of information contained in
the Company’s communications systems, is strictly
prohibited.
Using
the Internet to commit or participate in acts that could be
considered sexual harassment, racial harassment, religious
harassment or any other form of prohibited or illegal harassment is
strictly prohibited. The Company’s Policy Against Sexual
Harassment and Other Workplace Harassment applies to Internet
use.
The
Internet should not be used to post, distribute, participate in or
exchange offensive jokes, chain letters, pyramid schemes or other
similar matter. Some specific examples of prohibited uses include
but are not limited to:
●
Sending
confidential or copyrighted materials without prior
authorization.
●
Soliciting
personal business opportunities, or personal
advertising.
●
Day
trading, or otherwise purchasing or selling stocks, bonds or other
securities or transmitting, retrieving, downloading or storing
messages or images related to the purchase or sale of stocks, bonds
or other securities.
BLOGS
AND ON-LINE DISCUSSIONS
Personal
Blog Guidelines
AutoWeb
Personal Blog Guidelines have been developed for employees who
maintain personal blogs that contain postings about AutoWeb’s
business, products, or fellow employees and the work that they do.
They are also applicable to employees who post about the Company on
the blogs of others or during employees’ participation in
on-line forums (such as chat rooms, message boards, and discussion
groups). The guidelines outline the legal implications of blogging
about the Company and discussing the Company in on-line forums and
also include recommended practices to consider when posting about
AutoWeb. We encourage employees who want to blog or participate in
on-line forums to think carefully about what they intend to
publish. You should avoid comments about managers or co-workers
that are disrespectful, critical, or could be construed as
harassing or discriminatory in nature. Verify your facts before you
publish. You should not discuss the Company’s customers or
vendors without their explicit prior approval (and you should work
through your supervisor to obtain such approval if necessary). If
your blog or post concerns the Company or your job, you should
prominently display a disclaimer stating that you are expressing
only personal opinions that are not endorsed by and do not
represent the opinion or viewpoints of the Company.
Legal
Liability
You are
legally responsible for anything you post on your blog. Individual
bloggers can be held personally responsible for any commentary
deemed to be defamatory, obscene, proprietary, or libelous whether
they pertain to AutoWeb, its employees, or other people. For those
reasons, bloggers should exercise caution with regard to
exaggeration, colorful language, guesswork, obscenity, copyrighted
materials, legal conclusions, and derogatory remarks or
characterizations. In short, when you blog on your blog or the blog
of others or participate in on-line forums, you post at your own
risk! Outside parties can pursue legal actions against you for your
postings.
Company
Privileged Information
Remember that blogs
and other media may be public and accessible to third parties,
including the Company’s competitors, vendors and customers.
Any and all confidential, proprietary, trade secret information or
material non-public information about the Company as outlined in
the Confidential and Proprietary Information and Inventions
Agreement or its personnel is off-limits and cannot be published.
In addition, AutoWeb logo and trademarks cannot be used, and you
may not publish AutoWeb policies, strategies, or any non-pubic
financial information, product offerings, or similarly private
information.
Press
Inquiries
Blog
postings may generate media coverage. If a member of the media
contacts you about an AutoWeb related blog posting or requests
AutoWeb information of any kind, please refer the matter to the
Corporate Public Relations Department.
Please
remember that the Company may monitor blogs or Company-related chat
rooms or discussion groups. If you fail to abide by the above
guidelines or the Company’s policies, you may be subject to
legal or disciplinary action by the Company or others. If you have
any questions or concerns about this policy, please contact the
Human Resources Department.
INSTANT MESSAGES
The
Company e-mail systems are the preferred method of business
communication because they comply with our needs for record
keeping. Not all of the instant messaging systems are tracked and
documented as required by SOX for business communications.
Therefore, if you are giving directions, directing activities,
communicating changes to business processes or any other actions
that have a business impact, please use the e-mail system so that
we have appropriate records retention and audit
trails.
Violation
of this policy may result in disciplinary action, up to and
including termination of employment. Please contact the Human
Resources Department with any questions regarding this
policy.
USER FILE STORAGE
Our
“Path to Profitability” includes controlling our
infrastructure costs by managing our resources effectively. As our
online file space grows, so does the cost of storing, maintaining,
and backing up all of this data. The Company is always looking for
ways to be more efficient with resources, but we will need your
help and cooperation to be successful! The following plan outlines
our approach to manage e-mail resources, but the same philosophy
applies to all online file storage.
●
All
users have an allocated amount of storage on the e-mail
servers.
●
All
users have an allocated amount of storage on the file server for
business related material (home directory).
●
Any
accounts using more than their allotted space will be restricted
immediately.
●
Personal
picture and music files must not be placed on the
system.
●
Users
may contact the Service Desk for assistance with setting up storage
options such as achiving .pst files and other business required
data.
●
Users
are prohibited from storing any copyrighted, patented, or
non-business files on their local PC or home directory. This
includes, but is not limited to, MP3 files, movies, sound clips,
and pictures.
●
Non-secure
files relating to job function and needing to be shared should be
placed in an appropriate department or public folder.
●
Storing
consumer or customer information on local PCs or backup media that
is not in accordance with IT Policies or Procedures is strictly
prohibited.
●
When
any assistance is needed please email
“HelpMe@AutoWeb.com” and the Service Desk will assist
you.
Keep
in mind that there is no personal or private use of computer
equipment in the work environment. All computer resources are the
property of the Company and may be monitored by authorized
personnel at anytime. Employees should have no expectation of
privacy with respect to the Company’s computer
systems.
PERSONAL TELEPHONE CALLS AND USE OF COMPANY SUPPLIES
We
have a limited number of telephone lines at the Company, and it is
essential that we keep those lines open for business calls.
Therefore, we ask our employees to refrain from making or receiving
personal calls except, of course, in emergencies.
All
employees are also asked to use their personal long distance
calling card or personal credit card when making personal long
distance calls.
Personal use of
Company owned property, such as office supplies, postage, etc., are
prohibited. Use your common sense when using Company owned
property.
Enforcement
Violations of this
policy may result in disciplinary action, up to and including
termination of employment. Employees who damage the Company’s
computer system through its unauthorized use may additionally be
liable for the costs resulting from such damage. Employees who
misappropriate copyrighted or confidential and proprietary
information, or who distribute harassing messages or information,
also may be subject to criminal prosecution and/or substantial
civil monetary damages.