Exhibit 10.4
AUTOBYTEL INC.
AMENDED AND RESTATED SEVERANCE
AGREEMENT
AMENDED AND RESTATED SEVERANCE
AGREEMENT (“
Agreement ”) entered into effective as of
September 29, 2008 (“ Effective Date ”),
between Autobytel Inc., a Delaware corporation (“
Autobytel ”) and Glenn E. Fuller (“
Employee ”).
Background
Autobytel has determined that it is
in its best interests to encourage Employee’s continued
employment with, and dedication to the business of, Autobytel, and
as a result thereof, Autobytel and Employee have previously entered
into a severance agreement dated as of October 16, 2006
(“ Prior Severance Agreement ”). In light of
Autobytel’s financial condition, recent reductions in force
and evaluation of various strategic alternatives, which may include
a Change of Control of Autobytel, Autobytel has determined that it
is in the Company’s best interests to amend the Prior
Severance Agreement to provide for additional incentive to
encourage Employee’s continued employment with Autobytel and
dedication to Autobytel’s business.
In consideration of the foregoing
and other good and valuable consideration, receipt of which is
hereby acknowledged, the Parties hereby agree as
follows.
1. Definitions . For purposes
of this Agreement, the terms below that begin with initial capital
letters within this Agreement shall have the specially defined
meanings set forth below (unless the context clearly indicates a
different meaning).
(a) “ 409A Suspension
Period ” shall have the meaning set forth in
Section 4.
(b) “ Arbitration
Agreement ” means that certain Mutual Agreement to
Arbitrate dated as of October 16, 2006 by and between
Autobytel and Employee.
(c) “ Benefits ”
means all Company medical, dental, vision, life and disability
plans in which Employee participates.
(d) “ Cause ”
shall mean the termination of the Employee’s employment by
Company as a result of any one or more of the following:
(i) any conviction of, or pleading
of nolo contendre by, the Employee for any felony;
(ii) any willful misconduct of the
Employee which has a materially injurious effect on the business or
reputation of the Company;
(iii) the gross dishonesty of the
Employee in any way that adversely affects the Company;
or
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(iv) a material failure to
consistently discharge Employee’s employment duties to the
Company which failure continues for thirty (30) days following
written notice from the Company detailing the area or areas of such
failure, other than such failure resulting from Employee’s
Disability.
For purposes of this definition of
Cause, no act or failure to act, on the part of the Employee, shall
be considered “willful” if it is done, or omitted to be
done, by the Employee in good faith or with reasonable belief that
Employee’s action or omission was in the best interest of the
Company. Employee shall have the opportunity to cure any such acts
or omissions (other than clauses (i) and (iii) above)
within thirty (30) days of the Employee’s receipt of a
written notice from the Company finding that, in the good faith
opinion of the Company, the Employee is guilty of acts or omissions
constituting “Cause.”
(e) “ Change of Control
” shall have the meaning ascribed to such term in the
Company’s Amended and Restated 2001 Restricted Stock and
Option Plan as such definition exists as of the Effective
Date.
(f) “ COBRA ”
shall mean the Consolidated Omnibus Budget Reconciliation Act, as
amended, and the rules and regulations promulgated
thereunder.
(g) “ Code ”
shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
(h) “ Company ”
means Autobytel, and upon any assignment to and assumption of this
Agreement by any Successor Company, shall mean such Successor
Company.
(i) “ Disability
” shall mean the inability of the Employee to perform
Employee’s duties to the Company on account of physical or
mental illness or incapacity for a period of one-hundred twenty
(120) consecutive calendar days, or for a period of one
hundred eighty (180) calendar days, whether or not
consecutive, during any three hundred sixty-five (365) day
period.
(j) “ Excise Tax
” shall have the meaning set forth in
Section 3(a)(i).
(k) “ Employee’s
Position ” means Employee’s position as the Senior
Vice President, Chief Legal Officer and Secretary of the
Company.
(l) “ Employee’s
Primary Location ” means Autobytel’s headquarters
located at 18872 MacArthur Boulevard, Irvine, California,
92612-1400.
(m) “ Good Reason
” means any act, decision or omission by the Company that:
(A) materially modifies, reduces, changes, or restricts
Employee’s salary as in existence as of the date hereof or as
of the date prior to any such change, whichever is more beneficial
for Employee at the time of the act, decision, or omission by the
Company; (B) materially modifies, reduces, changes, or
restricts the Employee’s Benefits as a whole as in existence
as of the date hereof or as of the date prior to any such change,
whichever are more beneficial for Employee at the time of the act,
decision, or omission by the Company; (C) materially modifies,
reduces, changes, or restricts the Employee’s authority,
duties, or
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responsibilities commensurate with
the Employee’s Position but excluding the effects of any
reductions in force other than the Employee’s own
termination; (D) relocates the Employee place of employment
without Employee’s consent from Employee’s Primary
Location to any other location in excess of a forty (40) mile
radius from the Employee’s Primary Location or requires any
such relocation as a condition to continued employment by Company;
(E) constitutes a failure or refusal by any Company Successor
to assume this Agreement; or (F) involves or results in any
material failure by the Company to comply with any provision of
this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of written notice
thereof given by the Employee. Notwithstanding the foregoing, no
event shall constitute “Good Reason” unless
(i) the Employee first provides written notice to the Company
within ninety (90) days of the event(s) alleged to constitute
good reason, with such notice specifying the grounds that are
alleged to constitute good reason, and (ii) the Company fails
to cure such a material breach to the reasonable satisfaction of
the Employee within thirty (30) days after Company’s
receipt of such written notice.
(n) “ Gross-Up Payment
” shall have the meaning set forth in
Section 3(a)(i).
(o) “ Payment ”
shall have the meaning set forth in
Section 3(a)(i).
(p) “ Separation from
Service ” or “ Separates from Service
” shall mean Employee’s termination of employment, as
determined in accordance with Treas. Reg. § 1.409A-1(h).
Employee shall be considered to have experienced a termination of
employment when the facts and circumstances indicate that Employee
and the Company reasonably anticipate that either (i) no
further services will be performed for the Company after a certain
date, or (ii) that the level of bona fide services Employee
will perform for the Company after such date (whether as an
employee or as an independent contractor) will permanently decrease
to no more than twenty percent (20%) of the average level of
bona fide services performed by Employee (whether as an employee or
independent contractor) over the immediately preceding thirty-six
(36) month period (or the full period of services to the
Company if Employee has been providing services to the Company for
less than thirty six (36) months). If Employee is on military
leave, sick leave, or other bona fide leave of absence, the
employment relationship between Employee and the Company shall be
treated as continuing intact, provided that the period of such
leave does not exceed six months, or if longer, so long as Employee
retains a right to reemployment with the Company under an
applicable statute or by contract. If the period of a military
leave, sick leave, or other bona fide leave of absence exceeds six
months and Employee does not retain a right to reemployment under
an applicable statute or by contract, the employment relationship
shall be considered to be terminated for purposes of this Agreement
as of the first day immediately following the end of such six-month
period. In applying the provisions of this paragraph, a leave of
absence shall be considered a bona fide leave of absence only if
there is a reasonable expectation that Employee will return to
perform services for the Company. For purposes of determining
whether Employee has incurred a Separation from Service, the
Company shall include the Company and any entity that would be
considered a single employer with the Company under Code
Section 414(b) or 414(c).
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(q) “ Severance Period
” shall have the meaning set forth in
Section 2(a).
(r) Successor Company ”
means any successor to Autobytel or its assets by reason of any
Change of Control.
(s) “ Termination Without
Cause ” means termination of Employee’s employment
with the Company (i) by the Company (a) for any reason
other than (1) death, (2) Disability or (3) those
reasons expressly set forth in the definition of
“Cause”, (b) for no reason at all, or (c) in
connection with or as a result of a Change of Control; or
(ii) by Employee for Good Reason within ninety (90) days
following the initial existence of the event or events that
constitute Good Reason; provided, however, that a termination of
Employee’s employment with the Company in connection with a
Change of Control shall not constitute a Termination Without Cause
if Employee is offered employment with the Successor Company under
terms and conditions, including position, salary and other
compensation, and benefits, that would not provide Employee the
right to terminate Employee’s employment for Good
Reason.
2. Severance Benefits and
Conditions .
(a) In the event of
(i) Termination Without Cause by the Company, or (ii) the
termination of Employee’s employment with the Company by
Employee for Good Reason within 30 days of the earlier of
(i) the expiration of the Company’s 30-day right to cure
as set forth in the definition of Good Reason, or (ii) the
Company’s notice to Employee that it will not cure the event
giving rise to such termination for Good Reason, Employee shall
receive upon such termination (A) a lump sum amount equal to
twelve months (“ Severance Period ”) of the
Employee’s annual base salary (determined as the
Employee’s highest annual base salary paid to Employee while
employed by the Company; with the annual base salary not including
bonus payments); (B) subject to Section 2(b) below,
continuation of all Benefits for Employee and, if applicable,
Employee’s eligible dependents during the Severance Period at
the time they would have been provided or paid had the Employee
remained an employee of Company during the Severance Period and at
the levels provided prior to the event giving rise to a
termination; (C) any amounts due and owing to Employee as of
the termination date with respect to any base salary, bonus or
commissions; and (D) any other payments required by applicable
law (including payments with respect to accrued and unused
vacation, personal, sick and other days), subject, in each case, to
withholding for applicable taxes.
(b)(i) With respect to Benefits that
are eligible for continuation coverage under COBRA, in the event
the Company is unable to continue Employee’s and
Employee’s eligible dependents (assuming such dependents were
covered by Autobytel at the time of termination), participation
under the Company’s then existing insurance policies for such
Benefits Employee may elect to obtain coverage for such Benefits
either by (1) electing COBRA continuation benefits for
Employee and Employee’s eligible dependents;
(2) obtaining individual coverage for Employee and
Employee’s eligible dependents (if Employee and
Employee’s eligible dependents qualify for individual
coverage); or (3) electing coverage as eligible dependents
under another person’s group coverage (if Employee and
Employee’s eligible dependents qualify for such dependent
coverage), or any combination of the foregoing alternatives.
Employee may also initially elect COBRA continuation benefits and
later change to
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individual coverage or dependent
coverage for Employee or any eligible dependent of Employee, but
Employee understands that if continuation of Benefits under COBRA
is not initially selected by Employee or is later terminated by
Employee, Employee will not be able to return to continuation
coverage under COBRA. The Company shall pay directly or reimburse
to Employee the monthly premiums for the benefits or coverage
selected by Employee, with such payment or reimbursement not to
exceed the monthly premiums the Company would pay assuming Employee
elected continuation of benefits under COBRA. The Company’s
obligation to pay or reimburse for the Benefits covered by this
Section 2(b)(i) shall terminate upon the earlier of
(i) the end of the Severance Period; and
(ii) Employee’s employment by an employer that provides
Employee and Employee’s eligible dependents with group
coverage substantially similar to such Benefits as provided to
Employee and Employee’s eligible dependents at the time of
the termination of Employee’s employment with the Company,
provided that Employee and Employee’s eligible dependents are
eligible for participation in such group coverage.
(ii) With respect to Benefits that
are not eligible for continuation coverage under COBRA, in the
event the Company is unable to continue Employee’s
participation under the Company’s then existing insurance
policies for such Benefits, Employee may elect to obtain coverage
for such Benefits either by (1) obtaining individual coverage
for Employee (if Employee qualifies for individual coverage); or
(2) electing coverage as an eligible dependent under another
person’s group coverage (if Employee qualifies for such
dependent coverage), or any combination of the foregoing
alternatives. The Company shall pay directly or reimburse to
Employee the monthly premiums for the benefits or coverage selected
by Employee, with such payment or reimbursement not to exceed the
monthly premiums the Company paid for such Benefits at the time of
termination of Employee’s employment with the Company. The
Company’s obligation to pay or reimburse for the Benefits
covered by this Section 2(b)(ii) shall terminate upon the
earlier of (i) the end of the Severance Period; and
(ii) Employee’s employment by an employer that provides
Employee with group coverage substantially similar to such Benefits
as provided to Employee at the time of the termination of
Employee’s employment with the Company, provided that
Employee is eligible for participation in such group coverage.
Employee acknowledges and agrees that the Company shall not be
obligated to provide any Benefits covered by this
Section 2(b)(ii) for Employee if Employee does not qualify for
coverage under the Company’s existing insurance policies for
such Benefits, for individual coverage, or for dependent
coverage.
(c) Upon the earlier of (i) a
termination event giving rise to the payment of the amounts and
benefits under Section 2(a); (ii) a Change of Control;
and (iii) March 1, 2009, Employee shall receive a payment
equal to Employee’s 2008 Bonus. For purposes of this
Section 2(c), “ Employee’s 2008 Bonus
” means Employee’s bonus (both Company performance and
individual components) for 2008 payable as if both Company and
individual targets had been 100% achieved.
(d) In addition to the payments and
benefits set forth above, the Company shall make available to
Employee career transition services during the Severance Period at
Right Management or an equivalent provider selected by the
Company.
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(e) All payments under this
Section 2 that (i) arise as a result of a termination of
Employee’s employment shall be made to Employee concurrently
with any termination by the Company or within 2 business days of
any termination by Employee; and (ii) arise other than by
reason of a termination of Employee’s employment shall be
made upon the occurrence of the applicable event giving rise to the
payment. In any case, all payments that have arisen shall be made
no later than two and one-half months after the end of the calendar
year in which Employee’s Separation from Service
occurs.
(f) The amounts and benefits
required by Section 2(a) shall be provided only if the
Employee has executed and delivered to the Company (and not
revoked) a release in favor of the Company (which release shall be
substantially in the form attached as Exhibit A). Other than the
payments and benefits provided for in this Section 2, Employee
shall not be entitled to any additional amounts from the Company
resulting from a termination of Employee’s employment with
the Company.
3. Gross-Up Payment
.
(a) Gross-Up Payment
.
(i) If it shall be determined that
any amount paid, distributed or treated as paid or distributed by
the Company to or for the benefit of the Employee (whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement, any stock option agreement between the Employee and
the Company or otherwise, but determined without regard to any
additional payments required under this Section 3) (a “
Payment ”) would be subject to the excise tax imposed
by Section 4999 of the Code, or any interest or penalties are
incurred by the Employee with respect to such excise tax (such
excise tax, together with any such interest and penalties, being
hereinafter collectively referred to as the “ Excise
Tax ”), then the Employee shall be entitled to receive an
additional payment (a “ Gross-Up Payment ”) in
an amount such that after payment by the Employee of all federal,
state and local taxes (including any interest or penalties imposed
with respect to such taxes), including without limitation, any
income taxes (including any interest or penalties imposed with
respect thereto) and Excise Tax imposed on the Gross-up Payment,
the Employee retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments. The Employee shall apply for
all Gross-Up Payments as reimbursements of taxes the Employee pays
under Code Section 4999 for a particular calendar year, with
such request being filed by the Employee with the Company not later
than forty-five (45) days after such year ends, and payment
shall occur not later than the March 15th that immediately
follows the end of such 45-day period.
(ii) The determinations of whether
and when a Gross-Up Payment is required under this Section 3
shall be made by the Company based on its good faith interpretation
of applicable law. The amount of such Gross-Up Payment and the
valuation assumptions to be utilized in arriving at such
determination shall be made by the Company which shall provide
detailed supporting calculations to the Employee within 15 business
days of the receipt of notice from the Employee that
