UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For
the quarterly period ended June 30, 2018
or
[
]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
to
.
Commission file number 1-34761
AutoWeb,
Inc.
(Exact name of registrant as specified in its charter)
Delaware
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33-0711569
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification Number)
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18872 MacArthur Boulevard, Suite 200, Irvine,
California
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92612
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(Address of principal executive offices)
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(Zip Code)
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(949) 225-4500
(Registrant’s telephone number, including area
code)
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [
]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes
[X] No [ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
Large accelerated filer [ ]
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Accelerated filer [X]
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Emerging growth company [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [X
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(Do not check if a smaller
reporting company)
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards pursuant to Section 13(a) of the Exchange Act. [
]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ]
No [X]
As of July 30, 2018, there were
12,947,950
shares of the Registrant’s Common Stock,
$0.001 par value, outstanding.
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Page
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PART I. FINANCIAL INFORMATION
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PART II. OTHER INFORMATION
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P
ART I. FINANCIAL
INFORMATION
Item 1.
Financial
Statements
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands, except share and per-share
data)
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Assets
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Current
assets:
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Cash
and cash equivalents
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$
18,271
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$
24,993
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Short-term
investment
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255
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254
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Accounts
receivable, net of allowances for bad debts and customer credits of
$659 and $892 at June 30, 2018 and December 31, 2017,
respectively
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24,064
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25,911
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Prepaid
expenses and other current assets
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1,376
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1,805
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Total
current assets
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43,966
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52,963
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Property
and equipment, net
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3,702
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4,311
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Investments
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100
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100
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Intangible
assets, net
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25,755
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29,113
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Goodwill
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—
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5,133
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Long-term
deferred tax asset
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—
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692
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Other
assets
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1,233
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601
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Total
assets
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$
74,756
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$
92,913
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Liabilities and Stockholders’ Equity
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Current
liabilities:
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Accounts
payable
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$
8,895
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$
7,083
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Accrued
employee-related benefits
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2,697
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2,411
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Other
accrued expenses and other current liabilities
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7,649
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7,252
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Current
convertible note payable
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1,000
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—
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Total
current liabilities
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20,241
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16,746
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Convertible
note payable
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—
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1,000
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Borrowings
under revolving credit facility
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—
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8,000
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Total
liabilities
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20,241
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25,746
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Commitments
and contingencies (Note 10)
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—
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—
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Stockholders’
equity:
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Preferred
stock, $0.001 par value, 11,445,187 shares authorized
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Series
A Preferred stock, none issued and outstanding
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—
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—
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Common
stock, $0.001 par value; 55,000,000 shares authorized and
12,947,950 and 13,059,341 shares issued and outstanding at June 30,
2018 and December 31, 2017, respectively
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13
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13
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Additional
paid-in capital
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358,898
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356,054
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Accumulated
deficit
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(304,396
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(288,900
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Total
stockholders’ equity
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54,515
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67,167
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Total
liabilities and stockholders’ equity
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$
74,756
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$
92,913
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See accompanying notes to unaudited consolidated condensed
financial statements.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF
OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Amounts in thousands, except per-share data)
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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Revenues:
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Lead
fees
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$
22,211
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$
26,347
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$
46,291
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$
55,439
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Advertising
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6,950
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7,999
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15,037
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15,967
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Other
revenues
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131
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245
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313
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526
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Total
revenues
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29,292
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34,591
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61,641
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71,932
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Cost
of revenues
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23,765
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23,955
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48,423
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48,385
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Gross
profit
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5,527
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10,636
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13,218
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23,547
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Operating
expenses:
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Sales
and marketing
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3,052
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3,229
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6,764
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6,992
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Technology
support
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2,965
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3,188
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6,351
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6,441
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General
and administrative
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3,765
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2,766
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8,340
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6,223
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Depreciation
and amortization
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1,163
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1,201
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2,323
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2,430
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Goodwill
impairment
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—
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—
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5,133
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—
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Total
operating expenses
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10,945
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10,384
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28,911
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22,086
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Operating
income (loss)
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(5,418
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252
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(15,693
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1,461
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Interest
and other income (expense), net
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201
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(96
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201
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(196
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Income
(loss) before income tax provision (benefit)
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(5,217
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156
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(15,492
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1,265
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Income
tax provision (benefit)
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—
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(166
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4
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459
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Net
income (loss) and comprehensive income (loss)
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$
(5,217
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$
322
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$
(15,496
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$
806
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Basic
earnings (loss) per common share
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$
(0.41
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$
0.03
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$
(1.22
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$
0.07
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Diluted
earnings (loss) per common share
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$
(0.41
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$
0.02
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$
(1.22
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$
0.06
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See accompanying notes to unaudited consolidated condensed
financial statements.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOWS
(Amounts in thousands)
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Six Months Ended
June 30,
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Cash
flows from operating activities:
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Net
income (loss)
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$
(15,496
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$
806
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Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
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Depreciation
and amortization
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4,360
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3,663
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Goodwill
impairment
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5,133
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—
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Provision
for bad debts
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146
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76
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Provision
for customer credits
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153
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7
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Share-based
compensation
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2,569
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1,955
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Gain
on sale of investment
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(125
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—
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Loss
on disposal of assets
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—
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7
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Change
in deferred tax asset
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692
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124
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Changes
in assets and liabilities:
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Accounts
receivable
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1,548
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8,332
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Prepaid
expenses and other current assets
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428
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(548
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Other
assets
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(632
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106
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Accounts
payable
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1,812
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(1,273
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Accrued
expenses and other current liabilities
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683
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(3,282
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Net
cash provided by operating activities
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1,271
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9,973
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Cash
flows from investing activities:
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Purchases
of property and equipment
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(392
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(996
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Proceeds
from sale of investment
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125
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—
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Net
cash used in investing activities
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(267
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(996
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Cash
flows from financing activities:
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Payments
on term loan borrowings
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—
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(3,938
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Payment
on revolving credit facility
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(8,000
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—
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Proceeds
from issuance of common stock
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200
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—
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Proceeds
from exercise of stock options
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74
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1,004
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Net
cash used in financing activities
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(7,726
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(2,934
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Net
(decrease) increase in cash and cash equivalents
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(6,722
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6,043
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Cash
and cash equivalents, beginning of period
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24,993
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38,512
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Cash
and cash equivalents, end of period
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$
18,271
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$
44,555
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Supplemental
disclosure of cash flow information:
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Cash
paid for income taxes
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$
—
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$
445
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Cash
paid for interest
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$
88
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$
558
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See accompanying notes to unaudited consolidated condensed
financial statements.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS
1. Organization and Operations
AutoWeb, Inc. (“
AutoWeb
” or the “
Company
”) is a
digital marketing company for
the automotive industry that assists automotive retail dealers
(“
Dealers
”) and
automotive manufacturers (“
Manufacturers
”) market and sell
new and used vehicles to consumers by utilizing the Company’s
digital sales enhancing products and services.
The Company’s consumer-facing automotive
websites (“
Company
Websites
”) provide
consumers with information and tools to aid them with their
automotive purchase decisions and gives in-market consumers the
ability to connect with Dealers regarding purchasing or leasing
vehicles. These consumers are connected to Dealers via the
Company’s various programs for online lead referrals
(“
Leads
”)
. The AutoWeb® consumer
traffic referral product engages with car buyers from
AutoWeb’s network of automotive websites and uses the
Company’s proprietary technology to present them with highly
relevant offers based on their make and model of interest and their
geographic location. The Company then directs these in-market
consumers to key areas of a Dealer’s or Manufacturer’s
website to maximize conversion for sales or other products or
services.
The
Company was incorporated in Delaware on May 17, 1996. Its
principal corporate offices are located in Irvine, California. The
Company’s common stock is listed on the NASDAQ Capital Market
under the symbol AUTO.
On
October 9, 2017, the Company changed its name from Autobytel Inc.
to AutoWeb, Inc., assuming the name of AutoWeb, Inc., which was the
name of the company that the Company acquired in October 2015. In
connection with this name change, the Company changed its stock
ticker symbol from “ABTL” to “AUTO” on the
NASDAQ Capital Market.
2. Basis of Presentation
The accompanying unaudited consolidated condensed
financial statements are presented on the same basis as the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2017 (“
2017 Form 10-K
”)
filed with the Securities and Exchange Commission
(“
SEC
”). AutoWeb has made its
disclosures in accordance with U.S. generally accepted accounting
principles (“
GAAP
”) for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the
information and footnotes required by GAAP for complete financial
statements. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary
for a fair presentation with respect to interim financial
statements, have been included. Certain amounts have
been reclassified from the prior year presentation to conform to
the current year presentation. The consolidated condensed
statements of operations and comprehensive income (loss) and cash
flows for the periods ended June 30, 2018 and 2017 are not
necessarily indicative of the results of operations or cash flows
expected for the year or any other period. The unaudited
consolidated condensed financial statements should be read in
conjunction with the audited consolidated financial statements and
the notes thereto in the 2017 Form
10-K.
3. Recent Accounting Pronouncements
Issued but not yet adopted by the Company
Accounting Standards
Codification 220 “Comprehensive Income.”
In
February 2018, the
Financial
Accounting Standards Board (“
FASB
”) Accounting Standards Update
(“
ASU
”)
2018-02, “Reclassification
of Certain Tax Effects from Accumulated Other Comprehensive
Income” was issued. The new guidance allows a
reclassification from accumulated other comprehensive income to
retained earnings for stranded tax effects resulting from the Tax
Cuts and Jobs Act (“
TCJA
”) and will improve the
usefulness of information reported to financial statement users.
The ASU will take effect for all
entities for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2018. The Company believes this
ASU will not have a material effect on the consolidated financial
statements and related disclosures.
Accounting Standards
Codification 842 “Leases.”
In February 2016, the FASB issued Accounting
Standards Update No. 2016-02 (Topic 842) “Leases.”
Topic 842 supersedes the lease requirements in Accounting Standards
Codification (“
ASC
”) Topic 840, “Leases.” Under
Topic 842, lessees are required to recognize operating lease
obligations on their balance sheets by recording the rights
(“assets”) and obligations (“liabilities”)
created by those leases. As currently issued, entities are required
to use a modified retrospective approach for leases that exist or
are entered into after the beginning of the earliest comparative
period in the financial statements. The Company is evaluating the
impact of ASC 842, inclusive of ASUs that have been issued
subsequent to ASU No. 2016-02, that expand technical guidance,
outline optional practical expedients, improve transition method,
or provide further guidance on transition to or implementation of
the new accounting standard.
Below
is a list of related ASUs that the Company includes in its
evaluation of ASC 842:
Standard
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Description
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Date Issued
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ASU No. 2018-10
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“Leases - Codification Improvements to Topic 842,
Leases”
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July 2018
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ASU No. 2018-01
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“Leases (Topic 842): Land Easement Practical Expedient for
Transition to Topic 842”
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January 2018
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The Company believes that adoption of ASC 842 will have a
significant impact on the Company’s balance sheet. Under
current accounting guidelines, the Company’s office-related
leases are operating lease arrangements, in which rental payments
are treated as operating expenses and there is no recognition of
rights-of-use assets or liabilities related to lease obligations.
The requirements are effective for financial statements for annual
periods and interim periods within those annual periods beginning
after December 15, 2018, and early adoption is permitted. The
Company will adopt Topic 842 effective January 1, 2019 and expects
to elect certain available transitional practical
expedients.
Recently adopted by the Company
Accounting Standards
Codification 606 “Revenue from Contracts with
Customers.”
In
May 2014, ASU No. 2014-09, “Revenue from Contracts with
Customers (Topic 606)” was issued.
The new
standard sets forth a single comprehensive model for recognizing
and reporting revenue
and requires the
use of a five-step methodology to depict the transfer of promised
goods and services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for those goods or services.
Additionally,
the ASU requires enhanced disclosure
regarding revenue recognition.
On January 1, 2018, the
Company adopted ASC 606 using the modified retrospective transition
method, which had no material impact on operations, and required no
cumulative adjustment to be made to beginning retained earnings on
January 1, 2018. As such, results for reporting periods beginning
after January 1, 2018 are presented under ASC 606, while prior
period amounts have not been adjusted.
See Note 4 for further
discussion.
Accounting Standards
Codification 805 “Business
Combinations.”
In January 2017, ASU No. 2017-01,
“Clarifying the Definition of a Business” was
issued. This ASU provides a more robust framework to use
in determining when a set of assets and activities is a
business. The Company adopted this ASU on January 1,
2018 and it did not have a material effect on the consolidated
financial statements.
Accounting Standards
Codification 718 “Compensation – Stock
Compensation.”
In May 2017, ASU No. 2017-09, “Scope of
Modification Accounting” was issued. The
amendments in this update provide guidance about which changes to
the terms or conditions of a share-based payment award require an
entity to apply modification accounting in Topic 718. An entity
should apply this ASU on a prospective basis for an award modified
on or after the adoption date for annual periods, and interim
periods within those annual periods, beginning after December 15,
2017. Additionally, in June 2018, FASB issued ASU No. 2018-07,
“Compensation—Stock Compensation (Topic 718):
Improvements to Nonemployee Share-Based Payment Accounting.”
The update largely aligns the accounting for share-based payment
awards issued to employees and nonemployees, particularly with
regard to the measurement date and the impact of performance
conditions. Under the new guidance, the existing employee guidance
will apply to nonemployee share-based transactions (as long as the
transaction is not effectively a form of financing). The cost of
nonemployee awards will continue to be recorded as if the grantor
had paid cash for the goods or services. In addition, the
contractual term will be able to be used in lieu of an expected
term in the option-pricing model for nonemployee awards. The
Company adopted both ASUs in the current year and, as such,
results for reporting periods beginning after January 1, 2018 are
presented under AS
U No. 2017-09 and
ASU No. 2018-07
, while prior period amounts have not been
adjusted.
See Note 6 for further
discussion.
4. Revenue Recognition
Revenue
is recognized upon transfer of control of promised goods or
services to the Company’s customers, or when performance
obligations under contract have been satisfied, in an amount that
reflects the consideration the Company expects to be entitled to in
exchange for those goods or services. Further, under ASC 606,
contract assets or contract liabilities that arise from a past
performance but require a further performance obligation to be
satisfied as a condition of settlement must be identified and
recorded on the balance sheet until respectively
settled.
The
Company performs the following steps in order to properly determine
revenue recognition and identify relevant contract assets and
contract liabilities:
●
identify
the contract with a customer;
●
identify
the performance obligations in the contract;
●
determine
the transaction price;
●
allocate
the transaction price to the performance obligations in the
contract; and
●
recognize
revenue when, or as, the Company satisfies a performance
obligation.
Accounting Policy - Revenue Recognition
The
Company earns revenue by providing leads, advertising, and mobile
products and services used by Dealers and Manufacturers in their
efforts to market and sell new and used vehicles to consumers. The
Company enters into contracts that can include various combinations
of products and services, which are generally capable of being
distinct and accounted for as separate performance obligations. The
Company records revenue on distinct performance obligations at a
single point in time, when control is transferred to the customer,
which is consistent with past practice.
The
Company has three main revenue sources – Lead fees,
advertising, and other revenue. Accordingly, the Company recognizes
revenue for each source as described below:
●
Lead fees -
paid by Dealers and Manufacturers
participating in the Company’s Lead programs and are
comprised of Lead transaction and/or monthly subscription fees.
Lead fees are recognized in the period when service is
provided.
●
Advertising -
fees paid by Dealers and Manufacturers
for (i) display advertising on the Company’s websites and
(ii) fees from the Company’s click program. Revenue is
recognized in the period advertisements are displayed on the
Company’s websites or the period in which clicks have been
delivered, as applicable.
The Company recognizes gross
revenue from the delivery of action-based ads in the period in
which a user takes the action for which the marketer contracted for
with the Company. For advertising revenue arrangements where the
Company is not the principal, the Company recognizes revenue on a
net basis.
●
Other revenues
-
consists primarily of revenues from our mobile
products and revenues from the Company’s Reseller Agreement
with SaleMove, Inc. Revenue is recognized in the period in which
products or services are sold.
Variable Consideration
The
Company’s products, namely Leads, are generally sold with a
right-of-return for services that do not meet customer requirements
as specified by the contract. Rights-of-return are estimable, and
provisions for estimated returns are recorded as a reduction in
revenue by the Company in the period revenue is recognized, and
thereby accounted for as variable consideration. The Company
includes the allowance for customer credits in its net accounts
receivable balances on the Company’s balance sheet at period
end, which is consistent with past practice. Allowance for customer
credits totaled $166,000 and $213,000 as of June 30, 2018 and
December 31, 2017, respectively.
See
further discussion below on significant judgments exercised by the
Company in regard to variable consideration.
Contract Assets and Contract Liabilities
Unbilled Revenue
Timing
of revenue recognition may differ from the timing of invoicing to
customers. The Company records a receivable when revenue is
recognized prior to invoicing. From time-to-time, the Company may
have balances on its balance sheet representing revenue that has
been recognized, but not-yet invoiced, for which the Company has
satisfied contract performance obligations and has a right to
receive payment. These receivable balances are driven by the timing
of administrative transaction processing, and not indicative of
partially complete performance obligations, or unbilled revenue.
Unbilled revenue represents revenue that is partially earned,
whereby control of promised services has not yet transferred to the
customer, and for which the Company has not earned the complete
right to payment. The Company had zero unbilled revenue included in
its consolidated balance sheets as of June 30, 2018 and December
31, 2017.
Deferred Revenue
The Company defers the recognition of revenue when
cash payments are received or due in advance of satisfying its
performance obligations, including amounts which are refundable.
Such activity is not a common practice of operation for the
Company.
The
Company had zero deferred revenue included in its consolidated
balance sheets as of June 30, 2018 and December 31,
2017.
Payment
terms and conditions can vary by contract type. Generally, payments
terms within our customer contracts include a requirement of
payment within 30 to 60 days from date of invoice. Typically,
customers make payments after receipt of invoice for billed
services, and less typically, in advance of rendered
services.
Practical Expedients and Exemptions
The
Company excludes from the transaction price all sales taxes related
to revenue producing transactions collected from the customer for a
governmental authority.
The
Company applies the new revenue standard requirements to a
portfolio of contracts (or performance obligations) with similar
characteristics for transactions where it is expected that the
effects on the financial statements of applying the revenue
recognition guidance to the portfolio would not differ materially
from applying this guidance to the individual contracts (or
performance obligations) within that portfolio.
The
Company generally expenses incremental costs of obtaining a
contract when incurred because the amortization period would be
less than one year. These costs primarily relate to sales
commissions and are recorded in selling, marketing and distribution
expense.
Significant Judgments
The
Company provides Dealers and Manufacturers with various
opportunities to market their vehicles to potential vehicle buyers,
namely via consumer lead and traffic referrals and online
advertising products and services. Proper revenue recognition of
digital marketing activities, as well as proper recognition of
assets and liabilities related to these activities, requires
management to exercise significant judgment with the following
items:
●
Arrangements with Multiple Performance
Obligations
-
The
Company enters into contracts with customers that often include
multiple products and services to a customer. Determining whether
products and/or services are distinct performance obligations that
should be accounted for singularly or separately may require
significant judgment.
●
Variable Consideration and Customer
Credits
-
The
Company’s products are generally sold with a right-of-return.
The Company sometimes may also provide customer credits or sales
incentives. These items are accounted for as variable consideration
when
determining the allocation of the
transaction price to performance obligations under a
contract.
The allowance for customer credits is an estimate
of adjustments for services that do not meet customer requirements.
Additions to the estimated allowance for customer credits are
recorded as a reduction of revenues and are based on the
Company’s historical experience of: (i) the amount of credits
issued; (ii) the length of time after services are rendered that
the credits are issued; (iii) other factors known at the time; and
(iv) future expectations. Reductions in the estimated allowance for
customer credits are recorded as an increase in revenues. As
specific customer credits are identified, they are charged against
this allowance with no impact on revenues.
Returns
and credits are measured at contract inception, with respective
obligations reviewed each reporting period or as further
information becomes available, whichever is earlier, and only to
the extent that it is probable that a significant reversal of any
incremental revenue will not occur.
The allowance for
customer credits is included in the net accounts receivable
balances of the Company’s balance sheets at of June 30, 2018
and December 31, 2017.
The
Company has not made any significant changes to judgments in
applying ASC 606 during the six months ended June 30,
2018.
Disaggregation of Revenue
The
Company disaggregates revenue
from contracts with customers by
revenue source and has determined that disaggregating revenue into
these categories sufficiently depicts the differences in the
nature, amount, timing, and uncertainty of its revenue streams. The
Company has three main sources of
revenue: lead fees, advertising, and other
revenues.
The
following table summarizes revenue from contracts with customers,
disaggregated by revenue source, for the three and six months ended
June 30, 2018 and 2017. Revenue is recognized net of allowances for
returns and any taxes collected from customers, which are
subsequently remitted to governmental authorities.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
Lead
fees
|
$
22,211
|
$
26,347
|
$
46,291
|
$
55,439
|
Advertising
|
|
|
|
|
Clicks
|
5,771
|
6,454
|
12,462
|
12,967
|
Display
and other advertising
|
1,179
|
1,545
|
2,575
|
3,000
|
Other
revenues
|
131
|
245
|
313
|
526
|
Total
revenue
|
$
29,292
|
$
34,591
|
$
61,641
|
$
71,932
|
5. Net Earnings
(Loss) Per Share and Stockholders’ Equity
Basic
net earnings (loss) per share is computed using the weighted
average number of common shares outstanding during the period,
excluding any unvested restricted stock. Diluted net earnings
(loss) per share is computed using the weighted average number of
common shares, and if dilutive, potential common shares
outstanding, as determined under the treasury stock and
if-converted methods, during the period. Potential common shares
consist of unvested restricted stock and common shares issuable
upon the exercise of stock options, the exercise of warrants, and
conversion of convertible notes.
The
Company used the following share amounts to compute the basic and
diluted net earnings (loss) per share for the three and six
months ended June 30, 2018 and 2017:
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
|
|
|
|
Basic
Shares:
|
|
|
|
|
Weighted
average common shares outstanding
|
12,920,591
|
11,259,472
|
12,965,520
|
11,143,313
|
Weighted
average unvested restricted stock
|
(194,505
)
|
(110,440
)
|
(293,646
)
|
(113,536
)
|
Basic
Shares
|
12,726,086
|
11,149,032
|
12,671,874
|
11,029,777
|
|
|
|
|
|
Diluted
Shares:
|
|
|
|
|
Basic
shares
|
12,726,086
|
11,149,032
|
12,671,874
|
11,029,777
|
Weighted
average dilutive securities
|
—
|
662,876
|
—
|
690,373
|
Incremental
shares from convertible preferred stock
|
—
|
1,532,371
|
—
|
1,605,813
|
Diluted
Shares
|
12,726,086
|
13,344,279
|
12,671,874
|
13,325,963
|
For the three and six months ended June 30, 2018,
the Company’s basic and diluted net loss per share are the
same since the Company generated a net loss for the period and
potentially dilutive securities are excluded from diluted net loss
per share because they have an anti-dilutive impact. For the three
and six months ended June 30, 2017, weighted average dilutive
securities included dilutive options, restricted stock awards, and
incremental shares issued in connection with the acquisition of
Autobytel, Inc. (formerly AutoWeb, Inc.)
(“
AWI
”)
that converted in the six months ended June 30, 2017.
For
the three and six months ended June 30, 2018, 4.2 and 4.3 million
of potentially anti-dilutive securities related to common stock
have been excluded from the calculation of diluted net earnings per
share, respectively. For both the three and six months ended June
30, 2017, 2.8 million of potentially anti-dilutive securities
related to common stock have been excluded from the calculation of
diluted net earnings per share.
On September 6, 2017, the Company announced that
its board of directors authorized the Company to repurchase up to
$3.0 million of the Company’s common stock.
Under the
repurchase program, the Company may repurchase common stock from
time to time on the open market or in private transactions. This
authorization does not require the Company to purchase a specific
number of shares, and the board of directors may suspend, modify or
terminate the program at any time. The Company will fund future
repurchases, if any, through the use of available cash. No
shares were repurchased during the three and six months ended June
30, 2018. As of June 30, 2018, $2.3 million remains available for
the Company to repurchase common stock.
On June 22, 2017, the Company obtained stockholder
approval for the issuance of shares of the Company’s
common stock upon (i) the conversion of the Company’s then
outstanding Series B Junior Participating Convertible Preferred
Stock, par value $0.001 per share (“
Series B Preferred
Stock
”); and (ii) the
conversion of shares of Series B Preferred Stock that would be
issued upon exercise of the AWI Warrant (described below). Upon
obtaining stockholder approval for the conversion, each outstanding
share of Series B Preferred Stock was automatically converted into
10 shares of the Company’s common stock, which resulted in
the outstanding shares of Series B Preferred Stock being converted
into 1,680,070 shares of the Company’s common stock, and the
AWI Warrant converted into warrants to acquire up to 1,482,400
shares of the Company’s common stock.
Warrants.
The
warrant to purchase 69,930 shares of the Company’s common
stock issued in connection with the acquisition of AutoUSA was
valued at $7.35 per share for a total value of $0.5 million
(“
AutoUSA
Warrant
”). The
Company used an option pricing model to determine the value of the
AutoUSA Warrant. Key assumptions used in valuing the
AutoUSA Warrant are as follows: risk-free rate of 1.6%, stock price
volatility of 65.0% and a term of 5.0 years. The AutoUSA
Warrant was valued based on long-term stock price volatilities of
the Company. The exercise price of the AutoUSA Warrant
is $14.30 per share (as may be adjusted for stock splits, stock
dividends, combinations, and other similar events). The
AutoUSA Warrant became exercisable on January 13, 2017 and expires
on January 13, 2019.
The warrant to purchase up to 148,240 shares of
Series B Preferred Stock issued in connection with the acquisition
of AWI (“
AWI Warrant
”) was valued at $1.72 per share for a total
value of $2.5 million. The Company used an option
pricing model to determine the value of the AWI
Warrant. Key assumptions used in valuing the AWI Warrant
are as follows: risk-free rate of 1.9%, stock price volatility of
74.0% and a term of 7.0 years. The AWI Warrant was
valued based on long-term stock price volatilities of the
Company’s common stock. On June 22, 2017, the
Company received stockholder approval which resulted in the
automatic conversion of the AWI Warrant into warrants to acquire up
to 1,482,400 shares of the Company’s common stock at an
exercise price of $18.45 per share of common stock. The AWI Warrant
becomes exercisable on October 1, 2018, subject to the following
vesting conditions: (i) with respect to the first one-third (1/3)
of the warrant shares, if at any time after the issuance date of
the AWI Warrant and prior to the expiration date of the AWI Warrant
the weighted average closing price of the Company’s common
stock for the preceding 30 trading days (adjusted for any stock
splits, stock dividends, reverse stock splits or combinations of
the Company’s common stock occurring after the issuance date)
(“
Weighted Average Closing
Price
”) is at or above
$30.00; (ii) with respect to the second one-third (1/3) of the
warrant shares, if at any time after the issuance date of the AWI
Warrant and prior to the expiration date the Weighted Average
Closing Price is at or above $37.50; and (iii) with respect to the
last one-third (1/3) of the warrant shares, if at any time after
the issuance date of the AWI Warrant and prior to the expiration
date the Weighted Average Closing Price is at or above
$45.00. The AWI Warrant expires on October 1,
2022.
6.
Share-Based Compensation
Share-based
compensation expense is included in costs and expenses in the
accompanying Unaudited Consolidated Condensed Statements of
Operations and Comprehensive Income (Loss) as follows:
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
Share-based
compensation expense:
|
|
|
|
|
Cost
of revenues
|
$
4
|
$
19
|
$
19
|
$
39
|
Sales
and marketing
|
159
|
402
|
384
|
814
|
Technology
support
|
173
|
134
|
326
|
262
|
General and administrative
[1]
|
607
|
389
|
1,841
|
841
|
Share-based
compensation costs
|
943
|
944
|
2,570
|
1,956
|
|
|
|
|
|
Amount
capitalized to internal use software
|
—
|
—
|
1
|
1
|
Total
share-based compensation costs
|
$
943
|
$
944
|
$
2,569
|
$
1,955
|
[1]
Certain awards were modified in connection with
the termination of employment of two of the Company’s former
executive officers. In accordance with the terms of applicable
award agreements and/or consulting agreements, the vesting of
certain awards was accelerated, and the terms of certain awards
were modified. As such, in accordance with GAAP, the Company
recognized expense related to the acceleration of vested awards of
approximately $0.8 million and expense related to the modification
of awards of approximately $0.1 million during the six months ended
June 30, 2018.
Service-Based
Options.
The Company
granted the following service-based options for the three and six
months ended June 30, 2018 and 2017,
respectively:
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
Number
of service-based options granted
|
1,715,200
|
54,000
|
1,716,700
|
373,250
|
Weighted
average grant date fair value
|
$
1.83
|
$
6.56
|
$
1.84
|
$
6.86
|
Weighted
average exercise price
|
$
3.29
|
$
13.05
|
$
3.30
|
$
13.70
|
These
options are valued using a Black-Scholes option pricing model and
generally vest one-third on the first anniversary of the grant date
and ratably over twenty-four months thereafter. The
vesting of these awards is contingent upon the employee’s
continued employment with the Company during the vesting period and
vesting may be accelerated in the event of a change in control of
the Company.
Market Condition
Options.
On January
21, 2016, the Company granted 100,000 stock options to its former
chief executive officer (“
Former
CEO
”) with an exercise price of $17.09 and
grant date fair value of $1.47 per option, using a Monte Carlo
simulation model (“
Former
CEO Market Condition
Options
”).
The Former CEO Market Condition Options were previously valued at
$2.94 per option but were revalued when the requisite stockholder
approval for the Company’s Amended and Restated 2014 Equity
Incentive Plan was obtained in June 2016. The Former CEO Market
Condition Options were subject to both stock price-based and
service-based vesting requirements that must be satisfied for the
Former CEO Market Condition Options to vest and become exercisable.
On April 12, 2018, pursuant to the stock option award agreement,
vesting of the Former CEO Market Condition Options was accelerated
with the termination of employment of the Former CEO, resulting in
the recognition of approximately $0.8 million of non-recurring
share-based compensation expense during the three months ended
March 31, 2018. The Former CEO Market Condition Options expire on
January 21, 2023.
Additionally,
in connection with consulting agreements between the Company and
two former officers, the Former CEO and former chief financial
officer, modifications were made to certain shared-based awards
previously granted to respective officers while they were employees
of the Company. In accordance with guidance provided under ASC 718
and related ASU No. 2017-09 and ASU No. 2018-07, the Company
recognized approximately $0.1 million in share-based compensation
expense for certain shared-based awards that were modified during
the three months ended June 31, 2018. The modification expense was
determined by using the Black-Scholes option pricing model to
estimate the fair value of the modified awards as of the new
measurement date and respective fair value
assumptions.
Stock option
exercises
. The
following stock options were exercised during the three and six
months ended June 30, 2018 and 2017,
respectively:
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
Number
of stock options exercised
|
750
|
117,115
|
15,967
|
176,074
|
Weighted
average exercise price
|
$
2.20
|
$
4.67
|
$
4.68
|
$
5.70
|
The
grant date fair value of stock options granted during these periods
was estimated using the Black-Scholes option pricing model using
the following weighted average assumptions:
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
Dividend
yield
|
—
|
—
|
—
|
—
|
Volatility
|
68
%
|
62
%
|
68
%
|
61
%
|
Risk-free
interest rate
|
2.6
%
|
1.7
%
|
2.6
%
|
1.8
%
|
Expected
life (years)
|
4.5
|
4.4
|
4.5
|
4.4
|
Upon
adoption of ASU 2016-09, “Improvements to Employee
Share-Based Payment Accounting,” the Company elected to
estimate the number of forfeitures.
Restricted Stock
Awards.
The Company
granted an aggregate of 125,000 restricted stock awards
(“
RSAs
”) on April 23, 2015 in connection with the
promotion of one of its executive officers. Of these
125,000 RSAs, 25,000 were service-based and the forfeiture
restrictions lapse with respect to one-third of the restricted
stock on each of the first, second and third anniversaries of the
date of the award. Forfeiture restrictions lapsed on
8,333 shares of restricted stock on April 23, 2016. Forfeiture
restrictions also lapsed on 8,334 shares of restricted stock on
April 23, 2017. During the three months ended March 31, 2018, 8,333
of the foregoing service-based RSAs were forfeited upon the
resignation of this executive officer. This executive officer was
also awarded 100,000 shares of the Company’s common stock in
the form of performance-based RSAs. During the three months ended
March 31, 2018, 100,000 of these performance-based RSAs were
forfeited upon the resignation of this executive
officer.
The
Company granted an aggregate of 345,000 RSAs on September 27, 2017
to senior officers of the Company. These RSAs are
service-based and the forfeiture restrictions lapse with respect to
one-third of the restricted stock on each of the first, second, and
third anniversaries of the date of the award. Lapsing of
the forfeiture restrictions may be accelerated in the event of a
change in control of the Company and will accelerate upon the death
or disability of the holder. During the six months ended June 30,
2018, 80,000 shares of these RSAs were forfeited upon the
resignation of two executive officers.
7. Investments
The Company’s investments at June 30, 2018
and December 31, 2017 consisted primarily of investments in
SaleMove and GoMoto, Inc.,
a Delaware corporation (“
GoMoto
”).
In
September 2013, the Company entered into a Convertible Note
Purchase Agreement with SaleMove in which AutoWeb invested $150,000
in SaleMove in the form of an interest bearing, convertible
promissory note. In November 2014, the Company invested an
additional $400,000 in SaleMove in the form of an interest bearing,
convertible promissory note. Upon closing of a preferred
stock financing by SaleMove in July 2015, these two notes were
converted in accordance with their terms into an aggregate of
190,997 Series A Preferred Stock, which shares were previously
classified as a long-term investment on the consolidated balance
sheet. The Company recorded an impairment charge of $0.6 million in
SaleMove in the three months ended December 31, 2017. On, June 5,
2018, the Company sold its shares of Series A Preferred stock back
to SaleMove for $125,000. Amounts received are recorded in Other
Income on the Unaudited Consolidated Condensed Statement of
Operations and Comprehensive Income (Loss) for the six months ended
June 30, 2018.
In
October 2013, the Company entered into a Reseller Agreement with
SaleMove to become a reseller of SaleMove’s technology for
enhancing communications with
consumers. SaleMove’s technology allows Dealers
and Manufacturers to enhance the online shopping experience by
interacting with consumers in real-time, including live video,
audio, and text-based chat or by phone. The Company and SaleMove
share equally in revenues from automotive-related sales of the
SaleMove products and services. In connection with this reseller
arrangement, the Company advanced $1.0 million to SaleMove to
fund SaleMove’s 50% share of various product development,
marketing and sales costs and expenses. These previously advanced
funds are repaid to the Company from SaleMove’s share of net
revenues and expenses from the Reseller Agreement each reporting
period. As of June 30, 2018, the net advances due from
SaleMove totaled $379,000 and are included in the balances of Other
assets on the Unaudited Consolidated Condensed Balance
Sheets.
In December 2014, the Company entered into a
Series Seed Preferred Stock Purchase Agreement with GoMoto in which
the Company paid $100,000 for 317,460 shares of Series Seed
Preferred Stock, $0.001 par value per share. The
$100,000 investment in GoMoto was recorded at cost because the
Company does not have significant influence over
GoMoto. In October 2015 and May 2016, the Company
invested an additional $375,000 and $375,000, respectively, in
GoMoto in the form of convertible promissory notes
(“
GoMoto Notes
”). The GoMoto Notes accrue
interest at an annual rate of 4.0% and are due and payable in full
upon demand by the Company or at GoMoto’s option ten
days’ written notice unless converted prior to the repayment
of the GoMoto Notes. The GoMoto Notes will be converted
into preferred stock of GoMoto in the event of a preferred stock
financing by GoMoto of at least $1.0 million prior to repayment of
the GoMoto Notes. At June 30, 2018 and 2017, both GoMoto Notes and
related interest receivable are fully reserved on the Unaudited
Consolidated Condensed Balance Sheets because the Company believes
the amounts may not be recoverable.
8. Selected Balance Sheet Accounts
Property and
Equipment
. Property
and equipment consists of the following:
|
|
|
|
|
Computer
software and hardware
|
$
11,187
|
$
11,065
|
Capitalized
internal use software
|
5,977
|
5,774
|
Furniture
and equipment
|
1,705
|
1,703
|
Leasehold
improvements
|
1,605
|
1,539
|
|
20,474
|
20,081
|
Less—Accumulated
depreciation and amortization
|
(16,772
)
|
(15,770
)
|
Property
and Equipment, net
|
$
3,702
|
$
4,311
|
The
Company periodically reviews the value of long-lived assets to
determine if there are any impairment indicators. The
Company assesses the impairment of these assets, or the need to
accelerate amortization, whenever events or changes in
circumstances indicate that the carrying value may not be
recoverable. The Company’s judgments regarding the existence
of impairment indicators are based on legal factors, market
conditions, and operational performance of the Company’s
long-lived assets. If such indicators exist, the Company
evaluates the assets for impairment based on the estimated future
undiscounted cash flows expected to result from the use of the
assets and their eventual disposition. Should the carrying amount
of an asset exceed its estimated future undiscounted cash flows, an
impairment loss is recorded for the excess of the asset’s
carrying amount over its fair value. Fair value is generally
determined based on a valuation process that provides an estimate
of the fair value of these assets using an undiscounted cash flow
model, which includes assumptions and estimates.
Concentration of Credit Risk
and Risks Due to Significant Customers
. Financial instruments that
potentially subject the Company to concentrations of credit risk
consist primarily of cash and cash equivalents and accounts
receivable. Cash and cash equivalents are primarily maintained with
two high credit quality financial institutions in the United
States. Deposits held by banks exceed the amount of insurance
provided for such deposits. These deposits may be redeemed upon
demand.
Accounts
receivable are primarily derived from fees billed to Dealers and
Manufacturers. The Company generally requires no
collateral to support its accounts receivables and maintains an
allowance for bad debts for potential credit losses.
The
Company has a concentration of credit risk with its automotive
industry-related accounts receivable balances, particularly with
Urban Science Applications (which represents Acura, Audi, Honda,
Nissan, Infiniti, Subaru, Toyota, Volkswagen, and Volvo), Media.net
Advertising and General Motors. During the first six months of
2018, approximately 37% of the Company’s total revenues was
derived from these three customers, and approximately 43%, or $10.7
million of gross accounts receivables related to these three
customers at June 30, 2018. During the first six months of 2017,
approximately 30% of the Company’s total revenues was derived
from Urban Science Applications, Media.net Advertising and General
Motors, and approximately 38%, or $10.0 million of gross accounts
receivables, related to these three customers at June 30,
2017.
Intangible
Assets.
The Company
amortizes specifically identified definite-lived intangible assets
using the straight-line method over the estimated useful lives of
the assets.
On October 5, 2017, the Company and DealerX
Partners, LLC, a Florida limited liability company
(“
DealerX
”), entered into a Master License and
Services Agreement (“
DealerX
License
Agreement
”). Pursuant to
the terms of the DealerX License Agreement, the Company was granted
a perpetual license to access and use DealerX’s proprietary
platform and technology for targeted, online
marketing.
The transaction consideration consisted of: (i)
$8.0 million in cash paid to DealerX upon execution of the DealerX
License Agreement and (ii) the right to 710,856 shares of the
Company’s common stock representing approximately five
percent of the Company’s outstanding common stock as of the
date the parties entered into the DealerX License Agreement
(“
Market Capitalization
Shares
”) if on or before
October 5, 2022: (i) the Company’s market capitalization
averages at least $225.0 million over a consecutive 90-day period
or (ii) there is a change in control of the Company that reflects a
market capitalization of at least $225.0 million. If the Market
Capitalization Shares are issued to DealerX, DealerX’s
Platform Support Obligations will continue in perpetuity.
Alternatively, upon the occurrence of certain events prior to the
issuance of the Market Capitalization Shares, the Company may elect
to make an additional lump-sum payment of $12.5 million
(“
Alternative Cash
Payment
”) in order to
extend DealerX’s Platform Support Obligations in perpetuity.
If the Alternative Cash payment is made, DealerX’s contingent
right to receive the Market Capitalization Shares will be
terminated. The fair value of the Market Capitalization Shares was
calculated at $2.5 million. The DealerX perpetual license and
related Market Capitalization Shares are being amortized over seven
years.
The
Company’s intangible assets are amortized over the following
estimated useful lives:
|
|
|
|
Definite-lived
Intangible
Asset
|
|
|
|
|
|
|
|
|
|
|
Trademarks/trade
names/licenses/domains
|
3
-7 years
|
$
16,589
|
$
(5,164
)
|
$
11,425
|
$
16,589
|
$
(4,037
)
|
$
12,552
|
Software
and publications
|
3
years
|
1,300
|
(1,300
)
|
—
|
1,300
|
(1,300
)
|
—
|
Customer
relationships
|
2 -
10 years
|
19,563
|
(12,106
)
|
7,457
|
19,563
|
(10,555
)
|
9,008
|
Employment/non-compete
agreements
|
1 -
5 years
|
1,510
|
(1,504
)
|
6
|
1,510
|
(1,493
)
|
17
|
Developed
technology
|
5 -
7 years
|
8,955
|
(4,288
)
|
4,667
|
8,955
|
(3,619
)
|
5,336
|
|
$
47,917
|
$
(24,362
)
|
$
23,555
|
$
47,917
|
$
(21,004
)
|
$
26,913
|
|
|
|
|
Indefinite-lived
Intangible
Asset
|
|
|
|
|
|
|
|
Domain
|
Indefinite
|
$
2,200
|
$
—
|
$
2,200
|
$
2,200
|
$
—
|
$
2,200
|
Amortization
expense is included in cost of revenues and depreciation and
amortization in the Unaudited Consolidated Condensed Statements of
Operations. Total amortization expense was $1.7 million
and $3.4 million for the three and six months ended June 30, 2018,
respectively. Amortization expense was $1.4 million and $2.7
million for the three and six months ended June 30, 2017,
respectively.
Amortization
expense for the remainder of the year and for future years is as
follows:
Year
|
|
|
|
2018
|
$
3,252
|
2019
|
5,236
|
2020
|
3,805
|
2021
|
3,697
|
2022
|
3,100
|
Thereafter
|
4,465
|
|
$
23,555
|
Goodwill.
Goodwill
represents the excess of the purchase price over the fair value of
net assets acquired. Goodwill is not amortized and is
assessed annually for impairment or earlier, when events or
circumstances indicate that the carrying value of such assets may
not be recoverable. The Company impaired goodwill by $5.1 million
during the six months ended June 30,
2018.
|
|
Goodwill
as of December 31, 2017
|
$
5,133
|
Impairment
charge
|
(5,133
)
|
Goodwill
as of June 30, 2018
|
$
—
|
Accrued Expenses and Other
Current Liabilities
. Accrued expenses and other current
liabilities consisted of the following:
|
|
|
|
|
Accrued
employee-related benefits
|
$
2,697
|
$
2,411
|
Other
accrued expenses and other current liabilities:
|
|
|
Other
accrued expenses
|
6,752
|
6,307
|
Amounts
due to customers
|
467
|
438
|
Other
current liabilities
|
430
|
507
|
Total
other accrued expenses and other current liabilities
|
7,649
|
7,252
|
|
|
|
Total
accrued expenses and other current liabilities
|
$
10,346
|
$
9,663
|
Convertible Notes
Payable
. In
connection with the acquisition of AutoUSA, the Company issued a
convertible subordinated promissory note for $1.0 million
(“
AutoUSA Note
”)
to AutoNationDirect.com, Inc. The fair value of the AutoUSA
Note as of the AutoUSA Acquisition Date was $1.3 million.
This valuation was estimated using a binomial option pricing
method. Key assumptions used by the Company’s
outside valuation consultants in valuing the AutoUSA Note
included a market yield of 1.6% and stock price volatility of
65.0%. As the AutoUSA Note was issued with a substantial
premium, the Company recorded the premium as additional paid-in
capital. Interest is payable at an annual interest rate of 6%
in quarterly installments. The entire outstanding balance of
the AutoUSA Note is to be paid in full on January 31, 2019.
The holder of the AutoUSA Note may at any time convert all or any
part, but at least 30,600 shares, of the then outstanding and
unpaid principal of the AutoUSA Note into fully paid shares of the
Company's common stock at a conversion price of $16.34 per share
(as adjusted for stock splits, stock dividends, combinations, and
other similar events). In the event of default, the
entire unpaid balance of the AutoUSA Note will become immediately
due and payable and will bear interest at the lower of 8% per year
and the highest legal rate permissible under applicable
law.
9. Credit Facility
The Company and MUFG Union Bank, N.A. entered into
a Loan Agreement dated February 26, 2013, as amended on September
10, 2013, January 13, 2014, May 20, 2015, June 1, 2016, June 28,
2017 and December 27, 2017 (the original Loan Agreement, as
amended, is referred to collectively as the
“
Credit Facility
Agreement
”). The Credit Facility Agreement
provided for (i) a $9.0 million term loan; (ii) a $15.0 million
term loan; and (iii) an $8.0 million working capital revolving line
of credit (“
Revolving
Loan
”). The term
loans were fully paid as of December 31, 2017. The Revolving Loan
was fully paid as of March 31, 2018.
10. Commitments and Contingencies
Employment Agreements
The
Company has employment agreements and severance benefits/retention
agreements with certain key employees. A number of these agreements
require severance payments and continuation of certain insurance
benefits in the event of a termination of the employee’s
employment by the Company without cause or by the employee for good
reason (as defined is these agreements). Stock option agreements
and restricted stock award agreements with some key employees
provide for acceleration of vesting of stock options and lapsing of
forfeiture restrictions on restricted stock in the event of a
change in control of the Company, upon termination of employment by
the Company without cause or by the employee for good reason, or
upon the employee’s death or disability.
Litigation
From
time to time, the Company may be involved in litigation matters
arising from the normal course of its business activities. Such
litigation, even if not meritorious, could result in substantial
costs and diversion of resources and management attention, and an
adverse outcome in litigation could materially adversely affect its
business, results of operations, financial condition and cash
flows.
11. Income Taxes
On
December 22, 2017, the U.S. government enacted comprehensive tax
legislation known as the TCJA. The TCJA made a number of changes to
the federal income tax law that took effect in 2018, including, but
not limited to (1) reduction of the U.S. federal corporate tax rate
from a maximum of 35% to 21%; (2) elimination of the corporate
alternative minimum tax; (3) a new limitation on deductible
interest expense; (4) the Transition Tax; (5) limitations on the
deductibility of certain executive compensation; (6) changes to the
bonus depreciation rules for fixed asset additions; and (7)
limitations on net operating loss carryovers generated after
December 31, 2017 to 80% of taxable income.
Accounting Standards
Codification 740 “Income Taxes
” (ASC 740), requires the effects of changes
in tax laws to be recognized in the period in which the legislation
is enacted. However, due to the complexity and significance of the
TCJA's provisions, the SEC staff issued Staff Accounting Bulletin
118 (“
SAB 118
”), which provides guidance on accounting
for the tax effects of the TCJA. SAB 118 provides a measurement
period that should not extend beyond one year from the TCJA
enactment date for companies to complete the accounting under ASC
740. In accordance with SAB 118, a company must reflect the income
tax effects of those aspects of the TCJA for which the accounting
under ASC 740 is complete. To the extent that a company’s
accounting for certain income tax effects of the TCJA is incomplete
but it is able to determine a reasonable estimate, it must record a
provisional estimate in the financial statements. If a company
cannot determine a provisional estimate to be included in the
financial statements, it should continue to apply ASC 740 on the
basis of the provisions of the tax laws that were in effect
immediately before the enactment of the TCJA.
At
June 30, 2018 and December 31, 2017, the Company had not completed
its accounting for the tax effects of enactment of the TCJA;
however, the Company has made a reasonable estimate of the effects
of the TCJA’s change in the federal rate and revalued its
deferred tax assets based on the rates at which they are expected
to reverse in the future, which is generally the new 21% federal
corporate tax rate plus applicable state tax rate. The Company
recorded a decrease in deferred tax assets and deferred tax
liabilities of $11.7 million and $0.0 million, respectively, with a
corresponding net adjustment to deferred income tax expense of
$11.7 million for the year ended December 31, 2017. In addition,
the Company recognized a deemed repatriation of $0.6 million of
deferred foreign income from its Guatemala subsidiary, which did
not result in any incremental tax cost after application of foreign
tax credits. The Company’s provisional estimates will be
adjusted during the measurement period defined under SAB 118, based
upon ongoing analysis of data and tax positions along with the new
guidance from regulators and interpretations of the
law.
On
an interim basis, the Company estimates what its anticipated annual
effective tax rate will be and records a quarterly income tax
provision in accordance with the estimated annual rate, plus the
tax effect of certain discrete items that arise during the
quarter. As the fiscal year progresses, the Company
refines its estimates based on actual events and financial results
during the year. This process can result in significant
changes to the Company’s estimated effective tax
rate. When this occurs, the income tax provision is
adjusted during the quarter in which the estimates are refined so
that the year-to-date provision reflects the estimated annual
effective tax rate. These changes, along with
adjustments to the Company's deferred taxes and related valuation
allowance, may create fluctuations in the overall effective tax
rate from quarter to quarter.
During
2017, management assessed the available positive and negative
evidence to estimate if sufficient future taxable income will be
generated to utilize the existing deferred tax assets. A
significant piece of objective negative evidence evaluated was the
cumulative losses incurred over the three-year period ended
December 31, 2017. The Company was projecting pre-tax income for
2017 until the three months ended December 31, 2017, in which the
Company incurred a significant pre-tax loss due to goodwill
impairment. The Company experienced increased costs of providing
services to its customers, as well as decrease in market share
resulting from increased competition. Additionally,the Company also
projects that 2018 pre-tax profits may not offset the cumulative
three-year pre-tax loss as of December 31, 2017. Based on this
evaluation, the Company recorded an additional valuation allowance
of $16.7 million against its deferred tax assets during the year
ended December 31, 2017. At June 30, 2018 and December 31, 2017,
the Company has recorded a valuation allowance of $21.3 million
against its deferred tax assets.
The
Company’s effective tax rate for the six months ended June
30, 2018 differed from the U.S. federal statutory rate primarily
due to operating losses that receive no tax benefit as a result of
valuation allowance recorded for such losses.
The
total amount of unrecognized tax benefits, excluding associated
interest and penalties, was $0.5 million as of June 30, 2018, all
of which, if subsequently recognized, would have affected the
Company’s tax rate.
As
of June 30, 2018 and December 31, 2017, the total balance of
accrued interest and penalties related to uncertain tax positions
was zero. The Company recognizes interest and penalties
related to uncertain tax positions as a component of income tax
expense, and the accrued interest and penalties are included in
deferred and other long-term liabilities in the Company’s
condensed consolidated balance sheets. There were no
material interest or penalties included in income tax expense for
the three and six months ended June 30, 2018 and 2017.
The
Company is subject to taxation in the U.S. and in various foreign
and state jurisdictions. Due to expired statutes of
limitation, the Company’s federal income tax returns for
years prior to calendar year 2014 are not subject to examination by
the U.S. Internal Revenue Service. Generally, for the
majority of state jurisdictions where the Company does business,
periods prior to calendar year 2013 are no longer subject to
examination. The Company does not anticipate a
significant change to the total amount of unrecognized tax benefits
within the next twelve months. Audit outcomes and the
timing of settlements are subject to significant
uncertainty.
I
tem 2.
Management’s Discussion
and Analysis of Financial Condition and Results of
Operations
Cautionary Note Concerning Forward-Looking
Statements
The Securities and Exchange Commission
(“
SEC
”) encourages companies to disclose
forward-looking information so that investors can better understand
a company’s future prospects and make informed investment
decisions. This Quarterly Report on Form 10-Q contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as
“anticipates,” “could,” “may,”
“estimates,” “expects,”
“projects,” “intends,” “plans,”
“believes,” “will” and words of similar
substance used in connection with any discussion of future
operations or financial performance identify forward-looking
statements. In particular, statements regarding expectations and
opportunities, industry trends, new product expectations and
capabilities, and our outlook regarding our performance and growth
are forward-looking statements. This Quarterly Report on Form 10-Q
also contains statements regarding plans, goals and objectives.
There is no assurance that we will be able to carry out our plans
or achieve our goals and objectives or that we will be able to do
so successfully on a profitable basis. These forward-looking
statements are just predictions and involve significant risks and
uncertainties, many of which are beyond our control, and actual
results may differ materially from these statements. Factors that
could cause actual outcomes or results to differ materially from
those reflected in forward-looking statements include, but are not
limited to, those discussed in this Item 2 and under the heading
“Risk Factors” in our annual report on Form 10-K for
the year ended December 31, 2017 (“
2017 Form 10-K
”).
Investors are urged not to place undue reliance on forward-looking
statements. Forward-looking statements speak only as of the date on
which they were made. Except as may be required by law, we do not
undertake any obligation, and expressly disclaim any obligation, to
update or alter any forward-looking statements, whether as a result
of new information, future events or otherwise. All forward-looking
statements contained herein are qualified in their entirety by the
foregoing cautionary statements.
You
should read the following discussion of our results of operations
and financial condition in conjunction with our unaudited
consolidated condensed financial statements and related notes
included in Part I, Item 1 of this Quarterly Report on Form 10-Q
and our audited consolidated financial statements and the notes
thereto in the 2017 Form 10-K.
Our corporate website is located at
www.autoweb.com
.
Information on our website is not incorporated by reference in this
Quarterly Report on Form 10-Q. At or through the Investor Relations
section of our website we make available free of charge our Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and all amendments to these reports as soon as
practicable after the reports are electronically filed with or
furnished to the SEC.
Unless
the context otherwise requires, the terms “we,”
“us,” “our,” “AutoWeb,” and
“Company” refer to AutoWeb, Inc. and its consolidated
subsidiaries.
Basis of Presentation and Critical Accounting Policies
See Note 2,
Basis of
Presentation
, to the
accompanying unaudited consolidated condensed financial
statements.
We prepare our financial statements in conformity
with accounting principles generally accepted in the United States
of America (“
GAAP
”), which require us to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Accordingly,
actual results could differ materially from our estimates. To the
extent that there are material differences between these estimates
and our actual results, our financial condition or results of
operations may be affected. For a detailed discussion of the
application of our critical accounting policies, see Note 2 of the
“Notes to Consolidated Financial Statements” in Part
II, Item 8 “Financial Statements and Supplementary
Data” in the 2017 Form 10-K. There have been no changes to
our critical accounting policies since we filed our 2017 Form
10-K.
Overview
We are a digital marketing services company that
assists automotive retail dealers (“
Dealers
”) and automotive manufacturers
(“
Manufacturers
”)
market and sell new and used vehicles to consumers through our
programs for online lead referrals, Dealer marketing products and
services, online advertising and consumer traffic referral
programs, and mobile products.
Our consumer-facing automotive websites
(“
Company
Websites
”) provide
consumers with information and tools to aid them with their
automotive purchase decisions and the ability to submit inquiries
requesting Dealers to contact the consumers regarding purchasing or
leasing vehicles (“
Leads
”). Leads are
internally-generated from our Company Websites
(“
Internally-Generated
Leads
”) or acquired from
third parties (“
Non-Internally-Generated
Leads
”) that generate
Leads from their websites. Our AutoWeb
®
consumer traffic referral product
provides consumers who are shopping for vehicles online with
targeted offers based on make, model and geographic location. As
these consumers conduct online research on a Company Website or on
the site of one of our network of automotive publishers, they are
presented with relevant offers on a timely basis and, upon the
consumer clicking on the displayed advertisement, are sent to the
appropriate website location of one of our Dealer, Manufacturer or
advertising customers.
Our business, results of operations and financial
condition are impacted by the volume and quality of our Leads. We
measure Lead quality by the conversion of Leads to actual vehicle
sales, which we refer to as the “buy rate.” Buy rate is
the percentage of the consumers submitting Leads that we delivered
to our customers represented by the number of these consumers who
purchased vehicles within ninety days of the date of the Lead
submission. We rely on detailed feedback from Manufacturers
and wholesale customers to confirm the performance of our Leads.
Our Manufacturer and other wholesale customers each
match the Leads we deliver to our customers against vehicle sales
to provide us with information about vehicle purchases by the
consumers who submitted Leads that we delivered to these customers.
AutoWeb also obtains vehicle
registration data from a third-party provider. This information,
together with our internal analysis allows us to estimate the buy
rates for the consumers who submitted the Internally Generated
Leads and Non-Internally Generated Leads that we delivered to our
customers, and based on these estimates, to estimate an industry
average buy rate. Based on the most current information and our
internal analysis, we have estimated that, on average, consumers
who submit Internally-Generated Leads that we deliver to our
customers have an estimated buy rate of approximately
17%. Buy rates that individual Dealers may achieve can
be impacted by factors such as the strength of processes and
procedures within the dealership to manage communications and
follow up with consumers.
Total
revenues in the first six months of 2018 were $61.6 million
compared to $71.9 million in the first six months of 2017. The
decline in revenue was primarily due to less efficient traffic
acquisition
and lower retail dealer
count and lead volumes. We believe that a large part of the
inefficiency in traffic acquisition was the result of increased
traffic acquisition costs as we invest in new traffic acquisition
strategies, as well as the consumers shift to mobile and our
ability to efficiently convert traffic to leads. We will continue
to work with our traffic partners to optimize our search engine
marketing (“
SEM
”) methodologies and rebuild
our high-quality traffic streams. We also expect to invest in
new product development and restructure our organization to better
align with our revised strategy
, which could result in significant
costs
. In addition, in order to mitigate the impact
to profitability, we realigned our headcount in February 2018 and
expect it to reduce operating expenses. We cannot provide an exact
timeframe for resolution of these issues, as these trends remained
present in
2018 and may continue throughout the year and
beyond.
For
the three and six months ended June 30, 2018 our business, results
of operations and financial condition were affected, and may
continue to be affected in the future, by general economic,
employment and market factors, conditions in the automotive
industry, the markets for Leads, and online advertising services,
including, but not limited to, the following:
●
Pricing,
interest rates and purchase incentives for vehicles;
●
The
expectation that consumers will be purchasing fewer vehicles
overall during their lifetime as a result of better quality
vehicles and longer warranties;
●
The
impact of fuel prices on demand for the number and types of
vehicles;
●
Increases
or decreases in the number of retail Dealers or in the number of
Manufacturers and other wholesale customers in our customer
base;
●
The
effect of changes in search engine algorithms and methodologies on
our Lead generation and website advertising activities and
margins;
●
Volatility
in spending by Manufacturers and others in their marketing budgets
and allocations;
●
The
competitive impact of consolidation in the online automotive
referral industry;
●
The
effect of changes in transportation policy, including the potential
increase of public transportation options; and
●
The
effect of fewer vehicles being purchased as a result of new
business models and changes in consumer attitudes regarding the
need for vehicle ownership.
Results of Operations
Three
Months Ended June 30, 2018 Compared to the Three Months Ended June
30, 2017
The following table sets forth certain statement
of operations data for the three-month periods ended June 30, 2018
and 2017
(certain balances and
calculations have been rounded for presentation)
:
|
|
|
|
|
|
|
|
(Dollar amounts in thousands)
|
|
Revenues:
|
|
|
|
|
|
|
Lead
fees
|
$
22,211
|
76
%
|
$
26,347
|
76
%
|
$
(4,136
)
|
(16
%)
|
Advertising
|
6,950
|
24
|
7,999
|
23
|
(1,049
)
|
(13
)
|
Other
revenues
|
131
|
—
|
245
|
1
|
(114
)
|
(47
)
|
Total
revenues
|
29,292
|
100
|
34,591
|
100
|
(5,299
)
|
(15
)
|
Cost
of revenues
|
23,765
|
81
|
23,955
|
69
|
(190
)
|
(1
)
|
Gross
profit
|
5,527
|
19
|
10,636
|
31
|
(5,109
)
|
(48
)
|
Operating
expenses:
|
|
|
|
|
|
|
Sales
and marketing
|
3,052
|
10
|
3,229
|
9
|
(177
)
|
(5
)
|
Technology
support
|
2,965
|
10
|
3,188
|
9
|
(223
)
|
(7
)
|
General
and administrative
|
3,765
|
13
|
2,766
|
8
|
999
|
36
|
Depreciation
and amortization
|
1,163
|
4
|
1,201
|
4
|
(38
)
|
(3
)
|
Total
operating expenses
|
10,945
|
37
|
10,384
|
30
|
561
|
5
|
Operating
income (loss)
|
(5,418
)
|
(19
)
|
252
|
1
|
(5,670
)
|
N/A
|
Interest
and other income (expense), net
|
201
|
1
|
(96
)
|
—
|
297
|
N/A
|
Income
(loss) before income tax provision (benefit)
|
(5,217
)
|
(18
)
|
156
|
1
|
(5,373
)
|
N/A
|
Income
tax provision (benefit)
|
—
|
—
|
(166
)
|
—
|
166
|
N/A
|
Net
income (loss)
|
$
(5,217
)
|
(18
%)
|
$
322
|
1
%
|
$
(5,539
)
|
N/A
|
Leads.
Lead
fees revenues decreased $4.1 million, or 16%, in the second quarter
of 2018 compared to the second quarter of 2017 primarily as a
result of a decrease in retail lead fees revenues coupled with
decreased revenue from Manufacturers.
Advertising.
Advertising revenues decreased $1.0
million, or 13%, in the second quarter of 2018 compared to the
second quarter of 2017 as a result of a decrease in click revenue
associated with decreased pricing per click coupled with decreased
display advertising traffic on our website.
Other
Revenues.
Other
revenues consist primarily of revenues from our mobile products and
revenues from our Reseller Agreement with
SaleMove.
Other revenues decreased to $0.1 million in the
second quarter of 2018 from $0.2 million in the second quarter of
2017 primarily due to lower customer utilization of the mobile
product and SaleMove product.
Cost of
Revenues.
Cost of
revenues consists of purchase request and traffic acquisition costs
and other cost of revenues. Purchase request and traffic
acquisition costs consist of payments made to our purchase request
providers, including internet portals and online automotive
information providers. Other cost of revenues consists of SEM and
fees paid to third parties for data and content, including search
engine optimization activity, included on our websites,
connectivity costs, development costs related to our websites,
compensation related expense and technology license fees, server
equipment depreciation, and technology amortization directly
related to the Company Websites. SEM, sometimes referred to as paid
search marketing, is the practice of bidding on keywords on search
engines to drive traffic to a website.
Cost
of revenues decreased $0.2 million, or 1%, in the second quarter of
2018 compared to the second quarter of 2017 primarily due to
decreased revenues offset by increased traffic acquisition
costs.
Sales and
Marketing.
Sales and
marketing expense includes costs for developing our brand equity,
personnel costs, and other costs associated with Dealer sales,
website advertising, Dealer support, and bad debt expense. Sales
and marketing expense in the second quarter of 2018 decreased $0.2
million, or 5%, compared to the second quarter of 2017 due
primarily to lower headcount-related costs and professional
fees.
Technology Support.
Technology support expense includes
compensation, benefits, software licenses and other direct costs
incurred by the Company to enhance, manage, maintain, support,
monitor and operate the Company’s websites and related
technologies, and to operate the Company’s internal
technology infrastructure. Technology support expense in the second
quarter of 2018 decreased by $0.2 million, or 7%, compared to the
second quarter of 2017 due primarily to lower facilities costs and
headcount-related costs.
General and
Administrative.
General and
administrative expense consists of executive, financial and legal
personnel expenses and costs related to being a public company.
General and administrative expense in the second quarter of 2018
increased by $1.0 million, or 36%, from the second quarter of 2017
due primarily to increased headcount-related costs and increased
professional fees.
Depreciation and
Amortization.
Depreciation and amortization expense in the
second quarter of 2018 decreased $38,000 to $1.2 million compared
to $1.2 million in the second quarter of 2017 primarily due to
normal depreciation and amortization.
Interest and Other Income
(Expense), Net.
Interest and other income was $0.2 million for the
second quarter of 2018 compared to interest and other expense of
$0.1 million in the second quarter of 2017. Interest
expense decreased to $15,000 in the second quarter of 2018 from
$0.2 million in the second quarter of 2017 primarily due to
paying off our term loans as of December 31, 2017 and the revolving
loan during the first three months of 2018. We also recorded $0.1
million in other income during the second quarter of 2018 related
to a Transitional License and Linking Agreement with Internet
Brands, Inc. and $0.1 million in proceeds from the sale of our
SaleMove investment.
Income Taxes.
Income tax expense was zero in the
second quarter of 2018 compared to income tax benefit of $0.2
million in the second quarter of 2017. Income tax
expense for the second quarter of 2018 differed from the federal
statutory rate primarily due to operating losses that receive no
tax benefit as a result of valuation allowance recorded for such
losses.
Six
Months Ended June 30, 2018 Compared to the Six Months Ended June
30, 2017
The following table sets forth certain statement
of operations data for the six-month periods ended June 30, 2018
and 2017
(certain balances and
calculations have been rounded for presentation)
:
|
|
|
|
|
|
|
|
(Dollar amounts in thousands)
|
|
Revenues:
|
|
|
|
|
|
|
Lead
fees
|
$
46,291
|
75
%
|
$
55,439
|
77
%
|
$
(9,148
)
|
(17
%)
|
Advertising
|
15,037
|
24
|
15,967
|
22
|
(930
)
|
(6
)
|
Other
revenues
|
313
|
1
|
526
|
1
|
(213
)
|
(40
)
|
Total
revenues
|
61,641
|
100
|
71,932
|
100
|
(10,291
)
|
(14
)
|
Cost
of revenues
|
48,423
|
79
|
48,385
|
67
|
38
|
—
|
Gross
profit
|
13,218
|
21
|
23,547
|
33
|
(10,329
)
|
(44
)
|
Operating
expenses:
|
|
|
|
|
|
|
Sales
and marketing
|
6,764
|
11
|
6,992
|
10
|
(228
)
|
(3
)
|
Technology
support
|
6,351
|
10
|
6,441
|
9
|
(90
)
|
(1
)
|
General
and administrative
|
8,340
|
14
|
6,223
|
9
|
2,117
|
34
|
Depreciation
and amortization
|
2,323
|
4
|
2,430
|
3
|
(107
)
|
(4
)
|
Goodwill
Impairment
|
5,133
|
8
|
—
|
—
|
5,133
|
N/A
|
Total
operating expenses
|
28,911
|
47
|
22,086
|
31
|
6,825
|
31
|
Operating
income (loss)
|
(15,693
)
|
(26
)
|
1,461
|
2
|
(17,154
)
|
N/A
|
Interest
and other income (expense), net
|
201
|
1
|
(196
)
|
—
|
397
|
N/A
|
Income
(loss) before income tax provision (benefit)
|
(15,492
)
|
(25
)
|
1,265
|
2
|
(16,757
)
|
N/A
|
Income
tax provision (benefit)
|
4
|
—
|
459
|
1
|
(455
)
|
(99
)
|
Net
income (loss)
|
$
(15,496
)
|
(25
%)
|
$
806
|
1
%
|
$
(16,302
)
|
N/A
|
Leads.
Lead
fees revenues decreased $9.1 million, or 17%, in the first six
months of 2018 compared to the first six months of 2017 primarily
as a result of a decrease in retail lead fees revenues coupled with
decreased revenue from Manufacturers.
Advertising.
Advertising revenues decreased $0.9
million, or 6%, in the first six months of 2018 compared to the
first six months of 2017 due to a decrease in click revenue
associated with decreased pricing per click coupled with decreased
display advertising traffic on our website.
Other
Revenues.
Other
revenues decreased to $0.3 million in the first six months of 2018
from $0.5 million in the first six months of 2017 primarily due to
lower customer utilization of the mobile product and SaleMove
product.
Cost of
Revenues.
Cost of
revenues increased $38,000 in the first six months of 2018 compared
to the first six months of 2017 primarily due to increased traffic
acquisition costs associated with both lead and click volume offset
by a decrease in revenue.
Sales and
Marketing.
Sales and
marketing expense in the first six months of 2018 decreased $0.2
million, or 3%, compared to the first six months of 2017 due
primarily to lower headcount-related costs and professional
fees.
Technology Support.
Technology support expense in the
first six months of 2018 decreased by $90,000, or 1%, compared to
the first six months of 2017 due primarily to lower facilities
costs and headcount-related costs.
General and
Administrative.
General and
administrative expense in the first six months of 2018 increased
$2.1 million, or 34%, from the first six months of 2017 due
primarily to $1.4 million in severance-related costs associated
with the termination of the Company’s former CEO in April
2018, increased headcount-related costs from 2017 to 2018 and
increased professional fees.
Depreciation and
Amortization.
Depreciation and amortization expense in the first
six months of 2018 decreased $0.1 million to $2.3 million compared
to $2.4 million in the first six months of 2017 primarily due
to normal depreciation and amortization.
Goodwill impairment.
The Company evaluated enterprise
goodwill for impairment in the first six months of 2018 due to the
Company’s decreased stock price since its annual goodwill
impairment analysis on October 1, 2017. As of March 31, 2018, the
carrying value of AutoWeb was higher than its fair value based on
market capitalization at that date. As a result, a non-cash
impairment charge of $5.1 million was recording during the six
months ended June 30, 2018.
Interest and Other Income
(Expense), Net.
Interest and other income was $0.2 million for the
first six months of 2018 compared to interest and other expense of
$0.2 million in the first six months of 2017. Interest
expense decreased to $0.1 million in the first six months of 2018
from $0.4 million in the first six months of 2017 primarily due to
paying off our term loans as of December 31, 2017 and the revolving
loan during the first six months of 2018. We also recorded $0.2
million in other income during the first six months of 2018 related
to a Transitional License and Linking Agreement with Internet
Brands, Inc and $0.1 million in proceeds from the sale of our
SaleMove investment.
Income Taxes.
Income tax expense was $4,000 in the
first six months of 2018 compared to income tax expense of $0.5
million in the first six months of 2017. Income tax
expense for the first six months of 2018 differed from the federal
statutory rate primarily due to operating losses that receive no
tax benefit as a result of valuation allowance recorded for such
losses.
Liquidity and Capital Resources
The
table below sets forth a summary of our cash flows for the six
months ended June 30, 2018 and 2017:
|
Six Months Ended
June 30,
|
|
|
|
|
|
Net
cash provided by operating activities
|
$
1,271
|
$
9,973
|
Net
cash used in investing activities
|
(267
)
|
(996
)
|
Net
cash used in financing activities
|
(7,726
)
|
(2,934
)
|
Our
principal sources of liquidity are our cash and cash equivalents
balances. Our cash and cash equivalents totaled $18.3
million as of June 30, 2018 compared to $25.0 million as of
December 31, 2017.
For
information concerning the Company’s previously announced
share repurchase authorization, see Note 5, Notes to Unaudited
Consolidated Condensed Financial Statements included in Part I,
Item 1 of this Quarterly Report on Form 10-Q. We did not repurchase
any shares during the six months ended June 30, 2018 and
2017.
Credit Facility and Term
Loan
. For information
concerning our term and revolving bank loans, see Note 9, Notes to
Unaudited Consolidated Condensed Financial Statements included in
Part I, Item 1 of this Quarterly Report on Form
10-Q.
Net Cash Provided by Operating
Activities
. Net cash
used in operating activities in the six months ended June 30, 2018
of $1.3 million resulted primarily from net loss of $15.5 million,
as adjusted for non-cash charges. We also had net
increases in working capital, driven by a decrease in our accounts
receivable balance related to the timing of payments received
accompanied by an increase in accounts payable of $1.8 million and
an increase in accrued liabilities of $0.7 million primarily
related to accruals of annual incentive compensation accrued during
the first six months of 2018, but not paid until
2019.
Net
cash provided by operating activities in the six months ended June
30, 2017 of $10.0 million resulted primarily from net income of
$0.8 million, as adjusted for non-cash charges. We also
had net increases in working capital, driven by a decrease in our
accounts receivable balance related to the timing of payments
received offset by decreases in accounts payable of $1.3 million
and cash used to reduce accrued liabilities of $3.3 million
primarily related to the payment of annual incentive compensation
amounts accrued in 2016 and paid in the first six months of
2017.
Net Cash Used in Investing
Activities
. Net cash
used in investing activities was $0.3 million in the six months
ended June 30, 2018 which primarily related to purchases of
property and equipment and expenditures related to capitalized
internal use software offset by $0.1 million in proceeds from the
sale of the SaleMove investment.
Net
cash used in investing activities was $1.0 million in the six
months ended June 30, 2017 which primarily related to purchases of
property and equipment and expenditures related to capitalized
internal use software.
Net Cash Used In Financing
Activities
. Net cash
used in financing activities of $7.7 million in the six months
ended June 30, 2018 primarily related to payments of $8.0 million
to pay down the revolving credit facility. In addition, stock
options for 15,967 shares of the Company’s common stock were
exercised in the first six months of 2018 resulting in $0.1 million
cash inflow and $0.2 million related to cash received from the
issuance of common stock.
Net
cash used in financing activities of $2.9 million primarily related
to payments of $3.9 million made against the term loan borrowings
in the first six months of 2017. In addition, stock options for
176,074 shares of the Company’s common stock were exercised
in the first six months of 2017 resulting in $1.0 million cash
inflow.
Off-Balance Sheet Arrangements
At
June 30, 2018, we had no off-balance sheet arrangements as defined
in Regulation S-K, Item 303(a)(4)(D)(ii).
I
tem
3.
Quantitative and Qualitative
Disclosures about Market Risk
In
the ordinary course of business, we are exposed to various market
risk factors, including fluctuations in interest rates and changes
in general economic conditions. For the three months
ended June 30, 2018 there were no material changes in the
information required to be provided under Item 305 of Regulation
S-K from the information disclosed in Item 7A of the 2017 Form
10-K.
Item 4.
Controls
and Procedures
As of the end of the period covered by this
Quarterly Report on Form 10-Q, we carried out an evaluation under
the supervision and with the participation of our management,
including our Chief Executive Officer and our Interim Chief
Financial Officer, of the effectiveness of the design and operation
of our disclosure controls and procedures pursuant to Rule 13a-15
under the Securities Exchange Act of 1934, as amended
(“
Exchange Act
”). Disclosure controls and procedures
ensure that the information required to be disclosed by us in the
reports that we file or submit under the Exchange Act are
(i) recorded, processed, summarized, and reported within the
time periods specified in the SEC’s rules and forms and
(ii) accumulated and communicated to our management, including
our principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required financial
disclosure. Based on this evaluation, our Chief Executive Officer
and our Interim Chief Financial Officer believe that, due to the
material weakness in internal control over financial reporting
previously reported in our 2017 Form 10-K, our disclosure controls
and procedures were not effective as of June 30,
2018.
As
previously reported in our 2017 Form 10-K, in connection with their
attestation report on our internal control over financial reporting
as of December 31, 2017, Moss Adams LLP identified what they
believed was a material weakness in our evaluation and measurement
of goodwill for impairment and valuation of deferred tax
assets.
A
material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such
that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented
or detected on a timely basis. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluations of
effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may
deteriorate.
With
respect to the material weakness identified by Moss Adams LLP, we
are continuing to take steps to remediate this material weakness in
our internal control over financial reporting, including
identifying and documenting controls for increased management
review of goodwill and valuation of deferred tax assets. We have
also dedicated additional external resources to assist in improving
internal controls so that they are designed to operate at a
sufficient level of precision.
Effective January
1, 2018, we adopted the new revenue guidance under
Accounting Standards
Codification 606 “Revenue from Contracts with
Customers.”
The adoption of this guidance requires the
implementation of new accounting policies and processes, which
changed the Company’s internal controls over financial
reporting for revenue recognition and related
disclosures.
As
of the end of the period covered by this Quarterly Report on Form
10-Q, other than the items mentioned in the above paragraph, there
were no changes in our internal control over financial reporting
(as defined in Rule 13a-15(f) under the Exchange Act) that have
materially affected, or were reasonably likely to materially
affect, our internal control over financial reporting.
Our
management, including our Chief Executive Officer and our Interim
Chief Financial Officer, does not expect that our disclosure
controls and internal control over financial reporting will prevent
all errors and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must
be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of
fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because
of a simple error or mistake. Additionally, controls may be
circumvented by the individual acts of some persons, by collusion
of two or more people, or by management override of the
control.
The
design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated
goals under all potential future conditions; over time, a control
may become inadequate because of changes in conditions, or the
degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud
may occur and not be detected.
PART II. OTHER INFORMATION
Item 1A. Risk Factors
The following factors, which supplement or update the risk factors
set forth in Part I, Item 1A, “Risk Factors” of our
2017 Form 10-K, may affect our future financial condition and
results of operations. The risks described below are not
the only risks we face. In addition to the risks set
forth in the 2017 Form 10-K, as supplemented or superseded by the
risk factors set forth below, additional risks and uncertainties
not currently known to us or that we currently deem to be
immaterial may also materially and adversely affect our
business.
Interruptions
or failures in our information technology platforms, communication
systems or security systems could materially and adversely affect
our financial performance.
Our
information technology and communications systems are susceptible
to outages and interruptions due to fire, flood, earthquake, power
loss, telecommunications failures, cyber-attacks, terrorist
attacks, technology operations and development failures, failure of
redundant systems and disaster recovery plans and similar events.
Such outages and interruptions could damage our reputation and harm
our operating results. Despite our network security
measures, our information technology platforms are vulnerable to
computer viruses, worms, physical and electronic break-ins,
sabotage and similar disruptions from unauthorized tampering, as
well as coordinated denial-of-service attacks. We do not have
multiple site capacity for all of our services. In the event of
delays or disruptions to services we rely on third party providers
to perform disaster recovery planning and services on our behalf.
We are vulnerable to extended failures to the extent that planning
and services are not adequate to meet our continued technology
platform, communication or security systems’
needs. We rely on third party providers for our primary
and secondary internet connections. Our co-location service and
public cloud services that provide infrastructure and platform
services, environmental and power support for our technology
platforms, communication systems and security systems are received
from third party providers. We have little or no control over these
third-party providers. Any disruption of the services they provide
us or any failure of these third-party providers to effectively
design and implement sufficient security systems or plan for
increases in capacity could, in turn, cause delays or disruptions
in our services. We are insured for some, but not all, of these
events. Even for those events for which we are insured
and have coverage under the terms and conditions of the applicable
policies, there are no assurances given that the coverage limits
would be sufficient to cover all losses we might incur or
experience.
If we lose our key personnel or are unable to attract, train and
retain additional highly qualified sales, marketing, managerial and
technical personnel, our business may suffer.
Our
future success depends on our ability to identify, hire, train and
retain highly qualified sales, marketing, managerial and technical
personnel. In addition, as we introduce new services we may
need to hire additional personnel. We may not be able to attract,
assimilate or retain such personnel in the future. The inability to
attract and retain the necessary executive, managerial, technical,
sales and marketing personnel could have a material adverse effect
on our financial performance.
Our
business and operations are substantially dependent on the
performance of our executive officers and key
employees. Each of these executive officers could be
difficult to replace. There is no guarantee that these or any
of our other executive officers and key employees will remain
employed with us. The loss of the services of one or more of our
executive officers or key employees could have a material adverse
effect on our financial performance.
Qualified
individuals are in high demand, and we may incur significant costs
to attract and retain them. In order to attract and retain
executives and other key employees in a competitive marketplace, we
must provide competitive compensation packages, including cash and
stock-based compensation. Our primary forms of stock-based
incentive awards are stock options and restricted stock units. If
the anticipated value of such stock-based incentive awards does not
materialize, if our stock-based compensation otherwise ceases to be
viewed as a valuable benefit, or if our total compensation package
is not viewed as being competitive, our ability to attract, retain
and motivate executives and key employees could be
weakened.
Our
current executives may view the business differently than prior
members of management, and over time may make changes to our
strategic focus, operations or business plans with corresponding
changes in how we report our results of operations. We can make no
assurances that our current executives will be able to
properly manage any such shift in focus or that
any changes to our business would ultimately prove
successful. We cannot ensure that we will be able to retain the
services of any members of our senior management or other key
employees. If we do not succeed in attracting well-qualified
employees, retaining and motivating existing employees or
integrating new executives and employees, our business could be
materially and adversely affected.
I
tem 2. Unregistered Sales of
Equity Securities and Use of Proceeds
During the period covered by this Quarterly
Report, the Company issued a total of 60,975 shares of common stock
to the Company’s Chief Executive Officer
(“
CEO
”) pursuant to his employment agreement
dated April 12, 2018. Under the employment agreement, the CEO
acquired the right to purchase from the Company up to $1,000,000 in
shares of the Company's common stock, $0.001 par value per share
("
Common
Stock
"), within 60 days of
April 12, 2018. On May 15, 2018, the CEO exercised the right
to purchase 60,975 shares of Common Stock directly from the
Company. The Company received proceeds of $200,000 for the purchase
of these shares at $3.28 per share, which was the closing price of
the Common Stock on the NASDAQ Capital Market on the date of
purchase. The Company relied upon the exemption from registration
set forth in Section 4(a)(2) of the Securities Act of 1933, as
amended.
|
Asset
Purchase and Sale Agreement dated as of December 19, 2016 by and
among AutoWeb, Inc., Car.com, Inc., a Delaware corporation, and
Internet Brands, Inc., a Delaware corporation, incorporated by
reference to Exhibit 2.1 to the Current Report on Form 8-K filed
with the SEC on December 21, 2016 (SEC File No.
001-34761)
|
|
|
|
Sixth
Restated Certificate of Incorporation of AutoWeb, Inc.,
incorporated by reference to Exhibit 3.4 to the Current Report on
Form 8-K filed with the SEC on October 10, 2017 (SEC File No.
001-34761) (“
October 2017
Form 8-K
”)
|
|
|
|
Seventh
Amended and Restated Bylaws of AutoWeb, Inc. dated October 9, 2017,
incorporated by reference to Exhibit 3.5 to the October 2017 Form
8-K
|
|
|
|
Tax
Benefit Preservation Plan dated as of May 26, 2010 between Company
and Computershare Trust Company, N.A., as rights agent, together
with the following exhibits thereto: Exhibit A – Form of
Right Certificate; and Exhibit B – Summary of Rights to
Purchase Shares of Preferred Stock of Company, incorporated by
reference to Exhibit 4.1 to the Current Report on Form 8-K filed
with the SEC on June 2, 2010 (SEC File No. 000-22239), Amendment
No. 1 to Tax Benefit Preservation Plan dated as of April 14, 2014,
between Company and Computershare Trust Company, N.A., as rights
agent, incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K filed with the SEC on April 16, 2014 (SEC File
No. 001-34761), Amendment No. 2 to Tax Benefit Preservation Plan
dated as of April 13, 2017, between Company and Computershare Trust
Company, N.A., as rights agent, incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on
April 14, 2017 (SEC File No. 001-34761)
|
|
|
|
Certificate
of Adjustment Under Section 11(m) of the Tax Benefit Preservation
Plan, incorporated by reference to Exhibit 4.3 to the Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
2012 filed with the SEC on November 8, 2012 (SEC File No.
001-34761)
|
|
|
|
Employment Agreement dated as of April 12, 2018 between Company and
Jared R. Rowe, incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K filed with the SEC on April 18, 2018
(SEC File No. 001-34761) (“
April 2018 Form
8-K
”)
|
|
|
|
Inducement Stock Option Award Agreement dated as of April 12, 2018
between Company and Jared R. Rowe, incorporated by reference to
Exhibit 10.2 to the April 2018 Form 8-K
|
|
|
|
Consulting Services Agreement dated as of April 12, 2018 between
Company and Jeffrey H. Coats, incorporated by reference to Exhibit
10.3 to the April 2018 Form 8-K
|
|
|
|
Second Amended and Restated Severance Benefits Agreement dated as
of April 12, 2018 between Company and Glenn E. Fuller, incorporated
by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2018, filed with the SEC
on May 10, 2018 (SEC File No. 001-34761)
|
|
|
|
Confidential Separation and Release Agreement dated as of June 1,
2018 between Company and Kimberly Boren
|
|
|
|
Consulting Services Agreement dated as of June 9, 2018 between
Company and Kimberly Boren
|
|
|
|
AutoWeb, Inc. 2018 Equity Incentive Plan, which is incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K filed
with the SEC on June 27, 2018 (SEC File No. 001-34761)
|
|
|
|
Form of Non-Employee Director Stock Option Award Agreement
(Non-Qualified Stock Option) under the AutoWeb, Inc. 2018 Equity
Incentive Plan
|
|
|
|
Form of Employee Stock Option Award Agreement (Non-Qualified Stock
Option) (Executive) under the AutoWeb, Inc. 2018 Equity Incentive
Plan
|
|
|
|
Form of Employee Stock Option Award Agreement (Non-Qualified Stock
Option) (Non-Executive) under the AutoWeb, Inc. 2018 Equity
Incentive Plan
|
|
|
|
Form of Restricted Stock Award Agreement under the AutoWeb, Inc.
2018 Equity Incentive Plan
|
|
|
|
Rule 13a-14(a)/15d-14(a) Certification by Principal Executive
Officer
|
|
|
|
Rule 13a-14(a)/15d-14(a) Certification by Principal Financial
Officer
|
|
|
|
Section 1350 Certification by Principal Executive Officer and
Principal Financial Officer
|
|
|
101.INS††
|
XBRL Instance Document
|
|
|
101.SCH††
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL††
|
XBRL Taxonomy Calculation Linkbase Document
|
|
|
101.DEF††
|
XBRL Taxonomy Extension Definition Document
|
|
|
101.LAB††
|
XBRL Taxonomy Label Linkbase Document
|
|
|
101.PRE††
|
XBRL Taxonomy Presentation Linkbase Document
|
■
Management
Contract or Compensatory Plan or Arrangement.
‡
Certain
schedules in this Exhibit have been omitted in accordance with Item
601(b)(2) of Regulation S-K. AutoWeb, Inc. will furnish
supplementally a copy of any omitted schedule or exhibit to the
Securities and Exchange Commission upon request; provided, however,
that AutoWeb, Inc. may request confidential treatment pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for
any schedule or exhibit so furnished.
††
Furnished
with this report. In accordance with Rule 406T of
Regulation S-T, the information in these exhibits shall not be
deemed to be “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject
to liability under that section, and shall not be incorporated by
reference into any registration statement or other document filed
under the Securities Act of 1933, as amended, except as expressly
set forth by specific reference in such filing.
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
|
|
|
|
|
|
|
|
|
|
Date: August 2, 2018
|
By:
|
/s/ Wesley
Ozima
|
|
|
|
|
Wesley Ozima
|
|
|
|
|
Senior Vice President and
Interim Chief Financial Officer
|
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
Exhibit 10.5
CONFIDENTIAL
SEPARATION AND RELEASE AGREEMENT
It is
hereby agreed by and between you, Kimberly Boren (for yourself,
your spouse, family, agents and attorneys) (jointly,
“
You
” or
“
Employee
”), and AutoWeb,
Inc. “
Company
”), as
follows:
1.
Separation of
Employment
. You acknowledge that your employment with the
Company ended effective April 12, 2018 (“
Employment Termination Date
”) by
reason of your voluntary resignation and that You will perform no
further duties, functions or services for the Company subsequent to
the Employment Termination Date (other such transition consulting
services to be provided by you pursuant to the Consulting Services
Agreement referred to below), and that your last day of employment
with the Company was the Employment Termination Date.
2.
Release
Consideration
. In exchange for and in consideration of your
promises and obligations in this Confidential Separation and
Release Agreement (“
Release
”), including the release
of claims set forth below, if You sign and do not revoke this
Release and this Release becomes effective, and subject to your
compliance with the terms of this Release, the Company will enter
into the Consulting Services Agreement attached hereto as Exhibit A
(“
Consulting
Agreement
”), which provides for the Consulting
Consideration set forth on the Consulting Services Schedule to the
Consulting Agreement.
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.
4.
Return of Company
Property
. You represent and warrant that You have returned
to the Company any and all documents, software, equipment
(including, but not limited to, computers and computer-related
items), and all other materials or other things in your possession,
custody, or control which are the property of the Company,
including, but not limited to, Company identification, keys,
computers, cell phones, and the like, wherever such items may have
been located; as well as all copies (in whatever form thereof) of
all materials relating to your employment, or obtained or created
in the course of your employment with the Company. You hereby
represent that, other than those materials You have returned to the
Company pursuant to this Section 4, You have not copied or caused
to be copied, and have not transferred or printed-out or caused to
be transferred or printed-out, any software, computer disks,
e-mails or other documents other than those documents generally
available to the public, or retained any other materials
originating with or belonging to the Company. You further represent
that You have not retained in your possession, custody or control,
any software, documents or other materials in machine or other
readable form, which are the property of the Company, originated
with the Company, or were obtained or created in the course of or
relate to your employment with the Company. The parties acknowledge
that You have in your possession a Company laptop computer as
provided for in, and subject to the terms and conditions of, the
Consulting Agreement.
5.
Confidentiality and
Non-Solicitation/Interference
.
(a)
You shall keep
confidential, and shall not hereafter use or disclose to any
person, firm, corporation, or other entity, in whole or in part, at
any time in the future, any trade secret, proprietary information,
or confidential information of the Company, including, but not
limited to, information relating to trade secrets, processes,
methods, pricing strategies, customer lists, marketing plans,
product introductions, advertising or promotional programs, sales,
financial results, financial records and reports, regulatory
matters and compliance, and other confidential matters, except as
required by applicable law, rule, regulation, legal process or
order and as necessary for compliance purposes. These obligations
are in addition to the obligations set forth in any confidentiality
or non-disclosure agreement between You and the Company, including,
without limitation, that certain Employee Confidentiality Agreement
dated as of April 26, 2010, which shall survive and remain binding
on You after the Employment Termination Date. The parties
understand that You may have trade secret, proprietary information
or confidential information of the Company related to certain
proposed acquisitions or other transactions on your personal
electronic devices. You acknowledge that any trade secrets,
proprietary information or confidential information remains subject
to your confidentiality obligations to the Company and that you
remain responsible for maintaining the confidentiality of the
Company’s trade secrets, proprietary information or
confidential information. You will use all reasonable efforts to
delete all Company trade secrets, proprietary information or
confidential information from your personal electronic
devices.
(b)
Unless required by
applicable law, rule, regulation, legal process or order or to
enforce this Release, Employee shall not disclose the existence of
the Release or this Release or the underlying terms to any third
party, including without limitation, any former, present or future
employee of the Company, other than to Employee’s immediate
family who have a need to know such matters or to Employee’s
tax or legal advisors who have a need to know such matters. If
Employee does disclose this Release, or any of its terms to any of
Employee’s immediate family or tax or legal advisors, then
Employee will inform them that they also must keep the existence of
this Release and it terms confidential. The Company may disclose
the existence or terms of this Release and its terms and may file
this Release as exhibits to its public filings if it is required to
do so under applicable law, rule, regulation or order.
6.
Unconditional
General Release of Claims
.
(a)
In consideration
for the entering into the Consulting Agreement as provided for in
Section 2, and notwithstanding the provisions of Section 1542 of
the Civil Code of California, You unconditionally release and
forever discharge the Company, and the Company’s current,
former, and future controlling shareholders, subsidiaries,
affiliates, related companies, predecessor companies, divisions,
directors, trustees, officers, employees, agents, attorneys,
successors, and assigns (and the current, former, and future
controlling shareholders, directors, trustees, officers, employees,
agents, and attorneys of any such subsidiaries, affiliates, related
companies, predecessor companies, and divisions) (all of the
foregoing released persons or entities being referred to herein
collectively as “
Releasees
”), from any and all
known and unknown claims, complaints, demands, actions, suits,
causes of action, obligations, damages and liabilities of whatever
kind or nature, whether known or unknown and regardless of whether
the knowledge thereof would have materially affected your agreement
to release the Company hereunder, based on any act, omission,
event, occurrence, or nonoccurrence from the
beginning of time
to the date of execution of this Release, including, but not
limited to, claims that arise out of or in any way relate to your
employment or your separation from employment with the
Company.
(b)
You acknowledge and
agree that the foregoing unconditional and general release
includes, but is not limited to, (i) any claims for salary,
bonuses, commissions, equity, compensation (except as specified in
this Release), 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 (“
ADEA
”), 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, and
the Worker Adjustment and Retraining Notification Act; (iv)
whistleblower claims, claims of breach of implied or express
contract, breach of promise, misrepresentation, negligence, fraud,
estoppel, defamation, infliction of emotional distress, violation
of public policy, wrongful or constructive discharge, or any other
employment-related tort, and any claims for costs, fees, or other
expenses, including attorneys’ fees; and (v) any other aspect
of your employment or the termination of your
employment.
(c)
For the purpose of
implementing a full and complete release, You expressly acknowledge
and agree that this Release resolves all claims You may have
against the Company and the Releasees as of the date of this
Release, including but limited to claims that You did not know or
suspect to exist in your favor at the time of the execution of this
Release. You expressly waive any and all rights which You may have
under the provisions of Section 1542 of the California Civil Code
or any similar state or federal statute. Section 1542 provides as
follows:
“A general
release does not extend to claims which the creditor does not know
or suspect to exist in his or her favor at the time of executing
the release, which if known by him or her must have materially
affected his or her settlement with the debtor.”
(d)
You hereby certify
that You have not experienced a job-related illness or injury for
which You have not already filed a claim.
(e)
This general
release does not waive or release rights or claims arising after
You sign this Release, including claims to enforce this
Release.
7.
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 any Releasee in defending against your suit, including
reasonable attorneys’ fees, or, at the Company’s
option, return everything paid to You under this
Release.
In that
event, the Company shall be excused from making any further
payments owed to You under paragraph 2 of this Release.
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.
8.
Cooperation With
Company
. You agree to assist and cooperate (including, but
not limited to, providing information to the Company and/or
testifying truthfully in a proceeding) in the investigation and
handling of any internal investigation, governmental matter, or
actual or threatened court action, arbitration, administrative
proceeding, or other claim involving any matter that arose during
the period of your employment. You shall be reimbursed for
reasonable expenses actually incurred in the course of rendering
such assistance and cooperation. Your agreement to assist and
cooperate shall not affect in any way the content of information or
testimony provided by You.
9.
No
Reemployment
.
You
agree not to seek employment in the future with any Releasee. 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.
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 Release are
for convenience only and shall not control the meaning, effect, or
construction of this Release.
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
Rights.
(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 or in the Confidentiality
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 You are relying upon none. This represents the
entire agreement between You and the Company with respect to the
subject matter hereof, and supersedes 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 of, or related to, this Release,
or the breach thereof, shall be governed by the terms of the
Arbitration Agreement (as defined in the Severance Benefits
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 sign this Release
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 you sign this Release (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 specified in Paragraph 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.
|
|
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|
Dated June 1,
2018
|
|
/s/
Kimberly
Boren
|
|
|
|
Kimberly
Boren
|
|
|
|
|
|
|
|
A
UTO
W
EB
,
I
NC
.
|
|
|
|
|
|
|
Dated June
11, 2018
|
|
By:
|
/s/
Glenn
E. Fuller
|
|
|
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|
Glenn E.
Fuller
|
|
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|
EVP, Chief Legal
and Administrative Officer and Secretary
|
|
Exhibit
A
Form
of Consulting Services Agreement
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 EVP, Chief Financial Officer and
voluntarily resigned her positions at, and employment with, the
Company and its affiliated entities effective as of April 12, 2018
(“
Employment Termination
Date
”) in order to take a position with another
company. 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 until the first 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, and to the extent permitted
by applicable law, rule, regulation or order, 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
com
(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
Consideration
. In consideration for the performance of the
Consulting Services, Consultant shall receive the 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 includes 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 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 three (3)
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 one (1) year 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 one (1)-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:
|
Company
|
|
|
AutoWeb,
Inc.
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Glenn E.
Fuller
|
|
|
|
EVP, Chief Legal
and Administrative Officer and Secretary
|
|
|
“
Consultant”
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly
Boren
|
|
|
|
|
|
Exhibit
A
Consulting
Services Schedule
Consultant Name
: Kimberly
Boren
Consultant
Contact Information
for Notice Purposes
: Kimberly
Boren
[Personal Residence Information Redacted]
Consulting Services
: Consultant will
make herself available on an as-needed basis (subject to reasonable
notice and at reasonable times not interfering with
Consultant’s employment with her new employer), to provide,
and will provide, transition support services for the
Company’s accounting, banking, financial, governmental
reporting, finance, strategic transactions modeling and investor
relation functions.
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
50 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.
Stock
Options
.
(a)
Vesting
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
”) will
continue to vest in accordance with their normal vesting schedules
set forth in the applicable stock option award agreements during
the Consulting Term. Any Employment Stock Options that remain
unvested at the end of the Consulting Term shall terminate and be
cancelled at that time, and in no event shall any Employment Stock
Options vest if such Employment Stock Options would have vested
after the end of the Consulting Term. Notwithstanding any
provisions in the applicable stock option award agreements for the
Employment Stock Options to the contrary, the vesting of Employment
Stock Options shall not be accelerated if any acceleration event
provided for in the applicable stock option award agreements occurs
during the Consulting Term;
provided, however
, that if the acceleration event is a
change in control (as defined for purposes of the stock option
award agreements) of the Company, then the vesting of any unvested
Employment Stock Options shall be accelerated to the extent and as
provided in the applicable stock option award agreements. In no
event shall any Employee Stock Options vest (whether in accordance
with their normal vesting schedule or by reason of the limited
acceleration of vesting set forth above) after the original
expiration dates of the Employee Stock Options set forth in the
applicable stock option award agreements for the Employment Stock
Options.
(b)
Post-Termination
of Employment Exerise Periods
. Any post-employment
termination exercise periods 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 periods extend beyond the
original expiration
dates of the Employee Stock Options set forth in the applicable
stock option award agreements for such Employee Stock
Options.
(c)
Amendments
to Award Agreements
. The applicable provisions of the stock
option award agreements for the Employee Stock Options are hereby
amended to implement the vesting continuation and limited vesting
acceleration set forth in clause (a) of this paragraph 1 and the
tolling of the post-termination exercise periods set forth in
clause (b) of this paragraph 1.
Plan
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
|
Original
Expiration
Date
|
12/7/11 NQ $0.76
10IP
|
12/7/2011
|
$3.80
|
10,000
|
10,000
Covered
under
Rule 10b5-1 Plan
|
0
|
May exercise vested
options for a period of 90 days
|
12/7/2018
|
04/26/2010 NQ $0.79
06IP
|
4/26/2010
|
$3.95
|
5,000
|
5,000
|
0
|
May exercise vested
options for a period of
90
days
|
4/23/2020
|
1/10/12 NQ $0.78
10IP
Performance
|
1/10/2012
|
$3.90
|
12,340
|
12,340
|
0
|
May exercise vested
options for a period of
90
days
|
1/10/2019
|
1/24/13 NQ $4.00
10IP
Performance
|
1/24/2013
|
$4.00
|
6,875
|
6,875
|
0
|
May exercise vested
options for a period of
90
days
|
1/24/2020
|
3/17/14 NQ $14.32
10IP
|
3/17/2014
|
$14.32
|
7,400
|
7,400
|
0
|
May exercise vested
options for a period of
90
days
|
3/17/2021
|
1/21/15 NQ $9.10
2014IP
|
1/21/2015
|
$9.10
|
20,000
|
20,000
|
0
|
May exercise vested
options for a period of
90
days
|
1/21/2022
|
1/23/15 NQ $10.20
2014IP
|
1/23/2015
|
$10.20
|
15,000
|
15,000
|
0
|
May exercise vested
options for a period of
90
days
|
1/23/2022
|
5/18/15 NQ $13.22
2014IP
|
5/18/2015
|
$13.22
|
6,000
|
5,668
|
332
|
May exercise vested
options for a period of
90
days
|
5/18/2022
|
7/15/16 NQ $14.41
2014 AR IP
|
7/15/2016
|
$14.41
|
30,000
|
16,672
|
13,328
|
May exercise vested
options for a period of
90
days
|
7/15/2023
|
01/26/17 NQ $13.81
2014 AR IP
|
1/26/2017
|
$13.81
|
20,000
|
7,790
|
12,210
|
May exercise vested
options for a period of
90
days
|
1/26/2024
|
2.
Restricted
Shares
.
(a)
Lapsing
of Forfeiture Restrictions
. Consultant was awarded 40,000
shares of restricted stock on September 27, 2017
(“
Restricted
Shares
”). The forfeiture restrictions set forth in the
award agreement for the Restricted Shares lapse as to one-third
(1/3
rd
) of the Restricted
Shares each anniversary of the award date over three years. The
forfeiture restrictions will continue to lapse in accordance with
their
normal lapse
schedule set forth in the restricted stock award agreement for the
Restricted Shares during the Consulting Term, such that, provided
this Agreement has not been terminated by either party in
accordance with Section 1.2 prior to September 27, 2018, the
forfeiture restrictions on the first one-third (1/3
rd
) of the Restricted Shares (13,333
shares) shall lapse as of September 27, 2018, and all other
Restricted Shares shall terminate and be cancelled as of the end of
the Consulting Term, absent any acceleration of the lapsing of the
forfeiture restrictions as provided in clause (b) below prior to
the end of the Consulting Term. In no event shall the forfeiture
restrictions for any Restricted Shares lapse after the end of the
Consulting Term, and all Restricted Shares that remain subject to
forfeiture restrictions as of the end of the Consulting Term shall
be terminated and cancelled as of the end of the Consulting
Term.
(b)
Acceleration
of Lapsing
. Notwithstanding any provisions in the Restricted
Shares award agreement to the contrary, the lapsing of the
forfeiture restrictions for the Restricted Shares shall not be
accelerated if any acceleration event provided for in the
Restricted Shares award agreement occurs during the Consulting
Term;
provided, however
, that if the acceleration event is a
change in control (as defined for purposes of the Restricted Shares
award agreement) of the Company, then the lapsing of the forfeiture
restrictions shall be accelerated for any Restricted Shares that
are at the time still subject to forfeiture restrictions to the
extent and as provided in the Restricted Shares award
agreement.
(c)
Amendment
to Restricted Shares Award Agreement
. The applicable
provisions of the Restricted Shares award agreement are hereby
amended to implement the forfeiture restrictions lapsing
continuation set forth in clause (a) of this paragraph 2 and the
limited acceleration of the forfeiture lapsing provisions set forth
in clause (b) of this paragraph 2.
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, and the availability and use of the
Company laptop computer is not a condition or requirement for
Consultant’s performance of the Consulting Services. All such
Company equipment shall be returned to the Company at the end of
the Consulting Term or at any time prior to the end of the
Consulting Terms upon request by the Company. Consultant agrees
that Consultant will comply with all Company policies and
procedures regarding the use of Company equipment and systems as if
Consultant were employed by the Company.
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 EVP, Chief Financial Officer and
voluntarily resigned her positions at, and employment with, the
Company and its affiliated entities effective as of April 12, 2018
(“
Employment Termination
Date
”) in order to take a position with another
company. 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 until and including April 11,
2019 (“
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, and to the extent permitted
by applicable law, rule, regulation or order, 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.
(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
Consideration
. In consideration for the performance of the
Consulting Services, Consultant shall receive the 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 includes 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 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 three (3) 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
l
imiting 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 e
xtent 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 one (1) year 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 one (1)-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:
June 9, 2018
|
Company
|
|
|
AutoWeb,
Inc.
|
|
|
|
|
|
|
By:
|
/s/
Glenn
E. Fuller
|
|
|
|
Glenn E.
Fuller
|
|
|
|
EVP,
Chief Legal and Administrative
Officer
and Secretary
|
|
|
“
Consultant”
|
|
|
|
|
|
|
By:
|
/s/
Kimberly
Boren
|
|
|
|
Kimberly
Boren
|
|
|
|
|
|
Exhibit A
Consulting Services Schedule
Consultant
Name
:
Kimberly
Boren
Consultant Contact Information
for Notice
Purposes
:
Kimberly
Boren
[Personal
Residence Information Redacted]
Consulting Services
: Consultant will make herself available
on an as-needed basis (subject to reasonable notice and at
reasonable times not interfering with Consultant’s employment
with her new employer), to provide, and will provide, transition
support services for the Company’s accounting, banking,
financial, governmental reporting, finance, strategic transactions
modeling and investor relation functions.
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
50 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.
Stock
Options
.
(a)
Vesting
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
”) will
continue to vest in accordance with their normal vesting schedules
set forth in the applicable stock option award agreements during
the period commencing on the Employment Termination Date and ending
as of the end of the Consulting Term. Any Employment Stock Options
that remain unvested at the end of the Consulting Term shall
terminate and be cancelled at that time, and in no event shall any
Employment Stock Options vest if such Employment Stock Options
would have vested after the end of the Consulting Term.
Notwithstanding any provisions in the applicable stock option award
agreements for the Employment Stock Options to the contrary, the
vesting of Employment Stock Options shall not be accelerated if any
acceleration event provided for in the applicable stock option
award agreements occurs during the Consulting Term;
provided, however
, that if the acceleration event is a
change in control (as defined for purposes of the stock option
award agreements) of the Company, then the vesting of any unvested
Employment Stock Options shall be accelerated to the extent and as
provided in the applicable stock option award agreements. In no
event shall any Employee Stock Options vest (whether in accordance
with their normal vesting schedule or by reason of the limited
acceleration of vesting set forth above) after the original
expiration dates of the Employee Stock Options set forth in the
applicable stock option award agreements for the Employment Stock
Options.
(b)
Post-Termination
of Employment Exercise Periods
. Any post-employment
termination exercise periods 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 periods extend beyond the original
expiration dates of the Employee Stock Options set forth in the
applicable stock option award agreements for such Employee Stock
Options.
(c)
Amendments
to Award Agreements
. The applicable provisions of the stock
option award agreements for the Employee Stock Options are hereby
amended to implement the vesting continuation and limited vesting
acceleration set forth in clause (a) of this paragraph 1 and the
tolling of the post-termination exercise periods set forth in
clause (b) of this paragraph 1.
Plan
Name
|
Grant
Date
|
Grant
Price
|
Original
Options
Granted
|
Options
V
ested
as
of
Employment
Termination
Date
|
Options
Unvested
as
of
Employment
Termination
Date
|
Original
Post-
Termination
of
Employment
Exercise
Window
|
Original
Expiration
Date
|
12/7/11 NQ $0.76
10IP
|
12/7/2011
|
$3.80
|
10,000
|
10,000
Covered
under Rule 10b5-1 Plan
|
0
|
May exercise vested
options for a period of
90
days
|
12/7/2018
|
04/26/2010 NQ $0.79
06IP
|
4/26/2010
|
$3.95
|
5,000
|
5,000
|
0
|
May exercise vested
options for a period of
90
days
|
4/23/2020
|
1/10/12 NQ $0.78
10IP Performance
|
1/10/2012
|
$3.90
|
12,340
|
12,340
|
0
|
May exercise vested
options for a period of
90
days
|
1/10/2019
|
1/24/13 NQ $4.00
10IP Performance
|
1/24/2013
|
$4.00
|
6,875
|
6,875
|
0
|
May exercise vested
options for a period of
90
days
|
1/24/2020
|
3/17/14 NQ $14.32
10IP
|
3/17/2014
|
$14.32
|
7,400
|
7,400
|
0
|
May exercise vested
options for a period of
90
days
|
3/17/2021
|
1/21/15 NQ $9.10
2014IP
|
1/21/2015
|
$9.10
|
20,000
|
20,000
|
0
|
May exercise vested
options for a period of
90
days
|
1/21/2022
|
1/23/15 NQ $10.20
2014IP
|
1/23/2015
|
$10.20
|
15,000
|
15,000
|
0
|
May exercise vested
options for a period of
90
days
|
1/23/2022
|
5/18/15 NQ $13.22
2014IP
|
5/18/2015
|
$13.22
|
6,000
|
5,668
|
332
|
May exercise vested
options for a period of
90
days
|
5/18/2022
|
7/15/16 NQ $14.41
2014 AR IP
|
7/15/2016
|
$14.41
|
30,000
|
16,672
|
13,328
|
May exercise vested
options for a period of
90
days
|
7/15/2023
|
01/26/17 NQ $13.81
2014 AR IP
|
1/26/2017
|
$13.81
|
20,000
|
7,790
|
12,210
|
May exercise vested
options for a period of
90
days
|
1/26/2024
|
2.
Restricted
Shares
.
(a)
Lapsing
of Forfeiture Restrictions
. Consultant was awarded 40,000
shares of restricted stock on September 27, 2017
(“
Restricted
Shares
”). The forfeiture restrictions set forth in the
award agreement for the Restricted Shares lapse as to one-third
(1/3
rd
) of
the Restricted Shares each anniversary of the award date over three
years. The forfeiture restrictions will continue to lapse in
accordance with their normal lapse schedule set forth in the
restricted stock award agreement for the Restricted Shares during
the Consulting Term, such that, provided this Agreement has not
been terminated by either party in accordance with Section 1.2
prior to September 27, 2018, the forfeiture restrictions on the
first one-third (1/3
rd
) of the Restricted
Shares (13,333 shares) shall lapse as of September 27, 2018, and
all other Restricted Shares shall terminate and be cancelled as of
the end of the Consulting Term, absent any acceleration of the
lapsing of the forfeiture restrictions as provided in clause (b)
below prior to the end of the Consulting Term. In no event shall
the forfeiture restrictions for any Restricted Shares lapse after
the end of the Consulting Term, and all Restricted Shares that
remain subject to forfeiture restrictions as of the end of the
Consulting Term shall be terminated and cancelled as of the end of
the Consulting Term.
(b)
Acceleration
of Lapsing
. Notwithstanding any provisions in the Restricted
Shares award agreement to the contrary, the lapsing of the
forfeiture restrictions for the Restricted Shares shall not be
accelerated if any acceleration event provided for in the
Restricted Shares award agreement occurs during the Consulting
Term;
provided, however
, that if the acceleration event is a
change in control (as defined for purposes of the Restricted Shares
award agreement) of the Company, then the lapsing of the forfeiture
restrictions shall be accelerated for any Restricted Shares that
are at the time still subject to forfeiture restrictions to the
extent and as provided in the Restricted Shares award
agreement.
(c)
Amendment
to Restricted Shares Award Agreement
. The applicable
provisions of the Restricted Shares award agreement are hereby
amended to implement the forfeiture restrictions lapsing
continuation set forth in clause (a) of this paragraph 2 and the
limited acceleration of the forfeiture lapsing provisions set forth
in clause (b) of this paragraph 2.
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, and the availability and use of the
Company laptop computer is not a condition or requirement for
Consultant’s performance of the Consulting Services. All such
Company equipment shall be returned to the Company at the end of
the Consulting Term or at any time prior to the end of the
Consulting Terms upon request by the Company. Consultant agrees
that Consultant will comply with all Company policies and
procedures regarding the use of Company equipment and systems as if
Consultant were employed by the Company.
AUTOWEB, INC.
2018 EQUITY INCENTIVE PLAN
Non-Employee Director Stock Option Award Agreement
(Non-Qualified Stock Option)
This
Non-Employee Director 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 member of
Company’s Board set forth as Participant on the signature
page hereto (“
Participant
”).
This
Agreement and the stock options granted hereby are subject to the
provisions of the AutoWeb, Inc. 2018 Equity Incentive Plan
(“
Plan
”). In the
event of a conflict between the provisions of the Plan and this
Agreement, the Plan shall control. Capitalized terms used but not
defined in this Agreement shall have the meanings assigned to such
terms in the Plan.
1.
Grant of Options
. Company
hereby grants to Participant 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.
2.
Term of Options
. Unless the
Options terminate earlier pursuant to the provisions of this
Agreement or the Plan, the Options shall expire on the
seventh
(7
th
) anniversary of the
Grant Date (“
Option
Expiration Date
”).
3.
Vesting
. The Options shall vest
in twelve monthly installments of one-twelfth (1/12) each on the
[Day] day of each month commencing [One Month After Grant
Date].
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 6(f) of this Agreement 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 that are being
exercised, and shall be accompanied by full payment of the Exercise
Price of such Shares in a manner permitted under the terms of
Section 5.5 of the Plan (including same-day sales through a
broker), 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 may only be made with the consent of the Committee. 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, if
any, the Company shall issue to Participant 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 Participant 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. Participant hereby agrees that Company may
withhold from Participant’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 Participant on exercise of the Options, up to
Participant’s minimum required withholding rate or such other
rate determined by the Committee that will not trigger a negative
accounting impact.
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 Participant
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 Service as
a Director
.
(i)
Termination
of Service as a Director Other Than Due to Death, Disability or
Cause
. Participant may exercise the vested portion of the
Options for a period of twelve (12) months (but in no event later
than the Option Expiration Date) following any termination of
Participant’s service as a Director of Company (including
termination of service by reason of Participant’s
resignation, failure to be re-elected or failure to be nominated
for re-election), other than in the event of a termination of
Participant’s service as a Director due to Removal for Cause
(as defined below) or by reason of Participant’s death or
Disability (as defined below). In the event the termination of
Participant’s service as a Director or the Company is due to
resignation, failure to be re-elected, failure to be nominated for
re-election, or without Removal for Cause, any unvested portion of
the Options shall immediately become fully vested as of the date of
such termination of service. To the extent Participant is not
entitled to exercise the Options at the date of termination of
service as a Director, or if Participant does not exercise the
Options within the time specified in the Plan or this Agreement for
post-termination of service exercises of the Options, the Options
shall terminate.
(ii)
Termination
of Service Due to Removal for Cause
. Upon the termination of
Participant’s service as a Director due to Removal 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
Participant given as of the date of Removal for Cause, authorize
Participant to exercise any vested portion of the Options for a
period of up to thirty (30) days following Participant’s
termination of service due to Removal for Cause, provided that in
no event may Participant exercise the Options after the Option
Expiration Date. For purposes of this Agreement,
“
Removal for
Cause
” shall mean a removal of Participant as a member
of the Board by Company’s stockholders pursuant to applicable
corporate laws governing the removal of Directors.
(iii)
Termination of Participant’s
Service as a Director By Reason of Participant’s
Death.
In the event Participant’s service as a
Director is terminated by reason of Participant’s death,
unless the Options have earlier terminated, any unvested portion of
the Options shall become immediately and fully vested as of the
date of termination. Vested Options may be exercised at any time
within twelve (12) months following the date of termination (but in
no event later than the Option Expiration Date) by
Participant’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
Participant could exercise the Options at the date of
termination.
(iv)
Termination
of Participant’s Service as a Director By Reason of
Participant’s Disability
. In the event that
Participant ceases to be a Director by reason of
Participant’s Disability, unless the Options have earlier
terminated, any unvested portion of the Options shall become
immediately and fully vested as of the date of termination.
Participant (or Participant’s attorney in fact, conservator
or other representative on behalf of Participant) may, but only
within twelve (12) months from the date of such termination of
service as a Director (and in no event later than the Option
Expiration Date), exercise the Options to the extent Participant
was otherwise entitled to exercise the Options at the date of such
termination of service. For purposes of this Agreement,
“
Disability
”
shall mean Participant’s becoming “permanently and
totally disabled” within the meaning of Section 22(e)(3) of
the Code or as otherwise determined by the Committee in its
discretion. The Committee may require such proof of Disability as
the Committee in its sole and absolute discretion deems
appropriate, and the Committee’s determination as to whether
Participant has incurred a Disability shall be final and binding on
all parties concerned.
(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 10 of the Plan), provided that (i) to the extent the
Options are assumed or substituted by the successor company in
connection with the Change in Control (or the Options are continued
by Company if it is the ultimate parent entity after the Change in
Control), the Options will vest and become fully exercisable in
accordance with clause (i) of Section 10.2(a) of the Plan if within
twenty-four (24) months following the date of the Change in Control
Participant’s service as a Director of the Company is
terminated for any reason other than by reason of removal for
Cause, 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
such termination of service (but in no event later than the Option
Expiration Date); and (ii) any portion of the Options which vests
and becomes exercisable pursuant to Section 10.2(b) of the Plan 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 Participant is then a member of the Company’s Board and
(2) terminate on the date of the Change in Control. For purposes of
Section 10.2 (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.
If the Options are not deemed assumed, substituted or continued for
purposes of Section 10.2(a) of the Plan, the Options shall be
deemed not assumed, substituted or continued and governed by
Section 10.2(b) of the Plan. Notwithstanding the foregoing, 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.
Termination
of Participant’s Service as a Director By Reason of
Participant’s Death.
(d)
Extension
of Post-Termination Exercise Period
. Notwithstanding any provisions of this
Section 5 to the contrary, if following termination of service on
the Board, 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)
Forfeiture
upon Engaging in Detrimental Activities
. If, at any
time within the twelve (12) months after (i) Participant exercises
any portion of the Options; or (ii) the effective date of any
termination of Participant’s service as a Director of Company
for any reason, Participant engages in, or is determined by the
Committee in its sole discretion to have engaged in, any (i)
material breach of any non-competition, non-solicitation,
non-disclosure or settlement or release covenant or agreement with
Company or any Subsidiary; or (ii) activities during the course of
Participant’s service as a Director with Company or any
Subsidiary constituting fraud, embezzlement, theft or dishonesty;
or (iii) activity that is otherwise in conflict with, or adverse or
detrimental to the interests of Company or any Subsidiary, then (x)
the Options shall terminate effective as of the date on which
Participant 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 Participant
from exercising all or a portion of the Options at any time
following the date that Participant engaged in any such activity or
conduct, as determined as of the time of exercise, shall be
forfeited by Participant and shall be paid by Participant to
Company, and recoverable by Company, within sixty (60) days
following such termination date of the Options. For purposes of the
foregoing, the following will be deemed to be activities in
conflict with or adverse or detrimental to the interests of Company
or any Subsidiary: (i) Participant’s conviction of, or
pleading guilty or nolo contendere to any misdemeanor involving
moral turpitude or any felony, the underlying events of which
related to Participant’s service as a Director of Company;
(ii) knowingly engaged or aided in any act or transaction by
Company or a Subsidiary that results in the imposition of criminal,
civil or administrative penalties against Company or any
Subsidiary; or (iii) misconduct during the course of
Participant’s service as a Director of Company or any
Subsidiary that results in an accounting restatement by Company due
to material noncompliance with any financial reporting requirement
under applicable securities laws, whether such restatement occurs
during or after Participant’s service as a Director of
Company or any Subsidiary.
(f)
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.
(g)
Reversion
of Expired, Cancelled and Forfeited Options to Plan
. Any
Options that do not vest or that are cancelled, terminated or
expire unexercised are forfeited and revert to the Plan and shall
again be available for Awards under the Plan.
(a)
No
Rights of Stockholder
. Participant 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.
Notwithstanding the foregoing, Participant 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 Participant’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
Notice
to Participant should be addressed to Participant at
Participant’s address as it appears on Company’s
records.
Company
or Participant 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 a Service
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 Participant’s part to continue as a Director or
on Company’s part to continue Participant’s service as
a Director.
(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 the Plan and this
Agreement and to adopt such rules for the administration,
interpretation and application of the Plan and this Agreement as
are consistent with the Plan 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 Participant, 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 the Plan or this Agreement.
(j
)
Policies and
Procedures
. Participant agrees that Company may impose, and
Participant 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 and the Plan contain the entire
agreement between the parties with respect to the subject matter
contained herein and may not be modified except as provided in the
Plan 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:
_______________________________________
Total
Options Awarded: ______________________________
Exercise Price Per
Share: _____________________________
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“Company”
AutoWeb, Inc., a
Delaware corporation
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By:
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[Company
Representative]
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[Title]
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“Participant”
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By:
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[Participant’s
Name]
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[Title
]
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AUTOWEB, INC.
2018 EQUITY INCENTIVE PLAN
Employee Stock Option Award Agreement
(Non-Qualified Stock Option)
(Executive)
This
Employee 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 Participant on the signature page hereto
(“
Participant
”).
This
Agreement and the stock options granted hereby are subject to the
provisions of the AutoWeb, Inc. 2018 Equity Incentive Plan
(“
Plan
”). In the
event of a conflict between the provisions of the Plan and this
Agreement, the Plan shall control. Capitalized terms used but not
defined in this Agreement shall have the meanings assigned to such
terms in the Plan.
1.
Grant of Options
. Company
hereby grants to Participant 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.
2.
Term of Options
. Unless the
Options terminate earlier pursuant to the provisions of this
Agreement or the Plan, 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
(“
Vesting
Schedule
”).
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 6(f) of this Agreement 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 that are being
exercised and shall be accompanied by full payment of the Exercise
Price of such Shares in a manner permitted under the terms of
Section 5.5 of the Plan (including same-day sales through a
broker), 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
may only be made with the consent of the Committee. 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, if
any, the Company shall issue to Participant 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 Participant 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. Participant hereby agrees that Company may
withhold from Participant’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 Participant on exercise of the Options, up to
Participant’s minimum required withholding rate or such other
rate determined by the Committee that will not trigger a negative
accounting impact.
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 Participant 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) Participant
may exercise the vested portion of the Options for a period of
ninety (90) days (but in no event later than the Option Expiration
Date) following any termination of Participant’s employment
with Company, either by Participant or Company, other than in the
event of a termination of Participant’s employment by Company
for Cause (as defined below), voluntary termination by Participant
without Good Reason (as defined below) or by reason of
Participant’s death or Disability (as defined below). In the
event the termination of Participant’s employment is by
Company without Cause or by Participant for Good Reason, any
unvested portion of the Options shall become immediately and fully
vested as of the date of such termination.
(2) In
the event of a voluntary termination of employment with the Company
by Participant 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) Participant 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) For
purposes of this Agreement, the terms “
Cause
” and “
Good Reason
”
shall have the meanings ascribed
to them in that certain Severance Benefits Agreement listed on the
signature page to this Agreement by and between Company and
Participant (“
Severance
Agreement
”). To the extent Participant is not entitled
to exercise the Options at the date of termination of employment,
or if Participant does not exercise the Options within the time
specified in the Plan or this Agreement for post-termination of
employment exercises of the Options, the Options shall
terminate.
(ii)
Termination
of Employment for Cause
. Upon the termination of
Participant’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
Participant given as of the date of termination, authorize
Participant to exercise any vested portion of the Options for a
period of up to thirty (30) days following Participant’s
termination of employment for Cause, provided that in no event may
Participant exercise the Options beyond the Option Expiration
Date.
(iii)
Termination
of Participant’s Employment By Reason of Participant’s
Death
. In the event Participant’s employment is
terminated by reason of Participant’s death, the Options, to
the extent vested as of the date of termination, may be exercised
at any time within twelve (12) months following the date of
termination (but in no event later than the Option Expiration Date)
by Participant’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
Participant could exercise the Options at the date of
termination.
(iv)
Termination
of Participant’s Employment By Reason of Participant’s
Disability
. In the event that Participant ceases to be an
Employee by reason of Participant’s Disability, unless the
Options have earlier terminated, Participant (or
Participant’s attorney-in-fact, conservator or other
representative on behalf of Participant) may, but only within
twelve (12) months from the date of such termination of employment
(and in no event later than the Option Expiration Date), exercise
the Options to the extent Participant was otherwise entitled to
exercise the Options at the date of such termination of employment.
For purposes of this Agreement, “
Disability
” shall mean
Participant’s becoming “permanently and totally
disabled” within the meaning of Section 22(e)(3) of the Code
or as otherwise determined by the Committee in its discretion. The
Committee may require such proof of Disability as the Committee in
its sole and absolute discretion deems appropriate, and the
Committee’s determination as to whether Participant has
incurred a Disability shall be final and binding on all parties
concerned.
(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 10 of the Plan), provided that (i) to the extent the
Options are assumed or substituted by the successor company in
connection with the Change in Control (or the Options are continued
by Company if it is the ultimate parent entity after the Change in
Control), the Options will vest and become fully exercisable in
accordance with clause (i) of Section 10.2(a) of the Plan if within
twenty-four (24) months following the date of the Change in Control
Participant’s employment is terminated by Company or a
Subsidiary (or the successor company or a subsidiary or parent
thereof) without Cause or by Participant for Good Reason, 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 such
termination 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 Section 10.2(b) of the Plan 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 Participant is then employed by Company or a Subsidiary and (2)
terminate on the date of the Change in Control. For purposes of
Section 10.2(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.
If the Options are not deemed assumed, substituted or continued for
purposes of Section 10.2(a) of the Plan, the Options shall be
deemed not assumed, substituted or continued and governed by
Section 10.2(b) of the Plan. Notwithstanding the foregoing, 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.
(d)
Extension
of Post-Termination 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)
Other
Governing Agreements or Plans
. To the extent not prohibited
by the Plan, 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.
(f)
Forfeiture
upon Engaging in Detrimental Activities
. If, at any
time within the twelve (12) months after (i) Participant exercises
any portion of the Options; or (ii) the effective date of any
termination of Participant’s employment by Company or by
Participant for any reason, Participant engages in, or is
determined by the Committee in its sole discretion to have engaged
in, any (i) material breach of any non-competition,
non-solicitation, non-disclosure or settlement or release covenant
or agreement with Company or any Subsidiary; (ii) activities during
the course of Participant’s employment with Company or any
Subsidiary constituting fraud, embezzlement, theft or dishonesty;
or (iii) activity that is otherwise in conflict with, or adverse or
detrimental to the interests of Company or any Subsidiary, then (x)
the Options shall terminate effective as of the date on which
Participant 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 Participant
from exercising all or a portion of the Options at any time
following the date that Participant engaged in any such activity or
conduct, as determined as of the time of exercise, shall be
forfeited by Participant and shall be paid by Participant to
Company, and recoverable by Company, within sixty (60) days
following such termination date of the Options. For purposes
of the foregoing, the following will be deemed to be activities in
conflict with or adverse or detrimental to the interests of Company
or any Subsidiary: (i) Participant’s conviction of, or
pleading guilty or nolo contendere to any misdemeanor involving
moral turpitude or any felony, the underlying events of which
related to Participant’s employment with Company; (ii)
knowingly engaged or aided in any act or transaction by Company or
a Subsidiary that results in the imposition of criminal, civil or
administrative penalties against Company or any Subsidiary; or
(iii) misconduct during the course of Participant’s
employment by Company or any Subsidiary that results in an
accounting restatement by Company due to material noncompliance
with any financial reporting requirement under applicable
securities laws, whether such restatement occurs during or after
Participant’s employment by Company or any
Subsidiary.
(g)
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.
(h)
Reversion
of Expired, Cancelled and Forfeited Options to Plan
. Any
Options that do not vest or that are cancelled, terminated or
expire unexercised are forfeited and revert to the Plan and shall
again be available for Awards under the Plan.
6.
Miscellaneous
.
(a)
No
Rights of Stockholder
. Participant 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.
Notwithstanding the foregoing, Participant 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 Participant’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
Notice
to Participant should be addressed to Participant at
Participant’s address as it appears on Company’s
records.
Company
or Participant 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 Participant’s part to continue
as an Employee of Company or any Subsidiary or on the part of
Company or any Subsidiary to continue Participant’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 the Plan and this
Agreement and to adopt such rules for the administration,
interpretation and application of the Plan and this Agreement as
are consistent with the Plan 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 Participant, 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 the Plan or this Agreement.
(j)
Policies
and Procedures
. Participant agrees that Company may impose,
and Participant 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 the Company following a
public offering of the 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 and the Plan contain
the entire agreement between the parties with respect to the
subject matter contained herein and may not be modified except as
provided in the Plan 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:
_______________________________________
Total
Options Awarded: ______________________________
Exercise Price Per
Share: _____________________________
Severance Benefits
Agreement:
________________________
Vesting Schedule:
___________________________________
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“Company”
AutoWeb, Inc., a
Delaware corporation
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By:
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[Company
Representative]
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[Title]
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“Participant”
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By:
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[Participant’s
Name]
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[Title]
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AUTOWEB, INC.
2018 EQUITY INCENTIVE PLAN
Employee Stock Option Award Agreement
(Non-Qualified Stock Option)
(Non-Executive)
This
Employee 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 Participant on the signature page hereto
(“
Participant
”).
This
Agreement and the stock options granted hereby are subject to the
provisions of the AutoWeb, Inc. 2018 Equity Incentive Plan
(“
Plan
”). In the
event of a conflict between the provisions of the Plan and this
Agreement, the Plan shall control. Capitalized terms used but not
defined in this Agreement shall have the meanings assigned to such
terms in the Plan.
1.
Grant of Options
. Company
hereby grants to Participant 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.
2.
Term of Options
. Unless the
Options terminate earlier pursuant to the provisions of this
Agreement or the Plan, 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
(“
Vesting
Schedule
”).
4.
Excercise 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 6(f) of this Agreement 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 that are being
exercised, and shall be accompanied by full payment of the Exercise
Price of such Shares in a manner permitted under the terms of
Section 5.5 of the Plan (including same-day sales through a
broker), 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
may only be made with the consent of the Committee. 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, if
any, the Company shall issue to Participant 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 Participant 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. Participant hereby agrees that Company may
withhold from Participant’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 Participant on exercise of the Options, up to
Participant’s minimum required withholding rate or such other
rate determined by the Committee that will not trigger a negative
accounting impact.
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 Participant 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
.
Participant may exercise the vested portion of the Options for a
period of ninety (90) days (but in no event later than the Option
Expiration Date) following any termination of Participant’s
employment with Company, either by Participant or Company, other
than in the event of a termination of Participant’s
employment by Company for Cause (as defined below) or by reason of
Participant’s death or Disability (as defined below). To the
extent Participant is not entitled to exercise the Options at the
date of termination of employment, or if Participant does not
exercise the Options within the time specified in the Plan or this
Agreement for post-termination of employment exercises of the
Options, the Options shall terminate.
(ii)
Termination
of Employment for Cause
. Upon the termination of
Participant’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
Participant given as of the date of termination, authorize
Participant to exercise any vested portion of the Options for a
period of up to thirty (30) days following Participant’s
termination of employment for Cause, provided that in no event may
Participant exercise the Options after the Option Expiration Date.
For purposes of this Agreement, “
Cause
” shall mean (1) if a
definition of Cause made specifically applicable to option awards
held by Participant is provided in 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) and any such agreement or plan is in
effect at the time of the termination of employment, Cause shall be
as defined in such other agreement or plan; or (2) if no such other
definition of Cause is in effect at the time of termination of
employment, “
Cause
” shall mean a determination
by Company in its sole discretion, that Participant (i) has
breached Participant’s terms of employment with Company; (ii)
has failed to comply with Company policies and procedures in a
material manner; (iii) has engaged in disloyalty to Company,
including, without limitation, fraud, embezzlement, theft or
dishonesty in the course of Participant’s employment; (iv)
has disclosed trade secrets or confidential information of Company
to persons not entitled to receive such information; (v) has
breached any agreement between Participant and Company; (vi) has
engaged in such other behavior detrimental to the interests of
Company; (vii) has been convicted of, or pled guilty or nolo
contendere to any misdemeanor involving moral turpitude or any
felony; (viii) has failed in any material manner to consistently
discharge Participant’s employment duties to the Company,
which failure continues for thirty (30) days following written
notice from Company detailing the area or areas of such failure,
other than such failure resulting from Participant’s
Disability; (ix) has knowingly engaged in or aided any act or
transaction by Company or a Subsidiary that results in the
imposition of criminal, civil or administrative penalties against
Company or any Subsidiary; or (x) has engaged in misconduct during
the course of Participant’s employment by Company or any
Subsidiary that results in an accounting restatement by Company due
to material noncompliance with any financial reporting requirement
under applicable securities laws, whether such restatement occurs
during or after Participant’s employment by Company or any
Subsidiary.
(iii)
Termination
of Participant’s Employment By Reason of Participant’s
Death
. In the event Participant’s employment is
terminated by reason of Participant’s death, the Options, to
the extent vested as of the date of termination, may be exercised
at any time within twelve (12) months following the date of
termination (but in no event later than the Option Expiration Date)
by Participant’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
Participant could exercise the Options at the date of
termination.
(iv)
Termination
of Participant’s Employment By Reason of Participant’s
Disability
. In the event that Participant ceases to be an
Employee by reason of Participant’s Disability, unless the
Options have earlier terminated, Participant (or
Participant’s attorney in fact, conservator or other
representative on behalf of Participant) may, but only within
twelve (12) months from the date of such termination of employment
(and in no event later than the Option Expiration Date), exercise
the Options to the extent Participant was otherwise entitled to
exercise the Options at the date of such termination of employment.
For purposes of this Agreement, “
Disability
” shall mean
Participant’s becoming “permanently and totally
disabled” within the meaning of Section 22(e)(3) of the Code
or as otherwise determined by the Committee in its discretion. The
Committee may require such proof of Disability as the Committee in
its sole and absolute discretion deems appropriate, and the
Committee’s determination as to whether Participant has
incurred a Disability shall be final and binding on all parties
concerned.
(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 10 of the Plan), provided that (i) to the extent the
Options are assumed or substituted by the successor company in
connection with the Change in Control (or the Options are continued
by Company if it is the ultimate parent entity after the Change in
Control), the Options will vest and become fully exercisable in
accordance with clause (i) of Section 10.2(a) of the Plan if within
twenty-four (24) months following the date of the Change in Control
Participant’s employment is terminated by Company or a
Subsidiary (or the successor company or a subsidiary or parent
thereof) without Cause, 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 such termination 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 Section
10.2(b) of the Plan 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 Participant is then employed by Company or a
Subsidiary and (2) terminate on the date of the Change in Control.
For purposes of Section 10.2(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. If the Options are not deemed assumed, substituted
or continued for purposes of Section 10.2(a) of the Plan, the
Options shall be deemed not assumed, substituted or continued and
governed by Section 10.2(b) of the Plan. Notwithstanding the
foregoing, 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.
(d)
Extension
of Post-Termination 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 employment
or service time period set forth
in the paragraph of this
Section 5 applicable to the reason for termination of employment or
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)
Other
Governing Agreements or Plans
. To the extent not prohibited
by the Plan, 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.
(f)
Forfeiture
upon Engaging in Detrimental Activities
. If, at any
time within the twelve (12) months after (i) Participant exercises
any portion of the Options; or (ii) the effective date of any
termination of Participant’s employment by Company or by
Participant for any reason, Participant engages in, or is
determined by the Committee in its sole discretion to have engaged
in, any (i) material breach of any non-competition,
non-solicitation, non-disclosure or settlement or release covenant
or agreement with Company or any Subsidiary; (ii) activities during
the course of Participant’s employment with Company or any
Subsidiary constituting fraud, embezzlement, theft or dishonesty;
or (iii) activity that is otherwise in conflict with, or adverse or
detrimental to the interests of Company or any Subsidiary, then (x)
the Options shall terminate effective as of the date on which
Participant 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 Participant
from exercising all or a portion of the Options at any time
following the date that Participant engaged in any such activity or
conduct, as determined as of the time of exercise, shall be
forfeited by Participant and shall be paid by Participant to
Company, and recoverable by Company, within sixty (60) days
following such termination date of the Options. For purposes
of the foregoing, the following will be deemed to be activities in
conflict with or adverse or detrimental to the interests of Company
or any Subsidiary: (i) Participant’s conviction of, or
pleading guilty or nolo contendere to any misdemeanor involving
moral turpitude or any felony, the underlying events of which
related to Participant’s employment with Company; (ii)
knowingly engaged or aided in any act or transaction by Company or
a Subsidiary that results in the imposition of criminal, civil or
administrative penalties against Company or any Subsidiary; or
(iii) misconduct during the course of Participant’s
employment by Company or any Subsidiary that results in an
accounting restatement by Company due to material noncompliance
with any financial reporting requirement under applicable
securities laws, whether such restatement occurs during or after
Participant’s employment by Company or any
Subsidiary.
(g)
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.
(h)
Reversion
of Expired, Cancelled and Forfeited Options to Plan
. Any
Options that do not vest or that are cancelled, terminated or
expire unexercised are forfeited and revert to the Plan and shall
again be available for Awards under the Plan.
6.
Miscellaneous
.
(a)
No
Rights of Stockholder
. Participant 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.
Notwithstanding the foregoing, Participant 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 Participant’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
Notice
to Participant should be addressed to Participant at
Participant’s address as it appears on Company’s
records.
Company
or Participant, 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 Participant’s part to continue
as an Employee of Company or any Subsidiary or on the part of
Company or any Subsidiary to continue Participant’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 the Plan and this
Agreement and to adopt such rules for the administration,
interpretation and application of the Plan and this Agreement as
are consistent with the Plan 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 Participant, 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 the Plan or this Agreement.
(j)
Policies
and Procedures
. Participant agrees that Company may impose,
and Participant 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 the Company following a
public offering of the 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 and the Plan contain
the entire agreement between the parties with respect to the
subject matter contained herein and may not be modified except as
provided in the Plan 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:
_______________________________________
Total
Options Awarded: ______________________________
Exercise Price Per
Share: _____________________________
Severance Benefits
Agreement:
________________________
Vesting Schedule:
___________________________________
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AutoWeb, Inc., a
Delaware corporation
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By:
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[Company
Representative]
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[Title]
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“Participant”
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By:
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[Participant’s
Name]
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[Title]
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AUTOWEB, INC.
2018 Equity Incentive Plan Restricted Stock Award
Agreement
This
Restricted Stock Award Agreement (“
Agreement
”) is entered into
effective as of the Award Date set forth on the signature page to
this Agreement (“
Award
Date
”) by and between AutoWeb, Inc., a Delaware
corporation (“
Company
”), and the person set
forth as Participant on the signature page hereto
(“
Participant
”).
This
Agreement and the shares of restricted stock granted hereby are
subject to the provisions of the AutoWeb, Inc. 2018 Equity
Incentive Plan (“
Plan
”). In the event of a conflict
between the provisions of the Plan and this Agreement, the Plan
shall control. Capitalized terms used but not defined in this
Agreement shall have the meanings assigned to such terms in the
Plan.
1.
Award of Restricted
Stock
. Company hereby awards to Participant the number of
shares of common stock of Company, par value $0.001 per share, set
forth on the signature page to this Agreement (“
Restricted Shares
”), subject to
the Forfeiture Restrictions set forth herein.
2.
Forfeiture
Restrictions Lapse Schedule
. All Restricted Shares awarded
pursuant to this Agreement are subject to forfeiture back to
Company as may be provided in Section 3 (“
Forfeiture Restrictions
”) subject
to the Forfeiture Restrictions lapsing in accordance with the
vesting schedule set forth on the signature page to this agreement
(“
Vesting
Schedule
”).
3.
Effect of Certain
Events on Forfeiture Restrictions
.
(a)
Termination
of Employment
.
(i)
Termination
of Employment By Company Without Cause or By Participant With Good
Reason
. In the event Participant’s employment with
Company is terminated by Company without Cause or by Participant
for Good Reason, the Forfeiture Restrictions on the Restricted
Shares that have not lapsed prior to such termination of employment
shall lapse. For purposes of this Agreement, the terms
“
Cause
” and
“
Good
Reason
”
shall have the meanings ascribed
to them in the Severance Benefits Agreement by and between Company
and Participant and referenced on the signature page to this
Agreement, as such agreement may be amended from time to time
(“
Severance Benefits
Agreement
”).
(ii
)
Termination
of Employment By Company For Cause or By Participant Without Good
Reason
. Upon the termination of Participant’s
employment by Company for Cause or by Participant without Good
Reason, any Restricted Shares that remain subject to the Forfeiture
Restrictions at the time of termination of employment shall be
immediately forfeited and cancelled.
(iii
)
Termination
of Employment By Reason of Participant’s Death
. Upon
the termination of Participant’s employment by Company by
reason of Participant’s death, the Forfeiture Restrictions on
the Restricted Shares that have not lapsed prior to such
termination of employment shall lapse.
(iv
)
Termination of Employment
By Company By Reason of Participant’s Disability
. Upon
the termination of Participant’s employment by Company by
reason of Participant’s Disability, the Forfeiture
Restrictions on the Restricted Shares that have not lapsed prior to
such termination of employment shall lapse. For purposes of this
Agreement, “
Disability
” shall mean Participant
becoming “permanently and totally disabled” within the
meaning of Section 22(e)(3) of the Code or as otherwise determined
by the Committee in its discretion. The Committee may require such
proof of Disability as the Committee in its sole and absolute
discretion deems appropriate, and the Committee’s
determination as to whether Participant has incurred a Disability
shall be final and binding on all parties concerned.
(b)
Change
in Control
. In the event of a Change in Control, the effect
of the Change in Control on the Restricted Shares shall be
determined by the applicable provisions of the Plan (including,
without limitation, Article 10 of the Plan), provided that (i) to
the extent the Restricted Shares are assumed or substituted by the
successor company in connection with the Change in Control (or the
Restricted Shares are continued by Company if it is the ultimate
parent entity after the Change in Control), the Forfeiture
Restrictions shall lapse in accordance with clause (i) of Section
10.2(a) of the Plan only if Participant’s employment is
terminated within twenty-four (24) months following the date of the
Change in Control by Company or a Subsidiary (or the successor
company or a subsidiary or parent thereof) without Cause or by
Participant for Good Reason; and (ii) the Restricted Shares 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) for purposes of Section 10.2(a) of the Plan if
the Restricted Shares 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
Restricted Shares. If the Restricted Shares are not deemed assumed,
substituted or continued for purposes of Section 10.2(a) of the
Plan, the Restricted Shares shall be deemed not assumed,
substituted or continued and shall be governed by Section 10.2(b)
of the Plan.
(c)
Forfeiture
upon Engaging in Detrimental Activities
. If, at any time
while any Restricted Shares remain subject to the Forfeiture
Restrictions or within the twelve (12) months after (i) the
Forfeiture Restrictions lapse as to any Restricted Shares; or (ii)
the effective date of any termination of Participant’s
employment by Company or by Participant for any reason, Participant
engages in, or is determined by the Committee in its sole
discretion to have engaged in, any (i) material breach of any
non-competition, non-solicitation, non-disclosure or settlement or
release covenant or agreement with Company or any Subsidiary; (ii)
activities during the course of Participant’s employment with
Company or any Subsidiary constituting fraud, embezzlement, theft
or dishonesty; or (iii) activity that is otherwise in conflict
with, or adverse or detrimental to the interests of Company or any
Subsidiary, then (x) Restricted Shares still subject to Forfeiture
Restrictions shall be forfeited effective as of the date on which
Participant engaged in or engages in that activity or conduct,
unless terminated sooner pursuant to the provisions of this
Agreement; (y) Restricted Shares for which the Forfeiture
Restrictions have lapsed but that are still in the possession of or
control of Participant shall be forfeited and returned to Company
effective as of the date on which Participant engaged in or engages
in that activity or conduct, unless terminated sooner pursuant to
the provisions of this Agreement; and (z) the amount of any
proceeds realized by Participant from any sale or other transfer of
Restricted Shares as to which the Forfeiture Restrictions had
lapsed shall be forfeited by Participant and shall be paid by
Participant to Company, and recoverable by Company, within sixty
(60) days following such termination date of the Options. For
purposes of the foregoing, the following will be deemed to be
activities in conflict with or adverse or detrimental to the
interests of Company or any Subsidiary: (i) Participant’s
conviction of, or pleading guilty or nolo contendere to any
misdemeanor involving moral turpitude or any felony, the underlying
events of which related to Participant’s employment with
Company; (ii) knowingly engaged or aided in any act or transaction
by Company or a Subsidiary that results in the imposition of
criminal, civil or administrative penalties against Company or any
Subsidiary; or (iii) misconduct during the course of
Participant’s employment by Company or any Subsidiary that
results in an accounting restatement by Company due to material
noncompliance with any financial reporting requirement under
applicable securities laws, whether such restatement occurs during
or after Participant’s employment by Company or any
Subsidiary.
(d)
Reversion
of Forfeited Shares to Plan
. Any Restricted Shares that are
forfeited shall be cancelled and revert to the Plan and shall again
be available for Awards under the Plan.
(e)
Reservation of Committee
Discretion to Accelerate Lapse of Forfeiture
Restrictions
. The Committee reserves the right, in its
sole and absolute discretion, to accelerate the lapsing of the
Forfeiture Restrictions under circumstances not otherwise covered
by the foregoing provisions of this Section 3. 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.
4.
Restrictive Legend
. Until
Forfeiture Restrictions lapse, all book entry accounts (or if
applicable, certificates) representing the Restricted Shares shall
bear the following legend in addition to all other legends
applicable to shares of Company’s common stock:
The
shares represented by this Advice [or Certificate, if applicable]
are subject to forfeiture to and recoupment by AutoWeb, Inc. and
may not be sold or otherwise transferred except pursuant to the
provisions of the 2018 Equity Incentive Plan Restricted Stock Award
Agreement by and between AutoWeb, Inc. and [Participant] dated as
of [Award Date].
As
Forfeiture Restrictions lapse and Participant has made arrangements
satisfactory to Company to satisfy applicable tax-withholding
obligations, Company shall cause the foregoing restrictive legend
to be removed with respect to Restricted Shares that are no longer
subject to the Forfeiture Restrictions. Notwithstanding the
foregoing, Participant agrees that Company may impose, and
Participant 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.
5.
Section 83(b) Election
Notice
.
If
Participant
elects
under Section 83(b) of the Code to be taxed immediately on the
Restricted Shares rather than as the Forfeiture Restrictions lapse,
Participant must notify Company of the election within ten (10)
days of filing that election with the Internal Revenue
Service.
6.
Miscellaneous
.
(a)
Nontransferability
of Restricted Shares
. The Restricted Shares shall be
nontransferable or assignable except to the extent expressly
provided in the Plan.
This Agreement
is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
(b)
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.
(c)
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.
(d)
Headings
.
The headings in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this
Agreement.
(e)
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
Notice
to Participant should be addressed to Participant at
Participant’s address as it appears on Company’s
records.
Company
or Participant 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.
(f)
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 Restricted Shares shall be deemed to create in
any way whatsoever any obligation on Participant’s part to
continue as an employee of Company or any Subsidiary or on the part
of Company or any Subsidiary to continue Participant’s
employment or service as an Employee.
(g)
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.
(h)
Administration
.
The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration,
interpretation and application of the Plan and this Agreement as
are consistent with the Plan 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 Restricted Shares are
subject) shall be final and binding upon Participant, 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 the Plan or this
Agreement.
(i)
Entire
Agreement; Modification
. This Agreement and the Plan contain
the entire agreement between the parties with respect to the
subject matter contained herein and may not be modified except as
provided in the Plan 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.
Award
Date:
_______________________________________
Number
of Restricted Shares: __________________________
Severance Benefits
Agreement:
________________________
Vesting Schedule:
___________________________________
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“Company”
AutoWeb, Inc., a
Delaware corporation
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By:
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[Company
Representative]
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[Title]
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“Participant”
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By:
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[Participant’s
Name]
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[Title]
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Exhibit 31.1
CERTIFICATION
I, Jared R. Rowe, certify that:
1.
I
have reviewed this quarterly report on Form 10-Q of AutoWeb,
Inc.;
2.
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3.
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
4.
The
registrant’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a)
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
b)
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
c)
Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
d)
Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
5.
The
registrant’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a)
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize, and report financial
information; and
b)
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: August 2, 2018
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/s/ Jared R.
Rowe
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Jared R. Rowe
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President and Chief Executive Officer
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Exhibit 31.2
CERTIFICATION
I, Wesley Ozima, certify that:
1.
I
have reviewed this quarterly report on Form 10-Q of AutoWeb,
Inc.;
2.
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
3.
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
4.
The
registrant’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a)
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
b)
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
c)
Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
d)
Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
5.
The
registrant’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a)
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize, and report financial
information; and
b)
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: August 2, 2018
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/s/ Wesley
Ozima
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Wesley Ozima
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Senior Vice President and
Interim Chief Financial Officer
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Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of
AutoWeb, Inc. (the “
Company
”) on Form 10-Q for the period ended June
30, 2018 (the “
Report
”), we, Jared R. Rowe, President and Chief
Executive Officer of the Company, and Wesley Ozima, Senior Vice
President and Interim Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
1.
The
Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2.
The
information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations
of the Company.
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/s/
Jared R. Rowe
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Jared
R. Rowe
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President and Chief Executive Officer
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August
2, 2018
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/s/
Wesley Ozima
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Wesley
Ozima
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Senior Vice President and
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Interim Chief Financial Officer
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August 2, 2018
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A
signed original of this written statement required by
Section 906, or other document authenticating, acknowledging,
or otherwise adopting the signatures that appear in typed form
within the electronic version of this written statement required by
Section 906, has been provided to AutoWeb, Inc. and will be
retained by AutoWeb, Inc. and furnished to the Securities and
Exchange Commission or its staff upon request.