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EXHIBIT 10.24
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CARSDIRECT.COM, INC.
SERIES D PREFERRED STOCK PURCHASE AND WARRANT AGREEMENT
MAY 12, 2000
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TABLE OF CONTENTS
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RECITALS.................................................................................................1
SECTION 1 AUTHORIZATION AND SALE OF SERIES D PREFERRED STOCK.............................................2
1.1 Authorization of Series D Preferred Stock..............................................2
1.2 Sale and Issuance of Series D Preferred and Warrants...................................2
1.3 Separate Agreements....................................................................2
SECTION 2 CLOSING DATES; DELIVERY........................................................................2
2.1 Closing Date...........................................................................2
2.2 Delivery and Payment...................................................................3
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................3
3.1 Organization and Standing; Certificate of Incorporation and
Bylaws.................................................................................3
3.2 Corporate Power........................................................................3
3.3 Subsidiaries...........................................................................3
3.4 Capitalization.........................................................................4
3.5 Authorization..........................................................................4
3.6 Proprietary Rights.....................................................................5
3.7 Registration Rights....................................................................6
3.8 Governmental Consent, etc.............................................................10
3.9 Offering..............................................................................10
3.10 Permits...............................................................................10
3.11 Brokers or Finders; Other Offers......................................................10
3.12 Litigation, etc.......................................................................10
3.13 Disclosure............................................................................10
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...............................................11
4.1 Preexisting Relationship with Company; Business and Financial
Experience............................................................................11
4.2 Investment Intent; Blue Sky...........................................................11
4.3 Rule 144..............................................................................11
4.4 No Public Market......................................................................11
4.5 Restrictions on Transfer; Restrictive Legends.........................................12
4.6 Access to Data........................................................................12
4.7 Authorization.........................................................................12
4.8 Brokers or Finders....................................................................12
4.9 Tax Liability.........................................................................12
4.10 Limited Operating History.............................................................13
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TABLE OF CONTENTS
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SECTION 5 CONDITIONS TO CLOSING OF THE PURCHASER........................................................13
5.1 Representations and Warranties Correct................................................13
5.2 Covenants.............................................................................13
5.3 Blue Sky..............................................................................13
5.4 Restated Certificate..................................................................13
5.5 Compliance Certificate................................................................13
5.6 Opinion of Company's Counsel..........................................................13
5.7 Fourth Amended and Restated Investor Rights Agreement.................................13
5.8 Voting Agreement......................................................................13
5.9 Operating Agreement...................................................................13
5.10 Consulting Agreements.................................................................14
5.11 Regulatory Approval...................................................................14
5.12 Right of First Refusal................................................................14
SECTION 6 CONDITIONS TO CLOSING OF THE COMPANY..........................................................14
6.1 Representations and Warranties Correct................................................14
6.2 Covenants.............................................................................14
6.3 Blue Sky..............................................................................14
6.4 Restated Certificate..................................................................14
6.5 Fourth Amended and Restated Investor Rights Agreement.................................14
6.6 Voting Agreement......................................................................14
6.7 Operating Agreement...................................................................15
6.8 Consulting Agreements.................................................................15
6.9 Regulatory Approval...................................................................15
SECTION 7 TERMINATION...................................................................................15
7.1 Expiration Date.......................................................................15
SECTION 8 MISCELLANEOUS.................................................................................15
8.1 HSR Approval..........................................................................15
8.2 Taxes.................................................................................15
8.3 Governing Law.........................................................................15
8.4 Entire Agreement; Amendment...........................................................16
8.5 Notices, etc..........................................................................16
8.6 Delays or Omissions...................................................................16
8.7 Expenses..............................................................................17
8.8 Counterparts..........................................................................17
8.9 Severability..........................................................................17
8.10 Titles and Subtitles..................................................................17
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TABLE OF CONTENTS
(CONTINUED)
EXHIBITS
A. Schedules of Purchasers and Warrant Recipients
B. Restated Certificate of Incorporation
C. Schedule of Exceptions
D. Fourth Amended and Restated Investor Rights Agreement
E. Form of Compliance Certificate
F. Opinion of Wilson Sonsini Goodrich & Rosati
G. Series D Preferred Stock Warrants
H. Voting Agreement
I. Operating Agreement
J. Consulting Agreements
K. Right of First Refusal
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CARSDIRECT.COM, INC.
SERIES D PREFERRED STOCK PURCHASE AND WARRANT AGREEMENT
This Series D Preferred Stock Purchase and Warrant Agreement (this
"Agreement") is made as of May 12, 2000 by and among CarsDirect.com, Inc., a
Delaware corporation (the "Company"), and the undersigned purchasers of the
Company's Series D Preferred Stock (each, a "Purchaser," and collectively the
"Purchasers") and recipients of warrants to purchase Series D Preferred Stock
(each, a "Warrant Recipient," and collectively "Warrant Recipients").
RECITALS
A. The Board of Directors has determined that it is in the best
interests of the Company to enter into a strategic relationship with Penske
Automotive Group, Inc. ("Penske") and UnitedAuto Group, Inc. ("UAG"), pursuant
to which Penske and UAG will supply automobiles and perform certain other
services for the Company pursuant to an Operating Agreement dated as of May 12,
2000, and Penske and UAG will perform certain services for the Company pursuant
to a Consulting Services Agreement dated as of May 12, 2000.
B. The Board of Directors and the stockholders of the Company
authorized the sale of up to 28,000,000 shares of Series D Preferred Stock.
C. As of May 12, 2000, 18,336,336 shares of Series D Preferred Stock
have been issued or are obligated to be issued.
D. The sale and issuance of the shares of Series D Preferred Stock are
in connection and conditioned upon certain strategic transactions among the
Company, Penske, and UAG the primary purposes for which are other than raising
capital, including an Operating Agreement among Penske, UAG, and the Company
("Operating Agreement") and the Consulting Services Agreements between the
Company and (i) Penske, (ii) UAG, (iii) Penske Corporation, and (iv) HAC II,
Inc. ("Consulting Services Agreements").
E. It is a condition to the closing of the transactions contemplated by
this Agreement that Bill Gross' idealab!, a California corporation and idealab!
Holdings L.L.C., a Delaware L.L.C. (collectively, "idealab"), the Company, and
the Purchaser execute and deliver a voting agreement (the "Voting Agreement")
and that the Company, Penske and UAG will execute and deliver the Operating
Agreement and that Penske, UAG, Penske Corporation and HAC II, Inc. deliver the
Consulting Services Agreements.
F. The Purchasers, the Warrant Recipients and the Company desire to
provide for the purchase and sale of shares of Series D Preferred Stock,
warrants to purchase Series D Preferred Stock and the to establish the rights
and obligations in connection therewith.
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NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1
AUTHORIZATION AND SALE OF SERIES D PREFERRED STOCK
1.1 AUTHORIZATION OF SERIES D PREFERRED STOCK. The Company has
authorized the sale and issuance of up to 28,000,000 shares (the "Shares") of
its Series D Preferred Stock, par value $0.001 per share (the "Series D
Preferred"), having the rights, preferences, privileges and restrictions as set
forth in the Restated Certificate of Incorporation in substantially the form
attached hereto as Exhibit B (the "Restated Certificate").
1.2 SALE AND ISSUANCE OF SERIES D PREFERRED AND WARRANTS. Subject to
the terms and conditions hereof, the Company will issue and sell to the
Purchasers and the Purchasers will buy from the Company 1,078,681 shares at a
per share purchase price of $15.76 (the "Per Share Price"), with an aggregate
purchase price of $17,000,012.56, each Purchaser to buy the amount of Shares
specified under the name of that Purchaser indicated on the Schedule of
Purchasers on the signature page hereto, and issue to the Warrant Recipients
listed on the Schedule of Warrant Recipients, warrants to purchase shares of
Series D Preferred Stock in the forms attached hereto as Exhibit G, each such
Warrant Recipient to receive the type and amount of warrants specified on the
Schedule of Warrant Recipients.
The warrants are to purchase an aggregate of 7,939,340 shares of Series
D Preferred Stock at a purchase price of $15.76 per share exercisable upon the
terms and conditions contained in each of the warrants. The warrants for
3,650,000 shares, as reflected in the Schedule of Warrant Recipients, are being
issued in consideration of services pursuant to the Operating Agreement. The
warrants for 4,289,340 shares, as reflected in the Schedule of Warrant
Recipients, are being issued in consideration of services pursuant to the
Consulting Agreements. Each warrant issued to such Warrant Recipient pursuant to
this Agreement is herein referred to as a "Warrant" and the Shares issuable upon
exercise of a Warrant are referred to herein as the "Warrant Shares." The
Shares, the Warrants, the Warrant Shares and the Common Stock issuable upon
conversion of the Shares and the Warrant Shares (the "Conversion Stock") are
referred to herein as the "Securities."
1.3 SEPARATE AGREEMENTS. The Company's agreement with each of the
Purchasers hereunder is a separate agreement, the obligations of each of the
Purchasers hereunder are several and not joint, and the sale of the Shares to
each of the Purchasers is a separate transaction.
SECTION 2
CLOSING DATES; DELIVERY
2.1 CLOSING DATE. It is anticipated that purchase and sale of the Shares
hereunder and issuance of the Warrants shall be consummated at a closing (the
"Closing") held at the offices of Wilson Sonsini Goodrich & Rosati, 650 Page
Mill Road, Palo Alto, California at such date, time and place upon which the
Company and the Purchaser shall agree (the date and time of the Closing is
hereinafter referred to as the "Closing Date").
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2.2 DELIVERY AND PAYMENT. At the Closing, the Company will deliver (i)
to the Purchasers as listed on the Schedule of Purchasers a certificate or
certificates, registered in the Purchaser's name, representing the number of
Shares to be purchased by the Purchaser at the Closing, against payment of the
purchase price therefor, by check payable to the Company, by wire transfer per
the Company's instructions, or by such other means as the Company may, in its
discretion, agree to accept, and (ii) the Warrants to the Warrant Recipients as
listed on the Schedule of Warrant Recipients.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Schedule of Exceptions (the "Schedule of Exceptions")
attached hereto as Exhibit C, the Company represents and warrants to each
Purchaser and Warrant Recipient that, as of the Closing Date:
3.1 ORGANIZATION AND STANDING; CERTIFICATE OF INCORPORATION AND BYLAWS.
The Company is a corporation duly organized and existing under, and by virtue
of, the laws of the State of Delaware and is in good standing under such laws.
The Company has requisite corporate power and authority to own and operate its
properties and assets and to carry on its business as presently conducted. The
Company is presently qualified to do business as a foreign corporation in
California and there is no other jurisdiction in which the failure to be so
qualified would have a material adverse effect on the business or financial
condition of the Company. The Company has made available to the Purchaser copies
of its Restated Certificate and Bylaws. Said copies are true, correct and
complete and reflect all amendments now in effect.
3.2 CORPORATE POWER. Except for stockholder approval of the Restated
Certificate to increase the allocable shares of Series D Preferred, the Company
has all requisite legal and corporate power and authority to execute and deliver
this Agreement, the Fourth Amended and Restated Investor Rights Agreement in
substantially the form attached hereto as Exhibit D (the "Rights Agreement" and,
together with this Agreement, the "Investment Agreements"), the Operating
Agreement, the Consulting Agreements, and the Voting Agreement to sell and issue
the Shares and the Warrants hereunder and thereunder, to issue the underlying
Common Stock (the "Conversion Stock") in accordance with the provisions of the
Restated Certificate, and to carry out and perform its obligations under the
terms of the Investment Agreements, the Operating Agreement, the Consulting
Agreements, and the Voting Agreement.
3.3 SUBSIDIARIES. Except for Autodata Solutions Company, a Nova Scotia
unlimited liability company, Autodata, Inc., a Delaware corporation, CD1
Financial.com, LLC, a Delaware
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limited liability company, Autodata Solutions, Inc., a Delaware company, and
Autodata Solutions Group, Ltd., a Delaware company, the Company has no
subsidiaries or affiliated companies and does not otherwise own or control,
directly or indirectly, any equity interest in any corporation, association or
business entity.
3.4 CAPITALIZATION. Immediately prior to the Closing, the authorized
capital stock of the Company will, conditioned upon approval of the Restated
Certificate of Incorporation immediately prior to the Closing, consist of
80,000,000 shares of Class A Common Stock, 2,050,000 shares of Class B Common
Stock and 57,503,572 shares of Preferred Stock, 10,000,000 of which have been
designated Series A Preferred Stock, 9,558,572 of which have been designated
Series B Preferred Stock, 9,945,000 of which have been designated Series C
Preferred Stock and 28,000,000 shares of which have been designated Series D
Preferred Stock. As of May 3, 2000 the total number of outstanding shares of
Class A Common Stock was 11,225,267 and the total number of outstanding shares
of Class B Common Stock was 2,050,000. As of May 3, 2000, 10,000,000 shares of
Series A Preferred Stock, 9,558,571 shares of Series B Preferred Stock,
9,757,523 shares of Series C Preferred Stock, and 17,355,273 shares of Series D
Preferred Stock were outstanding. The Series D Preferred has the rights,
preferences, privileges and restrictions set forth in the Restated Certificate.
All currently outstanding shares of Preferred Stock and Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable, and have
been issued in compliance with applicable securities laws. The Company has
reserved a sufficient number of shares of Series D Preferred for issuance
hereunder and a sufficient number of shares of Common Stock for issuance upon
exercise of the Warrants and conversion of the Series D Preferred. Of the
11,500,000 shares of Common Stock of the Company reserved for issuance under the
Company's 1998 Stock Option Plan, options to purchase fewer than 11,500,000
shares have been granted. The Company has issued (i) a warrant to Bank One
Corporation for the purchase of up to 2,085,970 shares of Class A Common Stock,
(ii) a warrant to Heidrick & Struggles, Inc. for the purchase of up to 10,000
shares of Class A Common Stock and (iii) a promissory note to GBJ Holdings, LLC
in the principal amount of $490,000.00 which is convertible into shares of
Series C Preferred Stock. Additionally, the Company has granted warrants to
certain executives and consultants to acquire shares of capital stock. Except
(i) as set forth above, and (ii) as provided in the Company's Restated
Certificate (excluding any antidilution provisions contained in the Restated
Certificate) and the Schedule of Exceptions, there are no options, warrants or
other rights to purchase, acquire or otherwise receive any of the Company's
authorized and unissued capital stock. There are no preemptive rights or
anti-dilution rights triggered by the sale of Series D Preferred Stock and
issuance of Warrants pursuant to this Agreement and the transactions
contemplated thereby.
3.5 AUTHORIZATION. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, execution, delivery
and performance of the Investment Agreements, the Voting Agreement, the
Operating Agreement, and the Consulting Agreements by the Company, the
authorization, sale, issuance and delivery of the Shares and the Warrants and
the Conversion Stock and the performance of the Company's obligations under the
Investment Agreements has been taken or will be taken prior to the Closing. The
Investment Agreements, Voting Agreement, the Operating Agreement, and the
Consulting Agreements when executed and
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delivered by the Company, shall constitute valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies; provided, however, that the Company makes no representation
as to the enforceability of the indemnification provisions contained in the
Investor Rights Agreement. The Shares, the Warrants and the Conversion Stock
when issued in compliance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable, and will have the rights, preferences,
privileges and restrictions described in the Restated Certificate; the Common
Stock issuable upon conversion of the Shares and the Series D Preferred Stock
issuable upon conversion of the Warrant have been duly and validly reserved and,
when issued in compliance with the provisions of the Restated Certificate, will
be validly issued, fully paid and nonassessable; and the Shares and the
Conversion Stock will be free of any liens or encumbrances other than any liens
or encumbrances created by or imposed upon the holders; provided, however, that
the Shares and the Conversion Stock may be subject to restrictions on transfer
under state or federal securities laws and restrictions set forth in the
Investor Rights Agreement.
3.6 PROPRIETARY RIGHTS. The Company and its subsidiaries have title and
ownership of, or full right to use, all patents, trademarks, service marks,
trade names, copyrights, trade secrets, information, proprietary rights and
processes necessary for its business as now conducted and, to the Company's
knowledge, without any conflict with or infringement of the rights of others.
The Company and its subsidiaries have not violated in a material respect
outstanding options, licenses, or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights and processes of any other person or entity. The Company and its
subsidiaries have not received any communications alleging that the Company or
its subsidiaries have violated or, by conducting their business as currently
conducted, would violate any of the patents, trademarks, service marks, trade
names, copyrights or trade proprietary rights of any other person or entity. To
the knowledge of the Company, none of its employees or its subsidiaries
employees are obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of his or her best efforts to promote the interests of the Company or
any subsidiary or that would conflict with the Company's or a subsidiary's
business as currently conducted. Neither the execution and delivery of the
Investment Agreements, Voting Agreement, the Operating Agreement, and the
Consulting Agreements nor the carrying on of the Company's or any subsidiary's
business by the employees of the Company, nor the conduct of the Company's or
any subsidiary's business as currently conducted, will, to the Company's or any
subsidiary's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated. The
Company does not believe it is or will be necessary to utilize any inventions of
any of its employees (or people it currently intends to hire) made prior to
their employment by the Company.
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3.7 REGISTRATION RIGHTS. Except as set forth in the Rights Agreement
(and prior versions thereof) and as outlined pursuant to this Section 3.7, the
Company is not under any contractual obligation to register under the Securities
Act of 1933, as amended (the "Securities Act"), any of its presently outstanding
securities or any of its securities which may hereafter be issued.
3.7.1 REGISTRATION ON FORM S-3
(a) Request for Registration. In case the Company shall
receive from Purchasers a written request that the Company file a registration
statement on Form S-3 (or any successor form to Form S-3) for a public offering
of the Securities the aggregate price to the public of which, net of
underwriting discounts and commissions, would exceed $3,000,000, and the Company
is a registrant entitled to use Form S-3 to register the Securities for such an
offering, the Company shall use commercially reasonable efforts to cause such
Securities to be registered for the offering on such form and to cause such
Securities to be qualified in such jurisdictions as the Purchasers may
reasonably request; provided, however, that the Company shall not be required to
effect more than one registration pursuant to this Section 3.7.1 in any twelve
month period. If such offer is to be an underwritten offer, the underwriters
must be acceptable to both the Purchasers and the Company. The Company shall
inform the other parties to the extent required under the Rights Agreement, of
the proposed registration and offer them the opportunity to participate. In the
event the registration is proposed to be part of a firm commitment underwritten
public offering, the substantive provisions of Section 5.1(b) of the Rights
Agreement shall be applicable to each such registration initiated under this
Section 3.7.1.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 3.7.1:
(i) Following the filing of, and for 180 days immediately
following the effective date of, any registration statement pertaining to
capital stock of the Company (other than a registration of securities in a Rule
145 transaction or with respect to an employee benefit plan), provided that the
Company is actively employing in good faith commercially reasonable efforts to
cause such registration statement to become effective;
(ii) Within twelve months after the Company has effected
such a registration pursuant to this Section 3.7.1.3(a), and such registration
has been declared or ordered effective; or
(iii) If the Company shall furnish to the Purchasers a
certificate signed by the President of the Company (i) giving notice of its bona
fide intention to effect the filing of a registration statement with the
Commission, or (ii) stating that, in the good faith judgment of the Board of
Directors, it would be seriously detrimental to the Company or its stockholders
for a registration statement to be filed in the near future, then the Company's
obligation to use its commercially reasonable efforts to file a registration
statement shall be deferred one or more times for a period not to exceed 180
days from the receipt of the request to file such registration by such
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Purchasers, provided that the Company may not exercise this deferral right and
any other similar deferral right under the Rights Agreement more than once per
twelve month period.
3.7.2 REGISTRATION PROCEDURES. In the case of each registration
effected by the Company pursuant to this Agreement, the Company will keep each
Purchaser advised in writing as to the initiation of such registration and as to
the completion thereof. The Company will:
(a) Prepare and file with the Commission a registration
statement and such amendments and supplements as may be necessary and use
commercially reasonable efforts to cause such registration statement to become
and remain effective for at least 90 days or until the distribution described in
the registration statement has been completed, whichever first occurs; provided,
however, that such 90 day period shall be extended for a period of time equal to
that which the Purchaser refrains from selling any securities at the request of
any underwriter of the Company; and
(b) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably request
in order to facilitate the public offering of such securities.
3.7.3 INDEMNIFICATION
(a) The Company will indemnify each Purchaser, each of its
officers and directors and partners, and each person controlling such Purchaser
within the meaning of Section 15 of the Securities Act, with respect to which
registration has been effected pursuant to this Agreement, against all expenses,
claims, losses, damages or liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any amendment or
supplement thereto, incident to any such registration, or based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation by the
Company of the Securities Act, the Exchange Act, state securities laws or any
rule or regulation promulgated under such laws applicable to the Company in
connection with any such registration, and the Company will reimburse each such
Purchaser, each of its officers and directors, and each person controlling such
Purchaser, for any legal and any other expenses reasonably incurred, as such
expenses are incurred, in connection with investigating, preparing or defending
any such claim, loss, damage, liability or action, provided that the Company
will not be liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue statement
or omission or alleged untrue statement or omission, made in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such Purchaser or controlling person, and stated to be
specifically for use therein; provided, however, that the foregoing indemnity
Agreement is subject to the condition that, insofar as it relates to any
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such untrue statement, alleged untrue statement, omission or alleged omission
made in a preliminary prospectus on file with the Commission at the time the
registration statement becomes effective or the amended prospectus is filed with
the Commission pursuant to Rule 424(b) (the "Final Prospectus"), such indemnity
Agreement shall not inure to the benefit of any Purchaser , if a copy of the
Final Prospectus was not furnished to the person asserting the loss, liability,
claim or damage at or prior to the time such action is required by the
Securities Act, and if the Final Prospectus would have cured the defect giving
rise to the loss, liability, claim or damage.
(b) Each Purchaser will, if Securities held by such Purchaser
are included in the securities as to which such registration is being effected,
indemnify the Company, each of its directors and officers, other holders of the
Company's securities covered by such registration statement, each person who
controls the Company within the meaning of Section 15 of the Securities Act, and
each other such Purchaser, each of its officers and directors and each person
controlling such Purchaser within the meaning of Section 15 of the Securities
Act, against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Purchaser of the Securities Act, the Exchange Act, state securities laws or any
rule or regulation promulgated under such laws applicable to the Purchaser, and
will reimburse the Company, such other Purchasers, such directors, officers,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred, as such expenses are incurred, in connection with
investigating or defending any such claim, loss, damage, liability or action,
but in the case of the Company or the other Holders or their officers, directors
or controlling persons, only to the extent that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with information furnished to the Company by
such Purchaser. Notwithstanding the foregoing, the liability of each Purchaser
under this subsection 3.7.3(b) shall be limited in an amount equal to the
initial public offering price of the shares sold by such Purchaser, unless such
liability arises out of or is based on willful misconduct or fraud by such
Purchaser.
(c) Each party entitled to indemnification under this Section
3.7.3 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided further, that the Indemnifying Party
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shall not assume the defense for matters as to which there is a conflict of
interest or there are separate and different defenses. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party (whose consent shall not be unreasonably withheld),
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation.
(d) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
3.7.4 INFORMATION BY HOLDER. The Purchaser or Purchasers of
Securities included in any registration shall furnish to the Company such
information regarding such Purchaser or Purchasers, the Securities held by them
and the distribution proposed by such Purchaser or Purchasers as the Company may
request in writing and as shall be required in connection with any registration
referred to in this Agreement.
3.7.5 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the restricted Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to use commercially reasonable efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;
(b) File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) So long as a Purchaser owns any restricted Securities, to
furnish to the Purchaser forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), a copy of the most recent annual or quarterly report of the Company,
and such other reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as the Purchaser may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Purchaser to sell any such securities without
registration.
3.7.6 TERMINATION OF REGISTRATION RIGHTS. The rights granted
pursuant to Section 3.7.1 of this Agreement shall terminate as to any Purchaser
upon the earlier of (i) the date
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<PAGE> 14
twelve years after the effective date of this Agreement and (ii) the date such
Purchaser and its affiliates are able to immediately sell all shares of
Securities held or entitled to be held upon conversion by such Purchaser and its
affiliates under Rule 144 during any 90-day period.
3.7.7 DEFINITION. For Purposes of this Section 3.7 only, the terms
"Purchaser" and "Purchasers" include the Warrant Recipients.
3.8 GOVERNMENTAL CONSENT, ETC. No consent, approval order or
authorization of or registration, qualification, designation, declaration or
filing with any governmental authority on the part of the Company is required in
connection with the valid execution and delivery of the Investment Agreements,
or the offer, sale or issuance of the Shares, the Warrants or the Conversion
Stock, or the consummation of any other transaction contemplated hereby, except
(i) the filing of the Restated Certificate in the office of the Delaware
Secretary of State prior to the Closing and (ii) the qualification (or taking of
such action as may be necessary to secure an exemption from qualification, if
available) of the offer and sale of the Shares and the Conversion Stock under
applicable Blue Sky laws, which filings and qualifications, if required, will be
accomplished in a timely manner.
3.9 OFFERING. Subject to the accuracy of the Purchaser's
representations in Section 4 hereof, the offer, sale and issuance of the Shares
and the Conversion Stock constitute transactions exempt from the registration
requirements of Section 5 of the Securities Act.
3.10 PERMITS. The Company has or is seeking all franchises, permits,
licenses, and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could materially and adversely
affect the business, properties, or financial condition of the Company, and the
Company believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted.
3.11 BROKERS OR FINDERS; OTHER OFFERS. The Company has not incurred,
and will not incur, directly or indirectly, as a result of any action taken by
the Company, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with the sale of shares of Series D
Preferred Stock.
3.12 LITIGATION, ETC. To the Company's knowledge, as of the date
hereof, there is no action, suit, proceeding or investigation pending or
threatened, against the Company, and none which questions the validity of this
Agreement or the transactions contemplated herein. The Company is not a party or
subject to any material writ, order, decree or judgment, and there is no action,
suit or proceeding by the Company currently pending or which the Company intends
to initiate.
3.13 DISCLOSURE. The Company and each Purchaser and Warrant Recipient
have been engaged in a due diligence process and, in connection therewith, the
Company has made available to such Purchaser or Warrant Recipient information
reasonably available to the Company that such Purchaser requested to assist it
in making its decision of whether or not to purchase the Shares.
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<PAGE> 15
Assuming the accuracy of each Purchaser's representations regarding their
sophistication with regard to investments in companies similar to the Company
and in light of the aforementioned due diligence process, to the Company's
knowledge (1) neither the Agreement nor any other written statements or
certificates made or delivered in connection with the execution of the Agreement
contains any untrue statement of a material fact: and (2) in the due diligence
process the Company did not omit to state a material fact specific to the
Company necessary to make the statements made, in light of the circumstances in
which they were made, not misleading (it being understood that this
representation is qualified by the fact that the Company has not delivered to
any Purchaser and has not been requested to deliver, a private placement or
similar memorandum or any "Risk Factors" or "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of the type typically
contained therein).
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Each Purchaser hereby severally represents and warrants to the Company
as follows:
4.1 PREEXISTING RELATIONSHIP WITH COMPANY; BUSINESS AND FINANCIAL
EXPERIENCE. It either (i) has a prior business and/or personal relationship with
the Company and/or its officers and directors, or (ii) by reason of its business
or financial experience or the business or financial experience of its
professional advisors who are unaffiliated with the Company and who are not
compensated by the Company, has the capacity to protect its own interests in
connection with the purchase of the Shares and underlying Conversion Stock.
4.2 INVESTMENT INTENT; BLUE SKY. It is acquiring the Shares and the
underlying Conversion Stock for investment for its own account, not as a nominee
or agent, and not with a view to, or for resale in connection with, any
distribution thereof. It understands that the issuance of the Shares and the
underlying Conversion Stock has not been, and will not be, registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among
other things, the bona fide nature of the Purchaser's investment intent and the
accuracy of the Purchaser's representations as expressed herein. The Purchaser's
address set forth on the signature page hereto represents the Purchaser's true
and correct state of domicile, upon which the Company may rely for the purpose
of complying with applicable "Blue Sky" laws.
4.3 RULE 144. It acknowledges that the Shares and the underlying
Conversion Stock must be held indefinitely unless subsequently registered under
the Securities Act or unless an exemption from such registration is available.
It is aware of the provisions of Rule 144 promulgated under the Securities Act
which permit limited resale of shares purchased in a private placement subject
to the satisfaction of certain conditions, including, among other things, the
existence of a public market for the shares, the availability of certain current
public information about the Company, the resale occurring not less than one
year after a party has purchased and paid for the security to be sold, the
sale being effected through a "broker's transaction" or in a transaction
directly with a "market maker," and the number of shares being sold during any
three-month period not exceeding specified limitations.
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<PAGE> 16
4.4 NO PUBLIC MARKET. It understands that no public market now exists
for any of the securities issued by the Company and that the Company has made no
assurances that a public market will ever exist for the Company's securities.
4.5 RESTRICTIONS ON TRANSFER; RESTRICTIVE LEGENDS. It understands that
the transfer of the Shares and the Conversion Stock is restricted by applicable
state and Federal securities laws and by the provisions of the Investor Rights
Agreement, and that the certificates representing the Shares and the Conversion
Stock will be imprinted with legends restricting transfer except in compliance
therewith.
4.6 ACCESS TO DATA. It has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's management. It has
also had an opportunity to ask questions of officers of the Company. It
understands that such discussions, as well as any written information issued by
the Company, were intended to describe certain aspects of the Company's business
and prospects but were not a thorough or exhaustive description.
4.7 AUTHORIZATION. All action on the part of the Purchaser's partners,
board of directors, and stockholders, as applicable, necessary for the
authorization, execution, delivery and performance of the Investment Agreements
by the Purchaser, the purchase of and payment for the Shares and the Conversion
Stock and the performance of all of the Purchaser's obligations under the
Investment Agreements has been taken or will be taken prior to the Closing. The
Investment Agreements, when executed and delivered by the Purchaser, shall
constitute valid and binding obligations of the Purchaser, enforceable in
accordance with their terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies; provided,
however, that the Purchaser makes no representation as to the enforceability of
the indemnification provisions contained in the Investor Rights Agreement.
4.8 BROKERS OR FINDERS. The Company has not and will not incur,
directly or indirectly, as a result of any action taken by the Purchaser, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or the transactions contemplated
hereby based upon any arrangements or agreements made by the Purchaser.
4.9 TAX LIABILITY. It has reviewed with its own tax advisors the tax
consequences of the transactions contemplated by this Agreement. It relies
solely on such advisors and not on any statements or representations of the
Company or any of the Company's agents with respect to such tax consequences. It
understands that it, and not the Company, shall be responsible for its own tax
liability that may arise as a result of the transactions contemplated by this
Agreement.
4.10 LIMITED OPERATING HISTORY. It acknowledges that the Company was
incorporated on October 9, 1998 as a new business and has a limited operating
history.
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<PAGE> 17
SECTION 5
CONDITIONS TO CLOSING OF THE PURCHASER
Each Purchaser's obligation to purchase the Shares is, unless waived in
writing by the Purchaser, subject to the fulfillment as of the date of Closing
of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects as of the date of the Closing.
5.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or prior to
the Closing Date shall have been performed or complied with in all material
respects.
5.3 BLUE SKY. The Company shall have obtained all necessary Blue Sky
law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Shares and the
underlying Conversion Stock.
5.4 RESTATED CERTIFICATE. The Restated Certificate shall have been
filed in the office of the Delaware Secretary of State.
5.5 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Purchaser a certificate of the Company in substantially the form attached hereto
as Exhibit E, executed by the President of the Company, dated as of the date of
the Closing and certifying to the fulfillment of the conditions specified in
Sections 5.1 and 5.2 of this Agreement.
5.6 OPINION OF COMPANY'S COUNSEL. The Purchaser shall receive from
Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to the
Company, an opinion addressed to them, dated the Closing Date, in substantially
the form of Exhibit F.
5.7 FOURTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT. The
Purchaser and Warrant Recipients shall have executed and delivered the Fourth
Amended and Restated Investor Rights Agreement in substantially the form
attached hereto as Exhibit D.
5.8 VOTING AGREEMENT. The Company, Bill Gross' idealab! and idealab!
Holdings LLC shall have executed and delivered the Voting Agreement in
substantially the form attached hereto as Exhibit H.
5.9 OPERATING AGREEMENT. The Company shall have executed and delivered
the Operating Agreement in substantially the form attached hereto as Exhibit I.
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<PAGE> 18
5.10 CONSULTING AGREEMENTS. The Company shall have executed and
delivered the Consulting Agreements in substantially the form attached hereto as
Exhibit J.
5.11 REGULATORY APPROVAL.
(a) The parties shall have timely obtained all regulatory
approvals; and
(b) Any waiting period (and any extension thereof) under
the HSR Act (as defined herein) applicable to this Agreement and the
transactions contemplated hereby shall have expired or been terminated.
5.12 RIGHT OF FIRST REFUSAL. The Company and the "Qualified Purchasers"
under the Rights Agreement shall have delivered an amendment including the
parties to this Agreement as Qualified Purchasers under Section 8 of the Rights
Agreement, the amendment is attached hereto as Exhibit K.
SECTION 6
CONDITIONS TO CLOSING OF THE COMPANY
The Company's obligation to sell and issue the Shares is, unless waived
in writing by the Company, subject to the fulfillment as of the date of Closing
of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations made in
Section 4 hereof by the Purchaser shall be true and correct in all material
respects as of the date of Closing.
6.2 COVENANTS. All covenants, agreements, and conditions contained in
this Agreement to be performed or complied with by the Purchaser on or prior to
the date of Closing shall have been performed or complied with in all material
respects.
6.3 BLUE SKY. The Company shall have obtained all necessary Blue Sky
law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Shares and the
underlying Conversion Stock.
6.4 RESTATED CERTIFICATE. The Restated Certificate shall have been
filed in the office of the Delaware Secretary of State.
6.5 FOURTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT. The
Purchasers and Warrant Recipients shall have executed and delivered the Fourth
Amended and Restated Investor Rights Agreement in substantially the form
attached hereto as Exhibit D.
6.6 VOTING AGREEMENT. Penske Internet Capital Group L.L.C., United Auto
Group, Inc., HAC II, Inc. and Roger S. Penske shall have executed and delivered
the Voting Agreement in substantially the form attached hereto as Exhibit H.
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<PAGE> 19
6.7 OPERATING AGREEMENT. Penske and UAG shall have executed and
delivered the Operating Agreement in substantially the form attached hereto as
Exhibit I.
6.8 CONSULTING AGREEMENTS. Penske, UAG, Penske Corp., and HAC II, Inc.
shall have executed and delivered the Consulting Agreements in substantially the
forms attached hereto as Exhibit J.
6.9 REGULATORY APPROVAL.
(a) The parties shall have timely obtained all regulatory
approvals; and
(b) Any waiting period (and any extension thereof) under
the HSR Act (as defined herein) applicable to this Agreement and the
transactions contemplated hereby shall have expired or been terminated.
SECTION 7
TERMINATION
7.1 EXPIRATION DATE. In the event that the transactions contemplated by
this Agreement have not been consummated by December 31, 2000, then any party
may, on or after such date, terminate this Agreement; provided that a party will
not be entitled to terminate this Agreement pursuant to this Section 7.1 if that
party's breach of this Agreement has prevented the consummation of the
transactions contemplated hereby at or prior to such time.
SECTION 8
MISCELLANEOUS
8.1 HSR APPROVAL. The Company shall use commercially reasonable efforts
to cooperate with Purchasers whether prior to or after the Closing in making
filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act").
8.2 TAXES. The parties agree and acknowledge that the Warrants are
being issued in connection with performance of services and that the Federal
income tax treatment of the issuance and exercise of the warrants is accordingly
governed by Section 83 of the Code and the Treasury Regulations thereunder. Each
party agrees that it will take no reporting or other position for any income tax
purpose which is inconsistent with the foregoing.
8.3 GOVERNING LAW. This Agreement shall be governed in all respects by
the internal laws of the State of California without regard to conflict of laws
provisions.
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<PAGE> 20
8.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Investment
Agreements, the Operating Agreement, the Consulting Agreements, and the Voting
Agreement, including the exhibits hereto, constitute the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and thereof, and no party shall be liable or bound to any other party in any
manner by any warranties, representations or covenants except as specifically
set forth herein or therein. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.
8.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by facsimile
transmission, by hand or by messenger, addressed:
(a) if to a Purchaser or to a Warrant Recipient, to the
address or fax number listed after such Purchaser's name on the signature page
hereto or at such other address as such Purchaser shall have furnished to the
Company:
if to the Company, to:
10567 Jefferson Blvd.
Culver City, California 90232
Chief Executive Officer
Fax: (310) 280-4264
or at such other address as the Company
shall have furnished to the
Purchaser, with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Martin W. Korman, Esq.
Attn: Michael D. Weisberg, Esq.
Fax: (650) 493-6811
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when received if
delivered personally, if sent by facsimile, the first business day after the
date of confirmation that the facsimile has been successfully transmitted to the
facsimile number for the party notified, or, if sent by mail, at the earlier of
its receipt or 72 hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
8.6 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay
or omission to exercise any right, power or remedy accruing to any party, upon
any breach or default of another party under this Agreement, shall impair any
such right, power or remedy of such party nor shall it be
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<PAGE> 21
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
8.7 EXPENSES. Each of the parties hereto shall bear its own expenses
incurred in the preparation and negotiation of this Agreement, and the
consummation of the transactions contemplated hereby.
8.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which together
shall constitute one instrument.
8.9 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision, which shall be replaced with an enforceable provision
closest in intent and economic effect as the severed provision; provided that no
such severability shall be effective if it materially changes the economic
benefit of this Agreement to any party.
8.10 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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<PAGE> 22
The foregoing agreement is hereby executed effective as of the date
first set forth above.
<TABLE>
<CAPTION>
"COMPANY" "PURCHASER"
<S> <C>
CARSDIRECT.COM, INC.
A Delaware corporation --------------------------------------------------------
Print name of Purchaser as it is
to appear on stock certificate
By:
----------------------------------------------- --------------------------------------------------------
Authorized Signature
Name:
--------------------------------------------- --------------------------------------------------------
Title of Signatory (if appropriate)
Title: Number of Shares of Series D Preferred
-------------------------------------------- purchased:
-------------
Aggregate Purchase Price for Shares:
$
------------
Address for notices:
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
"WARRANT RECIPIENT"
--------------------------------------------------------
Print Name of Warrant Recipient
--------------------------------------------------------
Authorized Signature
Address for notices:
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
</TABLE>
[Signature Page to Series D Stock Purchase and Warrant Agreement]
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