<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 25, 1999.
REGISTRATION NO. 333-70621
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AUTOBYTEL.COM INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7375 33-0711569
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
18872 MACARTHUR BOULEVARD
IRVINE, CALIFORNIA 92612-1400
(949) 225-4500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MARK W. LORIMER, CHIEF EXECUTIVE OFFICER AND PRESIDENT
AUTOBYTEL.COM INC.
18872 MACARTHUR BOULEVARD
IRVINE, CALIFORNIA 92612-1400
(949) 225-4500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO:
<TABLE>
<S> <C>
THOMAS R. POLLOCK, ESQ. CHRISTOPHER L. KAUFMAN, ESQ.
BRIGITTE LIPPMANN, ESQ. LAURA I. BUSHNELL, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER LLP LATHAM & WATKINS
399 PARK AVENUE 135 COMMONWEALTH DRIVE
NEW YORK, NEW YORK 10022 MENLO PARK, CALIFORNIA 94025
(212) 318-6000 (650) 328-4600
</TABLE>
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement of the earlier effective registration statement for the
same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
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PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE(3)
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Common Stock, par value $.001
per share...................... 5,137,500 Shares $22.00 $113,025,000 $31,420.95
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</TABLE>
(1) Includes 637,500 shares that may be sold upon exercise of the underwriters'
over-allotment option.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.
(3) This registration fee has been previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
MARCH 25, 1999
4,500,000 SHARES
LOGO
AUTOBYTEL.COM INC.
COMMON STOCK
We are offering 3,500,000 shares of our common stock. The selling stockholders
identified in this prospectus are offering an additional 1,000,000 shares. We
will not receive any of the proceeds from the sale of shares by the selling
stockholders. There is currently no public market for our common stock. We
expect that the public offering price will be between $20.00 and $22.00 per
share. The market price of our common stock after this offering may be higher or
lower than the actual price at which the shares of our common stock will be sold
in this offering.
Our common stock has been approved for quotation on the Nasdaq National Market
under the symbol "ABTL."
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 6.
Autobytel.com has received from international strategic investors indications of
interest for the purchase of up to 250,000 shares registered under the
registration statement of which this prospectus is a part at the initial public
offering price. The sale of these shares will not be subject to the underwriting
agreement between Autobytel.com and the underwriters. No underwriting discounts
will apply to the sale of these shares, however, if these shares are sold to
these investors we will pay a fee of $350,000 to an affiliate of one of the
underwriters.
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- --------
<S> <C> <C>
Public Offering Price................................ $ $
Underwriting Discounts............................... $ $
Proceeds, before expenses, to Autobytel.com.......... $ $
Proceeds, before expenses, to the selling
stockholders....................................... $ $
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The selling stockholders have granted the underwriters a 30-day option to
purchase up to an additional 637,500 shares of common stock to cover any
over-allotments. If the underwriters exercise the over-allotment option in full,
these stockholders will receive $ from the proceeds.
BT ALEXS BROWN
LEHMAN BROTHERS
PAINEWEBBER INCORPORATED
, 1999
<PAGE> 3
GATEFOLD
- --------
Purchase Request Process utilizes easy-to-use online forms that enable consumers
to choose their desired vehicle and options. The purchase request is then routed
to the nearest Autobytel.com participating dealer, whom we expect to promptly
contact the customer with a haggle-free, competitive offer.
Research allows consumers to empower themselves by gathering up-to-date, useful
information regarding vehicles, vehicle pricing and other related topics from
Autobytel.com's comprehensive network of automobile information sources.
Dealer Real Time(tm) is a extranet used exclusively by Autobytel.com and its
participating dealers that delivers the purchase requests from consumers to
Autobytel.com dealers in real time. It notifies dealers when new purchase
requests have been received, enables dealers to efficiently manage the purchase
process and allows dealers to load their pre-owned vehicle inventories directly
to the network.
Pre-Owned Vehicle Purchasing is simplified through Autobytel.com's Pre-Owned
CyberStore, which enables consumers to search for vehicles according to specific
search parameters such as the price, make, model, mileage, year and location of
the vehicle. CyberStore locates and displays the description, location and
actual photograph of all vehicles that satisfy the search parameters.
INSIDE COVER
- ------------
New Cars
Consumers can shop for and select a new vehicle that specifically fits their
needs using Autobytel.com.
Pre-Owned CyberStore
Consumers can search for, view and select a certified, pre-owned vehicle through
CyberStore.
Research
Pricing information, consumer reports, "test drives" and up-to-date automotive
industry information help consumers make informed and intelligent buying
decisions.
Finance
Consumers can research loan and leasing information and receive online approval.
Insure
Consumers can receive insurance quotes and obtain approval online.
Rewards
Mobalist Rewards and its affiliate programs allow members to earn credits toward
the purchase of a new or pre-owned car through Autobytel.com.
Warranty
Consumers can purchase extended warranty and mechanical breakdown insurance
through our online affiliates.
My Area
Consumers can keep track of their current cars, watch expenses and plan future
"dream car" purchases through this personalized homepage.
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PROSPECTUS SUMMARY
In addition to this summary, you should read the more detailed information
appearing elsewhere in this prospectus, including the "Risk Factors" section and
the Consolidated Financial Statements and Notes thereto.
AUTOBYTEL.COM
We are a leading, branded Internet site for new and pre-owned vehicle
information and purchasing services. Through our Web site, www.autobytel.com,
consumers can research pricing, specifications and other information regarding
new and pre-owned vehicles. When consumers indicate they are ready to buy, they
can be connected to Autobytel.com's network of over 2,700 dealers in North
America, with each dealer representing a franchise for a particular vehicle
make. Dealers participate in our network by entering into non-exclusive
contracts with us. We expect our dealers to provide a haggle-free, competitive
offer. We provide our services free of charge to consumers and derive
substantially all of our revenues from fees paid by participating dealers.
We believe our services benefit both consumers and participating dealers in
the following ways:
- we supply consumers with information they can use to make an informed and
intelligent vehicle purchasing decision,
- we provide consumers a convenient buying experience,
- we provide consumers access to a broad range of related services such as
insurance, financing and leasing through our Web site,
- we reduce our participating dealers' costs by directing to them large
volumes of potential automotive buyers, and
- we train our dealers to appropriately deal with knowledgeable Internet
consumers.
We introduced our new vehicle purchasing services in May 1995 and our
Certified Pre-Owned CyberStore program in April 1997. Our new vehicle purchasing
service enables consumers to shop for and select a new vehicle through our Web
site by providing research on new vehicles such as pricing, features,
specifications and colors. When consumers indicate they are ready to buy, they
can complete a purchase request online. A purchase request is an online inquiry
a consumer makes to receive a price quote for a specific vehicle from one of the
dealers in our network. The CyberStore allows consumers to search for a
pre-owned vehicle according to the price, make, model, color, year and location
of the vehicle. The CyberStore locates and displays the descriptions, locations
and actual photographs of all vehicles that satisfy the consumers' search
parameters.
According to CNW Marketing/Research, an independent research organization,
United States consumers spent over $657 and $667 billion on new and pre-owned
vehicles representing the sale of over 60.0 and 60.3 million vehicles in 1997
and 1998, respectively. Although automotive retailing attracts significant
consumer dollars, we believe that consumers associate the traditional vehicle
buying experience with high-pressure sales tactics. In the United States, new
vehicles are traditionally sold through face-to-face, negotiated transactions at
approximately 49,000 dealerships franchised by manufacturers. Approximately 40%
of pre-owned vehicles are also sold through these dealerships. Our company was
founded with the objective of significantly improving the purchasing process for
consumers and dealers.
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<PAGE> 5
Since inception, we have successfully expanded our dealer network to over
2,700 dealers and have directed approximately 2.5 million purchase requests to
our dealer network. During 1998, we directed over 1.3 million purchase requests
to our dealers. The dealers in our network use our online information platform,
the Dealer Real Time system. The Dealer Real Time system is an Internet-based
communications platform that provides dealers with immediate purchase request
information, the ability to track customers and purchase requests, and other
value-added features, including automatic uploading of pre-owned vehicle
inventory into our database. We believe that the Dealer Real Time system gives
dealers a competitive advantage compared to delivering purchase requests by fax.
We have developed strategic marketing, advertising, development and
distribution affiliations with other companies, including:
- Internet search engine providers, such as Excite, Inc.,
- cable service providers, such as MediaOne Interactive Services, Inc.,
- international automotive distributors, such as Inchcape Automotive
Limited and Bilia AB,
- Internet providers of vehicle pricing and specification information, such
as Edmund's Publications Corp., Kelley Blue Book, Pace Publications, Inc.
and IntelliChoice, Inc., and
- financing and insurance providers, such as Chase Manhattan Automotive
Finance Corporation, General Electric Capital Auto Financial Services,
Inc. and New Hampshire Insurance Corporation, a member company of the
American International Group.
We have received indications of interest from existing and potential
strategic investors, including companies with international automotive
operations, for the purchase of up to 250,000 shares at the initial public
offering price. We have entered into agreements with e-solutions, Inc., Intec,
Inc. and Trans Cosmos, Inc. to provide for the organization and establishment of
a joint venture in Japan and the license for the use of our name and systems.
Following this offering, our executive officers and directors will
beneficially own or control approximately 5,856,614 shares or 30% of the
outstanding shares of our common stock. In addition, after this offering, our
founders, Peter Ellis and John Bedrosian will beneficially own or control
approximately 19% and 17%, respectively, of the outstanding shares of our common
stock. If the underwriters' over-allotment option is exercised in full, our
founders will beneficially own or control approximately 17% and 16%,
respectively, of the outstanding shares of our common stock.
We are a Delaware corporation incorporated on May 17, 1996. We were
previously formed in Delaware in January 1995 as a limited liability company
under the name Auto-By-Tel LLC. Our principal executive offices are located at
18872 MacArthur Boulevard, Irvine, California 92612-1400, and our telephone
number is (949) 225-4500. Our Web site is located at www.autobytel.com.
4
<PAGE> 6
THE OFFERING
The information below is stated as of December 31, 1998. Investors should
be aware that the aggregate number of shares of common stock to be outstanding
after the offering does not include 2,859,340 shares subject to outstanding
options and 773,133 shares subject to outstanding warrants.
<TABLE>
<S> <C>
Common stock offered by Autobytel.com...
3,500,000 shares
Common stock offered by the selling
stockholders..........................
1,000,000 shares
Common stock to be outstanding after the
offering..............................
17,858,745 shares
Use of proceeds.........................
For working capital and general
corporate purposes
Nasdaq National Market symbol...........
"ABTL"
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
We have calculated pro forma net loss per share assuming the conversion on
their date of issuance of the outstanding preferred stock into common stock. The
as adjusted for the offering column reflects the receipt by Autobytel.com of the
estimated net proceeds of $66.8 million from our sale of common stock offered in
this offering.
<TABLE>
<CAPTION>
INCEPTION
(JANUARY 31,
1995) TO YEARS ENDED DECEMBER 31,
DECEMBER 31, -----------------------------
1995 1996 1997 1998
------------ ------- -------- --------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATION DATA:
Revenues................................ $ 274 $ 5,025 $ 15,338 $ 23,826
======= ======= ======== ========
Loss from operations.................... (1,030) (6,159) (17,415) (20,643)
------- ------- -------- --------
Net loss................................ $(1,030) $(6,035) $(16,810) $(19,398)
======= ======= ======== ========
Basic net loss per share................ $ (0.12) $ (0.73) $ (2.03) $ (2.30)
======= ======= ======== ========
Shares used in computing basic net loss
per share............................. 8,250 8,252 8,291 8,423
Pro forma basic net loss per share...... $ (0.12) $ (0.68) $ (1.53) $ (1.49)
======= ======= ======== ========
Shares used in computing pro forma basic
net loss per share.................... 8,250 8,849 10,967 13,008
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998
---------------------------
AS ADJUSTED
ACTUAL FOR THE OFFERING
-------- ----------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 27,984 $ 94,768
Working capital........................................... 23,436 90,220
Total assets.............................................. 34,207 100,991
Accumulated deficit....................................... (43,273) (43,273)
Stockholders' equity...................................... 25,868 92,652
</TABLE>
5
<PAGE> 7
RISK FACTORS
You should read the following risk factors carefully before purchasing our
common stock.
WE HAVE A HISTORY OF NET LOSSES AND EXPECT NET LOSSES FOR THE FORESEEABLE
FUTURE. IF WE CONTINUE TO LOSE MONEY, OUR OPERATIONS WILL NOT BE FINANCIALLY
VIABLE.
We were formed in January 1995 as Auto-By-Tel LLC, and first received
revenues from operations in March 1995. We therefore have a limited operating
history upon which you may evaluate our operations and future prospects. Because
of the recent emergence of the Internet-based vehicle information and purchasing
industry, none of our executives has significant experience in the industry.
This limited operating history and management experience means it is difficult
for us to predict future operating results. We have incurred losses every
quarter since inception and expect to continue to incur losses for the
foreseeable future. We had an accumulated deficit of $43.3 million and $23.9
million as of December 31, 1998 and 1997, respectively. Our potential for future
profitability must be considered in light of the risks, uncertainties, expenses
and difficulties frequently encountered by companies in the early stages of
development, particularly companies in new and rapidly evolving markets, such as
the market for Internet commerce. To achieve profitability, we must, among other
things:
- generate increased vehicle buyer traffic to our Web site,
- continue to send new and pre-owned vehicle purchase requests to dealers
that result in sufficient dealer transactions to justify our fees,
- continue to expand the number of dealers in our network and enhance the
quality of dealers,
- respond to competitive developments,
- increase our brand name visibility,
- successfully introduce new services,
- continue to attract, retain and motivate qualified personnel, and
- continue to upgrade and enhance our technologies to accommodate expanded
service offerings and increased consumer traffic.
We cannot be certain that we will be successful in achieving these goals.
IF OUR DEALER TURNOVER INCREASES, OUR DEALER NETWORK AND REVENUE DERIVED FROM
THIS NETWORK MAY DECREASE.
Substantially all of our revenues are derived from fees paid by our network
of subscribing dealerships. If dealer turnover increases and we are unable to
add new dealers to mitigate any turnover, our revenues will decrease as our
network of dealers decreases. If the number of dealers in our network declines
our revenues may decrease and our business, results of operations and financial
condition will be materially and adversely affected. A material factor affecting
dealer turnover is our ability to provide dealers with high quality purchase
requests. High quality purchase requests are those that result in high closing
ratios. All of our subscribing dealerships have entered into written marketing
agreements with us having a stated term of one year or five years, but they are
cancelable at the option of either party upon 30 days notice. We cannot assure
that dealers will not terminate their agreements with us. Subscribing dealers
may terminate their relationship with us for any reason, including an
unwillingness to accept our subscription terms or in order to join alternative
marketing programs. Our business is dependent upon our ability to
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attract and retain qualified new and pre-owned vehicle dealers. During 1998, 556
subscribing dealers in the United States terminated their affiliation with us or
were terminated by us. During 1998 we also added 1,323 subscribing dealers to
our dealership network. In order for us to grow or maintain our dealer network,
we may need to reduce dealer turnover.
WE MAY LOSE SUBSCRIBING DEALERS IF WE RECONFIGURE DEALER TERRITORIES. IF WE LOSE
DEALERS, WE WILL LOSE THE REVENUES ASSOCIATED WITH THOSE DEALERS.
If the volume of purchase requests increases, we may need to reduce or
reconfigure the exclusive territories currently assigned to dealerships in order
to serve consumers more effectively. If a dealer is unwilling to accept a
reduction or reconfiguration of its territory, it may terminate its relationship
with us. The loss of dealers will cause a subsequent reduction in revenue unless
we are able to mitigate this loss by adding new dealers or increasing the fees
we receive from our other dealers. A dealer also could sue us to prevent such
reduction or reconfiguration, or collect damages from us. We have experienced
one such lawsuit -- for more details, see the section in this prospectus
entitled "Business -- Litigation." A material decrease in the number of dealers
subscribing to our network or litigation with dealers could have a material
adverse effect on our business, results of operations and financial condition.
WE RELY HEAVILY ON OUR PARTICIPATING DEALERS TO PROMOTE OUR BRAND VALUE BY
PROVIDING HIGH QUALITY SERVICES TO OUR CONSUMERS. IF DEALERS DO NOT PROVIDE OUR
CONSUMERS HIGH QUALITY SERVICES, OUR BRAND VALUE WILL DIMINISH AND THE NUMBER OF
CONSUMERS WHO USE OUR SERVICES MAY DECLINE CAUSING A DECREASE IN OUR REVENUES.
Promotion of our brand value depends on our ability to provide consumers a
high quality experience for purchasing vehicles throughout the purchasing
process. If our dealers do not provide consumers with high quality service, the
value of our brand could be damaged and the number of consumers using our
services may decrease. We devote significant efforts to train participating
dealerships in practices that are intended to increase consumer satisfaction.
Our inability to train dealers effectively, or the failure by participating
dealers to adopt recommended practices, respond rapidly and professionally to
vehicle inquiries, or sell and lease vehicles in accordance with our marketing
strategies, could result in low consumer satisfaction, damage our brand name and
could materially and adversely affect our business, results of operations and
financial condition.
OUR QUARTERLY FINANCIAL RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS WHICH
MAY MAKE IT DIFFICULT FOR INVESTORS TO PREDICT OUR FUTURE PERFORMANCE.
Our quarterly operating results may fluctuate due to many factors. Our
expense levels are based in part on our expectations of future revenues which
may vary significantly. We plan our business operations based on increased
revenues and if our revenues do not increase faster than our expenses, our
business, results of operations and financial condition will be materially and
adversely affected. Other factors that may adversely affect our quarterly
operating results include:
- our ability to retain existing dealers, attract new dealers and maintain
dealer and customer satisfaction,
- the announcement or introduction of new or enhanced sites, services and
products by us or our competitors,
- general economic conditions and economic conditions specific to the
Internet, online commerce or the automobile industry,
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- a decline in the usage levels of online services and consumer acceptance
of the Internet and commercial online services for the purchase of
consumer products and services such as those offered by us,
- our ability to upgrade and develop our systems and infrastructure and to
attract new personnel in a timely and effective manner,
- the level of traffic on our Web site and other sites that refer traffic
to our Web site,
- technical difficulties, system downtime or Internet brownouts,
- the amount and timing of operating costs and capital expenditures
relating to expansion of our business, operations and infrastructure,
- governmental regulation, and
- unforeseen events affecting the industry.
SEASONALITY IS LIKELY TO CAUSE FLUCTUATIONS IN OUR OPERATING RESULTS. INVESTORS
MAY NOT BE ABLE TO PREDICT OUR ANNUAL OPERATING RESULTS BASED ON A QUARTER TO
QUARTER COMPARISON OF OUR OPERATING RESULTS.
To date, our quarter to quarter growth in revenues have offset any effects
due to seasonality. However, we expect our business to experience seasonality as
it matures. If this occurs, investors may not be able to predict our annual
operating results based on a quarter to quarter comparison of our operating
results. Seasonality in the automotive industry, Internet and commercial online
service usage and advertising expenditures is likely to cause fluctuations in
our operating results and could have a material adverse effect on our business,
operating results and financial condition. We anticipate that purchase requests
will typically increase during the first and third quarters when new vehicle
models are introduced and will typically decline during the second and fourth
quarters. Internet and commercial online service usage and the growth rate of
such usage typically declines during the summer.
INTENSE COMPETITION COULD REDUCE OUR MARKET SHARE AND HARM OUR FINANCIAL
PERFORMANCE. OUR MARKET IS COMPETITIVE NOT ONLY BECAUSE THE INTERNET HAS MINIMAL
BARRIERS TO ENTRY, BUT ALSO BECAUSE WE COMPETE DIRECTLY WITH OTHER COMPANIES IN
THE OFFLINE ENVIRONMENT.
Our vehicle purchasing services compete against a variety of Internet and
traditional vehicle purchasing services and automotive brokers. Therefore, we
are affected by the competitive factors faced by both Internet commerce
companies as well as traditional, offline companies within the automotive and
automotive-related industries. The market for Internet-based commercial services
is new, and competition among commercial Web sites is expected to increase
significantly in the future. Our business is characterized by minimal barriers
to entry, and new competitors can launch a competitive service at relatively low
cost. To compete successfully as an Internet-based commercial entity, we must
significantly increase awareness of our services and brand name. Failure to
achieve these objectives will cause our revenues to decline and would have a
material adverse effect on our business, results of operations and financial
condition.
We compete with other entities which maintain similar commercial Web sites
including Autoweb.com, Cendant Membership Service, Inc.'s AutoVantage, Microsoft
Corporation's Carpoint and Stoneage Corporation. Republic Industries, Inc., a
large consolidator of dealers, has announced its intention to launch a Web site
for marketing vehicles. We also compete indirectly against vehicle brokerage
firms and affinity programs
8
<PAGE> 10
offered by several companies, including Costco Wholesale Corporation and
Wal-Mart Stores, Inc. In addition, all major vehicle manufacturers have their
own Web sites and many have recently launched or announced plans to launch
online buying services, such as General Motors Corporation's BuyPower. We also
compete with vehicle insurers, lenders and lessors as well as other dealers that
are not part of our network. Such companies may already maintain or may
introduce Web sites which compete with ours.
We believe that the principal competitive factors in the online market are:
- brand recognition,
- speed and quality of fulfillment,
- variety of value-added services,
- ease of use,
- customer satisfaction,
- quality of service, and
- technical expertise.
We cannot assure that we can compete successfully against current or future
competitors, many of which have substantially more capital, existing brand
recognition, resources and access to additional financing. In addition,
competitive pressures may result in increased marketing costs, decreased Web
site traffic or loss of market share or otherwise may materially and adversely
affect our business, results of operations and financial condition.
IF ANY OF OUR RELATIONSHIPS WITH INTERNET SEARCH ENGINES OR ONLINE AUTOMOTIVE
INFORMATION PROVIDERS TERMINATES, OUR PURCHASE REQUEST VOLUME COULD DECLINE. IF
OUR PURCHASE REQUEST VOLUME DECLINES, OUR PARTICIPATING DEALERS MAY NOT BE
SATISFIED WITH OUR SERVICES AND MAY TERMINATE THEIR RELATIONSHIP WITH US OR
FORCE US TO DECREASE THE FEES WE CHARGE FOR OUR SERVICE. IF THIS OCCURS, OUR
REVENUES WOULD DECREASE.
We depend on a number of strategic relationships to direct a substantial
amount of purchase requests and traffic to our Web site. The termination of any
of these relationships or any significant reduction in traffic to Web sites on
which our services are advertised or offered, or the failure to develop
additional referral sources, would cause our purchase request volume to decline.
Since our dealers would be receiving fewer purchase requests, they may no longer
be satisfied with our service and may terminate their relationships with us or
force us to decrease the fees we charge for our services. If our dealers
terminate their relationship with us or force us to decrease the fees we charge
for our services, our revenues will decline which will have a material adverse
effect on our business, results of operations and financial condition. We
receive a significant number of purchase requests through a limited number of
Internet search engines, such as Excite, and online automotive information
providers, such as Edmund's and Kelley Blue Book. For example, in 1997 and 1998,
approximately 49% and 34%, respectively, of our purchase requests came through
Edmund's. We may not be able to maintain our relationship with Edmund's or other
online service providers or find alternative, comparable marketing partners
capable of originating significant numbers of purchase requests on terms
satisfactory to us. In addition, we periodically negotiate revisions to existing
agreements and these revisions could increase our costs in future periods. A
number of our agreements with online service providers may be terminated without
cause. Also, our agreement with Excite relating to our sponsorship of Netscape
Communications Corporation's NetCenter Auto Channel is conditioned on Excite's
NetCenter agreement with Netscape remaining in effect. The
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NetCenter agreement between Excite and Netscape can be terminated in the event
of a change in control which may be triggered if America Online's proposed
acquisition of Netscape occurs.
IF WE CAN NOT BUILD STRONG BRAND LOYALTY OUR BUSINESS MAY SUFFER.
We believe that the importance of brand recognition will increase as more
companies engage in commerce over the Internet. Development and awareness of the
Autobytel.com brand will depend largely on our ability to obtain a leadership
position in Internet commerce. If dealers do not perceive us as an effective
channel for increasing vehicle sales, or consumers do not perceive us as
offering reliable information concerning new and pre-owned vehicles, as well as
referrals to high quality dealers, in a user-friendly manner that reduces the
time spent for vehicle purchases, we will be unsuccessful in promoting and
maintaining our brand. Our brand may not be able to gain widespread acceptance
among consumers or dealers. Our failure to develop our brand sufficiently would
have a material adverse effect on our business, results of operations and
financial condition.
IF WE LOSE OUR KEY PERSONNEL OR ARE UNABLE TO ATTRACT, TRAIN AND RETAIN
ADDITIONAL HIGHLY QUALIFIED SALES AND 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 and marketing, managerial and technical personnel.
In addition, as we introduce new services we will need to hire a significant
number of personnel. Competition for such personnel is intense, and we may not
be able to attract, assimilate or retain such personnel in the future. The
inability to attract and retain the necessary managerial, technical and sales
and marketing personnel could have a material adverse effect on our business,
results of operations and financial condition.
Our business and operations are substantially dependent on the performance
of our executive officers and key employees, some of whom are employed on an
at-will basis and all of whom have worked together for only a short period of
time. We maintain "key person" life insurance in the amount of $3.0 million on
the life of Mark W. Lorimer, our Chief Executive Officer and President. The loss
of the services of Mr. Lorimer or Ann Marie Delligatta, Executive Vice President
and Chief Operating Officer, or one or more of our other executive officers or
key employees could have a material adverse effect on our business, results of
operations and financial condition.
WE ARE A NEW BUSINESS IN A NEW INDUSTRY AND NEED TO MANAGE OUR GROWTH AND OUR
ENTRY INTO NEW BUSINESS AREAS IN ORDER TO AVOID INCREASED EXPENSES WITHOUT
CORRESPONDING REVENUES.
We are constantly expanding our operations and introducing new services to
consumers and dealers in order to establish ourselves as a leader in the
evolving market for Internet-based vehicle purchasing services. We also intend
to enter into new foreign markets. The growth of our operations requires us to
increase expenditures before we generate revenues. For example, we need to hire
personnel to oversee the introduction of new services before we generate revenue
from these services. Our inability to generate satisfactory revenues from such
expanded services to offset costs could have a material adverse effect on our
business, financial condition and results of operations. As of December 31,
1998, we had 180 employees, compared to 159 employees as of December 31, 1997,
and 73 employees as of December 31, 1996.
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We believe establishing industry leadership also requires us to:
- test, introduce and develop new services and products, including
enhancing our Web site,
- expand the breadth of products and services offered,
- expand our market presence through relationships with third parties, and
- acquire new or complementary businesses, products or technologies.
We cannot assure you that we can successfully manage these tasks.
IF FEDERAL OR STATE FRANCHISE LAWS APPLY TO US WE MAY BE REQUIRED TO MODIFY OR
ELIMINATE OUR MARKETING PROGRAMS. IF WE ARE UNABLE TO MARKET OUR SERVICES IN THE
MANNER WE CURRENTLY DO OUR REVENUES MAY DECREASE AND OUR BUSINESS MAY SUFFER.
We believe that neither our relationship with our dealers nor our dealer
subscription agreements constitute "franchises" under federal or state franchise
laws and that we are not subject to the coverage of state and motor vehicle
dealer licensing laws. However, in the event that any state's regulatory
requirements relating to franchises or our method of business impose additional
requirements on us or include us within an industry-specific regulatory scheme,
we may be required to modify our marketing programs in such states in a manner
which undermines the program's attractiveness to consumers or dealers, we may
become subject to fines or other penalties or if we determine that the licensing
and related requirements are overly burdensome, we may elect to terminate
operations in such state. In each case, our revenues may decline and our
business, results of operations and financial condition could be materially and
adversely affected.
A Federal district court in Michigan has ruled that our dealer subscription
agreement is not a "franchise" under Michigan law. However, if our relationship
or written agreement with our dealers were found to be a "franchise" under
federal or state franchise laws, then we could be subjected to other
regulations, such as franchise disclosure and registration requirements and
limitations on our ability to effect changes in our relationships with our
dealers. We also believe that our dealer marketing service does not qualify as
an automobile brokerage activity and therefore state broker licensing
requirements do not apply to us. In response to Texas Department of
Transportation concerns, we modified our marketing program in that state to
include a pricing model under which all subscribing dealerships in Texas are
charged uniform fees based on the population density of their particular
geographic area and to make our program open to all dealerships who wish to
apply.
IF FINANCIAL BROKER AND INSURANCE LICENSING REQUIREMENTS APPLY TO US IN STATES
WHERE WE ARE NOT CURRENTLY LICENSED, WE WILL BE REQUIRED TO OBTAIN ADDITIONAL
LICENSES AND OUR BUSINESS MAY SUFFER.
We currently hold financial broker licenses in the states of Florida,
Indiana, Rhode Island and Wisconsin and have applied for renewals in the states
of California and Colorado. If we are required to be licensed elsewhere, it may
result in an expensive and time-consuming process that could divert the effort
of management away from day-to-day operations. In the event other states require
us to be licensed and we are unable to do so, or are otherwise unable to comply
with regulations required by changes in current operations or the introduction
of new services, we could be subject to fines or other penalties, and our
business, results of operations and financial condition could be materially and
adversely affected.
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We provide a link on our Web site to an online insurance application
program offered by the American International Group. We receive fees from a
member company of the American International Group in connection with this
advertising activity. We do not believe that this activity requires us to be
licensed under state insurance laws. The use of the Internet in the marketing of
insurance products, however, is a relatively new practice. It is not clear
whether or to what extent; state insurance licensing laws apply to activities
similar to ours. Given these uncertainties, we currently hold, through a
wholly-owned subsidiary, insurance agent licenses in California, Indiana,
Nebraska, New Jersey, and Utah. We have applied for insurance agent licenses in
the remaining thirty-two states that issue corporate licensing and are awaiting
approval. In the event other states require us to be licensed and we are unable
to do so, or are otherwise unable to comply with regulations required by changes
in current operations or the introduction of new services, we could be subject
to fines or other penalties, and our business, results of operations and
financial condition could be materially and adversely affected.
INTERNET COMMERCE HAS YET TO ATTRACT SIGNIFICANT REGULATION. GOVERNMENT
REGULATIONS MAY RESULT IN ADMINISTRATIVE MONETARY FINES, PENALTIES OR TAXES THAT
MAY REDUCE OUR FUTURE EARNINGS.
There are currently few laws or regulations that apply directly to the
Internet. Because our business is dependent on the Internet, the adoption of new
local, state, national or international laws or regulations may decrease the
growth of Internet usage or the acceptance of Internet commerce which could, in
turn, decrease the demand for our services and increase our costs or otherwise
have a material adverse effect on our business, results of operations and
financial condition.
Tax authorities in a number of states are currently reviewing the
appropriate tax treatment of companies engaged in Internet commerce. New state
tax regulations may subject us to additional state sales, use and income taxes.
EVOLVING GOVERNMENT REGULATIONS MAY REQUIRE FUTURE LICENSING WHICH COULD
INCREASE ADMINISTRATIVE COSTS OR ADVERSELY AFFECT OUR REVENUES.
In a regulatory climate that is uncertain, our operations may be subject to
direct and indirect adoption, expansion or reinterpretation of various domestic
and foreign laws and regulations. Compliance with these future laws and
regulations may require us to obtain appropriate licenses at an undeterminable
and possibly significant initial monetary and annual expense. These additional
monetary expenditures may increase future overhead, thereby potentially reducing
our future results of operations.
We have identified what we believe are the areas of domestic government
regulation, which if changed, would be costly to us. These laws and regulations
include franchise laws; motor vehicle brokerage licensing laws; insurance
licensing laws; and motor vehicle dealership licensing laws, which may be
applicable to aspects of our business. There could be laws and regulations
applicable to our business which we have not identified or which, if changed,
may be costly to us.
The introduction of new services and expansion of our operations to foreign
countries may require us to comply with additional, yet undetermined, laws and
regulations. Compliance may require obtaining appropriate business licenses,
filing of bonds, appointment of foreign agents and periodic business reporting
activity. The failure to adequately comply with these future laws and
regulations may delay or possibly prevent some of our products or services from
being offered in a particular foreign country, thereby having an adverse affect
on our results of operations.
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OUR SUCCESS IS DEPENDENT ON OUR KEEPING PACE WITH ADVANCES IN TECHNOLOGY. IF WE
ARE UNABLE TO KEEP PACE WITH ADVANCES IN TECHNOLOGY, CONSUMERS MAY STOP USING
OUR SERVICES AND OUR REVENUES WILL DECREASE.
The Internet and electronic commerce markets are characterized by rapid
technological change, changes in user and customer requirements, frequent new
service and product introductions embodying new technologies and the emergence
of new industry standards and practices that could render our existing Web site
and technology obsolete. If we are unable to adapt to changing technologies, our
business, results of operations and financial condition could be materially and
adversely affected. Our performance will depend, in part, on our ability to
continue to enhance our existing services, develop new technology that addresses
the increasingly sophisticated and varied needs of our prospective customers,
license leading technologies and respond to technological advances and emerging
industry standards and practices on a timely and cost-effective basis. The
development of our Web site, Dealer Real Time system and other proprietary
technology entails significant technical and business risks. We may not be
successful in using new technologies effectively or adapting our Web site,
Dealer Real Time system, or other proprietary technology to customer
requirements or to emerging industry standards.
WE ARE VULNERABLE TO COMMUNICATIONS SYSTEM INTERRUPTIONS BECAUSE ALL OF OUR
PRIMARY SERVERS ARE LOCATED IN A SINGLE LOCATION. IF COMMUNICATIONS TO THAT
LOCATION WERE INTERRUPTED, OUR OPERATIONS COULD BE ADVERSELY AFFECTED.
We host our Web site and Dealer Real Time system at our corporate
headquarters in Irvine, California. Although we maintain redundant local offsite
backup servers, all of our primary servers are located at our corporate
headquarters and are vulnerable to interruption by damage from fire, earthquake,
flood, power loss, telecommunications failure, break-ins and other events beyond
our control. In the event that we experience significant system disruptions, our
business, results of operations and financial condition would be materially and
adversely affected. We have, from time to time, experienced periodic systems
interruptions and anticipate that such interruptions will occur in the future.
We maintain business interruption insurance which pays up to $6 million for the
actual loss of business income sustained due to the suspension of operations as
a result of direct physical loss of or damage to property at our offices.
However, in the event of a prolonged interruption, this business interruption
insurance may not be sufficient to fully compensate us for the resulting losses.
INTERNET COMMERCE IS NEW AND EVOLVING WITH FEW PROFITABLE BUSINESS MODELS. WE
CANNOT ASSURE THAT OUR BUSINESS MODEL WILL BE PROFITABLE.
The market for Internet-based purchasing services has only recently begun
to develop and is rapidly evolving. While many Internet commerce companies have
grown in terms of revenue, few are profitable. We can not assure that we will be
profitable. As is typical for a new and rapidly evolving industry, demand and
market acceptance for recently introduced services and products over the
Internet are subject to a high level of uncertainty and there are few proven
services and products. Moreover, since the market for our services is new and
evolving, it is difficult to predict the future growth rate, if any, and size of
this market.
IF CONSUMERS DO NOT ADOPT INTERNET COMMERCE AS A MAINSTREAM MEDIUM OF COMMERCE,
OUR REVENUES MAY NOT GROW AND OUR EARNINGS MAY SUFFER.
The success of our services will depend upon the adoption of the Internet
by consumers and dealers as a mainstream medium for commerce. While we believe
that our services offer significant advantages to consumers and dealers, there
can be no assurance
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that widespread acceptance of Internet commerce in general, or of our services
in particular, will occur. Our success assumes that consumers and dealers who
have historically relied upon traditional means of commerce to purchase or lease
vehicles, and to procure vehicle financing and insurance, will accept new
methods of conducting business and exchanging information. In addition, dealers
must be persuaded to adopt new selling models and be trained to use and invest
in developing technologies. Moreover, critical issues concerning the commercial
use of the Internet, such as, ease of access, security, reliability, cost, and
quality of service, remain unresolved and may impact the growth of Internet use.
If the market for Internet-based vehicle marketing services fails to develop,
develops slower than expected or becomes saturated with competitors, or if our
services do not achieve market acceptance, our business, results of operations
and financial condition will be materially and adversely affected.
THE PUBLIC MARKET FOR OUR COMMON STOCK MAY BE VOLATILE, ESPECIALLY SINCE MARKET
PRICES FOR INTERNET-RELATED AND TECHNOLOGY STOCKS HAVE OFTEN BEEN UNRELATED TO
OPERATING PERFORMANCE.
Prior to this offering, there has been no public market for our common
stock. We cannot assure that an active trading market will develop or be
sustained or that the market price of the common stock will not decline. Even if
an active trading market does develop, the market price of the common stock is
likely to be highly volatile and could be subject to wide fluctuations in
response to factors such as:
- actual or anticipated variations in our quarterly operating results,
- announcements of new product or service offerings,
- technological innovations,
- competitive developments,
- changes in financial estimates by securities analysts,
- conditions and trends in the Internet and electronic commerce industries,
- adoption of new accounting standards affecting the automotive industry,
and
- general market conditions and other factors.
Further, the stock markets, and in particular the Nasdaq National Market,
have experienced extreme price and volume fluctuations that have particularly
affected the market prices of equity securities of many technology companies and
have often been unrelated or disproportionate to the operating performance of
such companies. The trading prices of many technology companies' stocks are at
or near historical highs. We cannot assure that such high trading prices will be
sustained. These broad market factors may adversely affect the market price of
our common stock. In addition, general economic, political and market conditions
such as recessions, interest rates or international currency fluctuations, may
adversely affect the market price of the common stock. In the past, following
periods of volatility in the market price of a company's securities, securities
class action litigation has often been instituted against companies with
publicly traded securities. Such litigation, if instituted, could result in
substantial costs and a diversion of management's attention and resources, which
would have a material adverse effect on our business, results of operations and
financial condition.
WE FACE UNCERTAINTIES WITH CHANGING LEGISLATION IN THE AUTOMOTIVE INDUSTRY WHICH
COULD REQUIRE INCREASED REGULATORY AND LOBBYING COSTS AND MAY HARM OUR BUSINESS.
Our purchasing service may result in changing the way vehicles are sold
which may be viewed as threatening by new and pre-owned vehicle dealers who do
not subscribe to
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the Autobytel.com program. Such businesses are often represented by influential
lobbying organizations, and such organizations or other persons may propose
legislation which could impact the evolving marketing and distribution model
which our service promotes. Should current laws be changed or new laws passed,
our business, results of operations and financial condition could be materially
and adversely affected. As we introduce new services, we may need to comply with
additional licensing regulations and regulatory requirements.
To date, we have not spent significant resources on lobbying or related
government affairs issues but we may need to do so in the future. A significant
increase in the amount we spend on lobbying or related activities would have a
material adverse effect on our results of operations and financial condition.
OUR INTERNATIONAL EXPANSION MAY REQUIRE US TO COMPLY WITH BURDENSOME REGULATORY,
TARIFF AND LICENSING REQUIREMENTS. OUR NEED TO COMPLY WITH BURDENSOME
GOVERNMENTAL REQUIREMENTS MAY ADVERSELY AFFECT OUR ABILITY TO GROW OUR BUSINESS.
We intend to expand our new vehicle purchasing service to foreign markets
through licensing our technology, business processes and tradenames and by
establishing relationships with vehicle dealers and strategic partners located
in foreign markets.
By expanding our operations to various other countries, we may become
subject to laws or treaties that regulate the marketing, distribution and sale
of motor vehicles. We will need to spend our resources to determine whether the
laws of the countries in which we seek to operate require us to modify, or
prohibit the use of, our Autobytel.com system. In addition, the laws of other
countries may impose licensing, bonding or similar requirements on us as a
condition to doing business in these countries.
WE HAVE LIMITED EXPERIENCE IN PROVIDING OUR INTERNET-BASED MARKETING SERVICE
ABROAD. WE MAY NOT BE SUCCESSFUL IN ESTABLISHING OUR BUSINESS ABROAD WHICH MAY
LIMIT OUR FUTURE GROWTH.
We have had limited experience in providing our Internet-based marketing
service abroad and we cannot be certain that we will be successful in
introducing or marketing our services abroad. In addition, there are risks
inherent in conducting business in international markets, such as:
- changes in political conditions,
- regulatory requirements,
- potentially weaker intellectual property protections,
- tariffs and other trade barriers, fluctuations in currency exchange
rates, potentially adverse tax consequences,
- difficulties in managing or overseeing foreign operations, and
- educating consumers and dealers who may be unfamiliar with the benefits
of online marketing and commerce.
One or more of such factors may have a material adverse effect on our current or
future international operations and, consequently, on our business, results of
operations and financial condition.
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OUR COMPUTER INFRASTRUCTURE MAY BE VULNERABLE TO SECURITY BREACHES. ANY SUCH
PROBLEMS COULD JEOPARDIZE CONFIDENTIAL INFORMATION TRANSMITTED OVER THE
INTERNET, CAUSE INTERRUPTIONS IN OUR OPERATIONS OR CAUSE US TO HAVE LIABILITY TO
THIRD PERSONS.
Our computer infrastructure is potentially vulnerable to physical or
electronic computer break-ins, viruses and similar disruptive problems and
security breaches. Any such problems or security breach could cause us to have
liability to one or more third parties and disrupt all or part of our
operations. Any of these events would have a material adverse effect on our
business, results of operations and financial condition. A party who is able to
circumvent our security measures could misappropriate proprietary information,
jeopardize the confidential nature of information transmitted over the Internet
or cause interruptions in our operations. Concerns over the security of Internet
transactions and the privacy of users could also inhibit the growth of the
Internet in general, particularly as a means of conducting commercial
transactions. To the extent that our activities or those of third party
contractors involve the storage and transmission of proprietary information such
as personal financial information, security breaches could expose us to a risk
of financial loss, litigation and other liabilities. Our insurance does not
currently protect against such losses.
WE DEPEND ON CONTINUED TECHNOLOGICAL IMPROVEMENTS IN OUR SYSTEMS AND IN THE
INTERNET OVERALL. IF WE ARE UNABLE TO HANDLE AN UNEXPECTEDLY LARGE INCREASE IN
VOLUME OF CONSUMERS USING OUR WEB SITE, WE CANNOT ASSURE OUR CONSUMERS OR
DEALERS THAT PURCHASE REQUESTS WILL BE EFFICIENTLY PROCESSED AND OUR BUSINESS
MAY SUFFER.
If the Internet continues to experience significant growth in the number of
users and the level of use, then the Internet infrastructure may not be able to
continue to support the demands placed on it by such potential growth. The
Internet may not prove to be a viable commercial medium because of inadequate
development of the necessary infrastructure, timely development of complementary
products such as high speed modems, delays in the development or adoption of new
standards and protocols required to handle increased levels of Internet activity
or increased government regulation.
An unexpectedly large increase in the volume or pace of traffic on our Web
site or the number of orders placed by customers may require us to expand and
further upgrade our technology, transaction-processing systems and network
infrastructure. We may not be able to accurately project the rate or timing of
increases, if any, in the use of our Web site or expand and upgrade our systems
and infrastructure to accommodate such increases. In addition, we cannot assure
that our dealers will efficiently process purchase requests.
WE HAVE NO SPECIFIC PLAN FOR THE PROCEEDS OF THE OFFERING AND OUR MANAGEMENT MAY
ALLOCATE OUR PORTION OF THE PROCEEDS TO USES THAT COULD ADVERSELY AFFECT OUR
STOCKHOLDERS.
We currently have no specific plans for the net proceeds of the offering.
As a consequence, our management will have the discretion to allocate this
portion of the net proceeds of this offering to uses that the stockholders may
not deem desirable. We may not be able to invest these proceeds to yield a
significant return. Substantially all of the proceeds of the offering will be
invested in short-term, interest-bearing, investment grade securities for an
indefinite period of time.
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OUR BUSINESS COULD BE INTERRUPTED BY YEAR 2000 PROBLEMS IF OUR VENDORS,
CONSUMERS OR DEALERS ARE UNABLE TO CONVERT THEIR SYSTEMS. THEIR FAILURE TO
CONVERT THEIR SYSTEMS MAY AFFECT THE ABILITY OF OUR CONSUMERS AND DEALERS TO
ACCESS OUR WEB SITE OR THE DEALER REAL TIME SYSTEM. OUR BUSINESS WOULD SUFFER IF
SUCH FAILURE PREVENTED ACCESS TO OUR ONLINE SYSTEMS.
Because many computer applications have been written using two digits
rather than four to define the applicable year, date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. This
"Year 2000 issue" could result in system failures or miscalculations causing
disruptions of operations, including disruptions of our Web site, the Dealer
Real Time system or normal business activities.
We cannot predict the extent to which the Year 2000 issue will affect our
vendors, consumers or dealers, or the extent to which we would be vulnerable if
such parties fail to resolve any Year 2000 issues on a timely basis. The failure
of such parties to convert their systems on a timely basis or effect a
conversion that is compatible with our systems in order to avoid any Year 2000
issues could have a material adverse effect on us. In addition, to the extent
our customers are unable to access our Web site or dealers are unable to access
the Dealer Real Time system, such failures would have a material adverse effect
on our business, results of operations, or financial condition.
The worst-case scenario related to the Year 2000 issue would be an overall
failure of the national Internet and telecommunications infrastructure. If this
failure were to prevent users and dealers from accessing the Internet, we would
attempt to provide alternative means to allow users to connect to our servers.
Any national disruption to the telecommunications systems used by our business
will have a material adverse effect on our business, results of operations, or
financial condition.
MISAPPROPRIATION OF OUR INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS COULD
IMPAIR OUR COMPETITIVE POSITION.
Our ability to compete depends upon our proprietary systems and technology.
While we rely on trademark, trade secret and copyright law, confidentiality
agreements and technical measures to protect our proprietary rights, we believe
that the technical and creative skills of our personnel, continued development
of our proprietary systems and technology, brand name recognition and reliable
Web site maintenance are more essential in establishing and maintaining a
leadership position and strengthening our brand. Despite our efforts to protect
our proprietary rights, unauthorized parties may attempt to copy aspects of our
services or to obtain and use information that we regard as proprietary.
Policing unauthorized use of our proprietary rights is difficult. We cannot
assure that the steps taken by us will prevent misappropriation of technology or
that the agreements entered into for that purpose will be enforceable.
Misappropriation of our intellectual property or potential litigation would have
a material adverse effect on our business, results of operations and financial
condition. Effective trademark, service mark, copyright and trade secret
protection may not be available in every country in which our products and
services are made available online. In addition, litigation may be necessary in
the future to enforce or protect our intellectual property rights or to defend
against claims or infringement or invalidity. As part of our confidentiality
procedures, we generally enter into agreements with our employees and
consultants and limit access to our trade secrets and technology.
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OUR FOUNDERS, OFFICERS AND DIRECTORS AND THEIR AFFILIATES HAVE SUBSTANTIAL
CONTROL OF OUR VOTING STOCK AND HAVE THE ABILITY TO MAKE DECISIONS THAT COULD
ADVERSELY AFFECT STOCKHOLDERS. SUCH DECISIONS COULD ADVERSELY AFFECT OUR STOCK
PRICE.
The control of a large amount of our stock by insiders could have an
adverse effect on the market price of our common stock. Following this offering,
our executive officers and directors will beneficially own or control
approximately 5,856,614 shares or 30% of the outstanding shares of our common
stock. In addition, after this offering, our founders, Peter Ellis and John
Bedrosian will beneficially own or control approximately 19% and 17%,
respectively, of the outstanding shares of our common stock. If the
underwriters' over-allotment option is exercised in full, our founders will
beneficially own or control approximately 17% and 16%, respectively, of the
outstanding shares of our common stock. Our officers, directors, founders and
their affiliates, assuming they vote together, will have the ability to control
the election of our board of directors and the outcome of corporate actions
requiring stockholder approval, including mergers and other changes of corporate
control, going private transactions and other extraordinary transactions.
SUBSTANTIAL SALES OR THE PERCEPTION OF FUTURE SALES OF OUR COMMON STOCK MAY
DEPRESS OUR STOCK PRICE. SINCE THE MARKET PRICES FOR INTERNET-RELATED STOCKS ARE
LIKELY TO REMAIN VOLATILE, OUR STOCK PRICE MAY BE MORE ADVERSELY AFFECTED THAN
OTHER COMPANIES BY SUCH FUTURE SALES.
Sale of substantial numbers of shares of common stock in the public market
could adversely affect the market price of our common stock and make it more
difficult for us to raise funds through equity offerings in the future. A
substantial number of outstanding shares of common stock and shares of common
stock issuable upon exercise of outstanding stock options will become available
for resale in the public market at prescribed times. Of the 17,858,745 shares to
be outstanding after the offering, the 4,500,000 shares offered hereby will be
eligible for immediate sale in the public market without restriction. Other
outstanding shares of common stock are restricted by 180-day lock-up agreements
with the underwriters, and 6,590,112 shares held by the selling stockholders are
restricted by 270-day lock-up agreements with the underwriters. Upon the
expiration of these lock-up agreements, such shares of common stock will become
eligible for sale in the public market in accordance with the provisions of
Rules 144 and 701 under the Securities Act and any contractual restrictions on
their transfer, as applicable. BT Alex. Brown Incorporated may, in its sole
discretion and at any time without notice, release all or any portion of the
shares subject to lock-up agreements. Upon completion of the offering, the
holders of approximately 12,997,957 shares of common stock will be entitled to
certain registration rights with respect to such shares until such time as the
holders of such common stock may sell such shares under Rule 144 of the
Securities Act. In addition, we intend to register the shares of common stock
reserved for issuance under our 1996 Stock Option Plan, 1996 Stock Incentive
Plan, 1996 Employee Stock Purchase Plan, 1998 Stock Option Plan and 1999 Stock
Option Plan after the offering.
WE ARE UNCERTAIN OF OUR ABILITY TO OBTAIN ADDITIONAL FINANCING FOR OUR FUTURE
CAPITAL NEEDS. IF WE ARE UNABLE TO OBTAIN ADDITIONAL FINANCING WE MAY NOT BE
ABLE TO CONTINUE TO OPERATE OUR BUSINESS.
We currently anticipate that the net proceeds of this offering that we will
receive, together with our cash, cash equivalents and short-term investments,
will be sufficient to meet our anticipated needs for working capital and other
cash requirements for at least twelve months following the effective date of
this prospectus. We may need to raise
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additional funds sooner, however, in order to fund more rapid expansion, to
develop new or enhance existing services or products, to respond to competitive
pressures or to acquire complementary products, businesses or technologies.
There can be no assurance that additional financing will be available on terms
favorable to us, or at all. If adequate funds are not available or are not
available on acceptable terms, our ability to fund our expansion, take advantage
of potential acquisition opportunities, develop or enhance services or products
or respond to competitive pressures would be significantly limited. Such
limitation could have a material adverse effect on our business, results of
operations, financial condition and prospects.
OUR CERTIFICATE OF INCORPORATION AND BYLAWS AND DELAWARE LAW CONTAIN PROVISIONS
THAT COULD DISCOURAGE A THIRD PARTY FROM ACQUIRING US OR LIMIT THE PRICE THIRD
PARTIES ARE WILLING TO PAY FOR OUR STOCK.
Provisions of our amended and restated certificate of incorporation and
bylaws relating to our corporate governance could make it difficult for a third
party to acquire us, and could discourage a third party from attempting to
acquire control of us. These provisions allow us to issue preferred stock with
rights senior to those of the common stock without any further vote or action by
the stockholders. These provisions, effective upon the closing of this offering,
provide that the board of directors will be divided into three classes, which
may have the effect of delaying or preventing changes in control or change in
our management because less than a majority of the board of directors are up for
election at each annual meeting. In addition, these provisions impose various
procedural and other requirements which could make it more difficult for
stockholders to effect certain corporate actions. Such charter provisions could
limit the price that certain investors might be willing to pay in the future for
shares of our common stock and may have the effect of delaying or preventing a
change in control. The issuance of preferred stock also could decrease the
amount of earnings and assets available for distribution to the holders of
common stock or could adversely affect the rights and powers, including voting
rights, of the holders of the common stock.
We are also subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law. In general, the statute prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. For purposes of Section
203, a "business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder, and an
"interested stockholder" is a person who, together with affiliates and
associates, owns or did own 15% or more of the corporation's voting stock.
OUR ACTUAL RESULTS COULD DIFFER FROM FORWARD-LOOKING STATEMENTS IN THIS
PROSPECTUS.
This prospectus contains forward-looking statements based on current
expectations which involve risks and uncertainties. Our actual results could
differ materially from those anticipated in these forward-looking statements as
a result of many factors, including the risk factors set forth above and
elsewhere in this prospectus. The cautionary statements made in this prospectus
should be read as being applicable to all forward-looking statements wherever
they appear in this prospectus.
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USE OF PROCEEDS
We estimate that the proceeds from the sale by us of the 3.5 million shares
of common stock offered in this offering at an assumed initial public offering
price of $21.00 per share, after deducting estimated underwriting discounts and
estimated offering expenses, will be approximately $66.8 million. The selling
stockholders will receive $19.5 million from the sale of one million shares of
common stock, after deducting estimated underwriting discounts, and an
additional $12.5 million if the underwriters' over-allotment option is exercised
in full. We will not receive any proceeds from the sale of common stock by the
selling stockholders. We intend to use all of the net proceeds from the offering
for general corporate purposes, which may include online and traditional
advertising programs designed to strengthen the Autobytel.com brand name,
information technology investments to support and further develop our Web site
and Dealer Real Time system and new products and services. We may use a portion
of the proceeds from the offering for possible acquisitions of or investments in
businesses and the introduction of products or technologies that expand,
complement or are otherwise related to our current or planned services. We have
no current plans, agreements or commitments with respect to any such
transaction, and we are not currently engaged in any negotiations with respect
to any such transaction. Pending such uses, we will invest the proceeds in
short-term, investment grade, interest-bearing securities.
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock. We
intend to retain all of our future earnings, if any, for use in our business,
and therefore we do not expect to pay any cash dividends on our common stock in
the foreseeable future.
20
<PAGE> 22
CAPITALIZATION
The following table sets forth the actual capitalization of Autobytel.com
derived from our audited financial statements as of December 31, 1998. The as
adjusted capitalization of Autobytel.com as of December 31, 1998 set forth in
the following table reflects the conversion of all outstanding shares of
preferred stock into 5,852,290 shares of common stock and the sale by us of
3,500,000 shares of common stock pursuant to the offering at an assumed public
offering price of $21.00 net of estimated underwriting discounts and offering
expenses. The capitalization information set forth in the table below is
qualified by the more detailed consolidated financial statements and related
notes included elsewhere in this prospectus and should be read in conjunction
with such consolidated financial statements and related notes. Our stated number
of common shares outstanding does not include 2,859,340 shares of common stock
issuable upon exercise of options at a weighted average exercise price of $10.87
per share and 773,133 shares of common stock issuable upon exercise of warrants
outstanding at a weighted average exercise price of $13.12 per share.
<TABLE>
<CAPTION>
DECEMBER 31, 1998
--------------------------
AS
ACTUAL ADJUSTED
-------------- --------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents............................. $ 27,984 $ 94,768
======== ========
Stockholders' equity:
Convertible preferred stock, $0.001 par value;
11,445,187 shares authorized, 7,436,653 shares
issued and outstanding, actual; 11,445,187 shares
authorized, no shares issued and outstanding, as
adjusted............................................ 7 --
Common stock, $0.001 par value; 50,000,000 shares
authorized, 8,506,455 shares issued and outstanding,
actual; 50,000,000 shares authorized, 17,858,745
shares issued and outstanding, as adjusted.......... 8 18
Warrants.............................................. 1,332 1,332
Additional paid-in capital............................ 67,813 134,594
Cumulative translation adjustment..................... (19) (19)
Accumulated deficit................................... (43,273) (43,273)
-------- --------
Total stockholders' equity............................ 25,868 92,652
======== ========
Total capitalization.................................. $ 25,868 $ 92,652
======== ========
</TABLE>
21
<PAGE> 23
DILUTION
The pro forma net tangible book value of Autobytel.com as of December 31,
1998 was $25.8 million or $1.80 per share of common stock. Pro forma net
tangible book value per share is equal to Autobytel.com's total tangible assets
less its total liabilities, divided by the number of shares of common stock
outstanding on a pro forma basis after giving effect to the conversion of the
preferred stock into 5,852,290 shares of common stock concurrent with the
closing of the offering. After giving effect to the sale of shares of common
stock offered in this offering at an assumed initial public offering price of
$21.00 and the receipt by Autobytel.com of the estimated net proceeds from such
sale, after deducting estimated underwriting discounts and offering expenses,
the pro forma net tangible book value of Autobytel.com at December 31, 1998
would have been $92.6 million, or $5.19 per share. This represents an immediate
increase in pro forma net tangible book value of $3.39 per share to existing
stockholders and an immediate dilution of $15.81 per share to new investors. The
following table illustrates this per share dilution:
<TABLE>
<S> <C>
Assumed initial public offering price per share............. $21.00
Pro forma net tangible book value per share before the
offering.................................................. $ 1.80
Increase per share attributable to purchases of common stock
offered in this offering.................................. 3.39
------
Pro forma net tangible book value per share after the
offering.................................................. 5.19
Dilution per share to purchasers of common stock offered in
this offering............................................. $15.81
======
</TABLE>
The following table summarizes, as of December 31, 1998, the number of
shares of common stock purchased from Autobytel.com, the total consideration
paid to Autobytel.com and the average price per share paid by existing
stockholders and by the investors purchasing shares of common stock in this
offering, before deducting estimated underwriting discounts and estimated
offering expenses at an assumed public offering price of $21.00 per share:
<TABLE>
<CAPTION>
AVERAGE
SHARES PURCHASED TOTAL CONSIDERATION PRICE
-------------------- ---------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders........... 14,358,745 80.4 $ 68,033,000 48.1 $ 4.74
New investors................... 3,500,000 19.6 73,500,000 51.9 21.00
---------- ----- ------------ ----- ------
Total......................... 17,858,745 100.0 $141,533,000 100.0 $ 7.93
========== ===== ============ ===== ======
</TABLE>
22
<PAGE> 24
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following selected consolidated financial data should be read in
conjunction with our consolidated financial statements and related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this prospectus. The statement of operations
data for the period from inception (January 31, 1995) to December 31, 1995, the
years ended December 31, 1996, 1997 and 1998 and the balance sheet data as of
December 31, 1995, 1996, 1997 and 1998 are derived from our consolidated
financial statements which have been audited by Arthur Andersen LLP, independent
auditors, and are included elsewhere in this prospectus. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations." We
have calculated pro forma basic net loss per share assuming the conversion of
the outstanding preferred stock on their issue date into common stock. The
general and administrative expenses include a non-recurring $1.1 million charge
associated with a proposed initial public offering that was withdrawn in April
1997.
<TABLE>
<CAPTION>
INCEPTION
(JANUARY 31,
1995) TO YEARS ENDED DECEMBER 31,
DECEMBER 31, -------------------------------
1995 1996 1997 1998
------------- ------- -------- --------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues........................................... $ 274 $ 5,025 $ 15,338 $ 23,826
------- ------- -------- --------
Operating expenses:
Sales and marketing.............................. 930 7,790 21,454 30,033
Product and technology development............... 99 1,753 5,448 8,528
General and administrative....................... 275 1,641 5,851 5,908
------- ------- -------- --------
Total operating expenses...................... 1,304 11,184 32,753 44,469
------- ------- -------- --------
Loss from operations............................. (1,030) (6,159) (17,415) (20,643)
Other income, net................................ -- 124 620 1,280
------- ------- -------- --------
Loss before provision for income taxes........... (1,030) (6,035) (16,795) (19,363)
Provision for income taxes....................... -- -- 15 35
------- ------- -------- --------
Net loss......................................... $(1,030) $(6,035) $(16,810) $(19,398)
======= ======= ======== ========
Basic net loss per share........................... $ (0.12) $ (0.73) $ (2.03) $ (2.30)
======= ======= ======== ========
Shares used in computing basic net loss per
share............................................ 8,250 8,252 8,291 8,423
Pro forma basic net loss per share................. $ (0.12) $ (0.68) $ (1.53) $ (1.49)
======= ======= ======== ========
Shares used in computing pro forma basic net loss
per share........................................ 8,250 8,849 10,967 13,008
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
1998
DECEMBER 31,
--------------------------------------------- AS ADJUSTED
1995 1996 1997 1998 FOR THE OFFERING
------- ------- -------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................. $ 48 $ 9,062 $ 15,813 $ 27,984 $ 94,768
Working capital............................ (1,099) 5,977 10,938 23,436 90,220
Total assets............................... 285 12,298 20,513 34,207 100,991
Accumulated deficit........................ (1,030) (7,065) (23,875) (43,273) (43,273)
Stockholders' equity (deficit)............. (990) 7,996 13,259 25,868 92,652
</TABLE>
23
<PAGE> 25
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of the results of operations and financial
condition of Autobytel.com should be read in conjunction with our consolidated
financial statements and related notes included elsewhere in this prospectus.
This discussion contains forward-looking statements based on current
expectations that involve risks and uncertainties. Actual results and the timing
of certain events may differ significantly from those projected in such
forward-looking statements due to a number of factors, including those set forth
in the section entitled "Risk Factors" and elsewhere in this prospectus.
OVERVIEW
We are a leading, branded Internet site for new and pre-owned vehicle
information and purchasing services connecting consumers to our network of 2,718
participating dealers, as of December 31, 1998, in the United States and Canada.
Through our Web site, www.autobytel.com, consumers can research pricing,
specifications and other information regarding new and pre-owned vehicles. When
consumers indicate they are ready to buy, they can be connected to
Autobytel.com's dealer network. In addition, we are continuing to develop
ancillary programs for consumers such as financing, insurance and warranty
services. We introduced our new vehicle marketing service in 1995, and in 1997
commenced our CyberStore program.
Our revenues have increased from $274,000 in 1995 to $23.8 million in 1998.
We derive substantially all of our revenues from fees paid by subscribing
dealers, and we expect to be primarily dependent on our dealer network for
revenues in the foreseeable future. Dealers using our services pay an initial
subscription fee, as well as ongoing monthly fees based on the aggregation and
transmittal to them of purchase requests and through fiscal 1997, an annual fee.
In January 1998, Autobytel.com started to eliminate annual fees and increase
monthly fees to subscribing dealers. Average monthly program fees per dealer
were $947, $785 and $557 in 1998, 1997 and 1996, respectively. We also derive
some revenue on a per transaction basis by facilitating transactions between
consumers and other third parties, primarily lenders and insurance companies. We
reserve the right to raise our fees to dealers after 30 days notice.
Since the end of January 1999 and on a going forward basis we are
converting our dealers to new contracts with one year terms. Initial
subscription fees from dealers are recognized ratably over the first twelve
months of each dealer's contract in order to match the costs of integrating and
training dealers with revenues earned. Amortized revenues from initial
subscription fees were $2.4 million, $3.8 million and $2.2 million in 1998, 1997
and 1996, respectively. We anticipate that our initial subscription fee
amortization revenue will decline as a percentage of total revenue over time as
monthly fee revenues continue to grow. As our dealer network grows in absolute
terms, the number of new dealers added as a percentage of total dealers is
growing at a slower pace. Therefore, initial subscription fee revenue is
declining as a percentage of total revenue while monthly fee revenues are
growing. Monthly fees are recognized in the period the service is provided.
Monthly fee revenues were $18.2 million, $8.5 million, and $2.6 million in 1998,
1997 and 1996, respectively. Annual fees are recognized ratably over twelve
months. Amortized revenues from annual fees were $2.3 million, $1.1 million and
$103,000 in 1998, 1997 and 1996, respectively. Annual fee revenue will decline
in 1999 because we discontinued the practice of charging annual fees in late
1998. From October 1996 to February 1998, our revenues also included revenues
from sales of personal computers to our dealers, a practice we discontinued in
the first quarter of 1998. Our financial statements include revenues
24
<PAGE> 26
derived from computer equipment sales of $197,000 in 1998, $1.5 million in 1997,
and $147,000 in 1996. Excluding these revenues, our revenues would have been
$23.6 million, $13.8 million and $4.9 million in 1998, 1997 and 1996,
respectively.
Although we do not derive any direct revenue from the volume of purchase
requests, we believe our ability to increase the number of subscribing dealers
and the amount of fees paid by dealers is related to the volume of purchase
requests routed through our Web site. Vehicle purchase requests routed through
our online system increased from approximately 345,000 in 1996 to approximately
761,000 in 1997, an increase of 121%, and to 1.3 million in 1998, an increase of
71% over the previous year. Since inception we have directed approximately 2.5
million purchase requests to dealers.
We believe that our revenue growth has been and will continue to be
primarily dependent on our ability to continue to drive a significant number of
purchase requests to our dealer network, increase the number of dealers and
increase the average fees paid by each dealer. Since inception, our dealer
network has expanded in each quarter and as of December 31, 1998 there were
2,718 dealers. Of these dealers, 2,386 dealers, or 88% pay for our service and
we call them core dealers. The remaining 332 dealers, or 12% do not pay for our
service and we call them non-core dealers. Our non-core dealers are generally
associated with lower volume vehicle manufacturers such as Jaguar or Suzuki or
are located in remote, low volume territories and receive purchase request
referrals without paying fees to us. We enter into agreements with non-core
dealers to ensure the broadest geographic coverage possible for every make of
vehicle. These agreements also allow us to increase consumer satisfaction by
offering a complete selection of vehicle dealers throughout North America.
However, our costs incurred from non-core dealers are not offset by revenues.
Although the net number of our dealers in the United States increased by 51%
during 1998, 556 of our dealers were terminated or canceled during the same
period. We believe that the principal reasons for the dealer terminations were
due to our enforcement of our dealer network agreements and the cancellation of
our fax delivery of purchase requests in conjunction with the implementation of
the Dealer Real Time system. Our inability or failure to reduce dealer turnover
could have a material adverse effect on our business, results of operations and
financial condition.
Because our primary revenue source is from program fees, our business model
is significantly different from many existing Internet commerce sites. The
automobiles requested through our site are sold by individual dealers; therefore
we derive no direct revenue from the sale of a vehicle and have no significant
cost of goods sold, no procurement, carrying or shipping costs and no inventory
risk. The only cost of goods sold incurred by us since our inception was the
cost of computer equipment sold to dealers. We discontinued selling computer
equipment in the first quarter of 1998.
Sales and marketing costs consist primarily of promotion and advertising to
build brand awareness and encourage potential customers to go to our Web site.
Our sales and marketing expenses were $30.0 million, $21.5 million and $7.8
million in 1998, 1997 and 1996, respectively. We use Internet advertising, as
well as traditional media, such as television, radio and print. The majority of
our Internet advertising is comprised of sponsorship and partnership agreements
with Internet portals and advertising and marketing affiliations with online
automotive information providers. These internet portals and online information
providers charge a combination of set-up, initial, annual, monthly and variable
fees. Set-up fees are incurred for the development of the link between
Autobytel.com and the internet portal or online information provider and are
expensed in the period the link is established. Initial fees are prepaid annual
fees, which are amortized over the period they relate to and monthly fees which
are expensed in the month they
25
<PAGE> 27
relate to. Variable fees are fees paid for purchase requests and are expensed in
the period the purchase requests are received. During 1998, total Internet
marketing and advertising costs incurred were $11.1 million, including initial,
annual, monthly and variable fees of $50,000, $3.0 million, $2.9 million and
$5.2 million, respectively. There were no set-up fees incurred in 1998. Also
included in the sales and marketing expenses are the costs associated with
signing up new dealers and their ongoing training and support. Sales and
marketing costs are recorded as an expense in the period the service is
provided. Sales and marketing expenses have historically fluctuated
quarter-to-quarter due to varied levels of marketing and advertising and we
believe this will continue in the future.
RESULTS OF OPERATIONS
The following table sets forth our results of operations as a percentage of
revenues:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................................... 100% 100% 100%
Operating expenses:
Sales and marketing.................................. 155 140 126
Product and technology development................... 35 36 36
General and administrative........................... 33 38 25
---- ---- ----
Total operating expenses..................... 223 214 187
---- ---- ----
Loss from operations................................. (123) (114) (87)
---- ---- ----
Other income, net...................................... 2 4 5
Loss before provision for income taxes............... (120) (110) (81)
---- ---- ----
Provision for income taxes............................. -- -- --
---- ---- ----
Net loss............................................. (120)% (110)% (81)%
==== ==== ====
</TABLE>
1998 COMPARED TO 1997
Revenues. Our revenues increased by $8.5 million, or 56%, to $23.8 million
in 1998, compared to $15.3 million in 1997. The growth in revenue in 1998 was
primarily attributable to an increase in the net core dealer count and $162, or
a 21% increase in the average monthly program fee charged to subscribing
dealers. The net number of core dealers increased by 743, or 45%, to 2,386 as of
December 31, 1998, compared to 1,643 as of December 31, 1997. Our financial
statements include revenues derived from computer sales, a practice we
discontinued in the first quarter of 1998, of $197,000 in 1998 and $1.5 million
in 1997. Excluding our revenue from the sale of computer equipment, our revenues
increased by $9.8 million, or 71%, to $23.6 million in 1998 as compared to $13.8
million in 1997. In 1998, we launched additional ancillary services such as Web
site advertising and warranties.
Sales and Marketing. Sales and marketing expenses primarily include
advertising and marketing expenses paid to our purchase request providers and
for developing our brand equity, as well as personnel and other costs associated
with sales, training and support of our dealer network. Sales and marketing
expense increased by $8.6 million, or 40%, to $30.0 million in 1998, compared to
$21.5 million in 1997. The increase was primarily due to a $5.3 million or 91%
increase in fees related to information search aggregators resulting from higher
purchase requests and a $4.0 million, or 58% increase in other advertising and
26
<PAGE> 28
marketing expenses to build brand awareness. We expect to continue to increase
our advertising and marketing budget in the foreseeable future.
Product and Technology Development. Product and technology development
expense primarily includes personnel costs relating to enhancing the features,
content and functionality of our Web site and Dealer Real Time system, as well
as expenses associated with our telecommunications and computer infrastructure.
Product and technology development expense increased by $3.1 million, or 57%, to
$8.5 million in 1998, compared to $5.4 million in 1997. The increase was
primarily due to the additional staff and expenses related to Auto-by-Tel UK
Limited of $1.4 million in 1998.
General and Administrative. General and administrative expense primarily
consists of executive, financial and legal personnel expenses and related costs.
General and administrative expense was $5.9 million in 1998 and 1997. Excluding
a non-recurring charge of $1.1 million associated with a proposed initial public
offering withdrawn in April 1997, general and administrative expense increased
by $1.1 million, or 23%, to $5.9 million in 1998, compared to $4.8 million in
1997. This increase is primarily due to additional executive and financial
personnel and rent due to expansion of facilities.
Other Income. Other income consists primarily of interest income. Other
income increased by $660,000, or 106%, to $1.3 million in 1998, compared to
$620,000 in 1997. This increase is primarily due to a $1.4 million gain realized
from the sale of Auto-by-Tel UK Limited to Inchcape Automotive Limited in
November 1998, offset in part by a $792,000 charge for the value of warrants
issued to Invision AG and Aureus Private Equity AG. Excluding these
non-recurring items, other income increased by $44,000, or 7%, to $664,000 in
1998 as compared to $620,000 in 1997. Interest income increased due to higher
cash balances from the sale of preferred stock in 1998.
Income Taxes. No provision for federal income taxes has been recorded as we
incurred net operating losses through December 31, 1998. As of December 31,
1998, we had approximately $37.1 million of federal and $18.4 million of state
net operating loss carry forwards that we believe are available to offset future
taxable income; such carry forwards expire in various years through 2018. Under
the Tax Reform Act of 1986, the amounts of and benefits from our net operating
losses carry forwards will likely be limited upon the completion of the initial
public offering due to a cumulative ownership change of more than 50% over a
three year period. Based on preliminary estimates, we believe the effect of such
limitation, if imposed, will not have a material adverse effect on our business,
results of operations and financial condition.
1997 COMPARED TO 1996
Revenues. Our revenues increased by $10.3 million, or 206%, to $15.3
million in 1997, compared to $5.0 million in 1996. The significant growth in
revenue in 1997 was primarily attributable to an increase in the net core dealer
count and a $228, or 41% increase in the average monthly program fee charged to
subscribing dealers. The number of core dealers increased by 437, or 36%, to
1,643 as of December 31, 1997, compared to 1,206 as of December 31, 1996. We
started selling computer equipment to our dealers during the last quarter of
1996 and these revenues were $1.5 million in 1997 and $147,000 in 1996.
Excluding our revenue from the sale of computer equipment, our revenues
increased by $9.0 million, or 184%, to $13.8 million in 1997, compared to $4.9
million in 1996. Also, we launched several new ancillary services in 1997,
including leasing, financing, credit union services and the Mobalist Rewards
program, which cumulatively represented less than 3% of total revenues during
1997.
27
<PAGE> 29
Sales and Marketing. Sales and marketing expense increased by $13.7
million, or 176%, to $21.5 million in 1997, compared to $7.8 million in 1996.
This increase is attributable primarily to the increase in advertising and
marketing costs associated with driving the growth of purchase requests. The
number of purchase requests increased by approximately 416,000, or 121%, to
approximately 761,000. To a lesser degree this increase was also due to growth
in personnel and other expenses associated with sales training and maintenance
of our dealer channel.
Product and Technology Development. Product and technology development
expense increased by $3.7 million, or 206%, to $5.4 million in 1997, compared to
$1.8 million in 1996. The increase in product and technology development expense
was primarily associated with adding additional product and technical staff.
General and Administrative. General and administrative expense increased by
$4.2 million, or 263%, to $5.9 million in 1997, compared to $1.6 million in
1996. The increase was primarily due to additional executive, financial and
legal personnel and related costs, as well as a non-recurring $1.1 million
charge associated with a withdrawn initial public offering in 1997. Excluding
this non-recurring charge, general and administrative expense increased by $3.1
million, or 194%, to $4.8 million in 1997, compared to $1.6 million in 1996.
Other Income. Other income, which primarily consists of interest income,
increased by $496,000, or 400%, to $620,000 in 1997, compared to $124,000 in
1996. Interest income increased due to higher cash balances from the sale of
preferred stock in 1997.
28
<PAGE> 30
QUARTERLY RESULTS OF OPERATIONS
The following table sets forth quarterly statement of operations data for
the eight quarters ended December 31, 1998. This quarterly information has been
derived from our unaudited financial statements and, in our opinion, includes
all adjustments necessary for a fair presentation of the information for the
periods covered. The quarterly data should be read in conjunction with our
consolidated financial statements and related notes. The operating results for
any quarter are not necessarily indicative of the operating results for any
future period.
INCOME STATEMENT FOR THE THREE MONTHS ENDED
(unaudited in thousands)
<TABLE>
<CAPTION>
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1997 1997 1997 1997 1998 1998 1998 1998
-------- -------- --------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES.......................... $ 3,063 $ 3,414 $ 4,293 $ 4,568 $ 4,632 $ 5,405 $ 6,462 $ 7,327
Operating expenses:
Sales and marketing............. 6,675 4,683 4,436 5,660 8,459 5,470 8,320 7,784
Product and technology
development................... 1,103 1,394 1,496 1,455 1,895 1,969 2,352 2,312
General and administrative...... 1,823 1,216 1,079 1,733 1,346 1,190 1,480 1,892
------- ------- ------- ------- ------- ------- ------- -------
Total operating expenses...... 9,601 7,293 7,011 8,848 11,700 8,629 12,152 11,988
------- ------- ------- ------- ------- ------- ------- -------
Loss from operations............ (6,538) (3,879) (2,718) (4,280) (7,068) (3,224) (5,690) (4,661)
------- ------- ------- ------- ------- ------- ------- -------
Other income, net................. 165 114 147 194 185 163 153 779
Loss before provision for income
taxes......................... (6,373) (3,765) (2,571) (4,086) (6,883) (3,061) (5,537) (3,882)
------- ------- ------- ------- ------- ------- ------- -------
Provision for income taxes........ 11 4 -- -- 15 10 6 4
------- ------- ------- ------- ------- ------- ------- -------
Net loss........................ $(6,384) $(3,769) $(2,571) $(4,086) $(6,898) $(3,071) $(5,543) $(3,886)
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
PERCENTAGE OF REVENUE FOR THE THREE MONTHS ENDED
(unaudited)
<TABLE>
<CAPTION>
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1997 1997 1997 1997 1998 1998 1998 1998
-------- -------- --------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........................... 100% 100% 100% 100% 100% 100% 100% 100%
Operating expenses:
Sales and marketing.............. 218 137 103 124 183 101 129 106
Product and technology
development.................... 36 41 35 32 41 36 36 32
General and administrative....... 60 36 25 38 29 22 23 26
---- ---- --- --- ---- --- --- ---
Total operating expenses....... 313 214 163 194 253 160 188 164
---- ---- --- --- ---- --- --- ---
Loss from operations............. (213) (114) (63) (94) (153) (60) (88) (64)
---- ---- --- --- ---- --- --- ---
Other income, net.................. 5 3 3 4 4 3 2 11
Loss before provision for income
taxes.......................... (208) (110) (60) (89) (149) (57) (86) (53)
---- ---- --- --- ---- --- --- ---
Provision for income taxes......... -- -- -- -- -- -- -- --
---- ---- --- --- ---- --- --- ---
Net loss......................... (208)% (110)% (60)% (89)% (149)% (57)% (86)% (53)%
==== ==== === === ==== === === ===
</TABLE>
Revenues. Growth in our dealer network and increases in fees and the sale
of ancillary products and services have resulted in a compounded quarterly
growth in revenue of 13% over the last eight quarters of operations. Revenue
growth is primarily associated with program fees and, to a lesser extent, new
product offerings. Between the quarters ended December 31, 1996 and March 31,
1998, we recognized revenues associated with computer systems sold to dealers.
After the introduction of the current Dealer Real Time system in February 1998,
we discontinued the sale of computer equipment. Our financial
29
<PAGE> 31
statements include non-recurring revenue for the Dealer Real Time system
hardware sales of $147,000 in 1996, $1.5 million in 1997, and $197,000 in 1998.
Sales and Marketing. We have increased spending on sales and marketing
every year since our inception. The increase in sales and marketing spending
accelerated after we completed our Series A preferred stock offering of $15.0
million in August 1996. We launched an aggressive advertising campaign, and in
the quarters ended March 31, 1997 and 1998, we aired a television advertisement
during the Super Bowl at a cost of approximately $1.3 million and $1.5 million,
respectively. Additionally, in the quarter ended December 31, 1997, we entered
into several Internet branding and purchase request generation contracts,
including contracts with Excite. From October 1996 through February 1998, we
incurred expenses of approximately $1.6 million associated with the sale of
computer equipment to support the old Dealer Real Time system. Such expenses
were included in sales and marketing. These computer sales were discontinued in
February 1998. We have generally increased the number of sales and marketing
personnel each quarter.
Product and Technology Development. Product and technology development has
generally risen on a dollar basis since our inception. The primary cause for the
increase in product and technology development expenses is the addition of
personnel to develop the technology infrastructure and new programs for our
dealers and Internet consumers.
General and Administrative. The quarter ended March 31, 1997 includes
approximately $1.1 million in previously capitalized legal, accounting and other
direct costs associated with a proposed initial public offering that was
withdrawn in April 1997. In the quarter ended December 31, 1997, general and
administrative expenses included legal, severance and bonuses incurred during
the period.
To date, quarter to quarter growth in our revenues have offset any effects
due to seasonality. However, we expect our business to experience seasonality as
it matures, reflecting seasonal fluctuations in the automotive industry,
Internet and commercial online service usage and advertising expenditures. We
anticipate that purchase requests will typically increase during the first and
third quarters when new vehicle models are introduced and will typically decline
during the second and fourth quarters. Internet and commercial online service
usage and the growth rate of such usage may be expected typically to decline
during the summer. In addition, our advertising costs in traditional media, such
as broadcast and cable television, generally decline in the first and third
quarters of each year. Depending on the extent to which the Internet and
commercial online services are accepted as an advertising medium, seasonality in
the level of advertising expenditures could become more pronounced for
Internet-based advertising. Seasonality in the automotive industry, Internet and
commercial online service usage, and advertising expenditures is likely to cause
fluctuations in our operating results and could have a material adverse effect
on our business, operating results and financial condition.
STOCK OPTIONS GRANTED IN 1999
From January to March 1999, we granted stock options to purchase 392,112
shares of common stock under the 1999 Stock Option Plan. These stock options
were granted to employees and directors at exercise prices of $13.20 and $16 per
share which were below the fair market value at the date of grant. In relation
to these grants, we will recognize estimated compensation expense of
approximately $2.0 million ratably over the vesting term of one to four years.
Compensation expense of approximately $826,000, $390,000,
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$390,000, $390,000 and $30,000 will be classified as operating expense in the
years ending 1999, 2000, 2001, 2002 and 2003, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have financed our operations primarily from the
issuance of shares of preferred stock, which through December 31, 1998 totaled
$67.9 million, comprised of $15.0 million raised in August 1996, $9.1 million
raised in January 1997, $13.0 million raised in October 1997, $0.5 million
issued in exchange for advertising in April 1998, $5.0 million raised in May
1998, $0.6 million issued in exchange for advertising in October 1998, $5
million raised in November 1998 and $19.7 million raised in December 1998. As of
December 31, 1998, we had approximately $28.0 million in cash and cash
equivalents.
Net cash used in operating activities increased to $16.3 million in 1998
from $13.5 million in 1997 and $3.6 million in 1996. The increases in the net
cash used in operating activities resulted primarily from increased sales and
marketing, product development and general and administrative expenditures
related to expanding our infrastructure. Also, working capital was used to
finance accounts receivable, prepaid expenditures and other assets, offset
partially by increased deferred revenue.
Net cash used in investing activities decreased to $1.1 million in 1998
from $1.8 million in 1997 and increased to $1.8 million in 1997 from $1.5
million in 1996. The net cash used in investing activities resulted primarily
from purchases of property and equipment consisting of computer hardware,
telecommunications equipment, furniture and leasehold improvements.
Net cash provided by financing activities increased to $29.6 million in
1998 from $22.0 million in 1997 and $14.1 million in 1996. The net cash provided
by financing activities resulted primarily from the issuance of preferred stock.
We believe our current cash and cash equivalents, excluding proceeds from
this offering, will be sufficient to meet our anticipated cash needs for working
capital and capital expenditures for at least the next 12 months. With respect
to years beyond fiscal 1999, we may be required to raise additional capital to
meet our long term operating requirements. Although we have grown our revenues
consistently since inception, our expenses have continued to and in the
foreseeable future are expected to exceed our revenues. Accordingly, we do not
expect to be able to fund our operations from internally generated funds for the
foreseeable future. Our cash requirements depend on several factors, including
the level of expenditures on marketing and advertising, the rate of market
acceptance, the ability to expand our customer base and increase the volume of
purchase requests, the cost of contractual arrangements with online information
providers, search engines and other referral sources, and other factors. The
timing and amount of such working capital requirements cannot accurately be
predicted. If capital requirements vary materially from those currently planned,
we may require additional financing sooner than anticipated. We have no
commitments for any additional financing, and there can be no assurance that any
such commitments can be obtained on favorable terms, if at all. Any additional
equity financing may be dilutive to our stockholders, and debt financing, if
available, may involve restrictive covenants with respect to dividends, raising
capital and other financial and operational matters which could restrict our
operations or finances. If we are unable to obtain additional financing as
needed, we may be required to reduce the scope of our operations or our
anticipated expansion, which could have a material adverse effect on our
business, results of operations and financial condition.
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YEAR 2000 ISSUES
Because many computer applications have been written using two digits
rather than four to define the applicable year, some date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. This
"Year 2000 issue" could result in system failures or miscalculations causing
disruptions of operations, including disruptions of our Web site, the Dealer
Real Time system or normal business activities.
The information technology systems pertain to software applications and
database interface programs that support the consumer website, as well as the
Dealer Real Time system that manages the inventory of pre-owned vehicles and
purchase requests transmitted to our participating dealers.
Non-information technology systems include accounts receivable/payable,
payroll, banking, 401k, postal bar code, and Federal Express software that
support our daily business activities. Although we have not conducted a survey,
we believe there is no material exposure to our non-information technology
systems. We believe that we do not have any other non-information, embedded
technology systems, with potential Year 2000 issues.
We do not believe that we have material exposure to the Year 2000 issue
with respect to our own information systems since our existing systems correctly
define the Year 2000 with four digits. We are currently taking two actions to
mitigate the risk and exposure of the Year 2000 issue:
1. We are in the process of obtaining confirmation from all of our
third-party vendors that they have resolved their Year 2000 issues.
These third-party vendors can be categorized as follows:
A. information technology systems
- computer hardware vendors
- computer software vendors
- network communications vendors
- data suppliers vendors
B. non-information technology systems
- landlord who oversees the facilities and utilities
- building security company
We expect to receive replies to our Year 2000 requests from third-party
vendors by second quarter 1999. Approximately 35% of the third party
vendors have responded. All of these vendors provided a statement of
compliance either displayed on their website or furnished in hard copy
format. These vendors who have already responded represent the most
critical vendors in our business.
2. In March 1999, we implemented a test lab environment to simulate the
Year 2000 rollover with hardware, software, network communications
vendors and certain key data suppliers. We plan to make any
modifications resulting from the test lab environment by the third
quarter of 1999.
Based on the test results, if any vendor was found to be non-compliant, our
contingency plan is to first attempt to find a replacement vendor, and if no
replacement can be found, to assist such vendor in becoming Year 2000 compliant.
If we cannot effectively assist such vendor in becoming Year 2000 compliant, we
plan to set up a front-end application to screen all non-compliant data or to
receive the data and modify it so
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that the data is Year 2000 compliant. We plan to establish our front-end
application screen in the third quarter of 1999.
The worst-case scenario pertaining to Year 2000 issue would be an overall
failure of the national Internet and telecommunications infrastructure. This may
require alternative means for users to gain connection to our servers.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income." This statement, adopted by us in the first quarter of
1998, requires companies to report a new measurement of income. Comprehensive
income (loss) is to include foreign currency translation gains and losses and
other unrealized gains and losses that have historically been excluded from net
income (loss) and reflected instead in equity. Currently, no material
differences exist between our net income or loss and comprehensive net income or
loss.
In March 1998, the American Institute of Certified Public Accounts (AICPA)
issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained For Internal Use," which is effective for fiscal
years beginning after December 15, 1998. SOP No. 98-1 provides guidance on
accounting for the costs of computer software developed or obtained for internal
use and defines specific criteria that determine when such costs are required to
be expensed, and when such costs may be capitalized. Management believes the
adoption of SOP 98-1 will not have a material effect on our consolidated
financial statements.
In April 1998, the AICPA issued SOP 98-5, "Reporting the Costs of Start-up
Activities," which will be adopted by us in the beginning of our fiscal year
beginning January 1, 1999. SOP No. 98-5 provides guidance on the financial
reporting of start-up costs and organization costs and requires such costs to be
expensed as incurred. We believe the adoption of SOP 98-5 will not have a
material effect on our financial statements.
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which will be adopted by us in our fiscal
year beginning January 1, 2000. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments by requiring every derivative
instrument to be recorded in the balance sheet as a liability or an asset at
fair market value. Any changes to a derivatives fair market value must be
recognized currently in earnings unless specific hedge accounting criteria are
met. We do not have any derivative instruments or undertake any hedging
activities and do not anticipate doing so, therefore the adoption of SFAS No.
133 will not have a material effect on our financial statements.
LIMITATION ON NET OPERATING LOSS CARRYFORWARDS
We have approximately $37.1 million federal net operating loss
carryforwards as of December 31, 1998 which may be available to reduce the
amount of United States federal income taxes payable by us in the future.
However, if we undergo an "ownership change" within the meaning of Section 382
of the Internal Revenue Code, an annual limitation will be imposed on our use of
net operating loss carryforwards. If an "ownership change" occurs, Section 382
of the Internal Revenue Code limits the amount of net operating losses that may
be utilized from pre-ownership change years to offset our taxable income in any
post-ownership change year to an amount equal to:
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- the value of Autobytel.com's capital stock, as adjusted, at the time of
the ownership change, multiplied by
- the long-term tax exempt rate for the month of the ownership change.
We believe that this offering will result in an ownership change for
purposes of Section 382 of the Internal Revenue Code. As a result, the use of
our pre-ownership change net operating loss carryforwards will be limited
annually by Section 382 of the Internal Revenue Code under the rules described
above. Based on an estimated company value of $393 million, we will be permitted
to offset against any taxable income $18 million of losses per year using
pre-charge net operating losses based on a long-term tax exempt rate of 4.7% and
a share price of $22.
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BUSINESS
OVERVIEW
We are a leading, branded Internet site for new and pre-owned vehicle
information and purchasing services. Through our Web site, www.autobytel.com,
consumers can research pricing, specifications and other information regarding
new and pre-owned vehicles. When consumers indicate they are ready to buy, they
can be connected to Autobytel.com's network of over 2,700 participating dealers
in North America, with each dealer representing a particular vehicle make.
Dealers participate in our network by entering into non-exclusive contracts with
us. We expect our dealers to promptly provide a haggle-free, competitive offer.
In addition, consumers can apply for and receive insurance, financing, leasing
and warranty proposals as well as other services and information through our Web
site. We believe that our services provide benefits for consumers by supplying
them with information to make an informed and intelligent vehicle purchasing
decision and by directing consumers to dealers, whom we expect to provide a
competitive price. In addition, our services are intended to reduce our dealers'
costs by directing to them large volumes of purchase requests from potential
consumers who have already indicated their intent to buy, thereby enabling
dealers to lower their marketing, advertising and personnel costs while
enhancing sales productivity. We provide our services free of charge to
consumers and derive substantially all of our revenues from fees paid by
participating dealers.
We introduced our new vehicle purchasing services in May 1995 and our
Certified Pre-Owned CyberStore in April 1997. Our new vehicle purchasing service
enables consumers to shop for and select a new vehicle through our Web site by
providing research on new vehicles such as pricing, features, specifications and
colors. When consumers indicate they are ready to buy, they can complete a
purchase request online. The CyberStore allows consumers to search for a
pre-owned vehicle according to the price, make, model, color, year and location
of the vehicle. The CyberStore locates and displays the description, location
and actual photograph of all vehicles that satisfy the consumer's search
parameters. The dealers in our network use our online information platform, the
Dealer Real Time system, which provides dealers with immediate purchase request
information for new and pre-owned vehicles, the ability to track customers and
purchase requests, and other value-added features, including automatic uploading
of pre-owned vehicle inventory into our database. In addition, Autobytel.com
offers a number of automotive finance and insurance services in conjunction with
strategic partners, including automobile financing through Chase, GE Capital and
Provident Bank, automotive insurance through member companies of the American
International Group and extended warranty service through New Hampshire
Insurance Company, a member company of the American International Group.
BACKGROUND
Growth of the Internet and Online Commerce. The Web and online services
have emerged as significant global communications and commercial media enabling
millions of people worldwide to share information, communicate and conduct
business electronically. We believe that the number of Web users will grow based
on a number of factors, including the large and growing base of installed
personal computers in the home and workplace, the decreasing cost of personal
computers, easier, faster and cheaper access to the Internet, the distribution
of broadband applications, the proliferation of Internet
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content and the increasing familiarity and acceptance of the Internet by
businesses and consumers.
The growth in the use of the Internet has also led to a rapid growth of
online commerce. Web commerce sites are enabling businesses to target and manage
a broad customer base and establish and maintain ongoing direct customer
relationships. As a growing number of businesses and information providers have
begun marketing on the Web, it has rapidly become a medium in which consumers
can access a vast amount of information regarding the pricing, quality and
specification of products. Additionally, online transactions can be faster, less
expensive and more convenient than transactions conducted in person or even over
the telephone.
The Automotive Vehicle Market. Automotive dealers operate in localized
markets and face significant state regulations and increasing business
pressures. These fragmented markets, with over 49,000 dealers in aggregate, are
characterized by:
- a perceived overabundance of dealerships,
- competitive sales within regional markets,
- increasing advertising and marketing costs that continue to reduce dealer
profits,
- high-pressure sales tactics with consumers, and
- large investments by dealers in real estate, construction, personnel and
other overhead expenses.
In addition, consumers have traditionally entered into the highly
negotiated sales process with relatively little information regarding
manufacturer's costs, leasing costs, financing costs, relative specifications
and other important information. Buying a vehicle is considered to be one of the
most significant purchases a United States consumer makes. According to CNW
Marketing/Research, over $657 billion and $667 billion was spent on new and
pre-owned vehicles in the United States representing the sale of over 60.0 and
60.3 million vehicles in 1997 and 1998, respectively. Although automotive
retailing attracts significant consumer dollars, we believe that consumers
associate the traditional vehicle buying experience with high-pressure sales
tactics.
THE AUTOBYTEL.COM SOLUTION
We believe that our online products and services improve the vehicle
purchasing process for both consumers and dealers. We offer consumers an
information-rich Web site, numerous tools to configure this information, and a
quality fulfillment experience. As part of the fulfillment experience, we expect
our dealers to provide competitive price quotes for new and pre-owned vehicles.
We believe our services enable dealers to reduce personnel and marketing costs,
increase consumer satisfaction, increase customer volume, and expand dealer
territories.
Benefits to Consumers. Our Web site provides consumers free of charge
up-to-date specifications and pricing information on vehicles. In addition, our
consumers gain easy access to valuable automotive information, such as dealer
invoice pricing and the AutoBuyTools(TM) services which consist of a lease
calculator, a loan calculator to determine monthly payments and a lease or buy
decision tool. Our database of articles allows consumers to perform online
library research by accessing documents such as weekly automotive reports,
consumer reviews and manufacturer brochures. Various automotive information
service providers, such as Edmund's, Kelley Blue Book, Pace Publication's
Carprice.com, and IntelliChoice, are also aggregated on Autobytel.com's Web site
to assist consumers with specific vehicle and related automotive decisions such
as insurance and
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financing. Armed with such information, the consumer should be more confident
and capable of making an informed and intelligent vehicle buying decision.
We expect our dealers to provide competitive price quotes for new and
pre-owned vehicles. By providing dealers with a large number of consumers
through quality purchase requests, we believe that we can help our dealers to
lower their operating costs due to higher sales volume. We believe that lowering
their operating costs allows dealers to offer more competitive prices.
We believe we offer consumers a significantly different vehicle purchasing
experience from that of traditional methods. Consumers using the Autobytel.com
system are able to shop for a vehicle, and make financing and insurance
decisions from the convenience of their own home or office. We expect dealers to
provide consumers a haggle-free price quote and a high level of customer
service. We form our dealer relationships after careful analysis of automotive
sales and demographic data in each region. We seek to include in our dealer
network the largest and highest quality dealers within defined territories. Our
strategy to be the leading Internet-based vehicle information and purchasing
service depends on our ability to provide consumers with a quality experience.
Benefits to Dealers. Autobytel.com benefits dealers by reducing the
dealers' incremental personnel and marketing costs, increasing consumer
satisfaction and increasing consumer volume. Through our investment in national
advertising and brand recognition of Autobytel.com, we attract consumers to our
Web site and direct them to dealers in their local area. We believe this
provides dealers access to a larger number of prequalified consumers without
increasing their advertising costs. Dealers' personnel costs should be reduced
because we provide dealers access to potential purchasers who have completed
their research and should be ready to buy or lease a vehicle. As a result,
reaching these consumers and selling or leasing them vehicles costs the dealer
little or no additional overhead expense other than the fees paid to us and the
personnel costs of a dedicated Autobytel.com manager. Through our Dealer Real
Time system, we provide dealers with on-site technology to better track sales,
inventory, customer solicitations, responses and other communications.
By providing consumers a quality fulfillment experience, we seek to provide
Autobytel.com dealers a large number of consumers, allowing them to compete more
effectively. Our solution includes an expanding network of over 2,700
participating dealers in the United States and Canada representing every major
domestic and imported make of vehicles and light trucks. Because a single
dealership location may hold multiple manufacturer franchises, the dealership
may represent more than one dealer in the Autobytel.com network.
To increase each dealer's incentive to participate in the Autobytel.com
system, we allocate each dealer an exclusive geographic territory based upon
specific vehicle make. A territory allocated by us to a dealer is generally
larger than a territory assigned to a dealer by a manufacturer. By granting
dealers exclusivity within a geographic area, we intend to assure dealers of a
large enough volume of quality purchase requests to lower their operating costs.
Our Web Site. Because Web sites can be continually updated and provide a
large quantity of quality information, we believe the Internet offers the most
efficient medium for consumers to learn about and shop for vehicles. The
Internet's global reach to consumers allows us to leverage our investment in
branding and marketing across a very large national and international audience
to create qualified purchase requests for vehicles.
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For these reasons, we also believe that the Internet represents the most
efficient method of directing purchase requests to local markets and dealers.
We currently provide the following services on our Web site:
[Chart depicting programs and services accessible to Internet consumers through
Autobytel.com]
STRATEGY
Our primary objective is to be the leading global Internet brand for
vehicle information and purchasing services. We intend to achieve this objective
through the following principal strategies:
Continue to Build Brand Equity. We believe that due to our focus on both
online and offline marketing, we have created one of the leading brand names in
our sector. We intend to continue aggressively to market and advertise to
enhance our brand recognition with consumers. We believe that continuing to
strengthen brand awareness of the Autobytel.com name among consumers is critical
to attract vehicle buyers, increase purchase requests and, in turn, increase the
size of our dealer base. We intend to continue advertising on the Internet and
through traditional media, such as television, radio and printed publications.
Ensure the Highest Quality Consumer Experience. We believe that consumer
satisfaction and loyalty is heavily influenced by the consumer's experience with
our site and with our dealers. In order to enhance our appeal to consumers, we
intend to continue developing our Web site by enhancing vehicle information, as
well as building new features such as personalization, auto maintenance
reminders and consumer reviews. As part of our continuing effort to enhance our
Web site technology and features, we have entered into strategic co-development
relationships, with Intel and Cow Inc. to improve our interactive dealer
training. In addition, we plan to continue compiling high quality content from
third
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party sources on our site, including information from Edmund's, IntelliChoice,
Carprices.com and Kelley Blue Book. We believe that consumer satisfaction with
the vehicle purchasing experience is also essential to our success and the
differentiation of our services from those of our competitors. We intend to
continue to invest in our dealer training and support services to ensure a
consistent, high-quality alternative to the traditional vehicle buying process.
Increase Purchase Requests. We believe that increasing the volume and
quality of purchase requests directed from our Web site to our dealer network is
crucial to the long-term growth and success of our business. By augmenting the
volume of quality purchase requests, we expect to attract additional dealers to
our network, increase fees paid by dealers, and solidify our relationships with
participating dealers. Our strategy for increasing traffic to our site and the
number of purchase requests includes forming and maintaining online sponsorships
and partnerships with Internet portals, such as Excite, and with Internet
automotive information providers, such as Edmund's. As part of our strategy to
improve the quality of purchase requests, we continue to expand the breadth and
depth of information and services available through our Web site to insure that
well informed, ready-to-buy consumers are directed to participating dealers.
Expand and Improve Dealer Network. We believe that strengthening the size
and quality of our dealer network is important to the success and growth of our
business. We believe our network of over 2,700 dealers is one of the largest in
the Internet-based vehicle purchasing industry. Our strategy is to increase the
size of our dealer network by attracting new dealers and strengthening
relationships with existing dealers by:
- increasing the volume and quality of purchase requests,
- advertising in trade publications aimed at dealers and participating in
industry trade shows,
- maintaining our extensive training and support program to participating
dealers, and
- providing our Dealer Real Time system to all participating dealers.
Invest in Ancillary Online Services. We believe that expanding our services
to both consumers and dealers will be critical to establishing ourselves as the
premier provider of online automotive services in the future. Our strategy is to
continue to invest in ancillary services, particularly in the CyberStore and
warranty, finance and insurance services. We also intend to use the Dealer Real
Time system to launch value added services for our dealer network, including
allowing dealers to offer accessories and aftermarket products directly through
the Autobytel.com Web site. We have recently begun to sell advertising on our
Web site and expect to expand this business during 1999. We plan to launch an
auction-based, online program for our dealers who sell pre-owned vehicles. We
are also seeking opportunities to market the information contained in our
databases.
Expand Internationally. We intend to continue our international expansion
through licensing agreements and partnering with local strategic partners. We
have established licensing arrangements with strategic partners such as Inchcape
Motors and Bilia AB in the United Kingdom and Scandinavia, respectively. In
addition, we have entered into agreements with Invision AG and Aureus Private
Equity AG to obtain their assistance in meeting potential strategic partners who
will assist us in establishing national operating companies throughout the rest
of Europe using Autobytel.com vehicle marketing systems. We have also entered
into agreements in Japan with e-solutions, Inc., Intec, Inc. and
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Trans Cosmos, Inc. to form a joint venture. We are currently exploring
additional opportunities in Asia and Latin America.
PRODUCTS, PROGRAMS AND SERVICES
New Vehicle Purchasing Service. Our new vehicle marketing service enables
consumers to shop for and select a new vehicle through our Web site by providing
research on new vehicles such as pricing, features, specifications, colors, etc.
When consumers indicate they are ready to buy, a consumer can complete a
purchase request online, which specifies the type of vehicle and accessories the
consumer desires, along with the consumer's contact information. The purchase
request is then routed by us to the nearest participating dealer that sells the
type of vehicle requested, and we promptly return an e-mail message to the
consumer with the dealership's name and phone number and the name of the
Autobytel.com manager at the dealership. Dealers agree in their contracts to
contact the consumer within 24 hours of receiving the purchase request with a
firm, haggle-free price quote for the requested vehicle. When consumers complete
a purchase, they usually take delivery of their vehicle at the dealership
showroom. Generally, within ten days of the submission of a consumer's purchase
request, we contact the consumer again by e-mail to conduct a quality assurance
survey that allows us to evaluate the sales process at participating dealers and
improve the quality of dealer service.
The Autobytel.com network has grown to 2,718 dealers as of December 31,
1998. These dealers represent every major domestic and imported make of vehicle
and light truck sold in the United States and Canada. Core dealerships are
charged initial subscription fees and on-going fees, principally on a monthly
basis, to participate in our dealer network.
Certified Pre-Owned CyberStore. We launched our CyberStore program in April
1997. The CyberStore allows consumers to search for a pre-owned vehicle
according to specific search parameters such as the price, make, model, mileage,
year and location of the vehicle. CyberStore locates and displays the
description, location and actual digital photograph of all vehicles that satisfy
the search parameters. The consumer can then complete a formal purchase request
for a specific vehicle and is contacted by the dealer to conclude the sale. To
be listed in the CyberStore a pre-owned vehicle must first pass a 135-point
inspection, be covered by a 72-hour money-back guarantee and be covered by a
three-month, 3,000-mile warranty, which is honored nationally by all CyberStore
dealers. We charge each vehicle dealer that participates in the CyberStore
program a separate additional monthly fee. The CyberStore program uses the
Dealer Real Time system to provide participating dealers online purchase
requests shortly after submission by consumers as well as the ability to track
their inventory on a real-time basis.
Ancillary Customer Services. We offer a number of ancillary services that
we market to consumers through our Web site and the linked Web sites of
participating partners such as Chase, GE Capital, Provident Bank and member
companies of the American International Group. We make purchase and lease
financing available to consumers through various Autobytel.com financing
programs offered by Chase, GE Capital and Provident Bank that allow consumers to
research and apply for vehicle financing online in a secure manner. Consumers
can apply for a loan or lease online at the time they submit their purchase
request for either a new or pre-owned vehicle. Consumers are able to arrive at
the dealership with their loan pre-approved, their credit verification documents
in hand, and the loan paperwork waiting for them. We believe that the
convenience of pre-approved purchase or lease financing, combined with a firm,
competitive price, enables dealers more easily to consummate purchase requests.
Lenders to whom Autobytel.com refers customers
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pay us an origination fee for most loans and the dealership is compensated by
the lender for each loan made to an Autobytel.com consumer through either an
origination fee or a limited rate participation fee. We currently market
financing through Chase, GE Capital and Provident Bank.
We provide a link on our Web site to an online insurance application
program offered by the American International Group on behalf of its member
companies through which consumers submit requests for insurance quotes and
obtain approval. The types of insurance products offered through this link
include automobile liability and property damage coverage. Our agreement with
the American International Group provides that we receive an advertising fee
based on a percentage of the net premiums earned and collected by the member
companies of the American International Group on all policies issued to
Autobytel.com consumers who access the American International Group Web site
through a link from our Web site.
We offer critical information concerning all aspects of owning and leasing
new and pre-owned vehicles that we believe makes our Web site a valuable
resource to consumers. AutoBuyTools(TM), a service on our Web site, consists of
a lease calculator, a loan calculator to determine monthly payments and a lease
or buy decision tool.
The Dealer Real Time System. In 1997, we launched a new, proprietary
technology and software system called the Dealer Real Time system. The Dealer
Real Time system is an Internet-based communications platform that gives dealers
a competitive advantage compared to delivering purchase requests by fax. A
fax-based system has the following inherent inefficiencies: it is susceptible to
system delays, has a less effective purchase request and inventory tracking
system and it is difficult to control the distribution of purchase requests.
Such inefficiencies include the delay of delivering faxes to salesmen and the
uncertainty of response time to consumers related to this delivery.
Using Internet technology, the Dealer Real Time system enables the dealer
to:
- instantaneously access a consumer's vehicle purchase request as soon as
the consumer submits it online,
- track all interaction with the consumer,
- send e-mail to consumers using a variety of predetermined templates,
- input used vehicle inventory information for immediate display to
consumers on the Autobytel.com web page,
- track dealership performance through a series of reports available
online,
- access Autobytel.com "news" and product information online, and
- contact Autobytel.com technical support personnel via e-mail links.
In March 1998, as part of our new Dealer Agreement, we began requiring our
dealers to use the Dealer Real Time system, and have converted substantially all
of our dealers to the Dealer Real Time system.
Loyalty Rewards Program (ABT Mobalist). To attract new customers prior to
their next vehicle purchase and encourage repeat business from our existing
customers, we began to offer consumers in April 1998 an affinity program called
Mobalist Rewards. To date, our affinity marketing partners include Virtual
Vineyards, Inc. and Uniglobe Travel Online, Inc. This program allows members to
earn credits toward the purchase price of a new or pre-owned vehicle through our
service. Members earn credits by purchasing products and services from
Autobytel.com's retail partners and also by using a credit card co-branded with
the Autobytel.com trademark to make purchases. We earn a commission each time
these services or the affinity program services are used.
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Planned Online Auction Services. We plan to launch an auction-based
program designed to streamline the process of wholesale buying and selling of
pre-owned vehicles over the next year. Through this program, we expect that our
dealers will be able to place online bids for pre-owned vehicles directly to the
wholesaler, eliminating associated distribution costs.
INTERNATIONAL ACTIVITIES
We intend to expand our new vehicle marketing service to foreign markets
through licensing agreements and by establishing relationships with vehicle
dealers and strategic partners located in foreign markets. As of December 31,
1998, approximately 161 Canadian dealerships belonged to our network. We have
entered into a 20 year agreement with Auto-by-Tel UK Limited, an affiliate of
Inchcape Motors, the United Kingdom's largest independent automobile
distributor, to exclusively license our technology, business processes and trade
names in the United Kingdom, as well as provide maintenance and development for
such technology. We have also entered into a similar arrangement with a term of
up to 10 years with Auto-By-Tel AB, an affiliate of Bilia AB, to exclusively
license our technology, business processes, and trade names in Sweden, Norway,
Denmark and Finland for which we will receive annual licensing and maintenance
fees as well as an initial license fee. Under the terms of our agreement with
Auto-by-Tel UK Limited we are entitled to receive minimum annual license and
maintenance and support fees of $850,000 and $250,000, respectively, and will
receive an initial license fee. We intend to enter into similar relationships
with strategic partners in other countries that have attractive automobile
markets. In addition, we have entered into agreements with Aureus Private Equity
AG and Invision AG to obtain their assistance in meeting potential strategic
partners who will assist us in establishing national operating companies
throughout the rest of Europe using Autobytel.com vehicle marketing systems.
We intend to expand our operations to Japan and have entered into letter
agreements with e-solutions, Inc., Intec, Inc. and Trans Cosmos, Inc. to form
ABT Japan, a joint venture in which we will own a 33% interest. We will license
our trade names, technology and business processes to ABT Japan. We expect ABT
Japan to commence operations by the end of 1999. These companies have elected to
invest $6 million in ABT Japan and to fund an additional $6 million to cover
operating losses, if any, and we have agreed to incorporate ABT Japan with a
capital contribution of $100,000. In addition, these companies have indicated an
interest to purchase 200,000 shares in this offering.
MARKETING AND SALES
Our ability to enhance our brand name recognition, domestically and
internationally, and position ourselves as a leading Internet-based vehicle
information and purchasing services provider is critical to our efforts to
increase the number of vehicle purchase requests and requests for ancillary
services, as well as the number and quality of subscribing dealerships. We have
invested approximately $60 million to date in sales, marketing and
communications activities. Over the past several years, we have been the subject
of numerous newspaper, magazine, radio and television stories. Articles about
our new vehicle program have appeared in Business Week, Fortune, Forbes, Time,
and the Wall Street Journal, among other publications. Television stories
featuring us have been aired nationally on NBC Today, NBC Nightly News and CNN.
We believe that ongoing media coverage is an important element in creating
consumer awareness of the Autobytel.com brand name and has contributed to
dealership awareness of, and participation in, our programs.
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We have established marketing and advertising programs with many of the
leading automotive information providers on the Internet, including Edmund's,
IntelliChoice and Kelley Blue Book which help direct traffic to our Web site and
increase purchase requests. Our agreements with automotive information providers
typically have terms ranging from one to five years. The agreement with Kelley
Blue Book is for an indefinite term but can be terminated on 30 days' notice by
either party. Our Kelly Blue Book agreement calls for a monthly payment based on
the number of times their visitors click on our links. Our position with Kelly
Blue Book is not an exclusive arrangement. Therefore, our competitors may have
similar relationships with Kelley Blue Book.
Edmund's is our single largest referral service. In 1997 and 1998,
approximately 49% and 34%, respectively, of our total purchase requests
originated from Edmund's. This percentage decreased to 29% for the last quarter
of 1998. Our agreement with Edmund's, pursuant to which we receive referrals
from Edmund's Web site, is scheduled to expire July 31, 2000. Edmund's has
agreed to recommend or refer visitors to its Web site only to us and no other
competitive online marketing program with respect to new vehicles, although
Edmund's may refer prospective buyers directly to automotive manufacturers' Web
sites and dealer locator services. We expect Edmund's Web site to account for a
significant number of purchase requests for the foreseeable future. We pay
Edmund's a monthly fee based on a per purchase request basis. We pay
IntelliChoice both a monthly fee for the use of its data and a fee for each
purchase request. Our arrangement with them is not exclusive, as they provide
data to other Web sites.
We endeavor to position ourselves as the leading vehicle and related
services purchasing program by affiliating ourselves with online services and
Internet portals. We believe that our presence on these Internet sites helps to
increase purchase request volume and will remain a key element of our future
business. For example, we have agreements with AT&T Corp., Classifieds2000,
Excite and Lycos that provide as follows:
- We pay AT&T a monthly fee to insert our branded content on their site
which includes a car purchasing link enabling their visitors to send us
purchase requests. We also pay AT&T a fee for each purchase request it
sends us. The agreement is not exclusive and is for an indefinite term
which can be terminated on 30 days' notice by either party.
- Our contract with Classifieds2000 provides that we pay a monthly fee as
well as a fee for each purchase request it sends us for the number of
users who submit purchase requests after having visited its site.
Moreover, it includes our pre-owned vehicle inventory in its classified
listings. In return we provide it with a link on our site where owners
can list their cars for sale directly. Our arrangement with
Classifieds2000 is exclusive. The agreement is for an indefinite term
which can be terminated on 30 days' notice by either party.
- Our agreement with Excite covering its auto channel provides that we pay
Excite a set-up fee and an annual fee as well as a fee for each purchase
request it sends us. The agreement provides us with exclusivity in their
auto channel and is for a term of 3 years but can be terminated by us if
the number of purchase requests does not meet specified threshold for
each year of the term of the agreement. The agreement with Excite
precludes us from providing supplementary automobile research information
to other search engines. Our agreement with Netscape's NetCenter auto
channel is through Excite which manages NetCenter for Netscape. The
agreement provides for an annual fee as well as a fee for each purchase
request it sends us. The agreement with NetCenter is exclusive and has a
two year term.
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- Our agreement with Lycos in its "New" automotive channel is based on an
initial fee as well as a fee for each purchase request it sends us. The
agreement provides us with exclusivity in their "New" automotive area.
The agreement is for a term of one year.
As of December 31, 1998, our Internet marketing agreements with our two
largest search engines, NetCenter and Excite, required us to make aggregate
minimum future payments of $4.9 million and provide up to three new vehicles to
each in a 12 month period. As of December 31, 1998, our agreements with
automotive information providers require aggregate minimum future commitments of
$0.7 million.
During 1998, total Internet marketing and advertising costs incurred were
$11.1 million, including initial, annual and monthly fees of $50,000, $3.0
million and $2.9 million, respectively. No set-up fees were incurred in 1998 and
variable fees were $5.2 million.
We are also working with MediaOne to develop and deliver our broadband
service offering. Broadband allows the Internet to deliver content and services
at faster speeds through high capacity coaxial cable networks. We believe that
the broadband opportunity is becoming an increasingly important focus within the
Internet industry, and we intend to enhance our presence using this technology.
We supplement our Internet presence with television and traditional print
advertising. Our initial marketing focus was on computer user and hobbyist
publications and major automotive magazines. In late 1996, we began to broaden
our marketing efforts with a campaign to accelerate consumer awareness of the
Autobytel.com brand name and drive traffic to our Web site through cable
television advertisements featured on CNN and CNET, Inc. and network television
advertisements featured on NBC and MSNBC. As part of our branding efforts, we
aired a 30-second commercial during the broadcast of the Super Bowl in both 1997
and 1998. We expect to continue to use television advertising to strengthen our
brand awareness. As of December 31, 1998, the aggregate future minimum payments
we are required to make for television advertising was $1.7 million.
In addition to our consumer-oriented marketing activities, we also market
our programs directly to dealerships, participate in trade shows, advertise in
trade publications and major automotive magazines and encourage subscribing
dealerships to recommend our program to other dealerships.
INTELLECTUAL PROPERTY
We have the registered service mark Auto-By-Tel and have applied for the
registered service marks Autobytel.com, AutoBuyTools, Certified Pre-Owned
CyberStore, Kre8.net and Dealer Real Time. The Autobytel.com logo is a service
mark and trademark for which we have applied for federal registration.
DEALER RELATIONSHIPS AND SERVICES
Dealer Network. Dealers participate in our network by entering into
contracts with us. Prior to January 1998, substantially all of the dealer
contracts we entered into were terminable by either party at its sole discretion
with 30 days notice. Since the end of January 1999 and on a going forward basis
we are converting our dealers to new contracts with one year terms. Our
dealerships are located in most major metropolitan areas in the United States
and Canada and we believe they are generally leaders in their respective
markets. As of December 31, 1998, our participating dealership base totaled
2,718 dealers, of which 2,386, or 88%, are core dealers and 332, or 12%, are
non-core dealers. Core
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dealerships are franchises with typically high volume vehicle sales such as Ford
or Toyota. These dealerships pay initiation and monthly fees to subscribe to our
online marketing program. Both the initial and monthly subscription fees are
established in the contract and are based upon many business factors including
the type and location of the franchise. We reserve the right to raise our fees
to dealers after 30 days notice. Non-core dealers are typically franchises of
lower-volume vehicle manufacturers such as Jaguar or Suzuki or are located in
remote, low volume territories, and receive purchase request referrals from us
without paying us either initial or monthly subscription fees. We enter into
agreements with non-core dealers to ensure the broadest geographic coverage
possible for the make of vehicle represented by the non-core dealer. These
agreements also allow us to increase consumer satisfaction by offering a
complete selection of vehicle dealers throughout North America. However, our
costs incurred from non-core dealers are not offset by revenues. We do not
prevent dealers from entering into agreements with our competitors.
Customer Support. We actively monitor subscribing dealers through ongoing
customer surveys, and research conducted by our internal dealer support group.
Generally, within ten days after a consumer submits a purchase request through
our Web site, we re-contact the consumer by e-mail requesting completion of a
quality assurance survey on our Web site that allows us to evaluate the sales
process at participating dealers. Dealerships that fail to abide by our program
guidelines or who receive repeated consumer complaints are generally reviewed
and, if appropriate, terminated. In return for requiring a high level of
consumer service, we assign participating dealerships exclusive territories. We
try to assign dealers attractive territories in order to increase participation
in our program.
Our dealer agreements are cancelable by either party on 30 days notice.
Each dealer agreement obligates the dealers to adhere to our policy of providing
prompt responses to customers, no haggle pricing practices and full disclosure
regarding vehicle availability, add-ons and related matters. We require each
dealer to have an Autobytel.com manager whose principal responsibility is
supervising our system, similar to the way in which most dealers have a new
vehicle sales manager, pre-owned vehicle sales manager and service and parts
department managers who are responsible for those dealership functions. We
reserve the right to reduce or modify each dealer's assigned territory after the
first six months, although there can be no assurance that a dealer whose
territory is reduced or modified will not contest such a change or terminate its
subscription. In addition, dealers whose territories are reduced or modified by
us may sue us in an effort to prevent the change or recover damages. We have
experienced one such suit. See "-- Litigation."
Training. We believe that traditional dealers and their employees require
specialized training to learn the skills necessary to serve the Internet user
and take full advantage of our proprietary Dealer Real Time system. Therefore,
we have developed an extensive training program for our dealers. We believe that
this training is critical to enhancing the Autobytel.com brand and reputation.
We require participating dealerships to have their representatives trained on
our system. Training is conducted at our headquarters in Irvine, California, at
regional training centers and at dealerships' premises. Training is currently
provided to the dealers at no additional cost. In training our dealers, we
de-emphasize traditional vehicle selling techniques and emphasize the
Autobytel.com approach. To increase consumer satisfaction and reduce costs, we
seek to discourage dealerships from using commissioned and multiple salespersons
to interface with our customers.
COMPETITION
We believe that the principal competitive factors affecting the market for
Internet-based vehicle marketing services include:
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- successful marketing and establishment of national brand name
recognition,
- ease of use, speed and quality of service execution,
- the size and effectiveness of the participating dealership base,
- the volume and quality of traffic to and purchase requests from a Web
site,
- the ability to introduce new services in a timely and cost-effective
manner.
- technical expertise,
- customer satisfaction, and
- competitive dealer pricing.
Our vehicle purchasing services compete against a variety of Internet and
traditional vehicle buying services and automotive brokers. In the
Internet-based market, we compete with other entities which maintain similar
commercial Web sites including Autoweb.com, Cendant's AutoVantage, General
Motors' BuyPower, Microsoft's CarPoint and Stoneage Corporation. Republic
Industries has also announced its intention to create a Web site for marketing
vehicles. We also compete indirectly against vehicle brokerage firms and
affinity programs offered by several companies, including Costco Wholesale
Corporation and Wal-Mart Stores, Inc.
We compete with vehicle insurers, lenders and lessors as well as individual
dealerships. Such companies may already maintain or may introduce Web sites
which compete with ours. We cannot assure that we can compete successfully
against current or future competitors, many of which have substantially more
capital, resources and access to additional financing than we do, nor can there
be any assurance that competitive pressures faced by us will not result in
increased marketing costs, decreased Web site traffic or loss of market share or
otherwise will not materially and adversely affect our business, results of
operations and financial condition. We compete primarily on brand name
recognition acquired through early entry into the Internet-based automotive
purchase referral market and through customer and dealer satisfaction.
OPERATIONS AND TECHNOLOGY
We believe that our future success is significantly dependent upon our
ability to continue to deliver a high-performance and reliable Web site, enhance
consumer/dealer communications, maintain the highest levels of information
privacy and ensure transactional security. We host our Web site at our corporate
headquarters in Irvine, California. We currently contract the services of two
nationally established Internet service providers to connect our systems with
the Internet. Our primary provider supplies two-thirds of our capacity to
connect with the Internet and our secondary provider supplies the remaining
third. Our primary servers are housed in one climate-controlled, raised floor
computer room with back-up power systems. We use industry-standard computers and
equipment in our network. Network security is provided by utilizing standard
products.
System enhancements are primarily intended to accommodate increased traffic
across our Web site, improve the speed in which purchase requests are processed
and introduce new and enhanced products and services. System enhancements entail
the implementation of sophisticated new technology and system processes.
FACILITIES
Our operations are principally located in a single office building in
Irvine, California. We occupy three full floors, each consisting of
approximately 12,000 square feet, which are
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leased through August 2001. We have options to renew the leases on each floor
for an additional 5-year term. We also lease office space in Houston, Texas,
consisting of less than 5,000 square feet through one of our subsidiaries,
Kre8.net, Inc., an Internet software company for dealer Web site design and
systems backup. In order to replace their existing leased space, we have
recently entered into a lease agreement for office space in Houston consisting
of 9,000 square feet, which Kre8.net plans to move into in the second quarter of
1999.
GOVERNMENT REGULATION
Currently few laws or regulations have been adopted that apply directly to
Internet business activities. The adoption of additional local, state, national
or international laws or regulations may decrease the growth of Internet usage
or the acceptance of Internet commerce.
We believe that our dealer marketing services do not constitute franchising
or vehicle brokerage activity in a way that makes federal and state franchise,
motor vehicle dealer, or vehicle broker licensing laws applicable to us.
However, if individual state regulatory requirements change or additional
requirements are imposed on us, we may be required to modify our service
programs in such a state in a manner which may undermine our program's
attractiveness to consumers or dealers.
If we are required by a state to be licensed as a vehicle broker and we
determine that the licensing and related requirements are overly burdensome, we
may elect to terminate operations in such a state.
In the event a state deems that we are acting as a vehicle broker, we may
be required to comply with burdensome licensing requirements of such state or
terminate operations in such state. As we introduce new services, we may need to
comply with additional licensing regulations and regulatory requirements.
Our marketing service may result in changes in the way vehicles are
currently sold or may be viewed as threatening by new and pre-owned vehicle
dealers who do not subscribe to the Autobytel.com program. Such businesses are
often represented by influential lobbying organizations, and such organizations
or other persons may propose legislation that, if adopted, could impact our
evolving marketing and distribution model, which our service promotes.
We expect to expand our operations to other countries that may have laws or
be subject to treaties that regulate the marketing, distribution, and sale of
vehicles. As we consider specific foreign operations, we will need to determine
whether the laws of the countries in which we seek to operate require us to
modify our program or otherwise change the Autobytel.com system or prohibit the
use of the system in such country entirely. In addition, the laws of a foreign
country may impose licensing, bonding or similar requirements on us as a
condition to doing business there.
To date, we have not expended significant resources on lobbying or related
government affairs issues but may be required to do so in the future.
Franchise Classification. If our relationship or written agreement with our
dealers was found to be a "franchise" under federal or state franchise laws, we
could be subjected to additional regulations, including but not limited to
licensing, increased reporting and disclosure requirements. Compliance with
varied laws, regulations, and enforcement characteristics found in each state
may require us to allocate both staff time and monetary resources, each of which
may have an adverse affect on our results of operations. As an
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additional risk, if our dealer relationship or subscription agreement is
determined to establish a franchise, we may be subject to limitations on our
ability to quickly and efficiently effect changes in our dealer relationships in
response to changing market trends, which may negatively impact our ability to
compete in the marketplace.
We believe that neither our relationship with our subscribing dealers nor
our dealer subscription agreements themselves constitute "franchises" under
federal or state franchise laws. This belief has been challenged but upheld by a
Federal District Court in Michigan that ruled our business relationship and our
dealer subscription agreement does not rise to the level of a "franchise" under
Michigan law.
Vehicle Brokerage Activities. If government licensing and enforcement
authorities determine that state motor vehicle brokering laws apply to our
business operations, we may be required to apply for and obtain a motor vehicle
brokers license. As additional risk, we may be required to pay administrative
fees, fines, and penalties for failure to comply with such licensing
requirements.
We believe that state motor vehicles dealer or broker licensing laws do not
apply to us. We believe that our dealer marketing service model does not qualify
as an automobile brokerage activity and therefore state broker licensing
requirements do not apply to us.
In response to concerns about our marketing program raised by the Texas
Department of Transportation, we modified our marketing program in that state to
achieve compliance. These modifications included a unique pricing model under
which all subscribing dealerships in Texas are charged uniform fees based on the
population density of their particular geographic area and opening our program
to all dealerships who wish to apply.
In the event that any other state's regulatory requirements impose state
specific requirements on us or include us within an industry-specific regulatory
scheme, we may be required to modify our marketing programs in such states in a
manner which may undermine the program's attractiveness to consumers or dealers.
In the alternative, if we determine that the licensing and related requirements
are overly burdensome, we may elect to terminate operations in such state. In
each case, our business, results of operations and financial condition could be
materially and adversely affected.
Financing Related Activities. We provide a connection through our Web site
that allows a consumer to obtain finance information and loan approval. We do
not demand nor do we receive any fees from consumers for this service. We do
receive fees from participating lenders. We currently hold financial broker
licenses in the states of Florida, Indiana, Rhode Island, and Wisconsin and have
applied for renewals in California and Colorado. In the event other states
require us to be licensed, we intend to obtain such licenses. We may be unable
to comply with a state's regulations affecting our current operations or newly
introduced services, or we could be required to incur significant fees and
expenses to license or be compelled to discontinue finance operations in those
states.
Insurance Related Activities. We provide access through a link from our Web
site to a Web site owned and maintained by American International Group. Persons
visiting our Web site who access the Web site maintained by American
International Group may obtain insurance directly from its member companies. We
receive fees from American International Group for allowing the American
International Group's Web site to be accessed from ours. We receive no premiums
from consumers nor do we charge consumers fees for our services. All
applications are completed on American International Group's Web site and at no
time do we receive the secure data found on the applications.
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We do not believe that our activity requires us to be licensed under state
insurance laws. The use of the Internet in the marketing of insurance products,
however, is a relatively new practice. It is not clear whether or to what extent
state insurance licensing laws apply to activities similar to ours. Given this
aforementioned uncertainty, we elected to proactively apply for and currently
hold insurance agent licenses in California, Indiana, Nebraska, New Jersey, and
Utah. We have also applied for insurance agent licenses in all remaining states
that license corporations as insurance agents and are awaiting approvals.
EMPLOYEES
As of December 31, 1998, we had a total of 180 employees. We also utilize
independent contractors for software and hardware development and certain
administrative activities. None of our employees are represented by a labor
union. We have not experienced any work stoppages and consider our employee
relations to be good.
LITIGATION
Jerome-Duncan Ford, a Michigan dealership, first subscribed to our new
vehicle marketing program in June 1996. In January 1997, we sought to replace
the existing agreement with our new standard subscription services agreement and
realign Jerome-Duncan Ford territory. Jerome-Duncan Ford objected to the
realignment and ceased payment of its monthly subscription fee to us. Unable to
resolve the matter, we terminated Jerome-Duncan Ford's subscription dealer
agreement. Jerome-Duncan Ford then sued us in Michigan State Court and sought an
injunction to prevent us from cancelling Jerome-Duncan Ford's subscription
services agreement. Jerome-Duncan Ford based its action on Michigan franchise
law which prohibits a franchiser from terminating a franchisee without good
cause. We removed the case to federal court. In late June 1997, the federal
district court ruled in favor of us and denied the injunction. The court held
that Jerome-Duncan Ford showed insufficient evidence of a likelihood of success
on the merits involving claims of breach of Michigan franchise law. The court
found that no franchise existed. We thereafter moved for summary judgment on the
franchise issues.
In late 1997, the court granted our motion for summary judgment and held
that our subscription services agreement and method of operation did not
constitute a franchise under Michigan state law. The plaintiffs have appealed
the ruling.
Halrec, Inc., a California based Toyota dealership, first subscribed to our
new vehicle marketing program in October 1996 and subsequently to our financing
program. On November 13, 1998, Halrec sued us in Superior Court, County of Santa
Clara, California for, among other things, restraint of trade, intentional
misrepresentation and unfair competition claiming that we wrongfully awarded to
other car dealers geographic territories that were contractually the property of
Halrec. We believe Halrec's claims are without merit and are vigorously
defending ourselves against their claims.
From time to time, we are involved in other litigation matters relating to
claims arising out of the ordinary course of business. We are involved in at
least one such case currently, including one seeking punitive damages in an
unspecified amount. We believe that there are no claims or actions pending or
threatened against us, the ultimate disposition of which would have a material
adverse effect on our business, results of operations and financial condition.
However, if a court or jury rules against us and the ruling is ultimately
sustained on appeal and damages are awarded against us that include punitive
damages, such ruling could have a material and adverse effect on our business,
results of operations and financial condition.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information regarding the executive
officers and directors of Autobytel.com. Our audit committee consists of Mr.
Fuchs, Mr. Coats and Mr. Kaplan. Our compensation committee consists of Mr.
Fuchs, Mr. Coats and Mr. Orton.
<TABLE>
<CAPTION>
OFFICERS AND DIRECTORS AGE POSITION
---------------------- --- --------
<S> <C> <C>
Michael J. Fuchs.......................... 52 Chairman of the Board and Director
Mark W. Lorimer........................... 39 Chief Executive Officer, President and
Director
Robert S. Grimes.......................... 54 Executive Vice President and Director
Hoshi Printer............................. 57 Senior Vice President and Chief
Financial Officer
Ann M. Delligatta......................... 51 Executive Vice President and Chief
Operating Officer
Ariel Amir................................ 39 Vice President and General Counsel
Jeffrey H. Coats.......................... 41 Director
Mark N. Kaplan............................ 69 Director
Kenneth J. Orton.......................... 47 Director
Peter Titz................................ 45 Director
Richard A. Post........................... 40 Director
</TABLE>
Michael J. Fuchs was elected as a director of Autobytel.com in September
1996 and became Chairman in June 1998. Mr. Fuchs was Chairman and Chief
Executive Officer of Home Box Office, a Division of TimeWarner Entertainment
Company, L.P., a leading pay-television company, from October 1984 until
November 1995, and Chairman and Chief Executive Officer of Warner Music Group, a
Division of Time Warner Inc., from May 1995 to November 1995. Mr. Fuchs holds a
B.A. from Union College and a J.D. from the New York University School of Law.
Mr. Fuchs is a member of the board of directors of IMAX Corp., Wink
Communications, Inc. and Consolidated Cigar Holdings Inc.
Mark W. Lorimer joined Autobytel.com in December 1996 as Vice President,
General Counsel and Secretary, and was promoted to Executive Vice President and
Chief Operating Officer in May 1997. In May 1998, Mr. Lorimer was promoted to
President. He was elected a director and appointed Chief Executive Officer of
Autobytel.com in June 1998. From January 1996 to November 1996, Mr. Lorimer was
a partner and, from March 1989 to January 1996, was an associate with the law
firm of Dewey Ballantine LLP. Mr. Lorimer is a member of the board of directors
of IMC Mortgage Company. Mr. Lorimer holds a B.S. in Speech from Northwestern
University and a J.D. from the Fordham University School of Law.
Robert S. Grimes has been a director of Autobytel.com since inception and
has served as Executive Vice President since July 1996. Since September 1987,
Mr. Grimes has been President of R.S. Grimes & Co., Inc., a private investment
company. From April 1981 to March 1987, Mr. Grimes was a partner with the
investment firm of Cowen & Company. Mr. Grimes holds a B.S. from the Wharton
School of Commerce and Finance at the University of Pennsylvania and an L.L.B.
from the University of Pennsylvania Law School. Mr. Grimes has served on the
board of directors of Philips International Realty Corp., a New York Stock
Exchange listed company, since April 1998.
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Hoshi Printer joined Autobytel.com in January 1999 as Senior Vice President
and Chief Financial Officer. From June 1996 to December 1998, Mr. Printer served
as Vice President, Finance and Administration, Chief Financial Officer and
Secretary of Peerless Systems Corporation, a software technology company. From
July 1995 to May 1996, Mr. Printer was Chief Financial Officer of Neuron Data
Inc., a software technology company. From July 1994 to June 1995 Mr. Printer
served as Chief Financial Officer of Soane Technologies Inc., a polymer
technology company. From January 1990 to June 1994, Mr. Printer was Chief
Financial Officer of Catalytica Inc., an environmental technology company. Mr.
Printer also worked at Xerox Corporation for over 17 years as Vice President of
Finance and in 1976 served as a consultant to the White House for the
President's Reorganization project on cash management. Mr. Printer holds a B.E.
in mechanical engineering and a B.E. in electrical engineering from Poona
University in India, an M.S. in industrial engineering from Oklahoma State
University and an M.B.A. from Stanford University.
Ann M. Delligatta joined Autobytel.com in June 1997 as Senior Vice
President and Chief Technology Officer and was promoted to Executive Vice
President and Chief Operating Officer in July 1998. From September 1996 to June
1997, Ms. Delligatta was President and Chief Executive Officer of the Pharos
Group, an information technology consulting organization. From January 1987 to
September 1996, Ms. Delligatta held a number of managerial positions at TRW
Inc.'s TRW Information Systems and Services Group, most recently as Vice
President and General Manager/Information Technology Services. Ms. Delligatta
attended Mount St. Mary's College and was named by McGraw-Hill Companies as one
of the "Top 100 Women in Computing in 1996" in recognition of her success in the
alignment of business and technology strategies.
Ariel Amir joined Autobytel.com as Vice President and General Counsel in
March 1999. Mr. Amir was Vice President of Security Capital U.S. Realty from
February 1998 until March 1999, where he was responsible for mergers and
acquisitions and relations with strategic investees. Mr. Amir was Vice President
of Security Capital Group Incorporated, where he provided securities offering
and corporate acquisitions services from June 1994 until January 1998. Prior to
joining Security Capital Group, Mr. Amir was an attorney with the law firm of
Weil, Gotshal & Manges in New York where he practiced securities and corporate
law from September 1985 until April 1994. Mr. Amir received his law degree from
Georgetown University Law Center, an M.S. in industrial administration from
Carnegie-Mellon University Graduate School of Industrial Administration and an
A.B. in Economics, with honors, from Washington University in St. Louis.
Jeffrey H. Coats was elected a director of Autobytel.com in August 1996.
Mr. Coats has served as Managing Director of GE Equity Capital Group, Inc., a
wholly-owned subsidiary of General Electric Capital Corporation, a significant
stockholder in us, since April 1996. He has also held various positions, most
recently as Managing Director, of GE Capital Corporate Finance Group, Inc., a
wholly-owned subsidiary of General Electric Capital Corporation, from June 1987
to April 1993. From March 1994 to April 1996, Mr. Coats served as President of
Maverick Capital Equity Partners, LLC, and from April 1993 to January 1994, Mr.
Coats was a partner with Veritas Capital, Inc., both of which are investment
firms. Mr. Coats holds a B.B.A. in Finance from the University of Georgia and a
Masters in International Management in Finance from the American Graduate School
of International Management. Mr. Coats is a director and Chairman of the Board
of The Hastings Group, Inc., a privately-held clothing retailer, which on
October 23, 1995, filed a voluntary petition under Chapter 11 of the Bankruptcy
Code and confirmed a plan of liquidation in late 1997. Mr. Coats became a
director of The Hastings Group in
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connection with Maverick Capital Equity Partners' purchase of the assets of the
predecessor of The Hastings Group in a previous bankruptcy proceeding. Maverick
Capital Equity Partners was not able to make the business of The Hastings Group,
Inc. profitable after it purchased the business in a previous bankruptcy
proceeding and accordingly, The Hastings Group, Inc. filed for bankruptcy after
Maverick Capital Equity Partners determined not to continue to fund its
operating losses. Mr. Coats is a member of the board of directors of Wink
Communications, Inc. and of Krause's Furniture, Inc., a publicly-held company.
Mark N. Kaplan was elected as a director of Autobytel.com in June 1998. Mr.
Kaplan has been a member of the law firm of Skadden, Arps, Slate, Meagher & Flom
LLP since 1979. Mr. Kaplan serves on the board of directors of the following
companies whose shares are publicly traded: American Biltrite, Inc., Congoleum
Corporation, Inc., DRS Technologies, Inc., Grey Advertising, Inc., MovieFone,
Inc., REFAC Technology Development Corporation, and Volt Information Services,
Inc. Mr. Kaplan holds an A.B. from Columbia College and a J.D. from Columbia Law
School.
Kenneth J. Orton was elected a director of Autobytel.com in June 1998. Mr.
Orton is currently a director, and through February 1999 Mr. Orton was the
President and Chief Executive Officer, of Preview Travel, Inc., which he joined
in April 1994 as President and Chief Operating Officer. From September 1989 to
March 1994, Mr. Orton was Vice President and General Manager of the San
Francisco division of Epsilon, a database marketing firm and a wholly owned
subsidiary of American Express Company. Prior to his employment with Epsilon,
Mr. Orton was Vice President of MARC Inc., a market research and database
marketing company, and Vice President of Sales and Marketing for Future
Computing. Mr. Orton also serves as a director of ONSALE, Inc., a publicly-held
company. Mr. Orton received a B.A. from California State University, Fullerton.
Peter Titz was elected a director of Autobytel.com in January 1999. Mr.
Titz is a manager of Metro International Dienstleistung Beteiligungs AG and
Invision AG. Before joining Metro and Invision AG in 1989, Mr. Titz was managing
director of various institutions in the financial service sector including
American Express in Frankfurt where he was responsible for the introduction of
automatic teller machines and the installation of POS systems in Europe. Mr.
Titz received a degree in engineering from the University of Aachen and a degree
in economics from the University of Bonn. Mr. Titz is President of the board of
directors of Aureus Private Equity AG and Deutsche Media AG and is a member of
the board of directors of Teleclip AG.
Richard A. Post was elected a director of Autobytel.com in February 1999.
Mr. Post is Executive Vice President and Chief Financial Officer of MediaOne
Group, Inc. and president of MediaOne Capital Corp., a subsidiary of MediaOne
Group, Inc. Mr. Post joined US WEST Financial Services in April 1988 as manager
of Corporate Development and was promoted in 1990, first to executive director,
and then to vice president, responsible for all Capital Asset Group businesses.
From June 1996 to January 1997, he was president of Corporate Development at US
WEST, Inc. where he had responsibility for corporate development efforts at US
WEST Communications, as well as US WEST, Inc. US WEST, Inc. has since split into
two separate corporations, MediaOne Group, Inc. and US WEST. From December 1995
to June 1996, he served as vice president of Corporate Development for US WEST
Media Group, a division of the former US WEST, Inc. Mr. Post holds both a
business administration degree and an MBA from Delta State University. Mr. Post
is a member of the board of directors of Financial Security Assurance Holdings,
Inc., a financial guaranty company based in New York.
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BOARD COMPOSITION
The board of directors has currently authorized eight members of whom two
are to be elected by the holders of series A preferred stock pursuant to
Autobytel.com's certificate of incorporation. Mr. Coats and Mr. Fuchs are the
designees of the series A preferred stock to the board of directors. The rights
of the series A preferred stockholders will expire upon the closing of this
offering. Members of the board of directors are elected each year at our annual
meeting of stockholders, and serve until the following annual meeting of
stockholders or until their respective successors have been elected and
qualified.
In accordance with the terms of Autobytel.com's restated certificate of
incorporation, effective upon the closing of this offering, the terms of office
of the board of directors will be divided into three classes: the Class I term
will expire at the annual meeting of stockholders to be held in 1999; the Class
II term will expire at the annual meeting of stockholders to be held in 2000;
and the Class III term will expire at the annual meeting of stockholders to be
held in 2001. The Class I directors will be Mr. Lorimer, Mr. Titz and Mr. Post,
the Class II directors will be Mr. Kaplan and Mr. Orton and the Class III
directors will be Mr. Grimes, Mr. Fuchs and Mr. Coats. At each annual meeting of
stockholders after the initial classification, the successors to directors whose
term will then expire will be elected to serve from the time of election and
qualification until the third annual meeting following election. In addition,
our restated certificate of incorporation provides that the authorized number of
directors shall be designated by the bylaws of Autobytel.com. Any additional
directorships resulting from an increase in the number of directors will be
distributed among the three classes so that, as nearly as possible, each class
will consist of one-third of the directors. This classification of the board of
directors may have the effect of delaying or preventing changes in control or
management of Autobytel.com. Directors of Autobytel.com may be removed, with or
without cause, by the affirmative vote of the holders of a majority of the
shares entitled to vote at an election of directors. There are no family
relationships among any of the directors and executive officers of
Autobytel.com.
BOARD COMMITTEES
The audit committee consists of Mr. Coats, Mr. Fuchs and Mr. Kaplan. The
audit committee makes recommendations to the board of directors regarding the
selection of independent public accountants, reviews the results and scope of
the audit and other services provided by Autobytel.com's independent public
accountants and reviews and evaluates our control functions.
The compensation committee consists of Mr. Coats, Mr. Fuchs and Mr. Orton.
The compensation committee administers the issuance of stock under
Autobytel.com's 1996 Stock Incentive Plan, 1996 Stock Option Plan, 1996 Employee
Stock Purchase Plan, 1998 Stock Option Plan and 1999 Stock Option Plan, makes
recommendations regarding various incentive compensation and benefit plans and
determines salaries for the executive officers and incentive compensation for
employees and consultants of Autobytel.com.
DIRECTOR COMPENSATION
Our non-employee directors do not currently receive any cash compensation
for service on Autobytel.com's board of directors or any committee thereof, but
directors may be reimbursed for expenses incurred in connection with attendance
at board and committee meetings. Our 1999 Stock Option Plan provides for
automatic grants of stock options to non-employee directors. See "Stock
Plans -- 1999 Stock Option Plan."
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We have entered into indemnification agreements with each member of the
board of directors and our officers providing for the indemnification of such
person to the fullest extent authorized, permitted or allowed by law.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation
(rounded to the nearest thousand) paid during each of our last three completed
fiscal years to our Chief Executive Officer and each of our other five most
highly compensated executive officers as of December 31, 1998. Mr. Ellis
resigned as our Chief Executive Officer in June 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
FISCAL COMPENSATION OTHER SECURITIES
NAME AND PRINCIPAL YEAR ENDED ------------------- ANNUAL UNDERLYING
POSITION DECEMBER 31, SALARY BONUS COMPENSATION OPTIONS(#)
------------------ ------------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Peter R. Ellis............. 1998 $219,000 $ -- $522,000(1) --
Former Chief Executive 1997 275,000 100,000 15,000 --
Officer and President 1996 123,000 321,000 11,000 --
Mark W. Lorimer............ 1998 316,000 150,000 9,000 750,000(2)
Chief Executive Officer
and 1997 200,000 100,000 70,000(3) 100,000
President 1996 8,000 -- -- 333,333
Robert S. Grimes........... 1998 220,000 75,000 -- 125,000
Executive Vice President 1997 180,000 -- -- 116,667
1996 90,000 -- -- 166,667
Ann M. Delligatta.......... 1998 177,000 100,000 -- 316,667(4)
Executive Vice President 1997 88,000 -- -- 83,334
and Chief Operating
Officer
Michael J. Lowell.......... 1998 190,000 -- -- 16,667
Senior Vice President, 1997 139,000 50,000 -- 50,000
Development 1996 15,000 -- -- 111,111
Anne Benvenuto............. 1998 150,000 -- -- 16,667
Senior Vice President, 1997 13,000 5,000 15,000(3) 33,333
Marketing
</TABLE>
- -------------------------
(1) Represents a one-time payment of $500,000, $14,000 car allowance and $8,000
legal expenses. See "Certain Transactions."
(2) 500,000 shares of such securities underlying options are contingent on the
performance of our market trading price after the closing of the offering.
(3) Relocation expense reimbursement.
(4) 200,000 shares of such securities underlying options are contingent on the
performance of our market trading price after the closing of the offering.
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<PAGE> 56
OPTION GRANTS DURING 1998
The following table sets forth the five most highly compensated officers
and certain information concerning stock options granted to them during 1998. We
have never issued stock appreciation rights. Options were granted at an exercise
price equal to the fair market value of the common stock at the date of grant.
In determining the fair market value of the common stock, the board of directors
considered various factors, including recent arms' length transactions, our
financial condition and business prospects, operating results, the absence of a
market for the common stock and the risks normally associated with investments
in companies engaged in similar businesses. The term of each option granted is
generally ten years from the date of grant. Options may terminate before their
expiration dates, if the optionee's status as an employee or a consultant is
terminated or upon the optionee's death or disability. We have not included
disclosure on Mr. Ellis as he resigned as our Chief Executive Officer in June
1998 and did not receive any option grants in 1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
---------------------------------------------------------- OF ASSUMED ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM(3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------------
NAME GRANTED(#)(1) 1998(2) ($/SHARE) DATE(4) 5%($) 10%($)
---- ------------- -------------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mark W. Lorimer...... 200,000 12.3% $13.20 12/17/08 $1,660,282 $ 4,207,480
500,000 30.7% 13.20 12/17/08 4,150,705 10,518,700
50,000 3.1% 13.20 06/21/08 415,070 1,051,870
Robert S. Grimes..... 125,000 7.7% 13.20 12/17/08 1,037,676 2,629,675
Ann M. Delligatta.... 100,000 6.1% 13.20 12/17/08 830,141 2,103,740
200,000 12.3% 13.20 12/17/08 1,660,282 4,207,480
16,667 1.0% 13.20 06/21/08 138,360 350,630
Anne Benvenuto....... 16,667 1.0% 13.20 06/21/08 138,360 350,630
Michael J. Lowell.... 16,667 1.0% 13.20 06/21/08 138,360 350,630
</TABLE>
- -------------------------
(1) Represents options granted under our Amended and Restated 1996 Stock
Incentive Plan and the 1998 Stock Option Plan.
(2) Based on an aggregate 1,630,340 shares of our common stock subject to
options granted to employees during fiscal 1998.
(3) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent our estimate or projection of our future common stock prices.
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<PAGE> 57
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES
The following table sets forth for each of the five most highly compensated
officers certain information concerning options exercised during fiscal 1998 and
the number of shares subject to both exercisable and unexercisable stock options
as of December 31, 1998. The values for "in-the-money" options are calculated by
determining the difference between the fair market value of the securities
underlying the options as of December 31, 1998 ($13.20 per share as determined
by the board of directors) and the exercise price of the officer's options. In
determining the fair market value of the common stock, the board of directors
considered various factors, including recent arms' length transactions, our
financial condition and business prospects, its operating results, the absence
of a market for the common stock and the risks normally associated with
investments in companies engaged in similar businesses. Autobytel.com has never
issued stock appreciation rights. We have not included disclosure on Mr. Ellis
as he resigned as our Chief Executive Officer in June 1998 and holds no options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
NUMBER OF OPTIONS AT THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1998 DECEMBER 31, 1998($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark W. Lorimer........ -- $ -- 209,999 973,334 $1,609,491 $1,290,506
Michael J. Lowell...... -- -- 104,861 72,917 725,006 241,660
Robert S. Grimes....... -- -- 245,834 162,500 2,060,004 --
Ann M. Delligatta...... -- -- 29,165 370,836 -- --
Anne Benvenuto......... -- -- 8,333 41,667 -- --
</TABLE>
STOCK PLANS
Since our inception the board of directors has granted stock options in
order to attract, retain and motivate employees. Our board of directors
considers many factors in granting stock options. For example, among other
factors, our board of directors considers competitive market conditions for
employees and the risk associated with working for a development stage Internet
company.
1996 Stock Option Plan. Autobytel.com's 1996 Stock Option Plan was approved
by the board of directors on May 18, 1996 and the stockholders on May 31, 1996.
The 1996 Option Plan was terminated by a resolution of the board of directors on
October 23, 1996, at which time over 800,000 options had been issued.
The 1996 Option Plan provided for the granting to employees and directors
of stock options intended to qualify as incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and for
the grant to employees, consultants and directors of nonstatutory stock options.
Autobytel.com reserved 1,194,444 shares of common stock for issuance under the
1996 Option Plan. Under the 1996 Option Plan, the exercise price of any
incentive stock options granted under the 1996 Option Plan were not less than
the fair market value of the common stock on the date of grant, and the exercise
price of any non-statutory stock option granted under the 1996 Option Plan were
not less than 85% of the fair market value of the common stock at the date of
grant. The term of all options granted under the 1996 Option Plan did not exceed
10 years. The administrator of the options granted under the 1996 Option Plan is
the board of directors or a committee of the board of directors. Any options
granted under the 1996 Option Plan are exercisable at such times as determined
by the administrator, but in no case at a rate
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<PAGE> 58
of less than 20% per year over five years from the grant date. A majority of the
outstanding options vest and became exercisable as to one third of the grant on
October 31, 1996, and as to an additional one third of the grant at each
successive October 31. Options granted under the 1996 Option Plan generally must
be exercised within 30 days following termination of the optionee's status as an
employee, director or consultant of Autobytel.com, or within 12 months following
such optionee's termination by death or disability. Any optionee holding options
granted under the 1996 Option Plan cannot sell or transfer any shares of common
stock during the 180 day period following the effective date of the registration
statement relating to an initial public offering of securities filed pursuant to
the Securities Act.
1996 Stock Incentive Plan. The Incentive Plan was approved by the board of
directors on October 23, 1996, amended and restated by the board of directors on
November 24, 1996 and approved by the stockholders on January 16, 1997. The 1996
Stock Incentive Plan provides for the granting to employees and directors of
stock options intended to qualify as incentive stock options within the meaning
of Section 422 of the Code, and for the granting to employees, directors and
consultants of nonstatutory stock options and stock purchase rights.
As approved by the stockholders, Autobytel.com reserved 833,333 shares of
common stock for issuance under the Incentive Plan. Options with respect to all
of the common stock reserved for issuance have been issued and are either
incentive stock options or nonstatutory stock options.
Options granted under the Incentive Plan are not generally transferable by
the option holder, and each option is exercisable during the lifetime of the
option holder only by such option holder. Options granted under the Incentive
Plan must generally be exercised within three months of the end of the option
holder's status as an employee or consultant of Autobytel.com, or within twelve
months after such option holder's termination by death or disability, but in no
event later than the expiration of the option's ten year term.
The board of directors determined the exercise price of nonstatutory stock
options granted under the Incentive Plan, and in all cases, the exercise price
was the fair market value of the common stock on the date of grant. The term of
all options granted under the Incentive Plan did not exceed ten years. Stock
options granted under the Incentive Plan vest according to vesting schedules
determined by the administrator.
The Incentive Plan provides that in the event of a merger of Autobytel.com
with or into another corporation, a sale of substantially all of Autobytel.com's
assets or a like transaction involving Autobytel.com, each option will be
assumed or an equivalent option substituted by the successor corporation. If the
outstanding options are not assumed or substituted as described in the preceding
sentence, the committee of the board of directors shall provide for each option
holder to have the right to exercise the option as to all of the optioned stock,
including shares as to which it would not otherwise be exercisable. If the
administrator makes an option exercisable in full in the event of a merger or
sale of assets, the administrator will notify the option holder that the option
will be fully exercisable for a period of 15 days from the date of such notice,
and the option will terminate upon the expiration of such period.
From October 1996 through January 1999, we purported to grant incentive
stock options to employees, of which 689,406 shares granted exceeded the
Incentive Plan limit of 833,333 shares. As of January 29, 1999, 688,921 options,
and 485 shares that were acquired upon the exercise of excess options were
outstanding in excess of the Incentive
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Plan limit. Because these grants exceed the plan's limit, they did not qualify
as incentive stock options, which have more favorable tax treatment for
employees than nonqualified stock options. In connection with these matters, on
January 29, 1999, we filed an application with the California Department of
Corporations for approval of a rescission offer to those affected optionholders
holding options covering 689,406 shares of common stock. The Department of
Corporations approved the rescission offer on February 12, 1999. The rescission
offer allowed each affected optionholder to choose between a cash payment or a
new grant of incentive stock options under the 1999 Stock Option Plan. The offer
for a cash payment was for 10% of the aggregate exercise price per share of the
option plus 7% statutory interest since the date of grant of the option. The
terms of the options granted under the 1999 Stock Option Plan are similar to the
terms of the original stock options, with an exercise price equal to the fair
market value on the date of regrant. In addition, optionholders who chose new
grants under the 1999 Stock Option Plan were granted additional options based on
the length of time the original options were held. The aggregate maximum number
of additional shares of common stock issuable under this choice for all those
optionholders were 35,000 shares. All the affected optionholders participated in
the rescission offer and we paid $8,000 to four optionholders who chose the cash
alternative.
1996 Employee Stock Purchase Plan. Autobytel.com's 1996 Employee Stock
Purchase Plan was adopted by the board of directors on November 18, 1996 and
approved by the stockholders on January 16, 1997. The maximum number of shares
of common stock available for sale is 444,444. Currently the plan has not been
implemented. The Purchase Plan, which is intended to qualify under Section 423
of the Code, permits eligible employees of Autobytel.com to purchase shares of
common stock through payroll deductions of up to ten percent of their
compensation for all purchase periods ending within any calendar year.
Individuals who are eligible employees on the start day of any offering
period may enter the Purchase Plan on that start date. Individuals who become
eligible employees after the start date of the offering period may join the
Purchase Plan on any subsequent quarterly entry date within that period.
Employees are eligible to participate if they are customarily employed by
Autobytel.com or any designated subsidiary for at least 20 hours per week and
for more than five months in any calendar year.
The price of common stock purchased under the Purchase Plan will be 85% of
the lower of the fair market value of the common stock on the first or last day
of each six month purchase period. Employees may end their participation in the
Purchase Plan at any time during an offering period, and they will be paid their
payroll deductions to date. Participation ends automatically upon termination of
employment with Autobytel.com. Rights granted under the Purchase Plan are not
transferable by a participant other than by will, the laws of descent and
distribution, or as otherwise provided under the plan.
The Purchase Plan will be administered by the board of directors or by a
committee appointed by the board of directors. The board of directors may amend
or modify the Purchase Plan at any time. The Purchase Plan will terminate 10
years from the date of its adoption.
1998 Stock Option Plan. Our 1998 Stock Option Plan was adopted by the
board of directors in December 1998. The Plan provides that an aggregate of
1,500,000 shares of our common stock is available to be granted to key employees
of Autobytel.com and its parent or subsidiary corporations, if any. If any stock
option expires or terminates for any reason without having been exercised in
full, new stock options may be granted covering
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the shares of our common stock originally set aside for the unexercised portion
of such expired or terminated stock option.
Under the 1998 Option Plan, eligible key employees of Autobytel.com may
receive incentive stock options within the meaning of Section 422 of the Code or
nonstatutory stock options. No eligible employee shall receive stock options
with respect to more than 700,000 shares of our common stock during any one
calendar year. Incentive stock options granted under the 1998 Option Plan must
have an exercise price that is no less than the fair market value of our common
stock as of the time the option is granted and generally may not be exercised
more than ten years after the date of grant. Any incentive stock option that is
granted to any option holder who beneficially owns more than 10% of the total
combined voting power of all classes of outstanding shares of capital stock of
Autobytel.com must have an exercise price that is no less than 110% of the fair
market value of our common stock as of the time the option is granted and may
not be exercised more than five years after the date of grant. To the extent
that the aggregate fair market value of stock exercisable by an optionee for the
first time in any one calendar year under incentive stock options granted under
the 1998 Option Plan and all other stock plans of Autobytel.com exceeds
$100,000, options for such shares shall not be considered incentive stock
options but instead shall be considered nonstatutory stock options.
Nonstatutory stock options granted under the 1998 Option Plan must have an
exercise price that is no less than 85% of the fair market value of our common
stock as of the time the option is granted and may not be exercised more than 10
years after the date they are granted. Under the 1998 Option Plan, nonstatutory
stock options vest over a time period determined by the administrator, however,
the vesting could accelerate based on the performance of our common stock. All
other stock options granted under the 1998 Option Plan vest according to
time-based vesting schedules determined by the administrator. In addition, an
option holder who is not an officer, director or consultant shall have the right
to exercise at least 20% of the options granted per year over 5 years from the
date of grant. Options granted under the 1998 Option Plan are nontransferable,
other than by will or the laws of descent and distribution.
The 1998 Option Plan provides that, unless otherwise stated in a stock
option agreement, upon any merger, consolidation, or sale or transfer of all or
any part of our business or assets, any option shall vest and may be exercised
immediately unless any party to these transactions specifically assumes our
obligations under the 1998 Option Plan. In addition, unless otherwise provided
in the stock option agreement for any given option, upon any liquidation or
dissolution of Autobytel.com, all rights of the option holder with respect to
the unexercised portion of any option will terminate and all options will be
canceled unless the plan under which such liquidation or dissolution is effected
makes specific provisions regarding the 1998 Option Plan. The holder of any
option granted under the 1998 Option Plan has the right immediately prior to the
effective date of a merger, consolidation or sale of all or any part of our
business or assets or a liquidation or dissolution to exercise such option
without regard to any time vesting provision of such option. In no event may any
incentive stock options be exercised later than the date preceding the tenth
anniversary date of the grant.
The 1998 Option Plan will be administered by the board of directors or by a
committee of the board of directors acting as the administrator. The
administrator shall select the eligible key employees who are to be granted
options, determine the number of shares to be subject to options to be granted
to each eligible key employee and designate such options as incentive stock
options or nonstatutory stock options. The board of
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directors may at any time amend or modify the 1998 Option Plan, except that the
board of directors may not, without approval of the stockholders of
Autobytel.com:
- increase the number of shares issued under the 1998 Option Plan,
- modify the requirements as to eligibility for participation in the 1998
Option Plan or
- change the option price provisions of the 1998 Option Plan so as to have
a material adverse effect on Autobytel.com other than to conform with any
applicable provisions of the Code or regulations or rulings.
Unless terminated earlier, the 1998 Option Plan terminates ten years from
the date it was adopted by the board of directors.
1999 Stock Option Plan. Our 1999 Stock Option Plan was adopted by the board
of directors on January 14, 1999. The plan provides that an aggregate of
1,800,000 shares of our common stock are available to our employees; provided
that after March 31, 1999, we may not grant more than 1,000,000 options under
the plan. Unless otherwise provided in the stock option agreement, upon any
merger, consolidation, or sale or transfer of all or any part of our business or
assets, any option under the plan shall immediately vest and be exercisable
unless any party to such a transaction specifically assumes the obligations of
Autobytel.com under the 1999 Option Plan.
Non-employee directors are entitled to participate in our 1999 Stock Option
Plan. The 1999 Stock Option Plan provides for an automatic grant of a first
option to purchase 20,000 shares of common stock to each non-employee director
on the date on which the person first becomes a non-employee director; provided,
that if any person serving as a non-employee director before January 14, 1999
received options for less than 20,000 shares on the date such person became a
member of the board of directors, such person will be granted an option to
purchase a number of shares equal to the difference between 20,000 shares and
the shares actually granted. After the first option is granted to the non-
employee director, he or she will automatically be granted a subsequent option
to purchase 5,000 shares on November 1 of each subsequent year provided he or
she is then a non-employee director and, provided further, that on such date he
or she has served on the Board for at least six months. First options and each
subsequent option will have a term of ten years. The shares related to the first
option and each subsequent option vest in their entirety and becomes exercisable
on the first anniversary of the grant date, provided that the option holder
continues to serve as a director on such dates. The exercise price of shares
subject to the first option and each subsequent option shall be 100% of the fair
market value per share of the common stock on the date of the grant of the
option.
The 1999 Stock Option Plan is identical in all other material respects to
the 1998 Stock Option Plan.
401(K) PLAN
All employees of Autobytel.com over age 21 who have completed three months
of service with Autobytel.com are eligible to participate in the Auto-By-Tel
Retirement Savings Plan, a defined contribution plan effective September 1, 1997
and intended to qualify under Section 401 of the Internal Revenue Code. Eligible
employees may enter the savings plan as of the first day of January or July
following the date on which they have met the savings plan's eligibility
requirements. Participants may make pre-tax contributions to the savings plan of
up to 15 percent of their eligible earnings, but not in excess of a statutory
annual limit. Autobytel.com may make discretionary matching contributions to the
savings plan. For the year ended December 31, 1998, Autobytel.com made no
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<PAGE> 62
matching contributions to each eligible participant's contributions. Each
participant in the savings plan is fully vested in his or her contributions and
the investments earnings on these contributions. Participants vest in matching
contributions made on their behalf, and the investment earnings on these
contributions at the rate of 20 percent per year and are thus 100 percent vested
in their employer matching contribution accounts after five years of service.
Contributions by the participants or Autobytel.com and the income earned on such
contributions are not taxable to the participants until withdrawn. Contributions
by Autobytel.com, if any, are deductible by it when made. Contributions are held
in trust as required by law. Individual participants may direct the trustee to
invest their accounts in authorized investment alternatives.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No interlocking relationship exists between the board of directors or
compensation committee and the board of directors or compensation committee of
any other company, nor has any such interlocking relationship existed in the
past. The compensation committee of the board of directors currently consists of
Mr. Fuchs, Mr. Coats and Mr. Orton.
EMPLOYMENT AGREEMENTS
On July 1, 1998, we entered into a three year employment agreement with Mr.
Mark W. Lorimer, our President and Chief Executive Officer. Under this
agreement, Mr. Lorimer is entitled to a base salary of $325,000 and a bonus as
determined by the board of directors from time to time. Mr. Lorimer is also
entitled to 200,000 options which vest over two years, 500,000 performance
options which vest over seven years, unless accelerated upon the earlier
accomplishment of stock price goals. In addition, Mr. Lorimer may participate in
any medical, dental welfare plans, insurance coverages and any death benefit and
disability benefit plans afforded to executive employees of Autobytel.com.
If Mr. Lorimer's employment is terminated without cause or if Mr. Lorimer
terminates his employment with good reason, Mr. Lorimer is entitled to a lump
sum payment equal to the highest annual base salary in effect for the term of
the agreement multiplied by the greater of (1) the remaining balance of the
three year term or longer if there is a change of control or (2) two years. In
the event of a change of control of Autobytel.com prior to January 1, 2000, and
while Mr. Lorimer remains employed by Autobytel.com, the term of the agrement
shall automatically extend for a period of three years from the date of the
change of control.
In addition to the above, in the event Lorimer's employment is terminated
during the six month period prior to (or the first thirty-six months following)
a change of control by Mr. Lorimer for good reason or by Autobytel.com other
than for cause, disability or death, Mr. Lorimer is entitled to a lump sum
payment equal to twice the highest bonus paid to Mr. Lorimer in the last three
fiscal years plus the amount of the cost of all benefits for the greater of the
remaining balance of the term or two years.
In the event of a change of control while Mr. Lorimer is employed by
Autobytel.com or if Lorimer's employment is terminated by Autobytel.com without
cause or by Mr. Lorimer for good reason during the six month period prior to a
change of control, unvested time based options shall become vested and
exercisable and unvested performance-based options shall become vested and
exercisable to the extent performance targets are met. In the event of the death
or disability of Mr. Lorimer during the term of this employment agreement,
Autobytel.com shall provide Mr. Lorimer or his successors, heirs or designees,
with continued payment of Mr. Lorimer's then current base salary and all
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benefits for a period of two years. If Mr. Lorimer's severance benefits are
parachute payments under the Internal Revenue Code, we have agreed to make
additional payments to him to compensate for his additional tax obligations.
On December 17, 1998, Autobytel.com entered into a three year employment
agreement with Ms. Ann Marie Delligatta, our Executive Vice President and Chief
Operating Officer. Under this agreement, Ms. Delligatta is entitled to a base
salary of $225,000, a bonus in such amounts and based on such criteria as may be
established by the board of directors from time to time. Ms. Delligatta is also
entitled to 100,000 options which vest fully by December 17, 2000 and 200,000
performance options which vest over seven years unless accelerated upon the
earlier accomplishment of stock price goals. In addition, Ms. Delligatta may
participate in any medical, dental welfare plans, insurance coverages and any
death benefit and disability benefit plans afforded to executive employees of
Autobytel.com. If Ms. Delligatta's employment is terminated without cause or if
Ms. Delligatta terminates her employment for good reason, Ms. Delligatta is
entitled to a lump sum payment equal to the base salary that would have been
received by Ms. Delligatta if she had remained employed by Autobytel.com for the
remaining balance of the three year term. Ms. Delligatta's employment with
Autobytel.com shall terminate automatically in the event of death or upon 30
days' written notice of termination by Autobytel.com in the event of a
disability.
On March 4, 1999, we entered into an employment and severance agreement
with Mr. Michael J. Lowell, our Senior Vice President, Development. Under this
agreement, Mr. Lowell is entitled to a base salary of $140,000 per year and to
all ordinary and customary perquisites such as any medical, dental welfare
plans, insurance coverages and any death benefit and disability benefit plans
afforded to executive employees of Autobytel.com. If Mr. Lowell's employment is
terminated without cause, he is entitled to a lump sum severance payment in
varying amounts depending on the date of termination. The maximum severance
payment is $232,501, payable if the effective date of termination occurs during
March 1999, and the minimum severance payment is $90,000, payable if the
effective date of termination occurs after January 2000.
Under a letter agreement dated December 18, 1998, Hoshi Printer, our Senior
Vice President and Chief Financial Officer, is entitled to a base salary of
$150,000, a $50,000 bonus payable upon closing of the offering, 150,000 options
which vest fully by January 2003 and employee benefits such as health and
insurance.
Under a letter agreement dated March 7, 1999, Ariel Amir, our Vice
President and General Counsel, is entitled to a base salary of $175,000, 125,000
options which vest fully by March 2003 and employee benefits, including health
and insurance. If Mr. Amir's employment is terminated without cause during the
first year of employment, Mr. Amir is entitled to one year's base salary payable
monthly. If Mr. Amir's employment is terminated without cause thereafter, he is
entitled to six month's base salary payable monthly.
INDEMNIFICATION AND LIMITATION OF DIRECTOR AND OFFICER LIABILITY
We have entered into agreements to indemnify our directors and officers, in
addition to the indemnification provided for in our bylaws. These agreements,
among other things, indemnify our directors and officers for expenses including
attorneys' fees, judgments, fines and settlement amounts incurred by any such
person in any action or proceeding arising out of such person's services as an
officer or director of us.
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<PAGE> 64
In any event, our directors and officers shall not be entitled to indemnity
under these agreements if a reviewing party appointed by the board of directors
determines that such person is not entitled to be indemnified thereunder under
applicable law. In addition, our directors and officers may not be indemnified
for expenses reasonably incurred, regarding any claim related to the fact that
such person was a director or officer of Autobytel.com:
- if the expenses result from acts, omissions or transactions for which
such person is prohibited from receiving indemnification;
- if the claims were initiated or brought voluntarily by one of our
directors or officers and not by way of defense, counterclaim or cross
claim; or
- if a claim instituted by one of our directors or officers or by us to
enforce or interpret the indemnity agreement was found to be frivolous or
made in bad faith by a court having jurisdiction over such matter.
We believe that these agreements are necessary to attract and retain
qualified directors and officers.
To the extent indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling us as
discussed above, we have been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
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<PAGE> 65
FINANCINGS AND RELATED PARTY TRANSACTIONS
Series A Preferred Stock
On August 23, 1996, in a private placement transaction, we issued 1,500,000
shares of series A preferred stock at $10.00 per share convertible into common
stock at the conversion price per share of $9.00. The number of shares of common
stock into which each share of series A preferred stock will convert is 1.11
shares. The holders of such series A preferred stock are entitled to
registration rights regarding the shares of common stock issued or issuable upon
conversion. See "Description of Capital Stock--Registration Rights." The holders
of outstanding shares of series A preferred stock are entitled to receive, when
and as declared by the board of directors, dividends in cash at an annual rate
of $0.80 per share of series A preferred stock. Such dividends, if any, are
payable in preference and in priority to any declaration or payment of any
dividend on the series B preferred stock or common stock. We have never declared
or paid dividends on the series A preferred stock. All shares of series A
preferred stock will automatically convert into shares of common stock upon the
closing of the offering.
From July 9, 1996 through August 13, 1996, Mr. Fuchs made loans to us in
the aggregate principal amount of $500,000. These loans, along with accrued
interest, converted into series A preferred stock on August 23, 1996 at $10.00
per share. In September 1996, Mr. Fuchs was appointed to our board of directors.
The holders of series A preferred stock have the right to elect two members
of the board of directors. Because General Electric Capital Corporation holds
more than a majority of the shares of series A preferred stock it has the right
to designate on behalf of all holders of series A preferred stock such
directors. To date, General Electric Capital Corporation has designated Mr.
Fuchs and Mr. Coats to the board of directors.
Series B Preferred Stock
On January 30, 1997, in a private placement transaction we issued 967,915
shares of series B preferred stock at $9.35 per share convertible into common
stock at the conversion price per share of $10.37. The number of shares of
common stock into which each share of series B preferred stock will convert is
0.90 shares. The holders of such series B preferred stock are entitled to
registration rights with respect to the shares of common stock issued or
issuable upon conversion. See "Description of Capital Stock--Registration
Rights." The holders of outstanding shares of series B preferred stock are
entitled to receive, when and as declared by the board of directors, dividends
in cash at an annual rate of $0.80 per share of series B preferred stock. Such
dividends, if any, are payable in preference and in priority to any declaration
or payment of any dividend on the common stock. We have never declared or paid
dividends on the series B preferred stock. All shares of series B preferred
stock will automatically convert into shares of common stock upon the closing of
the offering.
Series C Preferred Stock
On October 21, 1997, April 30, 1998, May 7, 1998, October 30, 1998,
November 10, 1998, December 16, 1998, December 21, 1998 and December 24, 1998,
in private placement transactions, we issued a total of 4,968,738 shares of
series C preferred stock at $8.80 per share convertible into common stock at the
conversion price per share of $13.20.
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<PAGE> 66
The number of shares of common stock into which each share of series C preferred
stock will convert is 0.67 shares. The holders of such series C preferred stock
are entitled to registration rights with respect to the shares of common stock
issued or issuable upon conversion. See "Description of Capital
Stock--Registration Rights". The holders of outstanding shares of series C
preferred stock are entitled to receive, when and as declared by the board of
directors, dividends in cash at an annual rate of $0.80 per share of series C
preferred stock. Such dividends, if any, are payable in preference and in
priority to any declaration or payment of any dividend on the series A preferred
stock, series B preferred stock or common stock. We have never declared or paid
dividends on the series C preferred stock. All shares of series C preferred
stock will automatically convert into shares of common stock upon the closing of
the offering. National Broadcasting Company acquired its shares by providing
national spot advertising to Autobytel.com.
The following chart lists the holders of Autobytel.com's preferred stock
and the number and class of shares held by such holders as of March 1, 1999.
<TABLE>
<CAPTION>
SERIES A SERIES B SERIES C
NAME OF STOCKHOLDER PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
General Electric Capital
Corporation.......................... 800,000 534,760 681,819
National Union Fire Insurance Company
of Pittsburgh, PA, an affiliate of
American International Group......... 400,000 267,380 227,273
ContiTrade Services L.L.C............ 200,000 133,690
Michael Fuchs........................ 100,000 32,085
Tozer Kemsley and Millbourn
Automotive, Ltd., a unit of Inchcape
Motors............................... 568,182
Bilia AB............................. 568,182
National Broadcasting Company, Inc.,
an affiliate of General Electric
Capital Corporation.................. 121,009
Invision AG.......................... 568,182
Aureus Private Equity AG............. 1,097,727
MediaOne Interactive Services,
Inc.................................. 1,136,364
</TABLE>
Loans
From time to time, Autobytel.com has advanced funds to Peter R. Ellis, the
former Chairman of the board of directors and Chief Executive Officer of
Autobytel.com. As of December 31, 1998, Mr. Ellis was indebted to us in the
amount of $250,000 plus accrued interest at the rate of 8% per year compounded
quarterly. The principal amount of the loan is due and payable on or before
March 1, 2003. We received a pledge of 100,657 of Mr. Ellis' shares of common
stock to secure this loan.
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<PAGE> 67
Severance and General Release Agreement
Autobytel.com and John M. Markovich, our former Senior Vice President and
Chief Financial Officer, are parties to a severance and general release
agreement dated January 30, 1998. Under the terms of the severance agreement
regarding his resignation from Autobytel.com, we paid to Mr. Markovich a
severance payment of $75,000, extended Mr. Markovich's health coverage through
July 30, 1998, paid certain outplacement expenses of $10,000 and granted Mr.
Markovich a warrant to purchase 33,333 shares of common stock at $11.25 per
share. The warrant granted to Mr. Markovich expires on January 30, 2003.
Advisory Agreement
Autobytel.com and Mr. Ellis, our former Chief Executive Officer and
Chairman of the board of directors, are parties to a two year advisory agreement
dated as of August 20, 1998. Under the advisory agreement, Mr. Ellis received
$500,000 on the date of execution. Commencing on the thirteenth month
anniversary of this agreement, Mr. Ellis is entitled to receive $5,000 per
month. Mr. Ellis is entitled to participate in all employee health plans and
receives a car allowance of $1,000 per month until April 30, 1999. The advisory
agreement may be terminated by us for cause or upon 30 days prior written notice
without cause. In the event the advisory agreement is terminated without cause
by Autobytel.com or due to his death or disability, Mr. Ellis will still be
entitled to receive his base salary and health benefits through the remainder of
the term of the of the agreement. Mr. Ellis has the right to terminate the
advisory agreement on 90 days prior written notice to Autobytel.com. A majority
of disinterested directors approved the advisory agreement and the loans made to
Mr. Ellis from time to time.
Voting Proxy
In addition, on January 11, 1999, in consideration of us waiving our right
of first refusal permitting the sale of $1.4 million of our common stock by Mr.
Ellis to "accredited investors" as such term is defined under Rule 501 of the
Securities Act, Mr. Ellis transferred to us the voting power of 593,175 shares
of common stock of Autobytel.com owned by Mr. Ellis for a period that is the
earlier of five years from such date or until such time as Mr. Ellis sells the
shares to a person not affiliated with Mr. Ellis. Mr. Ellis sold these shares at
$11.88 per share.
Marketing Agreement
Auto-By-Tel Acceptance Corporation, member companies of the American
International Group, and Autobytel.com entered into a marketing agreement dated
July 22, 1996. Under this agreement, Autobytel.com, through Auto-By-Tel
Acceptance Corporation, authorizes and provides the American International Group
access to its Internet server, for the publication, display, and exhibition of
the American International Group's member companies' direct response automobile
insurance sales materials. In return, Auto-By-Tel Acceptance Corporation is paid
compensation based on a flat fee on the basis of the premiums collected from our
consumers.
Under a marketing and application processing agreement dated February 1,
1997, among GE Capital, Auto-By-Tel Acceptance Corporation and Autobytel.com,
Auto-By-Tel
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<PAGE> 68
Acceptance Corporation and Autobytel.com agreed to refer customers seeking
vehicle financing with favorable credit ratings to GE Capital. In return, GE
Capital agreed to pay Auto-By-Tel Acceptance Corporation a marketing fee of
$100.00 for each financing consummated by GE Capital under this agreement. GE
Capital is an affiliate of General Electric Capital Corporation, which
beneficially owns 1,831,903 shares of common stock. As of December 31, 1998,
Auto-By-Tel Acceptance Corporation had referred customers to GE Capital to whom
GE Capital extended financing in an aggregate amount of approximately $307,000
and received approximately $1,200 in marketing fees since the inception of this
relationship.
In addition, General Electric Capital Corporation is an affiliate of
PaineWebber Incorporated, one of the underwriters taking part in this offering.
As a result, BT Alex. Brown Incorporated will act as a qualified independent
underwriter to establish the price of the shares offered by this prospectus.
Issuance of Warrants
On November 10, 1998, we issued to Invision AG a warrant to purchase an
aggregate of 150,000 shares of our common stock at an exercise price of $13.20
per share. This warrant is exercisable as of such date and expires on November
10, 2001.
On December 16, 1998 and December 23, 1998, we issued to Aureus Private
Equity AG warrants to purchase 169,800 and 120,000 shares, respectively, of our
common stock at an exercise price of $13.20 per share. These warrants are
exercisable as of such date and expire on December 16, 2001 and December 23,
2001, respectively. In January 1999, Peter Titz, a manager of Invision AG and a
director of Aureus Private Equity AG, was appointed to our board of directors.
On December 21, 1998, we issued to MediaOne Interactive Services, Inc. a
warrant to purchase an aggregate of 300,000 shares of common stock of
Autobytel.com at an exercise price of $13.20 per share. This warrant is
exercisable as of such date and expires on December 21, 2001. In February 1999,
Richard Post, a director of MediaOne Interactive Services, Inc., was appointed
to Autobytel.com's board of directors.
Approval Procedure for Related Party Transactions
All future transactions between Autobytel.com and interested directors and
stockholders, if any, will be approved by the disinterested directors or
stockholders, as appropriate in accordance with Delaware law and our certificate
of incorporation and bylaws.
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<PAGE> 69
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of the common stock as of March 15, 1999, as adjusted to reflect the
conversion of the preferred stock into common stock concurrently with the
offering and sale of common stock offered in this offering for:
- each person or entity who is known by Autobytel.com to beneficially own
five percent or more of the outstanding common stock,
- each of our directors,
- each of the five most highly compensated officers in 1998,
- each stockholder who is selling shares of common stock in this offering,
and
- all directors and executive officers of Autobytel.com as a group.
As of March 15, 1999, there were 14,372,783 shares of common stock outstanding.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options or warrants held by that person that
are currently exercisable or exercisable within 60 days of March 15, 1999, are
deemed outstanding. Such shares, however, are not deemed outstanding for the
purposes of computing the percentage ownership of each other person. Except as
indicated in the footnotes to this table and under applicable community property
laws, each stockholder named in the table has sole voting and investment power
with respect to the shares set forth opposite such stockholder's name. The
following table assumes no exercise of the underwriters' over-allotment option.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING NUMBER OF AFTER OFFERING
------------------- SHARES BEING -------------------
NUMBER PERCENT OFFERED NUMBER PERCENT
--------- ------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
Peter R. Ellis(1)................... 3,877,032 27.0% 500,000 3,377,032 18.9%
c/o Autobytel.com
18872 MacArthur Boulevard
Irvine, California 92612-1400
John C. Bedrosian(2)................ 3,569,445 24.8% 500,000 3,069,445 17.2%
c/o Autobytel.com
18872 MacArthur Boulevard
Irvine, California 92612-1400
General Electric Capital
Corporation(3).................... 1,832,022 12.7% 1,832,022 10.2%
260 Long Ridge Road
Stamford, Connecticut 06927
Peter Titz(4)....................... 1,550,406 10.5% 1,550,406 8.5%
c/o Aureus Private Equity AG
Zugerstrasse 76b
CH-6340 Baar
Switzerland
MediaOne Interactive Services,
Inc.(5)........................... 1,057,576 7.2% 1,057,576 5.8%
9000 E. Nichols Avenue
Englewood, Colorado 80112
Aureus Private Equity AG(4)......... 1,021,618 7.0% 1,021,618 5.6%
Zugerstrasse 76b
CH-6340 Baar
Switzerland
National Union Fire Insurance
Company of Pittsburgh, PA(6)...... 837,157 5.8% 837,157 4.7%
200 Liberty Street
New York, New York 10281
</TABLE>
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<PAGE> 70
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING NUMBER OF AFTER OFFERING
------------------- SHARES BEING -------------------
NUMBER PERCENT OFFERED NUMBER PERCENT
--------- ------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
Robert S. Grimes(7)................. 809,493 5.5% 809,493 4.5%
c/o R.S. Grimes & Co., Inc.
152 West 57th Street
New York, NY 10019
Mark W. Lorimer(8).................. 296,412 2.0% 296,412 1.6%
Michael J. Fuchs(9)................. 146,249 1.0% 146,249 *
Michael J. Lowell(10)............... 110,280 * 110,280 *
Ann M. Delligatta(11)............... 40,704 * 40,704 *
Anne Benvenuto(12).................. 12,472 * 12,472 *
Mark N. Kaplan...................... 1,000 * 1,000 *
Kenneth J. Orton.................... -- * -- *
Hoshi Printer....................... -- * -- *
Ariel Amir.......................... -- * -- *
All directors and executive officers
as a group (14 persons)(13)....... 9,733,646 61.5% 9,233,646 47.7%
</TABLE>
- ---------------
* Less than 1%
(1) Includes 46,110 shares held by trusts established for family members of Mr.
Ellis as to which Mr. Ellis' spouse maintains sole voting power. Also
includes 593,175 shares as to which Mr. Ellis granted voting power to
Autobytel.com under a voting proxy dated January 11, 1999. See "Certain
Transactions." If the underwriters' over-allotment option were exercised in
full, the number of shares beneficially owned by Mr. Ellis after the
offering would be 2,994,532 and the percentage would be 16.8%.
(2) 2,569,445 shares are held in the John C. Bedrosian and Judith D. Bedrosian
Revocable Trust in which Mr. Bedrosian maintains shared voting powers.
1,000,000 shares are held by the Bedrosian Investment Group, Ltd., of which
Mr. Bedrosian and his spouse are general partners. If the underwriters'
over-allotment option were exercised in full, the number of shares
beneficially owned by Mr. Bedrosian after the offering would be 2,814,445
and the percentage would be 15.7%.
(3) Mr. Jeffrey Coats is a managing director of GE Equity Capital Group, Inc.,
an affiliate of General Electric Capital Corporation, and is a director of
Autobytel.com. Includes 888,889 shares held by General Electric Capital
Corporation (GE) following the conversion of the series A preferred stock,
482,393 shares held by GE following the conversion of the series B
preferred stock, and 454,546 shares held by GE following the conversion of
the series C preferred stock. Also includes 6,194 shares issuable upon
exercise of options exercisable within 60 days of March 15, 1999 which were
granted to Mr. Coats, and subsequently assigned to GE. Mr. Coats disclaims
beneficial ownership of such 6,194 shares.
(4) Mr. Peter Titz is a director of Aureus Private Equity AG, a manager of
Invision AG, and a director of Autobytel.com. Includes 731,818 shares
following the conversion of the series C preferred stock and 289,800 shares
issuable upon exercise of warrants held by Aureus Private Equity AG. Also
includes 378,788 shares following the conversion of the series C preferred
stock and 150,000 shares issuable upon exercise of warrants held by
Invision AG.
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<PAGE> 71
(5) Mr. Richard Post is a director of MediaOne Interactive Services, Inc. and a
director of Autobytel.com. Includes 757,576 shares held by MediaOne
Interactive Services, Inc. following the conversion of the series C
preferred stock and 300,000 shares issuable upon exercise of warrants.
MediaOne Interactive Services, Inc. is an indirect wholly owned subsidiary
of MediaOne Group, Inc. As a result, MediaOne Group, Inc., may be deemed to
indirectly, beneficially own the shares reported as being directly
beneficially owned by MediaOne Interactive Services, Inc. MediaOne Group,
Inc., disclaims such beneficial ownership.
(6) Represents 444,445 shares following the conversion of the series A
preferred stock, 241,197 shares following the conversion of the series B
preferred stock, and 151,515 shares following the conversion of the series
C preferred stock.
(7) Includes an aggregate of 5,554 shares held in irrevocable trusts as to
which Mr. Grimes' spouse maintains sole voting power. Includes 253,938
shares issuable upon exercise of options exercisable within 60 days of
March 15 1999.
(8) Represents 296,412 shares issuable upon exercise of options exercisable
within 60 days of March 15, 1999.
(9) Includes 6,195 shares issuable upon exercise of options exercisable within
60 days of March 15, 1999 and 111,111 shares held by Mr. Fuchs following
the conversion of the series A preferred stock and 28,943 shares following
the conversion of the series B preferred stock.
(10) Represents 110,280 shares issuable upon exercise of options exercisable
within 60 days of March 15, 1999.
(11) Represents 40,704 shares issuable upon exercise of options exercisable
within 60 days of March 15, 1999.
(12) Represents 12,472 shares issuable upon exercise of options exercisable
within 60 days of March 15, 1999.
(13) Includes 726,195 shares issuable upon exercise of options and 739,800
shares issuable upon exercise of warrants exercisable within 60 days of
March 15, 1999. Mr. Ellis resigned as Chief Executive Officer of
Autobytel.com in June 1998. If Mr. Ellis' shares are not included in the
number of shares beneficially owned by all directors and executive officers
as a group, the number of shares owned by the directors and executive
officers prior to the offering is 5,856,614 shares or 37.0% of the shares
of common stock outstanding, and after the offering would be 5,856,614
shares or 30.3% of the shares of common stock outstanding.
DESCRIPTION OF CAPITAL STOCK
Upon the closing of the offering, the outstanding shares of common stock
will consist of 17,858,745 shares, $0.001 par value. As of December 31, 1998,
there were 8,506,455 shares of common stock outstanding held of record by 49
stockholders.
COMMON STOCK
Autobytel.com is authorized to issue a total of 50,000,000 shares of common
stock. Holders of common stock are entitled to one vote per share in all matters
to be voted on by the stockholders. After the preferences of the preferred
stock, holders of common stock are entitled to receive ratably such dividends,
if any, as may be declared from time to time by the board of directors out of
funds legally available for payment. See "Dividend
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<PAGE> 72
Policy." In the event of a liquidation, dissolution or winding up of
Autobytel.com, the holders of common stock are entitled to share ratably in all
assets remaining after payment of liabilities, after prior distribution rights
of shares of preferred stock then outstanding, if any. The common stock has no
preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are fully paid and nonassessable, and the
shares of common stock to be issued upon completion of the offering will be
fully paid and non-assessable.
PREFERRED STOCK
Under our amended and restated certificate of incorporation, the board of
directors has the authority, without further action by the stockholders, to
issue up to 11,445,187 shares of preferred stock in one or more series. The
board of directors also has the power to determine the rights of the preferred
stock such as dividend rights, conversion rights, voting rights, and the terms
of redemption and liquidation preferences. The board of directors, without
stockholder approval, can issue preferred stock with voting, conversion or other
rights that are greater than the rights of the holders of common stock.
Preferred stock could thus be issued quickly with terms calculated to delay or
prevent a change in control of Autobytel.com or make removal of management more
difficult. Additionally, the issuance of preferred stock may have the effect of
decreasing the market price of the common stock, and may adversely affect the
voting and other rights of the holders of common stock. Upon the closing of the
offering, no shares of preferred stock will be outstanding and Autobytel.com has
no plans to issue any of the preferred stock. See "Financings and Related Party
Transactions."
REGISTRATION RIGHTS
The amended and restated investors' rights agreement, dated October 21,
1997, among Autobytel.com and the holders of 12,997,957 shares of common stock
and securities convertible into common stock, provides that the holders are
entitled to registration rights. If we propose to register any of our securities
under the Securities Act, either for our own account or for the account of other
holders exercising registration rights, the holders are entitled to notice of
such registration and may include shares of registrable securities in the
registration statement. Additionally, the holders are also entitled to demand
registration rights and may require us to file a registration statement under
the Securities Act at our expense for their shares of registrable securities.
The holders have waived their registration rights in connection with this
offering.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS
Anti-Takeover Law
The provisions of Section 203 of the Delaware General Corporation Law apply
to Autobytel.com. In general, Section 203 prohibits a publicly-held Delaware
corporation from engaging in a business combination with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner or unless the interested
stockholder acquired at least 85% of the corporation's voting stock (excluding
shares held by designated stockholders) in the transaction in which it became an
interested stockholder. For purposes of Section 203, a "business combination"
includes a merger, asset sale or other transaction resulting in a financial
benefit to the interested
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stockholder. Other than persons who own shares in excess of 15% of the voting
stock of the corporation as a result of action taken solely by the corporation,
an "interested stockholder" is a person who, together with affiliates and
associates, owns, or within the previous three years did own, 15% or more of the
corporation's voting stock.
Limitation of Director and Officer Liability
Our amended and restated certificate of incorporation and bylaws contain
provisions relating to the limitation of liability and indemnification of
directors and officers. Our amended and restated certificate of incorporation
provides that our directors may not be held personally liable to us or our
stockholders for a breach of fiduciary duty, except for liability:
- for any breach of the director's duty of loyalty to us or our
stockholders,
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law,
- under Section 174 of the Delaware General Corporation Law, relating to
prohibited dividends, distributions and repurchases or redemptions of
stock, and
- for any transaction from which the director derives an improper benefit.
In addition, our amended and restated certificate of incorporation and bylaws
provide that we will indemnify directors and officers to the fullest extent
authorized by Delaware law.
No Stockholder Action by Written Consent
Our amended and restated certificate of incorporation provides that the
stockholders can take action only at a duly called annual or special meeting of
stockholders. Accordingly, stockholders of Autobytel.com will not be able to
take action by written consent in lieu of a meeting. This provision may have the
effect of deterring hostile takeovers or delaying changes in control or
management of Autobytel.com.
Staggered Board of Directors
Our amended and restated certificate of incorporation provides that upon
the closing of this offering, the terms of office of the board of directors will
be divided into three classes, such that the terms of Class I, Class II and
Class III directors shall expire at the annual meeting of stockholders to be
held in 1999, 2000 and 2001, respectively. The number of directors will be
distributed among the three classes so that, as nearly as possible, each class
will consist of one-third of the directors. This provision may have the effect
of delaying or preventing changes in control or change in our management because
less than a majority of the board of directors are up for election at each
annual meeting.
TRANSFER AGENT AND REGISTRAR
U.S. Stock Transfer Corporation, Glendale, California, has been appointed
as the transfer agent and registrar for the common stock. Its telephone number
for such purposes is (818) 502-1404.
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to the offering, there has been no market for the common stock.
Future sales of substantial amounts of common stock in the public market could
adversely affect market prices prevailing from time to time. Upon completion of
the offering, Autobytel.com will have outstanding an aggregate of 17,858,745
shares of common stock, assuming no exercise of outstanding options or warrants.
Of these shares, the 4,500,000 shares sold in the offering will be freely
tradeable without restriction or further registration under the Securities Act,
except that any shares purchased by "affiliates" of Autobytel.com, as that term
is defined in Rule 144 of the Securities Act, may generally only be sold in
compliance with the limitations of Rule 144 described below.
SALES OF RESTRICTED SHARES
The remaining 13,358,745 shares of common stock held by existing
stockholders are "restricted securities" under Rule 144. The number of shares of
common stock available for sale in the public market is limited by restrictions
under the Securities Act and lock-up agreements. Under the lock-up agreements,
the holders of such shares have agreed not to sell or otherwise dispose of any
of their shares for a period of 180 days after the date of this prospectus (the
"lock-up period") without the prior written consent of BT Alex. Brown
Incorporated. In addition, the selling shareholders have agreed to the same
lock-up except that they have agreed to a 270-day lock-up. On the date of this
prospectus, no shares other than the shares in this offering will be eligible
for sale.
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person, or persons who has beneficially owned
restricted shares for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:
- one percent of the number of shares of common stock then outstanding; or
- the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale. One percent of the number
of shares of common stock outstanding after the offering equals
approximately 178,587 shares.
Sales must be made under manner of sale provisions and notice requirements
specified by Rule 144 and current public information about Autobytel.com must be
available. Under Rule 144(k), a person who is not deemed to have been an
affiliate of Autobytel.com at any time during the 90 days preceding a sale, and
who has beneficially owned the shares proposed to be sold for at least two
years, is entitled to sell such shares without complying with the manner of
sale, public information, volume limitation or notice provisions of Rule 144.
Therefore, unless otherwise restricted, "144(k) shares" could be sold
immediately upon the completion of this offering.
Following the expiration of the lock-up period, none of the restricted
shares will become available for sale in the public market until the expiration
of their respective holding periods (approximately 11,298,480 of such shares
will have been held for more than one year at the end of such 180-day period).
Upon completion of the offering, the holders of 12,997,957 shares of common
stock, or their transferees, will be entitled to rights with respect to the
registration of such shares under the Securities Act until such time as the
holders of such common stock may sell such shares under the Rule 144 of the
Securities Act. See "Description of Capital
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Stock -- Registration Rights." Registration of such shares under the Securities
Act would result in such shares becoming freely tradeable without restriction
under the Securities Act, except for shares purchased by affiliates, immediately
upon the effectiveness of such registration.
OPTIONS AND RESTRICTED STOCK
We intend to file a registration statement under the Securities Act
covering shares of common stock reserved for issuance under the 1999 Stock
Option Plan, 1998 Stock Option Plan, 1996 Stock Incentive Plan, the 1996 Stock
Option Plan and the 1996 Employee Stock Purchase Plan. Such registration
statement is expected to be filed and become effective as soon as practicable
after the effective date of the offering. Accordingly, shares registered under
such registration statement will, with regards to Rule 144 volume limitations
applicable to affiliates, be available for sale in the open market, unless such
shares are subject to vesting restrictions with Autobytel.com or the lock-up
agreements described above. A total of 3,723,433 shares have been reserved for
issuance under such plans. As of March 1, 1999, 737,191 options have been
granted under the 1999 Stock Option Plan, 1,125,000 options have been granted
under the 1998 Stock Option Plan, 833,333 options have been granted under the
1996 Stock Incentive Plan, 889,163 options have been granted under the 1996
Stock Option Plan and no shares have been purchased under the 1996 Employee
Stock Purchase Plan. See "Management -- Stock Plans."
In addition, under Rule 701 of the Securities Act as currently in effect,
any employee, consultant or advisor of Autobytel.com who is not an affiliate who
purchased shares from us under a compensatory stock or option plan or other
written agreement is eligible to resell such shares 90 days after the effective
date of this offering, governed by all provisions of Rule 144 except its minimum
holding period.
LOCK-UP AGREEMENTS
All officers, directors, and other stockholders of Autobytel.com have
entered into lock-up agreements. Under the lock-up agreements, each person
agreed not to sell or otherwise dispose of any shares of common stock or any
securities convertible into common stock for a period of 180 days after the date
of this prospectus, without the prior written consent of BT Alex. Brown
Incorporated. The selling stockholders have agreed to the same lock-up except
for a period of 270 days after the date of this prospectus. See "Underwriting."
In addition, under the terms of the 1999 Stock Option Plan, 1998 Stock Option
Plan, the 1996 Stock Option Plan and the 1996 Stock Incentive Plan, holders of
options to purchase common stock are obligated not to sell or transfer any
shares of Autobytel.com acquired through exercise of options during such 180-day
period if requested by us or the underwriters.
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MATERIAL UNITED STATES TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS
GENERAL
The following is a general discussion of the material United States federal
income and estate tax consequences of the ownership and disposition of common
stock by a Non-U.S. Holder, as defined below. As used in this prospectus, the
term "Non-U.S. Holder" is any person or entity that, for United States federal
income tax purposes, is either a non-resident alien individual, a foreign
corporation, a foreign partnership or a foreign trust in each case not subject
to United States federal income tax on a net basis in respect of income or gain
with respect to our common stock.
An individual may be deemed to be a resident alien, as opposed to a
nonresident alien, by virtue of being present in the United States for at least
31 days in the calendar year and for an aggregate of at least 183 days during a
three-year period ending in the current calendar year. In determining whether an
individual is present in the United States for at least 183 days, all of the
days present in the current year, one-third of the days present in the
immediately preceding year and one-sixth of the days present in the second
preceding year are counted. Resident aliens are subject to United States federal
income and estate tax in the same manner as United States citizens and
residents.
This discussion does not address all aspects of United States federal
income and estate taxes that may be relevant to a particular Non-U.S. Holder in
light of the holder's particular circumstances. This discussion is not intended
to be applicable in all respects to all categories of Non-U.S. Holders, some of
whom may be subject to special treatment under United States federal income tax
laws. Moreover this discussion does not address United States state or local or
foreign tax consequences. This discussion is based on provisions of the Internal
Revenue Code of 1986, as amended, existing and proposed regulations under, and
administrative and judicial interpretations of, the Internal Revenue Code, in
effect on the date of this prospectus. All of these authorities may change,
possibly with retroactive effect or different interpretations. The following
summary is included in this prospectus for general information. Accordingly,
prospective investors are urged to consult their tax advisers regarding the
United States federal, state, local and non-United States income and other tax
consequences of acquiring, holding and disposing of shares of our common stock.
DIVIDENDS
We do not anticipate paying cash dividends on our capital stock in the
foreseeable future. See "Dividend Policy." In the event, however, that dividends
are paid on shares of common stock, dividends paid to a Non-U.S. Holder of
common stock generally will be subject to United States withholding tax at a 30%
rate, unless an applicable income tax treaty provides for a lower withholding
rate. Non-U.S. Holders should consult their tax advisors regarding their
entitlement to benefit under a relevant income tax treaty.
Currently the applicable United States Treasury regulations presume, absent
actual knowledge to the contrary, that dividends paid to an address in a foreign
country are paid to a resident of such country for purposes of the 30%
withholding tax discussed above. However, the final United States Treasury
regulations provide that, in the case of dividends paid after December 31, 1999,
a Non-U.S. Holder who wishes to claim the benefits of an applicable treaty rate
and avoid backup withholding tax at a 31% rate as discussed below
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will be required to satisfy certification and other tax law requirements, which
will include filing an Internal Revenue Service Form W-8 containing the Non-U.S.
Holder's name, address and a certification that the holder is eligible for the
benefits of the treaty under the treaty's Limitations in Benefits Article. In
addition, certification and disclosure requirements must be met to be exempt
from withholding under the effectively connected income exemption discussed
below.
The regulations under the Internal Revenue Code also provide special rules
for dividend payments made to foreign intermediaries, United States or foreign
wholly owned entities that are disregarded for United States federal income tax
purposes and entities that are treated as fiscally transparent in the United
States, the applicable income tax treaty jurisdiction, or both. In addition,
recently enacted legislation, effective August 4, 1997, denies income tax treaty
benefits to foreign partners receiving income derived through a partnership, or
otherwise fiscally transparent entity, if the foreign partner does not certify
as to its Non-U.S. Holder status and the partnership does not provide required
information including a United States taxpayer identification number.
Prospective investors should consult with their own tax advisers concerning the
effect, if any, of these tax regulations and the recent legislation on an
investment in the common stock.
A Non-U.S. Holder of common stock that is eligible for a reduced rate of
United States withholding tax pursuant to an income tax treaty may obtain a
refund of any excess amounts withheld by filing an appropriate claim for a
refund with the IRS.
The recipient of dividends that are effectively connected with either a
Non-U.S. Holder's:
- conduct of a trade or business in the United States,
- permanent establishment in the United States if a tax treaty applies, or
- fixed base in the United States
are taxed generally on a net income basis at regular graduated rates. The 30%
withholding tax is not applicable to the payment of dividends if the Non-U.S.
Holder files Form 4224 or any successor form with the payor or, after December
31, 1999, such holder provides its United States taxpayer identification number
to the payor.
Any United States trade or business income received by a Non-U.S. Holder
that is a corporation also may be subject to an additional "branch profits tax"
at a 30% rate or such lower rate as may be specified by an applicable income tax
treaty.
GAIN ON DISPOSITION OF COMMON STOCK
A Non-U.S. Holder generally will not have to pay United States federal
income or withholding tax on gain recognized on a disposition of common stock
unless:
(1) the gain is effectively connected with the conduct of a trade or
business of the Non-U.S. Holder within the United States or of a
partnership, trust or estate in which the Non-U.S. Holder is a partner
or beneficiary within the United States,
(2) if a treaty applies, the gain is effectively connected to a permanent
establishment of the Non-U.S. Holders within the United States,
(3) the Non-U.S. Holder is an individual who holds the common stock as a
capital asset within the meaning of Section 1221 of the Internal
Revenue Code, is
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present in the United States for 183 or more days in the taxable year
of the disposition and meets other tax law requirements,
(4) the Non-U.S. Holder is a United States expatriate is required to pay
tax pursuant to the provisions of the United States tax law, or
(5) Autobytel.com is or has been a "United States real property holding
corporation" for federal income tax purposes at any time during the
shorter of the five-year period preceding such disposition or the
period that the Non-U.S. Holder holds the common stock.
Generally, a corporation is a United States real property holding
corporation if the fair market value of its United States real property
interests equals or exceeds 50% of the sum of the fair market value of its
worldwide real property interests plus its other assets used or held for use in
a trade or business.
Autobytel.com believes that it is not, has not been and does not anticipate
becoming a United States real property holding corporation for United States
federal income tax purposes. However, even if Autobytel.com were to become a
United States real property holding corporation, any gain realized by a Non-U.S.
Holder still would not be required to pay United States federal income tax if
the shares of Autobytel.com are regularly traded on an established securities
market. Autobytel.com believes that its common stock is "regularly traded on an
established securities market." If, however, Autobytel.com's common stock is not
so treated, on a sale or disposition by a Non-U.S. Holder of the common stock
the transferee of such stock will be required to withhold 10% of the proceeds
unless Autobytel.com certifies that either it is not and has not been a United
States real property holding company or another exemption from withholding
applies.
If a Non-U.S. Holder who is an individual meets the requirements of clause
(1), (2) or (4) above that individual generally will be required to pay tax on
the net gain derived from a sale of common stock under regular graduated United
States federal income tax rates. If an individual Non-U.S. Holder meets the
requirements of clause (3) above, such individual generally will be subject to a
flat 30% tax on the gain derived from a sale. Thus, individual Non-United States
Holders who have spent or expect to spend a short period of time in the United
States should consult their tax advisers prior to the sale of common stock to
determine the United States federal income tax consequences of the sale. If a
Non-U.S. Holder is a foreign corporation that is engaged in a United States
trade or business or has a United States permanent establishment, the
corporation generally will be required to pay tax on its net gain under regular
graduated United States federal income tax rates. Such a Non-U.S. Holder may
also have to pay branch profit tax.
FEDERAL ESTATE TAX
For United States federal estate tax purposes, an individual's gross estate
will include the common stock owned, or treated as owned, by an individual.
Generally, this will be the case regardless of whether such individual was a
United States citizen or a United States resident. This general rule of
inclusion may be limited by an applicable estate tax or other treaty.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
Under United States Treasury regulations, Autobytel.com must report
annually to the IRS and to each Non-U.S. Holder the amount of dividends paid to
such holder and the
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tax withheld with respect to such dividends. These information reporting
requirements apply regardless of whether withholding is required. Copies of the
information returns reporting such dividends and withholding may also be made
available to the tax authorities in the country in which the Non-U.S. Holder is
a resident under the provisions of an applicable income tax treaty or agreement.
Currently, the 31% United States backup withholding tax rate generally will
not apply:
- to dividends which are paid to Non-U.S. Holders and are taxed at the
regular withholding tax rate as discussed above, or
- before January 1, 2000, to dividends paid to a Non-U.S. Holder at an
address outside of the United States unless the payor has actual
knowledge that the payee is a United States Holder.
Backup withholding and information reporting generally will apply to dividends
paid to addresses inside the United States on shares of common stock to
beneficial owners that are not "exempt recipients" and that fail to provide, in
the manner required, identifying information.
On October 6, 1997, the United States Treasury Department issued new
regulations regarding the withholding and information reporting rules discussed
above. These regulations apply to payments made after December 31, 1999. The
regulations under the Internal Revenue Code do not significantly alter the
foregoing substantive withholding and information reporting requirements but do
alter the procedures for:
- claiming the benefits of an income tax treaty for, and
- the certification procedures relating to the receipt by intermediaries
of, dividends paid after December 31, 1999.
These regulations generally presume that backup withholding at the rate of 31%
and information reporting applies to payments made to a Non-U.S. Holder unless
Autobytel.com receives certification of such holder's Non-U.S. status. Depending
on the circumstances, this certification will need to be provided either:
- directly by the Non-U.S. Holder,
- in the case of a Non-U.S. Holder that is treated as a partnership or
other fiscally transparent entity, by the partners, shareholders or other
beneficiaries of such entity, or
- by qualified financial institutions or other qualified entities on behalf
of the Non-U.S. Holder.
Information reporting and backup withholding at a rate of 31% generally
will not apply to the payment of the proceeds of the disposition of common stock
by a holder to or through the United States office of a broker or through a
non-United States branch of a United States broker unless the holder either
certifies its status as a Non-U.S. Holder under penalties of perjury or
otherwise establishes an exemption. The payment of the proceeds of the
disposition by a Non-U.S. Holder of common stock to or through a Non-United
States office of a non-United States broker will not have to comply with backup
withholding or information reporting unless the non-United States broker has a
connection to the United States as specified in the tax law.
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In the case of the payment of proceeds from the disposition of common stock
effected by a foreign office of a broker that is a United States person or a
"United States related person," existing regulations require information
reporting on the payment unless
- the broker receives a statement from the owner, signed under penalty of
perjury, certifying its non-United States status or the broker has
documentary evidence in its files as to the Non-U.S. Holder's foreign
status, and the broker has no actual knowledge to the contrary, and other
United States federal tax law conditions are met or
- the beneficial owner otherwise establishes an exemption.
For this purpose, a "United States related person" is either
- a "controlled foreign corporation" for United States federal income tax
purposes; or
- a foreign person 50% or more of whose gross income from all sources for
the three-year period ending with the close of its taxable year preceding
the payment is derived from activities that are effectively connected
with the conduct of a United States trade or business.
After December 31, 1999, the regulations under the Internal Revenue Code
will impose information reporting and backup withholding on payments of the
gross proceeds from the sales or redemptions of common stock that are effected
through foreign offices of brokers having any of a broader class of specified
connections with the United States. Such information reporting and backup
withholding may be avoided, however, if a holder complies with the applicable
IRS certification requirements. Prospective investors should consult with their
own tax advisers regarding the regulations under the Internal Revenue Code and
in particular with respect to whether the use of a particular broker would
subject the investor to these rules.
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be either refunded or credited against the holder's United
States federal income tax liability provided sufficient information is furnished
to the Internal Revenue Service.
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UNDERWRITING
Under the terms of an underwriting agreement, the underwriters named below,
through their representatives, BT Alex. Brown Incorporated, Lehman Brothers Inc.
and PaineWebber Incorporated, have severally agreed to purchase from
Autobytel.com the following respective number of shares of common stock at the
public offering price less the underwriting discount set forth on the cover page
of this prospectus.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
BT Alex. Brown Incorporated.................................
Lehman Brothers Inc.........................................
PaineWebber Incorporated....................................
---------
Total............................................. 4,250,000
=========
</TABLE>
The underwriting agreement provides that the obligations of the
underwriters are subject to conditions precedent as outlined in the underwriting
agreement and that the underwriters will purchase all of the shares of common
stock offered if any of such shares are purchased.
Autobytel.com and the selling stockholders have been advised by the
representatives that the underwriters propose to offer the shares of common
stock to the public at the public offering price set forth on the cover page of
this prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The underwriters may allow, and such dealers may
re-allow, a concession not in excess of $ per share to certain other
dealers. After the initial public offering, the offering price and other selling
terms may be changed by the representatives of the underwriters.
Selling stockholders have granted the underwriters an option, exercisable
not later than 30 days after the date of this prospectus, to purchase up to
637,500 additional shares of common stock at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
prospectus. To the extent that the underwriters exercise such option, each of
the underwriters will have a firm commitment to purchase approximately the same
percentage of such option that the number of shares of common stock to be
purchased by it in the above table bears to 4,250,000, and the selling
stockholders will be obligated under the option to sell such shares to the
underwriters. The underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the common stock offered in
this offering. If purchased, the underwriters will offer such additional shares
on the same terms as those on which the 4,250,000 shares are being offered.
Autobytel.com and the selling stockholders have agreed to indemnify the
underwriters against certain liabilities, including liabilities under the
Securities Act.
Each of the officers and directors and substantially all of the
stockholders of Autobytel.com agreed not to sell or otherwise dispose of any
common stock for a period of 180 days after the date of our public offering,
without the prior written consent of
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BT Alex. Brown Incorporated. These officers, directors and stockholders hold
13,293,376 shares of our common stock in the aggregate. The selling stockholders
have agreed to a lock-up for a period of 270 days after the date of
Autobytel.com's public offering. BT Alex. Brown Incorporated may give such
consent at any time without public notice and may give consent for some
stockholders and not others. Autobytel.com has also entered into a similar
agreement, except that we may grant options or warrants to purchase shares of
common stock or any securities convertible into shares of common stock, under
the exercise of outstanding options and warrants and our issuance of options and
stock granted under our existing stock option and stock purchase plans.
The representatives have advised Autobytel.com that the underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.
In order to facilitate the offering of the common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
market price of the common stock. Specifically, the underwriters may over-allot
shares of the common stock in connection with this offering, thus creating a
short position in the common stock for their own account. Additionally, to cover
such over-allotments or to stabilize the market price of the common stock, the
underwriters may bid for, and purchase, shares of the common stock in the open
market. Finally, the representatives, on behalf of the underwriters, also may
reclaim selling concessions allowed to an underwriter or dealer if the
underwriting syndicate repurchases shares distributed by that underwriter or
dealer. Any of these activities may maintain the market price of our common
stock at a level above that which might otherwise prevail in the open market.
The underwriters are not required to engage in these activities and, if
commenced, may end any of these activities at any time.
At our request, the underwriters have reserved for sale, at the initial
public offering price, up to 450,000 shares for friends of our founders, our
employees, family members of our employees and our vendors. The number of shares
of common stock available for sale to the general public will be reduced to the
extent these people purchase such reserved shares. Any reserved shares which are
not so purchased will be offered by the underwriters to the general public on
the same basis as the other shares offered hereby.
In addition, we are reserving 250,000 shares to be offered at the public
offering price to strategic international investors. We expect that these
strategic investors will enter into agreements not to sell any of the shares
purchased by them for a period of at least 180 days following the completion of
this offering. These shares are not subject to the underwriting agreement and
the underwriters will not receive any fees or commissions in connection with the
sale of these shares, however, if these shares are sold to the strategic
investors then Autobytel.com will be required to pay a $350,000 fee to Bankers
Trust, Tokyo Branch. Bankers Trust, Tokyo Branch is an affiliate of BT Alex.
Brown Incorporated, one of the underwriters in this offering.
General Electric Capital Services, Inc. ("GE Capital Services") indirectly
beneficially owns approximately 22% of the issued and outstanding common stock
of Paine Webber Group, Inc., which is the parent holding company of PaineWebber
Incorporated, an SEC-registered broker-dealer and one of the underwriters in
this offering. The voting rights with respect to such common stock are
restricted by the terms of an amended and restated shareholder's agreement. As a
result, the offering of the shares of common stock offered in this offering is
required to be made in accordance with the applicable provisions of Rule 2720 of
the NASD.
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In compliance with Rule 2720, the public offering price can be no higher
than that recommended by a "qualified independent underwriter." BT Alex. Brown
Incorporated is acting as qualified independent underwriter and the public
offering price of the shares of common stock offered hereby will not be higher
than the public offering price recommended by BT Alex. Brown Incorporated. In
this offering, BT Alex. Brown Incorporated, in its role as qualified independent
underwriter, has performed due diligence investigations and reviewed and
participated in the preparation of the registration statement of which this
prospectus is a part.
PRICING OF THIS OFFERING
Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for our common stock will
be determined by negotiation among representatives of the underwriters and
Autobytel.com. Among the factors to be considered in determining the public
offering price will be:
- prevailing market conditions;
- our results of operations in recent periods;
- our present stage of development;
- the market capitalizations and stages of development of other companies
which we and the representatives of the underwriters believe to be
comparable to us; and
- estimates of our business potential.
LEGAL MATTERS
The validity of the shares of common stock offered in this offering will be
passed upon for Autobytel.com by Paul, Hastings, Janofsky & Walker LLP, New
York, New York and for the underwriters by Latham & Watkins, Menlo Park,
California. Attorneys in the firm of Paul, Hastings, Janofsky & Walker LLP may
participate in the directed share program in the offering in an amount of up to
15,000 shares.
EXPERTS
The consolidated financial statements as of December 31, 1997 and 1998 and
for the years ended December 31, 1996, 1997 and 1998 appearing in this
prospectus and the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as set forth in their report and are
included in reliance upon the authority of said firm as experts in giving said
report.
The discussion that appears under the headings "Risk Factors -- If
financial broker and insurance licensing requirements apply to us in states
where we are not currently licensed, we will be required to obtain additional
licenses and our business may suffer," "Business -- Products, Programs and
Services -- Ancillary Customer Services" and "Business -- Government Regulation"
has been reviewed by Barger & Wolen LLP, Los Angeles, California, and has been
included herein, to the extent such discussion involves regulations, laws or
legal conclusions relating to issues involving insurance, in reliance upon the
authority of such firm as an expert thereon.
82
<PAGE> 84
ADDITIONAL INFORMATION
A registration statement on Form S-1, including amendments, relating to the
common stock offered in this offering has been filed by Autobytel.com with the
Securities and Exchange Commission, Washington, D.C. This prospectus does not
contain all of the information set forth in the registration statement and the
exhibits and schedules. Statements contained in this prospectus as to the
contents of any contract or other document referred to are not necessarily
complete and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the registration statement, each such
statement being qualified in all respects by such reference. This prospectus
contains all material information required to be disclosed by the Securities
Act. For further information regarding Autobytel.com and the common stock
offered reference is made to such registration statement, exhibits and
schedules. A copy of the registration statement may be inspected by anyone
without charge at the SEC's principal office, 450 Fifth Street, N.W.,
Washington, D.C. 20549, the New York Regional Office located at 7 World Trade
Center, 13th Floor, New York, NY 10048, and the Chicago Regional Office located
at Northwestern Atrium Center, 500 West Madison Street, Chicago, IL 60661, and
copies of all or any part including any exhibit may be obtained from the SEC
upon the payment of fees prescribed by the SEC. The public may obtain
information on the operation of the Public Reference room by calling the SEC at
1-800-SEC-0330. The SEC maintains a World Wide Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC. The address of the site is
http://www.sec.gov.
83
<PAGE> 85
AUTOBYTEL.COM INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Stockholders' Equity (Deficit)... F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 86
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of autobytel.com inc.:
We have audited the accompanying consolidated balance sheets of
autobytel.com inc. (a Delaware corporation) and subsidiaries as of December 31,
1997 and 1998, and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for the years ended December 31,
1996, 1997 and 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
autobytel.com inc. and subsidiaries as of December 31, 1997 and 1998, and the
results of their operations and their cash flows for the years ended December
31, 1996, 1997 and 1998 in conformity with generally accepted accounting
principles.
/s/ ARTHUR ANDERSEN LLP
Los Angeles, California
February 3, 1999
F-2
<PAGE> 87
AUTOBYTEL.COM INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents, includes restricted amounts of
$248 and $248, respectively............................. $ 15,813 $ 27,984
Accounts receivable, net of allowance for doubtful
accounts of $337 and $402, respectively................. 1,493 2,315
Prepaid expenses and other current assets................. 795 1,353
-------- --------
Total current assets............................... 18,101 31,652
Property and equipment, net................................. 2,317 2,208
Other assets................................................ 95 347
-------- --------
Total assets....................................... $ 20,513 $ 34,207
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 2,223 $ 2,915
Accrued expenses.......................................... 1,047 915
Deferred revenue.......................................... 3,700 4,008
Customer deposits......................................... 127 345
Other current liabilities................................. 66 33
-------- --------
Total current liabilities.......................... 7,163 8,216
Deferred rent............................................. 91 123
-------- --------
Total liabilities.................................. 7,254 8,339
-------- --------
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, Series A, $0.001 par value;
aggregate liquidation preference of $15,000 at December
31, 1998; 1,500,000 shares authorized; 1,500,000 shares
issued and outstanding at December 31, 1997 and 1998.... 2 2
Convertible preferred stock, Series B, $0.001 par value;
aggregate liquidation preference of $9,050 at December
31, 1998; 967,915 shares authorized 967,915 shares
issued and outstanding at December 31, 1997 and 1998.... 1 1
Convertible preferred stock, Series C, $0.001 par value;
aggregate liquidation preference of $43,725 at December
31, 1998; 6,977,272 shares authorized; 1,477,274 shares
issued and outstanding at December 31, 1997; 4,968,738
shares issued and outstanding at December 31, 1998...... 1 4
Common stock, $0.001 par value; 50,000,000 shares
authorized; 8,324,443 shares issued and outstanding
December 31, 1997; 8,506,455 shares issued and
outstanding at December 31, 1998........................ 8 8
Warrants.................................................. -- 1,332
Additional paid-in capital................................ 37,123 67,813
Deferred compensation..................................... (1) --
Cumulative translation adjustment......................... -- (19)
Accumulated deficit....................................... (23,875) (43,273)
-------- --------
Total stockholders' equity......................... 13,259 25,868
-------- --------
Total liabilities and stockholders' equity......... $ 20,513 $ 34,207
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-3
<PAGE> 88
AUTOBYTEL.COM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1996 1997 1998
---------- ----------- -----------
<S> <C> <C> <C>
Revenues............................... $ 5,025 $ 15,338 $ 23,826
---------- ----------- -----------
Operating expenses:
Sales and marketing.................. 7,790 21,454 30,033
Product and technology development... 1,753 5,448 8,528
General and administrative........... 1,641 5,851 5,908
---------- ----------- -----------
Total operating expenses.......... 11,184 32,753 44,469
---------- ----------- -----------
Loss from operations................. (6,159) (17,415) (20,643)
Other income, net...................... 124 620 1,280
---------- ----------- -----------
Loss before provision for income
taxes............................. (6,035) (16,795) (19,363)
Provision for income taxes............. -- 15 35
---------- ----------- -----------
Net loss............................. $ (6,035) $ (16,810) $ (19,398)
========== =========== ===========
Basic net loss per share............... $ (0.73) $ (2.03) $ (2.30)
========== =========== ===========
Shares used in computing basic net loss
per share............................ 8,252,325 8,291,142 8,423,038
========== =========== ===========
Pro forma basic net loss per share..... $ (0.68) $ (1.53) $ (1.49)
========== =========== ===========
Shares used in computing pro forma
basic net loss per share............. 8,848,864 10,966,633 13,008,090
========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE> 89
AUTOBYTEL.COM INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
CONVERTIBLE MEMBERS'
PREFERRED STOCK COMMON STOCK INTEREST/
------------------ ------------------ ADDITIONAL DEFERRED CUMULATIVE
NUMBER OF NUMBER OF PAID-IN COMPEN- TRANSLATION
SHARES AMOUNT SHARES AMOUNT WARRANTS CAPITAL SATION ADJUSTMENT
--------- ------ --------- ------ -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995............. -- $-- -- $-- $ -- $ 40 $ -- $ --
Sale of members' interest in ABT
Acceptance Company, LLC............ -- -- -- -- -- 50 -- --
Issuance of common stock in exchange
for members' interest.............. -- -- 8,250,000 8 -- (8) -- --
Issuance of common stock options with
an exercise price of $0.90 per
share.............................. -- -- -- -- -- 87 (87) --
Issuance of Series A convertible
preferred stock at $10.00 per
share.............................. 1,450,000 2 -- -- -- 14,363 -- --
Issuance of Series A convertible
preferred stock at $10.00 per share
upon conversion of debt............ 50,000 -- -- -- -- 500 -- --
Issuance of common stock in exchange
for services....................... -- -- 6,667 -- -- 20 -- --
Issuance of common stock upon
exercise of stock options.......... -- -- 28,148 -- -- 25 -- --
Amortization of deferred
compensation....................... -- -- -- -- -- -- 61 --
Net loss............................. -- -- -- -- -- -- -- --
--------- -- --------- -- ------ ------- ---- ----
Balance, December 31, 1996............. 1,500,000 2 8,284,815 8 -- 15,077 (26) --
Issuance of Series B convertible
preferred stock at $9.35 per
share.............................. 967,915 1 -- -- -- 9,028 -- --
Issuance of Series C convertible
preferred stock at $8.80 per
share.............................. 1,477,274 1 -- -- -- 12,987 -- --
Issuance of common stock upon
exercise of stock options.......... -- -- 39,628 -- -- 31 -- --
Amortization of deferred
compensation....................... -- -- -- -- -- -- 25 --
Net loss............................. -- -- -- -- -- -- -- --
--------- -- --------- -- ------ ------- ---- ----
Balance, December 31, 1997............. 3,945,189 4 8,324,443 8 -- 37,123 (1) --
Issuance of Series C convertible
preferred stock at $8.80 per
share.............................. 3,370,455 3 -- -- -- 29,443 -- --
Issuance of Series C convertible
preferred stock at $8.80 per share
in exchange for advertising........ 121,009 -- -- -- -- 1,065 -- --
Issuance of warrants in exchange for
start-up costs for a Pan-European
entity............................. -- -- -- -- 792 -- -- --
Issuance of warrant in exchange for
involvement in broadband
application project................ -- -- -- -- 540 -- -- --
Issuance of common stock upon
exercise of stock options.......... -- -- 181,012 -- -- 169 -- --
Issuance of common stock at $13.20
per share.......................... -- -- 1,000 -- -- 13 -- --
Amortization of deferred
compensation....................... -- -- -- -- -- -- 1 --
Foreign currency translation
adjustment......................... -- -- -- -- -- -- -- (19)
Net loss............................. -- -- -- -- -- -- -- --
--------- -- --------- -- ------ ------- ---- ----
Balance, December 31, 1998............. 7,436,653 $7 8,506,455 $8 $1,332 $67,813 $ -- $(19)
========= == ========= == ====== ======= ==== ====
<CAPTION>
ACCUM-
ULATED
DEFICIT TOTAL
-------- --------
<S> <C> <C>
Balance, December 31, 1995............. $ (1,030) $ (990)
Sale of members' interest in ABT
Acceptance Company, LLC............ -- 50
Issuance of common stock in exchange
for members' interest.............. -- --
Issuance of common stock options with
an exercise price of $0.90 per
share.............................. -- --
Issuance of Series A convertible
preferred stock at $10.00 per
share.............................. -- 14,365
Issuance of Series A convertible
preferred stock at $10.00 per share
upon conversion of debt............ -- 500
Issuance of common stock in exchange
for services....................... -- 20
Issuance of common stock upon
exercise of stock options.......... -- 25
Amortization of deferred
compensation....................... -- 61
Net loss............................. (6,035) (6,035)
-------- --------
Balance, December 31, 1996............. (7,065) 7,996
Issuance of Series B convertible
preferred stock at $9.35 per
share.............................. -- 9,029
Issuance of Series C convertible
preferred stock at $8.80 per
share.............................. -- 12,988
Issuance of common stock upon
exercise of stock options.......... -- 31
Amortization of deferred
compensation....................... -- 25
Net loss............................. (16,810) (16,810)
-------- --------
Balance, December 31, 1997............. (23,875) 13,259
Issuance of Series C convertible
preferred stock at $8.80 per
share.............................. -- 29,446
Issuance of Series C convertible
preferred stock at $8.80 per share
in exchange for advertising........ -- 1,065
Issuance of warrants in exchange for
start-up costs for a Pan-European
entity............................. -- 792
Issuance of warrant in exchange for
involvement in broadband
application project................ -- 540
Issuance of common stock upon
exercise of stock options.......... -- 169
Issuance of common stock at $13.20
per share.......................... -- 13
Amortization of deferred
compensation....................... -- 1
Foreign currency translation
adjustment......................... -- (19)
Net loss............................. (19,398) (19,398)
-------- --------
Balance, December 31, 1998............. $(43,273) $ 25,868
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 90
AUTOBYTEL.COM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1996 1997 1998
------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $(6,035) $(16,810) $(19,398)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................... 178 860 1,255
Provision for bad debt.................................. 145 175 187
Loss on disposal of property and equiptment............. -- -- 1
Amortization of deferred compensation................... 61 25 1
Issuance of common stock in exchange for services....... 20 -- --
Issuance of Series C convertible preferred stock in
exchange for advertising............................... -- -- 1,065
Issuance of warrants in exchange for start-up costs for
a Pan-European entity.................................. -- -- 792
Issuance of warrant in exchange for involvement in
broadband application project.......................... -- -- 540
Changes in assets and liabilities:
Accounts receivable................................... (429) (1,370) (1,009)
Prepaid expenses and other current assets............. (788) 107 (558)
Other assets.......................................... (604) 516 (252)
Accounts payable...................................... 564 1,572 692
Accrued expenses...................................... 722 325 (132)
Deferred revenue...................................... 1,970 1,374 308
Customer deposits..................................... 554 (427) 218
Other current liabilities............................. 16 34 (33)
Deferred rent......................................... 17 74 32
------- -------- --------
Net cash used in operating activities............... (3,609) (13,545) (16,291)
------- -------- --------
Cash flows from investing activities:
Acquisition of Internet Development Corporation........... -- (100) --
Purchases of property and equipment....................... (1,501) (1,652) (1,147)
------- -------- --------
Net cash used in investing activities............... (1,501) (1,752) (1,147)
------- -------- --------
Cash flows from financing activities:
Proceeds from sale of common stock........................ 25 31 182
Proceeds from sale of members' interest in ABT Acceptance
Company, LLC............................................ 50 -- --
Net proceeds from issuance of Series A convertible
preferred stock......................................... 14,365 -- --
Net proceeds from issuance of Series B convertible
preferred stock......................................... -- 9,029 --
Net proceeds from issuance of Series C convertible
preferred stock......................................... -- 12,988 29,446
Proceeds from issuance of notes payable................... 765 -- --
Repayments of notes payable............................... (1,081) -- --
------- -------- --------
Net cash provided by financing activities........... 14,124 22,048 29,628
------- -------- --------
Effect of exchange rates on cash............................ -- -- (19)
------- -------- --------
Net increase in cash and cash equivalents................... 9,014 6,751 12,171
Cash and cash equivalents, at beginning of period........... 48 9,062 15,813
------- -------- --------
Cash and cash equivalents, at end of period................. $ 9,062 $ 15,813 $ 27,984
======= ======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes.............. $ 4 $ 15 $ 35
======= ======== ========
Cash paid during the period for interest.................. $ 24 $ -- $ 3
======= ======== ========
</TABLE>
Supplemental disclosure of non-cash financing activities (See Note 7):
* In May 1996, 8,250,000 shares of common stock were issued to founding
stockholders in exchange for members' interests in a predecessor limited
liability company.
* In August 1996, 50,000 shares of Series A convertible preferred stock were
issued in exchange for $500 previously advanced to the Company under three
notes payable.
* In September 1996, 6,667 shares of common stock with a fair market value of
$20 were issued for services.
* In April 1998, 56,776 shares of Series C convertible preferred stock with a
fair market value of $8.80 per share convertible into common stock at the
conversion price of $13.20 per share were issued for advertising.
* In October 1998, 64,233 shares of Series C convertible preferred stock with a
fair market value of $8.80 per share convertible into common stock at the
conversion price of $13.20 per share were issued for advertising.
* In November and December 1998, warrants to purchase 439,800 shares of common
stock at $13.20 per share were issued to investors in Series C convertible
preferred stock in exchange for a commitment to fund start-up activities of a
Pan-European entity in which the Company may invest with the investors.
* In December 1998, a warrant to purchase 300,000 shares of common stock at
$13.20 per share was issued to an investor in exchange for involvement in
broadband application project.
The accompanying notes are an integral part of these consolidated
statements.
F-6
<PAGE> 91
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data.)
1. ORGANIZATION AND OPERATIONS OF AUTOBYTEL.COM
autobytel.com inc. (Autobytel.com) is a branded Internet site for new and
pre-owned vehicle information and purchasing services. Through its Web site
(www.autobytel.com), consumers can research pricing, specifications and other
information related to new and pre-owned vehicles and, when consumers indicate
they are ready to buy, can be connected to Autobytel.com's network of
participating dealers. Autobytel.com also provides other related services such
as financing, leasing, vehicle warranties and insurance. Autobytel.com's
services are free to consumers and, to date, Autobytel.com has derived
substantially all of its revenues from fees paid by subscribing dealers located
in the United States and Canada.
Auto-By-Tel, LLC (ABT), Autobytel.com's predecessor, was organized in
January 1995 and commenced operations as a California limited liability company
in March 1995. ABT Acceptance Company, LLC (ABTAC), an affiliated company under
common control, was formed in February 1996. ABT and ABTAC (the LLCs) were
reorganized in May 1996 as a Delaware corporation pursuant to the terms of a
Contribution Agreement and Plan of Organization (the Plan of Organization)
entered into by all of the members of the LLCs (See Note 7). As the LLCs were
under common control, the reorganization was accounted for in a manner similar
to a pooling-of-interests, whereby the assets and liabilities of ABT and ABTAC
were transferred to Autobytel.com at their historical cost.
Since inception, Autobytel.com has invested the majority of its efforts in
marketing its brand name and developing infrastructure to support anticipated
future operating growth. As a result, Autobytel.com has experienced significant
operating losses and had an accumulated deficit of $43,273 at December 31, 1998.
To date, such losses have been financed primarily through private placements of
preferred stock (See Note 7).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Autobytel.com, its predecessors (See Note 1) and its wholly-owned subsidiaries:
Autobytel Services Corporation, Autobytel Acceptance Corporation, Autobytel
Insurance Services, Inc., Autobytel.ca Inc., Kre8.net, Inc., Auto-By-Tel
International LLC, Auto-by-Tel UK Limited and AutoVisions Communications, Inc.
All intercompany transactions and balances have been eliminated.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management 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. Actual results could differ from those estimates.
F-7
<PAGE> 92
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Cash and Cash Equivalents
For the purposes of the consolidated balance sheets and the consolidated
statements of cash flows, Autobytel.com considers all highly liquid investments
with an original maturity of three months or less to be cash equivalents.
Concentration of Credit Risk
Financial instruments that potentially subject Autobytel.com to significant
concentrations of credit risk consist primarily of accounts receivable. To date,
accounts receivable have primarily been derived from marketing fees billed to
subscribing dealers located in the United States and Canada. Autobytel.com
generally requires no collateral to support customer receivables. Autobytel.com
maintains reserves for potential credit losses. Historically, such losses have
been minor and within management's expectations. As of December 31, 1997 and
1998, no subscribing dealer accounted for greater than 10% of accounts
receivable.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the respective
assets, generally three years. Amortization of leasehold improvements is
provided using the straight-line method over the lesser of the remaining lease
term or the estimated useful lives of the improvements.
Stock-Based Compensation
In 1996, Autobytel.com adopted Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation." Autobytel.com has elected to continue accounting for
stock-based compensation issued to employees using Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and, accordingly,
pro forma disclosures required under SFAS No. 123 have been presented (See Note
8).
Revenue Recognition
Substantially all revenues to date consist of fees paid by subscribing
dealers. These fees are comprised of an initial fee, a monthly fee and, through
fiscal 1997, an annual fee. In January 1998, Autobytel.com started to eliminate
annual fees and increase monthly fees to subscribing dealers. The initial fee
and annual fee are recognized ratably over the service period of 12 months. The
monthly fee is recognized in the period services are provided. Deferred revenue
is comprised of unamortized fees.
Risks Due to Concentration of Significant Customers and Export Sales
For all periods presented in the accompanying consolidated statements of
operations, no subscribing dealer accounted for greater than 10% of revenues.
Autobytel.com conducts its business within one industry segment. Revenues
from customers outside of the United States were less than 10% of total revenues
for all periods presented in the accompanying consolidated statements of
operations.
F-8
<PAGE> 93
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Sales and Marketing
Sales and marketing expense primarily includes advertising and marketing
expenses paid to purchase request providers and developing Autobytel.com's brand
equity, as well as personnel and other costs associated with sales, training and
support of its dealer network. Sales and marketing expense also includes cost of
sales associated with the sale of computers, which was discontinued in February
1998. Sales and marketing costs are recorded as expenses as incurred. For the
years ended December 31, 1996, 1997 and 1998, Internet marketing and advertising
costs were $1,838, $5,828, and $11,090 and television advertising expenses were
$396, $4,048, and $5,296, respectively.
Product and Technology Development
Product and technology development expense primarily includes personnel
costs relating to enhancing the features, content and functionality of
Autobytel.com's Web site and its online dealer information platform (DRT), as
well as expenses associated with its telecommunications and computer
infrastructure. Product and technology development expenditures are expensed as
incurred.
General and Administrative
General and administrative expense primarily consists of executive,
financial and legal personnel expenses and related costs. General and
administrative expense for the year ended December 31, 1997 includes a
non-recurring $1.1 million charge associated with a proposed and withdrawn
initial public offering in April 1997.
Foreign Currency Translation
The functional currency of Autobytel.com's subsidiaries is the local
currency. Accordingly, all assets and liabilities are translated into United
States dollars at the current exchange rate as of the applicable balance sheet
date. Revenues and expenses are translated at the average exchange rate
prevailing during the period. Gains and losses resulting from the translation of
the financial statements are reported as a separate component of stockholders'
equity.
Computation of Basic Net Loss Per Share and Pro Forma Basic Net Loss Per
Share
Historical net loss per share has been calculated under SFAS No. 128,
"Earnings per Share." SFAS No. 128 requires companies to compute earnings per
share under two different methods (basic and diluted). Basic net loss per share
is calculated by dividing the net loss by the weighted average shares of common
stock outstanding during the period. No diluted loss per share information has
been presented in the accompanying consolidated statements of operations since
potential common shares from the conversion of preferred stock, stock options
and warrants are antidilutive. Autobytel.com evaluated the requirements of the
Securities and Exchange Commission Staff Accounting Bulletin (SAB) No. 98, and
concluded that there are no nominal issuances of common stock or potential
common stock which would be required to be shown as outstanding for all periods
as outlined in SAB No. 98.
F-9
<PAGE> 94
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Pro forma basic net loss per share has been calculated assuming the
conversion of the outstanding preferred stock into common stock, as if the
shares had been converted on the dates of their issuance.
New Accounting Pronouncements
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which establishes standards for reporting and presentation of
comprehensive income. SFAS No. 130, which was adopted by Autobytel.com in the
first quarter of 1998, requires companies to report a new measurement of income.
Comprehensive income (loss) is to include foreign currency translation gains and
losses and other unrealized gains and losses that have historically been
excluded from net income (loss) and reflected instead in equity. The only
comprehensive income included in the accompanying stockholders' equity is
foreign currency translation loss of $19 for the year ended December 31, 1998.
As this amount is not material, comprehensive income (loss) is not presented in
the accompanying consolidated financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." Autobytel.com adopted SFAS No. 131 in
the fourth quarter of 1998 (See Note 12).
In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use," which is effective
for fiscal years beginning after December 15, 1998. SOP 98-1 provides guidance
on accounting for the costs of computer software developed or obtained for
internal use and defines specific criteria that determine when such costs are
required to be expensed, and when such costs may be capitalized. Autobytel.com
currently expenses software development costs as incurred. Management
anticipates that it will continue to incur such development costs. However,
management expects that, as a percentage of revenues, such costs will remain
consistent.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of
Start-up Activities," which is effective for fiscal years beginning after
December 15, 1998. SOP 98-5 provides guidance on the financial reporting of
start-up cost and organization costs and require such costs to be expensed as
incurred. Management believes that the adoption of SOP 98-5 will not have a
material effect on Autobytel.com's consolidated financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is effective for fiscal years
beginning after June 15, 1999. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments. The statement requires that every
derivative instrument be recorded in the balance sheet as either an asset or
liability measured at its fair value, and that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met. Autobytel.com does not have any derivative instruments as of
December 31, 1998. Management believes that the adoption of SFAS No. 133 will
not have a material effect on Autobytel.com's consolidated financial statements.
F-10
<PAGE> 95
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. BUSINESS ACQUISITION
In May 1997, one of Autobytel.com's subsidiaries, Kre8.net, Inc., entered
into an asset purchase agreement with Internet Development Corporation to
purchase certain assets and to assume certain liabilities of the business. The
combined entity develops Web sites for automobile and other industries. The
purchase price for the net assets was $100 in cash.
The acquisition was accounted for by the purchase method. Accordingly, the
purchase price was allocated to the assets acquired and liabilities assumed
based on their estimated fair market values whose fair value equaled book value
at the closing date. The excess of purchase price over the estimated fair value
of net assets acquired was $93, and is being amortized using the straight-line
method over a period of three years. The results of operations of the acquired
business are included in the accompanying consolidated statements of operations
and in Autobytel.com's accumulated deficit beginning in May 1997. Internet
Development Corporation's revenues and results of operations since the date of
acquisition are immaterial.
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1998
------- -------
<S> <C> <C>
Computer software and hardware..................... $ 2,104 $ 2,800
Furniture and equipment............................ 892 1,206
Leasehold improvements............................. 427 561
------- -------
3,423 4,567
Less -- Accumulated depreciation and
amortization..................................... (1,106) (2,359)
------- -------
$ 2,317 $ 2,208
======= =======
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
Operating Leases
Autobytel.com leases its facilities and certain office equipment under
operating leases which expire on various dates through 2001. At December 31,
1998, future minimum lease payments are as follows:
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
-------------------------
<S> <C>
1999................................................... $ 619
2000................................................... 649
2001................................................... 501
2002................................................... --
2003................................................... --
Thereafter............................................. --
------
$1,769
======
</TABLE>
F-11
<PAGE> 96
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Rent expense was $92, $247, and $491 for the years ended December 31, 1996,
1997 and 1998, respectively.
Marketing and Advertising Agreements
In September 1997, Autobytel.com entered into a three year Internet
marketing agreement with a company that operates a search engine. The agreement
permits Autobytel.com to maintain certain exclusive promotional rights and
linkage with the search engine, and provides for certain advertising. The
payments under the agreement consist of a set-up fee, an annual fee and a
variable fee per purchase request. The set-up fee represents the cost of
initiating the link between Autobytel.com and the search engine and was expensed
in the period the link was established. Autobytel.com expenses the annual fee
ratably over a 12-month period and the variable fee in the period purchase
requests are received. The amount of variable fee per purchase request increases
as the number of purchase requests received reaches agreed upon increments.
Under the agreement, Autobytel.com is also to provide the search engine with up
to three new vehicles in a 12-month period. The agreement grants Autobytel.com
the right to terminate the agreement if the number of purchase requests does not
meet the threshold specified for each year of the term of the agreement. As of
December 31, 1998, the minimum future payments under the agreement amounted to
$3.7 million.
In June 1998, Autobytel.com entered into a two year Internet marketing
agreement with another company that operates a search engine. The agreement
permits Autobytel.com to maintain certain exclusive promotional rights and
linkage with the search engine. The payments under the agreement consist of an
annual fee, and a variable fee per purchase request. Autobytel.com expenses the
annual fee ratably over a 12-month period and the variable fee in the period
purchase requests are received. The amount of variable fee per purchase request
increases as the number of purchase requests received reaches agreed upon
increments. Under the agreement, Autobytel.com is also to provide the search
engine with up to three new vehicles in a 12-month period, the total value of
which is not to exceed $45, which has been expensed as incurred. The agreement
grants Autobytel.com the right to terminate the agreement if the number of
purchase requests does not meet the threshold specified for each year of the
term of the agreement. As of December 31, 1998, the minimum future payments
under the agreement amounted to $1.2 million.
Autobytel.com has agreements with other automotive information providers
that make available to consumers vehicle research data over the Internet. Such
agreements are generally for a term of one to four years and require that
Autobytel.com pay a combination of set-up, initial, annual, monthly and variable
fees based on the volume of purchase requests received by Autobytel.com. The
set-up fees are expensed as incurred, the initial fees and annual fees are
amortized over the period they relate to. The monthly fees are expensed in the
month they relate to and variable fees are expensed in the period purchase
requests are received. As of December 31, 1998, the minimum future commitments
under these agreements were $0.7 million.
During 1998, total Internet marketing and advertising costs incurred were
$11,090, including initial, annual and monthly fees of $50, $2,965 and $2,903,
respectively. No set-up fees were incurred in 1998 and variable fees were
$5,172.
F-12
<PAGE> 97
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Autobytel.com has agreements with network and cable television stations
under which it has the right to purchase television advertising. As of December
31, 1998, the minimum future commitments under these agreements were $1.7
million. These amounts are expensed as advertisements are aired.
For the years ended December 31, 1996, 1997 and 1998, Autobytel.com paid
$2,721, $8,474 and $15,540, respectively, under these marketing and advertising
agreements.
Employment Agreements
Autobytel.com has employment agreements with certain executives under
which, in the event of termination without cause or resignation with a good
reason, the executives are entitled to receive severance payments equal to the
base salary that would have been received by the executives over the remaining
term of the agreements. One of these agreements also provides for an additional
severance payment in the event of a change in control as defined in the
agreement. The term of the agreements range from two to three years.
Litigation
In the normal course of business, Autobytel.com is involved in various
legal proceedings. Based upon the information presently available, management
believes that the ultimate resolution of any such proceedings will not have a
material adverse effect on Autobytel.com's financial position, liquidity or
results of operations.
6. RETIREMENT SAVINGS PLAN
Autobytel.com has a Retirement Savings Plan (the Retirement Plan) which
qualifies as a deferred salary arrangement under Section 401(k) of the Internal
Revenue Code. The Retirement Plan covers all full time employees of
Autobytel.com who are over 21 years of age and have worked for Autobytel.com for
at least 90 days. Under the Retirement Plan, participating employees are allowed
to defer up to 15% of their pretax salaries up to a maximum of $10,000 per year.
Company contributions to the Retirement Plan are discretionary. Autobytel.com
has made no contributions since the inception of the Retirement Plan.
7. STOCKHOLDERS' EQUITY
Series A Convertible Preferred Stock
In August 1996, the Board of Directors authorized 1,500,000 shares of
Series A convertible preferred stock (Series A Preferred), and Autobytel.com
completed the sale of 1,500,000 shares of Series A Preferred at $10.00 per share
through a private placement offering. Of the total shares sold, 50,000 shares
were issued to an individual in exchange for $500 previously advanced to
Autobytel.com under three notes payable. In addition, $1,081 of the proceeds
were used to repay notes due to Autobytel.com's former Chairman and co-founder.
The Series A Preferred will be automatically converted into 1,666,667
shares of common stock at the conversion ratio of approximately 1:1.11 upon the
earliest of (i) the
F-13
<PAGE> 98
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
closing of an underwritten public offering of Autobytel.com's common stock with
a minimum per share price of $13.50 per share, and minimum aggregate offering
price of $30 million; (ii) the consent of two-thirds of the holders of preferred
stock; or (iii) when fewer than 300,000 shares of Series A Preferred remain
outstanding. The Series A Preferred is also convertible into 1,666,667 shares of
common stock at the option of the holder. Autobytel.com has reserved 1,666,667
shares of common stock to permit the conversion of the Series A Preferred.
Holders of Series A Preferred are entitled to one vote for each share of
common stock into which such shares of Series A Preferred may be converted
except with respect to election of directors, whereby the holders, voting
separately as a class, are entitled to elect two directors. Each share of Series
A Preferred entitles the holder to receive non-cumulative dividends, if and when
declared by the Board of Directors, prior to any dividend paid on Series B
Preferred or the common stock. Dividends, if any, on Series A Preferred shall be
declared at an annual rate of $0.80 per share. As of December 31, 1998, no
dividends have been declared.
In the event of liquidation, the Series A Preferred has preference over
Series B Preferred and the common stock in the amount of $10.00 per share, plus
declared but unpaid dividends.
Series B Convertible Preferred Stock
In January 1997, the Board of Directors authorized 967,915 shares of Series
B convertible preferred stock (Series B Preferred), and Autobytel.com completed
the sale of 967,915 shares of Series B Preferred at $9.35 per share through a
private placement offering.
The Series B Preferred will be automatically converted into 873,131 shares
of common stock at the conversion ratio of approximately 1:0.90 upon the
earliest of (i) the closing of an underwritten public offering of
Autobytel.com's common stock with a minimum per share price of $13.50 per share,
and minimum aggregate offering price of $30 million; (ii) the consent of
two-thirds of the holders of preferred stock; or (iii) when fewer than 200,000
shares of Series B Preferred remain outstanding. The Series B Preferred is also
convertible into 873,131 shares of common stock at the option of the holder.
Autobytel.com has reserved 873,131 shares of common stock to permit the
conversion of the Series B Preferred.
Holders of Series B Preferred are entitled to one vote for each share of
common stock into which such shares of Series B Preferred may be converted. Each
share of Series B Preferred entitles the holder to receive noncumulative
dividends, if and when declared by the Board of Directors, prior to any dividend
paid on the common stock. Dividends, if any, on Series B Preferred shall be
declared at an annual rate of $0.80 per share. As of December 31, 1998, no
dividends have been declared.
In the event of liquidation, the Series B Preferred has preference over the
common stock in the amount of $9.35 per share, plus declared but unpaid
dividends.
F-14
<PAGE> 99
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Series C Convertible Preferred Stock
In October 1997, the Board of Directors authorized 2,840,909 shares of
Series C convertible preferred stock (Series C Preferred), and Autobytel.com
completed the sale of 1,477,274 shares of Series C Preferred at $8.80 per share
through a private placement offering. The Board of Directors authorized an
additional 1,136,363 and 3,000,000 shares of Series C Preferred in February and
December 1998, respectively.
In April 1998, Autobytel.com issued 56,776 shares of its Series C Preferred
in payment of television advertising with an estimated fair market value of
$500. The majority of the advertising was aired and expensed in the three months
ended March 31, 1998.
In May 1998, Autobytel.com sold 568,182 shares of the Series C Preferred at
$8.80 per share through a private placement.
In October 1998, Autobytel.com issued 64,233 shares of Series C Preferred
in payment of television advertising with an estimated fair market value of
$565. The amount was expensed in the three months ended December 31, 1998.
In November 1998, Autobytel.com sold 568,182 shares of Series C Preferred
at $8.80 per share through a private placement.
In December 1998, Autobytel.com sold 2,234,091 shares of Series C Preferred
at $8.80 per share through private placements. Of these shares, 1,136,364 shares
were issued to an investor with whom Autobytel.com entered into a Directed
Proceeds Agreement. Under the Directed Proceeds Agreement, Autobytel.com is
committed to expend up to $1,000 for the development of technology for broadband
applications. In addition, Autobytel.com issued a warrant for 300,000 shares of
common stock in exchange for the right to participate in the development of this
technology and the warrant holder's agreement to use commercially reasonable
efforts to involve Autobytel.com in other broadband application projects. The
fair value of the warrant ($540) has been recorded as a prepaid expense at
December 31, 1998.
The Series C Preferred will be automatically converted into 3,312,492
shares of common stock at the conversion ratio of approximately 1:0.67 upon the
earliest of (i) the closing of an underwritten public offering of
Autobytel.com's common stock with a minimum per share price of $13.50 per share,
and minimum aggregate offering price of $30 million; (ii) the consent of
two-thirds of the holders of preferred stock; or (iii) when fewer than 250,000
shares of Series C Preferred remain outstanding. The Series C Preferred is also
convertible into 3,312,492 shares of common stock at the option of the holder.
Autobytel.com has reserved 3,312,492 shares of common stock to permit the
conversion of the Series C Preferred.
Holders of Series C Preferred are entitled to one vote for each share of
common stock into which such shares of Series C Preferred may be converted. Each
share of Series C Preferred entitles the holder to receive non-cumulative
dividends, if and when declared by the Board of Directors, prior to any dividend
paid on Series A and Series B Preferred and the common stock. Dividends, if any,
on Series C Preferred shall be declared at an annual rate of $0.80 per share. As
of December 31, 1998, no dividends have been declared.
F-15
<PAGE> 100
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In the event of liquidation, the Series C Preferred has preference over
Series A and Series B Preferred and the common stock in the amount of $8.80 per
share, plus declared but unpaid dividends.
As of December 31, 1998, 2,000,000 shares of preferred stock were
undesignated.
Common Stock
Under the terms of the Plan of Organization, the interests of the members
of the LLCs were transferred to autobytel.com inc. in a tax-free transaction. In
consideration for their respective ownership interests, the members of ABT and
ABTAC received 8,250,000 shares of common stock of Autobytel.com.
Warrants
In November 1998, Autobytel.com issued a warrant to purchase 150,000 shares
of common stock to an investor in its Series C Preferred in exchange for the
investor's commitment to assist Autobytel.com with organizational and start-up
activities related to a Pan-European entity in which Autobytel.com may invest
with the investor. The warrant is exercisable at $13.20 per share and expires in
November 2001. The warrant was valued at $270, which was expensed in 1998, as
the investor has fulfilled its commitment and has no further obligation to
Autobytel.com.
In December 1998, Autobytel.com issued warrants to purchase 289,800 shares
of common stock to another investor in its Series C Preferred in exchange for
the investor's commitment to assist Autobytel.com with organizational and
start-up activities related to a Pan-European entity in which Autobytel.com may
invest with the investor. The warrants are exercisable at $13.20 per share and
expire in December 2001. The warrants were valued at $522, which was expensed in
1998, as the investor has fulfilled its commitment and has no further obligation
to Autobytel.com.
In December 1998, Autobytel.com issued a warrant to purchase 300,000 shares
of common stock to an investor in exchange for the right to participate in the
development of broadband application technology. The warrant is exercisable at
$13.20 per share and expires in December 2001. The warrant was valued at $540,
and is recorded as a prepaid expense at December 31, 1998.
The fair value of each of these warrants was estimated using the
Black-Scholes option-pricing model and the following assumptions: (1) no
dividend yield, (2) volatility of 0.10%, (3) risk-free interest rate of 4.90%,
and (4) expected life of three years.
8. STOCK OPTION PLANS
1996 Stock Option Plan
Autobytel.com's 1996 Stock Option Plan (the Option Plan) was approved by
the Board of Directors in May 1996. The Option Plan was terminated by a
resolution of the Board of Directors in October 1996, at which time 870,555
options had been issued. The Option Plan provided for the granting to employees
and directors of incentive stock options within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the Code), and for the granting
to employees, consultants and directors of nonstatutory
F-16
<PAGE> 101
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
stock options. Autobytel.com reserved 1,194,444 shares of common stock for
exercise of stock options under the Option Plan. The exercise price of incentive
stock options granted under the Option Plan could not be lower than the fair
market value of the common stock, and the exercise price of nonstatutory stock
options could not be less than 85% of the fair market value of the common stock,
as determined by the Board of Directors, on the date of grant. With respect to
any participants who, at the time of grant, owned stock that possessed more than
10% of the voting power of all classes of stock of Autobytel.com, the exercise
price of any stock option granted to such person was to be at least 110% of the
fair market value on the grant date, and the maximum term of such option was
five years. The term of all other options granted under the Option Plan did not
exceed 10 years. Stock options granted under the Option Plan vest according to
vesting schedules determined by the Board of Directors. As of December 31, 1998,
options to purchase an aggregate of 206,388 shares of common stock at an
exercise price ranging from $0.84 to $0.90 per share were outstanding under the
Option Plan.
1996 Stock Incentive Plan
Autobytel.com's 1996 Stock Incentive Plan (the Incentive Plan) was approved
by the Board of Directors in October 1996, and was amended in November 1996. The
Incentive Plan provides for the granting to employees and directors of incentive
stock options within the meaning of Section 422 of the Code, and for the
granting to employees, directors and consultants of nonstatutory stock options
and stock purchase rights. Autobytel.com has reserved a total of 833,333 shares
of common stock for issuance under the Incentive Plan. The exercise price of
stock options granted under the Incentive Plan cannot be lower than the fair
market value of the common stock, as determined by the Board of Directors, on
the date of grant. With respect to any participants who, at the time of grant,
own stock possessing more than 10% of the voting power of all classes of stock
of Autobytel.com, the exercise price of stock options granted to such person
must be at least 110% of the fair market value on the grant date, and the
maximum term of such options is five years. The term of all other options
granted under the Incentive Plan may be up to 10 years. Stock options granted
under the Incentive Plan vest according to vesting schedules determined by the
Board of Directors.
1998 Stock Option Plan
In December 1998, Autobytel.com adopted the 1998 Stock Option Plan (the
1998 Option Plan). Autobytel.com has reserved 1,500,000 shares under the 1998
Option Plan. The 1998 Option Plan provides for the granting to employees of
incentive stock options within the meaning of the Code, and for the granting to
employees of nonstatutory stock options. The exercise price of non-statutory
options granted under the 1998 Option Plan cannot be lower than 85% of the fair
market value of the common stock on the date of grant. The exercise price of all
incentive stock options granted cannot be lower than the fair market value on
the grant date. With respect to any participants who beneficially own more than
10% of the voting power of all classes of stock of Autobytel.com, the exercise
price of any stock option granted to such person must be at least 110% of the
fair market value on the grant date, and the maximum term of such option is five
years. The term of all other options granted under the 1998 Option Plan may be
up to 10 years. Under the 1998 Option Plan, certain nonstatutory stock options
(Performance Options) vest over a
F-17
<PAGE> 102
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
time period determined by the Board of Directors, however, the vesting could be
accelerated based on the performance of Autobytel.com's common stock. In
December 1998, the Board of Directors granted Performance Options to purchase
700,000 shares of common stock to its executives at an exercise price of $13.20
per share, which represents the fair market value on the date of grant. These
options vest over a seven-year period, but the vesting could be accelerated
based on the performance of Autobytel.com's common stock. The accelerated
vesting schedule is conditioned on Autobytel.com consummating an initial public
offering. The accelerated vesting schedule provides that the grants will vest in
six installments, one installment vesting each six months over a three-year
period if pre-established average trading prices of the common stock are
achieved. Those installments will vest if the average trading price exceeds the
exercise price by $6.60, $13.20, $19.80, $26.40, $33.00 and $39.60,
respectively, in the applicable six month period after the date of grant. All
other stock options granted under the 1998 Option Plan vest according to vesting
schedules determined by the Board of Directors.
The 1998 Option Plan provides that, unless otherwise provided in the stock
option agreement, in the event of any merger, consolidation, or sale or transfer
of all or any part of Autobytel.com's business or assets, all rights of the
optionee with respect to the unexercised portion of any option shall become
immediately vested and may be exercised immediately, except to the extent that
any agreement or undertaking of any party to any such merger, consolidation, or
sale or transfer of assets makes specific provisions for the assumption of the
obligations of Autobytel.com with respect to the 1998 Option Plan.
During the year ended December 31, 1996, Autobytel.com granted options
under the aforementioned plans to purchase an aggregate of 1,568,059 shares of
common stock at various exercise prices ranging from $0.90 to $11.25 per share.
During the year ended December 31, 1996, Autobytel.com recorded, based upon an
independent appraisal obtained by Autobytel.com's Board of Directors, $87 of
deferred compensation expense relating to certain options. This amount was
amortized over the vesting periods of the options. Amortization of deferred
compensation for the years ended December 31, 1996, 1997 and 1998 was $61, $25
and $1, respectively.
During the year ended December 31, 1997, Autobytel.com granted options to
various employees to purchase 853,504 shares of common stock at an exercise
price of $13.20 per share.
During the year ended December 31, 1998, Autobytel.com granted options to
various employees to purchase 1,630,340 shares of common stock at an exercise
price of $13.20 per share.
In January 1999, Autobytel.com granted options to Hoshi Printer, Senior
Vice President and Chief Financial Officer, to purchase 150,000 shares of common
stock at an exercise price of $13.20 per share.
1996 Employee Stock Purchase Plan
Autobytel.com's 1996 Employee Stock Purchase Plan (the Purchase Plan) was
adopted by the Board of Directors in November 1996. The Purchase Plan, which is
intended to qualify under Section 423 of the Code, permits eligible employees of
Autobytel.com to purchase shares of common stock through payroll deductions of
up to
F-18
<PAGE> 103
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
ten percent of their compensation, up to a certain maximum amount for all
purchase periods ending within any calendar year. Autobytel.com has reserved a
total of 444,444 shares of common stock for issuance under the Purchase Plan.
The price of common stock purchased under the Purchase Plan will be 85% of the
lower of the fair market value of the common stock on the first or last day of
each six month purchase period. Employees may end their participation in the
Purchase Plan at any time during an offering period, and they will be paid their
payroll deductions to date. Participation ends automatically upon termination of
employment with Autobytel.com. There have been no stock purchases under the
Purchase Plan. In January 1999, the Board of Directors ratified the suspension
of the Purchase Plan.
F-19
<PAGE> 104
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A summary of the status of Autobytel.com's stock options as of December 31,
1996, 1997 and 1998, and changes during such periods is presented below:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE
OPTIONS PRICE
---------- --------
<S> <C> <C>
Outstanding at December 31, 1995................ -- $ --
Granted......................................... 1,568,059 3.24
Exercised....................................... (28,148) 0.90
Canceled........................................ (19,353) 0.90
---------- ------
Outstanding at December 31, 1996................ 1,520,558 3.32
Granted......................................... 853,504 13.20
Exercised....................................... (39,629) 0.90
Canceled........................................ (156,688) 7.88
---------- ------
Outstanding at December 31, 1997................ 2,177,745 6.92
Granted......................................... 1,630,340 13.20
Exercised....................................... (181,012) 0.94
Canceled........................................ (767,733) 6.93
---------- ------
Outstanding at December 31, 1998................ 2,859,340 $10.87
========== ======
Exercisable at December 31, 1996................ 362,958 $ 0.89
========== ======
Exercisable at December 31, 1997................ 858,187 $ 2.78
========== ======
Exercisable at December 31, 1998................ 738,860 $ 6.42
========== ======
Weighted-average fair value of options granted
during 1996 whose exercise price is less than
the market price of the stock on the grant
date (169,445 options)........................ $ 2.45
======
Weighted-average fair value of options granted
during 1996 whose exercise price exceeds the
market price of the stock on the grant date
(1,398,614 options)........................... $ 1.16
======
Weighted-average fair value of options granted
during 1997 whose exercise price equals the
market price of the stock on the grant date
(853,504 options)............................. $ 2.73
======
Weighted-average fair value of options granted
during 1998 whose exercise price equals the
market price of the stock on the grant date
(1,630,340 options)........................... $ 3.25
======
</TABLE>
The fair value of each option granted through December 31, 1998 is
estimated using the Black-Scholes option-pricing model on the date of grant
using the following assumptions: (i) no dividend yield, (ii) volatility of
effectively zero, (iii) weighted-average risk-free interest rate of
approximately 6.70%, 6.18%, and 4.80% for the years ended December 31, 1996,
1997 and 1998, respectively, and (iv) expected life of six years for the years
ended December 31, 1996 and 1997 and four to seven years for the year ended
December 31, 1998.
F-20
<PAGE> 105
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table summarizes information about stock options outstanding
at December 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------- --------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
NUMBER OF REMAINING LIFE AVERAGE NUMBER OF AVERAGE
EXERCISE PRICE OPTIONS (IN YEARS) EXERCISE PRICE OPTIONS EXERCISE PRICE
- -------------- --------- -------------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C>
0$.84......... 166,667 7.5 $ 0.84 166,667 $ 0.84
0.90......... 39,721 7.5 0.90 39,442 0.90
4.50......... 466,666 7.8 4.50 279,444 4.50
11.25........ 24,443 7.9 11.25 16,294 11.25
13.20........ 2,161,843 9.5 13.20 237,013 13.20
--------- --- ------ ------- ------
0$.84-$13.20.. 2,859,340 9.1 $10.87 738,860 $ 6.42
========= === ====== ======= ======
</TABLE>
Had compensation cost for Autobytel.com's stock option grants for its
stock-based compensation plans been determined consistent with SFAS No. 123,
Autobytel.com's net loss and net loss per share for the years ended December 31,
1996, 1997 and 1998 would approximate the pro forma amounts below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1996 1997 1998
------- -------- --------
<S> <C> <C> <C>
Net loss, as reported.................. $(6,035) $(16,810) $(19,398)
Net loss per share, as reported........ (0.73) (2.03) (2.30)
Net loss, pro forma.................... (6,270) (17,624) (21,109)
Net loss per share, pro forma.......... (0.76) (2.13) (2.51)
</TABLE>
The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts.
9. SALE OF AUTO-BY-TEL UK LIMITED
In November 1998, Autobytel.com entered into a Share Purchase Agreement
with Inchcape Automotive Limited to sell 100% of its United Kingdom operations
for a nominal cash amount and assumption of liabilities of $1,794. The sale
resulted in a gain of $1,408, which is included in other income in the
accompanying consolidated statements of operations. In connection with the Share
Purchase Agreement, Autobytel.com entered into a License and Service Agreement
with Auto-by-Tel UK Limited under which it will grant to Auto-by-Tel UK Limited
a license to use its proprietary software, technology and other business
procedures and provide maintenance and support in exchange for minimum annual
license and maintenance and support fees over a 20-year period.
The minimum annual license fee of $850 is payable in advance on a quarterly
basis beginning on the launch date of the Web site. The Web site has not yet
been launched. Beginning in the fourth year of this agreement, additional
license fees are payable based on a formula involving a percentage of
Auto-by-Tel UK Limited's gross revenue. A maintenance and support fee of $250 is
payable in advance on a monthly basis beginning on the execution date of the
agreement.
F-21
<PAGE> 106
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Annual license revenue will be recognized ratably over a 12-month period
beginning on the Web site launch date. Maintenance and support revenue will be
recognized ratably over the term of the agreement beginning on the execution
date of the agreement, as the maintenance and support fee also covers efforts to
develop the Web site. Autobytel.com recognized revenues of $26 under the License
and Service Agreement in the year ended December 31, 1998.
Under the Share Purchase Agreement, Inchcape shall not transfer 50% or more
of the shares of Auto-by-tel UK Limited for a period of 365 days from the Web
site launch date. Inchcape Automotive Limited, however, is entitled to transfer
any shares, not to exceed 50%, at any time after the execution of the Share
Purchase Agreement within the one-year period following the termination or
expiration of the License and Service Agreement. If Inchcape Automotive Limited
wishes to transfer any shares to a third party, Autobytel.com has the right to
purchase all, but not a portion, of such shares.
10. INCOME TAXES
Through May 1996, the LLCs were taxed as partnerships under the provisions
of the Internal Revenue Code of 1986 (Internal Revenue Code). Under those
provisions, Autobytel.com was not subject to corporate income taxes on its
taxable income. Instead, Autobytel.com's taxable income or loss was included in
the individual income tax returns of its members. Effective May 31, 1996, under
the terms of the Plan of Organization, the LLCs were reorganized as a C
Corporation under the provisions of the Internal Revenue Code (See Note 1). The
reorganization required that Autobytel.com adopt SFAS No. 109, "Accounting for
Income Taxes." Under SFAS No. 109, deferred income tax assets and liabilities
are determined based on the differences between the book and tax basis of assets
and liabilities and are measured using the currently enacted tax rates and laws.
The cumulative tax effect of these temporary differences was immaterial at the
time of the reorganization.
No provision for federal income taxes has been recorded as Autobytel.com
incurred net operating losses through December 31, 1998. Provision for income
taxes included in the accompanying consolidated statements of operations
primarily consists of franchise taxes paid to the state of Delaware. As of
December 31, 1998, Autobytel.com had approximately $37.1 million and $18.4
million of federal and state net operating loss carryforwards available to
offset future taxable income; such carry forwards expire in various years
through 2018. Under the Tax Reform Act of 1986, the amounts of and benefits from
Autobytel.com's net operating loss carryforwards will likely be limited upon the
completion of the initial public offering due to a cumulative ownership change
of more than 50% over a three year period. Based on preliminary estimates,
management believes the effect of such limitation, if imposed, will not have a
material adverse effect on Autobytel.com.
Net deferred income tax assets, totaling approximately $6.3 million at
December 31, 1997 and $15.8 million at December 31, 1998, consist primarily of
the tax effect of net operating loss carry forwards, reserves and accrued
expenses which are not yet deductible for tax purposes. Autobytel.com has
provided a full valuation allowance on these deferred income tax assets because
of the uncertainty regarding their realization.
F-22
<PAGE> 107
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. RELATED PARTY TRANSACTIONS
Peter R. Ellis
In March 1998, Autobytel.com extended a $250 loan to co-founding member and
stockholder, Peter R. Ellis. The loan bears interest at 8% per annum compounded
quarterly and principal and accrued interest are due in full in March 2003. The
loan is secured by Mr. Ellis's stock in Autobytel.com. In June 1998, Mr. Ellis
resigned from Autobytel.com as Chief Executive Officer. In August 1998,
Autobytel.com executed a two year agreement with Mr. Ellis to provide advisory
services. Under the agreement, Mr. Ellis received $500 in the first year and is
entitled to receive $5 per month in the second year of the agreement term. The
amounts paid to Mr. Ellis under this agreement are included in operating
expenses in the accompanying consolidated statements of operations.
12. BUSINESS SEGMENT
Autobytel.com conducts its business within one business segment, which is
defined as providing online vehicle purchasing and other related services.
13. SUBSEQUENT EVENTS
Proposed Initial Public Offering
In January 1999, the Board of Directors authorized the filing of a
registration statement with the Securities and Exchange Commission to permit
Autobytel.com to sell shares of its common stock in connection with the proposed
initial public offering (IPO). If the offering is consummated under the terms
presently anticipated, the Series A, the Series B and the Series C Preferred
(collectively Preferred Stock) outstanding at December 31, 1998 will
automatically convert to common stock upon closing of the IPO (See Note 7).
1999 Stock Option Plan
In January 1999, the Board of Directors adopted the 1999 Stock Option Plan
(the 1999 Option Plan). Autobytel.com has reserved 1,800,000 shares under the
1999 Option Plan. The 1999 Option Plan provides for the granting of stock
options to key employees of Autobytel.com. Under the 1999 Option Plan, not more
than 1,000,000 shares may be granted after March 31, 1999. The 1999 Option Plan
provides for an automatic grant of an option to purchase 20,000 shares of common
stock to each non-employee director on the date on which the person first
becomes a non-employee director. In each successive year the non-employee
director shall automatically be granted an option to purchase 5,000 shares on
November 1 of each subsequent year provided the non-employee director has served
on the Board for at least six months. Each option shall have a term of 10 years.
Such options vest in their entirety and become exercisable on the first
anniversary of the grant date, provided that the optionee continues to serve as
a director on such date and the exercise price per share shall be 100% of the
fair market value of Autobytel.com's common stock on the date of grant. The 1999
Option Plan is identical in all other material respects to the 1998 Option Plan.
F-23
<PAGE> 108
AUTOBYTEL.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Rescission Offer for Stock Options Granted in Excess of the 1996 Incentive
Plan Limit
From May 1997 to January 1999, Autobytel.com issued grants of incentive
stock options in excess of the plan limit of 833,333 shares. Subsequent to
December 31, 1998, Autobytel.com offered to exchange the affected options for a
cash payment or a new grant of incentive stock options under the 1999 Option
Plan. In 1999, Autobytel.com has resolved this matter without a material impact
on its financial statements. Total cash payments were less than $10. The new
stock options were granted at the fair market value at the date of the new
grant, which equaled the exercise price of the original options. All other
significant provisions associated with the options remained the same.
[The inside back cover of the prospectus depicts a map of the United States with
dots generally representing the territories covered by United States dealers
participating in the Autobytel.com network.]
F-24
<PAGE> 109
- ------------------------------------------------------
- ------------------------------------------------------
YOU MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS
PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR SALE OF COMMON STOCK
MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER THE DATE OF
THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR SOLICITATION OF AN
OFFER TO BUY THESE SHARES OF COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH THE
OFFER OR SOLICITATION IS UNLAWFUL.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................... 3
Risk Factors............................ 6
Use of Proceeds......................... 20
Dividend Policy......................... 20
Capitalization.......................... 21
Dilution................................ 22
Selected Consolidated Financial Data.... 23
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 24
Business................................ 35
Management.............................. 50
Financings and Related Party
Transactions.......................... 64
Principal and Selling Stockholders...... 68
Description of Capital Stock............ 70
Shares Eligible for Future Sale......... 73
Material United States Tax
Considerations for Non-U.S. Holders... 75
Underwriting............................ 80
Legal Matters........................... 82
Experts................................. 82
Additional Information.................. 83
Index to Consolidated Financial
Statements............................ F-1
</TABLE>
------------------
UNTIL , 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
THAT BUY, SELL OR TRADE THESE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
4,500,000 SHARES
LOGO
AUTOBYTEL.COM INC.
COMMON STOCK
-------------------
PROSPECTUS
-------------------
BT ALEXS BROWN
LEHMAN BROTHERS
PAINEWEBBER INCORPORATED
------------------
, 1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 110
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, to be paid in connection with the sale
of the common stock being registered, all of which will be paid by the
Registrant. All amounts are estimates except the SEC registration, NASD and
Nasdaq filing fees.
<TABLE>
<S> <C>
SEC Registration fee....................................... $ 32,000
NASD filing fee............................................ 9,000
Nasdaq National Market listing fee......................... 95,000
Blue Sky fees and expenses................................. 5,000
Accounting fees and expenses............................... 453,000
Legal fees and expenses.................................... 585,000
Transfer agent and registrar fees.......................... 15,000
Printing and engraving expenses............................ 300,000
Miscellaneous expenses..................................... 77,000
----------
Total............................................ $1,571,000
==========
</TABLE>
- -------------------------
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("Delaware Law") and
Autobytel.com's amended and restated certificate of incorporation provide for
indemnification of Autobytel.com's directors and officers in a variety of
circumstances which may include liabilities under the Securities Act. Article IX
of Autobytel.com's amended and restated certificate of incorporation provides
that Autobytel.com shall indemnify to the full extent permitted by the laws of
Delaware, as from time to time in effect, the persons described in Section 145
of Delaware Law.
The general effect of the provisions in our amended and restated
certificate of incorporation and Delaware Law is to provide that we shall
indemnify our directors and officers against all liabilities and expenses
actually and reasonably incurred in connection with the defense or settlement of
any judicial or administrative proceedings in which they have become involved by
reason of their status as corporate directors or officers, if they acted in good
faith and in the reasonable belief that their conduct was neither unlawful (in
the case of criminal proceedings) nor inconsistent with the best interests of
Autobytel.com. With respect to legal proceedings by or in the right of
Autobytel.com in which a director or officer is adjudged liable for improper
performance of his duty to Autobytel.com or another enterprise which such person
served in a similar capacity at the request of Autobytel.com, indemnification is
limited by such provisions to that amount which is permitted by the court.
We will maintain officers' and directors' liability insurance which will
insure against liabilities that our officers and directors may incur in such
capacities. We have also entered into indemnification agreements with its
directors and officers.
Reference is made to the Proposed Form of Underwriting Agreement filed as
Exhibit 1.1 which provides for indemnification of the directors and officers of
Autobytel.com signing the Registration Statement and certain controlling persons
of Autobytel.com against certain liabilities, including those arising under the
Securities Act in certain instances, of the Underwriters.
II-1
<PAGE> 111
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since Autobytel.com's inception, Autobytel.com has made the following sales
of securities that were not registered under the Securities Act:
1. On May 31, 1996, Autobytel.com issued and sold 8,250,000 shares of
common stock in exchange for membership interests in Autobytel LLC and
Autobytel Acceptance Corporation LLC.
2. During the period from May 18, 1996 through December 31, 1998,
Autobytel.com granted options to purchase an aggregate of 2,847,496 shares
of common stock pursuant to the 1996 Stock Option Plan, 1996 Stock
Incentive Plan and 1998 Stock Option Plan of which 248,788 options have
been exercised.
3. On August 20, 1996, Autobytel.com issued and sold 1,500,000 shares
of series A preferred stock in a private placement for an aggregate
consideration of $15.0 million in cash and cancellation of indebtedness. In
connection with such financing, Autobytel.com issued (i) 200,000 shares to
ContiTrade Services L.L.C. in exchange for $2.0 million in cash, (ii)
400,000 shares to National Union Fire Insurance company of Pittsburgh, PA
in exchange for $4.0 million in cash, (iii) 800,000 shares to General
Electric Capital Corporation in exchange for $8.0 million in cash, and (iv)
100,000 shares to Michael Fuchs in exchange for $1.0 million in cash and
cancellation of indebtedness.
4. On August 26, 1996, Autobytel.com issued and sold 6,667 shares to
a consultant of Autobytel.com.
5. On January 30, 1997, Autobytel.com issued and sold 967,915 shares
of series B preferred stock in a private placement for an aggregate
consideration of $9.05 million in cash. In connection with such financing,
Autobytel.com issued (i) 133,690 shares to ContiTrade Services L.L.C. in
exchange for $1.25 million in cash, (ii) 267,380 shares to National Union
Fire Insurance Company of Pittsburgh, PA in exchange for $2.5 million in
cash, (iii) 534,760 shares to General Electric Capital Corporation in
exchange for $5.0 million in cash, (iv) 32,085 shares to Michael Fuchs in
exchange for $300 thousand in cash.
6. On October 21, 1997, Autobytel.com issued and sold 1,477,274
shares of series C preferred stock in a private placement for an aggregate
consideration of $13.0 million in cash. In connection with such financing,
Autobytel.com issued (i) 681,819 shares to General Electric Capital
Corporation in exchange for approximately $6.0 million in cash; (ii)
227,273 shares to National Union Fire Insurance Company of Pittsburgh, PA
in exchange for approximately $2.0 million in cash; and (iii) 568,182
shares to Tozer Kemsley and Millbourn Automotive Ltd., a unit of Inchcape
Motors International plc in exchange for approximately $5.0 million in
cash.
7. On January 30, 1998, Autobytel.com issued to John M. Markovich a
warrant to purchase 33,333 shares of common stock of Autobytel.com (after
adjustment for the Reverse Split) at an exercise price of $11.25 per share.
The warrant expires on January 30, 2003.
8. On April 20, 1998, Autobytel.com entered into a transaction with
National Broadcasting Company, Inc. ("NBC") whereby Autobytel.com issued
and sold 56,776 shares of series C preferred stock in exchange for prime
time advertisement spots with a fair market value of not less than
$499,629.
II-2
<PAGE> 112
9. On May 7, 1998 Autobytel.com issued and sold 568,182 shares of
series C preferred stock to Bilia AB in a private placement for a total
consideration of approximately $5.0 million in cash.
10. On October 30, 1998, Autobytel.com entered into another
transaction with NBC whereby Autobytel.com issued and sold 64,233 shares of
Series C Stock in exchange for prime time advertisement spots with a fair
market value of not less than $565,250.
11. On November 10, 1998, Autobytel.com issued and sold 568,182 shares
of Series C Stock to Invision AG for a total consideration of approximately
$5 million in cash.
12. On November 10, 1998, Autobytel.com issued to Invision AG a
warrant to purchase an aggregate of 150,000 shares of common stock of
Autobytel.com at an exercise price of $13.20 per share. This warrant
expires on November 10, 2001.
13. On December 16, 1998, Autobytel.com issued and sold 643,182 shares
of Series C Preferred Stock to Aureus Private Equity AG for a total
consideration of approximately $5,660,000 in cash.
14. On December 16, 1998, Autobytel.com issued to Aureus Private
Equity AG a warrant to purchase an aggregate of 169,800 shares of common
stock of Autobytel.com at an exercise price of $13.20 per share. This
warrant expires on December 16, 2001.
15. On December 21, 1998, Autobytel.com issued and sold 1,136,364
shares of Series C Preferred Stock to MediaOne Interactive Services, Inc.
for a total consideration of approximately $10,000,000 in cash.
16. On December 21, 1998, Autobytel.com issued to MediaOne Interactive
Services, Inc. a warrant to purchase an aggregate of 300,000 shares of
common stock of Autobytel.com at an exercise price of $13.20 per share.
This warrant expires on December 21, 2001.
17. On December 23, 1998, Autobytel.com issued an additional warrant
to Aureus Private Equity AG to purchase 120,000 shares of common stock of
Autobytel.com at an exercise price of $13.20 per share. This warrant
expires on December 23, 2001.
18. On December 24, 1998, Autobytel.com issued and sold an additional
454,545 shares of Series C Preferred Stock to Aureus Private Equity AG for
a total consideration of approximately $4,000,000 in cash.
19. On December 30, 1998, Autobytel.com issued and sold 1,000 shares
of Common Stock to Mr. Kaplan for a total consideration of $13,200 in cash.
None of the foregoing transactions involved any underwriters, underwriting
discounts or commissions, or any public offering, and Autobytel.com believes
that each transaction was exempt from the registration requirements of the
Securities Act by virtue of Section 4(2) thereof, Regulation D promulgated
thereunder or Rule 701 pursuant to compensatory benefit plans and contracts
relating to compensation as provided under Rule 701. We did not engage in any
general solicitation in connection with such sales and, other than Rule 701
issuances, believe that each acquiror qualifies as an "accredited investor"
under Rule 501. In addition, the recipients in such transactions represented
their intention to acquire the securities for investment only and not with a
view to or for sale in
II-3
<PAGE> 113
connection with any distribution thereof, and appropriate legends were affixed
to the share certificates and instruments issued in such transactions.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
a. Exhibits
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
1.1 Form of Underwriting Agreement
3.1** Amended and Restated Certificate of Incorporation of
autobytel.com inc. certified by the Secretary of State of
Delaware (filed December 14, 1998 and amended March 1, 1999)
3.2** Amended and Restated Bylaws of autobytel.com inc.
4.1** Form of Stock Certificate
4.2** Amended and Restated Investors' Rights Agreement dated
October 21, 1997, as amended from time to time, between
autobytel.com inc. and the Investors named in Exhibit A
thereto
4.3** Form of Lock-Up Agreement
5.1** Opinion and Consent of Paul, Hastings, Janofsky & Walker LLP
9.1** Voting Proxy dated January 11, 1999 by Peter R. Ellis
10.1** Form of Indemnification Agreement between autobytel.com inc.
and its directors and officers
10.2 Employment Agreement dated July 1, 1998 between
autobytel.com inc. and Mark W. Lorimer
10.3** Employment Agreement dated December 17, 1998 between
autobytel.com inc. and Anne Delligatta
10.4** Amended and Restated Employment and Severance Agreement
dated March 4, 1999 between autobytel.com inc. and Michael
J. Lowell
10.5** 1996 Stock Option Plan and related agreements
10.6** 1996 Stock Incentive Plan and related agreements
10.7** 1996 Employee Stock Purchase Plan
10.8** 1998 Stock Option Plan
10.9 Marketing Agreement dated July 22, 1996, as amended on July
23, 1996, by and among Auto-By-Tel Acceptance Corporation, a
subsidiary of the Registrant ("ABTAC"), the Registrant, as
guarantor of the obligations of ABTAC, and AIU Insurance
Company, American International South Insurance Company,
American Home Assurance Company, American International
Insurance Company, American International Insurance Company
of California, Inc., Illinois National Insurance Company,
Minnesota Insurance Company, National Union Fire Insurance
Company of Pittsburgh, PA and the Insurance Company of the
State of Pennsylvania
10.10 Marketing Agreement dated February 8, 1996 between
Auto-By-Tel, LLC and Edmund's Publications Corp.
10.11 Amendment to Marketing Agreement of February 8, 1996, dated
June 6, 1997 between Edmund Publications Corp. and the
Registrant
10.12 Form of Dealership Agreements
10.13 Financing Inquiry Referral Agreement dated October 25, 1996
among Auto-By-Tel, Inc, as guarantor, Auto-By-Tel Acceptance
Corporation and Chase Manhattan Automotive Finance
Corporation
</TABLE>
II-4
<PAGE> 114
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
10.14 Marketing and Application Processing Agreement dated
February 1, 1997 between General Electric Capital Auto
Financial Services, Inc., Auto-By-Tel Acceptance Corporation
("ABTAC") and Auto-By-Tel, Inc., as guarantor
10.15 Content License and Channel Sponsorship Term Sheet dated
September 12, 1997 between Excite, Inc. and Auto-By-Tel
10.16 Data License and Web Site Agreement dated April 1, 1997
between IntelliChoice, Inc. and Auto-By-Tel Marketing
Corporation and the Registrant
10.17 Kelley Blue Book/Auto-By-Tel Agreement dated November 19,
1997, as amended July 1, 1998, between Kelley Blue Book and
Auto-By-Tel Corporation
10.18 Listings Distribution, Sponsorship, Display Advertising and
Network Affiliation Agreement dated May 29, 1997 between
Classifieds2000, Inc. and Auto-By-Tel Corporation
10.19 License Agreement dated June 4, 1998 among J.D. Power and
Associates, Auto-By-Tel Marketing Corporation, and
autobytel.com inc.
10.20 Site Page Sponsorship and Commission Agreement dated June
25, 1997, between Auto-By-Tel Marketing Corporation and AT&T
Corporation
10.21 Letter agreement dated April 1, 1997, between Auto-By-Tel
Marketing Corporation and NBC Multimedia Inc.
10.22 Sponsorship Agreement, dated as of June 24, 1998, between
Excite, Inc. and Auto-By-Tel Corporation
10.23 License and Services Agreement dated August 7, 1998 between
autobytel.com inc. and Auto-By-Tel AB
10.24 License and Services Agreement dated November 23, 1998
between autobytel.com inc. and Auto-by-Tel UK Limited
10.25 Share Purchase Agreement dated November 23, 1998 between
autobytel.com inc. and Inchcape Automotive Limited
10.26 Financing Inquiry Referral Agreement dated December 31, 1998
between Provident Bank, Auto-By-Tel Acceptance Corporation
and autobytel.com inc., as guarantor
10.27 Procurement and Trafficking Agreement dated September 24,
1998 between DoubleClick Inc. and autobytel.com inc.
10.28** Loan Agreement dated November 18, 1998 between Ann Benvenuto
and autobytel.com inc.
10.29** Advisory Agreement dated August 20, 1998 between
autobytel.com inc. and Peter R. Ellis
10.30** 1999 Stock Option Plan
10.31 Form of Gold Term Subscription Agreement
10.32 Form of Platinum Term Continuation Rider
10.33 Marketing Agreement dated February 18, 1999 between
autobytel.com inc. and Lycos, Inc.
10.34** Letter Agreement dated March 12, 1999 between autobytel.com
inc. and Trans Cosmos. Inc.
10.35** Letter Agreement dated March 12, 1999 between autobytel.com
inc. and e-solutions, Inc.
</TABLE>
II-5
<PAGE> 115
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
10.36** Letter Agreement dated March 12, 1999 between autobytel.com
inc. and Intec, Inc.
10.37 Letter Agreement dated March 7, 1999 between Autobytel.com
and Ariel Amir.
10.38 Letter Agreement dated December 18, 1998 between
Autobytel.com and Hoshi Printer.
11.1** Statement Regarding Computation of Per Share Earnings
21.1** Subsidiaries of autobytel.com inc.
23.1 Consent of Arthur Andersen LLP, Independent Public
Accountants
23.2** Consent of Paul, Hastings, Janofsky & Walker LLP (reference
is made to Exhibit 5.1)
23.3** Consent of CNW Marketing Research
23.4** Consent of Barger & Wolen LLP
24.1** Power of Attorney (reference is made to the signature page)
27.1** Financial Data Schedule
</TABLE>
- -------------------------
* To be filed by Amendment.
** Previously filed.
(b) Financial Statement Schedules
ITEM 17. UNDERTAKINGS
(a) The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(c) The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed as part of this Registration Statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act (sec.
230.424(b)(1) or (4) or 230.497(h)) shall be deemed to be part of this
Registration Statement as of the time the Commission declared it effective.
(2) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement for the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-6
<PAGE> 116
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 5 to the Registration Statement to
be signed on its behalf by the undersigned, hereunto duly authorized, in the
City of Irvine, State of California, on March 24, 1999.
autobytel.com inc.
By: /s/ MARK W. LORIMER
-----------------------------------
Name: Mark W. Lorimer
Title: Chief Executive Officer,
President and
Director
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 5 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Chairman of the Board March 24, 1999
- ------------------------------------------------ and Director
Michael Fuchs
* Director March 24, 1999
- ------------------------------------------------
Jeffrey H. Coats
* Director March 24, 1999
- ------------------------------------------------
Mark N. Kaplan
* Director March 24, 1999
- ------------------------------------------------
Kenneth J. Orton
* Executive Vice President March 24, 1999
- ------------------------------------------------ and Director
Robert S. Grimes
/s/ MARK W. LORIMER Chief Executive Officer, March 24, 1999
- ------------------------------------------------ President and Director
Mark W. Lorimer (Principal Executive
Officer)
/s/ HOSHI PRINTER Senior Vice President March 24, 1999
- ------------------------------------------------ and Chief Financial
Hoshi Printer Officer (Principal
Financial Officer and
Principal Accounting
Officer)
</TABLE>
II-7
<PAGE> 117
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Executive Vice President March 24, 1999
- ------------------------------------------------ and Chief Operating
Ann M. Delligatta Officer
* Director March 24, 1999
- ------------------------------------------------
Peter Titz
* Director March 24, 1999
- ------------------------------------------------
Richard Post
*By: /s/ HOSHI PRINTER
---------------------------------------
Hoshi Printer, Attorney-in-Fact
</TABLE>
II-8
<PAGE> 118
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ------------
<S> <C> <C>
1.1 Form of Underwriting Agreement
3.1** Amended and Restated Certificate of Incorporation of
autobytel.com inc. certified by the Secretary of State
of Delaware (filed December 14, 1998 and amended March
1, 1999)
3.2** Amended and Restated Bylaws of autobytel.com inc.
4.1** Form of Stock Certificate
4.2** Amended and Restated Investors' Rights Agreement dated
October 21, 1997 as amended from time to time, between
autobytel.com inc. and the Investors named in Exhibit
A thereto
4.3** Form of Lock-Up Agreement
5.1** Opinion and Consent of Paul, Hastings, Janofsky &
Walker LLP
9.1** Voting Proxy dated January 11, 1999 by Peter R. Ellis
10.1** Form of Indemnification Agreement between
autobytel.com inc. and its directors and officers
10.2 Employment Agreement dated July 1, 1998 between
autobytel.com inc. and Mark W. Lorimer
10.3** Employment Agreement dated December 17, 1998 between
autobytel.com.inc. and Anne Delligatta
10.4** Amended and Restated Employment and Severance
Agreement dated March 5, 1999 between
autobytel.com.inc. and Michael J. Lowell
10.5** 1996 Stock Option Plan and related agreements
10.6** 1996 Stock Incentive Plan and related agreements
10.7** 1996 Employee Stock Purchase Plan
10.8** 1998 Stock Option Plan
10.9 Marketing Agreement dated July 22, 1996, as amended on
July 23, 1996, by and among Auto-By-Tel Acceptance
Corporation, a subsidiary of the Registrant ("ABTAC"),
the Registrant, as guarantor of the obligations of
ABTAC, and AIU Insurance Company, American
International South Insurance Company, American Home
Assurance Company, American International Insurance
Company, American International Insurance Company of
California, Inc., Illinois National Insurance Company,
Minnesota Insurance Company, National Union Fire
Insurance Company of Pittsburgh, PA and the Insurance
Company of the State of Pennsylvania
10.10 Marketing Agreement dated February 8, 1996 between
Auto-By-Tel, LLC and Edmund Publications Corp.
10.11 Amendment to Marketing Agreement of February 8, 1996,
dated June 6, 1997 between Edmund Publications Corp.
and the Registrant
</TABLE>
<PAGE> 119
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ------------
<S> <C> <C>
10.12 Form of Dealership Agreements
10.13 Financing Inquiry Referral Agreement dated October 25,
1996 among Auto-By-Tel, Inc, as guarantor, Auto-By-Tel
Acceptance Corporation and Chase Manhattan Automotive
Finance Corporation
10.14 Marketing and Application Processing Agreement dated
February 1, 1997 between General Electric Capital Auto
Financial Services, Inc., Auto-By-Tel Acceptance
Corporation ("ABTAC") and Auto-By-Tel, Inc., as
guarantor
10.15 Content License and Channel Sponsorship Term Sheet
dated September 12, 1997 between Excite, Inc. and
Auto-By-Tel
10.16 Data License and Web Site Agreement dated April 1,
1997 between IntelliChoice, Inc. and Auto-By-Tel
Marketing Corporation and the Registrant
10.17 Kelley Blue Book/Auto-By-Tel Agreement dated November
19, 1997, as amended July 1, 1998, between Kelley Blue
Book and Auto-By-Tel Corporation
10.18 Listings Distribution, Sponsorship, Display
Advertising and Network Affiliation Agreement dated
May 29, 1997 between Classifieds2000, Inc. and
Auto-By-Tel Corporation
10.19 License Agreement dated June 4, 1998 among J.D. Power
and Associates, Auto-By-Tel Marketing Corporation, and
autobytel.com inc.
10.20 Site Page Sponsorship and Commission Agreement dated
June 25, 1997, between Auto-By-Tel Marketing
Corporation and AT&T Corporation
10.21 Letter agreement dated April 1, 1997, between
Auto-By-Tel Marketing Corporation and NBC Multimedia
Inc.
10.22 Sponsorship Agreement, dated as of June 24, 1998,
between Excite, Inc. and Auto-By-Tel Corporation
10.23 License and Services Agreement dated August 7, 1998
between autobytel.com inc. and Auto-By-Tel AB
10.24 License and Services Agreement dated November 23, 1998
between autobytel.com inc. and Auto-by-Tel UK Limited
10.25 Share Purchase Agreement dated November 23, 1998
between autobytel.com inc. and Inchcape Automotive
Limited
10.26 Financing Inquiry Referral Agreement dated December
31, 1998 between Provident Bank, Auto-By-Tel
Acceptance Corporation and autobytel.com inc., as
guarantor
10.27 Procurement and Trafficking Agreement dated September
24, 1998 between DoubleClick Inc. and autobytel.com
inc.
</TABLE>
<PAGE> 120
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ------------
<S> <C> <C>
10.28** Loan Agreement dated November 18, 1998 between Ann
Benvenuto and autobytel.com inc.
10.29** Advisory Agreement dated August 20, 1998 between
autobytel.com inc. and Peter R. Ellis
10.30** 1999 Stock Option Plan
10.31 Form of Gold Term Subscription Agreement
10.32 Form of Platinum Term Continuation Rider
10.33 Marketing Agreement dated February 18, 1999 between
autobytel.com inc. and Lycos, Inc.
10.34** Letter Agreement dated March 12, 1999 between
autobytel.com inc. and Trans Cosmos, Inc.
10.35** Letter Agreement dated March 12, 1999 between
autobytel.com inc. and e-Solutions, Inc.
10.36** Letter Agreement dated March 12, 1999 between
autobytel.com inc. and Intec, Inc.
10.37 Letter Agreement dated March 7, 1999 between
Autobytel.com and Ariel Amir
10.38 Letter Agreement dated December 18, 1998 between
Autobytel.com and Hoshi Printer.
11.1** Statement Regarding Computation of Per Share Earnings
21.1** Subsidiaries of autobytel.com inc.
23.1 Consent of Arthur Andersen LLP, Independent Public
Accountants
23.2** Consent of Paul, Hastings, Janofsky & Walker LLP
(reference is made to Exhibit 5.1)
23.3** Consent of CNW Marketing Research
23.4** Consent of Barger & Wolen LLP
24.1** Power of Attorney (reference is made to the signature
page)
27.1** Financial Data Schedule
</TABLE>
- -------------------------
* To be filed by Amendment.
** Previously filed.
<PAGE> 1
EXHIBIT 1.1
4,250,000 Shares
AUTOBYTEL.COM INC.
Common Stock
($0.001 Par Value)
EQUITY UNDERWRITING AGREEMENT
March 25, 1999
BT Alex. Brown Incorporated
Lehman Brothers Inc.
PaineWebber Incorporated
As Representatives of the
Several Underwriters
c/o BT Alex. Brown Incorporated
One South Street
Baltimore, Maryland 21202
Ladies and Gentlemen:
AUTOBYTEL.COM INC., a Delaware corporation (the "Company"), and certain
stockholders of the Company (the "Selling Stockholders") propose to sell to the
several underwriters (the "Underwriters") named in Schedule I hereto for whom
you are acting as representatives (the "Representatives") an aggregate of
4,250,000 shares of the Company's Common Stock, $0.001 par value (the "Firm
Shares"), of which 3,250,000 will be sold by the Company and 1,000,000 shares
will be sold by the Selling Stockholders. The respective amounts of the Firm
Shares and Option Shares (as hereinafter defined) to be so purchased by the
several Underwriters are set forth opposite their names in Schedule I hereto.
The Company and the Selling Stockholders are sometimes referred to herein
collectively as the "Sellers." The Selling Stockholders also propose to sell at
the Underwriters' option an aggregate of up to 675,000 additional shares of the
Company's Common Stock (the "Option Shares") as set forth below. The respective
amounts of Firm Shares and Option Shares to be sold by the Selling Stockholders
are set forth opposite their names in Schedule II hereto.
As the Representatives, you have advised the Company and the Selling
Stockholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and
<PAGE> 2
(b) that the several Underwriters are willing, acting severally and not jointly,
to purchase the numbers of Firm Shares set forth opposite their respective names
in Schedule I, plus their pro rata portion of the Option Shares if you elect to
exercise the over-allotment option in whole or in part for the accounts of the
several Underwriters. The Firm Shares and the Option Shares (to the extent the
aforementioned option is exercised) are herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
STOCKHOLDERS.
(a) The Company represents and warrants to each of the Underwriters
as follows:
(i) A registration statement on Form S-1 (File No. 333-70621)
with respect to the Shares has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"), and the
Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been delivered by the
Company to you. Such registration statement, together with any registration
statement filed by the Company pursuant to Rule 462(b) of the Act, herein
referred to as the "Registration Statement," which shall be deemed to include
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. "Prospectus" means the form of prospectus first filed
with the Commission pursuant to Rule 424(b). Each preliminary prospectus
included in the Registration Statement prior to the time it becomes effective is
herein referred to as a "Preliminary Prospectus."
(ii) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. Each of the subsidiaries of
the Company as listed in Exhibit 21.1 of the Registration Statement
(collectively, the "Subsidiaries") has been duly organized and is validly
existing as a corporation or other entity, in good standing under the laws of
the jurisdiction of its incorporation or organization, with corporate or other
organizational power and authority to own or lease its properties and conduct
its business as described in the Registration Statement. The Subsidiaries are
the only subsidiaries, direct or indirect, of the Company. The Company and each
of the Subsidiaries are duly qualified to transact business in all jurisdictions
in which the conduct of their business requires such qualification except where
the failure to so qualify would not have a material adverse effect on the
earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and of the
2
<PAGE> 3
Subsidiaries, taken as a whole. All of the states in which the Company is duly
qualified to transact business are set forth on Exhibit A hereto. The
outstanding shares of capital stock or other ownership interests of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid and
non-assessable and are owned by the Company or another Subsidiary free and clear
of all liens, encumbrances and equities and claims; and no options, warrants or
other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligations into shares of capital stock or ownership
interests in the Subsidiaries are outstanding.
(iii) The outstanding shares of Common Stock of the Company,
including all shares to be sold by the Selling Stockholders, have been duly
authorized and validly issued and are fully paid and non-assessable; the Shares
to be issued and sold by the Company have been duly authorized and when issued
and paid for as contemplated herein will be validly issued, fully paid and
non-assessable; and no preemptive rights of stockholders exist with respect to
any of the Shares or the issue and sale thereof. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any shares of the Company's
Common Stock.
(iv) The information set forth under the caption "Capitalization"
in the Prospectus is true and correct. All of the Shares conform to the
description thereof contained in the Registration Statement. The form of
certificates for the Shares conforms to the corporate law of the jurisdiction of
the Company's incorporation.
(v) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Shares nor, to the Company's knowledge, instituted proceedings for that purpose.
The Registration Statement contains, and the Prospectus and any amendments or
supplements thereto will contain, all statements which are required to be stated
therein by, and will conform to, the requirements of the Act and the Rules and
Regulations. At the time it became effective, the Registration Statement and any
amendment thereto do not contain, and will not contain as of the Closing Date
and Option Closing Date, any untrue statement of a material fact and do not
omit, and as of the Closing Date and Option Closing Date will not omit, to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus and any amendments and
supplements thereto do not contain, and as of the Closing Date and Option
Closing Date will not contain, any untrue statement of material fact; and do not
omit, and as of the Closing Date and Option Closing Date will not omit, to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from the
Registration Statement or the Prospectus, or any such amendment or supplement,
in reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of any Underwriter through the Representatives or
Selling Stockholder, specifically for use in the preparation thereof.
(vi) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth in the
Registration Statement,
3
<PAGE> 4
present fairly the financial position and the results of operations and cash
flows of the Company and the consolidated Subsidiaries, at the indicated dates
and for the indicated periods. Such financial statements and related schedules
have been prepared in accordance with generally accepted principles of
accounting, consistently applied throughout the periods involved, except as
disclosed therein, and all adjustments necessary for a fair and accurate
presentation of results for such periods have been made. The summary financial
and statistical data included in the Registration Statement presents fairly and
accurately the information shown therein and such data has been compiled on a
basis consistent with the financial statements presented therein and the books
and records of the Company. The pro forma financial information included in the
Registration Statement and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial information, have been properly
compiled on the pro forma bases described therein, and, in the opinion of the
Company, the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions or
circumstances referred to therein.
(vii) Arthur Andersen LLP, who have certified certain of the
financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Act and the
Rules and Regulations.
(viii) There is no action, suit, claim or proceeding pending or,
to the knowledge of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency or otherwise (A) which if
determined adversely to the Company or any of its Subsidiaries might result in
any material adverse change in the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects of
the Company and of the Subsidiaries taken as a whole or (B) to prevent the
consummation of the transactions contemplated hereby, except as set forth in the
Registration Statement.
(ix) The Company and the Subsidiaries own or have good and
marketable title to all of the properties and assets reflected in the financial
statements (or as described in the Registration Statement) hereinabove
described, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except those reflected in such financial statements (or as described in the
Registration Statement) or which are not material in amount. The Company and the
Subsidiaries occupy their leased properties under valid and binding leases
conforming in all material respects to the description thereof set forth in the
Registration Statement.
(x) The Company and the Subsidiaries have filed all Federal,
State, local and foreign tax returns which have been required to be filed and
have paid all taxes indicated by said returns and all assessments received by
them or any of them to the extent that such taxes have become due and are not
being contested in good faith [or for which no valid extension has been made]
and for which an adequate reserve for accrual has been established in accordance
with generally accepted accounting principles. All tax liabilities have been
adequately provided for in the financial statements of the Company, and the
Company does not know of any actual or proposed additional tax assessments,
[except for such tax assessments which do not, individually or in the aggregate,
amount to $10,000].
4
<PAGE> 5
(xi) Since the respective dates as of which information is given
in the Registration Statement, as it may be amended or supplemented, there has
not been any material adverse change or any development involving a prospective
material adverse change in or affecting the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise), or
prospects of the Company and its Subsidiaries taken as a whole whether or not
occurring in the ordinary course of business, and there has not been any
material transaction entered into or any material transaction that is probable
of being entered into by the Company or the Subsidiaries, other than
transactions in the ordinary course of business and changes and transactions
described in the Registration Statement, as it may be amended or supplemented up
to the Closing Date or the Option Closing Date. The Company and the Subsidiaries
have no material contingent obligations which are not disclosed in the Company's
financial statements which are included in the Registration Statement.
(xii) Neither the Company nor any of the Subsidiaries is or with
the giving of notice or lapse of time or both, will be, in violation of or in
default under its certificate of incorporation or bylaws or other organizational
document or under any agreement, lease, contract, indenture or other instrument
or obligation to which it is a party or by which it, or any of its properties,
is bound and which default is of material significance in respect of the
condition, financial or otherwise of the Company and its Subsidiaries taken as a
whole or the business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and the
Subsidiaries taken as a whole. The execution and delivery of this Agreement and
the consummation of the transactions herein contemplated and the fulfillment of
the terms hereof will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or any
Subsidiary is a party, or of the Company's or any Subsidiary's certificate of
incorporation or bylaws or other organizational document, or any order, rule or
regulation applicable to the Company or any Subsidiary of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction over the Company or any Subsidiary.
(xiii) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or blue sky laws) has been obtained
or made and is in full force and effect.
(xiv) The Company and each of the Subsidiaries holds all material
licenses, certificates and permits from governmental authorities which are
necessary to the conduct of their businesses. The Company owns, or possesses
adequate rights to use, all material patents, patent rights, trademarks, service
marks, trade names, trademark registrations, service mark registrations, domain
names and copyrights necessary for the conduct of its and the Subsidiaries'
5
<PAGE> 6
business and has no reason to believe that the conduct of its and the
Subsidiaries' business will conflict with, and has not received any notice of
any claim of conflict with any such rights, of others. To the Company's
knowledge, neither the Company nor any of the Subsidiaries has infringed or is
infringing any patents, patent rights, trade names, trademarks, service marks,
domain names, service mark registrations, trademark registrations, or
copyrights, which infringement is material to the business of the Company and
the Subsidiaries taken as a whole. The Company knows of no material infringement
by others of patents, patent rights, trade names, trademarks service marks,
domain names, service mark registrations, trademark registrations, or copyrights
owned by or licensed to the Company.
(xv) Neither the Company, nor to the Company's knowledge, any of
its affiliates, has taken or may take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or resale of the
Shares. The Company acknowledges that the Underwriters may engage in passive
market making transactions in the Shares on the Nasdaq Stock Market in
accordance with Regulation M under the Securities and Exchange Act of 1934, as
amended ("Exchange Act").
(xvi) Neither the Company nor any Subsidiary is an "investment
company" within the meaning of such term under the Investment Company Act of
1940, (as amended, the "1940 Act") and the rules and regulations of the
Commission thereunder.
(xvii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xviii) The Company and each of its Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is adequate for
the conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar industries.
(xix) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and, to the
Company's knowledge, nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
6
<PAGE> 7
(xx) To the Company's knowledge and based on questionnaires
received by the Company from its officers, directors and 5% or greater
securityholders, there are no affiliations or associations between any member of
the NASD and any of the Company's officers, directors or 5% or greater
securityholders, except as set forth in the Registration Statement.
(xxi) The Company has reviewed its operations and that of the
Subsidiaries and any third parties with which the Company or any of the
Subsidiaries has a material relationship as described in the Prospectus to
evaluate the extent to which the business or operations of the Company or any of
the Subsidiaries will be affected by the Year 2000 Problem. As a result of such
review, the Company has no reason to believe, and does not believe, that the
Year 2000 Problem will have a material adverse effect on the Company and the
Subsidiaries, taken as a whole. The "Year 2000 Problem" as used herein means any
significant risk that computer hardware or software used in the receipt,
transmission, processing, manipulation, storage, retrieval, retransmission or
other utilization of data or in the operation of mechanical or electrical
systems of any kind will not, in the case of dates or time periods occurring
after December 31, 1999, function at least as effectively as in the case of
dates or time periods occurring prior to January 1, 2000.
(xxii) Peter R. Ellis is not an executive officer, a significant
employee or in control of the Company within the meaning of the Act or the Rules
and Regulations.
(xxiii) All outstanding options to purchase shares of Common
Stock of the Company have been duly and validly issued under and pursuant to the
terms of the Company's 1996 Stock Option Plan, 1996 Stock Incentive Plan, 1998
Stock Option Plan, and 1999 Stock Option Plan, as the case may be.
(xxiv) The Common Stock has been approved for quotation on the
Nasdaq National Market, subject to official notice of issuance.
(b) Each of the Selling Stockholders severally represents and
warrants as follows:
(i) Such Selling Stockholder now has and at the Closing Date and
the Option Closing Date, (as such dates are hereinafter defined) will have good
and marketable title to the Firm Shares and the Option Shares to be sold by such
Selling Stockholder, free and clear of any liens, encumbrances, equities and
claims (other than the Power of Attorney and Custodian Agreement referred to
below), and full right, power and authority to effect the sale and delivery of
such Firm Shares and Option Shares; and upon the delivery of, against payment
for, such Firm Shares and Option Shares pursuant to this Agreement, the
Underwriters will acquire good and marketable title thereto, free and clear of
any liens, encumbrances, equities and claims.
7
<PAGE> 8
(ii) Such Selling Stockholder has full right, power and authority
to execute and deliver this Agreement, the Power of Attorney, and the Custodian
Agreement referred to below and to perform its obligations under such
Agreements. The execution and delivery of this Agreement and the consummation by
such Selling Stockholder of the transactions herein contemplated and the
fulfillment by such Selling Stockholder of the terms hereof will not require any
consent, approval, authorization, or other order of any court, regulatory body,
administrative agency or other governmental body (except as may be required
under the Act, state securities laws or blue sky laws) and will not result in a
breach of any of the terms and provisions of, or constitute a default under any
indenture, mortgage, deed of trust or other agreement or instrument to which
such Selling Stockholder is a party, or of any order, rule or regulation
applicable to such Selling Stockholder of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction.
(iii) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to, or which has constituted, or
which might reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Common Stock of the Company and, other than as
permitted by the Act, the Selling Stockholder will not distribute any prospectus
or other offering material in connection with the offering of the Shares.
(iv) Without having undertaken to determine independently the
accuracy or completeness of either the representations and warranties of the
Company contained herein or the information contained in the Registration
Statement or the Prospectus, such Selling Stockholder has read the Registration
Statement and Prospectus and during the course of such reading, no fact has come
to the attention of such Selling Stockholder that causes such Selling
Stockholder to believe that the representations and warranties of the Company
contained in this Section 1 are not true and correct, the Registration
Statement, at the time it became effective, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order make the statements therein, in light of the
circumstances under which they were made, not misleading, or that the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may be, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; and the sale of the Firm Shares and the Option Shares by
such Selling Stockholder pursuant hereto is not prompted by any information
concerning the Company or any of the Subsidiaries which is not set forth in the
Registration Statement. The information pertaining to such Selling Stockholder
under the caption "Principal and Selling Stockholders" in the Prospectus is
complete and accurate in all material respects.
(c) Peter R. Ellis represents and warrants that he is not an
executive officer, a significant employee or in control of the Company within
the meaning of the Act or the Rules and Regulations.
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2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Sellers
agree to sell to the Underwriters and each Underwriter agrees, severally and not
jointly, to purchase, at a price of $_______ per share, the number of Firm
Shares set forth opposite the name of each Underwriter in Schedule I hereof,
subject to adjustments in accordance with Section 9 hereof. The obligations of
the Company and of each of the Selling Stockholders shall be several and not
joint.
(b) Certificates in negotiable form for the total number of the
Shares to be sold hereunder by the Selling Stockholders have been placed in
custody with U.S. Stock Transfer Corporation as custodian (the "Custodian")
pursuant to the Custodian Agreement executed by each Selling Stockholder for
delivery of all Firm Shares and any Option Shares to be sold hereunder by the
Selling Stockholders. Each of the Selling Stockholders specifically agrees that
the Firm Shares and any Option Shares represented by the certificates held in
custody for the Selling Stockholders under the Custodian Agreement are subject
to the interests of the Underwriters hereunder, that the arrangements made by
the Selling Stockholders for such custody are to that extent irrevocable, and
that the obligations of the Selling Stockholders hereunder shall not be
terminable by any act or deed of the Selling Stockholders (or by any other
person, firm or corporation including the Company, the Custodian or the
Underwriters) or by operation of law (including the death of an individual
Selling Stockholder or the dissolution of a corporate Selling Stockholder) or by
the occurrence of any other event or events, except as set forth in the
Custodian Agreement. If any such event should occur prior to the delivery to the
Underwriters of the Firm Shares or the Option Shares hereunder, certificates for
the Firm Shares or the Options Shares, as the case may be, shall be delivered by
the Custodian in accordance with the terms and conditions of this Agreement as
if such event has not occurred. The Custodian is authorized to receive and
acknowledge receipt of the proceeds of sale of the Shares held by it against
delivery of such Shares.
(c) Payment for the Firm Shares to be sold hereunder is to be made in
Federal (same day) funds to an account designated by the Company for the shares
to be sold by it and to an account designated by the Custodian for the shares to
be sold by the Selling Stockholders, in each case against delivery of
certificates therefor to the Representatives for the several accounts of the
Underwriters. Such payment and delivery are to be made through the facilities of
the Depository Trust Company at 10:00 a.m., New York time, on the third business
day after the date of this Agreement or at such other time and date not later
than five business days thereafter as you and the Company shall agree upon, such
time and date being herein referred to as the "Closing Date." (As used herein,
"business day" means a day on which the New York Stock Exchange is open for
trading and on which banks in New York are open for business and not permitted
by law or executive order to be closed.)
(d) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Selling Stockholders listed on Schedule II hereto hereby grant an option to the
several Underwriters to purchase the Option
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<PAGE> 10
Shares at the price per share as set forth in the first paragraph of this
Section 2. The maximum number of Option Shares to be sold by the Selling
Stockholders is set forth opposite their respective names on Schedule II hereto.
The option granted hereby may be exercised in whole or in part by giving written
notice (i) at any time before the Closing Date and (ii) only once thereafter
within 30 days after the date of this Agreement, by you, as Representatives of
the several Underwriters, to the Attorney-in-Fact and the Custodian setting
forth the number of Option Shares as to which the several Underwriters are
exercising the option, the names and denominations in which the Option Shares
are to be registered and the time and date at which such certificates are to be
delivered. If the option granted hereby is exercised in part, the respective
number of Option Shares to be sold by each of the Selling Stockholders listed in
Schedule II hereto shall be determined on a pro rata basis in accordance with
the percentages set forth opposite their names on Schedule II hereto, adjusted
by you in such manner as to avoid fractional shares. The time and date at which
certificates for Option Shares are to be delivered shall be determined by the
Representatives but shall not be earlier than three nor later than ten full
business days after the exercise of such option, nor in any event prior to the
Closing Date (such time and date being herein referred to as the "Option Closing
Date"). If the date of exercise of the option is three or more days before the
Closing Date, the notice of exercise shall set the Closing Date as the Option
Closing Date. The number of Option Shares to be purchased by each Underwriter
shall be in the same proportion to the total number of Option Shares being
purchased as the number of Firm Shares being purchased by such Underwriter bears
to the total number of Firm Shares, adjusted by you in such manner as to avoid
fractional shares. The option with respect to the Option Shares granted
hereunder may be exercised only to cover over-allotments in the sale of the Firm
Shares by the Underwriters. You, as Representatives of the several Underwriters,
may cancel such option at any time prior to its expiration by giving written
notice of such cancellation to the Attorney-in-Fact. To the extent, if any, that
the option is exercised, payment for the Option Shares shall be made on the
Option Closing Date in Federal (same day) funds drawn to the order of
"_________, as Custodian" for the Option Shares to be sold by the Selling
Stockholders against delivery of certificates therefor through the facilities of
the Depository Trust Company, New York, New York.
(e) If on the Closing Date or Option Closing Date, as the case may
be, any Selling Stockholder fails to sell the Firm Shares or Option Shares which
such Selling Stockholder has agreed to sell on such date as set forth in
Schedule II hereto, the Company agrees that it will sell or arrange for the sale
of that number of shares of Common Stock to the Underwriters which represents
the Firm Shares or Option Shares which such Selling Stockholder has failed to so
sell, as set forth in Schedule II hereto, or such lesser number as may be
requested by the Representatives.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the initial
public offering price set forth in the Prospectus. The Representatives may from
time to time thereafter change the public offering price and other
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<PAGE> 11
selling terms. To the extent, if at all, that any Option Shares are purchased
pursuant to Section 2 hereof, the Underwriters will offer them to the public on
the foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDERS.
(a) The Company covenants and agrees with the several Underwriters
that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form
approved by the Representatives containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A of
the Rules and Regulations and (B) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations.
(ii) The Company will advise the Representatives promptly (A)
when the Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments from the Commission, (C)
of any request of the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, and (D) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the use of the Prospectus or of the institution of
any proceedings for that purpose. The Company will use its best efforts to
prevent the issuance of any such stop order preventing or suspending the use of
the Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Representatives may reasonably request for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as
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<PAGE> 12
many copies of the Prospectus in final form, or as thereafter amended or
supplemented, as the Representatives may reasonably request. The Company will
deliver to the Representatives at or before the Closing Date, one original (or
facsimile) signed copy of the Registration Statement and all amendments thereto
including all exhibits filed therewith, and will deliver to the Representatives
such number of copies of the Registration Statement (including such number of
copies of the exhibits filed therewith that may reasonably be requested), and of
all amendments thereto, as the Representatives may reasonably request.
(v) The Company will comply with the Act and the Rules and
Regulations, and the Exchange Act and the rules and regulations of the
Commission thereunder, so as to permit the completion of the distribution of the
Shares as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or, if it is necessary
at any time to amend or supplement the Prospectus to comply with any law, the
Company promptly will prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the law.
(vi) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earning
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earning statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will
advise you in writing when such statement has been so made available.
(vii) Prior to the Closing Date, the Company will furnish to the
Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for
any period subsequent to the period covered by the most recent financial
statements appearing in the Registration Statement and the Prospectus.
(viii) No offering, sale, short sale or other disposition of any
shares of Common Stock of the Company or other securities convertible into or
exchangeable or exercisable for shares of Common Stock or derivative of Common
Stock (or agreement for such) will be made for a period of 180 days after the
date of this Agreement, directly or indirectly, by the Company otherwise than
hereunder or with the prior written consent of BT Alex. Brown Incorporated,
except that the Company may, without such consent, (A) issue shares upon
exercise of options outstanding on the date of this Agreement issued pursuant to
the Company's currently existing stock-based compensation plans, and (B) grant
options, offer to sell and sell shares of its Common Stock to its employees,
directors and consultants pursuant to its currently existing stock-based
compensation plans, as such plans are described in the Prospectus.
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<PAGE> 13
(ix) Except for holders of ______ shares of Common Stock, the
Company has caused each officer and director of the Company and each stockholder
of the Company designated by BT Alex. Brown Incorporated to furnish to you, on
or prior to the date of this agreement, a letter or letters, substantially in
the form attached hereto as Exhibit B, pursuant to which each such person shall
agree not to offer, sell, sell short or otherwise dispose of any shares of
Common Stock of the Company or other capital stock of the Company, or any other
securities convertible, exchangeable or exercisable for Common Shares or
derivative of Common Shares owned by such person or request the registration for
the offer or sale of any of the foregoing (or as to which such person has the
right to direct the disposition of) for a period of 180 days (or, with respect
to the Selling Stockholders, 270 days) after the date of this Agreement,
directly or indirectly, except with the prior written consent of BT Alex. Brown
Incorporated ("Lockup Agreements").
(x) The Company shall apply the net proceeds of its sale of the
Shares as set forth in the Prospectus and shall file such reports with the
Commission with respect to the sale of the Shares and the application of the
proceeds therefrom as may be required in accordance with Rule 463 under the Act.
(xi) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would
require the Company or any of the Subsidiaries to register as an investment
company under the 1940 Act.
(xii) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock.
(xiii) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
(b) Each of the Selling Stockholders covenants and agrees with the
several Underwriters that:
(i) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with
respect to the transactions herein contemplated, each of the Selling
Stockholders agrees to deliver to you prior to or at the Closing Date a properly
completed and executed United States Treasury Department Form W-8 or W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
(ii) Such Selling Stockholder will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
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<PAGE> 14
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Sellers under this Agreement, including,
without limiting the generality of the foregoing, the following: accounting fees
of the Company; the fees and disbursements of counsel for the Company; the cost
of printing and delivering to, or as requested by, the Underwriters copies of
the Registration Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the blue sky survey and any supplements or amendments thereto; the
filing fees of the Commission; the filing fees and expenses (including legal
fees and disbursements) incident to securing any required review by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of
the Shares not to exceed $10,000; the listing fee of the Nasdaq Stock Market;
and the expenses, including the fees and disbursements of counsel for the
Underwriters, incurred in connection with the qualification of the Shares under
state securities or blue sky laws. The fees and expenses of the Selling
Stockholders' legal counsel shall be borne by the Selling Stockholders. Any
transfer taxes imposed on the sale of the Shares to the several Underwriters
will be paid by the Sellers pro rata. The Company agrees to pay all costs and
expenses of the Underwriters, including the fees and disbursements of counsel
for the Underwriters, incident to the offer and sale of directed shares of the
Common Stock by the Underwriters to employees and persons having business
relationships with the Company and its Subsidiaries. The Sellers shall not,
however, be required to pay for any of the Underwriters expenses (other than
those related to qualification under NASD regulation and state securities or
blue sky laws) except that, if this Agreement shall not be consummated because
the conditions in Section 6 hereof are not satisfied, or because this Agreement
is terminated by the Representatives pursuant to Section 11 hereof, or by reason
of any failure, refusal or inability on the part of the Company or the Selling
Stockholders to perform any undertaking or satisfy any condition of this
Agreement or to comply with any of the terms hereof on their part to be
performed, unless such failure to satisfy said condition or to comply with said
terms be due to the default or omission of any Underwriter, then the Company
shall reimburse the several Underwriters for reasonable out-of-pocket expenses,
including fees and disbursements of counsel, reasonably incurred in connection
with investigating, marketing and proposing to market the Shares or in
contemplation of performing their obligations hereunder; but the Company and the
Selling Stockholders shall not in any event be liable to any of the several
Underwriters for damages on account of loss of anticipated profits from the sale
by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option Closing
Date are subject to the accuracy, as of the Closing Date or the Option Closing
Date, as the case may be, of the representations and warranties of the Company
and the Selling Stockholders contained herein, and to the performance by the
Company and the Selling Stockholders of their covenants and obligations
hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the
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<PAGE> 15
Rules and Regulations shall have been made, and any request of the Commission
for additional information (to be included in the Registration Statement or
otherwise) shall have been disclosed to the Representatives and complied with to
their reasonable satisfaction. No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been issued and
no proceedings for that purpose shall have been taken or, to the knowledge of
the Company or the Selling Stockholders, shall be contemplated by the Commission
and no injunction, restraining order, or order of any nature by a Federal or
state court of competent jurisdiction shall have been issued as of the Closing
Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinions of Paul, Hastings,
Janofsky & Walker LLP, counsel for the Company, dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Underwriters (and
stating that it may be relied upon by counsel to the Underwriters) to the effect
that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement; each of the
Subsidiaries has been duly organized and is validly existing as a corporation or
other entity in good standing under the laws of the jurisdiction of its
incorporation or organization, with corporate or other organizational power and
authority to own or lease its properties and conduct its business as described
in the Registration Statement; the Company and each of the Subsidiaries are duly
qualified to transact business in all states listed on Exhibit A hereto; and the
outstanding shares of capital stock or organizational interests of each of the
Subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable and are owned by the Company or a Subsidiary; and, to the best of
such counsel's knowledge, the outstanding shares of capital stock or other
organizational interests of each of the Subsidiaries is owned free and clear of
all liens, encumbrances and equities and claims, and no options, warrants or
other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligations into any shares of capital stock or ownership
interests in the Subsidiaries are outstanding.
(ii) The Company has authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus; the authorized
shares of the Company's Common Stock have been duly authorized; the outstanding
shares of the Company's Common Stock, including the Shares to be sold by the
Selling Stockholders, have been duly authorized and validly issued and are fully
paid and non-assessable; all of the Shares conform to the description thereof
contained in the Prospectus; the certificates for the Shares, assuming they are
in the form filed with the Commission, are in due and proper form under Delaware
law; the shares of Common Stock to be sold by the Company pursuant to this
Agreement have been duly authorized and will be validly issued, fully paid and
non-assessable when issued and paid for as contemplated by this Agreement; no
statutory preemptive rights of stockholders exist with respect to any of the
Shares or the issue or sale thereof; and except as described in the Prospectus,
all outstanding options to purchase shares of Common Stock of the Company have
been duly and validly issued under and pursuant to the terms of the Company's
1996 Stock Option Plan, 1996 Stock Incentive Plan, 1998 Stock Option Plan, and
1999 Stock Option Plan, as the case may be.
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<PAGE> 16
(iii) Except as described in or contemplated by the Prospectus,
to the knowledge of such counsel, (A) there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and (B) there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of the
Shares or the right to have any Common Shares or other securities of the Company
included in the Registration Statement or the right, as a result of the filing
of the Registration Statement, to require registration under the Act of any
shares of Common Stock or other securities of the Company.
(iv) The Registration Statement has become effective under the
Act and, to the best knowledge of such counsel, no stop order proceedings with
respect thereto have been instituted or are pending or threatened under the Act.
(v) The Registration Statement, the Prospectus and each amendment
or supplement thereto comply as to form in all material respects with the
requirements of the Act and the applicable Rules and Regulations (except that
such counsel need express no opinion as to the financial statements and related
schedules therein).
(vi) The statements under the captions "-- Our certificate of
incorporation and bylaws and Delaware law contain provisions that could
discourage a third party acquisition of us," "Business -- Litigation,"
"Management -- Indemnification and Limitation of Director and Officer
Liability," "Financings and Related Party Transactions," "Description of Capital
Stock," "Certain United States Tax Considerations for Non-U.S. Holders" and
"Shares Eligible for Future Sale" in the Prospectus, insofar as such statements
constitute a summary of documents referred to therein or matters of law, fairly
summarize in all material respects the information called for with respect to
such documents or matters.
(vii) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or described in
the Registration Statement or the Prospectus which are not so filed or described
as required, and such contracts and documents as are summarized in the
Registration Statement or the Prospectus are fairly and accurately summarized in
all material respects.
(viii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company or any of the Subsidiaries
except as set forth in the Prospectus.
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<PAGE> 17
(ix) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the certificate of incorporation or bylaws of the
Company, the certificate of incorporation or bylaws or other organizational
documents of any Subsidiary, or any agreement or instrument known to such
counsel to which the Company or any of the Subsidiaries is a party or by which
the Company or any of the Subsidiaries may be bound.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by state securities
and blue sky laws as to which such counsel need express no opinion) except such
as have been obtained or made, specifying the same.
(xii) The Company is not, and will not become, as a result of the
consummation of the transactions contemplated by this Agreement, and application
of the net proceeds therefrom as described in the Prospectus, required to
register as an investment company under the 1940 Act.
In rendering such opinion Paul, Hastings, Janofsky & Walker LLP may
rely as to matters governed by the laws of states other than California,
Delaware or Federal laws on local counsel in such jurisdictions. In addition to
the matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads them
to believe that (i) the Registration Statement, at the time it became effective
under the Act (but after giving effect to any modifications incorporated therein
pursuant to Rule 430A under the Act), contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading (except, in
each case, that such counsel need express no view as to financial statements,
schedules and statistical information therein). With respect to such statement,
Paul, Hastings, Janofsky & Walker LLP may state that their belief is based upon
the procedures set forth therein, but is without independent check and
verification.
(c) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinions of counsel for the
Selling Stockholders, dated the Closing Date or the Option Closing Date, as the
case may be, addressed to the Underwriters to the effect that:
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<PAGE> 18
(i) Each of this Agreement, the Custodian Agreement and the Power
of Attorney has been duly executed and delivered by or on behalf of the Selling
Stockholder.
(ii) Each of the Custodian Agreement and the Power of Attorney
constitutes the legally valid and binding obligation of the Selling Stockholder,
enforceable against the Selling Stockholder in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally (including,
without limitation, fraudulent conveyance laws) and by general principles of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or law.
(iii) No order, consent, permit or approval of any California or
federal governmental authority that such counsel has, in the exercise of
customary professional diligence, recognized as applicable to the Selling
Stockholder or the sale of the Shares by the Selling Stockholder as contemplated
by this Agreement, is required on the part of the Selling Stockholder for the
sale of the Shares, except as required under the Act and applicable blue sky and
state securities laws.
(iv) Upon payment for and delivery of the Shares to be sold by
the Selling Stockholder in accordance with the terms of this Agreement, assuming
the Underwriters are acquiring such Shares in New York and that the Underwriters
are "protected purchasers" as defined in Article 8 of the New York Uniform
Commercial Code, the Underwriters will acquire all rights in such Shares that
the Selling Stockholder had free of any adverse claim as defined in Article 8 of
the New York Uniform Commercial Code.
(d) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of Marc Bonanni, Esq.,
in-house counsel the Company, dated the Closing Date or the Option Closing Date,
as the case may be, addressed to the Underwriters (and stating that it may be
relied upon by counsel to the Underwriters) to the effect that the statements
under the captions "Business -- Government Regulation -- Franchise
Classification" and "-- Vehicle Brokerage Activities" in the Prospectus, insofar
as such statements constitute a summary of documents referred to therein or
matters of law, fairly summarize in all material respects the information called
for with respect to such documents or matters.
(e) The Representatives shall have received from Latham & Watkins,
counsel for the Underwriters, an opinion dated the Closing Date or the Option
Closing Date, as the case may be, substantially to the effect specified in
subparagraphs (iv), (v) and (x) of Paragraph (b) of this Section 6, and that the
Company is a duly organized and validly existing corporation under the laws of
the State of Delaware. In rendering such opinion Latham & Watkins may rely as to
all matters governed other than by the laws of the State of California or
Delaware or Federal laws on the opinion of counsel referred to in Paragraph (b)
of this Section 6. In addition to the matters set forth above, such opinion
shall also include a statement to the effect that nothing has come to the
attention of such counsel which leads them to believe that (i) the Registration
Statement, or
18
<PAGE> 19
any amendment thereto, as of the time it became effective under the Act (but
after giving effect to any modifications incorporated therein pursuant to Rule
430A under the Act) as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Prospectus, or any supplement
thereto, on the date it was filed pursuant to the Rules and Regulations and as
of the Closing Date or the Option Closing Date, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact,
necessary in order to make the statements, in the light of the circumstances
under which they are made, not misleading (except that such counsel need express
no view as to financial statements, schedules and statistical information
therein). With respect to such statement, Latham & Watkins may state that their
belief is based upon the procedures set forth therein, but is without
independent check and verification.
(f) The Representatives shall have received at or prior to the
Closing Date from Latham & Watkins a memorandum or summary, in form and
substance satisfactory to the Representatives, with respect to the qualification
for offering and sale by the Underwriters of the Shares under the state
securities or blue sky laws of such jurisdictions as the Representatives may
reasonably have designated to the Company.
(g) You shall have received, on each of the dates hereof, the Closing
Date and the Option Closing Date, as the case may be, a letter dated the date
hereof, the Closing Date or the Option Closing Date, as the case may be, in form
and substance satisfactory to you, of Arthur Andersen LLP confirming that they
are independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating that in their
opinion the financial statements and schedules examined by them and included in
the Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations; and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus.
(h) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer and the Chief Financial Officer of the Company to
the effect that, as of the Closing Date or the Option Closing Date, as the case
may be, each of them severally represents in their capacity as such, as follows:
(i) The Registration Statement has become effective under the Act
and no stop order suspending the effectiveness of the Registrations Statement
has been issued, and no proceedings for such purpose have been taken or are, to
his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company contained
in Section 1 hereof are true and correct as of the Closing Date or the Option
Closing Date, as the case may be;
19
<PAGE> 20
(iii) All filings required to have been made pursuant to Rules
424 or 430A under the Act have been made;
(iv) He or she has carefully examined the Registration Statement
and the Prospectus and, in his or her opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration Statement
were true and correct, and such Registration Statement and Prospectus did not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is given
in the Registration Statement and Prospectus, there has not been any material
adverse change or any development involving a prospective material adverse
change in or affecting the condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole or the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and the Subsidiaries taken as a whole, whether or not
arising in the ordinary course of business.
(i) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, a certificate or certificates of
each of the Selling Stockholders to the effect that, as of the Closing Date or
the Option Closing Date, as the case may be, each of them severally represents
that the representations and warranties of such Selling Stockholder contained in
Section 1 hereof are true and correct as of the Closing Date or the Option
Closing Date, as the case may be.
(j) The Company and the Selling Stockholders shall have furnished to
the Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein and
related matters as the Representatives may reasonably have requested.
(k) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on the Nasdaq Stock Market.
(l) The Lockup Agreements described in Section 4(a)(x) are in full
force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Latham & Watkins,
counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company and
20
<PAGE> 21
the Selling Stockholders of such termination in writing or by facsimile at or
prior to the Closing Date or the Option Closing Date, as the case may be.
In such event, the Selling Stockholders, the Company and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE SELLERS.
The obligations of the Sellers to sell and deliver the portion of the
Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees:
(1) to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the
Act, against any losses, claims, damages or liabilities to which such
Underwriter or any such controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, (ii)
the 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 (iii) any alleged act or failure to act by
any Underwriter in connection with, or relating in any manner to, the
Shares or the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, damage, liability or action
arising out of or based upon matters covered by clause (i) or (ii) above
provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement, or
omission or alleged omission made in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or such amendment or supplement,
in reliance upon and in conformity with written information furnished to
the Company by or through the Representatives specifically for use in
the preparation thereof; provided, further, that this Indemnity
Agreement with respect to any preliminary prospectus shall not inure to
the benefit of any Underwriter from whom the person asserting any such
losses, liabilities, claims, damages or expenses purchased Shares, or
any person controlling such Underwriter, if a copy of the Prospectus (as
then amended or supplemented) was not sent or given by or on behalf of
such Underwriter to such person, at or prior to the written confirmation
of the sale of such Shares to such person and if the Prospectus (as so
21
<PAGE> 22
amended or supplemented) would have corrected the defect giving rise to
such loss, liability, claim, damage or expense.
(2) to reimburse each Underwriter and each such controlling
person upon demand for any legal or other out-of-pocket expenses
reasonably incurred by such Underwriter or such controlling person in
connection with investigating or defending any such loss, claim, damage
or liability, action or proceeding or in responding to a subpoena or
governmental inquiry related to the offering of the Shares, whether or
not such Underwriter or controlling person is a party to any action or
proceeding. In the event that it is finally judicially determined that
the Underwriters were not entitled to receive payments for legal and
other expenses pursuant to this subparagraph, the Underwriters will
promptly return all sums that had been advanced pursuant hereto.
(b) The Selling Stockholders severally and not jointly agree to
indemnify the Company and the Underwriters and each person, if any, who controls
any Underwriter within the meaning of the Act, against any losses, claims,
damages or liabilities to which such Underwriter or controlling person may
become subject under the Act or otherwise to the same extent as indemnity is
provided by the Company pursuant to Section 8(a) above; provided, however, that
each Selling Stockholder will be liable to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement in reliance upon and
in conformity with written information furnished to the Company by such Selling
Stockholder specifically for use in the preparation thereof. In no event,
however, shall the liability of any Selling Stockholder for indemnification
under this Section 8(b) exceed the proceeds received by such Selling Stockholder
from the Underwriters in the offering. This indemnity obligation will be in
addition to any liability which the Company may otherwise have.
(c) Each Underwriter severally and not jointly will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Selling Stockholders, and each person, if
any, who controls the Company within the meaning of the Act, against any losses,
claims, damages or liabilities to which the Company or any such director,
officer, Selling Stockholder or controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made; and will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, Selling Stockholder or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding; provided, however, that each
Underwriter will be liable in each case to the extent, but only to the extent,
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration
22
<PAGE> 23
Statement, any Preliminary Prospectus, the Prospectus or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by or through the Representatives specifically for use
in the preparation thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
8(a), (b) or (c) shall be available to any party who shall fail to give notice
as provided in this Section 8(d) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party otherwise than on
account of the provisions of Section 8(a), (b) or (c). In case any such
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party and shall
promptly pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of presentation) the
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel reasonably acceptable to the indemnified party within a reasonable
period of time after notice of commencement of the action. It is understood that
the indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by you in the case of parties indemnified
pursuant to Section 8(a) or (b) and by the Company and the Selling Stockholders
in the case of parties indemnified pursuant to Section 8(c). The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. In addition, the indemnifying party will not, without
the prior written consent of the indemnified party, which consent shall not be
unreasonably withheld, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
23
<PAGE> 24
(e) If the indemnification provided for in this Section 8 is
unavailable to hold harmless an indemnified party under Section 8(a), (b) or (c)
above in respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to therein, but is otherwise applicable
by its terms, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Selling Stockholders on the one hand and the Underwriters on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the Selling
Stockholders on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities, (or actions or proceedings in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Stockholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Section
8(e) were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 8(e). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) referred to above in this Section 8(e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim to
the extent not reimbursed. Notwithstanding the provisions of this subsection
(e), (i) no Underwriter shall be required to contribute any amount in excess of
the underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter, (ii) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation, and (iii) no
Selling Stockholder shall be required to contribute any amount in excess of the
proceeds received by such Selling Stockholder from the Underwriters in the
offering. The Underwriters' obligations in this Section 8(e) to contribute are
several in proportion to their respective underwriting obligations and not
joint.
24
<PAGE> 25
(f) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be promptly paid by the indemnifying party to the indemnified
party. The indemnity and contribution agreements contained in this Section 8 and
the representations and warranties of the Company and the Selling Stockholders
set forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers
or any persons controlling the Company or the Selling Stockholders, (ii)
acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Underwriter, or to the
Company, its directors or officers, or any person controlling the Company or the
Selling Stockholders, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may
be, any Underwriter shall fail to purchase and pay for the portion of the Shares
which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company or a Selling
Stockholder), you, as Representatives of the Underwriters, shall use your
reasonable efforts to procure within 36 hours thereafter one or more of the
other Underwriters, or any others, to purchase from the Company and the Selling
Stockholders such amounts as may be agreed upon and upon the terms set forth
herein, the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company and the
Selling Stockholders or you as the Representatives of the Underwriters will have
the right, by written notice given within the next 36-hour period to the parties
to this Agreement, to terminate this Agreement without liability on the part of
the non-defaulting Underwriters or of the Company or of the Selling
25
<PAGE> 26
Stockholders except to the extent provided in Section 8 hereof. In the event of
a default by any Underwriter or Underwriters, as set forth in this Section 9,
the Closing Date or Option Closing Date, as the case may be, may be postponed
for such period, not exceeding seven days, as you, as Representatives, may
determine in order that the required changes in the Registration Statement or in
the Prospectus or in any other documents or arrangements may be effected. The
term "Underwriter" includes any person substituted for a defaulting Underwriter.
Any action taken under this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows: if to the Underwriters, to BT Alex. Brown
Incorporated, One South Street, Baltimore, Maryland 21202, Attention: General
Counsel; with a copy to BT Alex. Brown Incorporated, One Bankers Trust Plaza,
130 Liberty Street, New York, New York 10006, Attention: General Counsel; if to
the Company, to autobytel.com inc., 18872 MacArthur Boulevard, Irvine, CA
92612-1400, Attention: President; if to the Selling Stockholders, to _________.
11. TERMINATION.
(a) This Agreement may be terminated by you by notice to the Company
and the Selling Stockholders at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of the Company and its
Subsidiaries taken as a whole or the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects of
the Company and its Subsidiaries taken as a whole, whether or not arising in the
ordinary course of business, (ii) any outbreak or escalation of hostilities or
declaration of war or national emergency or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or change
on the financial markets of the United States would, in your reasonable
judgment, make it impracticable or inadvisable to market the Shares or to
enforce contracts for the sale of the Shares, or (iii) suspension of trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or limitation on prices (other than limitations on hours or numbers of
days of trading) for securities on either such Exchange, (iv) the enactment,
publication, decree or other promulgation of any statute, regulation, rule or
order of any court or other governmental authority which in your opinion
materially and adversely affects or may materially and adversely affect the
business or operations of the Company, (v) declaration of a banking moratorium
by United States or New York State authorities, (vi) the suspension of trading
of the Company's Common Stock by the Nasdaq Stock Market, the Commission, or any
other governmental authority or, (vii) the taking of any action by any
governmental body or agency in respect of its monetary or fiscal affairs which
in your reasonable opinion has a material adverse effect on the securities
markets in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
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<PAGE> 27
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company and the Selling Stockholders and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, the Selling Stockholders and the Underwriters
acknowledge and agree that the only information furnished or to be furnished by
any Underwriter to the Company for inclusion in any Prospectus or the
Registration Statement consists of the information set forth in the last
paragraph on the front cover page of the Prospectus (insofar as such information
relates to the Underwriters), legends required by Item 502(d) of Regulation S-K
under the Act and the information under the caption "Underwriting" in the
Prospectus.
14. MISCELLANEOUS.
(a) The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers or any Selling Stockholder and (c) delivery of and
payment for the Shares under this Agreement.
(b) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(c) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Selling Stockholders, the
Company and the several Underwriters in accordance with its terms.
27
<PAGE> 28
Any person executing and delivering this Agreement as Attorney-in-Fact
for a Selling Stockholder represents by so doing that he has been duly appointed
as Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-Fact to take
such action.
Very truly yours,
AUTOBYTEL.COM INC.
By
---------------------------------------
President
Selling Stockholders listed on Schedule II
By
---------------------------------------
---------------------------------------
Attorney-in-Fact
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
BT ALEX. BROWN INCORPORATED
LEHMAN BROTHERS INC.
- ----------------------------------
PAINEWEBBER INCORPORATED
- ----------------------------------
As Representatives of the several
Underwriters listed on Schedule I
By: BT Alex. Brown Incorporated
By:
--------------------------
Authorized Officer
28
<PAGE> 29
SCHEDULE I
SCHEDULE OF UNDERWRITERS
<TABLE>
<CAPTION>
Number of
Number of Option Shares to be
Firm Shares Purchased if Maximum
Underwriter to be Purchased Amount Exercised
----------- --------------- --------------------
<S> <C> <C>
BT Alex. Brown Incorporated.................
Lehman Brothers Inc.........................
PaineWebber Incorporated....................
[Names of Other Underwriters]...............
--------- -------
Total........................ 4,250,000 675,000
========= =======
</TABLE>
29
<PAGE> 30
SCHEDULE II
SCHEDULE OF SELLING STOCKHOLDERS
<TABLE>
<CAPTION>
Maximum Number of Percentage of
Number of Firm Option Shares to Total Number of
Shares to be be Sold Option Shares
Seller Stockholder Sold
------------------ -------------- ----------------- ---------------
<S> <C> <C> <C>
Peter R. Ellis.................... 500,000 337,500 50%
John C. Bedrosian................. 500,000 337,500 50%
--------- ------- ---
Total.............. 1,000,000 675,000 100%
========= ======= ===
</TABLE>
30
<PAGE> 31
EXHIBIT A
STATES IN WHICH THE COMPANY IS
DULY QUALIFIED TO TRANSACT BUSINESS
<PAGE> 32
EXHIBIT B
FORM OF LOCKUP AGREEMENT
<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into, at
Irvine, California, as of the first day of July 1998, by and between
autobytel.com inc., a corporation duly organized under the laws of the State of
Delaware (the "Company"), with offices at 18872 MacArthur Blvd., Second Floor,
Irvine, California, 92612-1400, and Mark W. Lorimer (hereinafter referred to as
the "Executive"), who resides at 2624 Calle Onice, San Clemente, California
92673.
RECITALS
WHEREAS: The Company currently employs and desires to continue to
employ the Executive as President and Chief Executive Officer.
WHEREAS: The Executive is currently employed and desires to continue to
be so employed by the Company, subject to the following terms and conditions.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and with reference to the above recitals, the parties hereby
agree as follows:
ARTICLE 1
TERM OF EMPLOYMENT
The Company hereby employs the Executive as President and Chief
Executive Officer of the Company and the Executive hereby accepts such
employment by the Company for a period of three (3) years (the "Term")
commencing from July 1, 1998 (the "Commencement Date") and expiring upon the
third anniversary of the Commencement Date, unless extended at the mutual option
of the parties. Notwithstanding the above, in the event of a Change of Control
of the Company prior to January 1, 2001 and while the Executive remains employed
by the Company, the Term shall automatically extend for a period of three (3)
years commencing from the date of the Change of Control. For purposes of this
Agreement "Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation but not including any initial or secondary public
offering) in one or a series of related transactions of all or substantially all
of the assets of the Company taken as a whole to any person (a "Person") or
group of persons acting together (a "Group") (other than any of the Company's
wholly-owned subsidiaries, any Company employee pension or benefits plan, or any
person or entity owning at least five (5) percent of the common stock of the
Company as of October 1, 1998), (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company, (iii) the consummation of any
transactions (including any stock or other purchase, sale, acquisition,
disposition, merger or consolidation, but not including any initial or secondary
public offering) the result of which is that any Person or Group (other than any
of the Company's wholly-owned subsidiaries, any Company employee pension or
benefits plan, or any person or entity owning at least five (5) percent of the
common stock of the Company as of October 1, 1998), becomes the beneficial
owners of more than 40 percent of the aggregate voting power of all classes of
stock of the Company having the right to elect directors under ordinary
circumstances; or (iv) the first day on which a majority of the members of the
board of directors of the Company (the "Board") are not individuals who were
nominated for election or elected to the Board with the approval of two-thirds
of the members of the Board just prior to the time of such nomination or
election.
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ARTICLE 2
DUTIES AND OBLIGATIONS
2.1 During the Term of this Agreement, the Executive shall: (i) devote
his full business time, attention and energies to the business of the Company;
(ii) shall use his best efforts to promote the interests of the Company; (iii)
shall perform all functions and services as the President and Chief Executive
Officer of the Company, including general management and supervision over the
operations of the business and employees of the Company; (iv) shall act in
accordance with the policies and directives of the Company as determined from
time to time by its Board and communicated to the Executive in writing; and (v)
shall report directly to the Board.
2.2 The Executive covenants and agrees that, while actually employed by
the Company, he shall not engage in any other business duties or pursuits
whatsoever, or directly or indirectly render any services of a business or
commercial nature to any other person or organization, including, but not
limited to, providing services to any business that is in competition with or
similar in nature to the Company, whether for compensation or otherwise, without
the prior written consent of the Board. However, the expenditure of reasonable
amounts of time for educational, charitable, or professional activities shall
not be deemed a breach of this Agreement, if those activities do not materially
interfere with the services required under this Agreement, and shall not require
the prior written consent of the Board. Notwithstanding anything herein
contained to the contrary, this Agreement shall not be construed to prohibit the
Executive from making passive personal investments or conducting personal
business, financial or legal affairs or other personal matters if those
activities do not materially interfere with the services required hereunder. In
addition to the foregoing, notwithstanding anything contained herein to the
contrary, this Agreement shall not be construed to prohibit the Executive from
serving as a director or board member of any other corporation, company, or
other business entity, and such service shall not require approval by the Board.
2.3 The principal location in which the Executive's services are to be
performed will be the Irvine, California area. The Executive shall not be
required to change such principal location without his consent.
ARTICLE 3
COMPENSATION
3.1 As compensation for the services to be rendered by the Executive
pursuant to this Agreement, the Company hereby agrees to pay the Executive a
base salary equal to at least Three Hundred Twenty Five Thousand Dollars
($325,000.00) per year during the Term of this Agreement, which rate shall be
reviewed by the Board at least annually and may be increased (but not reduced)
by the Board in such amounts as the Board deems appropriate. The base salary
shall be paid in substantially equal bimonthly installments, in accordance with
the normal payroll practices of the Company.
3.2 The Company shall provide the Executive with the opportunity to
earn an annual bonus for each fiscal year of the Company, occurring in whole or
in part during the Term. The annual bonus payable to the Executive shall be in
such amount and based on such criteria for the award as may be established by
the Board from time to time. Any bonus shall be paid as promptly as practicable
following the end of the preceding fiscal year. The Executive shall participate
also in all other short-term and long-term bonus or incentive plans or
arrangements in which other senior executives of the Company are eligible to
participate from time to time. The provisions of this Section 3.2 shall be
subject to the provisions of Section 3.5.
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3.3 As further consideration for the services rendered by the Executive
during the Term, the Executive shall be granted stock options to purchase shares
of the Company's common stock on the terms and conditions set forth in the
attached Schedule A (each an "Option").
3.4 The Company shall have the right to deduct or withhold from the
compensation due to the Executive hereunder any and all sums required for
federal income and employee social security taxes and all state or local income
taxes now applicable or that may be enacted and become applicable during the
Term.
3.5 In the event the Company becomes a "publicly held corporation"
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Company may provide for shareholder approval of any
performance based compensation provided herein which is first created after the
Company becomes so "publicly held," and may provide for the establishment of a
compensation committee to establish any applicable performance goals and
determine whether such performance goals have been met.
ARTICLE 4
EMPLOYEE BENEFITS
4.1 The Company agrees that the Executive shall be entitled to all
ordinary and customary perquisites afforded to executive employees of the
Company, at the Company's sole expense (except to the extent employee
contribution may be required under the Company's benefit plans as they may now
or hereafter exist), which shall in no event be less than the benefits afforded
to the Executive on the date hereof and the other executive employees of the
Company as of the date hereof or from time to time, but in any event shall
include any qualified or non-qualified pension, profit sharing and savings
plans, any death benefit and disability benefit plans, life insurance coverages,
any medical, dental, health and welfare plans or insurance coverages and any
stock purchase programs that are approved by the Board on terms and conditions
at least as favorable as provided to the Executive on the date hereof and other
senior executives of the Company as of the date hereof or from time to time.
4.2 The Executive shall be entitled to four (4) weeks of paid vacation
for each year of his employment hereunder (including four weeks for 1998),
which, to the extent unused in any given year, may be carried over in accordance
with the policies of the Company then in effect. Notwithstanding anything to the
contrary, however, the Executive shall be entitled to carry over any unused
vacation for a period not less than two (2) years.
4.3 The Executive shall be entitled to a car allowance of One Thousand
Five Hundred Dollars ($1,500) per month during the Term.
4.4 The Company shall reimburse the Executive for all reasonable fees
and costs incurred for his health club membership, work-out sessions with a
trainer and the purchase and installation of a home computer, printer and fax
machine. All amounts paid pursuant to this Section 4.4 shall be equal on a net
after tax basis to the fees incurred by the Executive, provided, however, that,
as a condition to such reimbursement, the Executive shall furnish to the Company
adequate records and other documentary evidence substantiating each expenditure.
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ARTICLE 5
BUSINESS EXPENSES
5.1 The Company shall pay or reimburse the Executive for all reasonable
and authorized business expenses incurred by the Executive during the Term; such
payment or reimbursement shall not be unreasonably withheld so long as said
business expenses have been incurred for and promote the business of the Company
and are normally and customarily incurred by employees in comparable positions
at other comparable businesses in the same or similar market. Notwithstanding
the above, and except as otherwise provided in Section 4.4 hereof, the Company
shall not pay or reimburse the Executive for the costs of any membership fees or
dues for private clubs, civic organizations, and similar organizations or
entities, unless such organizations and the fees and costs associated therewith
have first been approved in writing by the Board.
5.2 The Company shall reimburse the Executive for expenses incurred
with business-related travel. Notwithstanding the above, the Company shall not
pay or reimburse the Executive for the costs of any business-related travel to
the extent such costs exceed the cost of Business Class.
5.3 As a condition to reimbursement under this Article 5, the Executive
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. The Executive 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.
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ARTICLE 6
TERMINATION OF EMPLOYMENT
6.1 Termination for Cause. The Board may, during the Term, without
notice to the Executive, terminate this Agreement and discharge the Executive
for Cause, whereupon the respective rights and obligations of the parties
hereunder shall terminate; provided, however, that the Company shall immediately
pay the Executive any amount due and owing pursuant to Articles 3, 4, and 5,
prorated to the date of termination; provided, further, however, that no
termination for Cause may occur without the Executive having the right to a
hearing with the Executive's counsel present. As used herein, the term "for
Cause" shall refer to the termination of the Executive's employment as a result
of any one or more of the following: (i) any conviction of the Executive for a
felony; (ii) the gross willful misconduct of the Executive which has a direct
and material injurious effect on the business or reputation of the Company; or
(iii) the gross dishonesty of the Executive which is directly and materially
injurious to the business and reputation of the Company. For purposes of this
Section 6.1, no act or failure to act, on the part of the Executive, shall be
considered "willful" if it is done, or omitted to be done, by the Executive in
good faith or with reasonable belief that his action or omission was in the best
interest of the Company. The Executive shall have the opportunity to cure any
such acts or omissions (other than item (i) above) within fifteen (15) days of
the Executive's receipt of a resolution adopted by the Board finding that, in
the good faith opinion of the Board, the Executive is guilty of acts or
omissions constituting "Cause," which resolution has been duly adopted by an
affirmative vote of a majority of the Board (excluding the Executive and any
individual alleged to have participated in the acts constituting "Cause"). Any
such vote shall be taken at a meeting of the Board called and held for such
purpose, after reasonable written notice is provided to the Executive setting
forth in reasonable detail the facts and circumstances claimed to provide a
basis of termination for Cause and the Executive is given an opportunity,
together with his counsel, to be heard before the Board.
6.2 Termination Without Cause. Anything in this Agreement to the
contrary notwithstanding, the Board shall have the right, at any time in its
sole and subjective discretion, to terminate this Agreement without Cause upon
not less than thirty (30) days prior written notice to the Executive. The term
"termination without Cause" shall mean the termination of the Executive's
employment for any reason other than those expressly set forth in Section 6.1,
or no reason at all, and shall also mean the Executive's decision to terminate
this Agreement by reason of any act, decision or omission by the Company or the
Board that: (A) materially modifies, reduces, changes, or restricts the
Executive's salary, bonus opportunities, options or other compensation benefits
or perquisites, or the Executive's authority, functions, services, duties,
rights, and privileges as, or commensurate with the Executive's position as,
President and Chief Executive Officer of the Company as described in Section 2.1
hereof; (B) relocates the Executive without his consent from the Company's
offices located at 18872 MacArthur Boulevard, Irvine, California, 92612-1400 to
any other location in excess of fifty (50) miles beyond the geographic limits of
Irvine, California; (C) deprives the Executive of his titles and positions of
President and Chief Executive Officer of the Company and/or his position as a
member of the Board; or (D) involves or results in any 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 notice thereof given by the
Executive (each a "Good Reason"). In the event the Company or the Executive
shall exercise the termination right granted pursuant to this Section 6.2, the
Company shall, within thirty (30) days of notice of termination to or from the
Executive (as the case may be), pay to the Executive in a single lump-sum
payment the base salary that would have been received by the Executive if he had
remained employed by the Company for the greater of (A) the remaining balance of
the Term or (B) two (2) years; provided, however, that for purposes of
calculating the payment pursuant to this sentence, the Executive's base salary
per year shall be the highest rate in effect during the Term. The Company also
shall (i) continue to provide to the Executive and his beneficiaries, at its
sole cost, the insurance coverages referred to in Section 4.1 above, and (ii)
pay to the Executive in a single lump-sum payment the aggregate cost of the
benefits (other than insurance coverages)
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under Section 4.1 hereof, in each case to the extent he would have received such
insurance coverages and benefits had he remained employed by the Company for the
greater of (A) the remaining balance of the Term or (B) two (2) years.
6.3 Termination for Death or Disability. The Executive's employment
shall terminate automatically upon the Executive's death during the Term. If the
Company determines in good faith that the Disability (as defined below) of the
Executive has occurred during the Term, it shall give written notice to the
Executive of its intention to terminate his employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive, provided that, within the
thirty (30) days after such receipt, the Executive shall not have returned to
full-time performance of his duties.
Anything in this Agreement to the contrary notwithstanding,
upon the death or Disability of the Executive, the Company shall provide the
Executive or his successors, heirs, designees, or assigns, with continued
payment of the Executive's then current base salary and all benefits under
Article 4 hereof for two (2) years. For purposes of this Agreement, "Disability"
shall mean the inability of the Executive to perform his duties to the Company
on account of physical or mental illness or incapacity for a period of one
hundred eighty (180) consecutive calendar days, or for a period of two hundred
ten (210) calendar days, whether or not consecutive, during any three hundred
sixty-five (365) day period.
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6.4 Termination Without Good Reason. Anything in this Agreement to the
contrary notwithstanding, the Executive shall have the right, at any time in his
sole and subjective discretion, to terminate this Agreement without Good Reason
upon not less than thirty (30) days prior written notice to the Company. In the
event the Executive voluntarily terminates his employment hereunder other than
for Good Reason, the respective rights and obligations of the parties hereunder
shall terminate; provided, however, that the Company shall immediately pay the
Executive any amount due and owing pursuant to Articles 3, 4, and 5, prorated to
the date of termination.
6.5 Termination Prior to or Following a Change of Control.
Notwithstanding, the foregoing, in the event the employment of the Executive is
terminated during the six (6) month period immediately prior to, or the first
thirty-six (36) months following, a Change of Control either (i) by the
Executive for Good Reason or (ii) by the Company other than for Cause,
Disability or death, then, in addition to the payments and benefits provided in
Section 6.2 hereof, the Company shall, within thirty (30) days of notice of
termination to the Executive, pay to the Executive in a single lump-sum payment
(i) an amount equal to (A) the highest annual bonus paid by the Company to the
Executive during the three (3) fiscal years prior to termination, multiplied by
(B) two (2); and (ii) an amount equal to the cost of all other benefits under
Article 4 hereof for the greater of (A) the remaining balance of the Term or (B)
two (2) years. For purposes of this Section 6.5, "Term" shall be the period of
time of this Agreement as defined by Article 1 hereof, which includes any
extension thereof by reason of a Change of Control prior to January 1, 2001.
6.6 Anything in this Agreement to the contrary notwithstanding, upon
the Executive's termination under this Article 6, the Company's obligations with
respect to any stock option to purchase shares of the Company's common stock
granted to the Executive shall be determined by the terms and conditions of such
option as set forth in the Executive's written option agreement regarding such
option, which shall be fully consistent with the terms and conditions set forth
in attached Schedule A with respect to the options described therein.
ARTICLE 7
PARACHUTE TAX INDEMNITY
7.1 Gross-Up Payment.
(a) 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
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Article 7) (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 Executive 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 Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive 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 Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments, provided, however, that in no event will
the amount of the Gross-Up Payment payable pursuant to this Article 7 exceed
Five Million Dollars ($5,000,000.00).
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(b) The determinations of whether and when a Gross-Up Payment is
required under this Article 7 shall be made by independent tax counsel (the "Tax
Counsel") 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 an independent nationally
recognized accounting firm (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. The Tax Counsel and
Accounting Firm shall initially be appointed by the Company after consultation
in good faith with the Executive and subject to the approval of the Executive
(which approval shall not be unreasonably withheld), provided, however, that if
the potential amount of the Gross-Up Payment (but for the limit in Section
7.1(a) above) could exceed Five Million Dollars, the Executive shall have the
opportunity to appoint a new Tax Counsel and Accounting Firm after consultation
in good faith with the Company. If the Tax Counsel and Accounting Firm selected
by the Company determine that the amount of the Gross-Up Payment is less than $5
million, but Executive provides an opinion of a second independent Tax Counsel
that the Gross-Up Payment (but for the limit in Section 7.1(a) above) could be
greater than $5 million, then Executive shall be entitled to appoint the Tax
Counsel and the Accounting Firm after consultation in good faith with the
Company and subject to the approval of the Company (which approval shall not be
unreasonably withheld). All fees and expenses of any Tax Counsels and Accounting
Firms referred to above shall be borne by the Company. Any Gross-Up Payment, as
determined pursuant to this Article 7, shall be paid by the Company to the
Executive within ten (10) days of the receipt of the Accounting Firm's
determination. Any determinations by the Tax Counsel and Accounting Firm shall
be binding upon the Company and the Executive, provided, however, if it is later
determined that there has been an underpayment of Excise Tax and that Executive
is required to make an additional Excise Tax payment(s) on any Payment or
Gross-Up Payment, the Company shall provide a similar full gross-up on such
additional liability, subject to the overall $5 million limit set forth in
Section 7.1(a) above.
(c) For purposes of any determinations made by any Tax Counsel and
Accounting Firm acting under Section 7.1(b) above:
(i) All Payments and Gross-Up Payments with respect to
Executive shall be deemed to be "parachute Payments"
under Section 280G(b)(2) of the Code and to be
"excess parachute payments" under Section 280G(b)(1)
of the Code that are fully subject to the Excise Tax
under Section 4999 of the Code, except to the extent
(if any) that such Tax Counsel determines in writing
in good faith that a Payment in whole or in part does
not constitute a "parachute payment" or otherwise is
not subject to Excise Tax;
(ii) The value of any non-cash benefits or deferred or
delayed payments or benefits shall be determined in a
manner consistent with the principles of Section 280G
of the Code; and
(iii) Executive shall be deemed to pay federal, state and
local income taxes at the actual marginal rate
applicable to individuals in the calendar year in
which the Gross-Up Payment is made, net of any
applicable reduction in federal income taxes for any
state and local taxes paid on the amounts in
question.
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7.2 Claims and Proceedings. The Executive shall notify the Company in
writing of any Excise Tax claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as soon as practicable but no later then twenty (20)
business days after the Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim
is to be paid. The Executive shall not pay such claim prior to the expiration of
the 30-day period following the date on which it gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
Excise Tax claim, the Executive shall: (i) give the Company any information
reasonably requested by the Company relating to such claim; (ii) take such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company after consultation in good faith with Executive and
subject to approval by Executive (which approval shall not be unreasonably
withheld) under the circumstances set forth in Section 7.1; (iii) cooperate with
the Company in good faith in order to effectively contest such claim; and (iv)
permit the Company to participate in any proceeding relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expense. Without limitation of the foregoing provisions of
this Article 7, if the Gross-Up Payment payable hereunder (determined on the
basis of the amount being contested), together with any previous Gross-Up
Payment made by the Company to the Executive hereunder (collectively the
"Aggregate Gross-Up Payment"), would not exceed Five Million Dollars
($5,000,000) (determined without regard to the $5 million limit in Section
7.1(a)), the Company shall control the Excise Tax portion of any proceedings
taken in connection with such contest and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such Excise Tax claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the Excise Tax claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine. If the Company directs the
Executive to pay such Excise Tax claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free basis,
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest and penalties) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and provided, however, that any Company-directed extension of the
statute of limitations relating to payment of taxes for the Executive's taxable
year with respect to which such contested Excise Tax amount is claimed to be due
shall be effective only if it can be and is limited to the contested Excise Tax
liability. Notwithstanding anything to the contrary herein, the Executive shall
control the settlement or contest, as the case may be, of all non-Excise Tax
issues and of any Excise Tax issues with respect to which the Aggregate Gross-Up
Payment payable hereunder (but for the limit in Section 7.1(a) above) would
exceed Five Million Dollars ($5,000,000). The Executive shall be entitled to
settle or contest, as the case may be, any non-Excise Tax issue raised by the
Internal Revenue Service or any other taxing authority, so long as such action
does not have a material adverse effect on an Excise Tax contest being pursued
by and under the control of the Company.
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7.3 Refunds. If, after the Executive's receipt of an amount advanced by
the Company pursuant to this Article 7 for payment of Excise Taxes, the
Executive files an Excise Tax refund claim and receives any refund with respect
to such claim, the Executive shall (subject to the Company's complying with the
requirements of this Article 7) except as provided below, promptly pay to the
Company the amount of any such refund of Excise Tax (together with any interest
paid or credited thereon, but after any and all taxes applicable thereto), plus
the amount (after any and all taxes applicable thereto) of the refund (if any is
applied for and received) of any income tax paid by Executive with respect to
and as a result of his prior receipt of any previously pai Gross-Up Payment
indemnifying Executive with respect to any such Excise Tax later so refunded. In
the event Executive files for a refund of the Excise Tax and such request would,
if successful, require Executive to refund any amount to the Company pursuant to
this provision, then Executive shall be required to seek a refund of the Income
Tax portion of any corresponding Gross-Up Payment so long as such refund request
would not have a material adverse effect on Executive (which determination shall
be made by independent tax counsel selected by Executive after good faith
consultation with the Company and subject to approval of the Company, which
approval shall not be unreasonably withheld). Notwithstanding the above,
Executive shall have no obligation to pay any portion of any such tax refund(s)
to the Company if and to the extent that the Excise Tax to which such refund
relates was not eligible for a Gross-Up Payment by reason of the $5 million
limit in Section 7.1(a) above. For this purpose, if the total Excise Tax paid
with respect to Executive exceeds the maximum amount eligible for Gross-Up
Payment coverage by reason of the $5 million limit in Section 7.1 (a) above, any
subsequent Excise Tax refunds shall first be applied against the portion of any
Excise Tax payments that are not covered by the Gross-Up Payments provided under
this Article 7. If, after the Executive's receipt of an amount advanced by the
Company pursuant to this Article 7, a determination is made that the Executive
shall not be entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of thirty (30) days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
the Gross-Up Payment required to be paid.
ARTICLE 8
NO MITIGATION OR OFFSET; INSURANCE
8.1 No Mitigation or Offset. The Executive shall not be required to
seek other employment or to reduce any severance benefit payable to him under
Article 6 hereof, and no severance benefit shall be reduced on account of any
compensation received by the Executive from other employment. The Company's
obligation to pay severance benefits under this Agreement shall not be reduced
by any amount owed by the Executive to the Company.
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8.2 Indemnification; Insurance.
(a) If the Executive is a party or is threatened to be made a
party to any threatened, pending or completed claim, action, suit or
proceeding, or appeal therefrom, whether civil, criminal,
administrative, investigative or otherwise, because he is or was an
officer of the Company, or at the express request of the Company is or
was serving, for purposes reasonably understood by him to be for the
Company, as a director, officer, partner, employee, agent or trustee
(or in any other capacity of an association, corporation, general or
limited partnership, joint venture, trust or other entity), the Company
shall indemnify the Executive against any reasonable expenses
(including attorneys' fees and disbursements), and any judgments, fines
and amounts paid in settlement incurred by him in connection with such
claim, action, suit, proceeding or appeal therefrom to the extent such
expenses, judgments, fines and amounts paid in settlement were not
advanced by the Company on his behalf pursuant to subsection (b) below,
to the fullest extent permitted under Delaware law. The Company shall
provide Executive with D&O insurance coverage at least as favorable to
Executive as what the Company maintains as of the date hereof or such
greater coverage as the Company may maintain from time to time.
(b) Upon the written request of the Executive specifying the
amount of a requested advance and the intended use thereof, the Company
shall indemnify Executive for his expenses (including attorneys' fees
and disbursements), judgments, fines and amounts paid in settlement
incurred by him in connection with such claim, action, suit, proceeding
or appeal whether civil, criminal, administrative, investigative or
otherwise, in advance of the final disposition of any such claim,
action, suit, proceeding or appeal therefrom to the fullest extent
permitted under Delaware law.
ARTICLE 9
RESTRICTIVE COVENANTS
9.1 Covenant Not to Disclose Confidential Information. During the Term
and following termination of this Agreement, the Executive agrees that, without
the Company's prior written consent, he will not use or disclose to any person,
firm, association, partnership, entity or corporation, any confidential
information concerning: (i) the business operations or internal structure of the
Company; (ii) the customers of the Company; (iii) the financial condition of the
Company; and (iv) other confidential information pertaining to the Company,
including without limitation, trade secrets, technical data, marketing analyses
and studies, operating procedures, customer and/or inventor lists, or the
existence or nature of any of the Company's agreements (other than this
Agreement and any other option or compensation related agreements involving the
Executive); provided, however, that the Executive shall be entitled to disclose
such information: (i) to the extent the same shall have otherwise become
publicly available (unless made publicly available by the Executive); (ii)
during the course of or in connection with any actual or potential litigation,
arbitration, or other proceeding based upon or in connection with the subject
matter of this Agreement; (iii) as may be necessary or appropriate to conduct
his duties hereunder, provided the Executive is acting in good faith and in the
best interest of the Company; or (iv) as may be required by law or judicial
process.
11
<PAGE> 12
9.2 Covenant Not to Compete. The Executive acknowledges that he has
established and will continue to establish favorable relations with the
customers, clients and accounts of the Company and will have access to trade
secrets of the Company. Therefore, in consideration of such relations and to
further protect trade secrets, directly or indirectly, of the Company, the
Executive agrees that during the Term and for a period of one (1) year from the
date of termination of the Executive, the Executive will not, directly or
indirectly, without the express written consent of the Board:
(i) own or have any interest in or act as an officer,
director, partner, principal, employee, agent, representative,
consultant or independent contractor of, or in any way assist in, any
business which is engaged, directly or indirectly, in any business
competitive with the Company in those automotive markets and/or
automotive products lines in which the Company competes within the
United States at any time during the Term, or become associated with or
render services to any person, firm, corporation or other entity so
engaged ("Competitive Businesses"); provided, however; that the
Executive may own without the express written consent of the Company
not more than two (2) percent of the issued an outstanding securities
of any company or enterprise whose securities are listed on a national
securities exchange or actively traded in the over the counter market;
(ii) solicit clients, customers or accounts of the Company
for, on behalf of or otherwise related to any such Competitive
Businesses or any products related thereto; or
(iii) solicit any person who is or shall be in the employ or
service of the Company to leave such employ or service for employment
with the Executive or an affiliate of the Executive.
Notwithstanding the foregoing, if any court determines that the covenant not to
compete, or any part thereof, is unenforceable because of the duration of such
provision or the geographic area or scope covered thereby, such court shall have
the power to reduce the duration, area or scope of such provision to the extent
necessary to make the provision enforceable and, in its reduced form, such
provision shall then be enforceable and shall be enforced.
9.3 Specific Performance. Recognizing the irreparable damage will
result to the Company in the event of the breach or threatened breach of any of
the foregoing covenants and assurances by the Executive contained in Sections
9.1 and 9.2 hereof, and that the Company's remedies at law for any such breach
or threatened breach may be inadequate, the Company and its successors and
assigns, in addition to such other remedies which may be available to them,
shall be entitled to an injunction to be issued by any court of competent
jurisdiction ordering compliance with this Agreement or enjoining and
restraining the Executive, and each and every person, firm or company acting in
concert or participation with him, from the continuation of such breach. The
obligations of the Executive and rights of the Company pursuant to this Article
9 shall survive the termination of this Agreement. The covenants and obligations
of the Executive set forth in this Article 9 are in addition to and not in lieu
of or exclusive of any other obligations and duties the Executive owes to the
Company, whether expresses or implied in fact or law.
12
<PAGE> 13
ARTICLE 10
GENERAL PROVISIONS
10.1 This Agreement and attached schedules (which are incorporated
herein and shall be treated as part of hereof) are intended to be the final,
complete and exclusive agreement between the parties relating to the employment
of the Executive by the Company with respect to the Term and all prior or
contemporaneous understandings, representations and statements, oral or written,
are merged herein. Notwithstanding anything to the contrary, the terms and
conditions of any stock option agreements signed by the Executive prior to the
date hereof shall remain in effect. No modification waiver, amendment, discharge
or change of this Agreement shall be valid unless the same is in writing and
signed by the party against which the enforcement thereof is or may be sought.
10.2 No waiver, by conduct or otherwise, by any party of any term,
provision, or condition of this Agreement, shall be deemed or construed as a
further or continuing waiver of any such term, provision, or condition nor as a
waiver of a similar or dissimilar condition or provision at the same time or at
any prior or subsequent time.
10.3 The rights under this Agreement, or by law or equity, shall be
cumulative and may be exercised at any time and from time to time. No failure by
any party to exercise, and no delay in exercising, any rights shall be construed
or deemed to be a waiver thereof, nor shall any single or partial exercise by
any party preclude any other or future exercise thereof or the exercise of any
other right.
10.4 Except as otherwise provided in this Agreement, any notice,
approval, consent, waiver or other communication required or permitted to be
given or to be served upon any person in connection with this Agreement shall be
in writing. Such notice shall be personally served, sent by telegram, tested
telex, fax or cable, or sent prepaid by either registered or certified mail with
return receipt requested or Federal Express and shall be deemed given (i) if
personally served or by Federal Express, when delivered to the person to whom
such notice is addressed, (ii) if given by telegram, telex, fax or cable, when
sent, or (ii) if given by mail, two (2) business days following deposit in the
United States mail. Any notice given by telegram, telex, fax or cable shall be
confirmed in writing by overnight mail or Federal Express within forty-eight
(48) hours after being sent. Such notices shall be addressed to the party to
whom such notice is to be given at the party's address set forth below or as
such party shall otherwise direct.
If to the Company: autobytel.com inc.
18872 MacArthur Boulevard
Irvine, California 92612-1400
(949) 862-1323 (fax)
Attn: General Counsel
If to the Executive: Mark W. Lorimer
2624 Calle Onice
San Clemente, California 92673
With a copy to: Brian Foley, Esq.
1 North Broadway
4th Floor
White Plains, New York 10601-2310
(914) 946-9717
13
<PAGE> 14
10.5 The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the parties hereto.
10.6 This Agreement shall be construed and enforced in accordance with
the laws of the State of California, without giving effect to the principles of
conflict of laws thereof, except that the indemnification provisions of Section
8.2 shall be governed by Delaware law without regard to conflict of laws
principles.
10.7 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which shall constitute one
instrument.
10.8 The provisions of this Agreement are agreed to be severable, and
if any provision, or application thereof, is held invalid or unenforceable, then
such holding shall not effect any other provision or application.
10.9 As used herein, and as the circumstances require, the plural term
shall include the singular, the singular shall include the plural, the neuter
term shall include the masculine and feminine genders, and the feminine term
shall include the neuter and the masculine genders.
10.10 Any controversy or claim arising out of, or related to, this
Agreement, or the breach thereof, shall be settled by binding arbitration in the
City of Irvine, California, in accordance with the rules then in effect of the
American Arbitration Association, and the arbitrator's decision shall be binding
and final, and judgment upon the award rendered may be entered in any court
having jurisdiction thereof. Each party hereto shall pay its or their own
expenses incident to the negotiation, preparation and resolution of any
controversy or claim arising out of, or related to, this Agreement, or the
breach thereof, provided, however, the Company shall pay and be solely
responsible for any attorneys' fees and expenses and court or arbitration costs
incurred by the Executive as a result of a claim that the Company has breached
or otherwise failed to perform this Agreement or any provision hereof to be
performed by the Company if the Executive prevails in the contest in whole or in
part.
14
<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
autobytel.com,inc.
By /s/ Michael J. Fuchs
-------------------------------
Michael J. Fuchs
Chairman of the Board
/s/ Mark w. Lorimer
-----------------------------------
Mark W. Lorimer
[Remainder of page intentionally left blank]
15
<PAGE> 16
SCHEDULE A
As further consideration for the services rendered by the Executive
during the Term, the Executive shall be granted Options on the terms and
conditions set forth below, effective as of December 17, 1998. Each such Option
shall be effective upon such grant effective date.
1. Regular 1998 Options. The Executive shall be granted Options to
purchase two hundred thousand (200,000) shares of the Company's common stock
(the "Regular 1998 Options") under the Company's 1998 Stock Option Plan. The
Regular 1998 Options shall have a ten (10) year term (the " Regular 1998 Option
Term") of exercise and, except as otherwise provided herein, shall remain
exercisable following vesting for the full term. The exercise price of an Option
granted as a Regular 1998 Option shall be equal to the fair market value per
share of the Company's common stock (as determined by the Company) as of the
date such Option is granted.
(a) Vesting. The Regular 1998 Options shall vest based on the continued
employment of the Executive (which shall include the Executive's membership on
the Board) in equal installments of fifty (50) percent of the number of subject
shares on each of June 1, 1999 and June 1, 2000.
(b) Payment Upon Exercise. Payment for the shares subject to any
Regular 1998 Option may be tendered in cash or by certified, bank cashier's or
teller's check or by shares of the Company's common stock (valued at fair market
value (as determined by the Company) as of the date of tender) already owned by
the Executive, or some combination of the foregoing or such other form of
consideration which has been approved by the Board, including any approved
cashless exercise mechanism or a promissory note given by the Executive.
(c) Termination for Cause. As of the date of the Executive's
termination for Cause under Section 6.1 of this Agreement, any unvested or
unexercised portion of the Regular 1998 Options shall terminate immediately and
shall be of no further force or effect.
(d) Termination Without Cause or for Good Reason. As of the date of the
Executive's termination by the Company without Cause or by the Executive for
Good Reason under Section 6.2 of this Agreement, any unvested portion of the
Regular 1998 Options shall become immediately and fully vested and exercisable
from such termination of employment until the date that is two (2) years
following the termination date.
(e) Termination due to Death or Disability. As of the date of the
Executive's termination due to death or Disability under Section 6.3 of this
Agreement, any unvested portion of the Regular 1998 Options shall become
immediately and fully vested and exercisable. Any previously vested but
unexercised Regular 1998 Options shall remain exercisable from the date of such
termination of employment until the end of the Regular 1998 Option Term or, if
earlier, the date that is two (2) years following the termination date.
(f) Termination Without Good Reason. As of the date of any voluntary
termination of employment with the Company by the Executive other than due to
death or Disability, and other than for Good Reason, any unvested portion of the
Regular 1998 Options shall terminate immediately and shall be of no further
force or effect. Any previously vested but unexercised Regular 1998 Options
shall remain exercisable from the date of such termination of employment until
the end of the Regular 1998 Option Term or, if earlier, the date that is one (1)
year following the termination date.
16
<PAGE> 17
(g) Termination Prior to or Following a Change of Control. In the event
of a Change of Control while the Executive is employed by the Company, or the
Executive's employment is terminated by the Company without Cause or by the
Executive for Good Reason within six (6) months prior to a Change of Control
during the Term, any unvested installment of the Regular 1998 Options shall
immediately vest and become exercisable from the date of such Change of Control,
or if earlier the date of termination, until the date that is two (2) years
following (i) the Change of Control date, or (ii) if earlier the date of
termination.
2. 1998 Performance Options. The Executive also shall be granted
Options to purchase five hundred thousand (500,000) shares of the Company's
common stock (the "1998 Performance Options") under the Company's 1998 Stock
Option Plan. The 1998 Performance Options shall vest in six (6) installments
with eighty thousand (80,000) shares subject to each of the first and second
installments and eighty-five thousand (85,000) shares subject to each of the
third, fourth, fifth and sixth installments. The 1998 Performance Options shall
have a ten (10) year term (the "1998 Performance Option Term") of exercise and,
except as otherwise provided herein shall remain exercisable following vesting
for the full term. The exercise price of an Option granted as a 1998 Performance
Option shall be equal to the fair market value (as determined by the Company)
per share of the Company's common stock as of the date of grant. (the "Exercise
Price").
(a) Vesting. The 1998 Performance Options shall vest on the seventh
(7th) anniversary of the date of grant, subject to the continued employment of
the Executive (without regard to the occurrence of an Initial Public Offering or
stock price performance); provided however that following an effective initial
public offering by the Company (the "IPO") and based on the continued employment
of the Executive, the vesting of the 1998 Performance Options shall accelerate
as follows:
(i) the first installment will vest immediately and fully upon
the first six (6) month anniversary of the date of grant, or any six
month anniversary of such date thereafter, following the IPO if the
average trading price (as determined by averaging either the closing
price or bid-ask midpoint) of the Company's common stock for the ten
trading days (the "Average Trading Price") preceding any such
anniversary date exceeds the Exercise Price by at least Six Dollars and
Sixty Cents ($6.60);
(ii) the second installment will vest immediately and fully
upon the first one (1) year anniversary of the date of grant, or any
six month anniversary of such date thereafter, following the IPO if the
Average Trading Price preceding any such anniversary date exceeds the
Exercise Price by at least Thirteen Dollars and Twenty Cents ($13.20);
(iii) the third installment will vest immediately and fully
upon the first eighteen (18) month anniversary of the date of grant, or
any six month anniversary of such date thereafter, following the IPO if
the Average Trading Price preceding any such anniversary date exceeds
the Exercise Price by at least Nineteen Dollars and Eighty Cents
($19.80);
(iv) the fourth installment will vest immediately and fully
upon the first two (2) year anniversary of the date of grant, or any
six month anniversary of such date thereafter, following the IPO if the
Average Trading Price preceding any such anniversary date exceeds the
Exercise Price by at least Twenty-Six Dollars and Forty Cents ($26.40);
17
<PAGE> 18
(v) the fifth installment will vest immediately and fully upon
the first two and half year anniversary of the date of grant, or any
six month anniversary of such date thereafter, following the IPO if the
Average Trading Price preceding any such anniversary date exceeds the
Exercise Price by at least Thirty-three Dollars ($33.00); and
(vi) the sixth installment will vest immediately and fully
upon the first three (3) year anniversary of the date of grant, or any
six month anniversary of such date thereafter, following the IPO if the
Average Trading Price preceding any such anniversary date exceeds the
Exercise Price by at least Thirty-nine Dollars and Sixty Cents
($39.60).
(b) Payment Upon Exercise. Payment for the shares subject to any 1998
Performance Option may be tendered in cash or by certified, bank cashier's or
teller's check or by shares of the Company's common stock (valued at fair market
value (as determined by the Company) as of the date of tender) already owned by
the Executive, or some combination of the foregoing or such other form of
consideration which has been approved by the Board, including any approved
cashless exercise mechanism or a promissory note given by the Executive.
(c) Termination for Cause. As of the date of the Executive's
termination for Cause under Section 6.1 of this Agreement, any unvested or
unexercised portion of the 1998 Performance Options shall terminate immediately
and shall be of no further force or effect.
(d) Termination Without Cause or for Good Reason. If the Company has
not effected an IPO as of the date of the Executive's termination by the Company
without Cause or by the Executive for Good Reason under Section 6.2 of this
Agreement, any unvested portion of the 1998 Performance Options shall become
immediately and fully vested and exercisable as of the date of such termination.
Any shares subject to the 1998 Performance Options that become vested and
exercisable in accordance with the foregoing and any previously vested but
unexercised 1998 Performance Options shall remain exercisable from the date of
such termination of employment until the date that is one (1) year following the
termination date. If the Company has effected an IPO as of the date of the
Executive's termination by the Company without Cause or by the Executive for
Good Reason under Section 6.2 of this Agreement, any unvested portion of the
1998 Performance Options shall become immediately and fully vested and
exercisable to the extent the stock price targets in Paragraph 2.(a)(i)-(vi)
above are met on the termination date or as of the immediately preceding six (6)
month anniversary of the date of grant, or as of the six (6) month anniversary
of the grant date following such termination. Any shares subject to the 1998
Performance Options that become vested and exercisable in accordance with the
foregoing and any previously vested but unexercised 1998 Performance Options
shall remain exercisable from the date of such termination of employment until
the date that is one (1) year following the termination date, provided, however,
that if the Average Trading Price as of the date of termination exceeds the
Company's IPO initial offering price by at least thirty (30) percent, the vested
and unexercised 1998 Performance Options shall remain exercisable until the date
that is two (2) years following the termination date.
18
<PAGE> 19
(e) Due to Death or Disability. If the Company has not effected an IPO
as of the date of the Executive's termination due to death or Disability under
Section 6.3 of this Agreement, as of the date of such termination of the
Executive any unvested portion of the 1998 Performance Options shall become
immediately and fully vested and exercisable. If the Company has effected an IPO
as of such termination date, any unvested portion of the 1998 Performance
Options shall become vested and exercisable to the extent the stock price
targets in Paragraph 2.(a)(i)-(vi) above are met on the termination date or as
of the immediately preceding six (6) month anniversary of the date of grant, or
as of the six (6) month anniversary of the grant date following such
termination. Any shares subject to the 1998 Performance Options that become
vested and exercisable in accordance with the foregoing and any previously
vested but unexercised 1998 Performance Options shall remain exercisable from
the date of such termination of employment until the date that is one (1) year
following the termination date, provided, however, that if the Average Trading
Price as of the date of termination exceeds the Company's IPO initial offering
price by at least thirty (30) percent, the vested and unexercised 1998
Performance Options shall remain exercisable until the date that is two (2)
years following the termination date.
(f) Termination Without Good Reason. Regardless of whether the Company
has or has not effected an IPO as of the date of any voluntary termination of
employment with the Company by the Executive other than due to death or
Disability and other than for Good Reason, as of the date of such termination by
the Executive any unvested portion of the 1998 Performance Options shall
terminate immediately and shall be of no further force or effect. Any previously
vested but unexercised 1998 Performance Options shall remain exercisable from
the date of such termination of employment until the date that is one (1) year
following the termination date, provided, however, that if the Average Trading
Price as of the date of termination exceeds the Company's IPO initial offering
price by at least thirty (30) percent, the vested and unexercised 1998
Performance Options shall remain exercisable until the date that is two (2)
years following the termination date.
(g) Change of Control. In the event of a Change of Control while the
Executive is employed by the Company, or the Executive's employment is
terminated by the Company without Cause or by the Executive for Good Reason
within six (6) months prior to a Change of Control during the Term, any
otherwise unvested installment of the 1998 Performance Options shall immediately
vest and become exercisable to the extent (i) the installment meets the
applicable stock price targets in Paragraph 2.(a)(i)-(vi) above based on the
Average Trading Price at the time of or within six (6) months of the Change of
Control but without regard to any anniversary of the installment's grant date if
the Company has effected an IPO as of the date of the Change of Control; or (ii)
the fair market value (as determined by an independent appraiser designated by
the Company) per share of the Company's common stock exceeds the Exercise Price
of the installment by an amount equal to or greater than the applicable dollar
amount for the installment as set forth in 2.(a)(i)-(vi) above if the Company
has not effected an IPO as of the date of the Change of Control. Any shares
subject to the 1998 Performance Options that become vested and exercisable in
accordance with the foregoing and any previously vested but unexercised 1998
Performance Options shall be at the Executive's option either cashed out based
on a value per share determined in accordance with (i) or (ii) of this clause
(g), as applicable, or remain exercisable from the date of such Change of
Control until the date that is one (1) year following the Change of Control
date, provided, however, that if the Average Trading Price as of the date of the
Change of Control exceeds the Company's IPO initial offering price by at least
thirty (30) percent, the vested and unexercised 1998 Performance Options shall
remain exercisable until the date that is two (2) years following the Change of
Control date.
19
<PAGE> 1
EXHIBIT 10.9
MARKETING AGREEMENT
between
AUTO-BY-TEL ACCEPTANCE CORPORATION
on the one hand,
and
AIU INSURANCE COMPANY
AMERICAN INTERNATIONAL SOUTH INSURANCE COMPANY
AMERICAN HOME ASSURANCE COMPANY
AMERICAN INTERNATIONAL INSURANCE COMPANY
AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC.
ILLINOIS NATIONAL INSURANCE COMPANY
MINNESOTA INSURANCE COMPANY
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA
THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA
and
AUTO-BY-TEL, INC.
as Guarantor of the obligations of
AUTO-BY-TEL ACCEPTANCE CORPORATION
hereunder
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
1. REPRESENTATIONS AND WARRANTIES................................................2
Section 1.1 Representations and Warranties of ABTAC and ABT.................2
Section 1.2 Representations and Warranties of AIC...........................2
2. MARKETING ARRANGEMENT.........................................................3
Section 2.1 Phases of Marketing Arrangement.................................3
Section 2.2 Preparation of Marketing Materials..............................4
Section 2.3 Ownership of Marketing Materials................................4
Section 2.4 Development Costs...............................................4
3. COVENANTS, DUTIES AND RIGHTS OF AIC...........................................5
Section 3.1 Regulatory Authorizations.......................................5
Section 3.2 Initial Product Offering........................................5
Section 3.3 Low Cost Products...............................................5
Section 3.4 Reservation of Rights...........................................5
Section 3.5 Toll Free Number................................................5
Section 3.6 Cross-Promotion.................................................5
Section 3.7 Payment of Development Costs....................................6
Section 3.8 Books and Records: Auditing.....................................6
4. COVENANTS, DUTIES AND RIGHTS OF ABTAC AND ABT.................................6
Section 4.1 Insurance Marketing Materials...................................6
Section 4.2 Relationships with ABT Friends..................................6
Section 4.3 Hyperlink Development Costs.....................................7
Section 4.4 Cross-Promotion.................................................7
Section 4.5 Guarantee.......................................................7
Section 4.6 Additional Services.............................................7
5. [RESERVED]....................................................................7
6. EXCLUSIVITY...................................................................7
Section 6.1 Exclusivity.....................................................7
Section 6.2 Exception From Exclusivity......................................8
Section 6.3 AIC Marks.......................................................8
Section 6.4 ABT Marks.......................................................8
7. FIRST REFUSAL.................................................................8
Section 7.1 New Product.....................................................8
Section 7.2 Right of First Refusal..........................................8
8. COMPENSATION..................................................................8
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
9. POLICIES.....................................................................9
Section 9.1 Product Control................................................9
Section 9.2 Underwriting and Administration................................9
Section 9.3 Policy and Quote Records.......................................9
Section 9.4 Billing........................................................9
Section 9.5 Authority as Insurance Provider................................9
Section 9.6 Privacy........................................................10
Section 9.7 Fair Credit Reporting..........................................10
10. CONFIDENTIALITY..............................................................10
Section 10.1 Confidential Information.......................................10
Section 10.2 Return of Confidential Information.............................10
Section 10.3 Survival of Confidentiality....................................10
11. USE OF NAMES/TRADEMARKS......................................................11
Section 11.1 Limitation on Use of AIC Marks.................................11
Section 11.2 Limitation on Use of ABT Marks.................................11
Section 11.3 Low Cost Logo..................................................11
Section 11.4 Use of User Data...............................................11
12. INDEPENDENT CONTRACTOR.......................................................11
Section 12.1 No Joint Venture...............................................11
Section 12.2 Limitations on Authority.......................................11
13. [RESERVED]...................................................................12
14. TERM AND TERMINATION.........................................................12
Section 14.1 Renewal........................................................12
Section 14.2 Cure Period....................................................12
Section 14.3 Termination Upon Insolvency....................................12
Section 14.4 Termination Upon Use of Marks..................................12
Section 14.5 Responsibilities Upon Termination..............................12
15. INDEMNIFICATION..............................................................13
16. NOTICES......................................................................13
Section 16.1 Legal and Regulatory Proceedings...............................13
Section 16.2 Addresses, etc.................................................13
17. MISCELLANEOUS................................................................13
Section 17.1 Choice of Law, Venue, Jurisdiction.............................13
Section 17.2 Assignment.....................................................13
Section 17.3 Modification; Waiver...........................................14
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 17.4 Entire Agreement...............................................14
Section 17.5 Remedies.......................................................14
Section 17.6 References and Section Headings................................14
Section 17.7 Severability...................................................14
Section 17.8 Signatures and Recording.......................................14
</TABLE>
-iii-
<PAGE> 5
MARKETING AGREEMENT
THIS AGREEMENT is made as of July 22, 1996, between AUTO-BY-TEL
ACCEPTANCE CORPORATION ("ABTAC") a Delaware corporation, having its offices at
2711 E. Coast Highway, Suite 203, Corona Del Mar, California 92625, on the one
hand, and AIU INSURANCE COMPANY, AMERICAN INTERNATIONAL SOUTH INSURANCE COMPANY,
AMERICAN HOME ASSURANCE COMPANY, AMERICAN INTERNATIONAL INSURANCE COMPANY,
AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC., ILLINOIS NATIONAL
INSURANCE COMPANY, MINNESOTA INSURANCE COMPANY, NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA and THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA
(collectively "AIC"), all member companies of American International Group, Inc.
having offices at 505 Carr Road, Wilmington, Delaware 19809, on the other hand
and AUTO-BY-TEL, INC. ("ABT") a Delaware corporation, having its offices at 2711
E. Coast Highway, Suite 203, Corona Del Mar, California 92625, in its capacity
as Guarantor of ABTAC's obligations hereunder ("ABT").
W I T N E S S E T H:
WHEREAS, AIC underwrites private passenger automobile,
homeowner/tenant/condo, and personal umbrella liability insurance ("Products"),
as well as (directly or through its affiliates) the products ("Additional
Products") enumerated on Schedule A hereto and has experience in providing
direct response marketing; and
WHEREAS, AIC wishes to market Products, but primarily private
passenger automobile insurance, to users of ABT's Internet Website and those
Websites of its contractual partners which are approved by AIC from time to time
("Users"); and
WHEREAS, AIC and ABTAC share a common philosophy on delivering a
low-cost, high-quality program to Users; and
WHEREAS, AIG Marketing, Inc. ("AIGM") acts as a marketing group
for and on behalf of AIC and in such capacity has negotiated this Agreement on
behalf of AIC and will provide such services and compensation as set forth
herein; and
WHEREAS, ABT is engaged in the marketing of automobile pricing
and automobile buying services to Users via the Internet and ABTAC is a
wholly-owned subsidiary of ABT established to, among other things, enter into
arrangements pursuant to which Users are afforded the opportunity to enter into
transactions they may find beneficial; and
WHEREAS, ABT, through ABTAC, is desirous of authorizing and
providing AIC access to its Internet Server ("Server"); and
WHEREAS, AIC is desirous of securing access to the Server for the
publication, display and exhibition of AIC's direct response sales materials to
ABT Users.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, ABT, ABTAC and AIC agree as follows:
<PAGE> 6
1. REPRESENTATIONS AND WARRANTIES.
Section 1.1 Representations and Warranties of ABTAC and ABT. Each of
ABTAC and ABT, as the case may be, hereby makes the following representations
and warranties to AIC:
(a) Each of ABT and ABTAC has been duly organized and is validly
existing as a corporation under the laws of the state of Delaware and each is
duly licensed where required as a "Licensee" or is otherwise qualified in each
state in which it transacts business and is not in default of such state's
applicable laws, rules and regulations, except where the failure to so qualify
or such default would not have a material adverse effect on its ability to
conduct its business or to perform its obligations under this Agreement.
(b) Each of ABT and ABTAC has the requisite power and authority and
legal right to execute and deliver this Agreement, engage in the transactions
contemplated by this Agreement, and perform and observe those terms and
conditions of this Agreement to be performed or observed by it hereunder. The
person or persons signatory to this Agreement and any document executed pursuant
to it on behalf of each of ABT and ABTAC have full power and authority to bind
either ABT or ABTAC, as the case may be. The execution, delivery and performance
of this Agreement, and the performance by each of ABT and ABTAC of all
transactions contemplated herein and therein, have been duly authorized by all
necessary and appropriate corporate action on the part of ABT and ABTAC, as the
case may be.
(c) This Agreement has been duly authorized and executed by each of ABT
and ABTAC and is valid, binding and enforceable against each of them in
accordance with its terms, except that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally, and the execution, delivery and
performance by each of ABT and ABTAC of this Agreement do not conflict with any
term or provision of (i) its certificates of incorporation or bylaws, (ii) any
law, rule, regulation, order, judgment, writ, injunction or decree applicable to
ABTAC of any court, regulatory body, administrative agency or governmental body
having jurisdiction over either ABT or ABTAC or (iii) any agreement to which
either ABT or ABTAC is a party or by which its property is bound.
(d) No consent, approval, authorization or order of, registration or
filing with, or notice to any governmental authority or court is required under
applicable law in connection with the execution, delivery and performance by
either ABT or ABTAC of this Agreement.
(e) There is no action, proceeding or investigation pending or, to the
best knowledge of both ABT and ABTAC, threatened against either of them before
any court, administrative agency or other tribunal (i) asserting the invalidity
of this Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, or (iii) which could reasonably be
expected to materially and adversely affect the performance by either of them of
their respective obligations under, or the validity or enforceability of, this
Agreement.
(f) ABTAC or ABT, as the case may be, has all regulatory approvals,
authorizations, licenses, permits and other permissions, consents and
authorities whatsoever, as needed to operate the ABT Website.
(g) ABTAC or ABT, as the case may be, warrants that it has the legal and
valid right to use any registered or unregistered trademark, tradename, service
mark, logo, emblem or other proprietary designation, or any variations,
derivatives and modifications thereof, used by it in the Insurance Marketing
Materials as defined hereafter (the "ABT Marks")
Section 1.2 Representations and Warranties of AIC. AIC hereby makes the
following representations and warranties, to ABTAC:
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(a) AIC is duly licensed where and as required in each state in which it
transacts business and is not in default of such state's applicable laws, rules
and regulations, except where such default would not have a material adverse
effect on the ability of AIC to conduct its business or to perform its
obligations under this Agreement.
(b) AIC has the requisite power and authority and legal right to execute
and deliver, engage in the transactions contemplated by, and perform and observe
the terms and conditions of, this Agreement. The person or persons signatory to
this Agreement and any document executed pursuant to it on behalf of AIC have
full power and authority to bind AIC. The execution, delivery and performance of
this Agreement, and the performance by AIC of all transactions contemplated
herein and therein, have been duly authorized by all necessary and appropriate
and corporate action on the part of AIC.
(c) This Agreement has been duly authorized and executed by AIC and is
valid, binding and enforceable against AIC in accordance with its terms, except
that such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws (whether statutory, regulatory or decisional)
now or hereafter in effect relating to creditors' rights generally, and the
execution, delivery and performance by AIC of this Agreement do not conflict
with any term or provision of the certificate of incorporation or bylaws of AIC,
or any law, rule, regulation, order, judgment, writ, injunction or decree
applicable to AIC of any court, regulatory body, administrative agency or
governmental body having jurisdiction over AIC.
(d) No consent, approval, authorization or order of, registration or
filing with, or notice to any governmental authority or court is required under
applicable law in connection with the execution, delivery and performance by AIC
of this Agreement.
(e) There is no action, proceeding or investigation pending or, to the
best knowledge of AIC, threatened against it before any court, administrative
agency or other tribunal (i) asserting the invalidity of this Agreement, (ii)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement, or (iii) which could reasonably be expected to materially and
adversely affect the performance by AIC of its obligations under, or the
validity or enforceability of, this Agreement.
(f) AIC warrants that it has all regulatory approvals, authorizations,
licenses, permits and other permissions, consents and authorities whatsoever, as
needed (i) to offer and sell the Products in each of the states (except for New
Jersey, Massachusetts, North Carolina, South Carolina and New Hampshire (the
"Excepted States")), territories and the District of Columbia of the United
States (the "Territory") and to otherwise perform its obligations under this
Agreement, and (ii) to use any Insurance Marketing Materials (as defined in
Section 2.2 of this Agreement) developed by AIC, or provided for inclusion in
any Insurance Marketing Materials developed jointly with ABTAC.
(g) AIC warrants that it has the legal and valid right to use any
registered or unregistered trademark, tradename, service mark, logo, emblem or
other proprietary designation, or any variations, derivatives and modifications
thereof, used by it in the Insurance Marketing Materials as defined hereafter
(the "AIC Marks").
2. MARKETING ARRANGEMENT.
Section 2.1 Phases of Marketing Arrangement. ABTAC and AIC shall
cooperate to provide the means for Users interested in the Products to establish
contact with AIC and purchase Products in three phases as follows:
(a) "'Phase 1' - Toll Free Telephone Marketing" Users accessing the ABT
Website shall be able to click on an icon and access another page at the ABT
Website containing information about the Products as well as a toll free
telephone number. Users dialing the toll free number will be connected to AIC
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employees who shall provide further information about the Products and take User
information in order to prepare a request for quote (an "RFQ"). AIC will
evaluate the RFQs for which they have received sufficient User information
(either on the first User call or after subsequent contact) and quote qualified
Users prices for the requested Products. Phase 1 shall commence approximately 30
days from the date of this Agreement and end when AIC and ABTAC agree that Phase
2 shall commence.
(b) "'Phase 2' - Electronic File Transfer" Users accessing the ABT
Website shall be able to click on an icon and access another page at the ABT
Website containing information about the Products as well as an RFQ which the
User can fill out and submit electronically. The ABT Website will forward the
RFQ files electronically to AIC. Upon receipt of the RFQ files, AIC employees
shall evaluate the RFQs for which they have received sufficient User information
(either at first or after subsequent contact) and quote any qualified User
prices for the requested Products. Phase 2 shall commence on such date as AIC
and ABTAC agree (cooperatively and in good faith) which date is expected to be
approximately 60 days from the date of the commencement of Phase 1
implementation. Phase 2 shall end when AIC and ABTAC agree that Phase 3 shall
commence.
(c) "'Phase 3' - Internet Hyperlink" Users accessing the ABT Website
shall be able to click on an icon and be hyperlinked to an AIC Website
containing information about the Products as well as an insurance RFQ which the
User can fill out and submit electronically. The AIC Website will evaluate the
RFQ file in real time (subject to System capabilities) and, if satisfactory
(either at first or after subsequent contact), will quote any qualified User
prices for the requested Products. Phase 3 shall commence on such date as AIC
and ABTAC agree (cooperatively and in good faith) which date is expected to be
prior to June 1, 1997.
Section 2.2 Preparation of Marketing Materials. (a) AIC and ABTAC shall
cooperate to prepare and produce (in each Phase of development) the Web page or
pages describing the Products on the ABT Website (the "Insurance info Pages"),
the Phase 2 ABT Website request for quote and electronic transfer mechanism, the
Phase 3 hyperlink and AIC Website request for quote, and all other marketing
materials (the "Collateral Materials") to be used to market and advertise the
Products or the Insurance Info Pages (the Insurance Info Pages and the Other
Materials, collectively, the "Insurance Marketing Materials").
(a) The content and form of the Insurance Marketing Materials must be
approved in writing by both AIC and ABTAC prior to use. Any modification in any
Insurance Marketing Materials shall be submitted by the party proposing the
modification to the other party in writing for approval. Unless the requested
modification is in any Insurance Marketing Material which is subject to any
filing or notice requirement with any governmental entity, which materials are
under the sole control of AIC, the party receiving such submission shall
preliminarily respond to the submitting party within two (2) business days of
receipt of such submission and shall deliver its final approval or disapproval
within five (5) business days of receipt of such submission. Approval of
requested modifications in Insurance Marketing Materials shall not be
unreasonably withheld or delayed. ABTAC acknowledges that any change in any
Insurance Marketing Materials subject to any filing or notice requirement with
any governmental entity may take considerable time to secure the required
approvals or to make the required filings. AIC acknowledges that the ABT Website
may (and is likely to) change from time-to-time in response to, among other
things, new display and/or hyperlink technologies, Internet server consolidation
or congestion, and changes in Internet providers.
Section 2.3 Ownership of Marketing Materials. Insurance Marketing
Materials shall be owned by ABT if provided by ABT, AIC if provided by AIC, and
by AIC if jointly produced. Ownership rights with respect to the AIC Marks and
the ABT Marks shall not be affected by this Section 2.3.
Section 2.4 Development Costs. AIC shall pay all reasonable
out-of-pocket costs for the development of the Insurance Marketing Materials;
provided, however, that the parties hereto agree that AIC's obligations to pay
for costs related to Phase I and Phase 2 shall not exceed in the aggregate fifty
thousand ($50,000) dollars.
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3. COVENANTS, DUTIES AND RIGHTS OF AIC.
Section 3.1 Regulatory Authorizations. AIC shall, at its own cost and
expense, secure and maintain all regulatory approvals, authorizations, licenses,
permits and other permissions, consents and authorities whatsoever, as needed to
offer and sell the Products in the Territory ("Insurance Approval"). AIC shall
use its best efforts to either (i) secure Insurance Approval as needed to offer
and sell the Products in the Excepted States and the provinces of Canada, or
(ii) to establish relationships with insurance producers or underwriters in the
Excepted States and the provinces of Canada which will allow the offering and
sale of Products in such jurisdictions in a manner which, as closely as
possible, mirrors the offering and sale of Products in the Territory. AIC shall
give ABTAC written notice promptly upon securing Insurance Approval in any
Excepted State or province of Canada and thereafter for all purposes such
jurisdiction shall be considered part of the Territory. AIC shall be responsible
for all aspects of any relationship established pursuant to clause (ii) of the
second sentence of this Section 3.1, and all Products sold pursuant to any such
relationship shall, for all purposes of this Agreement, be considered Products
sold within the Territory.
Section 3.2 Initial Product Offering. AIC shall initially offer only
automobile insurance, but shall use its best efforts to offer all Products by
June, 1997. In addition, AIC will facilitate the development of plans to market
those Additional Products through marketing on the ABT Website, either directly,
or through relationships between ABTAC and AIC affiliates offering such
products, which such relationships shall be facilitated and established in
accordance with Section 3.6 of this Agreement.
Section 3.3 Low Cost Products. AIC shall offer low-cost, high-quality
Products to qualified Users. AIC shall not offer insurance products similar to
the Products at prices lower than those quoted for the Products to qualified
Users except through distribution channels with lower distribution and/or
acquisition costs to AIC. For purposes of this Section 3.3, the similarity of
the Products shall be determined on the basis of the coverage terms, limitations
and conditions and the price levels shall be determined on the basis of persons
of like underwriting profiles seeking similar insurance products.
Section 3.4 Reservation of Rights. (a) AIC reserves the right to
suspend, restrict or modify the offer and sale of the Products to accommodate
regulations; provided, however, that AIC shall use its best efforts to limit
such suspension, restriction or modification to the smallest scope possible (in
both qualitative and temporal terms) to enable ABTAC to realize the full
expectancy of this Agreement.
(b) AIC reserves the right to use the services of AIGM for various
marketing, servicing and administrative functions under this Agreement;
provided, however, that AIC shall remain responsible at all times for its
obligations under this Agreement.
Section 3.5 Toll Free Number. AIC shall secure and maintain at least one
toll free telephone number for use in Phase 1. AIC shall (i) inform ABTAC of
such number, (ii) use its best efforts not to change such number, and (iii)
devote sufficient numbers of its trained employees to the answering of such
number so that Users dialing the number have to wait, on average, no more than
three minutes to be connected to an employee who will take the User's RFQ and
provide any requested information. From the commencement of Phase 1, the toll
free number shall be so staffed no less than 12 hours per day on weekdays and
six (6) hours per day on Saturdays. AIC acknowledges that ABTAC believes that
the Internet is utilized most heavily during non-business hours and on weekends,
and therefore agrees that it shall perform test marketing of expanded hours for
the staffing of the toll free number.
Section 3.6 Cross-Promotion. AIC shall promote and advertise the ABT
Website on the Website of AIGM, and shall use its best efforts to promote and
advertise the ABT Website on the Websites of all AIC corporate affiliates and
all AIC affinity partners (collectively, the "AIC Friends") and to promote
recognition and awareness of the ABT Website via ongoing public relations
efforts. AIC shall use its best efforts to secure the cooperation of the AIC
Friends in ABTAC's development and implementation of hyperlinks between the
Websites of the AIC Friends, on the one hand, and the ABT Website, on the other.
AIC agrees to facilitate the development of relationships between AIC's
affiliates and ABTAC with respect to the marketing of
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Additional Products or any other personal or commercial insurance products to
Users. Any compensation to be paid to ABTAC by the AIC affiliate offering such
products shall be mutually agreed upon by ABTAC and the related AIC affiliate.
Section 3.7 Payment of Development Costs. (a) AIC shall promptly, and in
any event, within 30 business days, pay ABTAC for any reasonable out-of-pocket
costs in connection with the development of the hyperlinks contemplated by Phase
3 and by Section 4.3 of this Agreement.
(b) AIC shall, subject to the reimbursement limit set forth in Section
2.4, promptly, and in any event, within 30 business days, pay ABTAC for any
reasonable out-of-pocket costs in connection with the development of the
electronic transmission mechanism contemplated by Phase 2.
Section 3.8 Books and Records: Auditing. (a) AIC shall keep complete and
accurate records of all of its activities under this Agreement at the address
specified in Section 16.2 of this Agreement. AIC shall, no later than the 30th
day of each month, deliver to ABTAC (i) the amounts to which ABTAC is entitled
pursuant to Section 8 of this Agreement, and (ii) a report setting forth the
amounts to be paid to ABTAC hereunder, accompanied by detail sufficient to
permit ABTAC to determine the basis of the computation and the accuracy of the
amount, together with a list of all Users of ABT's Website which have contacted
AIC through the toll free number provided on ABT's Website and such other
information as ABTAC shall reasonably request from time to time in order to
monitor the performance of this Agreement. Subject to the provisions of the
Insurance Information and Privacy Protection Model Act, as enacted in various
states (as so enacted, the "Privacy Act"), all records maintained by AIC related
to this Agreement shall be open to inspection and copying by ABTAC's employees,
agents, attorneys, accountants or other authorized representatives at reasonable
times during normal business hours.
(b) ABTAC may also appoint public accountants of its choice, and at its
sole expense, for the purpose of auditing AIC's performance of its obligations
under this Agreement and AIC agrees to grant such accountants access to all
records necessary to determine the compliance of AIC with the compensation
provisions of this Agreement. If the results of such audit reveal a discrepancy
between the amounts paid by AIC hereunder and the amounts which should have been
paid hereunder, then the appropriate payments shall be made (i) if to ABTAC,
immediately, and (ii) if to AIC, by the withholding of 1/12 of such amount from
the payments to be made to ABTAC over the succeeding twelve months. If the
discrepancy is in ABTAC's favor and exceeds $100,000, then AIC shall reimburse
ABTAC for the full cost of the audit.
4. COVENANTS, DUTIES AND RIGHTS OF ABTAC AND ABT.
Section 4.1 Insurance Marketing Materials. ABTAC shall maintain the
Insurance Marketing Materials (as available) at the ABT Website.
Section 4.2 Relationships with ABT Friends. ABT and ABTAC shall use best
efforts to establish and maintain relationships with major automobile-related
products and service providers on the Internet (such entities with which ABT or
ABTAC has established such relationships, the "ABT Friends") such as, among
others, Edmund's, Microsoft, Auto-Site and Kelly Blue Book which relationships
may include toll free "800" numbers and/or hyperlinks with the Websites of the
ABT Friends to the ABT Website allowing users at ABT Friends' Websites to link
to the ABT Website and view the Insurance Marketing Materials and/or hyperlinks
between the Websites of those ABT Friends approved in advance by AIC with the
Website of AIGM. If ABTAC proposes to establish a hyperlink between the Website
of AIGM and that of any ABT Friend, it shall submit such proposal to AIC in
advance for approval. AIC shall preliminarily respond to ABTAC within two (2)
business days of receipt of such submission and shall deliver its final approval
or disapproval within five (5) business days of receipt of such submission.
Approval of such proposed hyperlinks shall not be unreasonably withheld. AIC and
ABTAC agree that (i) any compensation to be paid to any ABT Friends in
connection with any relationship with respect to users at or originating at
their Websites shall be solely the responsibility of ABTAC and (ii) any such
users shall be considered Users for all purposes under this Agreement.
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Section 4.3 Hyperlink Development Costs. (a) ABTAC shall use its best
efforts to develop and implement the electronic transfer mechanism necessary for
Phase 2 and the hyperlink necessary for Phase 3.
(b) ABTAC shall use its best efforts to develop and implement hyperlinks
between the Websites of the AIC Friends and that of ABT to allow users of the
Websites of the AIC Friends to link to the ABT Website.
(c) ABTAC shall, no less frequently than monthly and no more frequently
than weekly (and in connection with the electronic transfer mechanism necessary
for Phase 2, subject to the reimbursement limit set forth in Section 2.4),
submit to AIC for reimbursement ABTAC's out-of-pocket expenses incurred in
connection with this Section 4.3, such submission to be accompanied by detail
sufficient to permit AIC to determine the basis of the computation and the
accuracy of the amount claimed. Such reimbursement shall be made by AIC within
30 days of receipt of the related request.
Section 4.4 Cross-Promotion. ABTAC shall promote and advertise the ABT
Website through Internet search engines and other public mass media and to
promote recognition and awareness of the ABT Website via ongoing public
relations efforts.
Section 4.5 Guarantee. ABT hereby unconditionally and irrevocably
guarantees to AIC, its successors, endorsees and assigns, the performance when
due of all present and future obligations and liabilities of all kinds of ABTAC
arising out of or in connection with this Agreement, whether due or to become
due, secured or unsecured, absolute or contingent, joint or several
("Obligations"). The Guarantor agrees that AIC and ABTAC may mutually agree to
modify the Obligations or any agreement between AIC and ABTAC without in any way
impairing or affecting this Guarantee.
Section 4.6 Additional Services. ABTAC hereby agrees that it shall
provide AIC, upon request of AIC, the following additional services:
(a) Consulting services concerning marketing of automobile insurance
to ABT Users;
(b) Data concerning persons requesting the Phase 1 toll free number
directly from ABT corporate offices;
(c) E-Mail monitoring and consulting service in respect of and
during Phase 3;
(d) Hyperlink monitoring and consulting service in respect of and
during Phase 3;
(e) Access to officers of ABT for Internet marketing trend updates;
and
(f) Icon design consulting services for AIGM Website.
5. [RESERVED]
6. EXCLUSIVITY.
Section 6.1 Exclusivity. (a) The parties hereto shall have an exclusive
arrangement for the first 18 months of the Initial Term (as defined in Section
14.1 of this Agreement) (such first 18 months, the "Initial Exclusivity
Period") whereby ABT and ABTAC, separately or together, shall not provide
Website access to any other underwriter of Products and whereby AIC shall not
market Products with any other Internet automobile buying program, automobile
purchase assistance or financing program, automobile pricing service, vehicle
information service or on-line service including, among others both existing and
to be created or initiated, America On-Line, Microsoft, Prodigy, CompuServe and
NetCom (collectively, "Internet Auto Providers"). The exclusivity of this
Agreement shall automatically continue for a 12 month period beyond the Initial
Exclusivity Period, and thereafter for successive 12 month periods, unless one
party shall give the other party written
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notice not less than 60 days prior to the end of the Initial Exclusivity Period
or the then current 12 month exclusivity period, as the case may be, that the
exclusivity shall end at the end of the Initial Exclusivity Period or the then
current 12 month exclusivity period, as the case may be.
(b) After the termination of the exclusivity of this Agreement, if
either party uses the "Prohibited Marketing Term" ascribed to it in this clause
(b), the other party shall have the right, but not the obligation, to terminate
this Agreement upon 30 days written notice. With respect to AIC, the Prohibited
Marketing Term shall be "[x] Low Cost Auto Insurance [y]" where "x" is the name
of any Internet Auto Provider, and "y" is the name of AIC or any affiliate
thereof or any variation thereon which conveys or links "x," "y" and the term
Low Cost within any logo, service mark, trademark or icon. With respect to ABTAC
or ABT, the Prohibited Marketing Term shall be "ABT Low Cost Auto Insurance [y]"
where "y" is the name of any underwriter of Products except AIC or any affiliate
thereof which conveys or links ABT or any affiliate thereof to "y" and the term
Low Cost within any logo, service mark, trademark or icon.
Section 6.2 Exception From Exclusivity. AIC's relationship with United
Buying Services, Inc., as in effect on the date of this Agreement, is exempt
from the provisions of Section 6.1 of this Agreement.
Section 6.3 AIC Marks. If, either in conjunction with a properly noticed
termination of exclusivity or at any time after such notice is delivered, AIC
intends to use any AIC Marks in conjunction with the offering or sale of
Products through any Internet Auto Providers, then AIC must give ABTAC 30 days
prior written notice thereof.
Section 6.4 ABT Marks. If, either in conjunction with a properly noticed
termination of exclusivity or at any time after such notice is delivered, ABT or
ABTAC intends to use any ABT Marks in conjunction with the marketing of any
Products outside of the terms of this Agreement, then ABTAC must give AIC 30
days prior written notice thereof.
7. FIRST REFUSAL.
Section 7.1 New Product. In the event that either (i) an insurer or
entity other than AIC or any of its affiliates (a "Competing Insurer") proposes
a program to offer on the ABT Website any personal or commercial insurance other
than the Products offered pursuant to this Agreement (a "New Product") or (ii)
ABTAC wishes to market a New Product through a Competing Insurer, then ABTAC
shall immediately give AIC written notice of such New Product and the related
terms (the "New Product Notice").
Section 7.2 Right of First Refusal. ABTAC hereby grants to AIC the right
of first refusal to offer such New Product to ABT's Users on terms no less
favorable to ABTAC or ABT's Users than those proposed by the Competing Insurer.
AIC shall be obligated to respond with its intent to ABTAC within 10 business
days after its receipt of the New Product Notice. If AIC does not respond within
such period, ABTAC may market such New Product on terms no less favorable than
those set forth in the related New Product Notice.
8. COMPENSATION.
During the term of this Agreement, for the services to be
performed by ABTAC hereunder (except for those services under Section 4.6
hereof), ABTAC shall be paid compensation by AIC calculated in accordance with
Schedule B attached hereto and made a part hereof. All payments due ABTAC
hereunder shall be made within thirty (30) days after the end of the month they
become due. For the services to be
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performed by ABTAC under Section 4.6 hereof, ABTAC shall be paid by AIC
compensation for each year (or portion thereof) by August 31 of such year in an
amount to be determined in good faith discussions to be held between AIC and
ABTAC based on the value of such services.
9. POLICIES.
Section 9.1 Product Control. Subject to its obligations under Section
3.3 hereof to offer low-cost insurance products, AIC reserves the sole right and
power, exercisable in good faith at any time, to change the terms, rates,
conditions, or other provisions contained in the Products or to reject requests
for quotes for the Products or to rescind or refuse to renew or cancel any
policy issued hereunder, in accordance with AIC's underwriting standards, except
as may be limited by the terms of the policies or by applicable law or
regulation. AIC further reserves the sole right and power to change its
underwriting standards for the Products in accordance with sound insurance
practices consistent with AIC's normal business practices and subject to
applicable insurance law and further to suspend, restrict or modify the offer
and sale of the Products for regulatory reasons. AIC shall inform ABTAC in
writing promptly upon its taking any action under this Section 9.1. In the event
AIC suspends the offer and sale of Products (or so restricts or modifies such
offer and sale so as to render the Products unavailable to the majority of Users
previously qualified for such Products on the terms and conditions previously
offered) in any jurisdiction or area within the Territory, it shall use its best
efforts to make provision for the offer and sale by another underwriter of
Products in such jurisdiction or area in a manner which minimizes the effect of
such suspension upon the orderly marketing of the Products in such jurisdiction
or area, and maximizes the expectancy of ABTAC under this Agreement. If AIC has
not made such provision within 10 days of any such suspension, ABTAC shall be
entitled to establish a relationship with another underwriter of Products in
such jurisdiction or area, such relationship to be for a term not to exceed
twelve months, and shall be entitled to make such agreements as necessary to
secure such relationship, including the use of a Prohibited Marketing Term (in
connection with the offering and sale of Products in such jurisdiction or area),
and no aspect of such relationship or agreements shall give rise to any rights
of AIC under this Agreement.
Section 9.2 Underwriting and Administration. AIC shall, at its expense,
provide all underwriting, policy issuance services, policyholder services,
premium disbursement and accounting services, premium collection, claims
adjustment, and all other administrative services required for policies issued
pursuant to this Agreement.
Section 9.3 Policy and Quote Records. All policy and quote records for
the policies issued hereunder shall be the property of AIC. Policy records shall
include but not be limited to all policy requests for quotes, policy
declarations pages, policy underwriting files and policy claim files, or
computer data files containing such information.
Section 9.4 Billing. AIC shall be responsible for the billing and
collection of insurance premiums from all Users who purchase insurance under
this Agreement.
Section 9.5 Authority as Insurance Provider. Nothing in this Agreement
shall be construed to mean that either ABT or ABTAC is a broker or an agent, and
in no event shall either ABT or ABTAC have any authority or represent itself as
having authority other than as is specifically set forth in this Agreement.
Without limiting the generality of the foregoing, neither ABT nor ABTAC shall do
any of the following:
(a) Attempt to or make, waive, alter or change any term, rate or
condition stated in any AIC policy, contract or AIC approved form; bind
coverage; or discharge any contract in the name of AIC.
(b) Offer to pay or pay directly or indirectly any rebate of premiums or
any other inducement not specified in the policy to any person.
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(c) Transact business in contravention of the rules and regulations of
an Insurance Department and/or other governmental authorities having
jurisdiction of all subject matters embraced within this Agreement.
Section 9.6 Privacy. (a) ABTAC recognizes that, in the performance of
its obligations under this Agreement, if permitted by the Privacy Act and other
applicable laws, AIC may disclose personal or privileged information about
individuals collected or received in connection with insurance transactions.
Since the disclosure of such information is protected by law, ABTAC agrees that
it will not redisclose any such privileged information of which ABTAC has actual
notice without the individual's written authorization, unless such disclosure is
permitted by law.
(b) ABT and ABTAC represents and warrants to AIC that neither ABT nor
ABTAC shall use such information as is disclosed by AIC pursuant to Section
9.6(a) other than in connection with the marketing of a product or service.
Section 9.7 Fair Credit Reporting. Nothing herein shall be construed to
require or imply that AIC is required to provide User information to ABT or
ABTAC in contravention of the Fair Credit Reporting Act (the "FCRA"). AIC is not
a "consumer reporting agency" as defined in the FCRA.
10. CONFIDENTIALITY.
Section 10.1 Confidential Information. In performing their obligations
pursuant to this Agreement, the parties may be provided access to and receive
disclosure of certain confidential and/or proprietary information about the
other including but not limited to names of Users, information provided by Users
to AIC for the purpose of obtaining an insurance quotation, names of
policyholders, marketing philosophy and objectives, financial results,
technological developments, computer system information (including information
provided in connection with the development of the Phase 2 and Phase 3
applications and links), trade secrets, and other materials and information that
such party considers confidential and/or proprietary ("Confidential
Information"). Unless expressly provided otherwise in this Agreement, AIC, ABT
and ABTAC agree not to give, sell, or in any way transfer, either directly or
indirectly, Confidential Information to any person or organization for any
purpose without the prior written approval of the other, except as may be
required by law, rule or regulation (including any filings under any securities
law) or court order. Notwithstanding anything to the contrary herein, AIC, ABT
and ABTAC may use Confidential Information for market research purposes upon
written consent from the other party, to the extent permissible by law. AIC, ABT
and ABTAC promise to make best efforts to see that all parties including
employees comply with this provision. These obligations as to confidentiality
and nonuse shall survive the termination of this Agreement.
Section 10.2 Return of Confidential Information. Except as otherwise
herein provided, all Confidential Information furnished by one party to the
other in connection with this Agreement is the exclusive property of that party
and shall be returned to that party upon request or upon termination of this
Agreement.
Section 10.3 Survival of Confidentiality. All obligations and duties of
the parties with respect to Confidential Information shall survive for five
years after the termination of this Agreement. Confidential Information shall no
longer be considered Confidential Information to the extent that such
information (a) is developed by a party independently, without reference to any
Confidential Information of the other party's; (b) is obtained from a third
party authorized to disclose it; (c) becomes a part of the public domain without
the fault of the disclosing party; (d) is released by the disclosing party to
third parties without similar restrictions; or (e) is released from such
restrictions by prior written agreement.
10
<PAGE> 15
11. USE OF NAMES/TRADEMARKS.
Section 11.1 Limitation on Use of AIC Marks. (a) ABTAC agrees that
neither it nor ABT shall use the AIC Marks without AIC's prior written consent.
(b) AIC hereby grants to ABT and ABTAC a limited license to use and
reproduce any AIC Mark approved in accordance with Sections 2.2(b) and 11.1 (a)
of this Agreement, in connection with the marketing arrangements set forth in
this Agreement and for no other purpose, and hereby agrees to provide ABT and
ABTAC, for the sole purpose of marketing the Products, acceptable copies of the
appropriate AIC Marks for purposes of reproduction.
(c) For so long as AIC or one of its affiliates has the right to use the
mark "AIG," AIC shall permit ABTAC to use the term "Auto-By-Tel Low Cost Auto
Insurance From AIG" in marketing the Products during the term of this Agreement;
provided however that the permission granted hereby shall not diminish AIC's
rights to approve the form and content of any Insurance Marketing Materials
pursuant to Section 2.2(b) hereof.
Section 11.2 Limitation on Use of ABT Marks. (a) AIC agrees that it
shall not use the ABT Marks without ABTAC's prior written consent.
(b) ABTAC hereby grants to AIC a limited license to use and reproduce
any ABT Mark approved in accordance with Sections 2.2(b) and 11.2(a) of this
Agreement, in connection with the marketing arrangements set forth in this
Agreement and for no other purpose, and hereby agree to provide AIC, for the
sole purpose of marketing the Products, acceptable copies of the appropriate ABT
Marks for purposes of reproduction.
Section 11.3 Low Cost Logo. The "Auto-By-Tel; Low Cost Auto Insurance
Through [NAME OF PROVIDER]" logo, and all variations and derivatives shall
remain the exclusive property of ABTAC; provided, however, that such logo shall
not refer to AIC after the termination of this Agreement.
Section 11.4 Use of User Data. Notwithstanding anything in this
Agreement to the contrary, AIC shall give to ABT and ABTAC User information
subject to Sections 9.6 and 9.7 which may be used by ABT and ABTAC in any lawful
manner, including for solicitation of such Users for financial products marketed
through the ABT Website, automobile pricing, purchasing, leasing and information
services offered or marketed through the ABT Website and any affinity programs
in which ABT or ABTAC may participate. The ownership interest in such User data
shall be held by AIC. Neither ABT nor ABTAC is an agent for purposes of
collection of insurance data.
12. INDEPENDENT CONTRACTOR.
Section 12.1 No Joint Venture. Nothing contained in this Agreement
creates or is intended to create the relationship of a joint venture,
partnership, agency or association between AIC and ABTAC. Nothing in this
Agreement shall be construed to mean that either ABT or ABTAC is a broker or an
agent, and in no event may ABTAC bind AIC to any contract of insurance or vary
the terms of any such contract, nor may AIC bind ABT or ABTAC to any
relationship or vary the terms of any agreement between ABT or ABTAC and any
third party.
Section 12.2 Limitations on Authority. Each of AIC, ABT and ABTAC shall
have only those powers enumerated herein and none other shall be implied.
Without limiting the generality of the foregoing, neither AIC, ABT nor ABTAC
shall do any of the following:
(a) Make, accept or endorse notes, endorse checks payable to the other
party, or otherwise incur any expense or liability on behalf of the other party.
(b) Waive a forfeiture.
11
<PAGE> 16
(c) Extend the time for the payment of monies due the other party beyond
the time agreed to by the other party.
(d) Collect money for the other party.
(e) Institute, prosecute, or maintain any legal proceedings in
connection with any matter pertaining to the other party's business, unless
otherwise approved in writing by the other party, nor accept legal process on
behalf of the other party.
(f) Hold itself out as an authorized agent of the other party in order
to deal with any regulatory authority or file any contract or policy on behalf
of the other party or contact or discuss any matter with any regulatory
authority on behalf of the other party without written approval of that party.
13. [RESERVED]
14. TERM AND TERMINATION.
Section 14.1 Renewal. This Agreement shall remain in effect for a period
of five (5) years from the effective date ("Initial Term"). This Agreement shall
automatically renew for subsequent five-year terms ("Renewal Term") unless
written notice is given by either party of its intention to terminate this
Agreement at the expiration of the Initial Term or any Renewal Term, as the case
may be, at least one hundred eighty (180) days prior to such expiration. This
Agreement shall also terminate if required by governmental authority or court of
law, but only insofar as this Agreement applies to such jurisdiction affected.
Section 14.2 Cure Period. If any party shall be in breach of any
material obligation under this Agreement and such breach shall remain uncured
for a period of thirty (30) days after written notice thereof from the other
party (or, if such breach is curable and requires more than thirty (30) days to
cure, if such cure is not commenced within thirty (30) days and thereafter
diligently prosecuted), then the other party may, by written notice sent, cancel
this Agreement upon 30 days after delivery of such notice. Non-payment of
amounts due under this Agreement shall be deemed to be a breach of a material
obligation hereunder, but institution of suit for payment of amounts due under
this Agreement shall not be deemed to be a cancellation hereunder. This Section
14.2 shall not apply to termination pursuant to Section 14.3 or Section 14.4 of
this Agreement.
Section 14.3 Termination Upon Insolvency. At any party's option, and
upon written notice of exercise of the option, this Agreement terminates upon
the voluntary or involuntary bankruptcy or insolvency of a party, the voluntary
or involuntary dissolution or liquidation of a party, the admission in writing
by a party of its inability to pay its debts as they mature, or the assignment
by a party for the benefit of creditors.
Section 14.4 Termination Upon Use of Marks. If any party shall give
notice to the other, under Section 6.1(b), then the Agreement shall terminate 30
days after receipt of such notice.
Section 14.5 Responsibilities Upon Termination. The termination of this
Agreement shall not terminate, affect, or impair any rights, obligations, or
other liabilities of any party hereto which may accrue prior to such termination
or which, under the terms of this Agreement, continue after the termination.
After termination of this Agreement, coverage under the insurance policies
issued hereunder shall continue pursuant to their terms. Ownership of all
renewals written after termination of this Agreement shall at all times remain
with AIC. Each party shall return all property and information rightfully
belonging to the other party which is in its possession at the time of
termination except as otherwise provided herein. The provisions of this
Paragraph 14.5 shall survive termination of this Agreement.
12
<PAGE> 17
15. INDEMNIFICATION.
Each party shall hold the other (and its directors, officers, employees
and authorized agents) harmless from and against any damages, liabilities,
claims, charges, reasonable attorneys' fees, or other costs arising from or in
connection with any claim, action, or proceeding relating to or arising from (a)
any grossly negligent act or omission or any intentional misconduct relating to
the subject matter of this Agreement or (b) the failure to comply with the terms
of this Agreement. The provisions of this Section 15 shall survive the
termination of this Agreement.
16. NOTICES.
Section 16.1 Legal and Regulatory Proceedings. Each party shall promptly
notify the others of any legal or regulatory proceeding or threat of legal or
regulatory proceeding with respect to any matters which are the subject of this
Agreement, except AIC shall have no obligation to notify ABTAC of legal
proceedings involving claims under the Products.
Section 16.2 Addresses, etc. All notices pursuant to this Agreement
shall be by facsimile transmission, by personal delivery, or by registered or
certified mail, return receipt requested, to the addresses of the parties listed
below, or such other address as any party listed below shall specify in writing
to the others in a notice conforming to this Section 16.2:
If to AIC: AIG MARKETING, INC.
505 Carr Road
Wilmington, DE 19809
Attention: J. Ernest Hansen,
President,
or his successor
If to ABTAC: AUTO-BY-TEL ACCEPTANCE CORPORATION
2711 E. Coast Highway, Suite 203
Corona Del Mar, CA 92625
Attention: Peter Ellis,
President,
or his successor
with copies to R.S. GRIMES & CO.
152 West 57th Street, 24th Floor
New York, NY 10019
Attention: Robert S. Grimes,
President,
or his successor
17. MISCELLANEOUS.
Section 17.1 Choice of Law, Venue, Jurisdiction. This Agreement shall be
governed by the internal laws of the State of New York. The parties agree that
any action in law or in equity brought under this Agreement shall be brought
only in a state or federal court seated in New York County, New York, and each
party hereto consents to the exclusive jurisdiction of such court and venue of
such action.
13
<PAGE> 18
Section 17.2 Assignment. Without the prior written consent of the other
party, which consent shall not be unreasonably withheld, this Agreement may not
be assigned in whole or in part by any party other than to an affiliate and
subsidiary (provided (A) such affiliate or subsidiary (i) shall agree in writing
to be bound by the terms of this Agreement and (ii) has a net worth immediately
following the assignment equal to or greater than that of the assignor, and (B)
the assignor gives written assurances that it will cause the assignee to perform
as contained herein or the assignor will perform in the assignee's place).
Notwithstanding the foregoing, ABTAC may assign this Agreement to ABT or any
wholly owned subsidiary of ABT or ABTAC, provided, however, that the guarantee
of ABT pursuant to Section 4.5 herein shall apply as to such subsidiary assignee
in the same manner as it applied to ABTAC.
Section 17.3 Modification; Waiver. This Agreement may only be revised
and/or modified in a writing which must be executed by each of the parties to
this Agreement. No other change, modification, addition, or deletion to any
portion of this Agreement will be valid or binding upon any of them.
Section 17.4 Entire Agreement. This Agreement constitutes the entire
Agreement between the parties with respect to the subject matter contained
herein and supersedes all oral or written negotiations of the parties.
Section 17.5 Remedies. All remedies of any party are cumulative. Waiver
by any party of any obligation of any other party does not constitute waiver of
any future or other obligation of said party.
Section 17.6 References and Section Headings. Any reference to the
singular shall include reference to the plural and vice versa. Section headings
are for description only and shall not be used to interpret this Agreement.
Section 17.7 Severability. If any part, term, or provision of this
Agreement shall be held void, illegal, or unenforceable, the validity of the
remaining portions or provisions shall not be affected thereby.
Section 17.8 Signatures and Recording. This Agreement shall not go into
force until duly executed on behalf of ABTAC, ABT and AIC. Each party represents
and warrants that each of the respective officers executing this Agreement on
its behalf is duly authorized by its Board of Directors and is acting within the
scope of his or her authority to bind said party under this Agreement.
14
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
below through their duly authorized officers as of the date first above written.
AIU INSURANCE COMPANY
AMERICAN INTERNATIONAL SOUTH INSURANCE COMPANY
AMERICAN HOME ASSURANCE COMPANY
AMERICAN INTERNATIONAL INSURANCE COMPANY
AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC.
ILLINOIS NATIONAL INSURANCE COMPANY
MINNESOTA INSURANCE COMPANY
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA
THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA
By: /s/ JOHN G. COLONA
--------------------------------------
John G. Colona, Vice President
AUTO-BY-TEL ACCEPTANCE CORPORATION
By:
--------------------------------------
Peter Ellis, President
AUTO-BY-TEL, INC., as Guarantor
By:
--------------------------------------
Peter Ellis, President
15
<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
below through their duly authorized officers as of the date first above written.
AIU INSURANCE COMPANY
AMERICAN INTERNATIONAL SOUTH INSURANCE COMPANY
AMERICAN HOME ASSURANCE COMPANY
AMERICAN INTERNATIONAL INSURANCE COMPANY
AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC.
ILLINOIS NATIONAL INSURANCE COMPANY
MINNESOTA INSURANCE COMPANY
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA
THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA
By:
--------------------------------------
John G. Colona, Vice President
AUTO-BY-TEL ACCEPTANCE CORPORATION
By: /s/ PETER ELLIS
--------------------------------------
Peter Ellis, President
AUTO-BY-TEL, INC., as Guarantor
By: /s/ PETER ELLIS
--------------------------------------
Peter Ellis, President
15
<PAGE> 21
[*]
[*] Confidential Treatment Requested
AMERICAN INTERNATIONAL COMPANIES
c/o AIG Marketing, Inc.
505 Carr Road
Wilmington, Delaware 19809
July 23, 1996
Auto-By-Tel, Inc.
2711 East Coast Highway
Suite 203
Corona del Mar, California 92625
Attention: Mr. Peter Ellis, President
- ----------
Re: Marketing Agreement between Auto-By-Tel Acceptance Corporation on the
one hand, and AIU Insurance Company, American International South
Insurance Company, American Home Assurance Company, American
International Insurance Company, American International Insurance
Company of California, Inc., Illinois National Insurance Company,
Minnesota Insurance Company, National Union Fire Insurance Company of
Pittsburgh, PA and The Insurance Company of the State of Pennsylvania
on the other hand, and Auto-By-Tel, Inc. as Guarantor of the
obligations of Auto-By-Tel Acceptance Corporation dated as of July 22,
1996 (the "Marketing Agreement")
----------------------------------------------------------------------
Gentlemen:
Reference is made to Section 8 of the above-referenced Marketing
Agreement. Capitalized terms used herein and in the attached Schedule A, and not
defined herein or therein, shall have the meanings ascribed thereto in the
Marketing Agreement. This will confirm our agreement that compensation to be
paid for the services provided to AIC pursuant to Section 4.6 of the Marketing
Agreement shall be calculated and paid in accordance with the attached Schedule
A on or before August 31, 1997, and on each August 31st thereafter for as long
as the Marketing Agreement is in effect. Please confirm that this represents our
understanding with respect to the foregoing matter by executing a copy of this
letter in the space provided below and returning to the undersigned.
Best regards.
Very truly yours,
AIU INSURANCE COMPANY
AMERICAN INTERNATIONAL SOUTH
INSURANCE COMPANY
AMERICAN HOME ASSURANCE
COMPANY
AMERICAN INTERNATIONAL
INSURANCE COMPANY
AMERICAN INTERNATIONAL
INSURANCE COMPANY OF CALIFORNIA,
INC.
ILLINOIS NATIONAL INSURANCE
COMPANY
MINNESOTA INSURANCE COMPANY
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA
THE INSURANCE COMPANY OF THE
STATE OF PENNSYLVANIA
By: /S/ JOHN G. COLONA
-------------------
John G. Colona, Vice President
<PAGE> 22
cc: Mr. Robert S. Grimes
Robert S. Grimes & Company
152 West 57th Street
24th Floor
New York, NY 10019
CONFIRMED AS OF JULY 24, 1996
AUTO-BY-TEL ACCEPTANCE CORP.
By: /S/ PETER R. ELLIS
-----------------------------------
Peter Ellis, President
-2-
SCHEDULE A
In any calendar year in which collected premium with respect to all
policies written in connection with the marketing arrangements exceeds five
hundred thousand (500,000.00) dollars, and the loss ratio is less than or equal
to the target loss ratio AIC shall pay ABTAC additional compensation, as set
forth below, based upon statutory profit as determined by "losses" and "loss
ratio" as defined below.
Losses: that amount which with respect to claims with occurrence dates
during any specified calendar year (hereinafter referred to as "Calendar
Accident Year") is the total of:
1) all payments of such claims;
2) the amount of case reserves on such claims;
3) a reasonable (in light of AIC practices in its other similar
portfolios) provision for future development of case reserves on such claims;
4) a reasonable (in light of AIC practices in its other similar
portfolios) provision for payment of such claims incurred but not yet reported
to the insurance company;
5) a reduction for salvage and subrogation payments, received or
receivable, resulting from all claims;
6) the amount of loss adjustment expenses (the reasonable and customary
costs associated with the defense and/or settlement of a claim, except for the
claim payment itself) incurred or reasonably anticipated;
7) a residual market subsidy based on the proportional state-by-state
distribution of the business in relation to residual market deficits;
8) a loss carryover provision which consists of the dollar amount by
which the loss ratio percentage exceeds the target loss ratio in the preceding
Calendar Accident Year calculation. This carryover will be restated each time
the preceding Calendar Accident Year is adjusted in accordance with the payment
cycle set forth below. Bad faith claim payments are specifically excluded from
the definition of Losses.
Loss Ratio: a fraction with the numerator being the sum of the losses,
and the denominator being the corresponding earned premium with respect to the
specified Calendar Accident Year, rounded to the nearest one tenth percent.
Target: a loss ratio calculated for each applicable Calendar Accident
Year which is derived by weighing 81.0% with that year's private passenger
automobile earned premium and 69.0% with that year's combined homeowners and
personal umbrella liability earned premium. This calculation is rounded to the
nearest percent.
Schedule A-1
<PAGE> 23
ADDITIONAL COMPENSATION CHART
-----------------------------
Loss Ratio* Additional Compensation
----------- -----------------------
Target and Higher 0%
(Target - 1.0%) to (Target - 0.1%) .25%
(Target - 2.0%) to (Target - 1.1%) .50%
(Target - 3.0%) to (Target - 2.1%) .75%
(Target - 4.0%) to (Target - 3.1%) 1.00%
(Target - 5.0%) to (Target - 4.1%) 1.25%
(Target - 6.0%) to (Target - 5.1%) 1.50%
(Target - 7.0%) to (Target - 6.1%) 1.75%
(Target - 7.1%) and Lower 2.00%
* The endpoints of each range are included in the range.
AIC shall, if appropriate, pay the additional compensation to ABTAC based
on an initial calculation and three subsequent adjustments for each Calendar
Accident Year to reflect the ultimate development of losses and over-reserves,
as applicable. The first Calendar Accident Year will begin on January 1, 1996
and end on December 31, 1996. Subsequent Calendar Accident Years will run
similarly.
The initial calculation for each Calendar Accident Year will be made in the
18th month after the beginning of a Calendar Accident Year based on inception to
date of evaluation losses for that Calendar Accident Year and the additional
compensation shall be paid in accordance with the Additional Compensation Chart,
if appropriate, by August 31st of the year in which the calculation is made. The
first adjustment to the initial calculation for each Calendar Accident Year will
be made in the 30th month after the beginning of such Calendar Accident Year
based on inception to date of evaluation losses for such Calendar Accident Year.
In the event the first adjustment indicates overpayment in the initial
calculation of a Calendar Accident Year, the amount of overpayment will be
deducted from additional compensation due for other Calendar Accident Years and,
if not sufficient, the remaining overpayment will be deducted from current
compensation under the Marketing Agreement. In the event the first adjustment
indicates underpayment in the initial calculation of a Calendar Accident Year,
such payment shall be made by August 31st of the year in which the first
adjustment is made.
The second and third adjustments for each Calendar Accident Year will be
made in the 42nd month and 54th month, respectively, after the beginning of a
Calendar Accident Year based on the same criteria as the first adjustment, and
payments will be deducted or made in accordance with the procedure established
for the first adjustment.
In the event the Marketing Agreement is terminated, all rights to payments
of additional compensation amounts shall terminate.
Schedule A-2
<PAGE> 24
SCHEDULE A
ADDITIONAL PRODUCTS
AIG Life Division
Mega Term (High Limit Term Life)
Graded Premium Life
Senior Life
Birthday Life
Whole Life
Universal Life
Survivorship Universal Life
Fixed Annuities
Variable Annuities
Variable Life
AIG A & H Division
Hospital Indemnity
Hospital Accident
Cancer Coverage
Accidental Death & Dismemberment (AD&D)
AIG Warranty Services
Mechanical Breakdown
Vehicle Service Agreement (VSA)
GAP Coverage (stand alone or with above-mentioned products)
Computer Warranty Coverage
AIG Capital Management Corp.
AIG All Ages Funds
Schedule A-1
<PAGE> 25
SCHEDULE B
BASE COMPENSATION
Compensation due to ABTAC pursuant to this Agreement shall be based on a
flat fee calculated on the basis of 2% of annualized written automobile premium
for all new policies in the first twelve months after the commencement of Phase
1. Calculations to adjust the compensation from a gross written premium basis to
a net collected premium basis will occur in months 13 through 24; the resultant
adjustments will be offset against the payments of future compensation in months
13 through 35. For purposes of this Schedule B, net collected premium basis
means the annualized written premium for any new or renewal policy reduced only
by those amounts not collected against the expectancy embodied in the annualized
amount. Illustrations of the compensation calculation are attached as pages
Schedule B-2 through Schedule B-7.
Compensation for new and renewal automobile policies after month 12
shall be based on a flat fee calculated on the basis of 2% of net collected
premium.
Compensation for homeowners and personal umbrella liability policies
shall be based on a flat fee calculated on the basis of 2% of new and renewal
net collected premium.
All payments due ABTAC by AIC during the term of this Agreement shall be
paid by AIC to ABTAC thirty (30) days after the end of each calendar month.
Schedule B-1
<PAGE> 26
EXAMPLE # 1
$600 6-Month Policy Written in Month One and
Collected Via Monthly Direct Bill for 1st and 2nd Term (12 Months)
<TABLE>
<CAPTION>
================================================================================
Gross Annualized Net Collected
Month Premium Compensation Premium Compensation
<S> <C> <C> <C> <C>
1 $1,200 $150
2 $24 $150 $3
3 $150 $3
4 $150 $3
5 $100 $3
6 $100 $2
7 $100 $2
8 $100 $2
9 $100 $2
10 $100 $2
11 $2
12
Total* $1,200 $24 $1,200 $24
</TABLE>
* No adjustments required
Schedule B-2
<PAGE> 27
EXAMPLE # 2
$600 6-Month Policy Written in Month One and
Collected Via Monthly Direct Bill for 1st and
Half of 2nd Term and Then Policy Lapses
<TABLE>
<CAPTION>
================================================================================
Gross Annualized Net Collected
Month Premium Compensation Premium Compensation
<S> <C> <C> <C> <C>
1 $1,200 $150
2 $24 $150 $3
3 $150 $3
4 $150 $3
5 $100 $3
6 $100 $2
7 $100 $2
8 $2
9
10
11
12
Total* $1,200 $24 $900 $18
</TABLE>
* $6 compensation adjustment @ .50(cent) per month ($24 - $18 divided by 12)
will occur in months 13 thru 24.
Schedule B-3
<PAGE> 28
EXAMPLE # 3
Same as #1 Except Policy Written in Month 7
<TABLE>
<CAPTION>
================================================================================
Gross Annualized Net Collected
Month Premium Compensation Premium Compensation
<S> <C> <C> <C> <C>
1
2
3
4
5
6
7 $1,200 $150
8 $24 $150 $3
9 $150 $3
10 $150 $3
11 $100 $3
12 $100 $2
13 $100 $2
14 $100 $2
15 $100 $2
16 $100 $2
17 $2
Total* $1,200 $24 $1,200 $24
</TABLE>
* No adjustment required
Schedule B-4
<PAGE> 29
EXAMPLE # 4
Same as #2 Except Policy Written in Month 7
<TABLE>
<CAPTION>
================================================================================
Gross Annualized Net Collected
Month Premium Compensation Premium Compensation
<S> <C> <C> <C> <C>
1
2
3
4
5
6
7 $1,200 $150
8 $24 $150 $3
9 $150 $3
10 $150 $3
11 $100 $3
12 $100 $2
13 $100 $2
14 $2
15
16
17
Total* $1,200 $24 $900 $18
</TABLE>
* $6 compensation adjustment @ .50(cent) per month ($24 - 18 divided by 12) will
occur in months 19 thru 30.
Schedule B-5
<PAGE> 30
EXAMPLE # 5
Same as #1 & #3 Except Policy Written in Month 12
<TABLE>
<CAPTION>
================================================================================
Gross Annualized Net Collected
Month Premium Compensation Premium Compensation
<S> <C> <C> <C> <C>
1
2
3
4
5
6
7
8
9
10
11
12 $1,200 $150
13 $24 $150 $3
14 $150 $3
15 $150 $3
16 $100 $3
17 $100 $2
18 $100 $2
19 $100 $2
20 $100 $2
21 $100 $2
22 $2
Total* $1,200 $24 $1,200 $24
</TABLE>
* No adjustment required.
Schedule B-6
<PAGE> 31
EXAMPLE # 6
Same as #1 & #3 Except Policy Written in Month 12
<TABLE>
<CAPTION>
================================================================================
Gross Annualized Net Collected
Month Premium Compensation Premium Compensation
<S> <C> <C> <C> <C>
1
2
3
4
5
6
7
8
9
10
11
12 $1,200 $150
13 $24 $150 $3
14 $150 $3
15 $150 $3
16 $100 $3
17 $100 $2
18 $100 $2
19 $2
20
21
22
23
Total* $1,200 $24 $900 $18
</TABLE>
* $6 compensation adjustment @ .50(cent) per month ($24 - 18 divided by 12) will
occur in months 24 thru 35.
Schedule B-7
<PAGE> 32
autobytel.com
November 12, 1998
Via Facsimile
- -------------
And Certified Mail, Return Receipt Requested
- --------------------------------------------
AIG MARKETING, INC.
505 Carr Road
Wilmington, DE 19809
Attention: J. Ernest Hansen, President
Or his successor
Re: Marketing Agreement, dated as of July 22, 1996, between Auto-By-Tel
Acceptance Corporation ("ABTAC") and Auto-By-Tel Corporation as
guarantor, and all member companies of American International Group,
(collectively "AIC") as signatory thereto (the "Agreement").
--------------------------------------------------------------------
Dear Mr. Hansen:
Reference is made to Section 6.1(a) of the above referenced Agreement.
This letter serves as notice that ABTAC elects to terminate the
exclusivity provisions of the Agreement, upon the expiration of the now
current twelve (12) month exclusivity period effective January 22, 1999.
Please contact me should you have any questions or comments.
Very truly yours,
/s/ Mark W. Lorimer
-------------------------------
Mark W. Lorimer
cc: Robert Sandler
R.S. Grimes & Co.
152 West 57th Street, 24th Floor
New York, NY 10019
Attention: Robert S. Grimes
President,
Or his successor
<PAGE> 1
EXHIBIT 10.10
[*] Confidential Treatment has been requested for certain portions of this
exhibit.
MARKETING AGREEMENT
This Agreement is made as of February 8, 1996, by and between
Auto-By-Tel, LLC, a California limited liability company with its principal
place of business at 2711 E. Coast Highway, Suite 203, Corona Del Mar,
California 92625 (hereafter "ABT") and Edmund Publications Corp., a New York
Corporation with its principal place of business at 300 N. Sepulveda Blvd.,
Suite 2050, El Segundo, California 90245 (hereafter "Edmund's").
RECITALS
WHEREAS, ABT is in the business of providing new vehicle purchase and
lease requests and other information to dealers of new automobiles and trucks;
WHEREAS, ABT obtains information for use by dealers of new automobiles
and trucks through Consumer inquiries on the Internet, Online services and other
sources;
WHEREAS, Edmund's is in the business of providing Consumers information
to aid them in their purchase or lease of new automobiles and trucks;
WHEREAS, Edmund's provides such information in print publications, on
the Internet and through other sources;
WHEREAS, ABT and Edmund's desire to enter into an agreement whereby
Edmund's will provide marketing information to ABT.
NOW THEREFORE, in consideration of the promises and covenants contained herein,
the parties agree as follows:
A. Definitions
1. "Edmund's Site" shall mean that information and text reflected on the
Internet, and other online sources established by Edmund's for the purpose of
providing information to aid Consumers in their purchase or lease of new cars
and trucks. Despite the use of the singular "Site", "Edmund's Site" shall refer
to all Internet and online services used by Edmund's as of the date of this
Agreement and thereafter. However, "Edmund's Site" shall not include any
Internet or other online source established by a third party under license from
Edmund's.
2. "Consumer" shall mean those persons who use or otherwise obtain
information from "Edmund's Site."
3. "ABT Purchase Request" shall mean a request by a Consumer for
assistance with the purchase or lease of a new automobile or truck from whatever
source.
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[*] Confidential Treatment Requested
B. Consumer Request for the Purchase or Lease of Automobiles and Trucks
1. Term of Agreement
This agreement shall be deemed to have commenced on January 1, 1996 and
shall expire on January 31, 1999; provided, however, that if Edmund's does not
receive from ABT in calendar year 1997 aggregate fees (including the amounts
referred to in Section C hereof and any additional amounts voluntarily paid by
ABT) of at least $500,000, Edmund's may terminate this Agreement on not less
than 10 days' prior written notice given to ABT on or before February 28, 1998.
This Agreement may be terminated prior to such dates only (i) by Edmund's in the
event that ABT does not pay the fees due Edmund's for ABT Purchase Requests
originated by Edmund's within 30 days of the date billed for such ABT Purchase
Requests, in the event that ABT does not pay the amounts required by Section C
hereof within 60 days of ABT's receipt of such origination fees, or in the event
ABT breaches any of the other terms of this Agreement, and (ii) by ABT in the
event that Edmund's breaches any of the terms of this Agreement, or if Edmund's
terminates the "Edmund's Site." Nothing herein shall preclude Edmund's from
discontinuing the "Edmund's Site," any of its publications, or its entire
business, or shall give ABT any rights against Edmund's hereunder as a result of
any such discontinuation.
2. Pricing Information
The "Edmund's Site" shall, so long as it is maintained by Edmund's,
reflect pricing information in the United States for the sale of automobiles and
trucks which is current and accurate.
3. ABT Information
[*]
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[*] Confidential Treatment Requested
4. Fees to be Paid to Edmund's
a. ABT shall pay Edmund's [*] for each ABT Purchase Request which
is received directly from Edmund's either from the "Edmund's Site" or otherwise.
If the total number of ABT Purchase Requests exceeds 200,000 in any calendar
year, ABT shall pay Edmund's [*] for each ABT Purchase Request in excess of
200,000 for such year. However, for purposes of calculating the amount of fees
to be paid to Edmund's, only one ABT Purchase Request shall be counted for any
one Consumer within a 90 day period.
b. ABT shall pay Edmund's any fees due it pursuant to this
paragraph within 30 days of receipt of billing.
c. All ABT Purchase Requests and information contained therein
received from Edmund's Site shall be the sole property of ABT.
5. Additional Advertisements
In its print publications and CD ROM products, Edmund's shall
advertise ABT's services in a form and content approved by ABT. In these
advertisements, Edmund's shall be permitted to place Edmund's' address for the
"Edmund's Site."
C. Financing of Automobiles
1. Edmund's shall recommend an entity later identified by ABT for
automobile and truck financing as ABT's source of automobile and truck financing
in a form and content approved by ABT, provided that this financing program is
in full operation within 150 days of the signing of this Agreement.
2. ABT shall pay Edmund's 25% of the net origination fee which it
received as a result of referrals made or loans originated by Consumers from ABT
Purchase Requests received from Edmund's.
D. Non-competition and Confidentiality
1. Confidentiality
Edmund's agrees to keep confidential and not disclose to any
third party, without ABT's prior written consent, any confidential or
proprietary information in its possession with respect to ABT's services.
Edmund's will give notice of such covenant to its employees and require its
employees to comply with such covenant. Such covenant shall not apply to any
such information that is or becomes generally available to third parties other
than as a result of its disclosure by Edmund's or its employees, which was
available to Edmund's prior to its disclosure to Edmund's by ABT, or which is
made available to Edmund's by a source other than ABT and its representatives.
If Edmund's is requested to produce any of such confidential or
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proprietary information by order of any governmental agency, court or civil
process, Edmund's may, upon less than five days' written notice to ABT, release
such information.
2. Non-Competition
For the term of this Agreement and for two years following the
termination of this Agreement pursuant to paragraph A.1., neither Edmund's nor
its subsidiaries or affiliates or their respective directors, officers,
employees or agents shall directly engage in the business of providing new
vehicle purchase and lease requests to dealers of new automobiles and trucks.
However, following such termination of this Agreement Edmund's shall be entitled
to refer Consumers to other third parties who, like ABT, are engaged in such
business, and following such termination Edmund's shall be entitled to advertise
other automotive broker services.
3. Indemnification
Edmund's agrees to indemnify and hold harmless ABT and its subsidiaries
and affiliates and their respective directors, members, managers, officers,
employees and agents against any and all losses, liabilities, claims, awards,
damages, judgments, settlements and costs, (including attorneys' fees and
expenses) arising out of or relating to any third party claim arising from the
negligent or wrongful acts or omissions of Edmund's, its subsidiaries and
affiliates, and their respective directors, officers, employees and agents.
ABT agrees to indemnify and hold harmless Edmund's and its subsidiaries
and affiliates and their respective directors, officers, employees and agents
against any and all losses, liabilities, claims, awards, damages, judgments,
settlements and costs, (including attorneys' fees and expenses) arising out of
or relating to any third party claim arising from the negligent or wrongful acts
or omissions of ABT, its subsidiaries and affiliates, and their respective
directors, members, managers, officers, employees and agents. In addition, ABT
hereby assigns to Edmund's any benefits of any indemnification or similar
agreement or arrangement that ABT has received, or hereafter receives, from
third parties with whom ABT does business (such as dealers), to the extent that
such indemnification does not compromise ABT's rights of indemnification from
such third parties.
4. Trade Marks and Service Marks
Any and all trade marks and service marks associated with ABT are and
shall remain the exclusive property of ABT. If during the term of this Agreement
a trade mark registration is filed by ABT, all rights belong to ABT who shall
bear the cost of such registration. Edmund's is permitted to use the trade mark
and service mark of ABT only as set forth herein or only as authorized in
writing by ABT.
E. Miscellaneous
1. Independent Parties
The relationship between ABT and Edmund's is, and at all times
shall
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remain, solely that of independent parties, and shall not be, or construed to be
a joint venture, partnership, fiduciary, or other relationship of any nature.
2. Notices
All notices and requests in connection with this Agreement shall
be given or made upon the respective parties in writing, and shall be deemed as
given on the day it is deposited in the U.S. Mail, postage prepaid, certified or
registered, return receipt requested, and addressed as designated at the top of
this Agreement, or such address as the party to receive the notice or request so
designates by written notice to the other.
3. Headings
The titles and captions of the various paragraphs and
subparagraphs of this Agreement are inserted for convenience only, and are not a
part of this Agreement, nor shall they be deemed in any manner to modify,
explain, enlarge or restrict any of the provisions of this Agreement.
4. Severability
The invalidity of any of the provisions or clauses in this
Agreement shall not affect any remaining provisions, clauses, or applications
which can be given effect without the invalid provision or clause. To this end,
the provisions of this Agreement are declared to be severable.
5. Waivers
A waiver of either party to exercise in any respect any right
provided for herein, including the termination of this Agreement, shall not be
deemed a waiver of any right hereunder.
6. Governing Law and Jurisdiction
This Agreement and the performance hereunder shall be governed
and construed in accordance with the laws of the State of California. Any
dispute or claim arising between the parties hereto, shall be brought in a court
of competent jurisdiction located in the State of California and the parties
hereto agree to jurisdiction in California.
7. Attorney's Fees
In the event any litigation is initiated by any of the parties to
enforce any of the provisions of this Agreement, the prevailing party shall be
entitled to receive from the other party its reasonable attorney's fees incurred
in such litigation.
8. Entire Agreement
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This Agreement may be modified, amended or waived in any respect
only by a written instrument signed by all the parties hereof. This Agreement
supersedes any and all agreements, either oral or written, between the parties
and contains all of the representations, covenants, and agreements between the
parties hereto. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, orally or otherwise have
been made by any party, or anyone acting on behalf of any party which are not
contained in this Agreement and that neither party enters this Agreement in
reliance upon a later agreement regarding an ABT Associated Financing Program.
9. Authority
The parties hereto have authorized the signatories identified
below to enter this Agreement on behalf of Edmund's and ABT, respectively.
EDMUND PUBLICATIONS CORP. AUTO-BY-TEL, LLC
a New York Corporation a California limited liability company
By: /s/ [SIG] By: /s/ [SIG]
------------------------------ ----------------------------------
Title: Chairman Title: President
--------------------------- -------------------------------
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EXHIBIT 10.11
[*] Confidential Treatment has been requested for certain portions of this
exhibit.
EDMUND PUBLICATIONS CORP.
AUTO-BY-TEL MARKETING CORPORATION
Amendment to Marketing Agreement dated February 8, 1996
1. Term of agreement to be extended [*]
2. Exclusivity:
a. New cars: Exclusive for entire term.
b. Used cars: Exclusivity unless and until terminated at Edmund's
election on not less than 90 days' notice, but no such election
to be effective prior to August 1, 1998. "Exclusivity" means
that other than EVRI, ABT will be the exclusive retail used
vehicle purchase program. Edmund shall have the right to
terminate ABT's used car program, on not less than 90 days'
notice, if the number of (non-duplicate) used car request forms
is less than (i) 100,000 during the twelve months commencing
with the first full calendar month after Edmund begins
submitting used car request forms to ABT, (ii) 200,000 during
the second such twelve-month period, or (iii) 250,000 during any
subsequent twelve-month period.
c. No exclusivity re financing.
3. Fees:
a. [*] for each new car request form for the first 16,667 per
calendar month. [*] for the next 8,333 per month, [*] for the
next 8,333 per month, [*] for the next 8,333 per month, and [*]
for any forms in excess of 41,667 per month. A reconciliation
shall be made as soon as practicable after each March 31, June
30, September 30 and December 31 based on Edmund being entitled
to [*] for each new car request form for the first 200,000 per
twelve months, [*] for the next 100,000 per twelve months, [*]
for the next 100,000 per twelve months, [*] for the next 100,000
per twelve months, and [*] for any forms in excess of 500,000
per twelve months (prorated for the number of months that are
the subject of such reconciliation). The first reconciliation
shall be for the period June 1 through September 30 1997. If, as
a result of any such reconciliation, ABT paid Edmund too much
for the applicable period, ABT shall offset such excess against
the next payment due to Edmund.
b. [*] for each used car request form, plus [*] for each form in
excess of 16,667 per calendar month, while exclusivity is in
effect. Thereafter, [*] for each used car request form plus
[*] for each form in excess of 16,667 per calendar month.
Similar reconciliation as for the new car request forms.
c. 25% of net origination fees paid to ABT from Chase Manhattan
Automotive Finance Corporation and/or other providers of
purchase and/or lease financing with respect to purchase
requests received through Edmund.
4. Upon execution hereof, ABT to pay Edmund $275,000 as a deposit against
future payments (to be offset by ABT in 10 installments of $27,500
beginning with the payment due by ABT in August 1997 in respect of July
1997, or to be paid in full if the agreement is terminated). Edmund
agrees to waive any right of offset or any other defenses to its
unconditional obligation to pay such amount back to ABT on such terms.
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[*] Confidential treatment requested.
5. Effective date of this amendment: June 1, irrespective of when the
long-form agreement is executed. All fees reflected in this amendment to
be paid in respect of requests forms submitted on or after June 1, 1997.
6. All Information from consumers is jointly owned by ABT and Edmund, and
both parties have unrestricted rights to use and/or sell such
information.
7. "Duplicate forms" issue: Edmund will be paid based on ABT's method of
acceptance/rejection of forms.
8. Location of forms:
a. New cars: to remain on Edmund site and Edmund will coordinate
with ABT to ensure that consumers have a seamless transfer to
ABT for financing.
b. Used cars: will reside on ABT server; however, there will be
appropriately-placed links back to Edmund.
9. Transmissions of data:
c. New cars: no changes from current arrangement.
d. Used cars and financing: ABT to e-mail to Edmund all information
submitted by consumers while on the ABT server (other than
financial information), and the consumer's search criteria.
e. At end of each month, ABT to send Edmund the aggregate number of
financings consummated by Edmund's consumers.
10. ABT and Edmunds will cooperate with one another on the issuance and
timing of a press release.
Agreed to and accepted this 6th day of June 1997:
AUTO-BY-TEL MARKETING CORPORATION EDMUND PUBLICATIONS CORP.
BY: /s/ MARK LORIMER By: /s/ PETER STEINLAUF
---------------------------------- ----------------------------------
Mark Lorimer Peter Steinlauf, President
Executive Vice President and
Chief Operating Officer
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EXHIBIT 10.12
AUTO-BY-TEL MARKETING CORPORATION
MASTER SUBSCRIPTION AGREEMENT
THIS AGREEMENT is entered into by and between Auto-By-Tel Marketing
Corporation, a Delaware Corporation, with its principal place of business at
18872 MacArthur Boulevard, Second Floor, Irvine, CA 92612-1400 ("ABT"), and
[Legal Name] a(n) [STInc] [Entity], with its principal place of business at
[Address], [City], [ST] [Zip] ("Dealer").
In consideration of the following mutual covenants and promises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, ABT AND DEALER, on their own behalf and on behalf of each
of their d.b.a. operation(s) set forth in Appendix "A" attached hereto,
intending to be legally bound hereby, warrant, covenant and agree as follows:
1. SERVICES TO BE PERFORMED.
ABT shall provide an Internet marketing program and Online Services to
attract Potential Purchasers. ABT shall forward to Dealer information regarding
the identified Potential Purchasers interested in purchasing/leasing a vehicle
of the make subscribed to by Dealer and in the zip code area subscribed to by
Dealer.
2. USE OF SERVICES.
(A) DEALER CONTACT REPRESENTATIVE(S). Dealer shall designate a key
employee(s) for the new vehicle program and a key employee(s) for the Used car
CyberStore(TM) program, if so elected by Dealer, to act as a liaison ("ABT
Manager") between ABT and Dealer. Dealer's ABT Manager shall be available to ABT
to receive instructions from time to time from ABT or its authorized agent.
Dealer may change the ABT Manager, provided that Dealer notifies ABT within ten
(10) days with the identity of the newly designated ABT Manager. Except as
otherwise provided to Dealer by ABT, Dealer shall be responsible for all
internal costs, if any, associated with the training of its key employee(s) to
use and implement ABT's systems and services within Dealer's facilities.
(B) CUSTOMER SERVICE STANDARDS. Dealer agrees to abide by ABT's Customer
Service Standards as set forth herein and on any Appendices or Amendments. In
order to improve the services offered by ABT and maintain uniform delivery and
quality standards among its Dealers, ABT reserves the right to amend the
Customer Service Standards from time to time or impose additional Customer
Service Standards, and ABT agrees to promptly notify Dealer in writing of any
revisions thereto. Dealer acknowledges that ABT's Customer Service Standards are
crucial to the value of ABT's services, and agrees to adopt and abide by such
revisions, even though they may require more work or expense to implement. ABT
agrees that it will not impose amendments or additions unless they are applied
to all Dealers.
(i) Dealer shall relay to Potential Purchasers a full and complete
response to the Potential Purchasers' inquiries transmitted by ABT to Dealer
within 24 hours of Dealer's receipt of the inquiry from ABT; and
(ii) Dealer's initial response shall be by telephone and shall disclose
all of the following information (the "Dealer Information"):
(a) the availability of the vehicle inquired about;
(b) the manufacturer's suggested retail price of the vehicle;
(c) all requested options;
(d) the price at which Dealer will sell or lease the vehicle with
all requested options to the Potential Purchaser;
(e) all other terms, costs and conditions required by law to be
disclosed to prospective purchasers; and
(f) relevant financing terms and conditions to which a consumer
shall be entitled to receive.
(C) DEALER INFORMATION. Dealer agrees that all Dealer Information
transmitted to a Potential Purchaser shall remain in full force and effect and
be binding on Dealer for a period of seven (7) days after its transmittal,
provided the identified vehicle still remains available for sale. If pricing,
terms, incentives or availability of vehicles used in the Dealer Information to
the Prospective Purchaser are in reliance on a manufacturer sponsored program,
the time period in which the terms and conditions shall remain in full force and
effect shall coincide with the termination date of the Manufacturer's program,
but shall not exceed seven (7) days. Dealer agrees to include a statement to
such effect in the Dealer Information and shall inform the Prospective Purchaser
of any reduction in the time period as set forth above. Any claim for damages
arising out of Dealer's failure to inform Potential Purchasers of all
information required by this Section shall be borne solely by Dealer who shall
hold ABT harmless from any loss as a result.
(D) PERIODIC OPERATIONS REPORTS. Dealer shall report to ABT on a monthly
basis the number and names of Potential Purchasers who purchased vehicles from
Dealer, the number of vehicles financed and amounts financed, and such other
data as ABT may request. Upon Dealer's written request, ABT shall furnish to
Dealer on a quarterly basis an operations report stating the number of purchase
requests received by ABT from Potential Purchasers in Dealer's Territory. ABT
shall use its best efforts to provide prompt transmission of data to Dealer, but
shall not be liable for any loss of data or delays or errors in transmitting
data or for any damages arising from any data loss, delay or error.
3. FINANCING PROGRAM PARTICIPATION.
ABT, through its affiliate, Auto-By-Tel Acceptance Corporation, a Delaware
Corporation ("ABTAC"), offers third party, low-cost financing programs for
consumers on its website from sources arranged by ABTAC (the "Financing
Arrangements"). Dealer's participation in offering financing through ABTAC,
regardless of compensation to Dealer, is a material element of this Agreement.
Dealer must be able to accommodate purchase requestors who are pre-approved for
financing. Dealer participation in making ABTAC finance programs available to a
purchase requestor is not OPTIONAL. Dealer agrees to fully participate in good
faith by offering, arranging and accepting ABTAC financing. Dealer agrees to
take such actions as reasonably requested by such Lenders or ABTAC to ensure
high quality service and satisfaction to ABT customers in the handling of their
Financing Arrangements. Dealer agrees it will not intentionally disparage or
otherwise mislead customer as to the terms and conditions of the Financing
Arrangements. Dealer shall not actively solicit the conversion of pre-approved
financing and/or insurance for any ABTAC, credit union, or affinity programs
presented by the purchase requestor to Dealer.
In many cases, Dealer will be compensated from a Lender for placing
financing through ABTAC. However, some Lenders do not offer compensation, and
neither ABT nor ABTAC makes any guarantee that Dealer will receive compensation
from any Lender. ABTAC uses its best efforts to negotiate advantageous terms for
Dealers through Lenders and will, from time to time, add or delete Lenders,
including banks, credit unions, thrift and loans and other sources to benefit
customers and/or Dealers. Dealer agrees to timely enter into Dealer
Participation Agreements with all Lenders as required by ABTAC within ten (10)
working days from receipt.
Dealer shall be paid a flat fee, as set forth on Appendix "B" hereto. Any
disagreement regarding the terms and conditions of a lender's Dealer
Participation Agreement shall be between Dealer and Lender, and shall not
involve ABT or ABTAC.
Dealer understands that each ABTAC finance contract will be pre-approved at
the Lender's prevailing buy rate. Dealer further understands that both the
customer and Dealer will be notified of the customer finance rate (APR) by ABT.
4. DEALER REAL TIME 2 INFORMATION SYSTEM
In consideration of the fees paid as set forth in Section 12 of this
agreement, ABT hereby grants to Dealer a nonexclusive, non-transferable license
and password to access and use for up to two simultaneous users, ABT's
proprietary real time access program referred to as Dealer Real Time 2 (DRT2),
subject to the terms and conditions of Appendix "C." Dealer agrees to dedicate a
personal computer and certain related ancillary equipment that meets or exceeds
ABT's minimal system specifications, for use in ABT's Dealer Real Time 2
Internet program and services. ABT will provide access and technical support
services to Dealer to assist Dealer in the access and use of the DRT2 system.
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5. EQUIPMENT.
ABT Equipment. ABT warrants that it possesses, or has access to and the
right to use, computer and other equipment necessary for it to perform its
services and provide the programs contemplated by this Agreement.
Dealer Equipment. Unless otherwise agreed between the parties, Dealer, at
its sole cost and expense, shall provide for itself a IBM compatible personal
computer with the minimum specifications determined by ABT to properly receive
and process purchase requests, facsimile machine and other office equipment
specified by ABT in order to receive and properly use ABT's services provided
under this Agreement. To ensure consistent, high quality service by Dealer, ABT
reserves the right to specify from time to time the equipment and software
required by its participating Dealers.
Equipment Maintenance. Dealer, at its sole expense, shall maintain all its
own computer/office equipment used for ABT services in good and proper working
order, and shall assume all responsibility for loss, damage and maintenance to
Dealer's own equipment. Dealer holds ABT harmless from any claim concerning
Dealer's own equipment.
6. ASSIGNMENT OF TERRITORY.
Subject to the terms and conditions of this Agreement, and its Appendices
and/or Amendments, ABT hereby grants to Dealer the exclusive non-transferable
right to conduct business using ABT's services (except for the Used Vehicle
CyberStore(TM)) within the geographic area designated by the Zip Codes set forth
in Appendix "A," attached hereto for each of Dealer's franchised makes and
incorporated herein by this reference. This exclusive territory extends only to
the make(s) of motor vehicles set forth in each Appendix "A" attached hereto
(together referred to as the "Territory"). Unless otherwise agreed to between
the parties, during the first six months of this Agreement this assigned
territory shall remain fixed. Thereafter, to provide and maintain the highest
quality of services to Dealer and Purchase Requester, ABT, in its sole
discretion, reserves the right to alter Dealer's Territory upon thirty- (30)
days' written notice to Dealer.
ABT retains the right to market and use its programs and services for
similar make dealers in all areas other than Dealer's Territory as designated
above, and within Dealer's Territory for all makes of motor vehicles not listed
above.
7. CONFIDENTIALITY.
During the term of this Agreement, Dealer will have access to and become
acquainted with various trade secrets consisting of formulas, strategies,
processes, computer programs, compilations of information, records,
specifications, and contractual information, all of which are owned by ABT and
regularly used in the operation of ABT's business. Dealer shall promptly sign
any confidentiality agreements submitted by ABT to protect ABT's proprietary
rights.
Dealer, on behalf of itself and its employees, agrees to keep all
information with respect to ABT's services confidential. Dealer acknowledges and
agrees that the sale or unauthorized use or disclosure of any of ABT's trade
secrets constitutes theft and will greatly damage ABT. Dealer shall not impart
ABT's services or the concept thereof to any person or entity other than
Dealer's key employee(s) without the previous written consent of ABT.
ABT agrees to treat all information provided by Dealer confidential. ABT
may, however, transmit pertinent vehicle information to consumers making
inquiries concerning the terms of purchase and financing or leasing of motor
vehicles.
Notwithstanding the foregoing, if either party is required to produce any
such information by order of any government agency, court of competent
jurisdiction, or other regulatory body, it may, upon not less than five (5)
days' written notice to the other party, release the required information.
8. TITLE TO SYSTEM, TRADEMARKS.
To the extent permitted by law, the services to be provided under this
Agreement and any Appendices or Amendments are proprietary to ABT, and title
thereto remains in ABT. All proprietary title and rights extends to any
extension of this Agreement and any Appendices and Amendments, together with all
copies thereof.
All applicable rights to patents, copyrights, trademarks and trade secrets
in the System and in the name "Auto-By-Tel" and its logo, now and in the future,
belong exclusively to ABT. Any and all trademarks and service marks associated
with ABT are and shall remain the exclusive property of ABT. If, during the term
of this Agreement, a trademark registration is filed by ABT, all rights belong
to ABT and ABT shall bear the costs for such registration. Dealer is permitted
to use the trademark and service mark only as set forth herein or only as
authorized in writing by ABT.
9. EXCLUSIVITY; NON-COMPETITION.
Dealer acknowledges and agrees that its compliance with Sections 2, 6 and 8
is essential to this Agreement and necessary to protect the business and good
will of ABT. Any breach of Sections 2, 6 or 8 hereof will cause irreparable harm
and continuing damage to ABT, for which money damages may not provide adequate
relief. Dealer understands and agrees that ABT's services include certain key
elements (the "Key Elements") which include:
(i) electronic transmission of customer purchase or lease requests;
(ii) rapid response by Dealer to customers (including immediate
telephone contact with up-front, firm pricing provided over the
telephone);
(iii) proper transmission to customers of the required Dealer
Information and adherence to Customer Service Standards, as stated
above;
(iv) customer purchase or lease documentation completed or nearly
completed prior to customer's arrival at the dealership for pickup
so as to ensure the customer spends as little time as possible at
the dealership; and
(v) continued Dealer training and support to implement and maintain
ABT's style and quality of services.
The parties agree that ABT's services are restricted solely to
use by Dealer and its designated key employee(s) and other duly authorized ABT
Dealers. Dealer agrees it will not compete with ABT in providing for its own
benefit the services contemplated in this Agreement, its Appendices and/or
Amendments.
Nothing in this section shall prohibit Dealer from establishing and
maintaining its own Internet web site and/or participating in any factory direct
program involving the Internet, World Wide Web online or other electronic means.
Similarly, Dealer is not prohibited from establishing for its own internal use,
business plans, policies or procedures that involve some or all of the "Key
Elements."
10. INDEMNIFICATION.
ABT agrees to indemnify and hold Dealer harmless against any and all losses,
liabilities, claims, awards, damages, judgments, settlements, and costs,
including fees and expenses, arising out of ABT's negligence or wrongful
conduct, or arising out of or related to any third party claim arising out of or
related to ABT's negligence or wrongful conduct, or from any other act done or
omitted to be done by ABT in executing the terms of this Agreement.
Dealer agrees to indemnify and hold harmless ABT and its subsidiaries and/or
affiliates and their respective members, managers, directors, officers,
employees and agents against any and all losses, liabilities, claims, awards,
damages, judgments, settlements, and costs, including fees and expenses, arising
out of or related to Dealer's negligence or wrongful conduct, or arising out of
any third party claim, including, but not limited to, any claim for damages by
any person or entity regarding the purchase, lease and/or finance of a motor
vehicle from Dealer or resulting from Dealer's utilization of ABT's services, or
from any other act done or omitted to be done by Dealer in executing the terms
of this Agreement.
In the event ABT shall be served with notification of action or suit against
Dealer, ABT shall promptly notify Dealer of such claim and Dealer shall defend
and settle, at its sole cost and expense, all such claims, actions, lawsuits or
proceedings. In all events, ABT, in its sole discretion, shall have the right to
participate in the defense of any such action through counsel of its own
choosing and at ABT's sole expense. In the event Dealer shall be served with
notification of action or suit against ABT, Dealer shall promptly notify ABT of
such claim(s), and ABT, in its sole discretion, shall defend and settle all such
actions or suits through counsel of its own choosing.
2
<PAGE> 3
11. TERM AND TERMINATION & REINSTATEMENT.
This Agreement shall be for a term of five (5) years, unless terminated
earlier pursuant to this Section.
(a) ABT may terminate this Agreement:
(i) immediately if Dealer does not adhere to its obligations under
Sections 2, 3, 6 and/or 8; or
(ii) immediately if any fees due ABT pursuant to Sections 9, 11 and/or
12 are unpaid and outstanding more than thirty (30) days after ABT
makes a written request therefor in the form of an invoice or any
other written communication; or
(iii) immediately for any other breach of this Agreement by Dealer which
is not cured within ten (10) days after written notice by ABT to
Dealer; or
(iv) upon thirty (30) days' notice following Dealer's failure to
exercise ABTAC Dealer Participation Agreement(s) in accordance with
Section 3; or
(v) at any other time with or without cause upon thirty (30) days'
written notice to Dealer.
(b) Dealer may terminate this Agreement:
(i) immediately, if an order for liquidation against ABT is entered and
not stayed in a bankruptcy proceeding; or
(ii) immediately, if ABT is guilty of willful misconduct in the
performance of its duties under this Agreement; or
(iii) upon thirty (30) days' written notice in accordance with Section
17 of this Agreement following the effective date of any shrinkage
of Dealer's Territory pursuant to Section 6; or
(iv) at any other time, in Dealer's sole discretion, upon thirty- (30)
days written notice to ABT in accordance with Section 17 of this
Agreement. Dealer shall be responsible for all fees due up to and
including the effective date of said termination.
If this Agreement is terminated prior to the date set forth herein, the
parties agree to continue to be bound to the covenants and promises set forth in
Sections 6, 7, 8, 9, 17, 19 and 21 hereof.
(c) If this agreement is terminated pursuant to Section 11(a)(ii) Dealer
may, within 30 days after termination, apply in writing for
reinstatement of this Subscription Agreement. The acceptance or
rejection of Dealers application is within the sole discretion of ABT
and conditioned upon 1) the territory is available for distribution, 2)
Any unpaid fees are paid satisfied and 3) Dealer pre-pays to ABT a
reinstatement fee of [ ].
(d) Dealer's participation in the Used Car CyberStore(TM) program may be
cancelled by Dealer independently of the new vehicle subscription, upon
thirty-(30) days written notice to ABT.
12. SUBSCRIPTION FEES.
(a) As consideration for the ABT Master Subscription, Dealer shall pay ABT
[WrittenAMTInFee] Dollars ($[InFee]) as an INITIAL START-UP FEE, to be
paid concurrently with the execution of this agreement. Of this fee,
[ ] shall be allocated for DRT2 initial start-up fee, receipt of which
is hereby acknowledged.
(b) As additional ongoing consideration, Dealer shall pay ABT the amount of
[WrittenAMTMoFee] ($[MoFee]) as a total MONTHLY SUBSCRIPTION FEE that is
due and payable monthly in advance on the first day of every month. The
total monthly amount due shall be allocated as follows: DRT2(TM) Access
Fee, [ ]; Used Car CyberStore, [UCCSMoFee]; [Make], [MoMakeFee]
[Make1] [MoMkFee1] [Make2] [MoMkFee2] [Make3] [MoMkFee3] [Make4]
[MoMkFee4] [Make5] [MoMkFee5] [Make6] [MoMkFee6] [Make7] [MoMkFee7]
(c) The first month's total fee is due and payable concurrently with the
execution of this agreement, receipt of which is hereby acknowledged.
ABT in their sole discretion may change these monthly subscription fees
upon thirty-(30) days' written notice to Dealer.
13. TAXES.
Dealer is solely responsible for paying all taxes (local, state and federal)
imposed by the sale or lease of any vehicles. ABT shall be responsible for
paying all taxes imposed upon ABT by reason of providing services to Dealer. In
the event ABT is required to collect and/or pay any taxes by reason of a
consumer's purchase or lease of a vehicle through the services ABT provides to
Dealer, Dealer shall promptly pay to ABT such taxes required to be collected or
paid by ABT.
14. WARRANTY LIMITATION.
Except as otherwise provided in Appendix "D," ABT makes no warranty
regarding the performance of the services hereunder, and Dealer specifically
waives all warranties, expressed or implied, arising out of or in connection
with the services to be provided by ABT hereunder. Specifically excluded are all
warranties, expressed or implied, including but not limited to, merchantability
and fitness for a particular purpose. In no event shall ABT be liable for any
loss of business profits or for any consequential, incidental, punitive or
similar damages, or for any third party claims of damages, even if advised of
the possibility of such damages.
15. NO WAIVER; NO REFUND.
The failures of either party to exercise in any respect any right provided
for herein shall not be deemed a waiver of any right hereunder. All fees paid to
ABT under this agreement are deemed earned upon the execution of this agreement
or delivery of services whichever occurs first. All fees paid to ABT are
non-refundable regardless of circumstances.
16. INDEPENDENT CONTRACTORS.
The relationship between ABT and Dealer created by this Agreement and/or any
Appendices or Amendments hereto shall be that of independent contractor. Nothing
contained in this Agreement shall be construed as creating or constituting a
franchise, partnership, agency, or joint venture between ABT and Dealer.
17. NOTICES.
All notices and requests in connection with this Agreement and/or any
Appendices and/or Amendments hereto shall be given or made upon the respective
parties in writing and shall be deemed given on the day deposited in the U.S.
mail, postage prepaid, certified or registered, return receipt requested, and
addressed as designated at the top of this Agreement, or to such address as the
party to receive the notice or request so designates by written notice to the
other. Notices may also be made by Facsimile and shall be deemed given on the
day sent when a confirming notice from the sending facsimile machine has been
generated. Notices may be made by overnight delivery service or courier, and
shall be deemed received on the day scheduled for delivery.
18. ASSIGNMENT.
This Agreement and the rights and duties hereunder, including any Appendices
or Amendments hereto shall not be assignable by Dealer, except upon written
consent of ABT. This Agreement and the rights and duties hereunder shall be
assignable by ABT without restriction.
19. PRESS RELEASES.
Except as agreed in writing between the parties, Dealer is prohibited from
issuing any press release(s) or making any public announcement(s) regarding
Dealer's business relationship with ABT or ABT's services or programs provided
to Dealer. Nothing in this section shall be construed to prohibit Dealer from
making reference to their affiliation with Auto-By-Tel in any advertisement
published by Dealer for their own benefit. Dealer may upon written request
receive a copy of ABT's logo, trademarks artwork and other printed material
along with a revocable limited license permitting the use of such materials by
Dealer within Dealer's advertisements.
3
<PAGE> 4
20. GOVERNING LAW AND JURISDICTION.
This Agreement and the performance hereunder shall be governed and construed
in accordance with the laws of the State of California. Any dispute or claim
arising between the parties hereto shall be brought in a court of competent
jurisdiction located in the County of Orange in the State of California, and the
parties hereto agree to jurisdiction in California.
21. OTHER AGREEMENTS; ATTACHMENTS.
This Agreement and all Appendices and Amendments hereto supersedes any and
all agreements, oral or written, between the parties, and contains all of the
representations, covenants, and agreements between the parties with respect to
services described in this Agreement. Each party to this Agreement acknowledges
that no representations, inducements, promises, or agreements, orally or
otherwise, have been made by any party, or anyone acting on behalf of any party,
which are not contained in this Agreement and/or any Appendices and/or
Amendments hereto. No other agreement(s), statement(s), or promise(s) not
contained in this Agreement or Appendices or Amendments hereto will be valid or
binding. The parties agree that any unilateral changes, amendments or
modifications made by one party are invalid against the other party. Any
amendment, change or modification of this Agreement will be effective only when
in writing and signed by the party to be charged. Upon ABT's request, Dealer
agrees to confirm in writing any amendment, modification, or change in original
terms or other action that alters the terms of this Agreement.
All Appendices and subsequent Amendments hereto are incorporated into this
Agreement by this reference as though fully set forth herein.
22. SEVERABILITY.
If any provision of this Agreement shall be held to be invalid, illegal or
unenforceable, such determination shall in no way alter or impair the validly,
legality and enforceability of the remaining provisions of this Agreement and
any Appendices and/or Amendments hereto.
23. ABT USED CAR CYBERSTORE PARTICIPATION ELECTION
NOTE: BY SIGNING APPENDIX "D" YOU ARE AGREEING TO PARTICIPATE IN THE
OPTIONAL ABT USED CAR CYBERSTORE(TM) (CYBERSTORE) AT AN ADDITIONAL MONTHLY FEE
PER MONTH AS SET FORTH IN SECTION 12. ABT NEW VEHICLE MASTER SUBSCRIPTION MUST
BE ESTABLISHED AND MAINTAINED CONCURRENTLY WITH THIS ELECTION.
In addition to the terms and conditions set forth in Appendix "D," Dealer
agrees as follows:
The ABT Used Car CyberStore(TM) program will provide an Internet marketing
program and online services targeted at persons ("Prospects") interested in
purchasing or leasing used vehicles ("Vehicles"), and establishes a database
permitting Dealer to publish "ABT Certified" Vehicles (as described below).
Prospects will be able to search the database for Vehicles by make, model and
option specifications. Purchase requests will be routed to dealers having the
appropriate Vehicle in the database, based on geographic and other appropriate
parameters established by ABT.
Dealer agrees that only "ABT Certified" vehicles that satisfy all
requirements specified by ABT's "Certified Car Checklist" may participate in the
ABT Used Car CyberStore(TM) program. The ABT Checklist requirements will be
provided to Dealer by ABT. ABT reserves the right to change the Checklist from
time to time. ABT may also establish a compliance program to ensure that ABT
certification and Checklist requirements are being met, and Dealer agrees to
cooperate with any such compliance program(s). Dealer agrees to indemnify ABT
for all liabilities for customary third party claims arising in connection with
ABT certified vehicles.
Dealer may periodically upload Vehicle photographic images and information
for Certified vehicles to ABT's CyberStore database. Dealer agrees, at Dealer's
expense, to make training resources available to Dealer's ABT Manager(s) in
order to facilitate use of the equipment, software and other components of the
ABT Used Car CyberStore(TM) program.
In participating in the optional ABT Used Car CyberStore(TM) program, Dealer
understands and agrees that additional fees and requirements apply, as set forth
in Appendix "D."
This Agreement is executed this ________day of __________________________, 1998.
DEALER: [Legal Name]
By:____________________________________________________
Name: [Auth Agnt]
Title: [Title]
AUTO-BY-TEL MARKETING CORPORATION
By: ____________________________________________________
Name: Brent Jones
Title: Chief Operating Officer
4
<PAGE> 5
APPENDIX "A"
EXCLUSIVE ZIP CODE TERRITORY ASSIGNMENT
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN SECTION 5 OF THE ABT MASTER
SUBSCRIPTION AGREEMENT BETWEEN AUTO-BY-TEL MARKETING CORPORATION AND
[LEGALNAME], THE FOLLOWING ZIP CODES ARE ASSIGNED TO DEALER AND SHALL COMPRISE
DEALERS EXCLUSIVE TERRITORY:
Acknowledged: [Legal Name]
Dealer Principal:_____________________________________ Date:____________________
[AuthAgnt]
[Title]
<PAGE> 6
APPENDIX "B"
ABTAC FINANCING PARTICIPATION DISCLOSURE STATEMENT
ABTAC has entered into arrangements with an affiliate of the Chase Manhattan
Automotive Finance Corporation ("Chase"), Triad Financial Corporation ("Triad")
and General Electric Capital Auto Financial Services Inc. ("GECAL") and may
enter into agreements with additional banks and finance companies (each, a
"Finance Company") to make available to ABT Purchase Requesters financing for
vehicles purchases.
Dealer desires to instruct ABTAC to specify to Finance Company a binding amount
of fee or "dealer participation" for these financing arrangements, which amount
Dealer will be paid directly by Finance Company. Dealer and ABTAC agree as
follows:
Dealer hereby instructs ABTAC to inform Finance Company that Dealer agrees to
accept, subject to the terms of the dealer agreement between Finance Company and
Dealer, as compensation for financing transactions, the amount indicated below.
In doing so, Dealer accepts a flat fee according to the following schedule to be
paid directly to Dealer by Finance Company and Dealer shall not increase the
customer finance rate (APR) over the buy rate (minimum rate). IN CONSIDERATION
OF THIS FLAT FEE THERE ARE NO CHARGE BACKS TO DEALER FROM FINANCE COMPANY.
The following fee schedule will be paid to dealer directly by finance source.
The flat rate fee schedule is as follows:
CHASE MANHATTAN BANK:
Amount Financed Dealer Fee
--------------- ----------
$25,000 + [ ]
$15,001- $25,000 [ ]
$10,000- $15,000 [ ]
GE CAPITAL
Amount Financed Dealer Fee:
--------------- -----------
$25,000 + [ ]
$15,001- $25,000 [ ]
less than $15,000 [ ]
Acknowleged: [Legal Name]
Dealer Principal:___________________________________ Date:______________________
[Auth Agnt]
[Title]
<PAGE> 7
APPENDIX "C"
DEALER REAL TIME 2(TM) LICENSE TERMS & CONDITIONS
Dealer agrees to the following terms and conditions, in addition to
those set forth in the Master Subscription Agreement:
1. System Requirements. Dealer shall provide at their own expense a
personal computer and related equipment that meets or exceeds the following
minimum specifications:
133 PENTIUM PROCESSOR; 32MB RAM; 33.6 MODEM (THE FASTER THE BETTER!);
2GB HARD DRIVE; WINDOWS '95; ISP (INTERNET SERVICE PROVIDER - IE: AT &
T, NETCOM, MCI....); NETSCAPE NAVIGATOR WEB BROWSER SOFTWARE (VERSION
3.0 OR LATER).
2. Technical Support. Licensor shall maintain for the benefit of the
Licensee a technical support help-line. Licensor shall establish and staff such
help-line with persons knowledgeable about the DRT 2 program. The hours of
availability shall be between 6:00 a.m. And 6:00 p.m. PST, excluding Sundays and
federal holidays. Technicians will provide assistance to licensee with respect
to accessing and using the DRT 2 program only. Technical assistance and support
regarding computer or related hardware are beyond the scope of this agreement
and will not be provided by Licensor. The hours of the availability of the
help-line are subject to change at the sole discretion of the licensor.
3. Covenants of licensee. During the term of this agreement:
(a) Licensee shall adopt and enforce such internal policies,
procedures and monitoring mechanisms as are necessary to ensure that the DRT 2
program is used only in accordance with this agreement and that all steps
necessary to ensure that no person or entity will have unauthorized access to
the programs are taken.
(b) Licensee shall not:
(i) assign, sublicense, lease, encumber or
otherwise transfer or attempt to transfer
the DRT 2 program or any portion thereof;
(ii) permit any third party other than the
Licensee or its authorized agent acting in
behalf of Licensee, to have access to the
DRT 2 passwords or to use programs, whether
by timesharing, networking, or any other
means;
(iii) duplicate, modify, translate, reverse,
engineer, decompile or disassemble the DRT 2
program;
(iv) possess or use the programs or any portion
thereof, other than in machine readable
object code;
(v) remove any copyright, trademark, patent or
other proprietary notices from the DRT 2
program(s), or any portion thereof without
the express written consent of Licensor.
4. Program Modifications: Only the Licensor shall make Program
modifications. Licensor shall from time to time provide upgrades and/or
modifications to the DRT 2 program to Licensee. Licensee shall accept any
upgrades or other modification made by licensor to the programs.
5. No warranty. The programs are provided on an "as is" basis. Licensor
makes no warranties or representations, express or implied, including but not
limited to any implied warranties of merchantability and fitness for a
particular purpose.
6. Limitation of remedies. Regardless of whether any remedy set forth
herein fails of its essential purpose, in no event will the licensor be liable
the damages to the licensee for any special, consequential, indirect or similar
damages, including any lost profits or lost data beyond the access fee paid for
the month in which they occurred, arising out of the use or inability to use the
DRT 2 program or any data supplied therewith.
7. Proprietary data. Licensee acknowledges that the programs are
proprietary to licensor and that it has (and will have) no interest therein or
in any modifications or improvements thereto, and hereby assigns to licensor all
rights in any such modifications or improvements made by or on behalf of
licensee.
8. Confidentiality. For the purpose of this agreement, confidential
information includes the DRT 2 programs and all other information provided by
licensor marked "confidential." Information shall not be deemed confidential
information and licensee and licensee's employees shall have no obligation with
respect to any such information if such information: (a) is or falls into the
public domain through no wrongful act of licensee or the licensee's employees;
(b) is rightfully received from a third party who is without restriction and
without breach of this agreement; (c) is approved for release by written
authorization of an officer of licensor; or (d) is disclosed pursuant to the
requirements of a governmental agency or operation of law.
9. Should the licensee or licensee's employees learn of confidential
information from licensor or any other source, neither licensee nor licensee's
employees shall, at any time during the term, or for one year thereafter,
disclose such information to any individual, agency, company or other entity.
Licensee shall not use such confidential information for licensee's own
advantage other than as permitted by this agreement.
10. Both parties recognize and acknowledge that breach of this Section
12 would cause irreparable injury inadequately compensable in damages.
Accordingly, licensor may seek and obtain injunctive relief against a breach or
threatened breach hereof, in addition to any other legal remedies that may be
available at law or in equity.
11. Assignment. Except for assignments to affiliates, provided each such
affiliate agrees to be bound by the terms hereof, licensee may not, without
licensor's prior written consent, assign its rights or delegate its obligations
under this agreement.
12. Independent contractors. Nothing in this agreement shall be deemed
or construed by the parties or any third person to create a franchise, agency,
partnership or joint venture between licensor and licensee.
13. Waiver. A failure of this licensor to enforce at any time any
provision of this agreement shall in no way affect the full right of the
licensor to enforce such provision at any time thereafter.
Acknowledged: [Legal Name]
Dealer Principal:__________________________________ Date:_______________________
[AuthAgnt]
[Title]
<PAGE> 8
APPENDIX "D"
USED CAR CYBERSTORE(TM) ELECTION
The undersigned Dealer elects to participate in the ABT Used Car
CyberStore(TM) services program and agrees to the following terms and
conditions, in addition to those set forth in the Master Subscription Agreement:
1. CUSTOMER SERVICE GUIDELINES.
Dealer agrees to abide by ABT's Used Car CyberStore Customer Service
Guidelines ("Guidelines") ABT in their sole discretion may, from time to time,
amend the Guidelines, or impose additional Guidelines on thirty (30) days'
notice to Dealer. Dealer acknowledges that following the Guidelines is crucial
to the value of ABT's services and agrees to follow them and any amendments or
additions to it even though they may require extra work or expense. The
Guidelines include the following:
(i) Dealer will warranty all vehicles sold through the CyberStore. The
warranty coverage will not be less favorable to the purchaser than the law of
the where Dealer is located, and as a minimum will be: "Three months or 3,000
miles, whichever comes first." The warranty will cover all matters governed by
applicable law and by the form of the attached Warranty. Dealer will indemnify
ABT for any third party claims arising under any warranty.
(ii) Dealer will provide prices ("Posted Prices") and vehicle
information for display on the ABT Website of all Vehicles posted to the
CyberStore. Dealer agrees to price Vehicles competitively. Dealer, and not ABT,
shall be solely responsible for the quality and accuracy of such information.
ABT reserves the right to monitor the quality of the photos and information
submitted. Dealer shall promptly correct any information or photo(s) deemed by
ABT to be inaccurate or below necessary quality levels set forth in Section 5.
If Dealer fails to correct such photo image(s) or information within 72 hours of
ABT's written notification thereof, ABT may remove the photo image(s) and/or
information from its website.
(iii) Except where expressly prohibited by law, Dealer will offer, in
writing, a return option allowing a purchaser to return a Vehicle to Dealer
within 72 hours or 300 miles, whichever comes first. Provided there has been no
damage to the Vehicle, Dealer will refund 100% of the amount paid by the
purchaser to the Dealer for the Vehicle. Dealer will provide each purchaser the
name and phone number of the Dealer employee to contact to exercise the
repurchase option. Dealer will facilitate the purchaser's exercise of the option
in good faith, and will use its best efforts to maximize the purchaser's
satisfaction with the repurchase experience. Dealer agrees to refund all amounts
due to the purchaser within five business days.
(iv) Dealer will participate in the emergency repair system established
by ABT. The emergency repair system will allows a purchaser of a CyberStore
Vehicle who is more than 100 miles from their residence and encounters a
situation where the vehicle is not operational (i.e. cannot be driven), to
contact the nearest CyberStore Dealer (the "Repairing Dealer") and have the
Repairing Dealer perform any warranted service or repair. The Repairing Dealer
will contact the dealership where the purchaser acquired its Vehicle (the
"Selling Dealer") and obtain an irrevocable Repair Order (an "R.O.") from the
Selling Dealer authorizing the repair the vehicle. For other covered items other
than those which disabled the vehicle, the owner should return to the Selling
Dealer. In the interest of customer satisfaction and improved inter-dealer
relations, the resulting R.O. will be calculated on an internal basis of "cost
plus 25%" for parts and labor in all states, except for those states with higher
mandates, in which states the applicable law will govern. In the event of a
"major" repair (i.e. engine or transmission), the Selling Dealer will have the
option of providing alternate transportation to the customer, retrieving the
affected unit, and repairing the Vehicle at the Selling Dealer's service
location. In the event of any dispute between the Selling Dealer and the
Repairing Dealer, ABT will act as mediator. In such circumstance, ABT's
decisions will be final and binding upon both parties.
(v) Dealer agrees to adopt ABT sales procedures on Vehicle sales
instituted through ABT's CyberStore program, including firm phone price quotes
not to exceed the posted price, advanced document preparation, a
"no-hassle-no-haggle" sales style and to take any other actions necessary to
minimize the time spent by the Prospect in closing the transaction. Dealer will
respond to the Prospect's inquiries within 24 hours from Dealer's receipt of the
inquiry from ABT. Dealer's initial response will be by telephone and will
disclose all "Dealer Information," as that term is defined in the Master
Subscription Agreement. Dealer agrees that all terms and conditions contained in
the Dealer Information transmitted to a Prospect shall remain in full force and
effect and will be binding for a period of seven (7) days after its transmittal,
provided the identified vehicle still remains available for sale.
2. DEALER EQUIPMENT. In order to assure consistent, high quality service by all
dealers participating in the CyberStore, ABT reserves the right to specify the
equipment and software required by participating dealers. Dealer will provide at
their own expense the computer and equipment and receive the services provided
in this Agreement as specified by ABT including the ABT Dealer Real Time 2(TM)
program. Dealer AT their own expense, will maintain all of its specified
equipment in good and proper working order. Dealer will assume all
responsibility for loss, damage and maintenance of Dealer's equipment and hereby
holds ABT, its officers, directors, agents and other representatives harmless
from any claim concerning the specified equipment.
3. DEALER REPORTS. On a monthly basis, Dealer will report to ABT the number and
names of Prospects who purchased used vehicles from Dealer, the number of used
vehicles financed and the amounts financed and any other information ABT may
request.
4. SUBSCRIPTION FEES. Dealer may publish an unlimited number of vehicles
(images) on the CyberStore for a subscription fee of [ ] per month, which
amount shall be due and payable in advance on the first day of each month. For
each vehicle, Dealer shall publish one digital image together with relevant
information in accordance with the Agreement. Such images shall be produced by
Dealer in accordance with the Specifications and Guidelines set forth in Section
5 below.
Upon receipt of an executed copy of this Amendment, ABT shall ship to Dealer a
digital camera of ABT's choice, for the purposes of producing images of vehicles
for publishing on the CyberStore.
5. SPECIFICATIONS AND GUIDELINES: All vehicle images shall (i) contain the
vehicle as the sole subject matter of the image, and shall not contain any
people, images of people, graphics, photos, artwork, overlays, signs, numbers,
banners, balloons or any form of visual advertisement, or any other image that
would have the effect of distracting from the vehicle; (ii) be side or angular
photographs; and (iii) be true and correct images of the vehicle, without
retouching, modification, manipulation or enhancement.
6. DIGITAL CAMERAS: ABT shall provide the dealer for their use, a Digital Camera
for the first six-(6) months. Upon the conclusion of a six-(6) month of paid
subscription term title and possession of this camera shall transfer to the
Dealer. In the event Dealer shall cancel this subscription before the sixth
(6th) month anniversary, Dealer shall promptly pay ABT the sum of [ ].
Accepted: [Legal Name]
Dealer Principal: ______________________________________ Date: _________________
[AuthAgnt]
[Title]
<PAGE> 9
ATTENTION DEALER: This is a suggested sample form.
Please add all state-mandated disclosures, etc.
FRONT SIDE OF FORM
WARRANTY
[ ] FULL [X] LIMITED WARRANTY. The dealer will pay 100% of the labor and 100% of
the parts for the covered systems that fail during the warranty period. See
reverse side of this form for the explanation of warranty coverage, exclusions,
and the dealer's repair obligations.
SYSTEMS COVERED: DURATION:
Engine Power steering 90 days or 3000 miles
Transmission Power brakes whichever occurs first.
Transaxle Air Conditioning
Drive line Electrical
Rear end
*SEE BELOW FOR SYSTEMS AND PARTS COVERAGE.
TRAVEL REPAIR PROVISION. A vehicle purchased through the Used Car CyberStore
that becomes inoperative when traveling over 100 miles from the originating
dealer will be eligible for repair at Auto-By-Tel accredited dealerships. Travel
repair service will be available throughout the U.S. and Canada via the
Auto-by-Tel accredited dealer network. On major repairs, the selling dealer has
the option of providing the customer with alternate transportation and repairing
the unit at the selling dealer's location. A vehicle that is non-operational
will be repaired sufficiently to return to the originating dealer where
additional repairs can be completed. To take advantage of the Travel Repair
Provision, customers may contact the originating dealer who will direct them to
the nearest Auto-By-Tel accredited dealership, or inquire through the
Auto-By-Tel Website for instructions and directions: www.autobytel.com. PLEASE
NOTE: Appearance and convenience items will NOT be covered by the Travel Repair
Provision, nor will light bulbs, fuses, alignments, adjustments, switches, oil
filters, and other maintenance items.
SERVICE CONTRACT. A service contract is available at an extra charge on this
vehicle. Ask your Dealer for details as to coverage, deductible, price and
exclusions.
PRE PURCHASE INSPECTION: ASK the dealer if you may have this vehicle inspected
by your mechanic either on or off the lot.
AUTO-BY-TEL HOME AND AWAY WARRANTY:
- -------------------- ---------- ------------------------ ----- ----------
vehicle make model dealer stock number year vin number
<PAGE> 10
BACK SIDE OF FORM
[ ] FULL [X] LIMITED WARRANTY. The dealer will pay 100% of the labor and 100% of
the parts for the covered systems that fail during the warranty period. The
following is the entire representation of coverage, no other systems or parts
are suggested or implied. State law may give your additional rights.
SYSTEMS COVERED: PARTS COVERED:
ENGINE: All internally lubricated parts including timing
chains, gears and cover, timing belt, pulleys and
cover, oil pump and gears, water pump, valve covers,
oil pan, manifolds, flywheel, harmonic balancer,
engine mounts, seals and gaskets, engine block,
cylinder heads and turbocharger housing if damaged
by the failure of internally lubricated parts.
TRANSMISSION/TRANSFER CASE: All internally lubricated parts, torque converter,
vacuum modulator, transmission mounts, seals and
gaskets. (MANUAL CLUTCH ASSEMBLY AND COMPONENT PARTS
ARE NOT COVERED)
FRONT WHEEL DRIVE: All internally lubricated parts, axle shafts, output
shafts, constant velocity joints, front hub
bearings, seals and gaskets.
REAR WHEEL DRIVE: All internally lubricated parts, propeller shafts,
supports and U-joints, drive shafts, axle shafts and
bearings, seals and gaskets.
BRAKES: Master cylinder, power booster, wheel cylinders,
calipers, hydraulic lines and fittings. (ABS
COMPONENT PARTS ARE NOT COVERED.)
STEERING: Steering gear housing and all internal parts, power
steering pump, valve body and rack.
ELECTRICAL: Alternator, generator and starter.
AIR CONDITIONER Compressor, evaporator core, condenser.
ALL SYSTEMS AND PARTS LISTED ARE COVERED 90 DAYS
FROM PURCHASE OR 3000 MILES, WHICHEVER OCCURS FIRST.
By accepting this warranty, Customer agrees to release Auto-By-Tel from all
obligations with respect to the acquisition of covered unit.
____________________________________ ________________________________
AUTO-BY-TEL ACCREDITED DEALER / DATE CUSTOMER SIGNATURE / DATE
<PAGE> 1
EXHIBIT 10.13
[*] Confidential treatment has been requested for certain portions of this
exhibit.
EXECUTION COPY
FINANCING INQUIRY REFERRAL AGREEMENT
This FINANCING INQUIRY REFERRAL AGREEMENT ("Agreement"),
dated as of October 25, 1996, between Chase Manhattan Automotive Finance
Corporation, a Delaware corporation ("CAF"), with its principal place of
business at 900 Stewart Avenue, Garden City, New York 11530, on the one hand,
and Auto-By-Tel Acceptance Corporation ("ABTAC"), a Delaware corporation, with
its principal place of business at 18722 MacArthur Blvd., Irvine, CA 92612 and
Auto-By-Tel, Inc. ("ABT"), a Delaware corporation, located at 18722 MacArthur
Blvd., Irvine, CA 92612, as guarantor of the obligations of ABTAC under this
Agreement, (in such capacity, the "Guarantor").
W I T N E S S E T H
WHEREAS, ABTAC is in the business of, among other things
identifying persons interested in arranging financing for the purchase or lease
of new and used Vehicles and trucks ("Vehicles") who visit the ABT Internet
website and purchase a new Vehicle ("Customers") and CAF and Chase Manhattan
Bank U.S.A., N.A. (hereinafter referred to collectively in the singular as
"CAF") is in the business of extending financing to certain persons for the
purchase and lease of Vehicles; and
WHEREAS, ABTAC desires to refer such Customers to CAF, and
CAF desires to purchase from Dealers (as defined herein) retail installment sale
contracts originated by such Dealers to finance the purchase of new motor
Vehicles only (excluding recreational vehicles) (such transactions, "RFTs") and
to pay marketing fees in connection with RFTs purchased by CAF as a result of
ABTAC's referrals;
NOW THEREFORE, in consideration of the foregoing premises,
and for other good and valuable consideration the receipt and sufficiency of
which is hereby acknowledged, and intending to be legally bound, ABTAC and CAF
agree as follows:
SECTION 1. FINANCING PROGRAM
(a) ABTAC shall cause to be included on the ABT Website an application
for credit containing requests for the information designated by CAF as set
forth on Exhibit A hereto (the "Application"). The Application shall request the
information specified by CAF and shall be in a form reasonably satisfactory to
CAF. CAF may request changes from time to time in the information solicited by
the Application and, provided the requests are made in writing and with
reasonable notice,
<PAGE> 2
ABTAC shall use its best efforts to promptly accommodate such requests;
provided, however, that CAF shall use its best efforts not to request changes to
the information requested by, or form of, the Application (unless such changes
are required by law) more often than once in any three-month period; provided,
further, if such changes are required by law, and CAF gives ABTAC 30 days
notice, ABTAC shall honor such requested change within such thirty (30) day
period.
(b) Unless it already has done so, CAF will enter into its standard
dealer agreement ("Closing Agreement") with each seller of Vehicles in the
United States and the District of Columbia (the "Territory") who has executed an
on-line purchase referral agreement with ABT (each, a "Dealer," and together the
"Dealers"). The Closing Agreement shall contain customary terms no less
favorable to the Dealers than CAF's customary agreements in use with its other
financing programs and shall govern the terms upon which the Dealer and CAF will
close vehicle financing transactions referred through this Agreement. Upon
execution of a Closing Agreement, CAF shall assign such Dealer an identifying
number (the "Dealer ID") and inform ABTAC of such number. CAF may terminate its
relationship with any Dealer at any time for any reason, subject to the terms
and conditions of its Closing Agreement with such Dealer. CAF shall notify ABT
if it terminates any such Dealer under the provisions of its Closing Agreement
with such Dealer. Notwithstanding the foregoing, CAF shall not be obligated to
enter into a Closing Agreement or otherwise do business with any Dealer which
CAF has determined it will not do any business.
(c) Except as specified to the contrary in this Agreement, ABTAC (i)
shall not be a party to, (ii) shall not have any obligations with respect to,
and (iii) shall be held harmless by each Dealer and CAF with respect to any
losses or liabilities arising from or in connection with, the Closing
Agreements. If for any reason the Closing Agreement between a Dealer and CAF is
terminated, then CAF shall be under no obligation to approve any Application
received from Customers of such Dealer.
(d) CAF agrees to offer a buy-rate for each approved Customer credit
application at terms no less favorable than those offered to the applicable
Dealer by CAF. For each Customer credit application approved, CAF agrees to
inform ABTAC of the buy-rate offered to the applicable Dealer for RFTs. On a
monthly basis, the buy rate for RFTs purchased from Dealers by CAF that month
shall average no higher than 210 basis points over the 18-month treasury (the
"Base Range"). CAF may, upon 90 days written notice (a "Base Range Notice") to
ABTAC, raise the Base Range.
Subject to the ability of CAF to handle the systems issues
involved, as reasonably determined by CAF, and pursuant to a methodology to be
agreed upon by CAF and ABTAC, from time to time, upon ten (10) business days
written request from ABTAC, CAF shall raise the buy rate offered on RFTs, up to
a limit 50bps over the life of the term of this Agreement, which raise shall be
paid to ABTAC in the form of an increase in the fees paid to ABTAC by CAF
pursuant to Section 6. Such increase in fees shall be determined by reference to
the present value
2
<PAGE> 3
of such rate raise determined in accordance with the assumptions employed by CAF
for its valuation of excess spread on the portion of the excess spread CAF
retains on such loan.
(e) For so long as the "Exclusivity Conditions" (as defined below) are
met, CAF shall not enter into any agreement or arrangement similar to this
Agreement with any other Internet automobile buying, purchase assistance, or
automotive pricing information program or service, whereby the Internet program
or service provider receives or solicits credit information from its customers
to finance the purchase of new motor vehicles only (excluding recreational
vehicles), forwards that information for credit review to CAF and CAF purchases
that customer's retail installment sales contract originated by an automobile
dealer that has executed an on-line purchase or financing referral agreement or
similar agreement with the Internet program or service provider; provided,
however, that (i) CAF's rights to and/or use of IBM's Auto Loan Exchange System
for indirect dealer financing shall not violate the provisions of this Section
1(e); and (ii) CAF, any affiliate of CAF or any person controlled by or under
common control with CAF may, after the date hereof, acquire control (through
merger, acquisition, consolidation or purchase of all or substantially all of
the assets) of any corporation or other entity (other than a corporation or
entity which has as its primary line of business services substantially similar
to ABT and ABTAC) which at the time of such acquisition is engaged in a business
or service substantially similar to that contemplated by this Agreement, so that
such corporation or entity (including the surviving or continuing entity in any
acquisition effective on a merger, consolidation or purchase of assets) shall
not violate the provisions of this Section 1(e). CAF shall not use or
participate in the use of the ABTAC Marks (as defined in Schedule 2) in
conjunction with the offering or making of any automobile finance product or
product related thereto on the Internet.
For purposes of this Agreement, the term "Exclusivity Conditions" shall
mean the occurrence of the following two conditions:
(i) ABTAC forwards to CAF not less than 51% of the Applications for
RFTs ABTAC receives from Customers who qualify for financing
from or through ABTAC within the Base Range; and
(ii) Of the Applications received by CAF from ABTAC, not less than
30% result in an RFT purchased from a Dealer.
(f) From time to time, ABTAC shall forward to CAF Applications received
from Customers. CAF shall review each forwarded Application and, if such
Application does not represent a credit which CAF will approve within the Base
Range, CAF shall so inform ABTAC and ABTAC may forward such Application to
another financing source.
3
<PAGE> 4
(g) ABTAC will be responsible for informing Dealers of the nature of
CAF's financing program. ABTAC will provide CAF with a list of the Dealers with
addresses so that CAF may forward Closing Agreements to them for signature. CAF
shall provide ABTAC with a copy of the form of Closing Agreement.
(h) ABTAC shall comply at all times with the provisions of the federal
Fair Credit Reporting Act and the Equal Credit Opportunity Act as well as the
so-called "fair lending" laws, in each case pertaining to the performance of its
obligations under this Agreement: including but not limited to the following:
(A) ABTAC will not submit any Application or credit information to
CAF with respect to applicants if ABTAC has any knowledge that such
Application, credit information or applicant is fraudulent, or that the
Application or credit information contains information which ABTAC knows
is untrue; and
(B) ABTAC will, on its Website, advise each applicant that his/her
Application may be submitted to Chase Manhattan Bank USA, N.A., 802
Delaware Avenue, Wilmington DE 19801, or such other address as CAF may
specify from time to time.
SECTION 2. RECEIPT AND TRANSMISSION OF APPLICANT INFORMATION
(a) Subject to the provisions of Section 1 (f), ABTAC will transmit each
completed Application to CAF by telephone, telefax, e-mail, or other electronic
or agreed upon means. When transmitting an Application to CAF, ABTAC will also
designate the Dealer that is to be notified of the credit decision.
(b) ABTAC will not use any such information in any manner which violates
applicable law in effect from time to time.
SECTION 3. UNDERWRITING
(a) Upon receipt, CAF will review each Application in accordance with
its underwriting criteria in effect from time to time. ABTAC acknowledges that
CAF has sole discretion in determining whether or not to approve an Application,
which discretion CAF agrees to exercise in a manner consistent with its
company-wide or market-wide underwriting procedures, as the case may be. CAF
shall inform ABTAC whether an Applicant has been approved, conditionally
approved or denied, but shall not reveal the reasons it has denied any
Application.
(b) CAF will complete its review of no less than 50% of the Applications
within the two (2) business hours after electronic receipt of the Application
and a further 80% of the Applications within four (4) business hours of
4
<PAGE> 5
such time. Compliance with these performance standards shall be measured on a
monthly basis. If CAF fails to comply with these performance standards, ABTAC's
sole remedy shall be to terminate this Agreement pursuant to Section 9(b). CAF's
business hours will be 8:00 a.m. to 9:00 p.m. Eastern Time, each day of the
year, except for those days banks located in New York are required to close.
Subject to the mutual agreement of the parties, the parties shall review the
foregoing business hours and expand same if justified economically by business
volume.
(c) CAF reserves the sole right and power to change the Underwriting
Criteria in accordance with sound lending practices consistent with CAF's normal
business practices and subject to applicable law, and further to suspend,
restrict or modify the purchase of RFTs from Dealers in any portion of the
Territory for any reason. CAF shall provide ABTAC with advance written notice,
given as early as practicable, of any actions under this clause (c) it plans to
implement. Any such actions shall be taken in good faith and only if consistent
with actions taken by CAF on a company-wide basis.
SECTION 4. COMMUNICATION OF CREDIT DECISIONS
At the completion of underwriting, subject to the time-frames set forth
in Paragraph 3(b) of this Agreement, CAF will notify ABTAC, [via E-MAIL] or such
other method as agreed upon by the parties from time to time, of CAF's credit
decision, and ABTAC shall use its best efforts to promptly notify the Dealer and
the Applicant on behalf of the Dealer and CAF of CAF's credit decision, and in
any event shall notify no less than 80% of such Dealers and Applicants within
two business hours. If CAF declines a request for credit, CAF will send to the
Applicant any and all notices required pursuant to federal or applicable state
law or regulation including, but not limited to, those required under the
federal Equal Credit Opportunity Act and Federal Reserve Regulation B. CAF shall
not provide Applications received from ABTAC which do not result in an RFT
purchase from a Dealer to any other financing source, including without
limitation, ProCredit Corp.
SECTION 5. CLOSING AND FUNDING
CAF and the Dealer shall use its best efforts to close approved
financing within 24 business hours after receipt from the Dealer of all properly
completed and required documentation pursuant to the terms of the Closing
Agreements. CAF will remit the proceeds of each purchased RFT to the related
Dealer in a timely manner.
5
<PAGE> 6
[*] Confidential Treatment Requested
SECTION 6. COMPENSATION
(a) During the term of this Agreement, CAF shall pay ABTAC a service
fee, in the amounts determined by reference to Exhibit A, and during the term of
this Agreement, CAF shall pay to each Dealer a service fee, in the amounts
determined by reference to Exhibit A and further subject to the terms of the
Closing Agreement for each RFT purchased under the terms of this Agreement. The
payment to ABTAC shall be made on the business day following any funding and the
payment to Dealer shall be made in accordance with the terms of the applicable
Closing Agreement. Dealer may markup CAF's buy rate, up to a maximum of 100 bps,
subject to the terms of the Closing Agreement and any applicable agreement
between the Dealer and ABTAC, which shall be provided to CAF. Dealers will earn
reserves in accordance with CAF's standard practices in connection with any such
mark up, subject to the terms of the Closing Agreement.
(b) ABTAC may appoint public accountants of its choice no more than once
during any 12 month period, and at its sole expense, for the purpose of auditing
CAF's compliance with the compensation provisions specified in Section 6 of this
Agreement and CAF agrees to grant such accountants access, during normal
business hours and upon reasonable notice, to all records necessary to determine
the compliance of CAF with the compensation provisions of Section 6 of this
Agreement. If the results of such audit reveal a discrepancy between the amounts
paid by CAF hereunder and the amounts which should have been paid hereunder,
then the appropriate payments shall be made (i) if to ABTAC, immediately, and
(ii) if to CAF, by the withholding of 1/6th of such amount from the payments to
be made to ABTAC over the succeeding six months with any balance due hereunder
payable on the 180th day notwithstanding any termination of this Agreement. If
the discrepancy is in ABTAC's favor and exceeds $250,000, then CAF shall
reimburse ABTAC for the full cost of the audit.
SECTION 7. REPORTS
(a) Each business day, via facsimile or such other method as agreed upon
by the parties from time to time, CAF will send to ABTAC a report identifying
each RFT to an Applicant, sorted by Dealer ID, that was purchased from a Dealer
on the preceding day (or, in the case of a report submitted on a Monday, each
RFT purchased from a Dealer on each of the three preceding days).
(b) On or before the 10th day of each month, via facsimile or such other
method as agreed upon by the parties from time to time, CAF will send to ABTAC a
report, sorted by Dealer ID, outlining for the preceding month (i) the number of
Applications received from ABTAC, (ii) the number of Applications that were
approved, (iii) the number of Applications that were denied, (iv) the number of
Applications pending at month-end, and (v) the average processing time for
6
<PAGE> 7
Applications, and the amount financed under each RFT. In the case of the
information set forth in clauses (i), (ii) and (iii) of the preceding sentence,
the report shall identify each Application by name of applicant. CAT shall
include with such report, a report indicating any Dealers which executed a
Closing Agreement and any Closing Agreements which terminated.
(c) On or before the 10th day of each month, via facsimile or such other
method as agreed upon by the parties from time to time, CAF will send to ABTAC a
report on the performance of RFTs purchased from Dealer detailing, for each
month this Agreement shall have been in effect, the number and aggregate
outstanding balance of (i) RFTs purchased during the month, (ii) RFTs in a
current status, (iii) RFTs more than 30 but less than 60 days delinquent, (iv)
RFTs more than 60 but less than 90 days delinquent, and (v) RFTs more than 90
days delinquent, (vi) repossessions and repossession ratio, (vii) gross and net
charge-offs and loss ratios. This monthly report will be provided on an overall
portfolio basis with respect to RFTs purchased from Dealers.
(d) ABTAC agrees to maintain complete and accurate books and records and
procedures concerning the taking and referral of Applications and credit
information and compliance with all applicable law. Throughout the term of this
Agreement, and for a period of twenty five (25) months after the termination of
this Agreement, CAF, its duly authorized agents, representatives or employees or
federal or state agencies having jurisdiction over CAF, may from time to time,
upon reasonable notice and during normal business hours, inspect such books,
records and procedures to ensure compliance with ABTAC's obligations concerning
the taking and referral of Applications and credit information under this
Agreement and compliance with all applicable law.
(e) On or before the 10th day of each month, via facsimile or such other
method as agreed upon by the partners from time to time, ABTAC will send to CAF
a report specifying for the preceding month, the number of Applications for RFTs
ABTAC receives from customers who qualified that month for financing from or
through ABTAC within the Base Range.
SECTION 8. INDEMNIFICATION
(a) ABTAC shall defend, indemnify and hold harmless CAF and its
affiliates and all of its and their officers, directors, owners, agents,
attorneys, and employees, from and against any and all loss, liability, claims,
counterclaims, damage, cost or expense (including reasonable attorney's fees and
costs), whether asserted in a judicial or administrative proceeding, arising out
of either (i) a breach of the representations and warranties of ABTAC designated
on Schedule 2 as items A(l), A(2), A(3), A(4), A(6) or A(7); (ii) a breach of
the provisions of Section 1(h); (iii) the receipt of a Customer's Application
information by any person or entity other than CAF or
7
<PAGE> 8
another entity that has a business relationship with ABTAC and a permissible
purpose to receive such information, by hacking or by any other authorized or
unauthorized method, unless such person or entity obtained or received such
information directly or indirectly from CAF; or (iv) any gross negligence or
intentional misconduct of ABTAC in connection with ABTAC's performance of its
obligations under this Agreement.
(b) CAF shall defend, indemnify and hold harmless ABTAC and its
affiliates and all of its and their officers, directors, owners, agents,
attorneys, and employees, from and against any and all loss, liability, claims,
counterclaims, damage, cost or expense including reasonable attorney's fees and
costs), whether asserted in a judicial or administrative proceeding, arising out
of either (i) a breach of the representations and warranties of CAF designated
on Schedule 2 as items B(1), B(2), B(3), B(4), B(6) or B(7); or (ii) any gross
negligence or intentional misconduct of CAF in connection with CAF's performance
of its obligations under this Agreement.
(c) Promptly after the receipt by either party hereto of notice of any
claim, action, suit or proceeding of any third party which is subject to
indemnification hereunder, such party (the "Indemnified Party") shall give
written notice of such claim to the party obligated to provide indemnification
hereunder (the "Indemnifying Party"), stating the nature and basis of such claim
and the amount thereof, to the extent known. Failure of the Indemnified Party to
give such notice shall not relieve the Indemnifying Party from any liability
which it may have on account of this indemnification or otherwise, except to the
extent that the Indemnifying Party is materially and adversely prejudiced
thereby. The Indemnifying Party shall be entitled to participate in the defense
of and, if it so chooses, to assume the defense of, or otherwise contest, such
claim, action, suit or proceeding with counsel selected by the Indemnifying
Party and reasonably satisfactory to the Indemnified Party. Upon the election by
the Indemnifying Party to assume the defense of, or otherwise contest, such
claim, action, suit or proceeding, the Indemnifying Party shall not be liable
for any legal or other expenses subsequently incurred by the Indemnified Party
in connection with the defense thereof. Although the Indemnified Party shall
have the right to participate in the defense thereof and to employ counsel, at
its own expense, separate from the counsel employed by the Indemnifying Party.
Notwithstanding the foregoing, the Indemnifying Party shall be liable for the
fees and expenses of counsel employed by the Indemnified Party, if, and only to
the extent that (i) the Indemnifying Party has not employed counsel or counsel
reasonably acceptable to the Indemnified Party to assume the defense of action
within a reasonable time after receiving notice of the commencement of the
action, (ii) the employment of counsel and the amount reimbursable therefor by
the Indemnified Party has been authorized in writing by the Indemnifying Party
or (iii) representation of the Indemnifying Party and the Indemnified Party by
the same counsel would, in the opinion of such counsel, constitute a conflict of
interest (in which case the Indemnifying Party will not have the right to direct
the defense of such action on behalf of the Indemnified Party). The parties
shall use commercially reasonable efforts to minimize Losses from claims by
third parties and shall act in good faith in responding to, defending against,
settling or
8
<PAGE> 9
otherwise dealing with such claims, notwithstanding any dispute as to liability
as between the parties under this Article 9. The parties shall also cooperate in
any such defense, give each other full access to all information relevant
thereto and make employees and other representatives available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Whether or not the Indemnifying Party shall have
assumed the defense, the Indemnifying Party shall not be obligated to indemnify
the other party hereunder for any settlement entered into without the
Indemnifying Party's prior written consent, which consent shall not be
unreasonably withheld. The Indemnifying Party shall not compromise or settle any
claim, action, suit or proceeding, without the consent of the Indemnified Party
(which consent shall not be unreasonably withheld) unless the terms of such
settlement or compromise release the Indemnified Party from any and all
liability with respect to such claim, action, suit or proceeding.
SECTION 9. TERM AND TERMINATION
(a) This Agreement shall remain in effect for a period of three (3)
years from the date hereof unless terminated by either party upon one hundred
eighty (180) days prior written notice. This Agreement shall also terminate if
required by governmental authority or court of law, but only insofar as this
Agreement applies to such jurisdiction affected.
(b) If any party shall be in breach of any material obligation under
this Agreement and such breach shall remain uncured for a period of thirty (30)
days after written notice thereof from the other party (or, if such breach is
curable and requires more than thirty (30) days to cure, if such cure is not
commenced within thirty (30) days and thereafter diligently prosecuted), then
the other party may, by written notice sent, terminate this Agreement upon 30
days after delivery of such notice. Non-payment of amounts due under this
Agreement shall be deemed to be a breach of a material obligation hereunder, but
institution of suit for payment of amounts due under this Agreement shall not be
deemed to be an automatic termination hereunder. Notwithstanding anything in
this Agreement to the contrary, either party has the right to terminate this
Agreement immediately, upon written notice to the other party, if the other
party's breach of any material obligation of this Agreement causes the
non-breaching party to be in violation of any applicable law, rule, regulation
or order.
(c) ABTAC may terminate this Agreement on thirty (30) business days
notice at any time between the receipt of a Base Range Notice and the date
specified in such notice for the increase in the Base Range.
(d) Notwithstanding paragraph 9(a) above, CAF may terminate this
Agreement on thirty (30) days written notice if, on the first business day of
any calendar month, the Exclusivity Conditions have not been met during the most
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<PAGE> 10
recently completed six (6) month period, measured on a weighted average basis.
For any six month period, CAF's right under this Section 9(d) shall expire on
the fifteenth day of the month following the end of such period, but shall have
no effect on any right CAF may have to terminate under any other provision of
this Agreement.
(e) At any party's option, and upon written notice of exercise of the
option, this Agreement shall terminate upon the voluntary or involuntary
bankruptcy or insolvency of a party, the voluntary or involuntary dissolution or
liquidation of a party, the admission in writing by a party of its inability to
pay its debts as they mature, or the assignment by a party for the benefit of
creditors.
SECTION 10. NOTICES
All notices or transmissions pursuant to this Agreement, unless
otherwise specified, shall be by facsimile transmission, by personal delivery,
or by registered or certified mail, return receipt requested, to the addresses
of the parties listed on Schedule 1 hereto, or such other address as any party
listed below shall specify in writing to the others in a notice conforming to
this Section.
SECTION 11. GUARANTEE
The Guarantor hereby unconditionally and irrevocably guarantees to CAF,
its successors, endorsees and assigns, the performance when due of all present
and future obligations and liabilities of all kinds of ABTAC arising out of or
in connection with the Agreement, whether due or to become due, secured or
unsecured, absolute or contingent, joint or several ("Obligations"). The
Guarantor agrees that CAF and ABTAC may mutually agree to modify the Obligations
or any agreement between CAF and ABTAC without in any way impairing or affecting
this Guarantee. The Guarantor agrees that the liability hereunder will not be
affected by any settlement, extension, renewal, or modification of this
Agreement or by the discharge or release of the Obligations of ABTAC, whether by
operation of law or otherwise. The Guarantor agrees to also be liable for all
fees and costs, including reasonable attorney's fees, incurred by CAF in
enforcing the terms of this guarantee.
SECTION 12. REPRESENTATIONS, GENERAL
The representations and warranties set forth on Schedule 2 to this
Agreement and the provisions of general application set forth on Schedule 3 to
this Agreement are incorporated herein by reference and shall have the same
force and effect as if set forth herein in their entirety.
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<PAGE> 11
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officer on the date first above written.
CHASE MANHATTAN AUTOMOTIVE FINANCE CORPORATION
By: /s/ [SIG]
-------------------------------------------
Title: President
----------------------------------------
AUTO-BY-TEL ACCEPTANCE CORPORATION
By:
-------------------------------------------
Title:
----------------------------------------
AUTO BY-TEL, INC., as Guarantor
By:
-------------------------------------------
Title:
----------------------------------------
11
<PAGE> 12
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officer on the date first above written.
CHASE MANHATTAN AUTOMOTIVE FINANCE CORPORATION
By:
-------------------------------------------
Title:
----------------------------------------
AUTO-BY-TEL ACCEPTANCE CORPORATION
By: /s/ [SIG]
-------------------------------------------
Title: Chief Operating Officer
----------------------------------------
AUTO BY-TEL, INC., as Guarantor
By: /s/ [SIG]
-------------------------------------------
Title: President
----------------------------------------
12
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[*] Confidential Treatment Requested
EXHIBIT A
to
Financing Inquiry Referral Agreement,
dated as of October 25, 1996, between
Chase Manhattan Automotive Finance Corporation,
and Auto-By-Tel Acceptance Corporation
and Auto-By-Tel, Inc., as guarantor (the "Agreement")
COMPENSATION SCHEDULE
Capitalized terms used in this Exhibit and not defined herein shall have the
meanings ascribed thereto in the Agreement.
The following compensation shall be paid for each financing contract (RFT or
lease) funded pursuant to the Agreement:
Fee to ABTAC
------------
Amount Financed Flat Fee
--------------- --------
$25,000 + $125
15,001 - 25,000 100
10,000 - 15,000 50
< $10,000 0
Fee to Dealer
-------------
Amount Financed Flat Fee
--------------- --------
$25,000 + $75
15,001 - 25,000 50
10,000 - 15,000 25
< $10,000 25
Contracts or title documents which have to be returned to the Dealer for the
correction of errors and omissions will not require payment, and will not be
funded, until corrected documents are received and accepted by CAF. All amounts
paid to Dealer shall be subject to the terms of the Closing Agreements.
Exhibit A - Page 1 of 1
<PAGE> 14
SCHEDULE 1
to
Financing Inquiry Referral Agreement,
dated as of October 25, 1996, between
Chase Manhattan Automotive Finance Corporation,
and Auto-By-Tel Acceptance Corporation
and Auto-By-Tel, Inc., as guarantor (the "Agreement")
NOTICES
Capitalized terms used in this Schedule
and not defined herein shall have the meanings
ascribed thereto in the Agreement.
If to CAF:
Chase Manhattan Automotive Finance Corporation
900 Stewart Avenue
Garden City, New York 11530
Attention: Anthony Langan,
Marketing Executive,
or his successor
If to ABTAC: AUTO-BY-TEL ACCEPTANCE CORPORATION
18722 MacArthur Blvd.
Irvine, CA 92612
Attention: Peter Ellis,
President,
or his successor
If to ABT: AUTO-BY-TEL, INC.
18722 MacArthur Blvd.
Irvine, CA 92612
Attention: Peter Ellis,
President,
or his successor
Schedule 1 - Page 1 of 1
<PAGE> 15
SCHEDULE 2
to
Financing Inquiry Referral Agreement,
dated as of October 25, 1996, between
Chase Manhattan Automotive Finance Corporation,
and Auto-By-Tel Acceptance Corporation
and Auto-By-Tel, Inc., as guarantor (the "Agreement")
REPRESENTATIONS AND WARRANTIES
Capitalized terms used in this Schedule
and not defined herein shall have the meanings
ascribed thereto in the Agreement.
(A) Representations and Warranties of ABTAC.
ABTAC hereby makes the following representations and warranties to CAF:
(1) ABTAC has been duly organized and is validly existing as a
corporation under the laws of the state of Delaware and is duly licensed where
required as a "Licensee" or is otherwise qualified in each state in which it
transacts business and is not in default of such state's applicable laws, rules
and regulations, except where the failure to so qualify or such default would
not have a material adverse effect on its ability to conduct its business or to
perform its obligations under the Agreement.
(2) ABTAC has the requisite power and authority and legal right to
execute and deliver the Agreement, engage in the transactions contemplated by
the Agreement, and perform and observe those terms and conditions of the
Agreement to be performed or observed by it hereunder. The person signing the
Agreement, and any document executed pursuant to it, on behalf of ABTAC has full
power and authority to bind ABTAC. The execution, delivery and performance of
the Agreement, and the performance by ABTAC of all transactions contemplated
therein, have been duly authorized by all necessary and appropriate corporate
action on the part of ABTAC.
(3) The Agreement has been duly authorized and executed by ABTAC and is
valid, binding and enforceable against ABTAC in accordance with its terms,
except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws (whether statutory, regulatory
or decisional) now or hereafter in effect relating to creditors' rights
generally, and the execution, delivery and
Schedule 2 - Page 1 of 3
<PAGE> 16
performance by ABTAC of the Agreement do not conflict with any term or provision
of (i) its certificate of incorporation or bylaws, (ii) any law, rule,
regulation, order, judgment, writ, injunction or decree applicable to ABTAC of
any court, regulatory body, administrative agency or governmental body having
jurisdiction over ABTAC or (iii) any agreement to which ABTAC is a party or by
which its property is bound.
(4) No consent, approval, authorization or order of, registration or
filing with, or notice to any governmental authority or court is required under
applicable law in connection with the execution, delivery and performance by
ABTAC of the Agreement.
(5) There is no action, proceeding or investigation pending or, to the
best knowledge of ABTAC, threatened against it before any court, administrative
agency or other tribunal (i) asserting the invalidity of the Agreement, (ii)
seeking to prevent the consummation of any of the transactions contemplated by
the Agreement, or (iii) which could reasonably be expected to materially and
adversely affect its performance of its respective obligations under, or the
validity or enforceability of, the Agreement.
(6) ABTAC has all regulatory approvals, authorizations, licenses,
permits and other permissions, consents and authorities whatsoever, needed to
operate the ABT Website and perform ABTAC's obligations under the Agreement.
(7) ABTAC warrants that it has the legal and valid right to use any
registered or unregistered trademark, tradename, service mark, logo, emblem or
other proprietary designation, or any variations, derivatives and modifications
thereof, used by it in the materials provided to CAF or used by ABTAC in
connection with the Agreement (the "ABTAC Marks").
(B) Representations and Warranties of CAF. CAF hereby makes the following
representations and warranties to ABTAC:
(1) CAF is duly licensed where and as required in each state in which it
transacts business and is not in default of such state's applicable laws, rules
and regulations, except where such default would not have a material adverse
effect on the ability of CAF to conduct its business or to perform its
obligations under the Agreement.
(2) CAF has the requisite power and authority and legal right to execute
and deliver, engage in the transactions contemplated by, and perform and observe
the terms and conditions of, the Agreement. The person or persons signatory to
the Agreement and any document executed pursuant to it on behalf of CAF have
full power and authority to bind CAF. The execution, delivery and performance of
the Agreement, and the performance by CAF of all transactions contemplated
therein, have
Schedule 2 - Page 2 of 3
<PAGE> 17
been duly authorized by all necessary and appropriate and corporate action on
the part of CAF.
(3) The Agreement has been duly authorized and executed by CAF and is
valid, binding and enforceable against CAF in accordance with its terms, except
that such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws (whether statutory, regulatory or decisional)
now or hereafter in effect relating to creditors' rights generally, and the
execution, delivery and performance by CAF of the Agreement do not conflict with
any term or provision of the certificate of incorporation or bylaws of CAF, or
any law, rule, regulation, order, judgment, writ, injunction or decree
applicable to CAF of any court, regulatory body, administrative agency or
governmental body having jurisdiction over CAF.
(4) No consent, approval, authorization or order of, registration or
filing with, or notice to any governmental authority or court is required under
applicable law in connection with the execution, delivery and performance by CAF
of the Agreement.
(5) There is no action, proceeding or investigation pending or, to the
best knowledge of CAF, threatened against it before any court, administrative
agency or other tribunal (i) asserting the invalidity of the Agreement, (ii)
seeking to prevent the consummation of any of the transactions contemplated by
the Agreement, or (iii) which could reasonably be expected to materially and
adversely affect the performance by CAF of its obligations under, or the
validity or enforceability of, the Agreement.
(6) CAF warrants that it has all regulatory approvals, authorizations,
licenses, permits and other permissions, consents and authorities whatsoever, as
needed (i) to offer and enter into the financing arrangements with Customers
contemplated by the Agreement in each jurisdiction in the Territory and to
otherwise perform its obligations under the Agreement, and (ii) to use any
materials developed, provided or used by CAF in connection with the Agreement.
(7) CAF warrants that it has the legal and valid right to use any
registered or unregistered trademark, tradename, service mark, logo, emblem or
other proprietary designation, or any variations, derivatives and modifications
thereof, used by it in any materials provided to ABTAC or used by CAF in
connection with the Agreement.
Schedule 2 - Page 3 of 3
<PAGE> 18
SCHEDULE 3
to
Financing Inquiry Referral Agreement,
dated as of October 25, 1996, between
Chase Manhattan Automotive Finance Corporation,
and Auto-By-Tel Acceptance Corporation
and Auto-By-Tel, Inc., as guarantor (the "Agreement")
PROVISIONS OF GENERAL APPLICABILITY
Capitalized terms used in this Schedule
and not defined herein shall have the meanings
ascribed thereto in the Agreement.
(a) Entire Agreement. Except as specified in paragraph (b) of this
Schedule 3, the Agreement and the exhibits and schedules thereto constitute the
entire agreement of the parties, and may be amended from time to time only upon
the execution of a written amendment by the parties. The indemnities of Section
8 of the Agreement shall survive the termination thereof.
(b) Confidentiality. Both ABTAC and CAF have made and will continue
throughout the term of the Agreement to make available to the other party
confidential and proprietary materials and information ("Proprietary
Information"). Prospectively, each party shall advise the other of material and
information that is confidential and/or proprietary. Proprietary Information
does not include materials or information that: (a) are already, or otherwise
become, generally known by third parties as a result of no act or omission of
the receiving party; (b) subsequent to disclosure hereunder are lawfully
received from a third party having the right to disseminate the information and
without restriction on disclosure; (c) are generally furnished to others by the
disclosing party without restriction on disclosure; (d) were already known by
the receiving party prior to receiving them from the disclosing party and were
not received from a third party in breach of that third party's obligations or
confidentiality; or (e) are independently developed by the receiving party
without use of confidential information of the disclosing party.
(i) Each party shall maintain the confidentiality of the other's
Proprietary Information and will not disclose such Proprietary Information
without the written consent of the other party unless required to by law, rule,
regulation or court
Schedule 3 - Page 1 of 3
<PAGE> 19
order of any applicable jurisdiction. Each party shall also keep confidential
the terms of the Agreement and/or schedule hereto. The confidentiality
provisions of the Agreement shall survive the termination of the Agreement.
Notwithstanding any contrary provision of the Agreement, the confidentiality
provisions of the two confidentiality agreements executed by the parties hereto
prior to the date of the Agreement shall remain in full force and effect.
(ii) Notwithstanding any contrary provision of the Agreement, as
long as each party protects Proprietary Information of the other, neither the
exposure to the other party's confidential information nor its ownership of work
products shall prevent either party from using ideas, concepts, expressions,
know-how, skills and experience possessed by either party prior to its
association with the other party or developed by either party during its
association with the other party.
(c) Limitation of Liability. In no event shall either party be liable to
the other party for any incidental, special, exemplary or consequential losses
or damages of any kind whatsoever (including but not limited to lost profits),
even if advised of the possibility of such losses or damages and regardless of
the form of action.
(d) Assignment. Either party shall have the right to transfer or assign
the Agreement to any direct or indirect wholly-owned subsidiary at no charge or
penalty; provided, however, that such assignee assumes assignors obligations,
and assignee remains liable hereunder.
(e) Waiver. Neither party shall be deemed to be in default of any
provision of the Agreement or be liable to the other party or to any third party
for any delay, error, failure in performance or interruption of performance
resulting directly or indirectly from causes beyond that party's reasonable
control. The period of performance shall be extended to such extent as may be
appropriate after the cause of the delay has been removed. If any excusable
delay or failure to perform by a party exceeds thirty (30) days, the other party
shall have the right to terminate the Agreement without liability.
(f) Severability. If any provision of the Agreement is declared or found
to be illegal, unenforceable or void, then both parties shall be relieved of all
obligations arising under such provision, but only to the extent that such
provision is illegal, unenforceable or void, it being the intent and agreement
of the parties that the Agreement shall be deemed amended by modifying such
provision to the extent necessary to make it legal and enforceable while
preserving its intent or, if that is not possible, by substituting therefore
another provision that is legal and enforceable and achieves the same objective.
Each party agrees that it will perform its obligations hereunder in accordance
with all applicable laws, rules and regulations now or hereafter in effect.
Schedule 3 - Page 2 of 3
<PAGE> 20
(g) Arbitration. The parties acknowledge that the Agreement evidences a
transaction involving interstate commerce. Any controversy or claim arising out
of or relating to the Agreement, or the breach of the same, shall be settled
through consultation and negotiation in good faith and a spirit of mutual
cooperation. However, if those attempts fail, the parties agree that any
misunderstandings or disputes arising from the Agreement shall be decided by
arbitration which shall be conducted, upon request by either party, in Orange
County, California, before three (3) arbitrators (unless both parties agree on
one (1) arbitrator) designated by the American Arbitration Association (the
"AAA"), in accordance with the terms of the Commercial Arbitration Rule of the
AAA, and, to the maximum extent applicable, the United States Arbitration Act
(Title 9 of the United States Code), or if such Act is not applicable, any
substantially equivalent state law. The parties further agree that the
arbitrator(s) (i) will decide which party must bear the expense, of the
arbitration proceedings; (ii) shall not have the authority to award punitive
damages; and (iii) shall apply the internal laws of the State of California.
Notwithstanding anything herein to the contrary, either party may proceed to a
court of competent jurisdiction to obtain injunctive relief at any time.
(h) Force Majeure. Neither party shall be deemed to be in default of any
provision of the Agreement or be liable to the other party or to any third party
for any delay, error, failure in performance or interruption of performance
resulting directly or indirectly from causes beyond that party's reasonable
control. The period of performance shall be extended to such extent as may be
appropriate after the cause of the delay has been removed.
(i) Media Releases. ABTAC and CAF may utilize media releases to
publicize their business relationship with the prior approval of the other party
which shall not be unreasonably withheld. ABTAC and CAF shall not use any trade
name, service mark or any other information which identifies the other in sales,
marketing, advertising and publicity materials placed in any medium without
obtaining the prior written approval of the other.
(j) Governing Law. The Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflicts
of law principles.
(k) No Agency: No Joint Venture. Neither of ABTAC nor CAF is the agent
or representative of the other. Nothing contained herein nor the acts of the
parties hereto shall be construed to create a partnership, agency or joint
venture between ABTAC and CAF.
(l) Counterparts. The Agreement may be signed in two or more
counterparts, each of which shall be deemed an original, and taken together they
shall be considered one agreement.
Schedule 3 - Page 3 of 3
<PAGE> 1
EXHIBIT 10.14
MARKETING AND APPLICATION PROCESSING AGREEMENT
This MARKETING AND APPLICATION PROCESSING AGREEMENT ("Agreement"), dated
as of February 1, 1997, between General Electric Capital Auto Financial
Services, Inc. ("GECAFS"), a Delaware corporation with its principal place of
business at 600 Hart Road, Barrington, Illinois, and Auto-By-Tel Acceptance
Corporation ("ABTAC") and Auto-By-Tel Corporation ("ABT") (as guarantor of the
obligations of ABTAC under this Agreement, in such capacity, the "Guarantor"),
each a Delaware corporation with its principal place of business at 18872
MacArthur Boulevard, Suite 200, Irvine, California 92612.
WITNESSETH:
WHEREAS, ABTAC is in the business of, among other things marketing
financial services to persons interested in arranging financing for the lease of
new and used motor vehicles ("Vehicles") who visit the ABT Internet website
("Customers") and GECAFS and its affiliates are in the business of purchasing
leases of Vehicles from authorized dealers in the business of leasing such
goods; and
WHEREAS, ABTAC desires to promote the services of GECAFS to certain such
Customers in exchange for a marketing fee, and GECAFS desires to purchase leases
and is willing to pay such fees, in connection with new lease accounts opened as
a result of ABTAC's marketing;
NOW, THEREFORE, in consideration of the foregoing premises, and for other
good and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, ABTAC and GECAFS agree as
follows:
SECTION 1. FINANCING PROGRAM
(A) ABTAC will cause to be included on the ABT Website, along with
specific identification of GECAFS as a participating lender in form and content
reasonably satisfactory to GECAFS, either an application in a form reasonably
satisfactory to GECAFS, substantially as set forth on Exhibit A hereto, or a
non-specific credit application soliciting information requested by GECAFS.
(Each such completed application is referred to herein as a "GECAFS Application"
and each Customer who completes a GECAFS Application is referred to herein as an
"Applicant.") GECAFS may, from time to time, request changes in the information
solicited by such application and ABTAC will use its best efforts to accommodate
such requests. GECAFS will be under no obligation hereunder with respect to any
GECAFS Application which does not solicit the information requested by GECAFS.
(B) GECAFS will offer to enter into a contract purchase agreement
("Closing Agreement") with each seller of Vehicles in the continental United
States (excluding Alaska and Hawaii) and the District of Columbia ("United
States") who has executed an on-line purchase request referral agreement with
ABT and who otherwise meets GECAFS's standards for such relationships
("Dealer(s)"). ABTAC will assist GECAFS in securing signed Closing Agreements
with Dealers and will provide GECAFS with the address of each Dealer to
facilitate this process. The Closing Agreement will contain customary terms no
less favorable to the Dealers than GECAFS's customary agreements in use with its
other leasing programs and will govern the terms upon which the Dealer and
GECAFS will close the Vehicle leasing transactions the subject of this Agreement
(Contracts"). ABTAC agrees, subject to its reasonable business judgment and
available resources, to promote its leasing programs to Dealers and to support,
assist and cooperate with GECAFS in the marketing of this program, and its
proper execution, to Dealers. Upon execution of a Closing Agreement, GECAFS will
assign such Dealer an identifying number (the "Dealer ID") and inform ABTAC of
such number. GECAFS will be responsible for informing Dealers of the nature of
its leasing programs. ABTAC will be responsible for informing Dealers of the
nature of its services and the differences, if any, between the programs
described by GECAFS and the ABTAC programs.
<PAGE> 2
(C) ABTAC will not be a party to, will have no obligations with respect
to and will be held harmless by GECAFS with respect to any act or omission by
GECAFS which gives rise to any losses or liabilities arising from or in
connection with the Closing Agreements. If for any reason the Closing Agreement
between a Dealer and GECAFS is terminated, then GECAFS will be under no
obligation to approve any application received from customers of such Dealer.
(D) GECAFS agrees to provide each Applicant lease rates and terms not
less favorable to Applicants than those offered by GECAFS to similar customers
in its customary lease programs unless ABTAC requests, and GECAFS agrees to
offer, less favorable terms. The standard money factor used to derive a monthly
payment for any Contract will be the rate factor announced by GECAFS from time
to time in its sole discretion as the minimum rate factor acceptable to GECAFS.
Upon ten business days' prior written notice, ABTAC may request that GECAFS
increase such rate factor, for such Contracts purchased by GECAFS and for such
period as ABTAC may specify, by an amount which will result in a remittance to
ABTAC, in accordance with Section 6 hereof, of a certain sum requested by ABTAC,
not to exceed $100 unless otherwise agreed, for each applicable Contract
purchased by GECAFS during such period.
(E) Each GECAFS Application received by ABTAC with respect to which
GECAFS is competitive will be forwarded to GECAFS for review until such time as
the volume targets set forth in Section 1(F) are achieved. As used herein,
"competitive" will mean cases in which the Applicant's monthly Contract payment
under the standard GECAFS program applicable to such Contracts would be not more
than $10 greater than the lowest monthly Contract payment otherwise available to
the Applicant, all other Contract terms being equal, from any other source of
financing with whom ABTAC is then doing business under the same or similar terms
as ABTAC's agreement with GECAFS. "Competitiveness" will be determined as
accurately as possible in good faith with reference to available data. GECAFS
and ABTAC each reserves the right to audit the process by which
"competitiveness" is determined. If GECAFS declines to proceed with the
transaction as described, GECAFS will return such GECAFS Application to ABTAC
for additional information or forwarding to another financing source, as the
case may be. If ABTAC requests, GECAFS will cooperate with ABTAC in developing a
screening methodology based upon GECAFS's underwriting criteria then in effect
which would enable ABTAC to forward to GECAFS only those GECAFS Applications
meeting an agreed-upon subset of credit criteria and to forward the remaining
applications to other financing sources. Such responsibilities are illustrated
by the Process Map attached hereto as Exhibit B, as may be modified from time to
time. GECAFS and ABTAC have agreed upon the responsibilities of each in
developing the tools necessary to implement this Process Map and this Agreement.
(F) The terms of this Agreement are based in part upon the expectation
by GECAFS of monthly Contract volume targets of 1000, 1250 and 1500,
respectively, during the first three years of this Agreement and upon the
expectation of ABTAC of providing such volume. The standard for
"competitiveness" set forth above and volume targets will be subject to review
after six months, and periodically thereafter, based upon the extent to which
those expectations are being realized.
SECTION 2. RECEIPT AND TRANSMISSION OF APPLICANT INFORMATION
(A) Subject to the provisions of Section 1, ABTAC will transmit each
completed GECAFS Application to GECAFS by telephone, telefax, e-mail, or other
electronic or agreed-upon means. Also subject to the provisions of Section 1,
ABTAC is under no obligation to screen or review any GECAFS Application before
transmission to GECAFS; provided, however, that ABTAC agrees not to transmit
incomplete Applications or Applicant information that ABTAC actually knows to be
false or misleading in any material respect.
2
<PAGE> 3
(B) ABTAC also agrees to subject Applicant information to the security
and confidentiality procedures consistent with its corporate policies in effect
from time to time. ABTAC will not use any such information in any manner which
violates applicable law in effect from time to time and will keep communications
from GECAFS to Applicants or Dealers confidential.
(C) GECAFS acknowledges and agrees that ABTAC has no liability, duty or
obligation with respect to the processing, underwriting, funding, or closing of
any lease. Except as set forth herein, ABTAC will have no responsibility for,
and makes no representation or warranty in connection with, the truth or
accuracy of the information provided by or on behalf of any Applicant or in the
GECAFS Application or regarding the eligibility of the Applicant for a lease.
(D) ABTAC will not make, and will use its best efforts to keep any of
its employees or agents from making, any oral or written statement to Applicants
or Dealers that would discourage, on a basis prohibited by law, an Applicant
from making or pursuing any transaction contemplated by this Agreement.
SECTION 3. UNDERWRITING
(A) Upon receipt, GECAFS will review each GECAFS Application in
accordance with its underwriting criteria and applicable law. GECAFS will
approve all GECAFS Applications meeting the underwriting criteria unless, in
accordance with its usual practice of applying GECAFS's underwriting policies,
the Applicant is otherwise not creditworthy. ABTAC acknowledges that GECAFS has
sole discretion in determining whether or not to approve a GECAFS Application,
which discretion GECAFS agrees to exercise in a manner consistent with its
customary underwriting procedures in effect from time to time.
(B) The goal of GECAFS will be to complete its review within four hours
after electronic receipt of a GECAFS Application but, absent unusual
circumstances, such review will be completed not later than the following
business day.
(C) GECAFS reserves the sole right and power to change the underwriting
criteria in accordance with GECAFS's normal business practices and subject to
applicable law, and further to suspend, restrict or modify the purchase of
leases in any portion of the United States for regulatory reasons. GECAFS will
provide ABTAC with advance written notice, given as early as practicable, of any
actions it plans to implement under this Section. Any such actions will be taken
in good faith.
SECTION 4. COMMUNICATION OF CREDIT DECISIONS
At the completion of underwriting as set forth in Section 3(B) of this
Agreement, GECAFS will notify ABTAC of GECAFS's credit decision. ABTAC will
notify the Dealer and the Applicant on behalf of GECAFS, in the case of
approval, and the Applicant in the case of disapproval. If GECAFS declines a
request for credit, GECAFS will send to the Applicant any and all notices
required, but only those required, pursuant to federal or applicable state law
or regulation including, but not limited to, those required under the federal
Equal Credit Opportunity Act and Federal Reserve Regulation B.
SECTION 5. CLOSING AND FUNDING
After the notification to the Dealer and Applicant, ABTAC will have no
responsibility under this Agreement to any of the Dealer (except as set forth in
Section l(B)), the Applicant or GECAFS. GECAFS will use its best efforts to
close all approved Contracts and will, absent unusual circumstances, remit the
proceeds of each Contract to the related Dealer within two business days
following compliance with all requirements for submission of Contracts under the
terms of the applicable Closing Agreement. Contracts submitted incorrectly with
respect to the parameters of the ABTAC program will not be accepted by GECAFS
but will be corrected by agreement with the Dealer or returned to the Dealer for
correction and resubmission provided, however, that GECAFS may afford
3
<PAGE> 4
the Dealer the benefit of any GECAFS program available to its dealers from time
to time the effect of which does not adversely affect the applicant's rate.
GECAFS will advise ABTAC of the existence and provisions of such programs. ABTAC
will assist GECAFS in encouraging Dealers to resubmit such corrected Contracts
to GECAFS for approval and not to other lenders.
SECTION 6. COMPENSATION
During the term of this Agreement, GECAFS will pay to ABTAC a marketing
fee of $100 for each Contract that is funded under the terms of this
Agreement. GECAFS will use its best efforts to effect such payment, and any
amount payable pursuant to Section 1.D. hereof, weekly for Contracts funded in
the prior period but in no event will compensation for any Contract be paid more
than 30 days after funding. ABTAC will be responsible for compensating the
associated Dealer in accordance with its on-line purchase referral agreement
with such Dealer.
SECTION 7. REPORTS
(A) On or before the 10th day of each month, GECAFS will transmit
electronically to ABTAC a report, sorted by Dealer ID and identifying the name
of each Applicant, outlining for the preceding month: (1) the number of GECAFS
Applications received from ABTAC, (2) the number of GECAFS Applications that
were approved and funded, (3) the number of GECAFS Applications pending at
month-end and (4) the number and aggregate outstanding balance of Contracts
funded during the effectiveness of this Agreement. GECAFS will include with such
report a report indicating any Dealers which executed a Closing Agreement and
any Closing Agreements which terminated during the preceding month.
(B) On the effective date of this Agreement, ABTAC will advise GECAFS in
writing of all sources of financing with whom ABTAC is doing business in the
same or similar fashion as GECAFS. On or before the 10th day of each month,
ABTAC will advise GECAFS in writing of any additions or deletions to such list.
In addition, on or before the 10th day of each month, ABTAC will transmit
electronically to GECAFS a report outlining for the preceding month: (1) total
"purchase requests," (2) total "hits" on the "lease screen," (3) total lease
applications submitted to ABTAC, and (4) total Applications. ABTAC will include
with such report a report indicating any Dealers which executed an on-line
purchase request referral agreement and any such agreements which terminated
during the preceding month.
(C) GECAFS and ABTAC will meet periodically, upon reasonable request, to
review all aspects of the program. GECAFS agrees to discuss with ABTAC, not less
than quarterly, at least the following aggregate portfolio performance
information for the ABTAC leases: (1) the number and aggregate outstanding
balance of Contracts funded during the effectiveness of this Agreement, (2)
Contracts in a current status, (3) Contracts more than 30 but less than 60 days
delinquent, (4) Contracts more than 60 but less than 90 days delinquent, (5)
Contracts more than 90 days delinquent, and (6) repossessions and repossession
ratio. ABTAC will keep such information strictly confidential and will hold
GECAFS harmless for any inaccuracy in such data. GECAFS will also discuss, in
accordance herewith, any other aggregate portfolio performance information for
the ABTAC leases which it makes available to any unaffiliated third party.
SECTION 8. STANDARDS FOR TRANSMITTING INFORMATION
GECAFS will either provide or make available to ABTAC its unique code
sets and edit procedures on a periodic basis as deemed necessary by GECAFS to
permit performance hereunder. ABTAC will transmit all Applications and other
information to GECAFS in the pre-defined format utilizing such GECAFS code sets
and in accordance with such parameters, all as set forth in Exhibit C attached
hereto and as may be amended from time to time.
4
<PAGE> 5
SECTION 9. GUARANTEE
Guarantor hereby unconditionally and irrevocably guarantees to GECAFS,
its successors, endorsees and assigns, the performance when due of all present
and future obligations and liabilities of all kinds of ABTAC arising out of or
in connection with the Agreement, whether due or to become due, secured or
unsecured, absolute or contingent, joint or several ("Obligations"). The
Guarantor agrees that GECAFS and ABTAC may mutually agree to modify the
Obligations or any agreement between GECAFS and ABTAC without in any way
impairing or affecting this Guarantee.
SECTION 10. REPRESENTATIONS AND WARRANTIES
(A) Representations and Warranties of ABTAC. ABTAC hereby makes the
following representations and warranties to GECAFS:
(1) ABTAC has been duly organized and is validly existing as a
corporation under the laws of the state of Delaware and is duly licensed where
required or is otherwise qualified in each state in which it transacts business
and is not in default of such state's applicable laws, rules and regulations,
except where the failure to so qualify or such default would not have a material
adverse effect on its ability to conduct its business or to perform its
obligations under the Agreement.
(2) ABTAC has the requisite power and authority and legal right
to execute and deliver the Agreement, engage in the transactions contemplated by
the Agreement, and perform and observe those terms and conditions of the
Agreement to be performed or observed by it hereunder. The person signing the
Agreement, and any document executed pursuant to it, on behalf of ABTAC has full
power and authority to bind ABTAC. The execution, delivery and performance of
the Agreement, and the performance by ABTAC of all transactions contemplated
therein, have been duly authorized by all necessary and appropriate corporate
action on the part of ABTAC.
(3) The Agreement has been duly authorized and executed by ABTAC
and is valid, binding and enforceable against ABTAC in accordance with its
terms, except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws (whether statutory, regulatory
or decisional) now or hereafter in effect relating to creditors' rights
generally, and the execution, delivery and performance by ABTAC of the Agreement
do not conflict with any term or provision of (a) its certificate of
incorporation or bylaws, (b) any law, rule, regulation, order, judgment, writ,
injunction or decree applicable to ABTAC of any court, regulatory body,
administrative agency or governmental body having jurisdiction over ABTAC or (3)
any agreement to which ABTAC is, a party or by which its property is bound.
(4) No consent, approval, authorization or order of, registration
or filing with, or notice to any governmental authority or court is required
under applicable law in connection with the execution, delivery and performance
by ABTAC of the Agreement.
(5) There is no action, proceeding or investigation pending or,
to the best knowledge of ABTAC, threatened against it before any court,
administrative agency or other tribunal (a) asserting the invalidity of the
Agreement, (b) seeking to prevent the consummation of any of the transactions
contemplated by the Agreement, or (3) which could reasonably be expected to
materially and adversely affect its performance of its respective obligations
under, or the validity or enforceability of, the Agreement.
(6) All regulatory approvals, authorizations, licenses, permits
and other permissions, consents and authorities whatsoever needed to operate the
ABT Website and perform this Agreement have been received.
5
<PAGE> 6
(7) ABTAC warrants that it has the legal and valid right to use
any registered or unregistered trademark, tradename, service mark, logo, emblem
or other proprietary designation, or any variations, derivatives and
modifications thereof, used by it in the materials provided to GECAFS or used by
ABTAC in connection with the Agreement.
(B) Representations and Warranties of GECAFS. GECAFS hereby makes the
following representations and warranties to ABTAC:
(1) GECAFS has been duly organized and is validly existing as a
corporation under the laws of the state of Delaware and is duly licensed where
required or is otherwise qualified in each state in which it transacts business
and is not in default of such state's applicable laws, rules and regulations,
except where the failure to so qualify or such default would not have a material
adverse effect on its ability to conduct its business or to perform its
obligations under the Agreement.
(2) GECAFS has the requisite power and authority and legal right
to execute and deliver, engage in the transactions contemplated by, and perform
and observe the terms and conditions of, the Agreement. The person or persons
signatory to the Agreement and any document executed pursuant to it on behalf of
GECAFS have full power and authority to bind GECAFS. The execution, delivery and
performance of the Agreement, and the performance by GECAFS of all transactions
contemplated therein, have been duly authorized by all necessary and appropriate
and corporate action on the part of GECAFS.
(3) The Agreement has been duly authorized and executed by GECAFS
and is valid, binding and enforceable against GECAFS in accordance with its
terms, except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws (whether statutory, regulatory
or decisional) now or hereafter in effect relating to creditors' rights
generally, and the execution, delivery and performance by GECAFS of the
Agreement do not conflict with any term or provision of (a) its certificate of
incorporation or bylaws, (b) any law, rule, regulation, order, judgment, writ,
injunction or decree applicable to GECAFS of any court, regulatory body,
administrative agency or governmental body having jurisdiction over GECAFS or
(3) any agreement to which GECAFS is a party or by which its properly is bound.
(4) No consent, approval, authorization or order of, registration
or filing with, or notice to any governmental authority or court is required
under applicable law in connection with the execution, delivery and performance
by GECAFS of the Agreement.
(5) There is no action, proceeding or investigation pending or,
to the best knowledge of GECAFS, threatened against it before any court,
administrative agency or other tribunal (a) asserting the invalidity of the
Agreement, (b) seeking to prevent the consummation of any of the transactions
contemplated by the Agreement, or (3) which could reasonably be expected to
materially and adversely affect the performance by GECAFS of its obligations
under, or the validity or enforceability of, the Agreement.
(6) GECAFS warrants that it has all regulatory approvals,
authorizations, licenses, permits and other permissions , consents and
authorities whatsoever, as needed (a) to offer and enter into the financing
arrangements with Customers contemplated by the Agreement in each jurisdiction
in the United States and to otherwise perform its obligations under the
Agreement, and (b) to use any materials developed, provided or used by GECAFS in
connection with the Agreement.
(7) GECAFS warrants that it has the legal and valid right to use
any registered or unregistered trademark, tradename, service mark, logo, emblem
or other proprietary designation, or any variations, derivatives and
modifications thereof, used by it in any materials provided to ABTAC or used by
GECAFS in connection with the Agreement.
6
<PAGE> 7
SECTION 11. INDEMNIFICATION
(A) ABTAC will defend, indemnify and hold harmless GECAFS and its
affiliates and all of its and their officers, directors, owners, agents,
attorneys, and employees, from and against any and all loss, liability, claims,
damage, cost or expense (including attorney's fees and costs) by third parties
arising out of any gross negligence or intentional misconduct of ABTAC in
connection with ABTAC's performance of its obligations under this Agreement or
relating to any breach or alleged breach of a third-party's proprietary rights
in connection with any intellectual property (except if provided by GECAFS),
used by ABTAC in performance of its obligations under this Agreement.
(B) GECAFS will defend, indemnify and hold harmless ABTAC and its
affiliates and all of its and their officers, directors, owners, agents,
attorneys, and employees, from and against any and all loss, liability, claims,
damage, cost or expense (including attorney's fees and costs) by third parties
arising out of any gross negligence or intentional misconduct of GECAFS in
connection with GECAFS's performance of its obligations under this Agreement or
relating to any claim regarding GECAFS's conduct with respect to any financing
transaction or proposed financing transaction (including Customer claims) in
connection with this Agreement and any breach or alleged breach of any law by
GECAFS relating to consumer financing (unless caused solely by ABTAC) in
connection with this Agreement and the transactions contemplated thereby.
(C) The indemnified party must give the indemnifying party prompt notice
of any claims covered by the indemnity of this Agreement. Each party will
promptly notify the others of any legal or regulatory proceeding or threat of
legal or regulatory proceeding with respect to any matters which are the subject
of this Agreement; provided, however, that the failure to notify will not afford
relief hereunder except to the extent that it results in prejudice.
SECTION 12. TERM AND TERMINATION
(A) This Agreement will remain in effect for a period of 3 years from
the date hereof unless terminated by either party upon 6 months' prior written
notice. This Agreement will also terminate if, required by governmental
authority or court of law, but only insofar as this Agreement applies to such
jurisdiction affected. In consideration of the significant investment made by
GECAFS in the implementation of this Agreement, a termination fee in the amount
of fifty thousand dollars ($50,000) will be due and payable from ABTAC to GECAFS
in the event that ABTAC terminates this Agreement prior to the first anniversary
hereof, except for cause as set forth below. Notwithstanding the foregoing, such
termination fee will be reduced by $2,000 for each full calendar month during
which the volume targets set forth in Section 1(F) are met and, provided
further, that no termination penalty will be incurred in the event that the
parties cannot agree in good faith upon the continued validity of the
"competitiveness" standard after six months as set forth in Section l(E).
(B) If any party will be in breach of any material obligation under this
Agreement and such breach will remain uncured for a period of 30 days after
written notice thereof from the other party (or, if such breach is curable and
requires more than 30 days to cure, if such cure is not commenced within 30 days
and thereafter diligently prosecuted), then the other party may, by written
notice sent, terminate this Agreement 30 days after delivery of such notice.
Non-payment of amounts due under this Agreement will be deemed to be a breach of
a material obligation hereunder, but institution of suit for payment of amounts
due under this Agreement will not be deemed to be an automatic termination
hereunder.
(C) At any party's option, and upon written notice of exercise of the
option, this Agreement will terminate upon the voluntary or involuntary
bankruptcy or insolvency of a party, the voluntary or involuntary dissolution or
liquidation of a party, the admission in writing by a party of its inability to
pay its debts as they mature, or the assignment by a party for the benefit of
creditors.
7
<PAGE> 8
SECTION 13. NOTICES
All notices or transmissions pursuant to this Agreement, unless
otherwise specified, will be by facsimile transmission, by personal delivery, or
by registered or certified mail, return receipt requested, to the addresses of
the parties set forth in the Preamble to this Agreement or such other address as
any party listed below will specify in writing to the others.
SECTION 14. PROVISIONS OF GENERAL APPLICABILITY
(A) Entire Agreement. The Agreement and the exhibits thereto constitute
the entire agreement of the parties, and may be amended from time to time only
upon the execution of a written amendment by the parties.
(B) Confidentiality. Both ABTAC and GECAFS have made and will continue
throughout the term of the Agreement to make available to the other party
confidential and proprietary materials and information ("Proprietary
Information"). Prospectively, each party will advise the other of material and
information that is confidential and/or proprietary. Proprietary Information
does not include material or information that: (1) are already, or otherwise
become, generally known by third parties as a result of no act or omission of
the receiving party; (2) subsequent to disclosure hereunder are lawfully
received from a third party having the right to disseminate the information and
without restriction on disclosure; (3) are generally furnished to others by the
disclosing party without restriction on disclosure; (4) were already known by
the receiving party prior to receiving them from the disclosing party and were
not received from a third party in breach of that third party's obligations or
confidentiality; or (5) ideas, concepts, expressions, know-how, skills and
experience possessed by either party prior to its association with the other
party or developed by either party during its association with the other party
without regard to Proprietary Information.
Each party will maintain the confidentiality of the other's Proprietary
Information and will not disclose such Proprietary Information without the
written consent of the other party unless legally required by law, rule,
regulation or court order of any applicable jurisdiction; in which case, each
party will, before disclosing the Information, (unless prior notice is
prohibited), promptly notify the other of the compelled disclosure. If a
protective order or other appropriate relief from compelled disclosure is not
obtained before disclosure is due, or if compliance with the provisions of this
section is waived, only that portion of the Information will be furnished which
counsel advises is legally required. Each party will also keep confidential the
terms of the Agreement. The confidentiality provisions of the Agreement will
survive the termination of the Agreement.
(C) Limitation of Liability. In no event will either party be liable to
the other party for any incidental, special, exemplary or consequential damages,
even if advised of the possibility of such damages.
(D) Appointment or Assignment. ABTAC and GECAFS will have the right to
appoint an affiliate to provide any services to be provided hereunder or to
assign the Agreement to any affiliate at no charge or penalty; provided,
however, that such appointee will agree to be governed by the provisions hereof
with respect to the provision of such services and such assignee assumes the
obligations of its assignor.
(E) Waiver. Neither party will be deemed to be in default of any
provision of the Agreement or be liable to the other party or to any third party
for any delay, error, failure in performance or interruption of performance
resulting directly or indirectly from causes beyond that party's reasonable
control. The period of performance will be extended to such extent as may be
appropriate after the cause of the delay has been removed. If any excusable
delay or failure to perform by a party exceeds 30 days, the other party will
have the right to terminate the Agreement without liability.
8
<PAGE> 9
(F) Severability. If any provision of the Agreement is declared or found
to be illegal, unenforceable or void, then both parties will be relieved of all
obligations arising under such provision, but only to the extent that such
provision is illegal, unenforceable or void; it being the intent and agreement
of the parties that the Agreement will be deemed amended by modifying such
provision to the extent necessary to make it legal and enforceable while
preserving its intent or, if that is not possible, by substituting therefore
another provision that is legal and enforceable and achieves the same objective.
Each party agrees that it will perform its obligations hereunder in accordance
with all applicable laws, rules and regulations now or hereafter in effect.
(G) Arbitration. Any controversy or claim arising out of or relating to
the Agreement, or the breach of the same, will be settled through consultation
and negotiation in good faith and a spirit of mutual cooperation. However, if
those attempts fail, the parties agree that any misunderstandings or disputes
arising from the Agreement will be decided by arbitration which will be
conducted, upon request by either party, in Orange County, California, before
three (3) arbitrators (unless both parties agree on one (1) arbitrator)
designated by the American Arbitration Association (the ("AAA"), in accordance
with the terms of the Commercial Arbitration Rules of the AAA, and, to the
maximum extent applicable, the United States Arbitration Act (Title 9 of the
United States Code), or if such Act is not applicable, any substantially
equivalent state law. The parties further agree that they will share the expense
of the arbitration proceedings equally. Notwithstanding anything herein to the
contrary, either party may proceed to a court of competent jurisdiction to
obtain injunctive relief at any time.
(H) Media Releases. ABTAC and GECAFS may utilize media releases to
publicize their business relationship only with the prior approval of the other
party which will not be unreasonably withheld. ABTAC and GECAFS will not use any
trade name, service mark or any other information which identifies the other in
sales, marketing and publicity materials without obtaining the prior written
approval of the other.
(I) Governing Law. The Agreement will be governed by and construed in
accordance with the laws of the State of California, without regard to conflicts
of law principles.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officer on the date first above written.
GENERAL ELECTRIC CAPITAL AUTO FINANCIAL SERVICES, INC.
By: [SIG]
------------------------------------
Its: Managing Dir. N.A.
-----------------------------------
AUTO-BY-TEL ACCEPTANCE CORPORATION
By: [SIG]
------------------------------------
Its: Chief Operating Officer
-----------------------------------
AUTO-BY-TEL CORPORATION, as Guarantor
By: [SIG]
------------------------------------
Its: Vice President/GC
-----------------------------------
9
<PAGE> 10
[GE LOGO] GE Capital EXHIBIT A
Consumer Application
- ------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INSTRUCTIONS: Please Use Black Ink To Complete Application. You may apply for credit individually or jointly. Please indicate
whether you are applying: [ ] Individually or [ ] Jointly
Please indicate whether the vehicle will be used primarily for: [ ] Personal or Family Purposes or
[ ] Business, Commercial or Agricultural Purposes
Boxes A and C below are to be completed by the Applicant.
If this is a joint application, the Joint Applicant should complete Box B. If this is not a joint application, Box B should be
completed with information about the Applicant's spouse if: (1) the Applicant is relying on the spouse's income as a repayment
source for the credit requested or (2) the Applicant resides in a community property state or is relying on property as a repayment
source which is located in a community property state (that is, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas,
Washington, or Wisconsin).
When completing Boxes A and B please note that alimony, child support, or separate maintenance income need not be revealed if you
do not wish it considered a repayment source.
If you reside in a community property state, please indicate whether you are:
Applicant [ ] Married [ ] Separated [ ] Unmarried (includes single, divorced, or widowed)
Joint Applicant [ ] Married [ ] Separated [ ] Unmarried (includes single, divorced, or widowed)
If you are married and reside in a community property state, unless otherwise indicated on this application it will be presumed
that all stated income and assets are community property, all stated debts and obligations are liabilities of the community
property, and this request for credit is made in the interest of your marriage or family.
</TABLE>
<TABLE>
<CAPTION>
VEHICLE INFORMATION
<S> <C> <C> <C> <C> <C> <C>
Type of Contract:
[ ] Retail Installment [ ] "Flexible Loan" [ ] Long Term Lease [ ] Lease Assumption # Dealership Name
- -----------------------------------------------------------------------------------------------------------------------------------
Dealer Phone Contact Yr. Make []New Model Mileage
[]Used
[]Demo
- -----------------------------------------------------------------------------------------------------------------------------------
LEASE INFORMATION Cap MSRP Term Mo. Payment
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL INSTALLMENT INFORMATION Amount Financed Invoice Dlr. Installed Options Credit Ins. MBP
$ $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------------------
Fax Other Charges Cash Down Payment $ Yr. Make Model Residual "Flexible Loan" Only Term Mo. Payment
$ $ Trade In $
- -----------------------------------------------------------------------------------------------------------------------------------
A. INFORMATION REGARDING APPLICANT:
- -----------------------------------------------------------------------------------------------------------------------------------
Full Name Date of Birth Social Security Number Ages of Dependents Home Phone
- - [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
Current Address Street City State County Zip Code How Long? # Yrs. in Community
Yrs. Mos.
- -----------------------------------------------------------------------------------------------------------------------------------
Previous Address (Min. 5 yr. history - use addt'l sheets if necessary) Zip Code How Long? Business Phone
Yrs. Mos. [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
Employer Name Business Address How Long? Occupation
Yrs. Mos.
- -----------------------------------------------------------------------------------------------------------------------------------
Self Employed Nature of Business Gross Monthly Income Source of Other Income Amount Total Gross Monthly
[ ]Yes [ ]No $ (Alimony, Child Support Maintenance Optional) $ Income $
- -----------------------------------------------------------------------------------------------------------------------------------
Previous Employer Name, City, State Phone How Long? Occupation
[ ] Yrs. Mos.
- -----------------------------------------------------------------------------------------------------------------------------------
Nearest Relative Not Living With You (Full Address) Phone Relationship
[ ]
- -----------------------------------------------------------------------------------------------------------------------------------
Personal Reference (Full Address) Phone
[ ]
- -----------------------------------------------------------------------------------------------------------------------------------
B. INFORMATION REGARDING JOINT APPLICANT, SPOUSE OR OTHER PERSONS:
- -----------------------------------------------------------------------------------------------------------------------------------
Full Name Relationship to the Applicant (if any) Date of Birth Social Security Number
- -----------------------------------------------------------------------------------------------------------------------------------
Current Address (if different than applicant) Street City State Zip Code How Long? Occupation
Yrs. Mos.
- -----------------------------------------------------------------------------------------------------------------------------------
Employer Name Business Address How Long? Business Phone
Yrs. Mos. [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
Self Employed Nature of Business Total Gross Monthly Source of Other Income Amount Total Gross Monthly
[ ]Yes [ ]No Income $ (Alimony, Child Support Maintenance Optional) $ Income $
- -----------------------------------------------------------------------------------------------------------------------------------
Previous Employer Name, City, State Phone How Long? Occupation
[ ] Yrs. Mos.
- -----------------------------------------------------------------------------------------------------------------------------------
C. FINANCIAL INFORMATION - ALL LOANS, LEASES AND OTHER OBLIGATIONS (INCLUDING ALIMONY, CHILD SUPPORT, MAINTENANCE)
- -----------------------------------------------------------------------------------------------------------------------------------
Residence Lienholder or Landlord Name Account No. Original Balance Balance Owing Mo. Payment
[ ]Buying or Own
[ ]Rent -----------------------------------------------------------------------------------------------------------------
[ ]With Parents Address $ $ $
- -----------------------------------------------------------------------------------------------------------------------------------
Name and Account No. Address $ $ $
- -----------------------------------------------------------------------------------------------------------------------------------
Name and Account No. Address $ $ $
- -----------------------------------------------------------------------------------------------------------------------------------
Previous Vehicle Was Name of Lessor or Financing Creditor Branch No. City, State Account No. Original Balance [ ]Open
[ ]Leased [ ]Purchased [ ]Paid
[ ]Trade
- -----------------------------------------------------------------------------------------------------------------------------------
Checking Name Branch Phone Account No. Balance
[ ] $
- -----------------------------------------------------------------------------------------------------------------------------------
Saving/ Name Branch Phone Account No. Balance
Money Mkt. [ ] $
- -----------------------------------------------------------------------------------------------------------------------------------
Have You Ever Obtained Credit [ ] Yes (List Name & Address) Have You Ever No
Under A Different Name? [ ] No Filed Bankruptcy Yes - Date_____________
- -----------------------------------------------------------------------------------------------------------------------------------
The following driver information is not required if application is being made for retail installment credit or "Flexible Loan"
credit.
- -----------------------------------------------------------------------------------------------------------------------------------
LIST ALL OPERATORS IN ORDER OF MOST FREQUENT USE:
- -----------------------------------------------------------------------------------------------------------------------------------
% of Vehicle Use Birth Date Operator's License Number State Years Licensed
Mo. Day Yr.
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Garaging Address Number & Street City State Zip Phone Number
If Other Than Residence [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 11
Exhibit A: Continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Description Length Type (Alpha/Num) Required
- --------------------------------------------------------------------------------
Applicants
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Primary First Name* 10 A Y
" Middle Initial* 1 A Y(space if n/a)
" Last Name* 15(*12) A Y
" Date of Birth* 6 N Y
" Social Security No.* 9 N Y
" # of Dependents 2 N Y
` Telephone Number 10 N Y
" Current Address* 19 A/N Y
" Current City* 12(*13) A Y
" Current State* 2 A Y
" Current Zip Code* 5 N Y
" Current Time at Addr.* 2 N Y
" Previous Address 19 A/N Y -e)
" Previous City 12 A Y -e)
" Previous State 2 A Y -e)
" Previous Zip Code 5 N Y -e)
" Previous Time at Addr. 2 N Y -e)
" Employer Name* 20 A/N Y(*N)
" Employment Time* 2 N Y(*N)
" Occupation Code 2 N Y
" Occupation Description* 20(*15) A Y(*N)
" Self-Employed Flag* 1 A Y -f)(*N)
" Employer Telephone # * 10 N Y
" Employer Address* 20 A/N Y
" Employer City* 13 A Y
" Employer State* 2 A Y
" Employer Zip Code* 5 N Y
" Gross Income* 6 N Y(*N)
" Gross Income Flag (A,M,W,B)* 1 A Y -g)
" Other Income* 6 N Y(0 if n/a)
" Other Income Flag* 1 A Y -g)
" Other Income Source* 13 A Y(spaces if n/a)
" Previous Employer* 20 A Y(spaces if n/a)
" Previous Employer Phone* 9 N Y(spaces if n/a)
" Previous Employer Time* 2 N Y(spaces if n/a)
" Prev. Employer Occupation* 15 A Y(spaces if n/a)
</TABLE>
- --------------------------------------------------------------------------------
* Denotes Same Specifications for Joint Applicant
<PAGE> 12
Exhibit A: Continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Description Length Type (Alpha/Num) Required
- --------------------------------------------------------------------------------
Collateral
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
New, Used, Demo (N/U/D) 1 A Y
Use (Personal, Business) 1 A Y
Product (Retail, Flex, Lease) 1 A Y
Received Date 6 N Y -a)
Received Time 4 N Y
Dealer Number 5 N Y
Dealer Name 20 A/N Y -b)
Dealer Telephone Number 10 N Y -b)
Dealer Contact 11 A Y
Vehicle Year 2 N Y
Vehicle Make 4 A Y
Joint Venture Flag (JV) 1 A Y -c)
Model Code 2 N Y
Cap Cost 6 N Y
Invoice (MSRP) 6 N Y
Down Payment 5 N Y
Trade-In Amount 6 N Y
Term 2 N Y
Monthly Lease Payment 4 N Y
Guar/CoSgn (G/C/N) 1 N Y -c)
For 20 A/N Y -d)
</TABLE>
- --------------------------------------------------------------------------------
(a- Cannot Be A Saturday or Sunday (subject to change????)
(b- Automatically Generated From Look-Up Table Based On GECAL Dealer Number
(c- Default to "N"
(d- Required If Guar/CoSgn Field Is "C" or "G"
<PAGE> 13
Exhibit A: Continued
<TABLE>
<CAPTION>
Description Length Type (Alpha/Num) Required
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Applicants continued
Joint - Relationship 7 A Y (spaces if n/a)
Residence (O, R, L, M) 1 A Y
Landlord/Lien holder 20 A/N Y (spaces if n/a)
Mortgage/Rent Amount 5 N Y
Previous Vehicle
(Lease, Purch., None) 1 A Y
Previous Vehicle Creditor 15 A Y (spaces if n/a)
Driver Info (Lines 1 and 2)
Driver (Primary, Joint, Other) 1 A Y
Percentage Use 3 N Y -h)
- --------------------------------------------------------------------------------
</TABLE>
(e- Required If Current Address Is 0 or 1 year.
(f- Default to "N"
(g- Required If Income Is Input
(h- Sum of Lines 1 and 2 Must Equal 100%
<PAGE> 14
Exhibit B
[FLOW CHART]
GECAL - AFS / ABT
Process Flow
As Of
01/28/97
<PAGE> 15
EXHIBIT C
to
Financing Inquiry Referral Agreement.
dated as of February 1, 1997, between
General Electric Capital Auto Financial Services, Inc.
and Auto-By-Tel Acceptance Corporation
and Auto-By-Tel, Inc., as Guarantor (the "Agreement")
INFORMATION STANDARDS
- - GECAL will either provide ABT or make available to ABT its unique code
sets on a periodic basis as deemed necessary, including
- Street rates
- Residuals
- Makes
- Models
- Dealer Information (i.e. ID, name, location)
- Occupation Codes
- others as required
- - ABT will send all transactions to GECAL in the predefined format
utilizing the GECAL code sets
- - Conditional data edits (i.e. if field A = 1, then field B must = 2) will
be incorporated into the online credit application by ABT. These edits
will be provided to ABT from GECAL as the detailed design tasks are
completed.
- - The ABT lease calculator will utilize GECAL rates and residuals, but
will also include a disclaimer to the consumer that the amounts shown
(i.e. monthly payment) are estimates only.
- - The Competitive Analysis query originated by ABT and sent to the GECAL
competitive matrix will be based off of GECAL makes, models and body
styles
The specifics of these requirements are subject to change as the detailed design
and implementation of the various system components are finalized. Both ABT and
GECAL agree in good faith to implement these and any other requirements as they
are encountered.
<PAGE> 1
EXHIBIT 10.15
[*] Confidential Treatment has been requested for certain portions of this
exhibit.
CONTENT LICENSE AND CHANNEL SPONSORSHIP TERM SHEET
This agreement ("Agreement") is entered into as of the ___ ("Effective Date"),
by and between Excite, Inc., a California corporation, located at 555 Broadway,
Redwood City, California 94063 ("Excite"), and Auto-By-Tel, a _________________
corporation, located at ____________________________________ ("Auto-By-Tel").
RECITALS
A. Excite maintains a site on the Internet at http://www.excite.com and owns
and/or manages related Web sites worldwide (collectively, the "Excite
Network") which, among other things, allow its users to search for and
access content and other sites on the Internet.
B. Within the Excite Network, Excite currently organizes certain content into
topical channels, including the Excite Automotive Channel.
C. Excite also maintains and/or manages certain Web pages which may be
delivered to users via email, desktop "channels" or Internet "push"
technologies (collectively, "Broadcast Pages") which may incorporate
content supplied to Excite by third parties for the purpose of providing
value to Excite users and providing access to the content, products and/or
services of such third parties.
D. Auto-By-Tel owns or has the right to distribute certain content relating to
online automobile buying and maintains a related site on the Internet at
http://www.autobytel.com (the "Auto-By-Tel Site") for which it wishes to
generate increased traffic.
E. Auto-By-Tel wishes to promote use of the Auto-By-Tel Site to Excite's users
by sponsoring the Excite Automotive Channel and purchasing banner
advertising on the Excite Network.
Therefore, the parties agree as follows:
1. SPONSORSHIP OF EXCITE AUTOMOTIVE CHANNEL
a) Auto-By-Tel will be the exclusive online automobile buying service
sponsor of the Excite Automotive Channel, located at
http://www.excite.com.
b) During the term of the Agreement, Excite will not display any banner
advertising or promotional placements for any of Auto-By-Tel's direct
competitors (listed in Exhibit C) in the Excite Automotive Channel.
Not more than once per quarter, Auto-By-Tel may update this list of
competitors.
1
<PAGE> 2
c) In the event that Excite intends to enter into an agreement with a
third party with respect to sponsorship of the Excite Automotive
Channel before the expiration of the term of the Agreement, Excite
will deliver to Auto-By-Tel a written notice describing the relevant
opportunity. Although Excite will not be required to disclose any
information in violation of any nondisclosure agreement between Excite
and any third party, the notice will include information sufficient to
permit Auto-By-Tel to evaluate the requirements for meeting the
competing offer for sponsorship of the Excite Automotive Channel and
to formulate a meaningful response. Auto-By-Tel will have ten (10)
days after receipt of such written notice to provide notice to Excite
that it is prepared to enter into an agreement with Excite on the same
terms and conditions as Excite proposes to accept from such third
party. Excite and Auto-By-Tel will then promptly commence good faith
negotiations to conclude the agreement. If Auto-By-Tel rejects said
offer or fails to notify Excite of its acceptance within the ten (10)
day period, Excite shall have the right to enter into the agreement
with such third party, provided the terms and conditions of the
agreement are not less favorable to Excite than previously offered by
Auto-By-Tel.
2. MARKETING AND PROMOTION
a) Excite will feature Auto-By-Tel in the Auto Buying Services department
of the Excite Automotive Channel for the term of the Agreement.
b) Excite will conduct three (3) two-week car give away promotions on the
Excite home page promoting Auto-By-Tel during the first year of the
Agreement, with one promotion coinciding with the launch of
Auto-By-Tel's sponsorship and the other two to be mutually scheduled.
Excite will conduct similar promotions in years two and three of the
Agreement. Auto-By-Tel will provide the cars to be given away through
these promotions.
c) Auto-By-Tel will purchase banner advertising on the Excite Network in
Year One of the Agreement in the amounts described in Exhibit A.
Auto-By-Tel will purchase banner advertising on the Excite Network in
Year Two and Year Three in amounts substantially comparable to the
amounts agreed upon in Exhibit B.
d) Excite will deliver a minimum of 150 impressions of Auto-By-Tel
promotional placements during the term of the Agreement, including the
placement in the Auto Buying Services department of the Excite
Automotive Channel, the car give-away promotions and the banner
advertisements described above, the display of Auto-By-Tel's content
described below and other promotional placements that may be
determined by the parties.
e) Neither party will make any public statement, press release or other
announcement relating to the terms of or existence of this Agreement
without
2
<PAGE> 3
[*] Confidential Treatment Requested
the prior written approval of the other. Notwithstanding the
foregoing, Auto-By-Tel hereby grants to Excite the right to issue an
initial press release, the timing and wording of which will be subject
to Auto-By-Tel's reasonable approval, regarding the relationship
between Excite and Auto-By-Tel.
3. CONTENT PROVIDED TO EXCITE
a) Auto-By-Tel will provide to Excite mutually agreed upon content
relating to online automobile buying such as AutoSite and The Bank
Rate Monitor (the "Content") which is described in Exhibit D. Excite
may display the Content in the Excite Automotive Channel and in other
locations in the Excite Network. Excite will determine the "look and
feel" of the Excite Automotive Channel and the Excite Network.
b) Auto-By-Tel will not provide the Content to any of Excite's
competitors during the term of the Agreement, including, but not
limited to, AltaVista, HotBot, Infoseek, Lycos, Search.com and Yahoo,
or any other Web site promoting itself as a provider of Internet
search and navigation services. Not more than once per quarter, Excite
may update this list of competitors.
c) Auto-By-Tel and Excite will determine mutually agreeable methods for
the transmission and incorporation of updates to the Content. Other
than updates to the Content or revisions as needed to reflect changes
to Auto-By-Tel's name and/or brand, Auto-By-Tel will not alter the
Content without Excite's prior consent.
d) Auto-By-Tel will ensure that the Content will at all times feature the
full array of content and functionality as made generally available by
Auto-By-Tel at the Auto-By-Tel Site, through any other means of
distribution of Auto-By-Tel's own branded service or through any other
third-party relationship.
e) Auto-By-Tel will have sole responsibility for providing, at its
expense, the Content to Excite.
f) Reasonable excerpts or portions of the Content may be incorporated
into "Broadcast Pages" delivered by Excite via email, desktop
"channels" or Internet "push" technologies. Excite will determine the
"look and feel" of the Broadcast Pages.
4. SPONSORSHIP AND ADVERTISING FEES AND REVENUE SHARING
a) A "set-up fee" of $550,000 will be due to Excite upon execution of the
Agreement as compensation for exclusivity, costs of initiating access
to the Excite Network, programming costs associated with the
incorporation of the Content into the Excite Network, set-up costs and
other expenses associated
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[*] Confidential Treatment Requested
with Excite's initiation of the links, placements, advertisements and
promotions contemplated by this Agreement.
b) Separate and apart from the set-up fee, sponsorship and advertising
fees will be due to Excite as follows:
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3
---------- ---------- ----------
<S> <C> <C> <C>
Sponsorship $ 650,000 $1,400,000 $1,600,000
Banners - US $ 800,000 $ 700,000 $ 700,000
Banners - WebTV/ $ 300,000 $ 300,000 $ 300,000
International
Total $1,750,000 $2,400,000 $2,600,000
</TABLE>
In the event that Excite is unable to deliver the agreed-upon amount
of banner advertising in the WebTV and/or International rotations,
Excite will provide the undelivered amounts in rotation on its primary
Web site.
c) Auto-By-Tel will pay Excite a bounty per unique purchase request
submitted by users referred to the Auto-By-Tel Site from the Excite
Network of [*] for the first 100,000 unique purchase requests in
each year of the Agreement, [*] for the second 100,000 unique
purchase requests in each year of the Agreement and [*] for each
unique purchase request in excess of 200,000 in each year of the
Agreement. For the purposes of the Agreement, a "unique purchase
request" is one purchase or lease request submitted by any particular
user in a sixty [60] day period, as measured by Auto-By-Tel.
d) If the number of unique purchase requests submitted by users referred
directly to the Auto-By-Tel Site from the Excite Network in any year
of the Agreement exceeds 180,000, the bounty increases to [*] for
the first 100,000 unique purchase requests in the following year of
the Agreement, [*] for the second 100,000 unique purchase requests
In the following year of the Agreement and [*] for each unique
purchase request in excess of 200,000 in the following year of the
Agreement.
e) The set-up, sponsorship and advertising fees are gross amounts and do
not reflect any agency commissions to be paid by Auto-By-Tel. The
bounty payment amounts are net of any agency commissions to be paid by
Auto-By-Tel.
f) Sponsorship and advertising fees will be paid in twelve equal monthly
installments commencing on the execution of the Agreement. Bounty
payments will be made quarterly. The parties will conduct annual
reviews to ensure accurate payments and accounting.
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<PAGE> 5
g) Auto-By-Tel will maintain accurate records with respect to the
calculation of all payments due under this Agreement. Excite may, upon
no less than thirty (30) days prior written notice to Auto-By-Tel,
cause an independent Certified Public Accountant to inspect the
records of Auto-By-Tel reasonably related to the calculation of such
payments during Auto-By-Tel's normal business hours. The fees charged
by such Certified Public Accountant in connection with the inspection
will be paid by Excite unless the payments made to Excite are
determined to have been less than ninety-five percent (95%) of the
payment owed to Excite, in which case Auto-By-Tel will be responsible
for the payment of the reasonable fees for such inspection.
5. CUSTOMER INFORMATION
a) Auto-By-Tel will retain all rights to customers acquired pursuant to
the Agreement.
b) Once per quarter, in connection with Auto-By-Tel's bounty payments,
Auto-By-Tel will provide Excite with all of the customer information
it acquires through the purchase requests submitted by users referred
directly to Auto-By-Tel's Web site from the Excite Network. This
customer information will be deemed to be the joint property of the
parties. Under no circumstances will Excite sell, provide or transfer
this customer information to any third party.
6. OPERATIONAL SUPPORT
a) Excite will provide, at its sole expense, Account Management support
of the Auto Buying Services department of the Excite Automotive
Channel sufficient to support for the level of sales and marketing
contemplated by the Agreement.
b) The parties will hold formal reviews on a monthly basis to maintain
anticipated results according to the sponsorship objectives.
Advertising and sponsorship placements will be adjusted monthly by
mutual agreement.
7. TERM AND TERMINATION
a) The Agreement will have an initial term three (3) years.
b) Auto-By-Tel will have the option to cancel the Agreement if, at the
end of the first year of the Agreement, users referred to the
Auto-By-Tel Site from the Excite Network do not submit 100,000 unique
purchase requests.
c) Either party may terminate this Agreement it the other party
materially breaches its obligations hereunder and such breach remains
uncured for thirty (30) days following the notice to the breaching
party of the breach, with the following exceptions:
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<PAGE> 6
(i) In the event of three or more errors, failures or outages of the
Content in any thirty (30) day period, Excite may elect to
immediately terminate this Agreement upon written notice to
Auto-By-Tel and enter into an other arrangements for the
acquisition of similar content; or
(ii) Auto-By-Tel will ensure that the Content will at all times be at
least comparable to any other source of similar topical content
available on the Internet in terms of the following factors,
taken as a whole: (i) breadth and depth of coverage, (ii)
timeliness of content updates and (iii) reputation and ranking
based on a cross-section of third party reviewers in terms of
features, functionality, quality and other qualitative factors.
In the event that Auto-By-Tel fails to meet these quality
criteria, Excite may terminate this agreement on thirty (30) days
written notice and enter into an other arrangements for the
acquisition of similar content.
d) All payments that have accrued prior to the termination or expiration
of this Agreement will be payable in full within thirty (30) days
thereof.
e) The provisions of Section 10 (Confidentiality), Section 11 (Warranty
and Indemnity), Section 12 (Limitation of Liability) and Section 13
(Dispute Resolution) will survive any termination or expiration of
this Agreement.
8. CONTENT OWNERSHIP AND LICENSE
a) Auto-By-Tel will retain all right, title and interest in and to the
Content worldwide (including, but not limited to, ownership of all
copyrights and other intellectual property rights therein). Subject to
the terms and conditions of this Agreement, Auto-By-Tel hereby grants
to Excite a royalty-free, nonexclusive, worldwide license to use,
reproduce, distribute, transmit and publicly display the Content in
accordance with this Agreement and to sublicense the Content to
Excite's wholly-owned subsidiaries or to joint ventures in which
Excite participates for the sole purpose of using, reproducing,
distributing, transmitting and publicly displaying the Content in
accordance with this Agreement.
b) Excite will retain all right, title, and interest in and to the Excite
Network and the Broadcast Pages worldwide (including, but not limited
to, ownership of all copyrights, look and feel and other intellectual
property rights therein).
9. TRADEMARK OWNERSHIP AND LICENSE
a) Auto-By-Tel will retain all right, title and interest in and to its
trademarks, service marks and trade names worldwide, subject to the
limited license granted to Excite hereunder.
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b) Excite will retain all right, title and interest in and to its
trademarks, service marks and trade names worldwide, subject to the
limited license granted to Auto-By-Tel hereunder.
c) Each party hereby grants to the other a non-exclusive, limited license
to use its trademarks, service marks or trade names only as
specifically described in this Agreement. All such use shall be in
accordance with each party's reasonable policies regarding advertising
and trademark usage as established from time to time.
d) Upon the expiration or termination of this Agreement, each party will
cease using the trademarks, service marks and/or trade names of the
other except:
i) As the parties may agree in writing; or
ii) To the extent permitted by applicable law.
10. CONFIDENTIALITY
a) For the purposes of this Agreement, "Confidential Information" means
information about the disclosing party's (or its suppliers') business
or activities that is proprietary and confidential, which shall
include all business, financial, technical and other information of a
party marked or designated by such party as "confidential" or
"proprietary"; or information which, by the nature of the
circumstances surrounding the disclosure, ought in good faith to be
treated as confidential.
b) Confidential Information will not include information that (i) is in
or enters the public domain without breach of this Agreement, (ii) the
receiving party lawfully receives from a third party without
restriction on disclosure and without breach of a nondisclosure
obligation or (iii) the receiving party knew prior to receiving such
information from the disclosing party or develops independently.
c) Each party agrees (i) that it will not disclose to any third party or
use any Confidential Information disclosed to it by the other except
as expressly permitted in this Agreement and (ii) that it will take
all reasonable measures to maintain the confidentiality of all
Confidential Information of the other party in its possession or
control, which will in no event be less than the measures it uses to
maintain the confidentiality of its own information of similar
importance.
d) Notwithstanding the foregoing, each party may disclose Confidential
Information (i) to the extent required by a court of competent
jurisdiction or other governmental authority or otherwise as required
by law or (ii) on a
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"need-to-know" basis under an obligation of confidentiality to its
legal counsel, accountants, banks and other financing sources and
their advisors.
e) The information contained in the Usage Reports provided by each party
hereunder will be deemed to be the Confidential Information of the
disclosing party.
f) The terms and conditions of this Agreement will be deemed to be the
Confidential Information of each party and will not be disclosed
without the written consent of the other party.
11. WARRANTY AND INDEMNITY
a) Auto-By-Tel warrants that it owns, or has obtained the right to
distribute and make available as specified in this Agreement, any and
all content provided to Excite or made available to third parties in
connection with this Agreement.
b) Auto-By-Tel warrants that the Content will comply with the description
and technical specifications contained in Exhibit D.
c) Auto-By-Tel will indemnify, defend and hold harmless Excite, its
affiliates, officers, directors, employees, consultants and agents
from any and all third party claims, liability, damages and/or costs
(including, but not limited to, attorneys fees) arising from:
i) The breach of any warranty, representation or covenant in this
Agreement;
ii) Any claim that the Content infringes or violates any third
party's copyright, patent, trade secret, trademark, right of
publicity or right of privacy or contains any defamatory content;
or
iii) Any claim arising from content displayed on the Auto-By-Tel Site.
Excite will promptly notify Auto-By-Tel of any and all such claims and
will reasonably cooperate with Auto-By-Tel with the defense and/or
settlement thereof; provided that, it any settlement requires an
affirmative obligation of, results in any ongoing liability to or
prejudices or detrimentally impacts Excite in any way and such
obligation, liability, prejudice or impact, can reasonably be expected
to be material, then such settlement shall require Excite's written
consent (not to be unreasonably withheld or delayed) and Excite may
have its own counsel in attendance at all proceedings and substantive
negotiations relating to such claim,
d) EXCEPT AS SPECIFIED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
WARRANTY IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT AND
HEREBY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES, INCLUDING ALL IMPLIED
WARRANTIES OF
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<PAGE> 9
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE REGARDING SUCH
SUBJECT MATTER.
12. LIMITATION OF LIABILITY
EXCEPT UNDER SECTION 11(c), IN NO EVENT WILL EITHER PARTY BE LIABLE TO
THE OTHER FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER
BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE,
WHETHER OR NOT THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGE. THE LIABILITY OF EXCITE FOR DAMAGES OR ALLEGED DAMAGES HEREUNDER,
WHETHER IN CONTRACT, TORT OR ANY OTHER LEGAL THEORY, IS LIMITED TO, AND
WILL NOT EXCEED, THE AMOUNTS ACTUALLY PAID BY AUTO-BY-TEL TO EXCITE
HEREUNDER.
13. DISPUTE RESOLUTION
a) The parties agree that any breach of either of the parties'
obligations regarding trademarks, service marks or trade names and/or
confidentiality would result in irreparable injury for which there is
no adequate remedy at law. Therefore, in the event of any breach or
threatened breach of a party's obligations regarding trademarks,
service marks or trade names or confidentiality, the aggrieved party
will be entitled to seek equitable relief in addition to its other
available legal remedies in a court of competent jurisdiction. For the
purposes of this section only, the parties consent to venue in either
the state courts of the county in which Excite has its principal place
of business or the United States District Court for the Northern
District of California.
b) In the event of disputes between the parties arising from or
concerning in any manner the subject matter of this Agreement, other
than disputes arising from or concerning trademarks, service marks or
trade names and/or confidentiality, the parties will first attempt to
resolve the dispute(s) through good faith negotiation. In the event
that the dispute(s) cannot be resolved through good faith negotiation,
the parties will refer the dispute(s) to a mutually acceptable
mediator for hearing in the county in which Excite has its principal
place of business.
c) In the event that disputes between the parties arising from or
concerning in any manner the subject matter of this Agreement, other
than disputes arising from or concerning trademarks, service marks or
trade names and/or confidentiality, cannot be resolved through good
faith negotiation and mediation, the parties will refer the dispute(s)
to the American Arbitration Association for resolution through binding
arbitration by a single arbitrator pursuant to the American
Arbitration Association's rules applicable to
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<PAGE> 10
commercial disputes. The arbitration will be held in the county in
which Excite has its principal place of business.
14. GENERAL
a) Assignment. Neither party may assign this Agreement, in whole or in
part, without the other party's written consent (which will not be
unreasonably withheld), except that no such consent will be required
in connection with a merger, reorganization or sale of all, or
substantially all, of such party's assets. Any attempt to assign this
Agreement other than as permitted above will be null and void.
b) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of California, notwithstanding
the actual state or country of residence or incorporation of
Auto-By-Tel.
c) Notice. Any notice under this Agreement will be in writing and
delivered by personal delivery, express courier, confirmed facsimile,
confirmed email or certified or registered mail, return receipt
requested, and will be deemed given upon personal delivery, one (1)
day after deposit with express courier, upon confirmation of receipt
of facsimile or email or five (5) days after deposit in the mail.
Notices will be sent to a party at its address set forth below or such
other address as that party may specify in writing pursuant to this
Section.
d) No Agency. The parties are independent contractors and will have no
power or authority to assume or create any obligation or
responsibility on behalf of each other. This Agreement will not be
construed to create or imply any partnership, agency or joint venture.
e) Force Majeure. Any delay in or failure of performance by either party
under this Agreement will not be considered a breach of this Agreement
and will be excused to the extent caused by any occurrence beyond the
reasonable control of such party including, but not limited to, acts
of God, power outages and governmental restrictions.
f) Severability. In the event that any of the provisions of this
Agreement are held by to be unenforceable by a court or arbitrator,
the remaining portions of the Agreement will remain in full force and
effect.
g) Entire Agreement. This Agreement is the complete and exclusive
agreement between the parties with respect to the subject matter
hereof, superseding any prior agreements and communications (both
written and oral) regarding such subject matter. This Agreement may
only be modified, or any rights under it waived, by a written document
executed by both parties.
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Auto-By-Tel Excite, Inc.
By: /s/ Mark W. Lorimer By: /s/ Robert C. Hood
-------------------------------- ------------------------------
Name: Mark W. Lorimer Name: Robert C. Hood
------------------------------ ----------------------------
Title: EVP & COO Title: EVP & CFO
------------------------------ ----------------------------
Date: ______________________________ Date: ____________________________
[ADDRESS] 555 Broadway
Redwood City, California 94063
415.568.6000 (voice)
415.568.6030 (fax)
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<PAGE> 12
EXHIBIT C
AUTO-BY-TEL LIST OF COMPETITORS
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<PAGE> 13
EXHIBIT D
CONTENT DESCRIPTION AND TECHNICAL SPECIFICATIONS
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<PAGE> 14
CONTENT LICENSE AND CHANNEL SPONSORSHIP TERM SHEET
This term sheet describes the basic points regarding a proposed transaction
between Excite, Inc. ("Excite") and Auto-By-Tel. The parties will enter into a
definitive agreement ("Agreement") incorporating the terms and conditions
contained in this term sheet as soon as reasonably possible. Until the execution
of the Agreement, the parties will be bound by the terms and conditions
contained in this term sheet.
1. SPONSORSHIP OF EXCITE AUTOMOTIVE CHANNEL
a) Auto-By-Tel will be the exclusive online automobile buying service
sponsor of the Excite Automotive Channel, located at
http://www.excite.com. If, based upon customer feedback, Excite
reasonably establishes that the user traffic level on this channel is
not being optimized due to a lack of diversity in the user experience,
the parties will work together in good faith to test enhancements for
the user experience and to generate optimum traffic.
b) During the term of the Agreement, Excite will not display any banner
advertising or promotional placements for any of Auto-By-Tel's direct
competitors in the Excite Automotive Channel.
c) Auto-By-Tel will have a right of first refusal to renew its
sponsorship of the Excite Automotive Channel upon the expiration of
the Agreement.
2. MARKETING AND PROMOTION
a) Excite will feature Auto-By-Tel in the Auto Buying Services department
of the Excite Automotive Channel for the term of the Agreement.
b) Excite will conduct three (3) two-week car give away promotions on the
Excite home page promoting Auto-By-Tel during the first year of the
Agreement, with one promotion coinciding with the launch of
Auto-By-Tel's sponsorship and the other two to be mutually scheduled.
Excite will conduct similar promotions three (3) times per year in
years two and three of the Agreement. Auto-By-Tel will provide the
cars to be given away through these promotions.
c) Auto-By-Tel will purchase banner advertising on the Excite Network in
the amounts described below,
d) Excite will deliver an annual minimum of 150 million impressions of
Auto-By-Tel promotional placements during the term of the Agreement,
including the placement in the Auto Buying Services department of the
Excite Automotive Channel, the car give-away promotions and the banner
advertisements described above, the display of Auto-By-Tel's Content
(described below) and
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other promotional placements that may be agreed upon by the parties.
Attached Exhibits A and B are examples of a Year One Promotional Plan
and a Three Year Promotional Plan, respectively.
e) The parties will issue an initial, mutually agreed upon press release.
3. CONTENT PROVIDED TO EXCITE
a) Auto-By-Tel will provide to Excite mutually agreed upon content
relating to online automobile buying such as AutoSite and The Bank
Rate Monitor (the "Content"). Excite may display the Content in the
Excite Automotive Channel and in other locations in the Excite
Network. Excite will determine the "look and feel" of the Excite
Automotive Channel and the Excite Network.
b) Auto-By-Tel and Excite will determine mutually agreeable methods for
the transmission and incorporation of updates to the Content.
c) Reasonable excerpts or portions of the Content may be incorporated
into "Broadcast Pages" delivered by Excite via email, desktop
"channels" or Internet "Push" technologies. Excite will determine the
"look and feel" of the Broadcast Pages.
4. SPONSORSHIP AND ADVERTISING FEES AND REVENUE SHARING
a) A set-up fee of $550,000 will be due to Excite upon execution of the
Agreement as compensation for exclusivity, costs of initiating access
to the Excite Network, programming costs associated with the
incorporation of the Content into the Excite Network, set-up costs and
other expenses associated with Excite's initiation of the links,
placements, advertisements and promotions contemplated by this
Agreement.
b) Sponsorship and advertising fees will be due to Excite as follows:
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3
---------- ---------- ----------
<S> <C> <C> <C>
Sponsorship $ 650,000 $1,400,000 $1,600,000
Banners - US $ 800,000 $ 700,000 $ 700,000
Banners - WebTV/ $ 300,000 $ 300,000 $ 300,000
International
Total $1,750,000 $2,400,000 $2,600,000
</TABLE>
In the event that Excite is unable to deliver the agreed-upon amount
of banner advertising in the WebTV and/or international rotations,
Excite will provide the undelivered amounts in rotation on its primary
Web site.
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[*] Confidential Treatment Requested
c) Auto-By-Tel will pay Excite a bounty per unique auto purchase request
(the "Bounty") submitted by users referred to Auto-By-Tel's Web site
from the Excite Network. The Bounty will be payments of [*] for the
first 100,000 unique auto purchase requests in each year of the
Agreement, [*] for the second 100,000 unique auto purchase requests
in each year of the Agreement and [*] for each unique auto purchase
request in excess of 200,000 in each year of the Agreement. For the
purposes of the Agreement, a "unique auto purchase request" is
one new-automobile purchase or lease request submitted by any
particular user in a sixty (60) day period, as measured by
Auto-By-Tel.
d) If the number of unique auto purchase requests submitted by users
referred to Auto-By-Tel's Web site from the Excite Network in any year
of the Agreement exceeds 180,000, the Bounty increases to [*] for
the first 100,000 unique auto purchase requests In the subsequent
year(s) of the Agreement, [*] for the second 100,000 unique auto
purchase requests in the subsequent year(s) of the Agreement and
[*] for each unique auto purchase request in excess of 200,000 in
the subsequent year(s) of the Agreement.
e) The set-up, sponsorship and advertising fees are gross amounts and do
not reflect any agency commissions to be paid by Auto-By-Tel. The
Bounty payment amounts are net of any agency commissions to be paid by
Auto-By-Tel.
f) Sponsorship and advertising fees will be paid in twelve equal monthly
installments commencing on the execution of the Agreement. Bounty
payments will be made quarterly. The parties will conduct annual
reviews to ensure accurate payments and accounting.
5. CUSTOMER INFORMATION
a) Auto-By-Tel will retain all rights to customers acquired pursuant to
the Agreement.
b) Once per quarter, in connection with Auto-By-Tel's Bounty payments,
Auto-By-Tel will provide Excite with all of the customer information
it acquires through the purchase requests submitted by users referred
directly to Auto-By-Tel's Web site from the Excite Network. This
customer information will be deemed to be the joint property of the
parties. Under no circumstances will Excite sell, provide or transfer
this customer information to any third party.
6. OPERATIONAL SUPPORT
a) Excite will provide. at its sole expense, Account Management support
of the Auto Buying Services department of the Excite Automotive
Channel sufficient
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to support for the level of sales and marketing contemplated by the
Agreement.
b) The parties will hold formal reviews on a monthly basis to maintain
anticipated results according to the sponsorship objectives.
Advertising and sponsorship placements will be adjusted monthly by
mutual agreement,
7. TERM AND TERMINATION
a) The Agreement will have an initial term three (3) years.
b) Auto-By-Tel will have the option to cancel the Agreement it, at the
end of the first year under the term of the Agreement, users referred
to Auto-By-Tel's Web site from the Excite Network do not submit
100,000 unique AUTO purchase requests.
c) Excite will have the option to cancel the Agreement if. at the end of
the second year under the term of the Agreement, Excite has not
received an aggregate of $1.4 million in Bounty.
d) Either party may terminate if the other party breaches the Agreement
and the breach remains uncured for thirty (30) days.
8. CONTENT OWNERSHIP AND LICENSE
Auto-By-Tel will retain all right, title and interest in and to the
Content worldwide, subject to a limited license necessary to perform
the Agreement. Excite will retain all right, title, and interest in
and to the Excite Network, the Excite Automotive Channel and the
Broadcast Pages worldwide.
9. TRADEMARK OWNERSHIP AND LICENSE
Auto-By-Tel and Excite will retain all right, title and Interest in
and to their trademarks, service marks and trade names worldwide,
subject to limited cross-licenses necessary to perform the Agreement.
10. CONFIDENTIALITY
The terms and conditions of the Agreement will be confidential.
11. WARRANTY AND INDEMNITY
Auto-By-Tel will indemnify Excite from third party claims that the
Content infringes or violates any third party's copyright, patent,
trade secret, trademark. right of publicity or right of privacy or
contains any defamatory content,
12. LIMITATION OF LIABILITY
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Except for liability for indemnity, neither Party will have liability
for any damages other than direct damages. Excite's liability will be
limited to the amounts actually paid by Auto-By-Tel.
13. DISPUTE RESOLUTION
Disputes about trademarks, service marks, trade names and
confidentiality can be resolved in court. All other disputes must be
resolved through mediation and then binding arbitration. All
proceedings will be held in the county in which Excite has its
principal place of business.
14. GENERAL
The Agreement will be governed by California law.
Excite, Inc. Auto-By-Tel
By: [SIG] By: /s/ MARK W. LORIMER
-------------------------- --------------------------
Name: [ILLEGIBLE] Name. Mark W. Lorimer
------------------------ ------------------------
Title: Pres. and CEO Title: EVP & COO
----------------------- -----------------------
Date: 9/10/97 Date: 9/12/97
------------------------ ------------------------
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[*] Confidential Treatment Requested
AUTO-BY-TEL AND EXCITE
YEAR ONE PROMOTIONAL PLAN
EXHIBIT A
<TABLE>
<CAPTION>
[COLUMN HEADS ILLEGIBLE]
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BASE PAYMENT 10/1 Base payment excluding Purchase Y [*]
requests
EXCITE AUTOMOTIVE CHANNEL
Sole buying service 10/1 Link under "Buying Services" to Y 150,000 [*] [*]
sponsorship with link off custom area
home page to Custom area Link under "Used Cars": Search ABT's Y
Used Car Cyberstore
Link under "News": Weekly Automotive Y
Report
Link under "Insurance & Finance": Y
Generic
Text/graphic on all pages Y
KEYWORDS*
Excite (Auto brand, keyword) 10/1 Minimum 12.5% "Gen'l Auto"* per month Y** 1,145 [*] [*]
Integrated Search 9,160
------
10,305
Webcrawler (Auto brand, 10/1 Minimum 15% "Gen'l Auto"* per month N 1,100 [*] [*]
keyword)
LIFESTYLE DIRECTORIES/GEN'L
Various & Specific 10/1 Business & Investing N 6,228 [*] [*]
preferences Shopping
Computers & Internet
General Rotation 10/1 Various keyword results N 7,000 [*] [*]
AUTOMOTIVE SHOPPING*** 10/1 Graphic link N 4,800 [*]
4,800M imp's/year
EXCITE HOME PAGE SPONSOR***
2 Weeks on Home Page (3X/yr.) 10/1 Car giveaway (1X in 1997, 3X/yr Y 0 [*]
6,000M imp's/wk. subsequent years)
ABT to provide cars ($25,000) retail
value per car)
WEB TV, EUROPE, CANADA
Programs TBD 10/1 25% Auto keywords on Web TV/possible Y 15,000 [*] [*]
in Auto area
Auto Keywords (Europe/Canada) TBD
TOTAL 191,633 [*] [*]
PURCHASE REQUEST PROGRAM
100M Unique requests annual 10/1 Net: [*] up to 100M, [*] up to 200M, N/A [*]
guarantee [*] after 200M.
Years 2*3: [*], [*], [*]
GRAND TOTAL 196,433 [*] [*]
</TABLE>
* Keywords: Car(s), Auto(s), Automobile(s), Automotive, Dealer, Incentive,
Buyer(s)
** Category Exclusivity on the [*] Keywords listed above only, not Auto brand
words
*** impressions included within Autochannel
<PAGE> 20
[*] Confidential Treatment Requested
AUTO-BY-TEL AND EXCITE
THREE YEAR PROMOTIONAL PLAN
EXHIBIT B
<TABLE>
<CAPTION>
Date of Impression Negotiate
Content Area Description
<S> <C> <C> <C> <C> <C>
BASE PAYMENT Base payment excluding Purchase requests Y [*] [*]
EXCITE AUTOMOTIVE CHANNEL
Sole buying service sponsorship Link under "Buying Services" to Custom area Y 150,000 [*] [*] [*]
with link off home page to "Used Cars": Search ABT's Used Car Cyberstore Y
custom area Link under "News": Weekly Automotive Report Y
Link under "Insurance & Finance". Generic Y
Text/graphic on all pages Y
KEYWORDS*
Excite (Auto brand, keyword) Minimum 12.5% "Gen'l Auto"* Y 10,300 [*] [*] [*]
Integrated Search
Webcrawler (Auto brand,
keyword) Minimum 15% "Gen'l Auto"* per month N 1,100 [*] [*] [*]
LIFESTYLE DIRECTORIES/GEN'L
Various Specific Preferences Business Investing N 8,228 [*] [*] [*]
Shopping
Computers & Internet
General Position Various keyword results N 7,000 [*] [*] [*]
AUTOMOTIVE SHOPPING*** Graphic link N 4,800 [*] [*]
4,800M imp's/year
EXCITE HOME PAGE SPONSOR***
2 weeks on Home Page (3x/yr.) Car giveaway 1x in 1997 3x/yr subsequent years Y 0 [*] [*] [*]
6,000M imp's/wk. ABT to provide cars ($25,000 retail value per
car)
WEB TV, EUROPE, CANADA
Programs TBD 25% Auto keywords on Web TV/possible in Auto area Y 15,000 [*] [*] [*]
Auto Keywords (Europe/Canada) 100
TOTAL 191,633 [*] [*] [*]
PURCHASE REQUEST PROGRAM
100M Unique requests Net [*] illegible to 2000M, $?? after 200M N/A [*] [*]
annual guarantee Years ??? illegible
GRAND TOTAL $191,633 [*] [*] [*]
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
BASE PAYMENT Base payment excluding Purchase (requests) Y
$2,600,000 [*]
EXCITE AUTOMOTIVE CHANNEL
Sole buying service sponsorship Link under "Buying Services" to Custom area Y $1,052,912 [*] [*] [*]
with link off home page to "Used Cars": Search ABT's Used Car Cyberstore Y
custom area Link under "News": Weekly Automotive Report Y
Link under "Insurance & Finance" Generic Y
Text/graphic on all pages Y
KEYWORDS*
Excite (Auto brand, keyword) Minimum 12.5% "Gen'l Auto"* Y $ 742,085 [*] [*] [*]
Integrated Search
Webcrawler (Auto brand, $ 45,350 [*] [*] [*]
keyword) Minimum 15% "Gen'l Auto"* per month N
LIFESTYLE DIRECTORIES/GEN'L $ 273,548 [*] [*] [*]
Various Specific Preferences Business Investing N
Shopping
Computers & Internet
$ 79,149 [*] [*] [*]
General Position Various keyword results N
$ 0 [*] [*]
AUTOMOTIVE SHOPPING*** Graphic link N
4,800M imp's/year
EXCITE HOME PAGE SPONSOR*** $ 0 [*] [*]
2 weeks on Home Page (3x/yr.) Car giveaway (1X in 1997 3x/yr subsequent years Y
6,000M imp's/wk. ABT to provide cars ($25,000 retail value per
car)
WEB TV, EUROPE, CANADA $ 406,956 [*] [*] [*]
Programs TBD 25% Auto keywords on Web TV/possible in Auto area Y
Auto Keywords (Europe/Canada) 100
$2,600,000 [*] [*] [*]
TOTAL
PURCHASE REQUEST PROGRAM
100M Unique requests Net [*] up to 100M, [*] up to 200M, [*] after ? $ 823,523 [*]
annual guarantee 200M. Years 2 & 3: [*], [*], [*]
GRAND TOTAL $3,423,529 [*] [*] [*]
</TABLE>
*Keywords: Car(1), Auto(2), Automobile(3), AutoCenter, Dealer Incentive,
Buyer(s).
**Category Exclusivity on the [*] keywords rated above only, not auto brand
words.
***impressions included within Autochannel number.
<PAGE> 1
EXHIBIT 10.16
[*] Confidential Treatment has been requested for certain portions of this
exhibit.
DATA LICENSE AND WEB SITE AGREEMENT
This Data License and Web Site Agreement (the "Agreement") is entered into as
of April 1, 1997 (the "Effective Date"), between (i) IntelliChoice, Inc. a
California corporation with a place of business at 471 Division Street,
Campbell, California 95008-6922 ("IntelliChoice") and (ii) Auto-By-Tel
Marketing Corporation, a California corporation with its principal place of
business at 18872 MacArthur Blvd., Suite 200, Irvine, California 92612-1400
("ABT") and Auto-By-Tel Corporation, a California corporation with its principal
place of business at 18872 MacArthur Blvd., Suite 200, 92612-1400 and the parent
company of ABT ("Parent").
RECITALS
A. IntelliChoice provides certain information concerning new and used
automobiles and their purchase, sale, lease and financing to other
companies, including by means of an Internet World Wide Web site ("Web
Site").
B. ABT hosts several Web Sites where it provides certain data and services to
end-users wishing to purchase, sell, lease, or finance new and used
automobiles.
C. ABT wishes to license certain data from IntelliChoice for use by ABT on
its Web Site and to have IntelliChoice place certain other information on
IntelliChoice's Web Site; IntelliChoice is willing to provide such
license and services on the terms of this Agreement.
D. This Agreement sets forth the agreements of the parties on these matters
and related covenants, conditions and restrictions.
AGREEMENTS
IN CONSIDERATION OF THE ABOVE RECITALS AND THE MUTUAL PROMISES CONTAINED
HEREIN, THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS
A. "ABT Site" shall mean the World Wide Web site, currently published
in HTML format, available through URL http://www.autobytel.com and resident on
an ABT-owned host server which provides those persons and entities that access
that Web Site certain information concerning new and used automobiles,
financing and other related information.
B. "ABT Auxiliary Site" shall mean one or more World Wide Web sites,
available through various URLs, resident on an ABT-owned host server, which is
run by ABT for one or more Affinity Groups or Credit Unions, which provides
those persons that access that Web Site
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certain information concerning new and used automobiles, financing, and other
related information.
C. "ABT Site Clients" shall mean persons or entities that or who access
the ABT Site.
D. "Affinity Group" shall mean a group of individuals or entities that
are members of a business, charitable, mutual benefit or similar organization,
or who access the ABT or ABT Auxiliary Site via one specific web site, that has
been submitted by ABT in writing and approved as such by IntelliChoice in
writing in its reasonable discretion.
E. "Affinity Group Clients" shall mean members of an Affinity Group.
F. "Affinity Group Data" shall mean information contained in
IntelliChoice's proprietary database consisting of that type of information
described on Exhibit "A" as Affinity Group Data and such Updates to such data as
IntelliChoice may compile from time to time in its sole and complete discretion,
in the format and media provided by IntelliChoice.
G. "Affinity Group Services" shall mean those services listed on Exhibit
"A" as Affinity Group Services.
H. "Affinity Group Site" shall mean the World Wide Web site, currently
published in HTML format, and resident on the IntelliChoice host server, which
will allow Affinity Group Clients the ability to access and utilize Affinity
Group Data and Affinity Group Services, and support the "look and feel" as
further defined in Section 3.H. The Affinity Group Site shall have Links to and
from the ABT Site or ABT Auxiliary Site. Neither ABT nor IntelliChoice shall
authorize any other Link to or from the Affinity Group Site without the consent
of the other party.
I. "Client Data" shall mean data, in both individual and aggregate (i.e.,
compilation of information) form, of persons or entities that access the
IntelliChoice Site, including the Sites, such as, by way of example only, name,
information request details, purchase, lease and financing information, which is
ascertainable or recordable by IntelliChoice as the result of the access.
J. "Credit Union" shall mean a credit union that has been submitted by
ABT in writing and approved in writing as such by IntelliChoice in its
reasonable discretion.
K. "Credit Union Client" shall mean a member of a Credit Union.
L. "Credit Union Data" shall mean information contained in
IntelliChoice's proprietary database consisting of that type of information
described on Exhibit "B" as Credit Union Data and such Updates to such data as
IntelliChoice may compile from time to time in its sole and complete discretion,
in the format and media provided by IntelliChoice.
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<PAGE> 3
M. "Credit Union Services" shall mean those services listed on Exhibit
"B" as Credit Union Services.
N. "Credit Union Site" shall mean the World Wide Web site published in
HTML format, and resident on the IntelliChoice host server which will allow
Credit Union Clients the ability to access and utilize Credit Union Data and
Credit Union Services, and support the "look and feel" as further defined in
Section 3.H.. The Credit Union Site shall have Links to and from the ABT Site
or ABT Auxiliary Site. Neither ABT nor IntelliChoice shall authorize any other
Link to or from the Credit Union Site without the consent of the other party.
O. "Data License" shall have the meaning specified in Section 2.A. below.
P. "Data Transfer Date" shall mean the date IntelliChoice first delivers
to ABT IntelliChoice Car Data as required by Section 2.A.
Q. "HTML" shall mean the Hypertext Markup Language.
R. "IntelliChoice Car Data" shall mean, collectively, the IntelliChoice
New Car Data and the IntelliChoice Used Car Data.
S. "IntelliChoice Client" shall mean persons or entities that or who
access the IntelliChoice Site (including the Sites).
T. "IntelliChoice Data" shall mean, collectively, the IntelliChoice New
Car Data, the Credit Union Data, the Affinity Group Data, the Credit Union Data
and any other data or information now or hereafter contained on the
IntelliChoice Site.
U. "IntelliChoice New Car Data" shall mean information contained in
IntelliChoice's proprietary database consisting of that type of information
described on Exhibit "C" as IntelliChoice New Car Data relating to information
compiled by IntelliChoice on certain makes and models of current model year
automobiles and such Updates to such data as IntelliChoice may compile from
time to time in its sole and complete discretion, in the format and media
provided by IntelliChoice.
V. "IntelliChoice Rights" has the meaning specified in Section 5.A.
below.
W. "IntelliChoice Used Car Data" shall mean information contained in
IntelliChoice's proprietary database consisting of that type of information
described on Exhibit "C" as IntelliChoice Used Car Data relating to information
compiled by IntelliChoice on certain makes and models of pre-current model year
automobiles and such Updates to such data as IntelliChoice may compile from time
to time in its sole and complete discretion, in the format and media provided by
IntelliChoice.
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<PAGE> 4
X. "IntelliChoice Services" shall mean all services of any nature
provided by IntelliChoice hereunder, including without limitation, the Credit
Union Services, the Affinity Group Services, and all services and obligations
to operate, maintain, support or provide the IntelliChoice Site, including the
Credit Union Site and the Affinity Group Site, and the Links to the ABT Site
from the IntelliChoice Site.
Y. "IntelliChoice Site" shall mean the World Wide Web site, currently
published in HTML format, available through URL http://www.intellichoice.com
and resident on an IntelliChoice owned host server which provides those persons
and entities that access that Web Site certain information concerning new and
used automobiles, financing and other related information, together with the
Affinity Group Site and the Credit Union Site. It is understood that the
IntelliChoice Site does not include any portion of the site resident on the host
server which IntelliChoice does not at the relevant time make available to the
general public at no cost or expense to the user.
Z. "Link" shall mean a hypertext link, in the form of a text or
graphical link, toolbar button or menu item.
AA. "Sites" shall mean, collectively, the Affinity Group Site and the
Credit Union Site.
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<PAGE> 5
2. DATA LICENSE
A. IntelliChoice Car Data. On the terms and conditions set forth herein,
IntelliChoice hereby grants to ABT a non-exclusive, limited term,
non-transferable right and license (the "Data License"), during the Agreement
Term to (i) reproduce and display IntelliChoice Car Data solely on the ABT Site
and (ii) use, and reproduce the IntelliChoice Car Data internally, solely for
the purpose of supporting the use of the IntelliChoice Car Data on the ABT
Site. ABT will permit the use or accessing of the IntelliChoice Car Data solely
by end-users of the ABT Site by means of accessing, viewing, printing or
downloading such data from the ABT Site for their own use and not for
sublicensing, reproduction or reuse by any other person or entity. ABT does not
currently have a license governing the use of the ABT Site. In the event ABT
institutes a license governing the use of the ABT Site, IntelliChoice shall
have the right to approve, which approval shall not be unreasonably withheld,
the terms by which users of the ABT Site are authorized to access and use the
IntelliChoice Car Data. ABT may not use, perform or display the IntelliChoice
Car Data (or permit such use, performance or display by any other person or
entity) in any other format, in any other way or through any other means. The
Data License is limited to rights and uses expressly permitted by this
Agreement.
B. Limits. ABT agrees, even after the Agreement Term, to comply with the
terms of Sections 5.B. with respect to the IntelliChoice Car Data. ABT has no
rights in the IntelliChoice Data or its use not expressly set forth in Section
2.A.
C. Format. IntelliChoice Car Data will be formatted as tab-delimited,
ASCII text files. Compression methods will be used if mutually agreed. Such
format and means can change from time to time if mutually acceptable.
D. Transfer. IntelliChoice Car Data will be uploaded by IntelliChoice to
IntelliChoice's FTP server (currently "ftp://mail.intellichoice.com"). ABT will
download from such server using a name and password to be mutually agreed.
E. Update Schedule. IntelliChoice Car Data will be updated as follows.
IntelliChoice, in its sole discretion, may update the IntelliChoice Car Data
more frequently:
IntelliChoice New Car Data Weekly
IntelliChoice Used Car Data Quarterly
3. SITES AND RELATED OBLIGATIONS
A. Creation and Maintenance of Credit Union Site. IntelliChoice shall
use reasonable commercial efforts to have the Credit Union Site complete and
available on IntelliChoice's host server for access to and use of the Credit
Union Data and Credit Union Services within 30 days of the Effective Date.
Thereafter, during the Agreement Term, IntelliChoice shall use reasonable
commercial efforts to maintain the Credit Union Site. The Credit Union Site
shall provide Credit
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<PAGE> 6
Union Clients with the ability to access and use Credit Union Data and Credit
Union Services and shall provide a Link to the ABT Site or ABT Auxiliary Site
through which a Credit Union Client may fill out a Purchase Request and Link
back to the Credit Union Site.
B. Creation and Maintenance of Affinity Group Site. IntelliChoice shall
use reasonable commercial efforts to have the Affinity Group Site complete and
available on IntelliChoice's host server for access to and use of the Affinity
Group Data and Affinity Group Services within 30 days of the Effective Date.
Thereafter, during the Agreement Term, IntelliChoice shall use reasonable
commercial efforts to maintain the Affinity Group Site. The Affinity Group Site
shall provide Affinity Group Clients with the ability to access and use
Affinity Group Data and Affinity Group Services and shall provide a Link to the
ABT Site or ABT Auxiliary Site through which a Affinity Group Client may fill
out a Purchase Request and Link back to the Affinity Group Site.
C. Creation and Maintenance of ABT and ABT Auxiliary Sites. ABT shall use
reasonable commercial efforts to have the ABT and/or ABT Auxiliary Sites
complete and available on ABT's host server with Links to the Credit Union Site
and Affinity Group Site, the capability to capture a Purchase Request from a
Credit Union Client or Affinity Group Client, Links back to the linking site,
and the ability to track purchase requests, within 30 days of the Effective
Date. Thereafter, during the Agreement Term, ABT shall use reasonable
commercial efforts to maintain the ABT Site or ABT Auxiliary Site with these
capabilities. IntelliChoice may terminate this Agreement upon 90 days written
notice to ABT if ABT either (i) establishes Websites or portions thereof
serving in excess of 25% of the aggregate number of its credit union clients
which Websites or portions thereof contain third party data similar or
competitive with the Credit Union Data, or (ii) establishes Websites or
portions thereof serving in excess of 25% of the aggregate number of its
affinity group clients which Websites or portions thereof contain third party
data similar or competitive with the Affinity Group Data. In the event of a
termination pursuant to the immediately preceding sentence, IntelliChoice shall
be entitled to all moneys earned through he date of termination, ABT shall be
relieved of any obligation to pay moneys which have not been earned at the date
of termination. Any such termination shall not be deemed a default by either
ABT or IntelliChoice, and after such termination, this Agreement shall be of no
further force or effect.
D. Registering and Deregistering Credit Union and Affinity Sites. ABT
shall submit to Intellichoice in writing each affinity group or credit union
proposed to be registered as an Affinity Group or Credit Union. IntelliChoice
shall respond in writing with its approval, within its reasonable discretion,
within five business days. ABT shall notify IntelliChoice in writing of any
Affinity Group or Credit Union which ABT has deregistered.
E. Access and License Rights. The right of Credit Union Clients and
Affinity Group Clients to access and use the Credit Union Site and/or the
Affinity Group Site shall be subject to all rules and policies and all license
terms and restrictions generally applied by IntelliChoice to the IntelliChoice
Site.
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<PAGE> 7
F. Links To ABT Site. IntelliChoice shall create and, during the Agreement
Term after creation, maintain Links embedded in the IntelliChoice Site linking
it to the ABT Site in: (i) that portion of the IntelliChoice Site which
provides new vehicle information; and (ii) that portion of the IntelliChoice
Site which provides used vehicle information. IntelliChoice agees that, during
the Agreement Term, it shall not create Links from the IntelliChoice Site to any
web site operated by Auto Web, Reynolds and Reynolds, CUC International,
StoneAge or AutoTown on its own branded host server (each, an "Excluded Site").
Irrespective of the foregoing, a site shall not be deemed an Excluded Site if
the site is labeled or co-labeled as a site of Microsoft Corporation and any
Link to that site is undertaken as an obligation of a contract which is in force
between IntelliChoice and Microsoft prior to the date that this contract is
signed. In addition, during the Agreement Term, IntelliChoice shall not create a
Link to any other web site which specifically identifies or characterizes that
website as a "vehicle buying" program or service. The foregoing sentence shall
not prevent IntelliChoice from providing any Link to any web site other than the
Excluded Sites, including sites that provide vehicle buying programs or
services, so long as such Link does not itself specifically identify or
characterize the website as a vehicle buying program or service. In addition,
during the Agreement Term, IntelliChoice shall from time to time, on a rotating
on and off basis, place banner advertising for the ABT Site on the IntelliChoice
Site, in places, sizes and frequency determined by IntelliChoice in its
discretion.
G. Identification Technology. ABT has developed software (the "Tracking
Software") designed to identify which Clients pass from the ABT Site to the
IntelliChoice Site (including the Affinity Group Site or the Credit Union Site)
or from the IntelliChoice Site to the ABT Site using any Links on either Site
or otherwise qualify for a Purchase Referral (as defined below). Additionally,
IntelliChoice and ABT may, together or independently, desire to create or
modify such Tracking Software.). In such event, the parties will use reasonable
efforts to agree upon the criteria for the Tracking Software and to allocate
development obligations. Unless otherwise agreed, each party will bear its own
expense in connection with such development. Each party shall retain all rights
to Tracking Software which they have developed.
H. Rights. The Sites and all proprietary rights used on the Sites or in
connection therewith (including any search engines, data, software, trademarks
or tradenames and other IntelliChoice Rights) shall be published by and owned
and operated solely by IntelliChoice. The rights of ABT, Credit Union Clients
and Affinity Group Clients to access and use the Site (and data and services
provided thereon) shall in all respects be non-exclusive. IntelliChoice will
have any rights in the Client Data that are authorized by any IntelliChoice
Client or are otherwise available to it at law or in equity. Except for the
obligation of IntelliChoice to provide the Credit Union Data and Credit Union
Services on the Credit Union Site and to provide the Affinity Group Data and
the Affinity Group Services on the Affinity Group Site, all aspects of the
creation and maintenance of the Sites shall be in IntelliChoice's sole
discretion, including formats, layouts, content, locations, etc.
Notwithstanding the foregoing sentence, the Affinity Group Site and the Credit
Union Site will be designed so that users may reasonably perceive such Sites as
part of the ABT Site through the use of the "look and feel" of the ABT Site.
ABT will provide graphic
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<PAGE> 8
images, user interface specifications and any navigational information
necessary to reproduce such look and feel, and IntelliChoice Agrees, subject
the following sentence, to incorporate ABT comments on the format, layout,
content, locations, etc. of the Affinity Group Site and the Credit Union Site
with the goal of reasonably recreating such look and fee. The parties agree
that "look and feel" refers to the general background of the screen, and that
the functionality of the Sites (e.g. the design of the searching capabilities,
the layout of the CarBuilder application, etc.) will not be modified from the
way that IntelliChoice has designed such functionality. Additionally, the
uniform reference locator of the Sites will begin with the prefix
"http://www.intellichoice.com/" followed by the name of ABT's choice. At the
option of IntelliChoice, the Sites may contain graphical and textual
representations of the ABT Trademarks; provided, that the style, content and
format of such ABT Trademarks shall be subject to the provisions of Section 6.
4. ADDITIONAL OBLIGATIONS
A. Responsibility for ABT Site. ABT shall have all obligations and
responsibilities (as well as ownership) of the ABT Site and its publication
(subject to the rights of IntelliChoice licensed hereunder). ABT shall embed in
the ABT Site text and graphical Links that will prominently feature
IntelliChoice as a provider of data and services for the ABT Site and ABT
Clients; such Links shall at a minimum appear in the ABT "Information Provider"
section of the ABT Site (which Link shall be at least as prominent as any
other Link in such section other than for "CarPoint") and in each place the
IntelliChoice Car Data in available; each such Link shall be approved by
IntelliChoice. In addition, in each place the IntelliChoice Data is available,
IntelliChoice shall be prominently disclosed and credited as the provider of
such data. To the extent that any Links or references contain the IntelliChoice
corporate name or IntelliChoice Trademarks (as hereinafter defined),
construction and design of such Links or reference shall be subject to the
provisions of Section 6 hereof. Without limiting ABT's obligations hereunder,
it must comply with all applicable laws and regulations relating to the use of
the Internet, including laws and regulations regarding prohibited usage,
materials and transmission on the Internet. As between ABT and IntelliChoice,
ABT shall be reasonable for the compliance with such laws and regulations of its
affiliates, employees, agents, consultants, customers and guests.
B. Responsibility for IntelliChoice Site. IntelliChoice shall have all
obligations and responsibilities (as well as ownership) of the IntelliChoice
Site and its publication. Any Link to the ABT Site shall be approved by ABT. To
the extent that any Links or references contain the ABT corporate name or ABT
Trademarks (as hereinafter defined), construction and design of such Links or
reference shall be subject to the provisions of Section 6 hereof. Without
limiting IntelliChoice's obligations hereunder, it must comply with all
applicable laws and regulations relating to the use of the Internet, including
laws and regulations regarding prohibited usage, materials and transmission on
the Internet. As between ABT and IntelliChoice, IntelliChoice shall be
responsible for the compliance with such laws and regulations of its
affiliates, employees, agents, consultants, customers and guests.
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[*] Confidential Treatment Requested
C. Acceptance. ABT shall have one week following the date a Site becomes
available during which to review and conduct testing of the Site to determine
whether it provides access to the applicable data and services. If, during the
course of such testing ABT reasonably determines that the IntelliChoice Site
fails to substantially provide such access (generally, "non-conformities"), it
shall so notify IntelliChoice in a writing which sets forth the
non-conformities discovered. IntelliChoice shall have a period of one week
thereafter in which to correct such non-conformities and publish a revised
version of the Site to ABT for further testing pursuant to the procedures set
forth in this Section. The foregoing procedures shall be repeated until ABT
determines that there are no material non-conformities in the Site. In the
event the IntelliChoice Site is not approved after two (2) iterations of the
foregoing process, ABT may terminate this Agreement, which termination shall
end all obligations of the parties and shall be without further liability or
obligation by either party, other than obligations which survive termination.
Should ABT not reject the Site by providing the writing described above within
one week, ABT shall be deemed to have accepted the Site (an "Acceptance").
5. COMPENSATION
A. Initial Fee. ABT agrees to pay to IntelliChoice, upon execution of
this Agreement, a one-time fee of $25,000 as a fee to create the Sites (the
"Initial Fee").
B. Monthly Fees. In consideration of the Data License and the provisions
of Section 3.F, ABT agrees to pay IntelliChoice monthly fees (the "Monthly
Fees") as follows: (i) for the first six months following the Data Transfer
Date, the sum of [*] per month; and (ii) for the remainder of the Agreement
Term, the sum of [*] per month. The Monthly Fees shall be due in advance on the
Data Transfer Date and of the same calendar day of each month during the
Agreement Term thereafter. Nothing in this Agreement, except a termination of
this Agreement per Section 10 shall relieve ABT of the Monthly Fee obligation.
C. Affinity Client Fee. In consideration of the Affinity Group Site,
Affinity Group Data and Affinity Services, ABT agrees to pay IntelliChoice Five
Hundred Dollars ($500) per month for each Affinity Client ABT has registered
with IntelliChoice during such month. Affinity Group Clients registered during a
month shall be charged to a pro-rata basis for such month. There shall be no
pro-rations for any month in which an Affinity Client is de-registered by ABT.
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<PAGE> 10
[*] Confidential Treatment Requested
D. Referral Fees
(i) Credit Unions: Links. For each "Referral" (as defined
below) for new vehicles submitted by an IntelliChoice Client
(other than an Affinity Group Client) or by a Credit Union
Client, ABT shall pay IntelliChoice a onetime fee of [*]. For
each Referral for used vehicles purchased by an IntelliChoice
Client (other than an Affinity Group Client) or by a Credit Union
Client, ABT shall pay IntelliChoice a onetime fee of [*].
(ii) Affinity Group. For each Referral from an Affinity Group
Client for a new or used vehicle, ABT shall pay IntelliChoice a
onetime fee of [*].
(iii) Referral. A Referral shall mean any completion of a
purchase request (a "Transaction Request") by any IntelliChoice
Client (including any Credit Union Client or Affinity Group
Client) that accesses the IntelliChoice Site (including the
Sites) and thereafter submits a Transaction Request with ABT
(whether at the ABT Site, the IntelliChoice Site, or elsewhere),
whether or not the applicable client initiates first contact
through the ABT Site or the IntelliChoice Site and whether or not
such IntelliChoice Client makes a direct Link to the ABT Site or
accesses the ABT Site or otherwise makes a Transaction Request at
some later date. It is understood that each request for lease,
financing or similar purpose will only occur in conjunction with,
or after, a Transaction Request, and not independent of a
Transaction Request. The parties will establish mechanisms in
addition to the Tracking Software to track such Clients,
including mechanisms to determine whether each person or entity
that completes a Transaction Request accessed the IntelliChoice
Site at any prior time. Multiple requests from an individual car
buyer made within sixty (60) days shall count as one Referral.
Multiple requests from an employee of a credit union or affinity
group, made on behalf of credit union or affinity group members,
shall count as one Referral only to the extent that only one
Referral would have been counted if the credit union or affinity
group members had made the requests themselves. Referrals shall
be paid monthly, within twenty (20) days after the calendar month
in which the Referral is made. Each payment of Referral Fees
shall be accompanied by a detailed report, showing the
transactions upon which the fees are based (including the name of
each Credit Union Client, Affinity Group Client and the details
of the transaction). Referral Fees will be payable after the
Agreement Term for IntelliChoice Clients who access the
IntelliChoice Car Data during the Agreement Term and make a
Transaction Request within one (1) month after the Agreement
Term.
E. Books and Records: Audit. ABT agrees to maintain, until two (2)
years after the termination of this Agreement, complete books, records and
accounts regarding all Purchase Requests. ABT agrees to allow IntelliChoice's
independent auditor, no more than three times each calendar year, to audit and
examine such books, records and account during ABT's normal
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business hours and upon at least five (5) days' prior written notice to ABT, in
order to verify the accuracy of the reports under this Section. Such audit
shall be subject to the auditor's agreement to confidentiality restrictions
substantially similar to the terms and conditions of Section 10 if so
requested by ABT. Such auditor shall report to ABT and IntelliChoice only
whether any Purchase Referral Fees were under-reported and, if so, the amount
of such under-reporting. If such auditor reasonably determines that ABT has not
made full accounting to IntelliChoice under this Agreement, ABT agrees to
promptly pay IntelliChoice the amount of such shortfall (together with late
charges as applicable). If such auditor reasonably determines that ABT has
overpaid IntelliChoice under this Agreement, ABT shall have a credit balance in
its account with IntelliChoice of the amount of such overpayment. In addition,
if any such examination reveals an under reporting to IntelliChoice with
respect to Purchase Referral Fees of five percent (5%) or more, ABT shall
reimburse IntelliChoice its costs of such examination.
F. Taxes. ABT shall pay or, at IntelliChoice's option, reimburse
IntelliChoice for any and all taxes, duties and assessments imposed on ABT or
IntelliChoice in connection with the license and other transactions
contemplated in this Agreement, including, without, limitation, all sales, use,
excise and other taxes and duties, and excluding only taxes based upon
IntelliChoice's income, and taxes (other than sales, use, and excise taxes) due
by IntelliChoice under current taxing authority rules and regulations.
G. Late Charges. Downtime Offsets: Etc. Any amounts not paid when due
shall bear interest at the lesser of fifteen percent (15%) per annum and the
maximum legal rate. All amounts shall be payable without offset, except the
offset of a credit balance determined in Section 5E. Downtime or unavailability
of a Site for any reason within the reasonable control of IntelliChoice for
greater than seven (7) days in a month shall give ABT the right to terminate
this Agreement, upon 30 day's notice, if the Site continues to be unavailable
or down for seven (7) days within the notification period. A termination under
this clause is not a default by IntelliChoice, and this Agreement will
terminate without other force or effect. Upon termination, IntelliChoice is
entitled to all moneys earned through the date of termination. ABT is relieved
of any obligation to pay fees which have not been earned at the date of
termination.
H. Obligations of Parent. Parent hereby agrees that it is jointly and
severally liable for all of the obligations of ABT hereunder. Parent
acknowledges that it is obtaining direct benefit from this contract by reason
of its ownership of ABT and its direct and indirect interests in the
transactions contemplated hereby.
6. PROPRIETARY RIGHTS.
A. Ownership. ABT agrees that IntelliChoice owns all right, title and
interest in the IntelliChoice Data, the IntelliChoice Site, and all technology
incorporated therein or used therein, and any and all presentations,
modifications, enhancements and copies thereof, and in all trademarks, trade
names, inventions, copyrights, patents, know-how and trade secrets used in or
connection with the IntelliChoice Data, the IntelliChoice Site, and/or any
software used on or in
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<PAGE> 12
connection with the IntelliChoice Site (collectively, the "IntelliChoice
Rights"). ABT's use of the IntelliChoice Rights is authorized only for the
purposes and to the extent set forth in this Agreement, and upon termination of
this Agreement such authorization will cease immediately and ABT will deliver
to IntelliChoice any tangible embodiments of any of the IntelliChoice Rights.
ABT has no rights in or to any of the IntelliChoice Rights other than as
expressly set forth in this Agreement and will acquire no additional rights
during the Agreement Term.
B. Limits. The right to use the IntelliChoice Car Data and to access
the Sites in accordance with the terms of this Agreement does not convey any
license, expressly or by implication, to manufacture, duplicate or otherwise
copy or reproduce any IntelliChoice Data except as expressly provided in this
Agreement. ABT agrees, during and after the Agreement Term: (a) not to copy
(other than regular back-up copies), modify, disassemble, reverse engineer or
decompile any IntelliChoice Rights, (b) not to copy, perform, distribute or
sublicense the IntelliChoice Rights except as expressly permitted hereby, and
(c) to maintain the IntelliChoice Rights which are not publicly available in
complete confidence without disclosure to any third party (except employees
with a need for access who agree to comply with your obligations), notify us
immediately of any unauthorized disclosure or use, and cooperate with
IntelliChoice to protect all proprietary rights in and ownership of the
Intellectual Property. ABT may not retain, modify, copy, or distribute any
IntelliChoice Rights which are accessed via the IntelliChoice Site. In addition,
ABT acknowledges that no ABT Client, Credit Union Client or Affinity Group
Client is granted permission to retain, modify, copy, or distribute any
IntelliChoice Rights which are accessed via the IntelliChoice Site or the Sites.
ABT will promptly notify IntelliChoice in writing of any such retention,
modification, copying, or distribution of which it obtains actual knowledge or
has reason to believe, and ABT agrees that any Credit Union or Affinity Group
who suffers such retention, modification, or distribution shall immediately be
deregistered.
C. Improvements. All right, title and interest in and to any
developments, modifications, derivations, continuations or improvements made,
discovered or used by IntelliChoice or ABT during and after the term of this
Agreement arising out of or in connection with the IntelliChoice Site or the
IntelliChoice Data, including but not limited to, the presentation, retrieval,
display, charge for access to the IntelliChoice Data (if any), shall belong
exclusively to IntelliChoice, and ABT is not hereby granted any license
thereto. ABT hereby retains all right, title and interest in and to all
suggestions, drawings, reports, designs, specifications, screen displays and
other materials or assistance provided by ABT and acknowledged as such in
writing by IntelliChoice with respect to the Sites.
7. TRADEMARKS AND MARKETING
A. Trademarks. The trademarks, trade names and other product and company
identifiers of IntelliChoice that IntelliChoice may adopt from time to time,
including but not limited to IntelliChoice. Just the Facts, CarCenter,
CarBuilder, and Window Sticker Plus (collectively, the "IntelliChoice
Trademarks"), are the sole property of IntelliChoice. Except for the use of
IntelliChoice's Corporate name and logo among other customer names and logos in
a
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<PAGE> 13
listing of ABT's customers, or as otherwise set forth in this Agreement, ABT
shall not use IntelliChoice's corporate name or the IntelliChoice Trademarks
with any product or service for any means, including any promotional
advertisement without IntelliChoice's prior written consent. Any IntelliChoice
Trademarks which ABT uses must be reproduced with the appropriate trademark
notations in accordance with IntelliChoice's instructions and in the form and
manner designated by IntelliChoice. The trademarks, trade names and other
product and company identifiers of ABT that ABT may adopt from time to time
(collectively, the "ABT Trademarks"), are the sole property of ABT. Except for
the use of ABT's Corporate name and logo among other customer names and logos
in a listing of IntelliChoice's customers, or as otherwise set forth in this
Agreement, IntelliChoice shall not use ABT's corporate name or the ABT
Trademarks with any product or service for any means, including any promotional
advertisement without ABT's prior written consent. Any ABT Trademarks which
IntelliChoice uses must be reproduced with the appropriate trademark notations
in accordance with ABT's instructions and in the form and manner designated by
ABT.
B. Marketing. All representations of IntelliChoice Trademarks that ABT
shall incorporate on the ABT Site or ABT Auxiliary Sites shall be exact copies
of those used by IntelliChoice or shall be first submitted to IntelliChoice for
approval (which shall not be unreasonably withheld) of design, color, and other
details. ABT shall incorporate the IntelliChoice name and logo in all marketing
materials or promotional advertisement related to the Sites; provided, however,
that any promotional advertisement, marketing material or other public
communication used for such purpose shall not be published or disseminated
without the prior written approval of IntelliChoice.
8. WARRANTY; DISCLAIMERS OF WARRANTY
A. Services. IntelliChoice warrants that, during the Agreement Term, the
IntelliChoice Services will be provided in a professional, workerlike manner.
If a claim occurs under this warranty, ABT must notify IntelliChoice within 30
days after ABT becomes aware of any facts supporting the claim. IntelliChoice
will either correct the problem or re-perform the Services. THESE ARE
INTELLICHOICE'S ONLY OBLIGATIONS AND ABT'S ONLY REMEDY FOR BREACH OF WARRANTY,
EXCEPT FOR THE PROVISIONS OF SECTION 5.G., WITHOUT LIMITING SECTION 8.D.,
INTELLICHOICE MAKES NO OTHER WARRANTY, GUARANTY OR PROMISE CONCERNING THE
INTELLICHOICE SERVICES EXCEPT FOR THE PROVISIONS OF SECTION 5.G.
B. Data. IntelliChoice has conducted research to obtain the
IntelliChoice Data in the manner IntelliChoice considers to be commercially
reasonable from sources IntelliChoice considers to be reliable. IntelliChoice
has made no independent verification of the accuracy of the information it has
received. The IntelliChoice Data is comprised of the most recent available
information in IntelliChoice's database. Timeliness of data is dependent upon
IntelliChoice's collection schedule and the level of cooperation from third
parties, including, but not limited to, dealers and car manufacturers.
IntelliChoice cannot assure that the IntelliChoice Data will be
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<PAGE> 14
current at any time. WITHOUT LIMITING SECTION 8.D, INTELLICHOICE MAKES NO
GUARANTY, WARRANTY OR REPRESENTATION WITH RESPECT TO INTELLICHOICE DATA OR ANY
OTHER INFORMATION CONTAINED IN THE INTELLICHOICE SITE, INCLUDING AS TO
COMPLETENESS, ADEQUACY, ACCURACY OR CURRENT NATURE.
C. Sites. IntelliChoice shall use reasonable commercial efforts to
maintain the Sites. If ABT claims IntelliChoice has breached this obligation,
ABT must notify IntelliChoice within 30 days after ABT becomes aware of any
facts supporting the claim. IntelliChoice will correct the problem as soon as
commercially reasonable. THIS IS INTELLICHOICE'S ONLY OBLIGATION AND ABT'S ONLY
REMEDY FOR BREACH OF THIS OBLIGATION EXCEPT FOR THE PROVISION OF SECTION 5.G.
WITHOUT LIMITING SECTION 8.D, INTELLICHOICE MAKES NO GUARANTY, WARRANTY OR
REPRESENTATION WITH RESPECT TO THE AVAILABILITY OR PERFORMANCE OF THE
INTELLICHOICE SITE (INCLUDING THE SITES), OR THE PERFORMANCE OF ANY HOST SERVER
ON WHICH SUCH SITES ARE RESIDENT. IN ADDITION, ABT RECOGNIZES THAT
INTELLICHOICE HAS NO CONTROL OVER THE INTERNET OR ACCESS PROVIDERS THEREFORE
AND HAS NO RESPONSIBILITY OF ANY NATURE WITH RESPECT THERETO.
D. General Disclaimer. Except as expressly set forth in this
Section 8., INTELLICHOICE MAKES NO WARRANTIES WITH RESPECT TO THE INTELLICHOICE
SERVICES, THE INTELLICHOICE DATA, THE INTELLICHOICE SITE OR ANY INFORMATION
CONTAINED THEREIN, OR ANY OTHER SUBJECT MATTER OR TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, AND INTELLICHOICE
SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR INFRINGEMENT WITH RESPECT TO ANY SUCH MATTERS.
9. LIMITATION OF LIABILITY.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY LOST PROFITS, LOSS OF
USE (EXCEPT FOR THE PROVISIONS OF SECTION 5.G.), LOSS OR INTERRUPTION OF
BUSINESS, OR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY
KIND, HOWEVER CAUSED, AND WHETHER BASED ON CONTRACT, TORT (INCLUDING
NEGLIGENCE), STRICK LIABILITY, STATUTORY CLAIM OR ANY OTHER THEORY OF
LIABILITY. THE FOREGOING LIMITATION SHALL APPLY WHETHER OR NOT EITHER PARTY
KNOWS OR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT WILL
INTELLICHOICE BE LIABLE FOR (A) ANY REPRESENTATION OR WARRANTY MADE TO ANY
CLIENT OR OTHER THIRD PARTY BY ABT, OR ANY AGENT OF ABT, OR (B) THE
UNAVAILABILITY OF THE INTELLICHOICE SITE, THE INTELLICHOICE DATA OR OTHERWISE.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, EXCEPT AS TO ITS
LIABILITY, IF ANY, UNDER SECTION 11,
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<PAGE> 15
INTELLICHOICE'S ENTIRE AGGREGATE LIABILITY TO ABT FOR DAMAGES CONCERNING
PERFORMANCE OR NONPERFORMANCE OR IN ANY WAY RELATED TO THE SUBJECT MATTER
HEREOF, AND REGARDLESS OF WHETHER THE CLAIM FOR SUCH DAMAGES IS BASED IN
CONTRACT OR IN TORT (INCLUDING NEGLIGENCE) STRICT LIABILITY, STATUTORY OR OTHER
THEORY OF LIABILITY, SHALL NOT EXCEED THE HIGHEST AMOUNT OF PAYMENTS OF MONTHLY
FEES MADE HEREUNDER BY ABT WITHIN ANY CONSECUTIVE SIX MONTH PERIOD. IN THAT
REGARD, ABT ACKNOWLEDGES THAT ABT IS RECEIVING VALUE FROM INTELLICHOICE'S
OBLIGATIONS HEREUNDER AS THEY ARE RECEIVED, SO THAT DAMAGES ARE GENERALLY
NEITHER BACKWARD OR FORWARD LOOKING.
10. TERM AND TERMINATION
A. Term. This Agreement shall commence on the Effective Date and shall
continue in full force and effect for two (2) years after the Data Transfer Date
unless earlier terminated in accordance with the provisions of this Agreement
(the "Initial Term"). Thereafter, this Agreement shall renew automatically for
one (1) year (the "Renewal Terms") unless-either party provides thirty (30) days
prior written notice to the other party of its intent to terminate for
convenience. The Initial Term and any Renewal Term are collectively the
""Agreement Term".
B. Termination for Cause. If either party defaults in the performance of
any provision of this Agreement, and the default is one which is reasonably
susceptible of cure, then the non-defaulting party may give written notice to
the defaulting party that if the default is not cured within thirty (30) days
this Agreement will terminate. If the non-defaulting party gives such notice
and the default is not cured within thirty (30) days, this Agreement shall
terminate automatically without any obligation on the non-defaulting party to
provide any further notice of termination. If the default is one which is not
reasonably susceptible of cure, this Agreement shall terminate immediately upon
the giving of notice by the non-defaulting party, with no cure period provided.
C. Effect of Termination.
(I) Upon the termination of this Agreement, the following provisions
shall take effect:
(A) The rights and licenses granted under this Agreement,
including IntelliChoice's obligations under Section 3, shall automatically
terminate and ABT shall cease any use of any IntelliChoice Rights, and
IntelliChoice shall cease use of any ABT Rights;
(B) All payments owed to IntelliChoice shall become due and
payable;
(C) Except as otherwise provided herein, the non-breaching
parties shall have all other rights and remedies available at law or in equity
(and for such purposes, each party
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<PAGE> 16
acknowledges that injunctive relief will be appropriate to protect the other
party's Rights, which are unique and special and which cannot be protected
through the award of damages); and
(D) The provisions of Sections 2.B, 6, 7.A, 8.D, 9, 10.C,
11, 12, and 13 shall survive the termination of this Agreement.
11. CONFIDENTIALITY
A. Obligation of Confidentiality. The parties acknowledges that by
reason of their relationship to each other hereunder, each shall have access to
certain information and materials concerning the other's business, plans,
customers, technology and products that is confidential and of substantial
value to that other party, which value would be impaired if such information
were disclosed to third parties. Confidential Information shall consist of the
IntelliChoice Rights (as to IntelliChoice) and, as to each party, such other
information and materials of such party as are marked as "Confidential",
"Proprietary" or some similar designation ("Confidential Information"). Each
party agrees that it shall not use in any way, for its own account or the
account of any third party, nor disclose to any third party, any such
Confidential Information revealed to it by the other party (except to carry out
its express rights and obligations under this Agreement) and shall take every
reasonable precaution to protect the confidentiality of such information.
B. Exceptions. Information shall not be deemed Confidential
Information hereunder if such information: (I) is known to the recipient on the
Effective Date directly or indirectly from a source other than one having an
obligation of confidentiality to the providing party; (II) hereafter becomes
known (independently of disclosure by the providing party) to the recipient
directly or indirectly from a source other than one as to which the recipient
is aware that such source has an obligation of confidentiality to the providing
party; (III) becomes publicly known or otherwise ceases to be secret or
confidential, except through a breach of this Agreement by the recipient; or
(IV) was independently developed by the recipient without use of or reference
to the providing party's confidential information.
12. TRADEMARK INDEMNITY
Each party shall defend, or at its option settle, any claim brought
against the other by a third party and shall indemnify and hold harmless the
other party against all costs and expenses of such claims alleging that, in the
case of IntelliChoice, ABT's Trademarks, and, in the case of ABT,
IntelliChoice's Trademarks, infringe a trademark, trade name, service mark or
other intellectual property right of such third party, provided however, that:
(i) the party to be indemnified shall notify the indemnifying party promptly of
any such claim and gives the indemnifying party full and complete authority,
information and assistance to defend or settle such claim at the indemnifying
party's expense; and (ii) the party to be indemnified gives the indemnifying
party full control of the defense and all negotiations for its compromise and
settlement.
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13. GENERAL
A. Successors and Assigns. This Agreement and the rights and
obligations hereunder may not be assigned or sublicensed by either party. Any
attempt by either party to license, assign or transfer any of the rights,
duties or obligations under this Agreement is void. Notwithstanding the
foregoing, IntelliChoice may assign or transfer this Agreement in connection
with any sale, or transfer of substantially all the ownership of IntelliChoice
or its assets. Subject to the foregoing, this Agreement will benefit and bind
the successors and assigns of the parties. For purposes of the foregoing, any
transaction or series of transactions (other than a public offering) which
results in an aggregate transfer of fifty percent (50%) or more of the assets
or stock of ABT shall be considered an assignment of for purposes of this
Agreement.
B. Notices. All notices the parties may give to each other will be in
writing and by personal delivery or by first class mail, registered or
certified, postage prepaid with return receipt requested, addressed to the
other party at the address provided at the beginning of the Agreement or to
such other address as the parties designate to the other in writing pursuant to
this Section. 12.B. A notice under this Agreement will be effective on personal
delivery or three (3) days after deposit, if by U.S. mail.
C. Severability. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall continue in full force and effect. EACH PART OF THIS AGREEMENT
THAT LIMITS LIABILITY, DISCLAIMS WARRANTIES OR GUARANTEES, OR EXCLUDES DAMAGES
IS SEVERABLE AND INDEPENDENT OF ANY OTHER PROVISION AND IS TO BE ENFORCED THAT
WAY. IF ANY REMEDY FAILS TO FULFILL ITS ESSENTIAL PURPOSE, THE LIMITATIONS OF
LIABILITY AND EXCLUSIONS OF DAMAGES REMAIN IN EFFECT.
D. Waivers. Any waivers must be in writing and the waiver of one breach
or default in exercising any rights will not constitute a waiver of any
subsequent breach or default.
E. Attorney's Fees. If any action or arbitration is brought to enforce
or interpret the provisions of this Agreement, the prevailing party will be
entitled to reasonable attorney's fees and costs, in additions to any other
relief to which that party may be entitled and awarded by a court of competent
jurisdiction, including any fees and costs incurred on any appeal.
F. Integration. This Agreement represents the entire agreement between
the parties, may only be amended by a writing signed by both parties and
supersedes all prior agreements and understandings with respect to the matters
covered by this Agreement.
G. Force Majeure. Neither party will be liable to the other for delays
or failures in performance arising out of or resulting from causes beyond the
reasonable control of that party, including, without limitation, acts of God,
labor disputes or disturbance, material shortages or
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rationing, riots, acts of war, governmental regulation, communication or
utility failures, or casualties.
H. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, and all of which
together will constitute the Agreement.
I. Injunctive Relief. In addition to any of the other remedies available
to the parties hereto, each party agrees that it shall be entitled to a decree
of specific performance or an injunction restraining violations of a parties'
proprietary rights (including any violation of Section 10 of this Agreement).
No remedy provided herein is intended to be exclusive of any other remedy, and
each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or equity.
J. Governing Law. This Agreement shall be governed by the laws of the
State of California.
K. Expenses. Each party hereto shall pay such party's own expenses
incurred (including, without limitation, the fees of counsel) on such party's
behalf in connection with this Agreement or the performance of its services
hereunder.
L. Entire Agreement. This Agreement embodies the entire agreement and
understanding of the parties hereto as to the subject matter of this Agreement,
and supersedes all prior or contemporaneous written or oral communications or
agreements between the parties regarding the subject matter hereof. Without
limiting the foregoing, neither party has any obligation to provide any
services or data not expressly set forth in this Agreement, including any
additional development work, maintenance or support. This Agreement may only be
amended by written agreement between parties.
M. Independent Contractors. The parties will act as independent
contractors in the performance of this Agreement, and nothing contained in this
Agreement will be construed to (i) give either party the power to direct and
control the day-to-day activities of the other, (ii) constitute the parties, as
partners, joint venturers, co-owners or otherwise as participants in a joint or
common undertaking, or (iii) allow either party to create or assume any
obligation on behalf of the other party for any purpose whatsoever. All
financial obligations associated with each party's business are the sole
responsibility of that party. All sales and other agreements between ABT and
ABT Clients are ABT's exclusive responsibility and will have no effect on ABT's
obligations under this Agreement. All sales and other agreements between
IntelliChoice and IntelliChoice Clients and IntelliChoice's exclusive
responsibility and will have no effect on IntelliChoice's obligations under
this Agreement.
N. Arbitration. Any controversy between ABT and IntelliChoice related
directly or indirectly to any this Agreement or any rights or obligations
hereunder (including as to whether a
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dispute is subject to arbitration) will be settled by binding arbitration under
the commercial rules of the American Arbitration Association then in effect,
except as specifically stated in this Agreement. It does not matter whether the
controversy is based on contract, tort, strict liability or other legal theory.
Despite the foregoing, ABT and IntelliChoice will not arbitrate controversies
involving violation of any of the proprietary rights of either party (including
of the IntelliChoice Rights) or of third parties. Any arbitration will be held
in Santa Clara, California, by one arbitrator with significant knowledge about
the electronic information services industry. Each party reserves the right to
obtain an interim or permanent injunction in court to prevent infringement,
misappropriation or other violation of its proprietary rights of and/or the use
of rights in violation of this Agreement. The Federal Arbitration Act, 9 U.S.C.
Sections 1-15, not state law, will govern the arbitrability of all claims and
all aspects of any arbitration. The arbitrator will not have authority to award
any punitive, exemplary or other non-compensatory damages or any penalties
relating to any dispute arbitrated or litigated. At the request of a party, the
arbitrator will establish a discovery schedule that will: (i) allow each party
to notice the depositions of up to three persons (and the length of any such
deposition will not exceed two days), (ii) allow each party to serve up to 10
requests for production of up to forty documents or things, and (iii) require
each party to notify the other party of the names and address of each person
knowing any facts relating to the claims being arbitrated and describing
briefly for each person the relevant facts known by that person. Each party
will be allowed at least 20 days after receiving those names and addresses to
notice the depositions stated in (i) above. The scope of the depositions,
requests for production and the extent of the parties' obligations to respond
will be governed by the Federal Rules of Civil Procedure. Except as provided
above, there will be no discovery in any arbitration that results from this
Agreement.
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IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
Auto-By-Tel Marketing Corporation IntelliChoice, Inc.
By: /s/ MARK W. LORIMER By: /s/ PETER S. LEVY
----------------------------- ----------------------------
Mark W. Lorimer, Peter S. Levy, President
Vice President & Secretary
Auto-By-Tel Corporation
By: /s/ MARK W. LORIMER
-----------------------------
Mark W. Lorimer,
Vice President & Secretary
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EXHIBIT A
Affinity Group Data and Services
URL:
www.intellichoice.com/(to be specified)
CONTENT AND FUNCTIONALITY:
Current model-year vehicle criteria search engine:
Search Criteria:
Drive
Passenger Doors
Transmission
Body Style
Base Price or Monthly Payment (Max)
Horsepower (Min)
EPA City Mileage (Min)
EPA Highway Mileage (Min)
Seating Capacity (Min)
Specified Safety Features
Specified Optional Features
Search Results:
IntelliChoice Value Rating
Vehicle Name
Base Price
Monthly Loan Payment
New Car Pricing Reports: (Example is attached as Exhibit A-1)
ABT supplied header image
Model and Trim-Line Name
Pricing Data:
Last Mfg. Price Change
Mfg. Code
Base Invoice Price
Destination Charge
Consumer Rebate
Dealer Incentive
Consumer Information:
General:
MPG (City/Highway)
Full Warranty
Dimensions:
Wheelbase
Overall Length
Curb Weight
Cargo capacity
Seating Capacity
Front Headroom
Front Legroom
Safety:
ABS Brakes
<PAGE> 22
Automatic Seatbelts
Driver Side Airbag
Passenger Side Airbag
Standard Features
Packages
Features
IntelliChoice Attribution
Listing and photo of current model-year Best Overall Value of the Year
(BOVY) winners by category (At ABT's option)
Listing of all current Manufacturer Rebates and Incentives (At ABT's
option)
Listing of current National and Regional Manufacturer leases included
those awarded the IntelliChoice Gold Star Lease Award (At ABT's option)
LINKS:
As specified in Section 3B.
WINDOW STICKER PLUS:
IntelliChoice is in the process of developing and testing an application
(working title: Window Sticker Plus) which allows users to select only
valid options and features for selected trim lines. The application then
computes a detailed window sticker for the vehicle. IntelliChoice will add
this application to the Affinity Group Site within 30 days of implementing
it at it's own site, www.intellichoice.com
<PAGE> 23
EXHIBIT B
Credit Union Data and Services
URL:
www.intellichoice.com/(to be specified)
CONTENT AND FUNCTIONALITY:
Current model-year vehicle criteria search engine:
Search Criteria:
Drive
Passenger Doors
Transmission
Body Style
Base Price or Monthly Payment (Max)
Horsepower (Min)
EPA City Mileage (Min)
EPA Highway Mileage (Min)
Seating Capacity (Min)
Specified Safety Features
Specified Optional Features
Search Results:
IntelliChoice Value Rating
Vehicle Name
Base Price
Monthly Loan Payment
New Car Pricing Reports: (Example is attached as Exhibit A-1)
ABT supplied header image
Model and Trim-Line Name
Pricing Data:
Last Mfg. Price Change
Mfg. Code
Base Invoice Price
Destination Charge
Consumer Rebate
Dealer Incentive
Consumer Information:
General:
MPG (City/Highway)
Full Warranty
Dimensions:
Wheelbase
Overall Length
Curb Weight
Cargo capacity
Seating Capacity
Front Headroom
Front Legroom
Safety:
ABS Brakes
Automatic Seatbelts
Driver Side Airbag
Passenger Side Airbag
<PAGE> 24
Standard Features
Packages
Features
IntelliChoice Attribution
Listing and photo of current model-year Best Overall Value of the Year
(BOVY) winners by category (At ABT's option)
Listing of all current Manufacturer Rebates and Incentives (At ABT's
option)
LINKS:
As specified in Section 3B.
WINDOW STICKER PLUS:
IntelliChoice is in the process of developing and testing an application
(working title: Window Sticker Plus) which allows users to select only
valid options and features for selected trim lines. The application then
computes a detailed window sticker for the vehicle. IntelliChoice will add
this application to the Credit Union Site within 30 days of implementing
it at it's own site, www.intellichoice.com
<PAGE> 25
EXHIBIT C
New Car and Used Car Data
NEW CAR DATA:
- -------------
FILE#1: NEW VEHICLE FILE
- ------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
1 Tag Unique IntelliChoice vehicle ID used as foreign key to other
data files.
2 Brand Manufacturer name.
3 Model First word of model name (Model 1).
4 Series Remainder of model name (Model 2 - Model 5).
5 Doors Number of Doors
6 Class Classification of model.
7 Bodystyle Bodystyle
8 Invoice Invoice price
9 Retail Retail price
10 Destination Destination fee
11 Luxury Tax Luxury tax amount
12 Gas Guzzler Gas Guzzler tax amount
FILE #2: STANDARD FEATURES
- --------------------------
1 Tag Unique IntelliChoice vehicle ID.
2 Name Feature Name.
</TABLE>
<PAGE> 26
FILE #3: OPTION PACKAGES
- ------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
1 Tag Unique IntelliChoice vehicle ID.
2 Name Option Package Name
3 Availability Availability of option package
4 Invoice Invoice Price
5 Retail Retail Price
6 Components List of option package components.
FILE #4: OPTION PACKAGE RELATIONS
- ---------------------------------
1 Tag Unique IntelliChoice vehicle ID.
2 Name Option Package Name.
3 Relationship with Option package name of relation
4 Relationship Type Type of relation
FILE #5: COLOR AVAILABILITY
- ---------------------------
1 Tag Unique IntelliChoice vehicle ID.
2 Name Manufacturer name of paint.
3 Exterior Color 1 Exterior color. If two tone, then the upper color.
4 Exterior Color 2 Only used if two tone. Lower color.
5 Interior Color Material color.
USED CAR DATA:
- -------------
FILE #1: VEHICLE
- -----------------------
1 Year Year.
2 Brand Manufacturer name.
3 Model First word of model name (Model 1).
4 Series Remainder of model name (Model 2 - Model 5).
</TABLE>
<PAGE> 27
<TABLE>
<S> <C> <C>
5 Class Classification of model.
6 Look Up Class Foreign key value, used in lookup of File #3.
7 Price Original Base Price.
8 Equipment Schedule
Reference Reference Foreign key to File #4.
</TABLE>
FILE #2: MPG FUNCTION FILE:
<TABLE>
<S> <C> <C>
1 Year Year of vehicle to which the used mileage function stored in this
record applies.
2 Low Dollar Amount Minimum dollar amount of used vehicle to which this mileage
function applies.
3 High Dollar Amount Maximum dollar amount of used vehicle to which this mileage
function applies.
4 Constant Constant in two degree polynomial mileage function.
5 Coefficient 1 Coefficient of x in two degree polynomial mileage function.
6 Coefficient 2 Coefficient of x squared in two degree polynomial mileage
function.
</TABLE>
<PAGE> 28
FILE #3: MPG2 FUNCTION FILE:
<TABLE>
<S> <C> <C>
1 Year Year of vehicle to which the used mileage function stored in this
record applies.
2 Class Vehicle classification to which the used mileage function stored
in this record applies.
3 Constant Constant in two degree polynomial mileage function.
4 Coefficient 1 Coefficient of x in two degree polynomial mileage function.
5 Coefficient 2 Coefficient of x squared in two degree polynomial mileage
function.
</TABLE>
FILE #4: FEATURE SCHEDULE:
<TABLE>
<S> <C> <C>
1 Year Year.
2 Schedule Schedule to which this entry applies.
3 Name Name of feature.
4 Availability Availability of feature.
5 Offset Feature value offset.
</TABLE>
<PAGE> 1
EXHIBIT 10.17
[*] Confidential Treatment has been requested for certain portions of this
exhibit.
KELLEY BLUE BOOK/AUTO-BY-TEL AGREEMENT
This Agreement supersedes the prior Agreements executed June 27, 1996 and
January 31, 1996 between Kelley Blue Book and Auto-By-Tel.
1. Kelley Blue Book will provide a link to Auto-By-Tel from its pages
beyond the "Buy A Car Now" and "Buy A New Car Now" buttons on the used
car report pages and new car pricing report pages, respectively.
(www.kbb.com/buyueast.html, www.kbb.com/buyneast.html and
www.kbb.com/cgi-bin/cgi.exe?kbb+nc+byn)
2. Auto-By-Tel's link will be placed as the third position of the "auto
buying services" on these pages.
3. Kelley Blue Book may, from time to time, change the geographic regions
of the United States to which this service pertains. Initially, it will
include all states, except California, Nevada, and Arizona.
4. Kelley Blue Book will track the number of click throughs to the
Auto-By-Tel buying service each month by users coming from Kelley Blue
Book's "buying service" pages. Auto-By-Tel will pay Kelley Blue Book a
referral fee of [*] generated from the Kelley Blue Book site per month.
5. Kelley Blue Book will invoice Auto-By-Tel, with payment due in thirty
(30) days. If payment is not made in a timely manner, Kelley Blue Book
may, at its option, terminate this Agreement immediately.
6. Auto-By-Tel will provide a link to Kelley Blue Book's New and Used Car
Pricing services. Users coming to Kelley Blue Book from Auto-By-Tel's
site will see the Kelley Blue Book services in a controlled mode. In the
controlled mode, all links to the Kelley Blue Book Home Page will be
replaced with links to a page on the Auto-By-Tel site, and all other
outside links, i.e. links to other "buying services", links to the
Carfax service, and banner ads will be removed and the normal controlled
mode service charge will be waived.
7. Auto-By-Tel and Kelley Blue Book will not disclose the terms of this
Agreement to any outside entity at any time for any reason.
8. This Agreement will extend for a period of thirty (30) days from its
effective date. It shall continue automatically until either party
discontinues this Agreement by providing the other party with thirty
(30) days prior written notice of such termination.
/s/ PETE ELLIS 11-19-97 /s/ STEVE HENSON 11/17/97
- --------------------------------------- ------------------------------------
Pete Ellis Date Steve Henson Date
AUTO-BY-TEL KELLEY BLUE BOOK
<PAGE> 2
AMENDMENT
Kelley Blue Book/Auto-By-Tel Agreement
This is an Amendment to the Agreement executed November 19, 1997 by and
between Kelley Blue Book and Auto-By-Tel.
Paragraph 6 shall be Amended, effective 7/1/98, to read:
6. Auto-By-Tel will provide a link to Kelley Blue Book's New and Used Car
Pricing services. Users coming to Kelley Blue Book from Auto-By-Tel's site
will see the Kelley Blue Book services in a controlled mode. In the
controlled mode, all links to the Kelley Blue Book Home Page will be replaced
with links to a page on the Auto-By-Tel site, and all other outside links
(banner ads, links to other buying services, vehicle history, finance sites,
etc.) will be removed. Kelley Blue Book and Auto-By-Tel will work together on
the "look and feel" of the controlled mode pages. Kelley Blue Book will track
the number of reports (New Car, Trade-In and Retail Used Car) downloaded each
month by users coming from the Auto-By-Tel site. At the end of each month,
the number of reports will be multiplied by the price per report of 2 cents
and used as the invoice amount for that month. Minimum payment, regardless of
the number of reports downloaded, will be five hundred dollars ($500) per
month. Kelley Blue Book will invoice Auto-By-Tel, with payment due by the
30th day of the following month.
Paragraph 9 shall be added:
9. Once an Auto-By-Tel user has downloaded a used car report, Kelley Blue Book
will, at Auto-By-Tel's option, pass back much of the vehicle information,
including zip code, vehicle make/model, year, equipment, suggested retail
price, etc. via the URL string to Auto-By-Tel.
/s/ MARK LORIMER 6/30/98 /s/ STEVE HENSON 6/26/98
- ----------------------------------- ----------------------------------------
Mark W. Lorimer Date Steve Henson Date
AUTO-BY-TEL KELLEY BLUE BOOK
<PAGE> 3
ADDENDUM TO AGREEMENT
Kelley Blue Book / Auto-By-Tel
This is an Addendum to the Agreement executed November 19, 1997 by and between
Kelley Blue Book and Auto-By-Tel.
Effective February 13, 1998, Auto-By-Tel gives authorization to Kelley Blue Book
to use the Auto-By-Tel registered trademark within the 'Web Export' function of
Kelley Blue Book's KARPOWER(R) Used Car valuation software.
/s/ MARK W. LORIMER 2/9/98 /s/ STEPHEN HENSON 2/9/98
- ----------------------------------- -------------------------------
Mark W. Lorimer C.O.O. Date Stephen Henson Date
Auto-By-Tel Kelley Blue Book
<PAGE> 1
Exhibit 10.18
[*] Confidential Treatment has been requested for certain portions of this
exhibit.
CLASSIFIEDS2000 LISTINGS DISTRIBUTION, SPONSORSHIP, DISPLAY ADVERTISING AND
NETWORK AFFILIATION AGREEMENT
This LISTINGS DISTRIBUTION, SPONSORSHIP, DISPLAY ADVERTISING AND NETWORK
AFFILIATION AGREEMENT (the "Agreement") is between CLASSIFIEDS2000, INC., a
California corporation having its place of business at 617 Palomar Avenue,
Sunnyvale, CA 94086 ("Classifieds2000"), and AUTO-BY-TEL, CORPORATION, a
Delaware Corporation, having its place of business at 18872 MacArthur Blvd.,
2nd Floor, Irvine, CA 92612 ("Customer"). This Agreement is effective as of May
29, 1998 (the "Effective Date").
WHEREAS, Classifieds2000 is the creator and administrator of an Internet
classifieds service (the "Classifieds2000 Service");
WHEREAS, Customer is in the business of distributing Vehicle Listings
("Classified Advertisements" or "Listings") and offering other services on its
own Web site and elsewhere on the Internet on behalf of its clients;
WHEREAS, Customer desires to: (a) license Classifieds2000 to distribute
Classified Advertisements through the Classifieds2000 Service; (b) be one of
four (4) sponsors of the Classifieds2000 Vehicles Channel; (c) display banner
and in-line text advertorials through the Classifieds2000 Vehicles category;
and (d) be a Network Affiliate of the Classifieds2000 Network, as the
Classifieds2000 Network presently exists or is augmented or supplemented from
time to time during the term of this Agreement.
WHEREAS, Customer and Classifieds2000 desire that this new Agreement replace
any and all oral or written agreements or understandings between the parties as
to the subject matter of this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
1. SERVICES. Classifieds2000 will provide to Customer the services described in
this section. For the purposes of this section, a Listing means a single used
vehicle listing that is delivered to Classifieds2000 according to the
Classifieds2000 Standard Vehicle Upload Specification. A summary of such
services is shown in Attachment A.
1.1. DISTRIBUTION OF LISTINGS. Classifieds2000 will distribute all
Listings provided by Customer within the Vehicles section of the
Classifieds2000 Service. Customer may include listings from DealerSites.com in
the Listings feed that it sends to Classifieds2000. Classifieds2000 will
provide Customer with the ability to remotely and automatically upload and
update the Listings it distributes in the Classifieds2000 Service on a regular
basis. The upload and update capability currently allows changes on a twenty
four-hour basis.
1.1.1. DETAIL PAGE LAYOUT AND BRANDING. For each Listing distributed
by Customer, Classifieds2000 will display a detail page in a layout exactly as
Customer's Listings are displayed in the current Classifieds2000 Service. Each
Listing will display the Customer logo and will contain links to additional
pages describing Customer's services. An example of this layout is shown in
Attachment B.
1.1.2. CONTACT REQUEST LEADS. Classifieds2000 will provide Customer
with contact request leads via a specialized Customer enhanced email form that
captures specific information and directly processes such information into
Customer's contact request service.
1.2. NETWORK-WIDE EXPOSURE. Classifieds2000 will integrate and
display Customer's branding throughout the Classifieds2000 Service in the
manner described below in order to provide users with easy access from various
points within the Vehicles Channel of Classifieds2000's premier classifieds to
the Customer Site.
1.2.1. CATEGORY-ENTRY SPONSOR BUTTON. Customer will be the exclusive
Auto Buying Service Sponsor. As such, Customer shall receive a fixed presence
logo link and FasTrak box on the Entry Page of the Vehicles Channel. The logo
shall link to a page of Customer's choice. Minimum impressions from this box
shall be one million (1,000,000) per month.
1.2.2. PRODUCTS AND SERVICES PAGE. Customer will receive a fixed
presence logo, text link and two lines of text in the New Car Price Quotes
Section of the Products and Services Page. The text link shall link to
Customer's FasTrak new car buying form. Minimum impressions from this page shall
be fourteen thousand (14,000) per month. Logo specifications shall be: 88x31
pixels.
1.
<PAGE> 2
1.2.3. INLINE TEXT ADVERTORIALS. Customer will receive four (4)
separate Text Advertorial links that will rotate randomly throughout the Search
Results Grid of the Vehicles Channel of the Classifieds2000 Service. Minimum
impressions from the Inline Text Advertorials shall be two million (2,000,000)
per month. Inline text specifications shall be no greater than sixty (60)
characters long; no mention of any company names or brands.
1.2.4. PAGE BOTTOM TEXT ADVERTISEMENTS. Customer will receive a Page
Bottom Text Advertisement that will rotate on the Vehicle Search Results Pages
and the Vehicle Details Pages of the Private Party Listings. These
advertisements shall link to Customer's FasTrak new car buying form. Minimum
impressions from the Page Bottom Text Advertisements shall be one million per
month.
1.2.5. BANNER ADVERTISEMENTS. Customer will receive a minimum of five
hundred thousand (500,000) banner impressions per month. Banner Specifications
shall be 468 x 60 pixels; 10K maximum file size.
1.2.6. SEASONAL PROMOTIONS. Customer will be included in all
relevant Classifieds2000 Service seasonal promotions for advertisers/sponsors
that occur during the term of this Agreement. The impressions for this type of
advertisement will vary.
1.3. CLASSIFIEDS2000 NETWORK AFFILIATION. Classifieds2000 will develop and
offer the following network affiliation service to Member:
1.3.1. CONTENT AND TECHNOLOGY. Classifieds2000 will provide Customer
with a private label classified advertising service including the Search Ad,
Place Ad, Change Ad, Cool Notify and Hot List features ("Customer
Classifieds"). The Customer Classifieds shall include the Vehicles category and
any other classified categories selected by Member. The look and feel of the
Customer Classifieds Service shall be as shown on:
http://classifieds2000.com/cgi-cls/Display.exe?Customer-demo+class.
1.3.2. LISTINGS RESTRICTIONS. In the Vehicles category, the Customer
Classifieds shall contain only private party listings provided by
Classifieds2000.
1.3.3. ALL SERVICE UPGRADES AND NEW CATEGORIES. All new standard
feature enhancements and categories will be added to the Customer Classifieds
as they are released.
1.3.4. PROMOTION OF CUSTOMER CLASSIFIEDS ON WWW.AUTOBYTEL.COM/
("CUSTOMER SITE"). Customer will provide a prominent home page link and
tool/menu bar link to the Customer Classifieds from the Customer Site.
1.3.5. ADVERTISING SALES. No third party advertising or banners shall
be displayed in the Customer Classifieds.
1.3.6. FREE SERVICE. Private parties will be able to list and view
merchandise and services for free on Customer Classifieds.
1.3.7. EXCLUSIVITY. For the Term of this Agreement, Customer shall
not enter into any on line co-branding or private label arrangements wherein
any party (other than Classifieds2000) provides a private party classifieds
service ("For Sale by Owner") to Customer.
1.3.8. CLASSIFIEDS2000 MARKS. A credit for the Classifieds2000
Service and a "Powered By Classifieds2000 - The Internet Classifieds" logo will
be displayed on each page within the Customer Classifieds.
1.3.9. OPTION TO REMOVE OF CUSTOMER CLASSIFIEDS. Customer shall have
the option of removing Customer Classifieds if it determines that it has a
negative impact on Customer's Cyberstore service.
1.4. REPORTING. Classifieds2000 shall provide periodic reports by email to
Customer outlining the number of banner impressions and total click-throughs
delivered, number of Customer listings in the Classifieds2000 database, and
detail pages viewed. Classifieds2000 shall commit to quarterly performance
reviews to assess the quality of purchase requests being sent to Customer.
Classifieds2000 shall commit to working closely with Customer to improve the
quality of purchase requests throughout the term of this Agreement.
1.5. ADDITIONAL PER LISTING SERVICES. The fee for additional per listing
services such as secondary detail pages will be on a per listing or setup fee
basis
2.
<PAGE> 3
[*] Confidential Treatment Requested
2. FEES. The fees for the services contemplated in this Agreement shall be as
follows:
2.1 A flat fee of [*] per month for the Listings Distribution Services
described in Section 1.1 together with the Network Affiliation
Services described in Section 1.3 herein; plus
2.2 A flat fee of [*] per month for the Network Wide Exposure Services
described in Section 1.2 herein; plus
2.3 A variable "Bounty" as follows:
i. [*] per Unique New Car Purchase Request forwarded to Customer for
the first seventy five thousand (75,000) Unique New Car Purchase
Requests;
ii. [*] per Unique New Car Purchase Request beginning with seventy
five thousand and one (75,001) up to and including one hundred
and fifty thousand (150,000) Unique New Car Purchase Requests;
and
iii. [*] per Unique New Car Purchase Requests after the first 150,000
new car purchase requests.
2.4 Classifieds2000 will guarantee a minimum of one hundred thousand
(100,000) Unique New Car Purchase Requests over the term of this
Agreement.
2.5 The total number of Unique New Car Purchase Request shall be
calculated in accordance with Customer's standard de-duplication
formula as set forth in item (i) on the attached Schedule C,
incorporated herein by this reference.
2.6 All fees payable to Classifieds2000 shall be invoiced monthly at the
beginning of the month. Fees due under this Agreement shall be paid
within thirty (30) days of receipt of a statement of such payment
obligations. In the event there is an unpaid thirty (30) days after
payment is due, Customer shall also pay interest at the rate of the
lesser of one and one-half (1.5%) per month or the then-highest
interest rate allowed to be imposed by applicable law, plus
Classifieds2000's reasonable costs of collection.
3. TERM. The term of this Agreement shall be as follows:
3.1 This Agreement shall have a stipulated start date of June 1, 1998,
and shall remain in effect for one contract year ("Contract Year").
3.2 A Contract Year shall be the longer of (a) twelve (1) consecutive
months following the stipulated start date; or (b) that period of
time following the stipulated start date deemed necessary for
Classifieds2000 to deliver the guaranteed number of Unique New Car
Purchase Requests as set forth in Section 2.3 above. Classifieds2000
agrees that in the event a Contract Year extends beyond twelve (12)
months following the stipulated start date, then Classifieds2000
shall waive the fixed monthly cost associated with Section 2.2 of
this Agreement until such time as the guaranteed number of Unique New
Car Purchase Requests are delivered to Customer, and Customer shall
only pay the variable fee per Unique New Car Purchase Request as
identified in Section 2.2 above.
3.3 Upon the expiration of this Agreement, which shall be either the
lapse of (12) months following the stipulated start date or upon the
lapse of the Contract Year, whichever term is in effect, this
Agreement will automatically renew on a monthly basis, unless either
party provides thirty (30) days written notice of its election to not
have this Agreement automatically renew.
3.4 After this Agreement has been in effect for twelve (12) consecutive
months, either party may terminate or renegotiate the terms upon
thirty (30) days written notice.
4. ADDITIONAL TERMS AND CONDITIONS.
4.1. CLASSIFIED ADVERTISEMENTS. Customer hereby authorizes Classifieds2000
to use, reproduce, publicly distribute and publicly display
Classified Advertisements on the Classifieds2000 Service. Customer
will be solely responsible for creating, managing, editing,
reviewing, deleting and otherwise controlling the Listings. Customer
will deliver to Classifieds2000 Customers' Classifieds Advertisements
in the format specified by the document "Classifieds2000 Vehicle
Listing Import Specification." Classifieds2000 and its affiliates may
decline to include any Classified Advertisements in the
Classifieds2000 Service for any reason or at any time.
3.
<PAGE> 4
4.2. DISPLAY ADVERTISING. Electronic images and URLs must be
submitted at least 3 days before the desired start date. GIFs and go-to URLs
should be e-mailed to [email protected]. Classifieds2000 and its
related parties reserve the right, at any time, and for any reason in its sole
discretion to decline any advertising and to cease further publication of any
advertising, and shall not be liable in any way, provided that any amounts
received for advertising that is not published will be refunded.
4.3. TERMINATION. This Agreement may be terminated by the parties as
follows:
4.3.1 This Agreement will terminate automatically in the event
that Classifieds2000 decides, in its sole discretion, to
stop operating its Web-accessible service.
4.3.2 Either party may terminate this Agreement after eight
(8) months provided that sixty (60) days prior written
notice is delivered.
4.3.3 Either party may terminate this agreement upon the
material breach of the other party, if such breach
remains uncured for thirty (30) days following written
notice to the breaching party; except that
Classifieds2000 may, by providing written notice,
terminate this Agreement immediately if the monthly
fees are not paid when due, as set forth herein.
4.3.4 Either Party may terminate this Agreement upon thirty
(30) days written notice to Classifieds2000 upon the
determination that the Unique New Car Purchase
Requests forwarded to Customer fall below Customer's
acceptable quality standard should such unacceptable
quality standard remains uncured for sixty (60) days
following written notice to the other party. For the
purposes of this Agreement, Customer's quality standard
shall be determined in accordance with the formula set
forth in item (ii) on the attached Schedule C,
incorporated herein by this reference.
4.3.5 Except for Classified Advertisements that
Classifieds2000 requires for maintenance of its
systems, upon the expiration or termination of this
Agreement, Classifieds2000 will promptly remove the
Classified Advertisements from its systems. Sections 2,
4.3, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11 and 4.12
shall survive any termination or expiration of this
Agreement.
4.4. DISCLAIMER OF WARRANTIES. Classifieds2000 provides all Services
performed hereunder "AS IS" and without any warranty of any kind.
Classifieds2000 does not guarantee continuous or uninterrupted service to and
use of the Services. In the event of interruption of Services, Classifieds2000's
sole obligation shall be to restore service as soon as practicably and
reasonably possible.
4.5. TRADEMARKS. Neither party may use the other party's trademarks,
service marks, trade names, logos, or other commercial or product designations
(collectively, "Marks") for any purpose whatsoever without the prior written
consent of the other party. Notwithstanding the foregoing, each party grants to
the other a revocable, non-exclusive, nontransferable, royalty-free, worldwide
license to use each other's respective Marks (a) in conjunction with the
Services for the purposes of marketing, promotion, and Classified
Advertisements directories or indexes, and (b) in electronic or printed
advertising, publicity, press releases, newsletters and mailings about the
Services or Classifieds2000.
4.6. CLASSIFIEDS2000 SERVICE PROMOTION. Customer may not use the
names of specific Classifieds2000 affiliates to promote, advertise, or publicly
state, either verbally or in written form, that Customer's listings are being
distributed on such affiliates' Web sites without explicitly stating that this
distribution is enabled via an arrangement with Classifieds2000.
4.7. INDEMNITY. Customer agrees to defend, indemnify and hold
harmless Classifieds2000 and its directors, officers, agents and employees for
any and all losses, costs, liabilities or expenses (including without
limitation reasonable attorneys' and expert witnesses' fees) incurred or
arising from any Classified Advertisements.
4.8. LIMITATIONS ON LIABILITY. IN NO EVENT SHALL CLASSIFIEDS2000 BE
LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING BUT NOT LIMITED TO SUCH DAMAGES ARISING FROM BREACH OF CONTRACT OR
WARRANTY OR FROM NEGLIGENCE OR STRICT LIABILITY), OR FOR INTERRUPTED
COMMUNICATIONS, LOST DATA OR LOST PROFITS, ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT, EVEN IF CLASSIFIEDS2000 HAS BEEN ADVISED OF (OR KNOWS OR SHOULD
KNOW OF) THE POSSIBILITY OF SUCH DAMAGES. UNDER NO CIRCUMSTANCES SHALL
CLASSIFIEDS2000 BE LIABLE TO CUSTOMER OR ANY THIRD PARTIES FOR AN AMOUNT
GREATER THAN THE AMOUNTS RECEIVED FROM CUSTOMER HEREUNDER.
4.9. GOVERNING LAW. This Agreement will be governed and construed
in accordance with the laws of the State of California without giving effect to
principles of conflict of laws. Customer agrees to submit to jurisdiction in
California and further agrees that any cause of action arising under this
Agreement may be brought in a court in Santa Clara County, California.
4.
<PAGE> 5
4.10. SUCCESSORS AND ASSIGNS. Neither party may assign this Agreement
without prior written consent of the other, except that no such consent shall
be required for assignments in connection with the sale of all or substantially
all of the assets or securities of a party or by merger (whether by operation
of law or otherwise). The parties' rights and obligations will bind and inure
to the benefit of their respective successors, heirs, executors and
administrators and permitted assigns.
4.11. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding
and agreement of the parties and supersedes any and all oral or written
agreements or understandings between the parties as to the subject matter of
this Agreement. This Agreement may be changed only by a written agreement
signed by both parties.
4.12. CONFIDENTIALITY. This Agreement and its terms and conditions are
confidential information of both parties. Neither party may disclose the terms
and conditions hereof without the advance written consent of the other party.
Signed:
AUTO-BY-TEL, CORPORATION CLASSIFIEDS2000, INC.
/s/ Mark S. Lockareff
- ---------------------------- --------------------------------------
Customer Signature Signature
/s/ Mark Lockareff
- ------------------------------- --------------------------------------
Anne M. Benvenuto Mark Lockareff
Senior Vice President, Marketing Vice President, Classified Advertising
6/4/98
- ------------------------------- --------------------------------------
Date Date
5.
<PAGE> 6
4.10. SUCCESSORS AND ASSIGNS. Neither party may assign this Agreement
without prior written consent of the other, except that no such consent shall
be required for assignment in connection with the sale of all or substantially
all of the assets or securities of a party or by merger (whether by operation
of law or otherwise). The parties' rights and obligations will bind and inure
to the benefit of their respective successors, heirs, executors and
administrators and permitted assigns.
4.11 ENTIRE AGREEMENT. This Agreement set forth the entire understanding
and agreement of the parties and supersedes any and all oral or written
agreements or understandings between the parties as to the subject matter of
this Agreement. This Agreement may be changed only by a written agreement
signed by both parties.
4.12. CONFIDENTIALITY. This Agreement and its terms and conditions are
confidential information of both parties. Neither party may disclose the terms
and conditions hereof without the advance written consent of the other party.
Signed:
AUTO-BY-TEL, CORPORATION CLASSIFIEDS2000, INC.
- ------------------------------- -------------------------------
Customer Signature Signature
/s/ ANNE M. BENVENUTO
- ------------------------------- -------------------------------
Anne M. Benvenuto Mark Lockareff
Vice President, Classified
Advertising
- ------------------------------- -------------------------------
Date Date
5.
<PAGE> 7
[*] Confidential Treatment Requested
ATTACHMENT A
<TABLE>
<CAPTION>
USED CAR PROGRAM
FLAT FEE INCLUDES: Fixed Monthly [*] [*]
----------- ----------
<S> <C> <C> <C> <C> <C> <C>
- - Listings Distribution on Network
- - Per Listing Branding & Links
- - Unlimited Dealer Participation
- - Unlimited Contact Request Leads
- - FSBO Listings on ABT Site
NEW CAR PROGRAM
FLAT FEE INCLUDES: Fixed Monthly [*] [*]
- - Exclusive Buying Service Sponsor
- - Real Estate Slotting Fee
- - Minimum guarantee of 4,514,000 imps per month
PER NEW PURCHASE REQUEST Variable Monthly [*]
- - 0 - 75,000 - [*]
- - 75,001 - 150,000 - [*]
- - 150,001 + - [*]
- - Minimum guarantee of 100,000 new "PR's" during terms
TOTAL MONTHLY FIXED [*]
TOTAL ANNUAL FIXED [*]
TOTAL VARIABLE (ESTIMATED*) PER MONTH MONTH # PRs S/PR TOTAL
Jun-98 3,000 [*] [*]
* [*] Jul-98 5,000 [*] [*]
Aug-98 6,000 [*] [*]
Sep-98 7,000 [*] [*]
Oct-98 7,000 [*] [*]
Nov-98 8,000 [*] [*]
Dec-98 9,000 [*] [*]
Jan-99 9,000 [*] [*]
Feb-99 10,000 [*] [*]
Mar-99 11,000 [*] [*]
Apr-99 12,000 [*] [*]
May-99 13,000 [*] [*]
ESTIMATED TOTAL ANNUAL VARIABLE 100,000 [*]
TOTAL ESTIMATED MONTHLY COST Jun-98 [*]
Jul-98 [*]
Aug-98 [*]
Sep-98 [*]
Oct-98 [*]
Nov-98 [*]
Dec-98 [*]
Jan-99 [*]
Feb-99 [*]
Mar-99 [*]
Apr-99 [*]
May-99 [*]
----------
TOTAL ESTIMATED ANNUAL COST [*]
----------
</TABLE>
<PAGE> 8
SCHEDULE C
TO THAT CERTAIN CLASSIFIED2000 LISTING DISTRIBUTION,
SPONSORSHIP, DISPLAY ADVERTISING AND
NETWORK AFFILIATION AGREEMENT ("AGREEMENT")
BETWEEN
CLASSIFIEDS2000, INC
AND
AUTO-BY-TEL CORPORATION
THE FOLLOWING LANGUAGE SHALL BE INCORPORATED INTO SECTION 2.4 OF THE
AGREEMENT AS THOUGH FULLY SET FORTH THEREIN:
i. Unique Purchase Request. For the purposes of this Agreement, a "Unique
Purchase Request" shall be a new car purchase request electronic form
with all data fields deemed mandatory by Customer completed by the
user, which has been received by Customer from Classifieds2000, and
for which Customer has not, within the previous ninety (90) day
period, received a duplicate new car purchase request from
Classifieds2000, or any other source from which Customer regularly
receives purchase requests, for the same or similar vehicle, as
determined by the year, make and model; from the same user, as
identified by the same name, zip code and/or the same e-mail address.
THE FOLLOWING LANGUAGE SHALL BE INCORPORATED INTO SECTION 4.3.4 OF THE
AGREEMENT AS THOUGH FULLY SET FORTH THEREIN:
ii. Customer may terminate this Agreement at any time during the term of
hereof, if, based upon a random sampling over a thirty (30) day period
of not less than one hundred (100) purchase requests referred by
Classifieds2000 for either new or used vehicles, it is determined that
the number of Classifieds2000 referred purchase requests which are
converted to actual sales of vehicles is less than fifteen percent
(15%) of the total number of conversion experienced by Customer with
non-Classifieds2000 purchase requests during the same time frame.
<PAGE> 9
ATTACHMENT B
[CLASSIFIEDS2000 LETTERHEAD]
"The most visited classifieds on the web!"
FEATURES
7.25% OR 7.75%
HOME CLICK HERE!
SEARCH ADS CLICK HERE FOR MORE INFORMATION
PLACE ADS
DELETE ADS SEARCH ADS
CHANGE ADS CATEGORIES / VEHICLES / CARS
COOL NOTIFY
HOT LIST Back to List Next Cool Notify Add to Hot List
HELP
AUTO-BY-TEL - RISK FREE VEHICLE!
72 hour money back refund!
[PHOTOGRAPH]
AUTO-BY-TEL MAKES YOUR USED CAR PURCHASE RISK-FREE
- - Full refund within 72-hours
- - National 3Mo./3K Mi. Limited Warranty
- - Travel Repair Program
- - Certified 135 Point Inspection
CAR 1996, Pontiac Grand Am SE, 31K miles, $11,300
OPTIONS 31227 exterior
Air Conditioning
Cruise Control
Two Door
Automatic Transmission
DESCRIPTION bucket seats, am/fm radio, tilt steering wheel, power door
locks, stock number 67801
VEHICLE ID 1G2NE12M7TM565098
SELLER INFO
More about Auto-By-Tel Purchase Guidelines
Birmingham, Alabama 35209
Back to List Next Cool Notify Add to Hot List
<PAGE> 1
EXHIBIT 10.19
J.D. POWER AND ASSOCIATES
LICENSE AGREEMENT
This License Agreement (the "Agreement") is dated as of June 4, 1998 by and
between J.D. POWER AND ASSOCIATES, a California corporation, and Auto-By-Tel
Corporation, a Delaware corporation, which together with its wholly-owned
subsidiary, Auto-By-Tel Marketing Corporation, a Delaware corporation, is
referred to herein as "Licensee."
1.1 GRANT OF LICENSE.
(a) J. D. Power and Associates hereby grants to Licensee a nonexclusive
license to use the trade name and services mark, "J. D. Power and Associates,"
(collectively called the "Service Marks") in connection with the promotion and
advertising of the claim(s) arising out of the J. D. Power and Associates 1998
Dealer Satisfaction With Online Buying Services Study(SM) as set forth on the
attached Exhibit 1 (the "Claims") as follows:
(i) On the proprietary Extranet for clients located in the United
States operated by Licensee presently known as the Dealer Real
Time System ("DRT").
(ii) In print or other traditional advertising media primarily
circulated in the United States and Canada; and
(iii) In Licensee's media /press releases ("Press Releases")
circulated in United States and Canada.
(b) J. D. Power and Associates will sell to Licensee merchandise described
in Exhibit 4 bearing the Service Marks and Claims (the "Merchandise") provided
that Licensee and any person or entity acting on behalf of Licensee first
obtains written approval for each use of the Service Marks and Merchandise from
J. D. Power and Associates pursuant to Section 1.4 hereof. Licensee shall
<PAGE> 2
not use any of the Service Marks or Merchandise except as expressly permitted by
the terms of this Agreement.
(c) Use of the Claims as contemplated herein shall begin upon date of
execution of this Agreement and shall continue until December 31, 1998,
inclusive.
1.2 USE BY LICENSEE'S DISTRIBUTOR'S, DEALERS, DEALER ASSOCIATIONS AND THEIR
ADVERTISING AGENCIES.
(a) J.D. Power and Associates will permit Licensee's distributors,
dealers, dealer associations and their advertising agencies to use the Service
Marks in connection with the promotion and advertising of the Claims for the
term of this Agreement, provided that such distributors, dealers, associations
and agencies first execute and deliver to J.D. Power and Associates a written
agreement for the express benefit of J.D. Power and Associates, in the form
attached hereto as Exhibit 2, to be bound by the terms of this Agreement.
(b) It is the obligation of Licensee to advise all parties acting on behalf
of Licensee, and all of Licensee's distributors, dealers, dealer associations
and their advertising agencies, of the rights and obligations stated herein.
Once such advice has been given by Licensee, Licensee has no further obligation
to monitor the compliance of its distributors, dealers, dealer associations and
their advertising agencies with the terms of this License Agreement.
1.3 J.D. POWER AND ASSOCIATES' OWNERSHIP.
Licensee acknowledges that J.D. Power and Associates is the exclusive owner of
the Service Marks, and agrees to do nothing inconsistent with such ownership.
Licensee agrees that the license or use of the Service Marks shall not create
any
<PAGE> 3
interest or right, express or implied, in Licensee except as set forth in this
Agreement. Licensee shall not grant, assign, convey, sublicense or transfer any
of its rights or obligations hereunder without the written consent of J.D. Power
and Associates except as expressly permitted by this Agreement.
1.4 USE OF SERVICE MARKS AND QUALITY CONTROL.
(a) Licensee shall faithfully reproduce the Service Marks and Claims as the
same may be modified from time to time by J.D. Power and Associates in its sole
discretion. J.D. Power and Associates agrees to give Licensee not less than
thirty (30) days' written notice of any such modifications.
(b) No Service Mark may be used unless the entire text of each proposed use
is first submitted to J.D. Power and Associates for review, along with samples
which are accurate and true representations of the final form of the proposed
use of the Service Mark, and is first "Approved As Is" on the written form that
J.D. Power and Associates then uses for such purposes. Once a specific creative
execution has been so approved, it can be re-used without additional approval.
If any changes of any kind whatsoever are made to the content of a creative
execution that has been previously approved, it must again be submitted to J.D.
Power and Associates for review and approval before it is used. Licensee shall
comply with the then current Guidelines for J.D. Power and Associates
Advertising Usage Approval, the current version of which is attached as
Exhibit 3.
(c) No Merchandise may be used unless a written proposal describing each
proposed use is first submitted to J.D. Power and Associates for review, and
unless such proposed use is first "Approved As Is" on the written form that J.
D. Power and Associates uses for such purposes. If any changes of any kind
whatsoever are made to the use of the Merchandise that has been previously
<PAGE> 4
approved, the new proposed use must again be submitted to J.D. Power and
Associates for review and approval.
2.1 LICENSE FEE.
(a) Licensee shall pay a one-time license fee of $100,000 and submit a
signed License Agreement prior to any advertising or promotional use of any
claim. Liquidated damages in the amount $13,500 or, in the case of Merchandise,
twice the purchase price of the Merchandise involved, will be paid for any
creative execution of advertising or public relations/promotional use of a
Service Mark for which prior written approval from J.D. Power and Associates was
not obtained.
(b) J.D. Power and Associates has the right, upon reasonable notice, at its
sole cost, to have an inquiry conducted by an independent party of Licensee's
media schedules, tear sheets and other documents relating to use of the Service
Marks.
3.1 INFRINGEMENT OF THE SERVICE MARKS.
If any third party's unauthorized or incorrect use of the Service Marks comes to
the attention of Licensee, Licensee shall give J.D. Power and Associates prompt
notice of all details. Licensee shall cooperate and assist J.D. Power and
Associates in its investigation and prosecution of any such unauthorized or
incorrect use but shall have no right to commence any action, or proceeding
concerning infringement of the Service Marks.
<PAGE> 5
3.2 INDEMNITY.
J.D. Power and Associates does not endorse any of Licensee's Claims, and
Licensee shall indemnify J.D. Power and Associates with respect to all losses or
damages, including reasonable attorneys' fees that relate in any way to
Licensee's use of the Service Marks; provided, however, that Licensee shall have
no liability to J.D. Power and Associates for the acts or omissions of J.D.
Power and Associates or its employees.
4.1 TERM.
This Agreement shall be effective as of the date of this Agreement and shall
remain in effect as provided in Section 1.1.
4.2 TERMINATION.
J.D. Power and Associates may terminate this Agreement upon written notice if
Licensee commits or threatens to commit any breach of this Agreement unless
Licensee withdraws the threat or cures the breach within five (5) days after the
date of such notice. Licensee may terminate this Agreement at any time upon 30
days prior written notice to J.D. Power and Associates. Licensee shall
discontinue all use of the Service Marks or any confusingly similar or
conflicting names or service marks after the effective date of the termination
or expiration of this Agreement, and will destroy all Merchandise remaining in
Licensee's possession, custody, and or control.
5.1 AMENDMENT.
No waiver, alteration or amendment of this Agreement shall be effective except
pursuant to a writing by an authorized representative of the party to be bound
thereby.
<PAGE> 6
IN WITNESS WHEREOF, the duly authorized representatives of J.D. Power
and Associates and Licensee have executed this Agreement as of the date first
set forth above.
J.D. POWER AND ASSOCIATES AUTO-BY-TEL CORPORATION
BY: [SIG] BY: [SIG]
------------------------------ ------------------------------------
ITS: CFO ITS: SR. V.P. MARKETING
------------------------------ ------------------------------------
AUTO-BY-TEL MARKETING CORPORATION
BY: [SIG]
------------------------------------
ITS: President
------------------------------------
<PAGE> 7
5.2 GOVERNING LAW.
This Agreement shall be governed by and interpreted in accordance with the
internal laws of the State of California.
5.3 NO ENDORSEMENT.
It is understood that J.D. Power and Associates approval of creative executions
submitted to it for review does not constitute an endorsement by J.D. Power and
Associates of any of Licensee's Claims.
5.4 WHOLE AGREEMENT.
This Agreement constitutes the complete, final and exclusive statement of the
terms of the agreement between the parties with respect to its subject matter
and supersedes any and all other agreements, written or oral, with respect
thereto.
5.5 HEADINGS.
The headings in the Agreement are for convenience only and are of no legal
effect.
<PAGE> 8
EXHIBIT 1
J.D. POWER AND ASSOCIATES 1998 DEALER SATISFACTION WITH ONLINE BUYING
SERVICES STUDY(SM)
AUTO-BY-TEL CORPORATION AND AUTO-BY-TEL MARKETING CORPORATION
-------------------------------------------------------------
"#1 in Dealer Satisfaction With Internet Buying Services"
Based on top ranking in Dealer Services, Web Site Technology and Sales
Effectiveness.
DISCLAIMER: J.D. POWER AND ASSOCIATES 1998 DEALER SATISFACTION WITH ONLINE
BUYING SERVICES STUDY(SM). STUDY CONDUCTED AMONG DEALERSHIP INTERNET SPECIALISTS
WHO COMPLETED 540 INDIVIDUAL EVALUATIONS.
<PAGE> 9
EXHIBIT 2
AGREEMENT TO BE BOUND
- --------------------------------------------------------------------------------
(name of distributor, dealer, dealer association or advertising agency)
hereby agrees, for the express benefit of J.D. Power and Associates, to be bound
by the terms of the License Agreement between J.D. Power and Associates and
Auto-By-Tel Corporation and Auto-By-Tel Marketing Corporation.
- ------------------------------------
By:
------------------------------
Its:
------------------------------
<PAGE> 10
EXHIBIT 3
GUIDELINES FOR LICENSED USE OF
J.D. POWER AND ASSOCIATES NAME
OBJECTIVE
J.D. Power and Associates marketing information provides data to ensure that
consumer needs are properly identified and addressed. While the purpose and
intent in providing this information has not been promotional use, we realize
that manufacturers, and their distributors are able to establish product
differentiation by doing so. It will always be the goal of J.D. Power and
Associates to encourage our subscribers to use the information we collect to
meet the needs of a consumer-driven marketplace and not merely create a contest
ranking.
In light of the above, widespread use of J.D. Power and Associates marketing
information findings in advertising has required us to establish a licensing
arrangement with formal policies and procedures for reviewing all materials
which use information derived from J.D. Power and Associates proprietary
information. These policies and procedures are intended to protect:
1. Our clients from making misstatements about the information used,
thereby preventing costly production problems (e.g., network
disapproval).
2. The findings of the studies conducted by J.D. Power and Associates.
3. Manufacturer claims approved by J.D. Power and Associates.
4. Consumers from misrepresentation.
<PAGE> 11
GUIDELINES FOR LICENSED USE OF
J.D. POWER AND ASSOCIATES NAME
POLICIES/PROCEDURES
J.D. Power and Associates, via the signed license agreement, permits licensees
to use the specifically awarded claim from J. D. Power and Associates' survey as
part of their print or broadcast advertising promotion, or public relations
provided that:
a. the manufacturer or the United States affiliate of the manufacturer is
a paid subscriber to the study being cited, and has committed via a
signed Letter of Intent to be a subscriber of the study during the
period that the advertising is placed, and has signed and executed a
license agreement with J.D. Power and Associates.
b. the advertiser or its agency cites data from the most recently
published version of the study containing the specific claim.
c. the specific data cited is in the format and context used solely in
the respective study's management report.
d. advertising claims promote the advertiser's positive results without
denigrating other manufacturers.
e. only manufacturers ranking above industry average may be identified.
Any segment that falls below industry average will not be permitted in
an advertising claim. Manufacturers shall not disclose to advertising
associations specific comparisons with makes or models that fall in
the lower half of rankings.
f. advertising claims are judged to be consistent with the findings from
the survey cited.
<PAGE> 12
GUIDELINES FOR LICENSED USE OF
J.D. POWER AND ASSOCIATES NAME
g. a disclaimer is included that identifies the source of the data to the
appropriate J.D. Power and Associates survey and identifies the number
of consumers responding to the survey.
h. advertising claims have been reviewed and written approval has been
granted by J.D. Power and Associates. Review complete upon receipt of
claim approval (form indicated "Approved As Is").
i. clear and conspicuous disclosure of all information must be included
in advertising. Disclaimers must not be relied upon to convey full
disclosure.
j. all creative executions submitted must include a representation of
visuals that will accompany advertising.
k. the advertiser and consumer understand that the use of the J.D. Power
and Associates trade name and service mark does not in any way imply
endorsement of advertising claims or imply that J.D. Power and
Associates has rated, endorsed, or chosen any particular make or
model.
1. in order for J. D. Power and Associates to better monitor usage and
proper dissemination of information from syndicated studies,
manufacturers/distributors shall provide J.D. Power and Associates
with a complete copy of all materials taken from J. D. Power and
Associates studies and forwarded internally.
<PAGE> 13
GUIDELINES FOR LICENSED USE OF
J.D. POWER AND ASSOCIATES NAME
AWARD/LOGO REPRODUCTION
The following details the policy for the use of the J.D. Power and Associates
Service Mark reflecting the J.D. Power and Associates award ("Award") or
circular award logo, hereinafter ("Logo").
1. The Award must be an actual photographic representation. Photographic
representation excludes the use of line art, computerized
presentation, or any other non-photographic presentation.
2. The circular J.D. Power and Associates Logo contained in the Award
must be 1" (one inch) minimum in its final reproduced form. There
will be no exceptions to this policy.
3. The final version of the Award must include the 1" minimum circular
Logo and all other features of the Award must be proportionally
correct.
4. There is only one situation that allows reproduction of the Logo by
itself, (outside the context of the full award representation), and
that is use by the awardees of the "#1 Customer Satisfaction,"
"Airline," "Tire," "Computer," and "Medium Duty Truck" studies. All
other advertising featuring the Award must include a photographic
reproduction of the actual Award following the above guidelines.
Advertising or promotion that does not meet the above criteria shall not be
granted permission for use in public media. If an advertisement is aired or
published that does not conform to the above standards, J. D. Power and
Associates reserves the right to take appropriate legal or administrative
action.
<PAGE> 14
GUIDELINES FOR LICENSED USE OF
J.D. POWER AND ASSOCIATES NAME
CONTACT
The Advertising Specialist at J.D. Power and Associates will be responsible for
coordinating the review of the claim and issuing the release for its use.
J.D. Power and Associates will attempt to process all requests within three
working days of receipt of the proposed advertising copy and will strive to
accommodate special client timing needs. Maximum turnaround time for responding
to requests will be five working days.
IMPORTANT: In an effort to protect your interests as well as the integrity of
the information produced by J.D. Power and Associates, we would appreciate your
assistance in helping us monitor what may be inappropriate or incorrect usage of
J.D. Power and Associates marketing information. In such cases, please notify
the Advertising Specialist.
POLICY EFFECTIVE DATE: REVISED FEBRUARY 1998
<PAGE> 15
EXHIBIT 4
IN CONNECTION WITH THE promotion of Claims, Licensee will purchase any and
all merchandise (the "Merchandise" from J.D. Power and Associates that bear the
Service Marks and Claims, provided that Licensee agrees to be bound by the terms
of the License Agreement by signing and delivering to J.D. Power and Associates
a signed License Agreement or, in the case of distributors, dealers, or
advertising agencies, an Agreement to be Bound (Exhibit 2).
According to the License Agreement, all proposed Merchandise using the
Service Marks or Claims must be reviewed by J.D. Power and Associates, and
submitted along with written descriptions of any proposed use of the
Merchandise. This will be sent either by fax or mail. Merchandise is then
reviewed and will receive an "Approved As Is" status before J.D. Power and
Associates will move forward with production of Merchandise.
Merchandise available will be on a variety of items and in a range of
costs. J.D. Power and Associates has established this Merchandise program to
ensure that all items bearing the J.D. Power and Associates Service Marks and
Claims retain their official status and are of the highest quality reproduction
and the integrity protected through the entire creative and production process.
<PAGE> 16
[J.D. POWER AND ASSOCIATES LETTERHEAD]
INVOICE NO.: 16895
INVOICE DATE: 12/30/98
PURCHASE ORDER NO.:
CLIENT NO.: 124409
BILL TO: Mr. Eric Schaefer
AUTOBYTEL.COM SHIP TO:
18872 MacArthur Blvd.
Irvine, CA 92612
DESCRIPTION
1 License Fee for extension of license for "#1 in Dealer
Satisfaction with Online Buying Services" claim to
February 15, 1998 $25,000.00
8020:
NET SALES 25,000.00
SALES TAX
TOTAL AMOUNT DUE 25,000.00
PAYMENT DUE UPON RECEIPT
Interest at the rate of 2% per month will be charged on any account over 30 days
past due.
<PAGE> 1
[*] Confidential treatment has been requested for certain portions of this
exhibit.
EXHIBIT 10.20
AT&T WorldNet(SM) Service
Site Page Sponsorship and Commission
Agreement
AT&T Corp., a New York corporation ("AT&T"), and Auto-By-Tel
Marketing Corporation, 18872 MacArthur Blvd., Second Floor, Irvine, CA 92612, a
Delaware corporation ("Company") agree to enter into this Site Page Sponsorship
and Commission Agreement, including all schedules attached hereto (the
"Agreement"). This Agreement becomes effective when signed by Company and
accepted in writing by AT&T. The effective date (the "EFFECTIVE DATE") of this
Agreement shall be the date indicated below AT&T's signature on the Agreement.
Company and AT&T acknowledge receipt of good and valuable consideration for
making this Agreement and pursuant to the terms and conditions of this Agreement
agree as follows:
Key Definitions
"AT&T Contact" Sharon Love
Advertising Sales Director,
AT&T WorldNet Service, 400 Interpace Pkwy
Parsippany, NJ 07054-1113
Tel: 201-331-7725, Fax: 201-331-4689
"Company Contact" Peter R. Ellis
CEO/President, Auto-By-Tel
18872 MacArthur Blvd.
Irvine, CA 92612-1400
Tel: 714-225-4500: Fax: 714-225-4541
"Company Site" means the Company's World Wide Web site on the
Internet currently known as "Auto-By-Tel" at URL,
http://www.autobytel.com. All references to the Company
Site in this Agreement shall include the Tracked Pages as
defined below,
"Content" means information, data and/or other materials created by
Company and/or third parties, including all updates
thereof.
"Automotive Page" means the page of the Service, currently known as the
Automotive Page, and currently accessible at the home
page (i.e., the "explore view") of the Service at the
URLs, http://www.att.net and http://www.worldnet.att.net;
or the equivalent of such Automotive Page as determined
by AT&T, which is the primary site within the Service
where automotive information and services are aggregated.
"Tracked Pages" means the pages of the Company Site to which a User can
link through the Service and be tracked in accordance
with Section 2.2.
"Market Square" means the page of the Service, currently known as Market
Square, or its equivalent as determined by AT&T.
"Members"/"Visitors"/ "Members" means registered subscribers of the Service;
"Users" Visitors" means users of AT&T WorldNet Service's public
sites on the Internet who are not Members; and "Users"
means Members and Visitors, collectively.
1
<PAGE> 2
"Service" means AT&T WorldNet Service.
"Teaser Material" means Content, such as financing material, race car
results, manufacturer news, recall information, etc., to
be provided by Company to AT&T and to be used to attract
users of the Service to the Tracked Pages in accordance
with Section 2.3
"Term" means the period commencing on the date of this Agreement
and, unless terminated earlier pursuant to Section 8,
ending six (6) calendar months following the month in
which the Deployment Date occurs, subject to renewal as
provided in Section 1.2 below.
1.0 Scope of Agreement
1.1 Sponsorship. During the Term, Company shall be the sole sponsor of
and the only Aggregate Automotive Service on the Automotive Page. "Sole sponsor"
means that, unless otherwise agreed by the parties, only the Company Icon,
Teaser Material and other Content provided by Company shall be displayed under
the 435 pixel width bar entitled " Automotive" on the Automotive Page.
"Aggregate Automotive Service" means a service that provides Internet users who
wish to purchase a car with the ability to place purchase requests with respect
to new and/or used cars..] If Company ceases to be the sole sponsor and the only
Aggregate Automotive Service on the Automotive Page, Company shall have the
right to terminate this Agreement in accordance with Section 8.
1.2 Deployment Date; Renewals. (a) The "DEPLOYMENT DATE" means the date
on which the Tracked Pages will first generally be made available to Users
through the Service, which date shall be mutually agreed upon by the parties.
(b) The Term shall automatically be extended for additional consecutive
six (6) month periods (each a "RENEWAL TERM") unless either party provides
written notice to the other party, at least thirty (30) days prior to expiration
of the Term, of its desire not to renew. Any reference herein to the "Term"
shall include each Renewal Term, if any.
1.3 Non-Exclusivity; The relationship specified in this Agreement shall
be nonexclusive for both parties (i.e., AT&T shall be entitled to make the sites
of other companies available anywhere on the Service, and the Company shall be
entitled to make the Company Site and any of its Content available through
online or Internet access services other than the Service).
1.4 Market Square. During the initial Term of this Agreement, Company
shall receive a text listing on, and link to the Company Site from, the "Market
Square" area of the Service. Any link from Market Square shall be tracked in
accordance with Section 2.2. The size and placement of the link shall be
determined by AT&T in its sole discretion.
2.0 Development of Automotive Page; Linkage & Tracking; Teaser Material;
Company Icon
2.1 Development of Automotive Page. (a) Company shall, at its expense,
develop and make available to AT&T Content for display on the Automotive Page in
accordance with Section 1.1. AT&T may reasonably require Company to present the
Content in a specific format and font, in order to fit graphically within the
look and feel of the Automotive Page, and the specific use determined by AT&T.
As between AT&T and Company, Company shall have sole ownership of all Content
provided by Company to AT&T for the Automotive Page.
(b) AT&T shall, at its expense, design and develop the Automotive Page
Trade Dress. "Automotive Page Trade Dress" means the general image, formats and
appearance (i.e., the "look and feel") of the Automotive Page, including without
limitation, the size and placement of the icons, Teaser Material and other
material, the distinctive headers on the page, the colors, designs
2
<PAGE> 3
and all other aspects of the page, as amended from time to time as provided in
Section 2.1 (d). As between AT&T and Company, AT&T shall have sole ownership of
all the Automotive Page Trade Dress.
(c) Except as expressly provided in Section 1.1 and in this Section
2.1 (c), AT&T may, at its discretion, place advertising or any other Content
anywhere on the Automotive Page, provided that no service offered and no
advertising displayed on the Automotive Page shall comprise or include an
Aggregate Automotive Service. All revenue received by AT&T from advertising or
such other Content, as between Company and AT&T, shall belong exclusively to
AT&T. No service offered at the Tracked Pages or through a transaction with a
User arising out of the Tracked Pages, and no advertising displayed at the
Tracked Pages, shall comprise or include local or long distance telephone
service or online or Internet access service (other than a service offered by
AT&T).
(d) AT&T may, at its discretion and at its expense, from time to time
modify or supplement the Automotive Page Trade Dress. AT&T may require Company
to modify or supplement, at Company's expense, the Content made available
through the Automotive Page upon reasonable advance notice.
(e) Company shall not (i) on the Company Site or otherwise use trade
dress that is substantially similar or confusingly similar to the Automotive
Page Trade Dress or (ii) make the Content available to third parties using trade
dress substantially similar or confusingly similar to the Automotive Page Trade
Dress.
(f) For Content that is of a "critical business nature," Company may
change or modify any Content made available by Company for use on the Automotive
Page upon one (1) business day prior notice to AT&T, and for Content that is of
a non-critical business nature, upon seven (7) calendar days prior notice,
provided that, in each case, the Content continues to meet the minimum
specifications as agreed to by the parties.
2.2 Linkage & Tracking. Users shall be linked from the Service with the
subset of the Company Site that constitutes the Tracked Pages, which shall be
identical to the corresponding pages of the Company Site accessed through the
URL www.autobytel.com (except for the addition of the WorldNet Icon and other
changes as may be necessary to comply with the provisions of this Agreement) and
which shall have distinct URLs in order to ensure the separate and accurate
identification of all revenues generated by Users (as specified in Sections 4
below). Company will not invite or solicit any User, in their capacity as a User
of the Service, to connect directly with the Company Site by any means other
than through the Tracked Pages for the purpose of avoiding payment of commission
to AT&T. AT&T acknowledges that Company conducts extensive advertising aimed at
users of Internet at-large designed to attract users to the Company Site.
2.3 Teaser Material. From time to time, Company shall make available
Teaser Material to AT&T. The Teaser Material shall be located on Company's
server. AT&T may use the Teaser Material on or in connection with the Service,
either independently or in conjunction with the Company Icon, for purposes of
promoting visits by Users to the Tracked Pages. AT&T may reasonably require
Company to present the Teaser Material in a specific format and font, in order
to fit graphically within the look and feel of the Service, and the specific use
determined by AT&T. The Teaser Material may be used in AT&T's sole discretion as
a hyperlink icon appearing on the Service during the Term, which will link Users
with the Company Site. Teaser Material shall not contain advertisements, but may
contain references to Company programs or other promotions.
2.4. Company Icon. Company shall furnish to AT&T at least fourteen (14)
days prior to the Deployment Date, one full color representation, in "GIF" or
"JPEG" format (on diskette or by email), of Company's hyperlink icon ("Company
Icon") to be used to take Users from the Service to the Tracked Pages. If
Company subsequently modifies the Company Icon, it shall furnish a
representation in the same format which AT&T shall substitute for the prior
version within seven (7) days after receipt. The size and format of the Company
Icon shall be subject to the reasonable approval of AT&T. The Company Icon, may,
in AT&T's sole discretion, be included among the hyperlink icons appearing on
the Service during the Term; when clicked upon by a User, the Company Icon will
link that User with the Tracked Pages.
3
<PAGE> 4
2.5 Company Permissions. (a) Company hereby grants to AT&T during the
Term a worldwide, nonexclusive, nontransferable, nonassignable right (except as
provided in Section 10(c)) to use (i.e., to copy, transmit, distribute, display
and perform both privately and publicly), the Company Icon, the Company name,
the Company Site name, and other related textual and graphic material to be
provided by Company to AT&T from time to time (the "Other Material") on the
Service. Company also authorizes AT&T to refer in advertising, marketing and
promotion to the fact that the Tracked Pages are accessible through the Service,
provided that any such statement: (A) does not include any trademarks, service
marks, design marks, symbols and/or other indicia of origin of Company other
than Company's name and/or the Company Site name in a non-distinctive typeface
(i.e. not the typeface used in the logo design of either mark); and (B) except
as set forth in Section 1.1, does not state, suggest or imply by the wording or
prominence of such statement, or otherwise, that Company co-brands, sponsors,
authorizes, and/or is the source or origin of the Service. All such use of the
Company Icon, the Company name, the Company Site name, and the Other Material
shall inure to the benefit of Company and shall not create any rights, title or
interest in them for AT&T. No other use of the Company's names, trademarks,
service marks, design marks, symbols and/or other indicia of origin will be made
by AT&T for any purpose, without the prior written approval of Company. AT&T
shall use the Company's name, the Company Site name and the Other Material in
accordance with such reasonable guidelines as Company may provide to AT&T from
time to time. AT&T agrees to cooperate with Company in facilitating Company's
monitoring and control of the use of its name and marks and to supply Company
with samples of AT&T's use of such names and marks upon request.
3.0 WorldNet Icon
3.1 WorldNet Icon. The graphic depicted on the attached Schedule A (the
"WORLDNET ICON") shall be displayed by Company on each of the Tracked Pages
during the Term, in the position within the page layout shown on Schedule A;
AT&T-shall furnish to Company at least fourteen (14) days prior to the
Deployment Date, a full color representation of the WorldNet Icon in "GIF or
"JPEG" format (on diskette) for Company's use under this Agreement. If AT&T
subsequently modifies the WorldNet Icon, it shall furnish a representation in
the same format which Company shall substitute for the prior version within
seven (7) days after receipt. If AT&T so requests, the WorldNet Icon shall be
implemented as a "return icon", which when clicked upon by a User will link such
User back to the Automotive Page or such other page as mutually agreed by the
parties.
3.2 AT&T Permissions. AT&T hereby grants to Company during the Term a
worldwide, nonexclusive, nontransferable, nonassignable right to use (i.e., to
copy, transmit, distribute, display and perform both privately and publicly) the
WorldNet Icon solely on each of Designated Page as provided in Section 3.1
above. AT&T also authorizes Company to refer in Company's advertising, marketing
and promotion to the fact that the Company Site is accessible through the
Service, provided that any such statement: (a) does not include any trademarks,
service marks, design marks, symbols and/or other indicia of origin of AT&T
other than the name of AT&T and/or the name of an agreed upon segment of the
Service and/or the name of the Service, in a nondistinctive typeface (i.e. not
the typeface used in the logo design of any such mark); and (b) does not state,
suggest or imply by the wording or prominence of such statement, or otherwise,
that AT&T is co-branding, sponsoring, authorizing, and/or is the source or
origin of the Company Site or any Content or Company Products. All such use of
the WorldNet Icon shall inure to the benefit of AT&T. Nothing in this Agreement
shall create any rights, title or interest for Company in the WorldNet Icon
(except to the extent provided in the first sentence of this Section) or in any
of AT&T's other names, trademarks, service marks, design marks, symbols and/or
other indicia of origin and no use of such will be made by Company for any
purpose without the prior written approval of AT&T. Company shall use the
WorldNet Icon in accordance with such reasonable guidelines as AT&T may provide
to Company from time to time. Company agrees to cooperate with AT&T in
facilitating AT&T's monitoring and control of the use of the WorldNet Icon and
to supply AT&T with samples of use of the WorldNet Icon upon request.
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[*] Confidential Treatment Requested
4.0 Commissions.
4.1. Sponsorship Fee. (a) During the initial Term and in each Renewal
Term, if any, Company shall pay AT&T a non-refundable, monthly fee (the
"Sponsorship Fee") in arrears equal to (i) a minimum of [*] plus (ii) [*] for
each additional [*] Automotive Page Views over eighty thousand (80,000) in any
such month, with overages rolling up to next 10,000 increment. For example, if
there are [*] Automotive Page Views in a month, the Sponsorship Fee for that
month be [*] and if there are 90,001 Automotive Page Views in a month, the
Sponsorship Fee would be [*], and so on. The Sponsorship Fee shall not be less
than [*] in any month, regardless of the number of Automotive Page Views,
"Automotive Pages Views" means the number of times the Automotive Page is
served, as determined by a third party auditor selected by AT&T.
(b) During the initial Term, the Sponsorship Fee shall be capped at [*]
dollars per month. Beginning on the first day of each Renewal Term, if any, the
cap on the Sponsorship Fee shall be automatically adjusted in proportion to any
increase in the number of Members of the Service, as reported by AT&T on the
first day of such Renewal Term. For the purposes of this calculation, the
parties agree that the baseline for the number of Members of the Service for the
initial Term is nine hundred thousand (900,000). Thus, for example, if the
Agreement is renewed beginning on the date that is six-months after the
Deployment Date and the number of Members reported by AT&T on such date is
1,350,000, the monthly cap on the Sponsorship Fee for such six-month Renewal
Term shall be [*].
4.2 Commission Revenue. (a) During the initial Term, Company shall pay
AT&T [*] for each Unique New Vehicle Purchase Request made by a User after the
5000th Unique Vehicle Purchase Request in any one month. "Unique New Vehicle
Purchase Request" means any purchase request for a new vehicle by a User that is
received by Company for which Company has not, within the previous ninety (90)
day period, received a purchase request for a new vehicle from a person
identified by the same name and/or the same e-mail address.
(b) In addition, Company shall pay AT&T [*] dollars for each Unique Used
Car Inquiry by a User that results in a request for purchase information.
"Unique Used Car Inquiry" means any request for purchase information on a used
car from a User that is received by Company for which Company has not, within
the previous ninety (90) day period, received a request for purchase information
on a used car from a person identified by the same name and/or the same e-mail
address.
4.3 Tax Responsibility. Company is solely responsible and liable for the
collection and remittance of any applicable federal, state and/or local sales
taxes on all retail, advertising, and subscription membership, or similar sales.
4.4 Auditing. AT&T shall have the right, at its expense, upon five (5)
business days written notice and during Company's normal business hours, to
inspect and audit the site logs of the Company Site and other books and records
of Company as necessary to verify any reports, information or payments due to
AT&T under this Agreement. In the event of any shortfall in payment to AT&T is
found which exceeds five percent (5%) of the total due to AT&T for the reporting
period audited, Company shall reimburse AT&T for all reasonable costs of the
audit, including without limitation, accountant fees and attorney fees, without
limitation of AT&T's other rights and remedies.
4.5 Payments and Reporting to AT&T. (a) Payments. The first payment of
the Sponsorship Fee shall be due 30 days after the end of the calendar month
containing the Deployment Date, but shall be prorated based on the number of
days for which the Automotive Page was "live" in accordance with the terms of
this Agreement. All subsequent payments of the Sponsorship Fee shall be due
thirty (30) days after the end of the applicable calendar month. All other
payments under this Agreement are due thirty (30) days after the end of the
applicable calendar quarter. For
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all payments under this Agreement, Company will submit payment in full on or
prior to the due date pursuant to the terms set forth in Schedule B.
(b) Overdue Payments. Any amount payable by Company under Section 4 not
paid when due shall bear interest at a rate of fifteen (15) percent per annum
until paid in full. Such interest will be computed from the date payment was due
until the date actually received by AT&T.
(c) Company Reports. Within thirty (30) days following the close of each
calendar month for so long as Company or any Company Affiliate receives gross
consideration to which AT&T is entitled a commission (as provided in Sections
4.2), Company shall furnish AT&T with a statement showing the number of Users
who visited the Company Site, the number of Users who completed New Car Purchase
Requests and Used Car Inquiries during such month, and the calculation of the
payment due to AT&T from each such category.
4.6 Company Affiliate. "COMPANY AFFILIATE" means a corporation or other
entity that controls, is controlled by or is under common control with Company,
where "control" means the direct or indirect ownership or control of more than
fifty percent (50%) of the stock or other equity interest entitled to vote for
the election of directors or equivalent governing body.
5.0 Press Releases. Neither party shall issue any press release or other
public statement concerning the existence of this Agreement or the terms hereof
without the prior written approval of the other party. Any press release issued
by either party whose primary focus is the relationship established under this
Agreement shall give first and primary mention to the method of accessing the
Company Site set forth in this Agreement.
6.0 User Considerations.
6.1 Editorial Standards. The Content at the Company Site and any Content
provided to AT&T by Company shall at all times during the Term conform with the
Editorial Standards (annexed as Schedule C below).
6.2 Minimum Specifications. Company's server on which the Tracked Pages
will be hosted, and from which the Tracked Pages will be accessed by Users,
shall at all times meet the following minimum specifications: no page of the
Tracked Pages shall have a download time of more than sixty (60) seconds at a
modem speed of 28.8 kbps.
6.3 Customer Service Standards. Company shall adequately staff, equip,
maintain and offer to all Users, at its sole expense, customer services which
shall equal or exceed the standards which follow: Company shall (a) forward any
electronic mail inquiries regarding Users and/or the Service to AT&T within
twenty-four (24) hours following receipt; (b) electronically notify AT&T of any
failure of service regarding the Company Site that affects Users within sixty
(60) minutes of Company's becoming aware of its occurrence and give AT&T at
least twenty-four (24) hours prior notice of any scheduled down time; and (c)
provide AT&T with access (which may be by beeper) to Company's technical support
twenty-four (24) hours per day, three hundred sixty-five (365) days per year,
(d) display customer service contact information prominently and clearly within
the Company Site, (e) maintain a maximum response time for service inquiries
submitted by e-mail by Users of no more than twenty-four (24) hours.
6.4 Security Standards Company shall provide secure connections, Secure
Sockets Layer ("SSL"), to the Tracked Pages for the transfer of User information
required to complete an electronic transaction, if any, in which case, Company
shall provide and maintain the necessary hardware and software to support SSL,
version 2, at a minimum, at its sole expense. Company agrees to store all
User-identifiable information, including credit card information, off-line
behind a secure firewall. Company shall initiate all credit card settlements via
either direct dial connection or dedicated private line connection to the card
transaction processing agent.
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6.5 User Privacy. Company agrees that it will not sell, lease, barter,
or give away to third parties any User's name, telephone number, e-mail address,
residential address, office address and/or fax number. Company further agrees
that it will not send unsolicited e-mail messages or other unsolicited
communications to Users; except that Company may send e-mails to Users, so long
as such Users have an option at all times to elect not to receive such e-mail.
7.0 Confidentiality. The parties agree and acknowledge that, as a result of
negotiating, entering into and performing this Agreement, each party has and
will have access to certain of the other party's Confidential Information (as
defined below). Each party also understands and agrees that misuse and/or
disclosure of that information could adversely affect the other party's
business. Accordingly, the parties agree that, during the term of this Agreement
and thereafter, each party shall use and reproduce the other party's
Confidential Information only for purposes of this Agreement and only to the
extent necessary for such purpose and shall restrict disclosure of the other
party's Confidential Information to its employees, consultants or independent
contractors with a need to know and shall not disclose the other party's
Confidential Information to any third party without the prior written approval
of the other party. Notwithstanding the foregoing, it shall not be a breach of
this Agreement for either party to disclose Confidential Information of the
other party if compelled to do so under law, in a judicial or other governmental
investigation or proceeding, provided the other party has been given prior
notice to permit such other party a reasonable opportunity to object to the
judicial or governmental requirement to disclosure. As used in this Agreement,
the term "Confidential Information" refers to: (a) the terms and conditions of
this Agreement; (b) each party's trade secrets, business plans, strategies,
methods and/or practices; (c) any and all information which is governed by any
now-existing or future non-disclosure agreement between the parties; and (d) any
other information relating to either party that is not generally known to the
public, including information about either party's personnel, products,
customers, marketing strategies, services or future business plans.
Notwithstanding the foregoing, the term "Confidential Information" specifically
excludes (i) information that is now in the public domain or subsequently enters
the public domain by publication or otherwise through no action or fault of the
other party; (ii) information that is known to either party without restriction,
prior to receipt from the other party under this Agreement, from its own
independent sources, and which was not acquired, directly or indirectly, from
the other party; (iii) information that either party receives from any third
party having a legal right to transmit such information, and not under any
obligation to keep such information confidential; and (iv) information
independently developed by either party's employees or agents provided that
either party can show that such information was developed without reference to
the Confidential Information received hereunder. The provisions of this Section
shall apply for the duration of the Term of this Agreement and for three (3)
years after the expiration or termination of this Agreement.
8.0 Termination and Severance. (a) This Agreement may be terminated immediately
by either party (i) if the other party shall fail to do business in the normal
course or become subject to a bankruptcy or any similar proceeding, (ii) thirty
(30) days after delivery of written notice from the terminating party to the
effect that the other party has committed a material breach under this
Agreement, provided such breach is not cured within such thirty (30) day period,
(iii) if the Deployment Date does not occur within thirty (30) days of the
Effective Date of this Agreement, provided such termination right is exercised
before deployment occurs, (iv) thirty (30) days after delivery of written notice
that, in the case AT&T is the terminating party, AT&T intends to terminate all
or a substantial part of the Service, and, in the case Company is the
terminating party, Company intends to terminate all or a substantial part of the
Company Site, or (v) if Company ceases to be the sole sponsor and only Aggregate
Automotive Service on the Automotive Page, then Company shall have the right to
terminate this Agreement upon thirty (30) days' written notice to AT&T.
(b) If Company's Site fails to perform in accordance with this
Agreement, including, without limitation, with respect to "User Considerations"
under Section 6 or "Product Responsibility" under Section 9, AT&T shall have the
right at any time and at its discretion to sever immediately one or all of the
links between the Service and the Tracked Pages. In the event that AT&T severs a
link,
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AT&T will give Company prompt notice of such fact and Company shall have five
(5) days to resolve the problem to the reasonable satisfaction of AT&T. If the
link remains severed for more than ten (10) days, then AT&T may, immediately and
without further notice, terminate this Agreement.
(c) Amounts due and owing AT&T arising prior to any termination shall
continue to be paid to AT&T pursuant to Section 4, but AT&T shall not be
entitled to collect commissions or any Sponsorship Fee accruing after such
termination. The Sponsorship Fee payable upon termination shall be prorated
based on the number of days in the calendar month prior to the termination date.
9.0 Liability.
9.1 Product and Content Responsibility. Company acknowledges that AT&T
does not advocate or endorse the purchase or the use of products, if any, or
services offered by Company by or through the Company Site or otherwise (the
"COMPANY PRODUCTS"), nor does it guaranty the quality, fitness, or results of
any such Company Products or their compliance with any law or regulation; and
that AT&T is providing the Company Site an exposure on the Service to enable
Company to offer Company Products for sale and has no control over the selection
of goods or services offered for sale, over their quality or content or over the
Content, advertisements or any other material at the Tracked Pages or the
Company Site (except the WorldNet Icon). As between AT&T and Company, Company
shall have sole responsibility and liability for: (a) the quality of all Company
Products and compliance thereof with all Government Standards (defined in
Section 9.2 below) (including without limitation safety standards); (b)
processing all orders by Users of Company Products; and (c) shipping or
otherwise furnishing Company Products as ordered and in timely fashion, in the
event products are offered for sale by or through the Company Site. Company
agrees to furnish Company Products as ordered to all Users throughout the United
States and all of its possessions and territories, including Puerto Rico and the
U.S. Virgin Islands, as well as Canada. Company shall display adequate notices,
in a manner and form satisfactory to AT&T, on all Tracked Pages that offer
Company Products. "Adequate notices" means (a) the selling company's legal name
and place of business, (b) any territorial restrictions on the delivery of
products or services offered by or through the Company Site, (c) the selling
company's refund and return policies and (d) any other notices required by
applicable laws. Further, AT&T may require that Company reproduce the following
sentence in connection with Company Products offered on Tracked Pages: AT&T DOES
NOT ADVOCATE OR ENDORSE THE PURCHASE OR USE OF ANY OF THE PRODUCTS BEING OFFERED
FOR SALE BY [COMPANY], NOR DOES IT MAKE ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF ANY SUCH PRODUCTS OR THEIR COMPLIANCE OR
[COMPANY'S] COMPLIANCE WITH ANY APPLICABLE LAW OR REGULATION.
9.2 Representations and warranties of AT&T. AT&T represents and warrants
that: (a) AT&T has the right to enter into this Agreement and to grant the
rights and licenses granted herein; and (b) AT&T shall comply with all
applicable laws, statutes, ordinances, rules and regulations of each county,
state and city or other political entity with respect to the operation of the
Service (collectively, "Government Standards").
9.3 Representations and warranties of Company. Company represents and
warrants that: (a) Company has the right to enter into this Agreement and to
grant the rights and licenses granted herein; is the owner of the Company Site;
is a wholly-owned subsidiary of the Auto-By-Tel Corporation; and will cause the
Auto-By-Tel Corporation to execute a performance guarantee, in a form reasonably
satisfactory to AT&T, to cover its obligations under this Agreement; (b) the
Company Site and the reproduction, distribution, transmission, public
performance and public display of the Company Site, the Tracked Pages, the
Company name, the Company Site name, the Other Material and the Teaser Material
and any other Content provided to AT&T pursuant to this Agreement do not and
will not (i) invade the right of privacy or publicity of any third person, (ii)
contain any libelous, obscene, indecent or otherwise unlawful material; or (iii)
infringe any patent, copyright or trademark right in any jurisdiction or
otherwise contravene any rights of any
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third person and Company has received no notice of such infringement; (iv) or
otherwise fail to comply with any Government Standards; (c) the Company Products
are and will be accurately presented, delivered as promised, merchantable and
fit for the purposes for which they are intended; (d) the Company Products will
be in all respects safe and noninjurious for the persons intended to use them,
and all packaging, promotional materials, and Company's marketing, sales and
distribution methods shall meet or exceed all Government Standards; (e) Company
will not package, market, sell or distribute any Company Products or cause or
permit any Company Products to be packaged, marketed, sold or distributed in
violation of any such Government Standards; provided that the representations
and warranties in subsection (b) above shall not apply to User Content or
Product Content (as defined below). Instead, Company represents and warrants
that it shall monitor and edit such User Content and Product Content and shall
promptly remove any User Content and Product Content from the Company Site which
fails to conform with the warranties and representations in subsection (b)
above. "USER CONTENT" means content uploaded by Users and/or other end users of
the Company Site; "PRODUCT CONTENT" means language incorporated by the
manufacturer thereof (other than Company) in Company Products.
9.4 Indemnities. Each party to this Agreement shall and hereby agrees to
defend, indemnify and hold harmless the other party and each of its officers,
directors, employees and agents (each, an "Indemnitee") against and in respect
of any loss, debt, liability, damage, obligation, claim, demand, 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 alleging
any breach of any representation, warranty or covenant made by such indemnifying
party (the "INDEMNIFYING PARTY") in this Agreement. Company further agrees to
defend, indemnify and hold harmless AT&T and its officers, directors, employees
and agents against and in respect of any Damages arising out of, or resulting
from or based upon any claim, action or proceeding by any third party relating
to the Company Products, User Content, Product Content, Company Site, and other
Content provided to AT&T pursuant to this Agreement and to other materials or
information that Users can link to from the Tracked Pages. Whenever a claim
shall arise for indemnification under this Section 9.4, the relevant
Indemnitees, as appropriate, shall promptly notify the Indemnifying Party and
request the Indemnifying Party to defend the same.
9.5 No Consequential or Punitive Damages. NEITHER PARTY WILL BE LIABLE
TO THE OTHER PARTY (NOR TO ANY PERSON CLAIMING RIGHTS DERIVED FROM THE OTHER
PARTY'S RIGHTS) FOR INCIDENTAL, INDIRECT, CONSEQUENTIAL, SPECIAL, PUNITIVE OR
EXEMPLARY DAMAGES OF ANY KIND -- INCLUDING LOST REVENUES OR PROFITS, LOSS OF
BUSINESS OR LOSS OF DATA -- ARISING OUT OF THIS AGREEMENT (INCLUDING WITHOUT
LIMITATION AS A RESULT OF ANY BREACH OF ANY WARRANTY OR OTHER TERM OF THIS
AGREEMENT), REGARDLESS OF WHETHER THE PARTY LIABLE OR ALLEGEDLY LIABLE WAS
ADVISED, HAD OTHER REASON TO KNOW, OR IN FACT KNEW OF THE POSSIBILITY THEREOF.
9.6 Acknowledgment of No Warranty. EXCEPT AS EXPRESSLY PROVIDED HEREIN,
NEITHER PARTY WARRANTS THAT THE SERVICE OR THE COMPANY SITE, AS THE CASE MAY BE,
WILL PERFORM IN THE MANNER EXPECTED OR WITHOUT INTERRUPTION, ERROR OR DEFECT.
EXCEPT AS SET EXPRESSLY FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR WARRANTIES AGAINST
INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS NOT SPECIFICALLY ENUMERATED.
9.7 Limitation of Liability. Each party's liability to the other party
for any and all claims and damages incurred by such party relating to or arising
out of the subject matter of this Agreement, whether in contract, tort, implied
warranty, strict liability or other form of action, except for (a) real or
tangible property damage or personal injury or death, and (b) any claims or
damages relating to or arising out of any claim, action or proceeding by a third
party which is
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subject to any right of indemnity provided herein; shall be limited to the
amounts paid by Company to AT&T pursuant to this Agreement. AT&T and Company
each acknowledges that the provisions of this Agreement were negotiated to
reflect an informed, voluntary allocation between them of all risks (both known
and unknown) associated with the transactions associated with this Agreement.
9.8 Insurance. Company has obtained and shall maintain during the term
of the Agreement, appropriate insurance covering the Company Site and all
transactions made through it, and all products and services offered and/or sold
through it, with a reputable insurer . Such insurance shall have limits of not
less than One Million Dollars ($1,000,000) per occurrence and Three Million
Dollars ($3,000,000) in the aggregate and shall have a deductible of not more
than Ten Thousand Dollars ($10,000) per occurrence. Such insurance shall be
primary, and no insurance maintained by AT&T shall be deemed contributory in any
way. Such policy shall be non-cancelable except after (30) days prior written
notice to AT&T. Company shall furnish AT&T with a copy of such policy within
(30) days after execution of this Agreement and to the extent such an insurance
must be renewed, shall furnish AT&T with proof of renewal at least thirty (30)
days prior to the termination date of coverage.
10.0 Miscellaneous Provisions. (a) The provisions of Section 2.5 (for a
reasonable period following termination), Section 4 (to the extent any payments
are accrued prior to termination), Sections 5, 6.5, 7, 8(d), 9 and 10, shall
survive termination or expiration of this Agreement. (b) Company and AT&T are
independent contractors under this Agreement, and nothing herein shall be
construed to create a partnership, joint venture or agency relationship between
Company and AT&T. Neither party has authority to enter into agreements of any
kind on behalf of the other party. (c) Neither Company nor AT&T may assign this
Agreement or any of its rights or delegate any of its duties under this
Agreement without the prior written consent of the other, except that (i) AT&T
may, without Company's consent, assign this Agreement to a present or future
affiliate or successor and may assign its right to receive payments and (ii)
Company may, without AT&T's consent, assign this Agreement to a present or
future affiliate or successor, provided that such affiliate or successor in not
an Online Service Provider. "Online Service Provider" means any entity that, in
AT&T's reasonable judgment, competes with AT&T in the marketing, offering or
provision of online computer services (whether or not such services include or
offer access to the Internet), Internet access services or communication
services (including local exchange, interexchange or international
communications services). Any purported assignment or delegation without such
required consent shall be null and void. (d) This Agreement, its interpretation,
performance or any breach thereof, shall be construed in accordance with, and
all questions with respect thereto shall be determined by, the laws of the state
of New York applicable to contracts entered into and wholly to be performed
within said state. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association,
and by judgment upon the award rendered by the arbitrator(s) may be entered into
any court having jurisdiction thereof. (e) No waiver of any breach of any
provision of this Agreement shall constitute a waiver of any prior, concurrent
or subsequent breach of the same or any other provisions hereof, and no waiver
shall be effective unless made in writing and signed by an authorized
representative of the waiving party. (f) All notices, demands and other
communications hereunder shall be in writing or by written telecommunications,
and shall be deemed to have been duly given: (i) if mailed to the other party's
Addressee by certified mail, postage prepaid, on the date three (3) days from
the date of mailing, (ii) if delivered by overnight courier, when received by
the Addressee or (iii) if sent by confirmed telecommunication, one business day
following receipt by the Addressee. "ADDRESSEE" shall mean (A) each party's
respective "Contact" as set forth under "Key Definitions" above, plus in the
case of AT&T, with a copy to V.P. Law, AT&T WorldNet Service, 295 North Maple
Avenue, Basking Ridge, New Jersey 07920, and, in the case of Company, with a
copy to General Counsel, Auto-By-Tel Marketing Corporation, 18872 MacArthur
Blvd., Second Floor, Irvine, CA 92612; in each case by the same means of
delivery or (B) such other addressee as one party may notify to the other party.
(g) In the event any provision of this Agreement shall for any reason be held to
be
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invalid, illegal or unenforceable in any respect, the remaining provisions shall
remain in full force and effect. (h) In resolving any dispute or construing any
provision hereunder, there shall be no presumptions made or inferences drawn (i)
because the attorneys for one of the parties drafted the Agreement; (ii) because
of the drafting history of the Agreement; or (iii) because of the inclusion of a
provision not contained in a prior draft, or the deletion of a provision
contained in a prior draft. (i) Section headings are for convenience only and
are not a part of this Agreement. (j) This Agreement contains the entire
understanding of the parties hereto with respect to the transactions and matters
contemplated hereby, supersedes all previous agreements between AT&T and Company
concerning the subject matter, and cannot be amended except by a writing signed
by both parties. No party hereto has relied on any statement, representation or
promise of any other party or with any other officer, agent, employee or
attorney for the other party in executing this Agreement except as expressly
stated herein.
AUTO-BY-TEL MARKETING CORPORATION AT&T CORPORATION
By: /s/ MARK W. LORIMIR By: /s/ CHRIS VARLEY
----------------------------- -------------------------------------
(Authorized Signature) (Authorized Signature)
MARK W. LORIMIR CHRIS VARLEY
----------------------------- -------------------------------------
(Typed or Printed Name) (Typed or Printed Name)
EXECUTIVE VICE PRESIDENT CONTENT DIRECTOR
----------------------------- -------------------------------------
(Title) (Title)
6/25/97 6/25/97
----------------------------- -------------------------------------
(Date) (Date)
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SCHEDULE A
[LOGO]
Please place WorldNet Icon on top left side of all pages.
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SCHEDULE B
PAYMENT TERMS
[Please make a copy of this form each calendar quarter to complete and mail with
your quarterly commission payments]
Submit Payments each quarter to AT&T c/o
[NationsBank
P.O. Box 277757
Atlanta, GA 30384-7757]
Date:
-----------------------------
From:
-----------------------------
Auto-By-Tel Marketing Corp.
SUBJECT: Please indicate either: (a) AT&T WorldNet Service Monthly Page
Sponsorship Fee or (b) Quarterly Commission Payment, as the case may be.
Credit to Account No.
Commission Payment for ______ Month [Quarter] , 19__
(enter applicable month or quarter, and year)
If any problems or questions arise with this payment, please contact:
13
<PAGE> 14
SCHEDULE C
Editorial Standards
Neither the Company Site nor any product or service offered at the Company Site
shall contain.
1. Any matter which is libelous, defamatory or which discloses private
or personal matters concerning any person, including home phone numbers and
addresses, credit card information, and/or Member account information such as
Member passwords.
2. Any messages, data, images, programs, or other matter which are
obscene or pornographic or which contain racial, ethnic or religious slurs or
similar epithets, or advocating violence, hate or other language that is deeply
and widely offensive.
3. Any messages, data, images, programs, or other matter that would
violate the property rights of others, including unauthorized copyrighted text,
images or programs, trade secrets or other confidential proprietary information
or trademarks or service marks used in an infringing fashion.
Furthermore, the Company Site shall not be used by any person or entity who
conducts, or solicits the performance of, any illegal activity or other activity
which infringes the rights of AT&T, Members, Visitors, merchants, or other
publishers of information on the Service.
14
<PAGE> 1
EXHIBIT 10.21
[*] Confidential Treatment has been requested for certain portions of this
exhibit.
April 1, 1997
[NBC LETTERHEAD]
Federal Express
Mr. Peter Ellis
President/CEO
Auto-By-Tel
11872 MacArthur Blvd., Second Floor
Irvine, CA 92612
Re: Auto-By-Tel Participation in NBC Syndication Platform
Dear Mr. Ellis:
This Letter sets forth the initial agreement between NBC Multimedia, Inc.
("NBC"), and Auto-By-Tel Marketing Corporation ("Company") with respect to the
Company's agreement to provide content as part of NBC's Syndication Platform.
The terms and conditions shall be as follows:
1. Description of NBC Syndication Platform: NBC intends to create a menu of
localized world wide web services (the "NBC Syndication Platform") which
it will offer to the NBC Television Network's ("NBC TV") owned and
operated stations and interested affiliates (the "Stations"). NBC agrees
that if it does actually offer the NBC Syndication Platform, localized
versions of the Auto-By-Tel online automotive information, purchasing
financing and related services created and operated by the Company
("Auto-By-Tel") shall be among the list of primary services offered as
part of such platform subject to the terms and conditions hereof. Company
acknowledges (i) that each Station will have the sole right to determine
which individual services it will accept as part of the NBC Syndication
Platform, (ii) that Auto-By-Tel may or may not be included in any
individual Station's list of such services, and (iii) that NBC and
declining Stations shall have no liability or obligations to Company due
to any Stations' decision not to so include Auto-By-Tel.
2. Creation of Auto-By-Tel Local Sites: Company agrees that it shall create
customized local versions of Auto-By-Tel (each a "Auto-By-Tel Local
Site") for use by Stations participating in the NBC Syndication Platform.
Such Auto-By-Tel Local Sites will be designed to provide online viewers
of the Stations' world wide web sites (the "Station Sites") with
automotive information and purchasing financing and related services.
Each such Auto-By-Tel Local Site shall be a mirror Auto-By-Tel site which
shall be framed within a sub-page of the Station Site but which will
contain material to be provided by Company and located at a to be
established URL on a server of the Company. As a result, all online
viewers will be accessing and bookmarking the Auto-By-Tel Local Site
content through the NBC Syndication Platform's portion of the Station's
URL, and any user searches will continue to take place within the portion
of the Station Site framing the Auto-By-Tel Local Site.
3. Links: As a condition of utilizing the NBC Syndication Platform, each
participating Station will be required to devote a portion of the front
page of the Station Site to the NBC Syndication Platform, subject to
Station's right to have overall design control of the Station Site. Each
Station shall be encouraged to devote enough space on its front page to
permit the placement of hotlinks to the individual services which make up
the NBC Syndication Platform within space on such front page allocated
and dedicated to the NBC Syndication Platform, but at a minimum, each
participating Station Site's front page shall contain a prominent hotlink
to a special sub-page devoted to hotlinks for all of the services making
up the NBC Syndication Platform, the size and placement
<PAGE> 2
of which shall be comparable to that of any other link to a service
offered by the Station. NBC agrees that when the individual services which
make up the NBC Syndication Platform are displayed and a hotlink to the
Auto-By-Tel Local Site is provided, whether on a front page or on a
separate page, the link to the Auto-By-Tel Local Site which may be either
a generic category description or a Auto-By-Tel logo or text (the
"Auto-By-Tel Link") shall be comparable and consistent with the links
devoted to any of the other individual services which are part of the NBC
Syndication Platform.
4. Management of Auto-By-Tel Local Sites: The day-to-day management of the
Auto-By-Tel Local Sites, and all costs associated therewith, shall be the
responsibility of the Company subject to the following:
(a) Content - Company will provide all of the content for each of the
Auto-By-Tel Local Sites, provided that as part of the localization and
customizing process required herein, NBC and the Stations may provide
relevant local material (but not advertising) in their own discretion from
time to time with reasonable notice for use on the relevant Auto-By-Tel
Local Sites and Company will make good faith efforts to include such
material in its reasonable discretion. Company will acquire all necessary
rights and licenses required for the operation of each Auto-By-Tel Local
Site as contemplated herein and for the acquisition and use of any content
(e.g., automobile purchase analyses, appreciation costs, financing
incentives, etc.) not provided by NBC and the Stations. Each of the
Company, NBC and the Stations will retain and own all copyrights and other
intellectual property rights in, and to, the material which that entity
contributes for use hereunder.
(b) Editorial - Editorial standards and direction regarding the inclusion
and presentation of content will come from Company. In addition, Company
agrees to allow NBC to review the Auto-By-Tel Local Sites for compliance
with any NBC Broadcast Standards and Practices which may apply to the
Auto-By-Tel Local Sites and make all changes requested by NBC in
connection therewith. Finally, Company agrees to comply with any Rules and
Regulations of the Federal Communications Commission which may be
applicable to the Auto-By-Tel Local Sites and/or the rules and regulations
of any other governmental body having jurisdiction.
(c) Technology - Auto-By-Tel shall be responsible for all maintenance of
the Auto-By-Tel Local Sites (including customer service, technical upkeep,
etc.) including the costs associated therewith. Auto-By-Tel agrees to use
its best efforts to work with NBC's technology partners to coordinate the
interface between the Auto-By-Tel Local Sites and the Station Sites and
provide the required services contemplated herein.
(d) Branding - NBC shall create the Auto-By-Tel Link and may request that
Company provide appropriate proprietary material for use thereon. The
Auto-By-Tel Local Sites will be co-branded with trademarks and other
material to be provided by NBC, the Stations and Company subject to the
approval of each party and provided that the size of such brands shall be
left to the reasonable discretion of NBC. The parties agree that the
Company's brands on the Auto-By-Tel Local Sites shall be not more than
fifty percent (50%) smaller than, but as visible as, the brands of NBC and
the relevant Stations. Company agrees to abide by all requirements and
guidelines which NBC and the Stations may have regarding the use of their
trademarks, service marks and other brands and agrees that it shall make
no use of such marks and brands which is not approved in advance by NBC
and the relevant Stations. Branding for all other areas of the NBC
Syndication Platform and the Station Sites shall be at the sole discretion
of NBC and the Stations.
5. Promotion: As a condition of utilizing the NBC Syndication Platform, each
Station will be required of offer a minimum of 10 on-air promos
concerning, or mentions of,
2
<PAGE> 3
the URL address of the Station Site per week. NBC shall encourage
Stations to include information regarding the NBC Syndication Platform
as part of such promos or mentions.
6. Exclusivity: NBC agrees that Auto-By-Tel will be the exclusive service
provider for the online automotive purchasing and information category
of the NBC Syndication Platform offered by NBC, provided that Company
acknowledges that nothing in this Section 6 or elsewhere in the Letter
Agreement shall restrict NBC rights in any way in connection with NBC's
world wide web site ("NBC.com"), MSNBC.com, Intellicast.com or any
other future NBC related interactive (or other) services other than the
NBC Syndication Platform. Notwithstanding the foregoing, Company
acknowledges that (i) other services provided by third parties may be
offered to the Stations by NBC as part of the NBC Syndication Platform
which happen to provide online automotive information in addition to
their primary services as long as NBC does not offer such third party
services in place of Company's services on the NBC Syndication Platform
or materially promote such competing aspects of such third party
services to the Stations or the public (other than through general
advertising) in connection with the NBC Syndication Platform and (ii)
NBC will have no ability to prevent the Stations from placing competing
services elsewhere on their own Station Sites. Company agrees that NBC
will be the exclusive United States television distribution partner for
Auto-By-Tel's content and service, and Company agrees not to provide
the Auto-By-Tel service, or any portion thereof, to national or
regional television networks, syndicated programming services or
syndicated or like content platforms distributed by or through the
foregoing; provided, however, that NBC recognizes that such exclusivity
shall not prevent Company from providing the Auto-By-Tel service to any
internet service provider which uses televisions as a delivery device
(i.e., Web TV). The exclusivity terms of this Paragraph 6 will be
contingent upon NBC's reaching and then maintaining over each following
year on average the following critical mass of Station support for the
NBC Syndication Platform: (x) participating Stations providing 50% of
the total Stations' television household market reach in the United
States as of the later of December 31, 1998 or 18 months after launch
of the platform and (y) participating Stations providing 75% of the
total Stations' television household market reach in the United States
three years after launch of the platform, provided that for purposes
of this calculation, no Station Site including online automotive
purchasing or information content or service shall be included when
calculating the participating Stations. If such contingencies are not
met, the exclusivity terms of this Section 6 shall no longer apply,
but all other terms of this Letter Agreement shall remain in effect
until the termination hereof. In addition, if Company is not able to
provide competitive, localized coverage and service for any of the NBC
TV markets, NBC will be free to contract with Company's competitors in
order to obtain online automotive information in such markets.
7. Advertising Sales: Company shall be responsible for the sale of
advertising inventory to be placed on each Auto-By-Tel Local Site, if
any. Company shall have the responsibility of administering the contract
for such advertising, paying all necessary expenses and collecting all
fees related thereto in return for a seller's commission of [ ] of the
gross advertising revenues related to such sale (the "Sales
Commission"). Unless the parties mutually agree to the contrary, if
Company decides in its sole discretion to sell advertising inventory for
the Auto-By-Tel Local Sites at less than the rates normally charged by
Company for advertising appearing elsewhere on Auto-By-Tel (the "Normal
Rates") or barters such inventory in any way, such advertising inventory
shall be deemed to have been sold at such Normal Rates for purposes of
calculating revenues for purposes of Section 8(b) below. Company
acknowledges that NBC and the Stations will be solely responsible for
the sale of advertising which appears within the area of the Station
Sites which frames Auto-By-Tel Local Sites and that Company will have no
right to advertising revenues received by NBC and Stations in connection
with such frames or any other portions of the
3
<PAGE> 4
[*] Confidential Treatment Requested
Station Sites other than the Auto-By-Tel Local Sites. NBC acknowledges
that manufacturers' financing and insurance products or services offered
through the Auto-By-Tel Local Site shall not be deemed advertising for
the purposes hereof.
8. Financial Terms: Company agrees that it will be responsible for all costs
and expenses associated with the creation and operation of the Auto-By-Tel
Local Sites. Auto-By-Tel shall make the following monthly payments to NBC.
(a) Annual License Fee - Company will pay NBC a license fee of [*] upon
execution hereof and upon each anniversary date of the launch of the NBC
Syndication Platform occurring during the term hereof. This fee shall also
be considered a non-refundable advance on any revenues payable to NBC in
connection with the terms of sub-section (c) of this Section 8.
(b) Advertising Revenues - NBC and Company will equally share (i.e.,
50/50) all gross revenues received by Company in connection with the sale
of advertising for display anywhere within the Auto-By-Tel Local Sites
after deduction of the Sales Commission is made but prior to the
deduction of any expenses of any kind.
(c) Lead Generation Revenues - Company will pay NBC [*] for each online
or physical (e.g., mail, fax, etc.) submission of any "unique purchase
request" to Auto-By-Tel by any individual or corporate user which is
received by Company and attributable to usage on an Auto-By-Tel Local
Site. "Unique purchase request" shall mean a purchase request from a user
with a different name and e-mail address from any name or address received
by Company in the past. In addition, once the Auto-By-Tel Local Sites
generate one hundred and fifty thousand (150,000) such submissions in any
calendar year during the term hereof, then Company will pay NBC [*] for
each such submission received thereafter until the end of that calendar
year. The parties agree that the Annual License Fee described above shall
be an advance against payments for the first 8,333 submissions otherwise
owed hereunder.
(d) Future Revenue - The parties agree that if any future revenue
generating opportunities not engaged in by Company through its
Auto-By-Tel service as of the date hereof or described above are created
in connection with the Auto-By-Tel Local Sites, the parties will
negotiate in good faith regarding what revenue sharing arrangements
between the parties would be appropriate, provided that, unless such
opportunities involve characteristics which would make them materially
different from the opportunities described above, it is the intent of the
parties to share such revenues equally.
9. Payment and Audit Conditions. At the end of each month in which Company
receives any revenue of the type described in Section 8 (b) and (c),
Company shall prepare a monthly statement providing sufficient detail
regarding the source of such revenue and will deliver such statement
along with the required payment described therein to NBC no less than
thirty (30) days following such date. Company agrees that NBC shall have
the right to conduct a reasonable audit of the relevant books and records
of such party in order to determine compliance with the terms of this
Letter Agreement. The parties agree that all amounts due under this
Agreement from the Company to NBC shall be paid directly to NBC and not
to any of the individual Stations.
10. Representations and Warranties: (a) Company represents and warrants to
NBC and the Stations that it has the right and power to perform its
obligations and to grant the rights granted herein, that Company's
creation and operation of the Auto-By-Tel Local Sites pursuant to this
Letter Agreement will not violate any agreement or obligation between
Company and a third party or any laws or regulations and that, except for
material provided by NBC and the Stations, the material included on the
Auto-By-Tel Local Sites and the Auto-By-Tel Link as well as the operation
of the Auto-By-Tel
4
<PAGE> 5
Local Sites as contemplated herein will, to the best of its knowledge, be
accurate and correct and will not violate or infringe any third party
rights, including intellectual property rights. Company also agrees that
standard software industry representation and warranties will apply to
all software and technology used by Company in order to carry out its
obligations described herein. Company acknowledges that the Final
Agreement (as defined below) will contain additional and more detailed
versions of the representations and warranties described above.
(b) NBC represents and warrants to Company that it has the right and
power to perform its obligations and to grant the rights granted herein
and that the material provided by NBC to Company for inclusion on the
Auto-By-Tel Local Sites will, to the best of its knowledge, be accurate
and correct and will not violate or infringe any third party rights,
including intellectual property rights.
11. Indemnity. (a) Company agrees to indemnify, defend, and hold NBC, the
Stations, their affiliates and their successors, officers, directors and
employees harmless from any and all actions, causes of action, claims,
demands, costs, liabilities, expenses (including reasonable attorneys'
fees) and damages arising out of or in connection with any third party
claims (i) relating to Company's operation and management of the
Auto-By-Tel Local Sites, or (ii) relating to a breach of any of Company's
representations and/or warranties set forth in Section 10 of this Letter
Agreement.
(b) NBC agrees to indemnify, defend, and hold Company, its affiliates
and its successors, officers, directors and employees harmless from any
and all actions, causes of action, claims, demands, costs, liabilities,
expenses (including reasonable attorneys' fees) and damages arising out
of or in connection with any third party claims relating to a breach of
any of NBC's representations and/or warranties set forth in Section 10 of
this Letter Agreement.
(c) The indemnified party agrees to notify the other party promptly of
any written claims or demands against the indemnified party for which the
other party is responsible, and the Indemnified Party for which the other
party will be entitled, at its option, to assume the defense or
settlement of any such claim, provided that no settlement shall be
reached without the consent of the indemnifying party. The indemnified
party will promptly be reimbursed by the other party for Indemnified
Amounts as they are incurred.
(d) IN NO EVENT UNDER ANY CIRCUMSTANCES SHALL EITHER PARTY (OR ITS
AFFILIATES) BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF OR IN CONNECTION WITH ITS
OBLIGATION UNDER THIS LETTER AGREEMENT; PROVIDED HOWEVER, THAT THE
FORGOING LIMITATION SHALL NOT APPLY TO DIRECT DAMAGES RESULTING FROM THE
INTENTIONAL OR WILLFUL BREACH OF THIS LETTER AGREEMENT.
12. Term. The initial term of this Letter Agreement shall be four (4) years,
and ninety (90) days prior to the end of the initial term, the parties
agree to negotiate in good faith regarding a possible extension of the
term hereof for an additional two (2) years. Either party may terminate
this Letter Agreement upon a material default by the other party of the
terms hereof which default is not cured within thirty (30) days following
such party's receipt of a written notice regarding the default. In
addition, if Company materially alters the nature or quality of its
service (e.g., changes Auto-By-Tel from a free to subscription service),
NBC may terminate this Letter Agreement, at its option, by providing
Company with ten (10) days prior notice thereof in writing. Finally, if
NBC determines in its sole discretion at any time, not to offer the NBC
Syndication Platform as such term is described in Paragraph 1, it will
inform the Company of such
5
<PAGE> 6
decision in writing and this Letter Agreement shall be deemed terminated as
of the date of such notice.
13. Formal Agreement. Recognizing that time is of the essence, this Letter
Agreement shall serve as the intent of both parties to enter into a more
formal agreement for the creation and operation of Auto-By-Tel Local Sites
(the "Final Agreement"). Both parties shall use reasonable efforts to
complete the Final Agreement within a reasonable time period following the
date of execution of this Letter Agreement, provided, however, that
notwithstanding the foregoing, if no Final Agreement is reached, the terms
contained herein shall govern the relationship between the parties for the
Term.
14. NBC Local Link. The parties agree that each Auto-By-Tel Local Site shall
include a link (which may include an appropriate NBC logo) to the NBC
Local section of NBC.com in its first page.
15. Confidentiality. Neither party shall issue a press release or make any
statement to the general public concerning this Letter Agreement, the NBC
Syndication Platform or the Auto-By-Tel Local Sites, or the existence
thereof, without the express prior written consent of the other; provided,
however, that NBC agrees that Company may file this Letter Agreement with
the Securities and Exchange Commission (the "SEC") if so required by the
Securities Act of 1933 and Securities Exchange Act of 1934, in each case,
as amended, the rules and regulations related thereto or any applicable
state laws (the "Securities Laws") as long as Company agrees to use its
best efforts to obtain confidential treatment of the economic and other
material terms hereof under the Securities Laws and consult with NBC
during the process.
16. Miscellaneous. This Letter Agreement constitutes the entire agreement and
understanding of the parties relating to the subject matter hereof and
supersedes all prior and contemporaneous agreements, negotiations, and
understandings between the parties, both oral and written, provided that
the Non-Disclosure and Confidentiality Agreement between the parties shall
remain in full force and effect. No waiver or modification of any
provision of this Letter Agreement shall be effective unless in writing
and signed by both parties. Any waiver by either party of any provision of
this Letter Agreement shall not be construed as a waiver of any other
provision of this Letter Agreement, nor shall such waiver operate as or be
construed as a waiver of such provision respecting any future event or
circumstance. This Letter Agreement shall be governed by and construed
under the laws of the State of New York applicable to contracts fully
executed in New York, without regard to New York conflicts law. The
parties hereby consent to and submit to the jurisdiction of the federal
and state courts located in the State of New York.
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<PAGE> 7
If you are in agreement with the above terms and conditions, please
indicate your acceptance by signing in the space provided below, and return one
original to me. This Letter Agreement shall be null and void if not signed
within 7 days of the date set forth above.
Very truly yours,
NBC MULTIMEDIA, INC.
By: /s/ KEN KRUSHEL
-------------------------------------
Name: Ken Krushel
Title: Vice President
ACCEPTED AND AGREED;
AUTO-BY-TEL MARKETING
CORPORATION
By: /s/ MARK W. LORIMER
-----------------------------------
Name: Mark W. Lorimer
Title: Vice President, General Counsel
and Secretary
7
<PAGE> 8
Exclusivity "Critical Mass" Formula:
NBC must reach and maintain over each following year, on average, the following
critical mass:
X= Participating stations providing 50% of the total station's television
household market reach in the U.S. as of the later of 12/31/98 or 18 months
after launch of the platform.
Y= Participating stations providing 75% of the total station's television
household market reach in the U.S. 3 years after launch of the platform.
"Provided that no Station Site including online automotive purchasing or
information content or service shall be included when calculating the
participating stations."
<PAGE> 1
EXHIBIT 10.22
[*] Confidential treatment has been requested for certain portions of this
exhibit.
CONFIDENTIAL
------------
SPONSORSHIP AGREEMENT
This agreement ("Agreement") is entered into as of the 24th day of June, 1998
("Effective Date"), by and between Excite, Inc., a California corporation,
located at 555 Broadway, Redwood City, California 94063 ("Excite"), and
Auto-By-Tel Corporation, a California corporation, located at 18872 MacArthur
Boulevard, #200, Irvine, California 92612-1400 ("Client").
RECITALS
A. Excite has obtained the right to program certain content and sell and
display advertising on the site on the Internet maintained by Netscape
Communications Corporation ("Netscape") located at
http://home.netscape.com and/or other URLs or locations designated by
Netscape (the "Excite Portion of the Netscape Site") pursuant to an
agreement dated April 29, 1998 ("the Netcenter Agreement"), which, among
other things, allow Netscape's users to search for and access content
and other sites on the Internet.
B. Within the Excite Portion of the Netscape Site, Excite plans to organize
certain content into topical channels (each, a "Channel") and to provide
an Internet search service ("Netscape Search").
C. Client is engaged in the business of, among other things, (i) providing
online information and data to prospective purchasers of motor vehicles
through its Web site located at http://www.autobytel.com (the "Client
Site") and facilitating the acquisition of vehicles through a network of
dealer subscribers; (ii) offering to any such purchaser vehicle
financing and leasing programs, insurance programs and after market
products, and (iii) offering an incentive "rewards" based membership
program featuring a co- branded credit card, roadside assistance and
select retail providers (the "Mobalist" Program).
D. Client wishes to promote its business to Netscape's users through
promotions, content and advertising in the Excite Portion of the
Netscape Site.
Therefore, the parties agree as follows:
1. SPONSORSHIP OF THE AUTOS CHANNEL
(a) Client acknowledges that Excite's right to display promotional
placements on the Excite Portion of the Netscape Site is
conditioned on the Netcenter Agreement remaining in effect.
However, Excite represents that it will, in good faith, perform
all of its obligations under the Netcenter Agreement and do all
other commercially
1
<PAGE> 2
CONFIDENTIAL
------------
reasonable acts necessary to keep such Agreement in place,
subject at all times to Netscape's rights to terminate the
Netcenter Agreement for reasons unrelated to Excite's performance
or breach. Therefore, subject to the Netcenter Agreement
remaining in effect, commencing on the Launch Date (as defined
below), Client will be promoted in the Autos Channel of the
Excite Portion of the Netscape Site:
(i) A link to the Client Site (consistent with the format used
on similar links on the same page) will be displayed in
the Autos Channel home page for the duration of the term
of the Agreement.
(ii) A link to the Client Site (consistent with the format used
on similar links on the same page) will be displayed in
the "Buy A Car Online" department of the Autos Channel (or
a similar portion of the Autos Channel featuring
comparable content) for the duration of the term of the
Agreement.
(iii) A link to the Client Site (consistent with the format used
on similar links on the same page) will be displayed in
the "Take a Test Drive" department of the Autos Channel
(or a similar portion of the Autos Channel featuring
comparable content) for the duration of the term of the
Agreement.
(iv) A link to the Client Site (consistent with the format used
on similar links on the same page) will be displayed in
the "Auto Makers" promotional area in the "SUV," "Truck,"
"Cars" and "Luxury Cars" departments of the Autos Channel
(or a similar portion of the Autos Channel featuring
comparable content) for the duration of the term of the
Agreement.
(b) Client acknowledges that Excite's right to display content on the
Excite Portion of the Netscape Site is conditioned on the
Netcenter Agreement remaining in effect. Therefore, subject to
the Netcenter Agreement remaining in effect, commencing of the
Launch Date (as defined below), motor vehicle related content
supplied by Client ("Client Content") will be promoted in the
Autos Channel of the Excite Portion of the Netscape Site:
(i) Client Content from Bank Rate Monitor, Edmunds,
Auto-By-Tel, and/or AIG (subject to approval by Excite)
will be displayed in the Autos Channel for the duration of
the term of the Agreement. The selection and placement of
Client Content to appear in the Autos Channel will be
subject to Excite's discretion.
(ii) A module containing text and graphics links of less than
6K in file size, the pixel dimensions to be mutually
determined by the parties, featuring Client's "Mobalist"
program which will be displayed in the Autos Channel for
the
2
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[*] Confidential Treatment Requested
CONFIDENTIAL
------------
duration of the term of the Agreement. The placement of
the "Mobalist" module in the Autos Channel will be subject
to Excite's discretion and continued positive user
feedback.
(iii) All Client Content will link to the Client Site. The
"Mobalist" module will link to http://www.mobalist.com;
unless, upon reasonable notice, Client directs Excite to
link the Mobalist module to an additional or alternative
address.
(iv) Client and Excite will determine mutually agreeable
methods for the transmission and incorporation of updates
to the Client Content and "Mobalist" module. Other than
updates to the Client Content and "Mobalist" module,
Client will not alter the Client Content or "Mobalist"
module without Excite's prior consent.
(v) Netscape and Excite, on the one hand, and Client, on the
other, will cooperate in good faith regarding the "look
and feel" of the "Mobalist" module, but Netscape and
Excite will have final decision authority over of the
"look and feel" of the Client Content, the "Mobalist"
module and the Autos Channel.
(vi) Client will have sole responsibility for providing, at its
expense, the Client Content and "Mobalist" module to
Excite.
2. SWEEPSTAKES
(a) Every twelve (12) months, Client, at its sole expense, will
supply Excite with up to three (3) new motor vehicles to be used
by Excite as sweepstakes prizes offered to Netscape users. The
parties agree that the aggregate suggested manufacturer's retail
price for the vehicle(s) selected by Excite though Client shall
not exceed forty-five thousand dollars ($45,000) in any
twelve-month period.
(b) Client and Excite will cooperate in good faith to identify
appropriate opportunities to promote these sweepstakes and Client
in the Excite Portion of the Netscape Site during the term of the
Agreement.
(c) Other than the motor vehicles supplied by Client, Excite will
assume all expenses involved in administering and promoting these
sweepstakes.
(d) Either party may issue press releases regarding the sweepstakes,
the timing and wording of which will be mutually agreed upon. Any
such press releases will
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<PAGE> 4
CONFIDENTIAL
------------
identify Excite as the host of the sweepstakes and Client as the
provider of the prize vehicle.
3. ADVERTISING ON THE EXCITE PORTION OF THE NETSCAPE SITE
(a) Client acknowledges that Excite's right to display advertising on
the Excite Portion of the Netscape Site is conditioned on the
Netcenter Agreement remaining in effect. Therefore, subject to
the Netcenter Agreement remaining in effect, commencing of the
Launch Date (as defined below), Excite will display Client's
banner advertising in rotation on the Channels on the Excite
Portion of the Netscape Site for the term of the Agreement.
(b) Subject to the Netcenter Agreement remaining in effect, Excite
guarantees the display of twenty-eight million seven hundred
fifty thousand (28,750,000) of Client's advertising banners,
which shall be distributed evenly and equitably per month, during
the term of the Agreement.
4. EXCLUSIVITY
(a) For the term of the Agreement, Excite will not enter into any
agreement to display and shall not display on the Autos, Arts &
Leisure, Auctions, Education, Games, Lifestyle, Real Estate or
Shopping Channels of the Excite Portion of the Netscape Site
content created by Excite promoting Client's "Competitors,"
content created by Client's Competitors or promotional placements
and/or advertising banners from Client's Competitors.
(b) For the purposes of this Agreement, "Competitors" means those
merchants whose primary business is (i) the online referral of
new motor vehicle purchase and/or leasing requests or the online
referral of used motor vehicle purchase requests to a nationwide
network of automobile dealers, (but does not include Excite's
subsidiary, Classifieds2000, Inc. ("Classifieds2000")), together
with the offering of ancillary motor vehicle products in
connection with any such purchase or lease including financing,
insurance and aftermarket products as well as (ii) the offering
of a rewards-based incentive program targeted to motorists
featuring a co-branded credit card, roadside assistance and
select retail dealers (but does not include any rewards-based
incentive program offered by Excite under the "Excite" brand).
(c) Notwithstanding the foregoing, Excite may display links to
Client's Competitors in Excite's general directory of Web sites
that appears on the Netscape Site, in search results displayed in
"Jango" shopping search services, in Netscape Search results
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pages and in classified advertising listings, subject to any
agreement entered into by Client and Classifieds2000, pursuant to
Section 5 below.
5. RIGHT OF FIRST NEGOTIATION FOR CLASSIFIEDS CHANNEL
(a) Client will have a right of first negotiation with
Classifieds2000 for an exclusive sponsorship of the Classifieds
Channel of the Excite Portion of the Netscape Site.
(b) Excite will not propose, solicit or negotiate offers from
entities other than Client for any exclusive sponsorships of the
Classifieds Channel of the Excite Portion of the Netscape Site by
any of Client's Competitors, if at all, prior to fifteen (15)
business days from the Effective Date.
(c) Classifieds2000 will negotiate with Client in good faith with
respect to the terms and conditions under which Client would
become the exclusive online seller of new motor vehicles
sponsoring the Classifieds Channel of the Excite Portion of the
Netscape Site. If Client and Classifieds2000 have not entered
into a written sponsorship agreement by close of business on the
fifteenth business day from the Effective Date, Excite and/or
Classifieds2000 may enter into negotiations with any third party
with respect to exclusive sponsorships of the Classifieds Channel
of the Excite Portion of the Netscape Site.
6. LAUNCH DATE AND REPORTING
(a) Client and Excite will use reasonable efforts to implement the
display of the promotional placements, content and advertising
described in the Agreement by July 1, 1998 (the "Launch Date").
The parties recognize that the scheduled Launch Date can be met
only if Client provides final versions of all graphics, text,
keywords, banner advertising, promotional placements, other
promotional media and valid URL links necessary to implement the
promotional placements, content and advertising described in the
Agreement (collectively, "Impression Material") to Excite five
(5) days prior to scheduled Launch Date.
(b) In the event that Client fails to provide the Impression Material
to Excite five (5)days in advance of the scheduled Launch Date,
Excite may, at its sole discretion (i) reschedule the Launch Date
at the earliest practicable date according to the availability of
Excite's engineering resources after delivery of the complete
Impression Material or (ii) commence delivery of Impressions
based on Impression Material in Excite's possession at the time
and/or reasonable placeholders created by Excite.
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(c) Excite will provide Client with monthly reports substantiating
the number of impressions of Client's advertising banners,
content and promotional placements displayed on the Excite
Portion of the Netscape Site.
7. SPONSORSHIP, ADVERTISING AND TRANSACTION FEES
(a) Client will pay Excite sponsorship and advertising fees of two
million four hundred eighty-seven thousand dollars ($2,487,000)
in the first year of the term of the Agreement. These fees will
be paid in equal monthly installments of two hundred seven
thousand two hundred fifty dollars ($207,250). The first monthly
payment will be due upon the display of the first of the
promotional placements and advertising described in the
Agreement. Subsequent installments will be due on a monthly basis
thereafter.
(b) Client will pay Excite sponsorship and advertising fees of four
million one hundred fifty thousand dollars ($4,150,000) in the
second year of the term of the Agreement. These fees will be paid
in equal monthly installments of three hundred forty-five
thousand eight hundred thirty three dollars and thirty-three
cents ($345,833.33). The first monthly payment will be due upon
the first anniversary of the display of the first of the
promotional placements and advertising described in the
Agreement. Subsequent installments will be due on a monthly basis
thereafter.
(c) Separate and apart from the sponsorship and advertising fees,
Client will pay Excite for each "Unique Purchase Request"
completed by users referred to the Client Site from the Excite
Portion of the Netscape Site during the first year of the term of
the Agreement. For the purposes of this Agreement, a "Unique
Purchase Request" shall be a new car purchase request electronic
form with all data fields deemed mandatory by Client completed by
the user, which has been received by Client from Excite, and for
which Client has not, within the previous ninety (90) day period,
received a duplicate new car purchase request from the Excite
Portion of the Netscape Site for the same or similar vehicle, as
determined by the year, make and model; from the same user, as
identified by the same name, zip code and/or the same e-mail
address. Client will pay Excite for each Unique Purchase Request
during the first year of the term of the Agreement as follows:
(i) [*] per Unique Purchase Request up to the first one
hundred fifty thousand (150,000) Unique Purchase Requests;
(ii) [*] per Unique Purchase Request for between one hundred
fifty thousand one (150,001) and two hundred thirty
thousand (230,000) Unique Purchase Requests; and
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(iii) [*] per Unique Purchase Request in excess of [*] Unique
Purchase Requests.
(d) Separate and apart from the sponsorship and advertising fees,
Client will pay Excite for each Unique Purchase Request completed
by users referred to the Client Site from the Excite Portion of
the Netscape Site during the second year of the term of the
Agreement as follows:
(i) [*] per Unique Purchase Request up to the first [*] Unique
Purchase Requests;
(ii) [*] per Unique Purchase Request for between [*] and [*]
Unique Purchase Requests; and
(iii) [*] per Unique Purchase Request in excess of [*] Unique
Purchase Requests.
(e) The sponsorship fees and transaction payments are net of any
agency commissions to be paid by Client.
(f) Client will provide Excite with monthly reports of the number of
"Unique Purchase Requests." It is currently Client's goal to
provide these reports to Excite on or about the fifth business
day after the close of the preceding month. Client shall pay
Excite the transaction payments within [*] days after Excite's
receipt of Client's report of the number of "Unique Purchase
Requests" each month. In the event that Client does not pay the
transaction payments within [*] days after Excite's receipt of
Client's report of the number of "Unique Purchase Requests" for
any month, that month shall be deemed to be a "Late Payment
Month" for the purposes of this Agreement. In the event that
there are [*] Late Payment Months in any [*] period during the
term of the Agreement, Client will increase by [*] the monthly
payment otherwise due for the second and any other Late Payment
Month that occurs in the [*] period.
(g) Client will provide complete reports to Excite within thirty (30)
days of each month describing the month's transaction activity by
users referred to the Client Site from the Excite Portion of the
Netscape Site including, but not limited to, the total number of
purchase requests submitted and the number of Unique Purchase
Requests completed. Client will make good faith efforts to
develop tracking and reporting capabilities to correlate this
transaction information to the various promotional placements,
content and advertising banners on the Excite Portion of the
Netscape
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Site in order to facilitate optimization of Client's
sponsorship program. Client's reports will be delivered to Excite
in a mutually agreed-upon electronic format to an email address
or URL designated by Excite. In the event that Client does not
provide the required reports to Excite within sixty (60) days
after the end of any month, that month shall be deemed to be a
"Late Reporting Month" for the purposes of this Agreement. In the
event that there are two or more Late Reporting Months in any
twelve (12) month period during the term of the Agreement, Client
will increase by ten percent (10%) the monthly payment otherwise
due for the second and any other Late Reporting Month that occurs
in the twelve (12) month period. To the extent that interim
reports regarding the quality of the performance of Client's
sponsorship program on the Excite Portion of the Netscape Site,
as described in Section 9(b)(i), are available more frequently
than quarterly, Client will make good faith efforts to supply
such interim reports to Excite as soon as reasonably practical.
(h) Client will maintain accurate records with respect to the
calculation of all transaction payments and reporting due under
this Agreement. Once per year, the parties will review these
records to verify the accuracy and appropriate accounting of all
payments made pursuant to the Agreement. In addition, Excite may,
upon no less than thirty (30) days prior written notice to
Client, cause an independent Certified Public Accountant to
inspect the records of Client reasonably related to the
calculation of such payments during Client's normal business
hours. The fees charged by such Certified Public Accountant in
connection with the inspection will be paid by Excite unless the
payments made to Excite are determined to have been less than
ninety-five percent (95%) of the payments actually owed to
Excite, in which case Client will be responsible for the payment
of the reasonable fees for such inspection.
8. PUBLICITY
Unless required by law, neither party will make any public statement,
press release or other announcement relating to the terms of or
existence of this Agreement without the prior written approval of the
other. Notwithstanding the foregoing, the parties agree to issue an
initial press release regarding the relationship between Excite and
Client, the timing and wording of which will be mutually agreed upon.
9. TERM AND TERMINATION
(a) The term of this Agreement will begin on the Launch Date and will
end at the earlier of June 30, 2000 or the expiration or
termination of the Netcenter Agreement. In the event that the
Netcenter Agreement expires or is terminated prior to June 30,
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2000, Client and Excite will negotiate in good faith to resolve
all outstanding promotional and financial issues.
(b) Despite Excite's performance of its obligations hereunder, Client
may terminate this Agreement under the following limited
conditions:
(i) Client and Excite will meet once per quarter throughout
the term of the Agreement to review the performance of
Client's sponsorship program on the Excite Portion of the
Netscape Site. At the quarterly meeting, refers to the
Client Site generated on the Excite Portion of the
Netscape Site will be evaluated for quality and compared
to an index (the "Performance Index") based on the
performance of refers to the Client Site from the
excite.com Web site (the "Excite Site"). The Parties agree
that the Performance Index shall use June 1998 performance
results of the Excite Site as its baseline, which shall be
deemed "100%" for the purposes of comparison to the Excite
Portion of the Netscape Site. Quality performance will be
monitored and provided by Client's independent auditors
(currently, Arthur Andersen).
This information will be shared with Excite at the
quarterly performance meetings.
(ii) In the event that purchase request quality performance
from the Excite Portion of the Netscape Site is materially
below that from the Excite Site during any ninety (90) day
period during the term of the Agreement, Client will
notify Excite in writing of the poor performance. Excite
will undertake commercially reasonable efforts to remedy
the poor performance.
(iii) In the first year of the term of the Agreement only, if
Excite's efforts do not materially improve performance
after a reasonable period of time after receiving Client's
written notice of poor performance pursuant to Section
9(b)(ii), then, no later than forty-five (45) days prior
to the end of the first year of the term of the Agreement,
Client can give written notice to Excite of termination of
the Agreement at the end of the first year due to the
purchase request quality performance from the Excite
Portion of the Netscape Site being materially below that
from the Excite Site. This written termination notice must
include supporting reports or analysis by the accredited
neutral third party. Client may not terminate the
Agreement prior to the end of the first year of the term
of the Agreement under Sections 9(b)(ii) or 9(b)(iii).
(iv) In the event that purchase request quality performance
from the Excite Portion of the Netscape Site is materially
below that from the Excite Site
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during any ninety (90) day period during the second year
of the term of the Agreement and Excite's efforts do not
materially improve performance after a reasonable period
of time after receiving Client's notice of poor
performance then, in any quarterly meeting in the second
year of the term of the Agreement, Client may give notice
to Excite that Excite has sixty (60) days to remedy the
poor performance or the Agreement will be subject to
termination. Should Excite not be able to remedy purchase
request quality performance within the sixty (60) day
period, Client may give Excite written notice that the
Agreement will be terminated in thirty (30) additional
days.
(v) In the event that Client receives less than one hundred
fifty thousand (150,000) Unique Purchase Requests from
users referred to the Client Site from the Excite Portion
of the Netscape Site in the first year of the term of the
Agreement, Client can terminate the Agreement upon written
notice to Excite. Notwithstanding Section 7(c), within
thirty (30) days of any such termination, Client will pay
Excite the difference between (i) three million two
hundred twenty-five thousand dollars ($3,225,000) and (ii)
the amounts previously paid to Excite pursuant to 7(c)(i)
for the Unique Purchase Requests from users referred to
the Client Site from the Excite Portion of the Netscape
Site in the first year of the term of the Agreement under
the 150,000 minimum.
(vi) As soon as it becomes reasonably apparent that Client is
likely to pay Excite ten million two hundred thousand
dollars ($10,200,000) for Unique Purchase Requests from
users referred to the Client Site from the Excite Portion
of the Netscape Site within the next sixty (60) days,
Excite and Client will meet to discuss Client's plans to
continue or terminate the Agreement. After that meeting,
Client may, in its sole discretion, give Excite written
notice terminating the Agreement effective thirty (30)
days after Client has paid to Excite ten million two
hundred thousand dollars ($10,200,000) for Unique Purchase
Requests from users referred to the Client Site from the
Excite Portion of the Netscape Site. Once Client gives
written notice to Excite of its election to terminate the
Agreement under this Section 9(b)(vi), Excite will be free
to commence negotiations for replacement advertising
and/or sponsorships of the Excite Portion of the Netscape
Site with any third party, including Client's Competitors.
(c) Either party may terminate this Agreement if the other party
materially breaches its obligations hereunder and such breach
remains uncured for thirty (30) days following the notice to the
breaching party of the breach.
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(d) All undisputed payments that have accrued prior to the
termination or expiration of this Agreement will be payable in
full within thirty (30) days thereof.
(e) The provisions of Section 12 (Confidentiality), Section 13
(Indemnity), Section 14 (Limitation of Liability) and Section 15
(Dispute Resolution) will survive any termination or expiration
of this Agreement.
10. TRADEMARK OWNERSHIP AND LICENSE
(a) Client will retain all right, title and interest in and to its
trademarks, service marks and trade names worldwide, subject to
the limited license granted to Excite hereunder.
(b) Excite will retain all right, title and interest in and to its
trademarks, service marks and trade names worldwide, subject to
the limited license granted to Client hereunder.
(c) Each party hereby grants to the other a revocable, royalty-free,
nonexclusive, limited license to use its trademarks, service
marks or trade names only as specifically described in this
Agreement. All such use shall be in accordance with each party's
reasonable policies regarding advertising and trademark usage as
established from time to time.
(d) Upon the expiration or termination of this Agreement, each party
will cease using the trademarks, service marks and/or trade names
of the other except as the parties may agree in writing.
11. CONTENT OWNERSHIP AND LICENSE
(a) Client will retain all right, title and interest in and to the
Client Site worldwide including, but not limited to, ownership of
all copyrights and other intellectual property rights therein.
(b) Client will retain all right, title and interest in and to the
Client Content and the content of the "Mobalist" module worldwide
(including, but not limited to, ownership of all copyrights and
other intellectual property rights therein). Subject to the terms
and conditions of this Agreement, Client hereby grants to Excite
a revocable, royalty-free, non-exclusive, worldwide license to
use, reproduce, distribute, transmit and publicly display the
Client Content and "Mobalist" module in accordance with this
Agreement and to sub-license the Client Content and "Mobalist"
module to Excite's wholly-owned subsidiaries or to joint ventures
in
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which Excite participates for the sole purpose of using,
reproducing, distributing, transmitting and publicly displaying
the Client Content and "Mobalist" module in accordance with this
Agreement
(c) Netscape and Excite will retain all right, title, and interest in
and to the Excite Portion of the Netscape Site worldwide
including, but not limited to, ownership of all copyrights, look
and feel and other intellectual property rights therein.
12. CONFIDENTIALITY AND USER DATA
(a) For the purposes of this Agreement, "Confidential Information"
means information about the disclosing party's (or its
suppliers') business or activities that is proprietary and
confidential, which shall include all business, financial,
technical and other information of a party marked or designated
by such party as "confidential or "proprietary" or information
which, by the nature of the circumstances surrounding the
disclosure, ought in good faith to be treated as confidential.
(b) Confidential Information will not include information that (i) is
in or enters the public domain without breach of this Agreement,
(ii) the receiving party lawfully receives from a third party
without restriction on disclosure and without breach of a
nondisclosure obligation, (iii) the receiving party knew prior to
receiving such information from the disclosing party or (iv) the
receiving party develops independent of any information
originating from the disclosing party.
(c) Each party agrees (i) that it will not disclose to any third
party or use any Confidential Information disclosed to it by the
other except as expressly permitted in this Agreement and (ii)
that it will take all reasonable measures to maintain the
confidentiality of all Confidential Information of the other
party in its possession or control, which will in no event be
less than the measures it uses to maintain the confidentiality of
its own information of similar importance.
(d) The usage reports provided by Excite to Client hereunder will be
deemed to be the Confidential Information of Excite. The reports
provided to Excite under Section 7(g) will be deemed to be the
Confidential Information of Client.
(e) The terms and conditions of this Agreement will be deemed to be
Confidential Information and will not be disclosed without the
written consent of the other party.
(f) The parties acknowledge that Client is in the process of
obtaining access to data base marketing capabilities and that it
is Client's current goal to enable such data base marketing
capabilities on or about January 1999. The parties will cooperate
in good
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faith to develop a program whereby Excite may leverage
Client's data base marketing opportunities under the following
guidelines:
(i) Excite will not have direct access to any user data
collected on the Client Site;
(ii) Excite will have the right to market Excite's own services
and/or products to Client's users coming through the
Excite Portion of the Netscape Site, by specifying a
profile of the target audience (e.g., male, 25 - 40 years
old, etc.);
(iii) Excite will deliver any marketing material to Client.
Client will then arrange for delivery of the marketing
material to the target audience;
(iv) Excite will bear all direct expenses in connection with
the creation and delivery of the marketing material.
Client will not charge Excite for usage of Client's user
data;
(v) Excite's marketing plans and the results of Excite's
marketing efforts through Client will be "Confidential
Information" of Excite under this Agreement; and
(vi) Excite will not conduct such marketing through Client on
behalf of Client's Competitors.
(g) Client will not use User Data to directly or indirectly target
for solicitations any Excite users as a unique subset of Client's
user data base (except as specifically provided in this Agreement
or except to encourage the continued use of Client's own products
and/or services) either individually or in the aggregate during
the term of this Agreement and for a period of twelve (12) months
following the expiration or termination of this Agreement (except
to encourage the continued use of Client's own products and/or
services).
(h) Neither party will sell, disclose, transfer or rent any user data
obtained from users referred to the Client Site from the Excite
Portion of the Netscape Site which could reasonably be used to
identify a specific named individual ("Individual Data") to any
third party nor will either party use Individual Data on behalf
of any third party without the express permission of the
individual user. Where user permission for dissemination of
Individual Data to third parties has been obtained, each party
will use commercially reasonable efforts to require the third
party recipients of Individual Data to provide an "unsubscribe"
feature in any email communications generated by, or on behalf
of, the third party recipients of Individual Data.
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(i) Notwithstanding the foregoing, each party may disclose
Confidential Information or user data obtained from users
referred to the Client Site from the Excite Portion of the
Netscape Site (i) to the extent required by a court of competent
jurisdiction or other governmental authority or otherwise as
required by law or (ii) on a "need-to-know" basis under an
obligation of confidentiality to its legal counsel, accountants,
banks and other financing sources and their advisors.
Notwithstanding the foregoing, Excite may disclose Confidential
Information or user data obtained from users referred to the
Client Site from the Excite Portion of the Netscape Site to
Netscape as required under the terms of the Netcenter Agreement.
13. INDEMNITY
(a) Client will indemnify, defend and hold harmless Excite, its
affiliates, officers, directors, employees, consultants and
agents from any and all third party claims, liability, damages
and/or costs (including, but not limited to, attorneys fees)
arising from:
(i) The breach of any representation or covenant in this
Agreement; or
(ii) Any claim that Client's Impression Material, the Client
Content or the content of the "Mobalist" module infringe
or violate any third party's copyright, patent, trade
secret, trademark, right of publicity or right of privacy
or contain any defamatory content; or
(iii) Any claim arising from content displayed on the Client
Site.
Excite will promptly notify Client of any and all such claims and
will reasonably cooperate with Client with the defense and/or
settlement thereof; provided that, if any settlement requires an
affirmative obligation of, results in any ongoing liability to or
prejudices or detrimentally impacts Excite in any way and such
obligation, liability, prejudice or impact can reasonably be
expected to be material, then such settlement shall require
Excite's written consent (not to be unreasonably withheld or
delayed) and Excite may have its own counsel in attendance at all
proceedings and substantive negotiations relating to such claim.
(b) Excite will indemnify, defend and hold harmless Client, its
affiliates, officers, directors, employees, consultants and
agents from any and all third party claims, liability, damages
and/or costs (including, but not limited to, attorneys fees)
arising from:
(i) The breach of any representation or covenant in this
Agreement; or
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(ii) Any claim arising from the Excite Portion of the Netscape
Site other than content or services provided by Client.
Client will promptly notify Excite of any and all such claims and
will reasonably cooperate with Excite with the defense and/or
settlement thereof; provided that, if any settlement requires an
affirmative obligation of, results in any ongoing liability to or
prejudices or detrimentally impacts Client in any way and such
obligation, liability, prejudice or impact can reasonably be
expected to be material, then such settlement shall require
Client's written consent (not to be unreasonably withheld or
delayed) and Client may have its own counsel in attendance at all
proceedings and substantive negotiations relating to such claim.
(c) EXCEPT AS SPECIFIED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
WARRANTY IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT
AND HEREBY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES, INCLUDING
ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE REGARDING SUCH SUBJECT MATTER.
14. LIMITATION OF LIABILITY
EXCEPT UNDER SECTIONS 13(a) AND 13(b), IN NO EVENT WILL EITHER
PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, WHETHER BASED ON BREACH OF CONTRACT, TORT
(INCLUDING NEGLIGENCE) OR OTHERWISE, WHETHER OR NOT THAT PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. EXCEPT UNDER
SECTIONS 13(a) AND 13(b), THE LIABILITY OF EITHER PARTY FOR
DAMAGES OR ALLEGED DAMAGES HEREUNDER, WHETHER IN CONTRACT, TORT
OR ANY OTHER LEGAL THEORY, IS LIMITED TO, AND WILL NOT EXCEED,
THE AMOUNTS TO BE PAID BY CLIENT TO EXCITE HEREUNDER.
15. DISPUTE RESOLUTION
(a) The parties agree that any breach of either of the parties'
obligations regarding trademarks, service marks or trade names,
confidentiality and/or User Data would result in irreparable
injury for which there is no adequate remedy at law. Therefore,
in the event of any breach or threatened breach of a party's
obligations regarding trademarks, service marks or trade names or
confidentiality, the aggrieved party will be entitled to seek
equitable relief in addition to its other available legal
remedies in a court of competent jurisdiction.
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(b) In the event of disputes between the parties arising from or
concerning in any manner the subject matter of this Agreement,
other than disputes arising from or concerning trademarks,
service marks or trade names, confidentiality and/or User Data,
the parties will first attempt to resolve the dispute(s) through
good faith negotiation. In the event that the dispute(s) cannot
be resolved through good faith negotiation, the parties will
refer the dispute(s) to a mutually acceptable mediator.
(c) In the event that disputes between the parties arising from or
concerning in any manner the subject matter of this Agreement,
other than disputes arising from or concerning trademarks,
service marks or trade names, confidentiality and/or User Data,
cannot be resolved through good faith negotiation and mediation,
the parties will refer the dispute(s) to the American Arbitration
Association for resolution through binding arbitration by a
single arbitrator pursuant to the American Arbitration
Association's rules applicable to commercial disputes.
16. GENERAL
(a) Assignment. Neither party may assign this Agreement, in whole or
in part, without the other party's written consent (which will
not be unreasonably withheld), except that no such consent will
be required in connection with (i) a merger, reorganization or
sale of all, or substantially all, of such party's assets or (ii)
either party's assignment and/or delegation of its rights and
responsibilities hereunder to a wholly-owned subsidiary or joint
venture in which the assigning party holds an interest. Any
attempt to assign this Agreement other than as permitted above
will be null and void.
(b) Governing Law. This Agreement will be governed by and construed
in accordance with the laws of the State of California,
notwithstanding the actual state or country of residence or
incorporation of Excite or Client.
(c) Notice. Any notice under this Agreement will be in writing and
delivered by personal delivery, express courier, confirmed
facsimile, confirmed email or certified or registered mail,
return receipt requested, and will be deemed given upon personal
delivery, one (1) day after deposit with express courier, upon
confirmation of receipt of facsimile or email or five (5) days
after deposit in the mail. Notices will be sent to a party at its
address set forth in this Agreement or such other address as that
party may specify in writing pursuant to this Section.
(d) No Agency. The parties are independent contractors and will have
no power or authority to assume or create any obligation or
responsibility on behalf of each other.
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This Agreement will not be construed to create or imply any
partnership, agency or joint venture.
(e) Force Majeure. Any delay in or failure of performance by either
party under this Agreement will not be considered a breach of
this Agreement and will be excused to the extent caused by any
occurrence beyond the reasonable control of such party including,
but not limited to, acts of God, power outages and governmental
restrictions.
(f) Severability. In the event that any of the provisions of this
Agreement are held to be unenforceable by a court or arbitrator,
the remaining portions of the Agreement will remain in full force
and effect.
(g) Entire Agreement. This Agreement is the complete and exclusive
agreement between the parties with respect to the subject matter
hereof, superseding any prior agreements and communications (both
written and oral) regarding such subject matter. This Agreement
may only be modified, or any rights under it waived, by a written
document executed by both parties.
(h) Counterparts. This Agreement may be executed in counterparts,
each of which will serve to evidence the parties' binding
agreement.
Auto-By-Tel Corporation Excite, Inc.
By: /s/ Anne Benvenuto By: /s/ Tod C. Harmon
------------------------- -------------------------
Name: Anne Benvenuto Name: Tod C. Harmon
------------------------- -------------------------
Title: Senior V.P., Marketing Title: Dir. Financial Planning
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Date: June 25, 1998 Date: June 29, 1998
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18872 MacArthur Blvd., #200 555 Broadway
Irvine, California 92612-1400 Redwood City, California 94063
949-225-4500 (Voice) 650-566-6000 (Voice)
949-662-1323 (Fax) 650-566-6030 (Fax)
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EXHIBIT 10.23
[*] Confidential Treatment has been requested for certain portions of this
exhibit.
autobytel.com inc.
LICENSE AND SERVICES AGREEMENT
This LICENSE AND SERVICES AGREEMENT (this "Agreement") is entered into as of
AUGUST 7, 1998, (the "Effective Date") by and between autobytel.com inc., a
Delaware corporation with offices at 18872 MacArthur Boulevard, Irvine,
California, 92612 ("ABT"), and Auto-By-Tel AB, a Swedish corporation with
offices at Haradsvagen 255, 14172 Huddinge, Sweden ("ABT/Nordic"), and
describes the terms and conditions pursuant to which ABT will grant to
ABT/Nordic a license to use and modify the Software and Business Procedures (as
defined below) and to use certain related technology, to deploy, develop and
support a localized version of such Software and Business Procedures.
BACKGROUND
WHEREAS, ABT is engaged in an Internet-based marketing business for new
and used vehicles in North America that provides Internet users with fast,
haggle-free, and courteous purchasing and related services designed to improve
consumers' overall vehicle buying experience;
WHEREAS, ABT/Nordic desires to market new and used vehicles, including
construction equipment vehicles, in Finland, Norway, Sweden and Denmark using
the ABT proprietary Software, technology, and ABT Business Procedures;
WHEREAS, ABT/Nordic desires to develop a localized version of ABT's
proprietary Software and Business Procedures applicable to Finland, Norway,
Sweden and Denmark;
NOW, THEREFORE, in consideration of the mutual promises and upon the
terms and conditions set forth below, the parties agree as follows:
1. Definitions
1.1 "ABT Brand" means the "Auto-By-Tel" trademark, service mark and
logo, and does not include the mark DealerSites.com.
1.2 "Business Procedures" means the proprietary business procedures for
offering purchasing-related services, as delivered by ABT to ABT/Nordic before
the Effective Date, and any updates or new revisions thereof.
1.3 "Confidential Information" means this Agreement and all its
Attachments, any addenda hereto signed by both parties, all Software listings,
Documentation, information, data, drawings,
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benchmark tests, specifications, trade secrets, object code and machine-readable
copies of the Software, Business Procedures, and any other proprietary
information disclosed by one party to the other.
1.4 "Current Term" means the initial three (3) years after the Launch
Date, and any one (1) year renewal described in Section 11.1, during which this
Agreement is in effect.
1.5 "Derivative Work" means a derivative work within the meaning of 17
U.S.C. Section 101 of the U.S. copyright law.
1.6 "Documentation" means any electronic instructions, manuals or other
materials, including without limitation on-line help files, regarding the
development or use of the Software provided by ABT under this Agreement.
1.7 "DRT" means the Dealer Communication System portion of the Software.
1.8 "Error Correction" means a patch to, or release or version of the
Software containing error corrections or fixes.
1.9 "Extensions" means any modifications or additions to the Software or
Business Procedures that are not Derivative Works of the Software or Business
Procedures.
1.10 "Fees" mean all minimum and monthly license, maintenance and other
fees payable to ABT hereunder.
1.11 "Global Brand Protocols" means the procedures for use of the ABT
Brand set forth on Attachment B along with any revisions thereof provided by ABT
from time to time in its sole discretion.
1.12 "Gross Revenues" means all payments actually received by ABT/Nordic
with regard to the Local Business, including without limitation fees received
from dealers for participating in the Internet referral system, payments
received from dealers as a result of Internet inquiries referred to them, sums
received as payments for advertising on internet sites which are part of the
Local Business, gross revenues (but not reimbursement of costs or expenses) from
providing maintenance of, and training regarding, the DRT, and all other
revenues arising directly out of the Local Business. Gross revenues will not
include revenues from sales of cars or other vehicles, from servicing of cars or
other vehicles or from other activities by ABT/Nordic or any of its affiliates
other than the operation of the Local Business. Gross Revenues received in any
currencies other than U.S. dollars will be converted into U.S. dollars at the
exchange rate in effect at 12:00 noon, Eastern Standard Time, on the first
business day of the calendar month in which such revenues are received.
1.13 "Launch Date" means the first date ABT/Nordic makes the World Wide
Web site for the Local Business generally available on the World Wide Web; but
in no event later than March 31, 1999.
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1.14 "Local Business" means a business providing Internet based
marketing of automotive and automotive related products and services, including
without limitation trucks and construction vehicles relating to vehicle dealers
located in the Territory. The parties acknowledge that the inclusion of trucks
and construction vehicles in the Local Business must not be construed to
obligate ABT to include trucks and construction vehicles in the operation of the
ABT business generally, nor to create any Software or Business Procedures
relating thereto.
1.15 "Localized Version" means a Derivative Work of the Software and
Business Procedures that implements the core functionality of the Software and
Business Procedures, but incorporates the language, currency and functional
variations for the various countries of the Territory, which Derivative Works
are in each case created by or for use by ABT/Nordic.
1.16 "Localize, or Localization" means any modifications to the Software
or Business Procedures necessary to facilitate the operation and functionality
of the Software on the operating systems or platforms within the Territory, or
the modification of the Business Procedures to meet local custom or
technological or regulatory requirements.
1.17 "Fiscal Quarter" means a period of three (3) consecutive calendar
months which period commences upon the Launch Date, or three (3), six (6), or
nine (9) months thereafter; or the anniversary of any of the foregoing.
1.18 "Fiscal Year" means a period of four (4) consecutive Fiscal
Quarters commencing on the Launch Date or the anniversary thereof.
1.19 "Software" means ABT's existing proprietary Software products
specified on Attachment A hereto, together with any Error Corrections, Updates
or Upgrades thereof provided to ABT/Nordic pursuant to this Agreement.
1.20 "Territory" means the geographical area of Finland, Norway, Sweden
and Denmark.
1.21 "Update" means a release or version of the Software containing
minor functional enhancements, or extensions.
1.22 "Upgrade" means any version of the Software designated as such by
ABT, which contains new functionality or significantly enhanced operation.
2. Grant of License
2.1 License. Subject to the terms and conditions of this Agreement, ABT
hereby grants to ABT/Nordic:
(a) a non-exclusive, non-transferable license to use, reproduce,
transmit, and to distribute, to provide access to and make available to
employees of ABT/Nordic, the Software and Business
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Procedures in the Territory, and to create Derivative Works and Extensions,
solely in connection with the development of a Localized Version or Extension in
connection with the operation of the Local Business in the Territory; and to
provide access to and make available the Software and Business Procedures to
third party contractors, solely in accordance with Section 10.4.
(b) an exclusive, non-transferable license in the Territory to
use, reproduce, make available on a server, and distribute, transmit, make
available and provide access to, to employees of ABT/Nordic, the Software in
object code format and the Business Procedures, solely for the operation of the
Local Business in the Territory, provided that ABT/Nordic operates the Local
Business solely in the accordance with the Business Procedures, and only with
respect to vehicle dealers in the Territory.
(c) a non-exclusive license to distribute, make available,
provide access to, and to publicly perform and display, and to transmit copies
of the client or "run-time" portions of the Software, or the DRT, in object code
format, in the Territory, and to reproduce the Software as necessary to exercise
such rights.
2.2 Sublicenses. ABT/Nordic may (a) grant non-exclusive sublicenses to
vehicle dealers in the Territory to use copies of the DRT in object code format,
solely for use in connection with the Local Business, and (b) grant to third
parties the right to use and reproduce copies of client or "run-time" portions
of the Software for use in connection with the Local Business' Web site. Such
sublicenses must be granted solely in connection with end user licenses in a
form subject to ABT's approval, which will not be unreasonably withheld.
ABT/Nordic may grant sublicenses of the rights granted in Section 2.1 only upon
the prior written approval of ABT. ABT shall not grant to any third party in the
Territory a license to the use DRT in connection with a Local Business.
2.3 Copies. ABT shall deliver to ABT/Nordic, as soon as practicable, one
(1) copy of the Software in executable form, and one (1) copy of the Software in
commented source code form including APIs, one (1) copy of the related
Documentation and one (1) copy of the Business Procedures. ABT/Nordic will be
entitled to make one (1) copy of the Software solely for backup or archival
purposes, and a reasonable number of copies for development purposes, and to
retain one (1) copy of the Software for production purposes. Except as otherwise
set forth herein, ABT/Nordic may not copy, distribute, reproduce, use or allow
access to the Software and Business Procedures. All copies of the Software will
be subject to the terms and conditions of this Agreement. Whenever ABT/Nordic is
permitted to copy or reproduce all or any part of the Software and Business
Procedures, all titles, trademark symbols, copyright symbols and legends, and
other proprietary markings of ABT or its suppliers or licensors must be
reproduced. ABT/Nordic shall not alter or remove any of ABT's trademarks,
copyright notices or other proprietary notices affixed to the Software by ABT.
2.4 Ownership. ABT owns all right, title and interest in and to the
Software and Business Procedures, together with any Localized Version or other
modifications to the Software and Business Procedures made by either ABT or
ABT/Nordic in connection with Localization of the Software or Business
Procedures. The licenses granted herein transfers to ABT/Nordic neither title,
nor any
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proprietary or intellectual property rights to the Software, Business
Procedures, or Documentation, or any copyrights, patents, or trademarks,
embodied or used in connection therewith, except for the rights expressly
granted herein. Upon development of any Localized Version by ABT/Nordic,
ABT/Nordic hereby assigns all right, title and interest to such Localized
Version to ABT. Such Localized Version will be included as, and incorporated in,
the Software for the purposes of the license grant in this Section 2. ABT hereby
grants ABT/Nordic an irrevocable, perpetual, worldwide, non-exclusive, fully
paid-up, transferable, sublicenseable license to reproduce, distribute, publicly
perform and display, transmit, make available, provide access to, and prepare
Derivative Works of the Extensions, and Derivative Works thereof, in connection
with the Local Business. The foregoing license will survive the termination of
this Agreement. All rights in Software and Business Procedures not expressly
granted hereunder are reserved to ABT.
2.5 Software and Business Procedure Localization. As between the
parties, ABT/Nordic is responsible for any changes to the Software,
Documentation, or Business Procedures necessary to Localize them in accordance
with the operation of the Local Business. All such Localization changes, and the
development of any Extensions, must be approved by ABT prior to development and
implementation. All such Localization changes and the development of any
Extensions must be either (i) performed by ABT in accordance with Section 3.2
below; or (ii) performed by ABT/Nordic, or by its independent contractor
approved by ABT, under the technical oversight and subject to the approval of
ABT, subject to Section 3.2 below. ABT will assist ABT/Nordic and any
independent contractors approved by ABT in all reasonable ways in making
Localization changes and developing Extensions, subject to any fees due for such
services pursuant to Section 6.2. Any modifications made to the Software,
Documentation, or Business Procedures without the approval of ABT will be a
material breach of this Agreement. In the event the Business Procedures violate
the laws or regulations of the Territory or the European Union, the parties will
cooperate in good faith to Localize them to comply with the laws and regulations
of the Territory or the European Union, as applicable. Upon completion of any
Localized Version or Extension, ABT/Nordic must disclose to ABT a copy of such
Localized Version or Extension. Any such disclosure of Localized Software or
Extension must be in source code format.
2.6 Updates and Upgrades. During the term of this Agreement, and subject
to ABT/Nordic's payment to ABT of the Maintenance Fee set forth in Section 5.3
below, ABT will deliver to ABT/Nordic any Error Corrections, Updates or Upgrades
to the Software or Business Procedures that ABT uses or releases to any of ABT's
other local country affiliates or United States licensees. ABT/Nordic shall
promptly implement all use Error Corrections, Updates, or Upgrades provided by
ABT under this Agreement, to the extent (i) consistent with Localization
requirements and (ii) such Error Corrections, Updates, or Upgrades do not cause
material errors in the software, Internet or telecommunications operations of
the Local Business. Notwithstanding the above, ABT will not be obligated to
provide such Error Corrections, Updates or Upgrades during the period during
which, in the reasonable discretion of ABT's project manager, they are in
release solely for testing purposes or otherwise not suitable for release
outside the United States.
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[*] Confidential Treatment Requested
2.7 License Restrictions. ABT/Nordic shall not:
(a) sell, lease, license, sublicense or distribute the Software,
Documentation, or Business Procedures except in accordance with this Agreement;
(b) provide, disclose, divulge or make available to, or permit
use of the Software, Documentation, Business Procedures, or Localized Version by
any third party without ABT's prior written consent, except as specifically
authorized by this Agreement; or
(c) use the Software for any purpose except as expressly
provided for in this Agreement.
2.8 Third Party Technology. The parties acknowledge that certain
software, equipment, or technology of third parties, including without
limitation server equipment, server software, and database software, may be
required to operate the Software. ABT shall cooperate reasonably with ABT/Nordic
to identify any such third-party technology that will be available to
ABT/Nordic, but ABT will not be obligated to provide any such third party
technology to ABT/Nordic.
2.9 Reimbursement for Certain Extensions. If ABT/Nordic wishes to create
an Extension, it may request reimbursement for the development of such Extension
pursuant to this Section 2.9. ABT/Nordic will submit to ABT a description in
reasonable detail of such Extension. ABT shall, at ABT/Nordic's expense in
accordance with Section 3.2, prepare a high-level specification, budget and
schedule for development of the Extension. If the budgeted development fees for
the Extension (the "Estimated Fees") are under [*], then ABT will not be
obligated to reimburse ABT/Nordic for the development of such Extension. If the
budgeted development fees for the Extension are [*] or over, then ABT shall have
a right of first refusal to perform such development, as follows: ABT may,
within ten (10) days after the completion of the aforementioned estimate, elect
by written notice to perform the development of such Extension, pursuant Section
3.2. If ABT does not provide such notice within such ten (10) day period,
ABT/Nordic may, in its discretion, elect to perform the development of such
Extension, subject to the terms of Section 2.5. Upon completion of the
Extension, ABT/Nordic shall provide a copy of such Extension in source code
format, including any related technical documentation, to ABT. If, within the
next one (1) year period after ABT/Nordic provides the Extension to ABT, either
ABT or its affiliates use such Extension (other than solely for testing
purposes), ABT shall, no later than thirty (30) days after the date of such use,
reimburse ABT/Nordic [*] of the Estimated Fees for development of such
Extension.
2.10 Outsourcing. Upon ABT/Nordic's request, the parties will use
reasonable efforts to enter into an agreement, before the Launch Date, to allow
ABT/Nordic to engage a third party to operate the Software on ABT/Nordic's
behalf.
3. Obligations.
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3.1 Services. Upon mutual agreement, ABT may, from time to time, perform
services and provide support to ABT/Nordic that will be subject to a Services
Agreement in a format similar to the Services Agreement included on Attachment D
hereto (the "Services" as further defined below).
(a) In addition to the compensation set forth in the definitive
Services Agreement, ABT/Nordic shall reimburse ABT for the reasonable actual
travel and living expenses of ABT's personnel engaged in performing the Services
at locations other than ABT's facilities, together with other reasonable
out-of-pocket expenses incurred in connection with the performance of such
Services. ABT shall adhere to any travel policy reasonably promulgated by
ABT/Nordic in connection therewith.
(b) ABT/Nordic shall pay ABT for any Services provided under
this Section 3.1 in accordance with the payment terms set forth in Section 5
below.
3.2 Scope of Services. The parties currently anticipate that the
Services that may be performed in accordance with Section 3.1 above may include
the following. However, nothing in this Section 3.2 will be deemed to create any
binding obligation on either party.
(a) Hardware selection and configuration consulting services;
(b) Business model conversion support for software systems and
operating procedures;
(c) Marketing, sales and information technology training;
(d) Support for training of vehicle dealers in the use of the
DRT portions of the Software; and
(e) Business Procedures marketing support, including support
regarding know-how, cooperative advertising or other co-marketing activities.
3.3 ABT/Nordic Obligations. ABT/Nordic shall operate the Local Business
solely in accordance with the Localized Business Procedures. ABT/Nordic shall
operate the Local Business solely in accordance with the laws, regulations, and
other requirements of the Territory and of the European Union. During the term
of this Agreement, ABT/Nordic will devote sufficient resources and personnel to
the Local Business to market, promote and operate the Local Business properly.
ABT/Nordic will be responsible for training vehicle dealers in the use of the
DRT portions of the Software and will be solely responsible for all costs and
expenses related to the marketing, promotion and operation of the Local Business
and for performing its obligations hereunder. ABT/Nordic will ensure that only
properly trained and qualified persons perform its technical obligations under
this Agreement.
3.4 Hyperlinks. ABT shall, on and after the Launch Date, maintain a
location on its Web Page where ABT provides links to its local country
affiliates, and display at that location a hypertext link pointing toward
ABT/Nordic's home Web page for the Local Business, and ABT/Nordic shall, on and
after the Launch Date, display a hypertext link on the home Web page for the
Local Business pointing to such location.
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3.5 Territory and Sales. The parties acknowledge that ABT/Nordic may
receive inquiries or orders for sales of products or services from persons
outside the Territory. In such case, ABT/Nordic shall respond to such inquiries
only in accordance with the laws of the Territory and the European Union. In
addition, ABT/Nordic acknowledges that ABT may enter into agreements with other
parties who will operate a Local Business outside the Territory. ABT/Nordic
shall use its best efforts to resolve any channel conflicts with such third
parties relating to such inquiries in the manner which, in ABT's reasonable
discretion, best promotes overall worldwide use of the business of providing
Internet-based marketing of automobiles using the ABT Brand, the Software and
the Business Procedures.
4. Warranty and Disclaimer
4.1 ABT Warranty. ABT warrants that (a) during the term of this
Agreement, the Software will perform in substantial accordance with the
Documentation; and (b) the Software, together with third party technology
identified in accordance with Section 2.8, is all the technology ABT uses to
operate its Internet-based marketing business for new and used cars in the
manner ABT operates such business as of the Effective Date. If the Software does
not perform as warranted in accordance with subsection (a) of this Section 4.1,
ABT shall use commercially reasonable efforts to provide Error Corrections to
correct the Software in accordance with the escalation procedures in
Attachment C, and include the correction therefor in the next Error Correction
released by ABT and provided to ABT/Nordic under Section 6.2 below. If
additional technology is necessary due to a breach of the warranty in subsection
(b) of this Section 4.1, ABT shall cooperate in good faith to assist ABT/Nordic
in procuring any such additional technology. The foregoing are ABT/Nordic's sole
and exclusive remedies for breach of warranty. The warranty will apply only if
the then-current version of the Software has been properly installed and used at
all times and in accordance with the Localized Business Procedures and any
relevant Documentation.
4.2 ABT/Nordic Warranty. ABT/Nordic represents and warrants that
ABT/Nordic is sufficiently capitalized to undertake the business transaction
contemplated hereunder.
4.3 Disclaimer. EXCEPT FOR THE EXPRESS LIMITED WARRANTY SET FORTH IN
SECTION 4.1 ABOVE, THE SOFTWARE, DOCUMENTATION AND BUSINESS PROCEDURES ARE
PROVIDED "AS-IS" AND WITHOUT WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED,
STATUTORY OR OTHERWISE. ABT HEREBY DISCLAIMS ANY WARRANTY THAT THE OPERATION OF
THE SOFTWARE WILL BE UNINTERRUPTED OR ERROR-FREE. ABT SPECIFICALLY DISCLAIMS ALL
IMPLIED WARRANTIES OF, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE
WITH RESPECT TO THE SOFTWARE, DOCUMENTATION, OR BUSINESS PROCEDURES.
4.4 Disclaimer. The success of the business venture contemplated to be
undertaken by ABT/Nordic by virtue of this Agreement is speculative and depends,
to a large extent, upon the ability of ABT/Nordic as an independent business
operator and the active participation of ABT/Nordic in the daily affairs of the
Local Business, as well as other factors. ABT does not make any representation
or
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[*] Confidential Treatment Requested
warranty, express, or implied, as to the potential success of the business
venture contemplated by this Agreement.
5. Compensation.
5.1 Minimum License Fee. In consideration of the licenses granted
herein, ABT/Nordic shall pay to ABT the minimum license fee specified on
Attachment A ("Minimum Annual License Fee"). The Minimum Annual License Fee will
be payable in four (4) equal installments, in advance of each Fiscal Quarter.
5.2 Additional License Fees. No later than thirty (30) days after the
end of each month, ABT/Nordic shall pay to ABT an amount equal to [*] of Gross
Revenues received by ABT/Nordic during such month in connection with the
operation of the Local Business (the "Monthly Fees"). ABT/Nordic may credit any
previously paid Minimum Annual License Fees paid for the current Fiscal Year
against the Monthly Fees.
5.3 Maintenance Fee. In consideration of the services to be provided by
ABT under Section 6, ABT/Nordic shall pay to ABT the maintenance fee specified
on Attachment A (the "Maintenance Fee"). The Maintenance Fee will be due on the
Effective Date, and each anniversary thereof. ABT may increase the Maintenance
Fee after the first year of the Term, in proportion to any increase in the
Orange County Technical Support Index, as compared to the latest index published
as of the Effective Date.
5.4 Taxes. All charges and Fees provided for in this Agreement are
exclusive of, and do not include, any taxes, duties, or similar charges imposed
by any government. ABT/Nordic shall pay or reimburse ABT for all federal, state,
dominion, provincial, or local sales, use, personal property, excise or other
taxes, fees, or duties arising out of this Agreement or the transactions
contemplated by this Agreement (other than taxes on the net income of ABT).
5.5 Payment. ABT/Nordic shall make all payments in U.S. Dollars by wire
transfer to an account designated by ABT. Any payments due under this Agreement
which are not paid when due will bear interest, to the extent permitted by
applicable law, at the prime rate as reported by the Chase Manhattan Bank, New
York, New York, on the date such payment is due, plus an additional three
percent (3%), calculated on the number of days such payment is delinquent. This
Section 5.5 will not limit any other remedies available to any party.
5.6 Records. ABT/Nordic shall make and maintain an accounting and record
keeping system, approved in accordance with the standards and specifications set
forth in the Business Procedures, which is sufficient to enable ABT/Nordic to
calculate, and ABT to review, the monthly fees due under Section 5.3 and to
provide all other information required under this Agreement. ABT will have the
right, at its own expense, to inspect, through either its employees or agents,
and upon reasonable notice in writing, and during regular business hours,
ABT/Nordic's relevant records to verify the accuracy of fees paid by ABT/Nordic
under the terms of this Agreement. If any such examination discloses a shortfall
in the fees
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[*] Confidential Treatment Requested
due to ABT hereunder, ABT/Nordic shall reimburse ABT for the full amount of such
shortfall plus interest and if the amount of the underpayment for any period is
more than [*] ABT/Nordic shall pay ABT's costs of performing that audit with
respect to such period.
6. Maintenance and Support.
6.1 Support. ABT shall provide Maintenance and Support as described in
Section 6.2 below. ABT's provision of Maintenance and Support to ABT/Nordic will
commence upon payment of the Maintenance Fee.
6.2 Maintenance and Support Services. For purposes of this Agreement,
"Maintenance and Support" means that ABT will provide: (a) Error Corrections,
Updates and Upgrades, if any, to the Software, Business Procedures and
Documentation that ABT releases during the current period covered by the
Maintenance Fee, in accordance with Section 2.6; and (b) up to six hundred (600)
hours of technical support per year, in English, pursuant to the escalation
procedures in Attachment C. Any hours of support provided by ABT on or after
June 1, 1998 (whether or not such date is before the Effective Date) will be
counted toward the six hundred (600) hours for the first year. ABT shall provide
ABT/Nordic with a monthly report of the hours of technical support provided by
ABT under this Section 6.2. Upon ABT/Nordic request, ABT shall provide copies of
documents to support such invoices. Fees for any additional Maintenance and
Support services beyond the initial six hundred (600) hours will be invoiced
monthly in arrears by ABT, in reasonable detail showing such additional hours to
the nearest quarter hour, and Customer shall pay such Fees no later than fifteen
(15) days after the invoice date. The Fee for such additional hours is currently
One Hundred Dollars ($100) per hour. However, ABT may increase such Fees for any
such additional hours of Maintenance and Support in proportion to any increase
in the Orange County Technical Support Index, as compared to the latest index
published as of the Effective Date. All Maintenance and Support services will be
provided by appropriately trained personnel in accordance with Attachment C.
6.3 Project Managers and Staff. Each party shall designate a project
manager to administer Maintenance and Support under this Agreement. The parties
shall coordinate all Maintenance and Support work under this Agreement through
such project managers. Each party may change its project manager upon written
notice. ABT will ensure that only properly trained and qualified persons perform
its technical obligations under this Agreement.
7. Trademarks.
7.1 Trademarks. ABT hereby grants to ABT/Nordic the exclusive right and
license to use the ABT Brand in connection with a Local Business in the
Territory, including without limitation the right and license to use or display
the ABT Brand on World Wide Web sites, or other world-wide Internet
transmissions, relating to the Local Business. The above license will include,
without limitation, the right to indicate to the public that ABT/Nordic is an
authorized licensee of ABT and to advertise ABT/Nordic's products and services
in connection with the Local Business under the ABT Brand.
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ABT/Nordic shall fully comply with the Global Brand Protocols. ABT/Nordic shall
present its annual marketing plans for ABT's review and keep ABT, informed about
any material changes in such plans. Subject to the Global Brand Protocols, after
approval of such marketing plans, ABT/Nordic may use media of its choice to
present such marketing plan to the public.
7.2 Restrictions. Except as set forth in this Section 7.2, nothing
contained in this Agreement will grant or will be deemed to grant to ABT/Nordic
any right, title or interest in or to the ABT Brand. ABT/Nordic shall not
challenge or assist others to challenge the ABT Brand (except to the extent such
restriction is expressly prohibited by applicable law) or the registration
thereof or attempt to register any trademarks, marks or trade names confusingly
similar to those of ABT. If ABT/Nordic, in the course of exercising its rights
hereunder, acquires any goodwill or reputation in the ABT Brand, all such
goodwill or reputation will automatically vest in ABT when and as, on an
on-going basis, such acquisition of goodwill or reputation occurs, as well as at
the expiration or termination of this Agreement, without any separate payment or
other consideration of any kind to ABT/Nordic, and ABT/Nordic agrees to take all
such actions necessary to effect such vesting, including without limitation the
transfer to ABT of rights in any filings or registrations made under Section 7.3
below. Upon termination of this Agreement, ABT/Nordic shall immediately cease to
use the ABT Brand.
7.3 Trademark Registrations in the Territory. ABT/Nordic shall advise
ABT regarding the appropriate registrations or filings appropriate to protect
the use of the ABT Brand in the Territory and the European Union. ABT/Nordic
shall make any registrations or filings requested by ABT with the appropriate
authorities, and shall pay all costs or fees associated with such filing.
7.4 Registered User Agreements. To the extent ABT deems necessary, in
its reasonable discretion, to properly protect ABT's rights, ABT and ABT/Nordic
shall enter into registered user agreements with respect to the ABT Brand
pursuant to applicable trademark law requirements in the Territory or the
European Union. ABT/Nordic will be responsible for proper filing of registered
user agreements with appropriate government authorities and shall pay all costs
or fees associated with such filing.
7.5 Name Branding; Product Protection. On any promotional materials
used or disseminated by ABT/Nordic relating to the Local Business, ABT/Nordic
shall display the ABT Brand. Where both ABT/Nordic's marks and the ABT Brand are
displayed, the marks will be presented equally legibly, and in a size and style
in accordance with ABT's then-current Global Brand Protocols.
7.6 Enforcement of Standards. ABT will require all United States and
foreign affiliates who are authorized to display, or market services or products
under, the ABT Brand, in connection with an agreement similar to this Agreement,
to (i) comply with the Global Brand Protocols, (ii) operate their businesses
which use the ABT Brand in accordance with the Business Procedures (subject to
reasonable localization). ABT will use commercially reasonable efforts to
enforce those requirements with regard to all such affiliates.
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<PAGE> 12
8. Limitation of Liability
EXCEPT FOR LIABILITY ARISING OUT OF SECTION 10, IN NO EVENT WILL ABT'S
TOTAL LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT EXCEED THE TOTAL
AMOUNTS PAID BY ABT/NORDIC TO ABT FOR THE CURRENT ONE-YEAR TERM. EXCEPT FOR
LIABILITY FOR THIRD PARTY CLAIMS ARISING OUT OF SECTION 9 OR 10, IN NO EVENT
WILL EITHER PARTY HAVE ANY LIABILITY FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER
FOR BREACH OF CONTRACT, TORT OR OTHERWISE, ARISING OUT OF OR RELATED TO THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO, LOSS OF ANTICIPATED PROFITS, LOSS OF
DATA, LOSS OF USE, OR COST OF COVER, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
9. Indemnification for Infringement
9.1 ABT Indemnity for Infringement. ABT shall, at its expense, defend or
settle any claim, action or allegation brought against ABT/Nordic that the
Software or Business Procedures infringes any copyright or trade secret right of
any third party, and shall pay any final judgments awarded or settlements
entered into; provided that ABT/Nordic gives prompt written notice to ABT of any
such claim, action or allegation of infringement and gives ABT the authority to
proceed as contemplated herein. ABT will have the exclusive right to defend any
such claim, action or allegation and make settlements thereof in its own
discretion, and ABT/Nordic may not settle or compromise such claim, action or
allegation, except with the prior written consent of ABT. Not withstanding the
above, ABT/Nordic shall have the right (i) to take action in order to prevent a
default judgment, if ABT fails to act and (ii) to take action to prevent or
dissolve any temporary restraining orders or other injunctions which materially
impair ABT/Nordic's ability to conduct the Local Business. ABT/Nordic shall give
such assistance and information as ABT may reasonably require to settle, or
oppose such claims. In the event any intellectual property infringement, claim,
action or allegation is brought or threatened, ABT shall, at its sole option and
expense:
(a) procure for ABT/Nordic the right to continue use of the
Software or Business Procedures or infringing part thereof.
(b) modify or amend the Software or Business Procedures or
infringing part thereof, or replace the Software or Business Procedures or
infringing part thereof with other Software or Business Procedures having
substantially the same or better capabilities; or
(c) if neither (a) nor (b) is reasonably possible, terminate this
Agreement and repay to ABT/Nordic a portion of the Minimum Annual License Fee
equal to the amount paid by ABT/Nordic less an amount equal to one twelfth
(1/12) of the total Minimum Annual License Fee for each month or portion thereof
of the current one (1) year term to account for use by ABT/Nordic. ABT and
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<PAGE> 13
ABT/Nordic will then be released from any further obligation to the other
hereunder, except for the obligations that survive expiration or termination of
this Agreement.
The foregoing obligations will not apply to the extent the infringement
arises as a result of modifications to the Software not made by or for ABT. The
foregoing states the entire liability of ABT with respect to infringement of any
patent, copyright, trademark, trade secret or other proprietary right.
9.2 ABT/Nordic Indemnity. ABT/Nordic shall, at its expense, defend or
settle any claim, action or allegation brought against ABT (to the extent not
covered by Section 9.1) arising from the act or omission of ABT/Nordic,
including without limitation any claims of fraud, misrepresentation, or unfair
business practices arising from the operation of the Local Business, or those
that arise from the allegation that the Localized Version or any Extension, or
the use of the ABT Brand in the Territory, infringes any copyright or trade
secret right of any third party, and shall pay any final judgments awarded or
settlements entered into; provided that ABT gives prompt written notice to
ABT/Nordic of any such claim, action or allegation of infringement and gives
ABT/Nordic the authority to proceed as contemplated herein. ABT/Nordic will have
the exclusive right to defend any such claim, action or allegation and make
settlements thereof in its own discretion, and ABT may not settle or compromise
such claim, action or allegation, except with the prior written consent of
ABT/Nordic. ABT shall give such assistance and information as ABT/Nordic may
reasonably require to settle or oppose such claims. In the event any
intellectual property infringement, claim, action or allegation is brought or
threatened, ABT/Nordic shall, at its sole option and expense:
(a) procure for ABT the right to continue use of the Localized
Version or Extension or infringing part thereof; and/or
(b) modify or amend the Localized Version or Extension or
infringing part thereof, or replace the Localized Version or infringing part
thereof with other materials having substantially the same or better
capabilities;
(c) if neither (a) nor (b) is reasonably possible, terminate
ABT's rights in such Localized Version or Extension, and repay to ABT a portion
of the fees paid or reimbursed by ABT for such Localized Version or Extension.
The foregoing states the entire liability of ABT/Nordic with respect to
infringement of any patent, copyright, trademark, trade secret or other
proprietary right.
9.3 Prosecution of Infringers. ABT and ABT/Nordic shall give each other
written notice of any acts of alleged infringement by third parties involving
intellectual property rights relating to the Software, Business Procedures, or
ABT Brand anywhere in the Territory of which ABT or ABT/Nordic has knowledge,
and the parties shall consult together with a view to determine the course of
action, if any, to be taken in such circumstances. ABT will have the right to
take action to enforce such rights. If the parties are unable to agree on any
such course of action to be taken, ABT/Nordic may take such
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<PAGE> 14
actions as ABT/Nordic considers necessary or appropriate in its own name (or, if
required by law, in ABT's name) at ABT/Nordic's expense. Each party shall render
to the other any assistance requested by the other in proceedings against an
infringer within the Territory, at the other party's expense. Any damage that
might be awarded will, after deduction of actual costs, be awarded to the party
that undertakes legal action.
10. Confidential Information
10.1 Obligations. The parties acknowledge and agree that the
Confidential Information disclosed by one party (the "Disclosing Party") to the
other party (the "Receiving Party") directly or indirectly (which information is
marked as "proprietary" or "confidential" or, if disclosed orally, is designated
as confidential or proprietary at the time of disclosure) hereunder constitutes
the confidential and proprietary information of the Disclosing Party. The
Receiving Party shall retain in strict confidence and not disclose to any third
party any Confidential Information without the Disclosing Party's express
written consent, and the Receiving Party shall not use such Confidential
Information except to exercise the rights and perform its obligations under this
Agreement. Without limiting the foregoing, each party shall use at least the
same procedures and degree of care which it uses to protect its own Confidential
Information of like importance, and in no event less than reasonable care.
10.2 Exceptions. The Receiving Party shall be relieved of this
obligation of confidentiality to the extent it can demonstrate that any such
information is: publicly available, already in the Receiving Party's possession
at the time of disclosure and not subject to a confidentiality obligation,
obtained by the Receiving Party from third parties without restrictions on
disclosure, independently developed by the Receiving Party without reference to
Confidential Information, or required to be disclosed by order of a court or
other governmental entity.
10.3 Source Code Protections. ABT/Nordic shall not under any
circumstances distribute or disclose the source code for the Software in any
manner, except in accordance with Section 10.4. Each copy or Derivative Work of
the source code for the Software must be marked as the confidential and
proprietary property of ABT to which access is restricted, and must be kept and
used solely at ABT/Nordic's secure development facilities under password
protection. ABT/Nordic agrees to limit access to the source code for the
Software twenty-four (24) hours a day, and strictly to those employees to whom
access is reasonably necessary in order to carry out the permitted uses of the
source code for the Software hereunder. ABT/Nordic will use its best efforts to
ensure that all such employees abide by the terms of its confidentiality
obligations hereunder. ABT/Nordic shall keep records of all persons who have
access to the source code for the Software. At ABT's request, ABT/Nordic agrees
to provide such records to ABT for review.
10.4 Contractors. ABT/Nordic may appoint a third party contractor
("Contractor") to assist ABT/Nordic in ABT/Nordic's modification or
implementation of the Localized Version as authorized hereunder; provided,
however, any such Contractor's access to and use of the Software, including the
Localized Version, will only be permitted pursuant to a signed written agreement
between ABT/Nordic
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<PAGE> 15
[*] Confidential Treatment Requested
and such Contractor reasonably acceptable to ABT and containing at least the
terms set forth in this Section 10 ("Contractor Agreement"). Such agreement must
be approved in writing by ABT prior to its execution. ABT may perform technical
oversight of all work performed by a Contractor in accordance with this Section
10.4. ABT/Nordic shall indemnify and hold harmless ABT for any losses, damages,
or expenses arising out of the breach of such agreements by such Contractors.
10.5 Notification of Security Breach. ABT/Nordic shall notify ABT
promptly in the event of any breach of its security, under conditions in which
it would appear that the trade secrets contained in the source code for the
Software or the Localized Version were prejudiced or exposed to loss. ABT/Nordic
shall, upon request of ABT, take all other reasonable steps necessary to recover
any compromised trade secrets disclosed to or placed in the possession of
ABT/Nordic by virtue of this Agreement. The cost of taking such steps will be
borne solely by ABT/Nordic, unless ABT willfully caused the breach.
10.6 Injunctive Relief. In the event of actual or threatened breach of
the provisions of Section 10.1 or 10.3, the non-breaching party will have no
adequate remedy at law and will be entitled to immediate injunctive and other
equitable relief, without the necessity of showing actual money damages.
11. Term and Termination
11.1 Term. This Agreement and the licenses granted hereunder will be
effective as of the Effective Date and will continue in full force and effect
for a term of up to ten (10) years (the "Term") after the Launch Date. During
the first three (3) Fiscal Years, the Agreement will renew automatically on the
anniversary of the Launch Date, and ABT/Nordic will be obligated to pay the
related Fees as they become due and payable in accordance with the terms and
conditions contained herein.
11.2 Renewal.
(a) After the conclusion of the third Fiscal Year of the Term,
this Agreement will renew automatically in one (1) Fiscal Year increments,
unless terminated by ABT/Nordic in its option and discretion upon one hundred
twenty (120) days' prior written notice of its intent to not to renew this
Agreement.
(b) Five (5) months before the conclusion of the fifth (5th)
Fiscal Year of the Term, if the total Monthly Fees due to ABT for the prior
twenty-four (24) months, divided by two (2) (the "Actual Annual Fees") , are
less than the Minimum Annual License Fee, then, upon the written request of
ABT/Nordic on or before the date one hundred twenty (120) days' prior to the
conclusion of the fifth (5th) Fiscal Year of the Term, ABT shall, at its option
and discretion, promptly either (i) reduce the Minimum Annual License Fee to the
amount of such Actual Annual Fees for the duration of the Term, or (ii)
terminate the Agreement, in which case (1) the non-competition obligations of
Section 11.5(c) will cease in effect, and (2) for the period three (3) years
after such termination, no later than thirty (30) days after the end of each
month, ABT/Nordic shall pay to ABT an amount equal to [*]
15
<PAGE> 16
of Gross Revenues received by ABT/Nordic during such month in connection with
the operation of the Local Business (the "Monthly Fees").
(c) During the period one (1) year to one hundred eighty (180)
days before the end of the Term, the parties shall negotiate in good faith the
extension of the Term of the Agreement and the conditions therein, as follows:
(d) If the parties cannot agree on extension of the Term of the
Agreement and the conditions therein within the period described in subsection
(a), then during the period one hundred eighty (180) to ten (10) days before
the end of the Term, ABT shall not grant to any third party the right to use the
ABT Brand, Software and Business Procedures to conduct a Local Business in the
Territory without offering ABT/Nordic a right of first refusal, as follows: if
ABT receives a bona fide proposal from any third party for such a license, ABT
shall communicate the proposal in reasonable detail to ABT/Nordic, and
ABT/Nordic shall, within ten (10) business days, either (x) elect to enter into
an agreement with ABT on such terms, or (y) refuse to do so, in which case ABT
would be free to enter into an agreement on substantially such terms with a
third party.
(e) If, by ten (10) days before the end of the Term, ABT has not
entered into an agreement with a third party or ABT/Nordic as described in
subsection (b) above, ABT/Nordic may, upon written notice to ABT before the end
of the Term, elect to continue the Term for a five (5) year period based on a
Minimum Annual License Fee each year equal to the average actual annual license
fee due to ABT under the Agreement during the prior two (2) years of the Term.
11.3 Termination. This Agreement may be terminated by ABT/Nordic upon
six (6) months prior written notice to ABT, with or without cause, upon payment
of any unpaid Minimum Annual License Fee for the Current Term.
11.4 Termination For Cause. ABT may, by written notice to ABT/Nordic,
terminate this Agreement if any of the following events ("Termination Events")
occur:
(a) ABT/Nordic fails to pay the Fees thirty (30) days after they
become due; or
(b) ABT/Nordic is in material breach of any nonmonetary term,
condition or provision of this Agreement, which breach, if capable of being
cured, is not cured within thirty (30) days after ABT gives ABT/Nordic written
notice of such breach; or
(c) ABT/Nordic (i) terminates or suspends its business; (ii) is
insolvent, admits in writing its inability to pay its debts as they mature,
makes an assignment for the benefit of creditors, or becomes subject to direct
control of a trustee, receiver or similar authority; or (iii) becomes subject to
any bankruptcy or insolvency proceeding under federal, foreign, or state
statutes.
If any Termination Event occurs, termination will become effective
immediately or on the date set forth in the written notice of termination. For
the avoidance of doubt, payment by ABT/Nordic of
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<PAGE> 17
any amount reported by ABT/Nordic in good faith under Section 5.2, and payment
by ABT/Nordic of any amount invoiced in good faith by ABT under Section 3.1 or
6.1, will not be deemed a breach of this Agreement by ABT/Nordic, even if a
subsequent audit reveals that the amount paid is less than the actual amount
due.
(d) Upgrades. In the event that during the Term there is a
change in the prevalent platform for development and deployment of software
systems over the World Wide Web, which change requires an Upgrade to the
Software, ABT/Nordic may notify ABT that such an Upgrade should be performed. If
ABT does not, within six (6) months after such notice, make significant efforts
toward preparing such an Upgrade, or if within one (1) year after such notice,
ABT does not provide such Upgrade to ABT/Nordic, ABT Nordic, may terminate this
Agreement at the end of the current Fiscal Year in accordance with Section
11.2(a), and the obligations of Section 11.5(c) will cease in effect.
11.5 Effect of Termination.
(a) Survival. Upon termination of this Agreement in accordance
with the above provisions, the rights and licenses granted under this Agreement
will immediately terminate except as otherwise stated herein. The terms and
conditions of the following Sections will survive termination or expiration of
this Agreement: 1, 2.4, 2.7, 4.2, 4.4, 5.6, 7.2, 8, 9, 10, 11.4, 11.5, 13 and
15, as well as any payment obligations in accordance with Section 5 which
accrued prior to expiration or termination hereof.
(b) Return of Materials. Within thirty (30) days after the date
of termination or discontinuance of this Agreement for any reason whatsoever,
(i) ABT/Nordic shall, at ABT's option, return or destroy any copies of the
Software, Documentation, Business Procedures and any other Confidential
Information in its possession that is in tangible form, and (ii) ABT shall, at
ABT/Nordic's option, return or destroy any copies of any Confidential
Information of ABT/Nordic that is in ABT's possession that is in tangible form.
Each party shall furnish to the other with a certificate signed by an executive
officer of ABT/Nordic verifying that the same has been done.
(c) Non-Competition. Subject to Section 11.2(a), if this
Agreement is terminated before the end of the Term, then during the period one
(1) year after termination of this Agreement, ABT/Nordic shall not, either for
its own account, or through any parent, subsidiaries, or affiliates, operate a
Local Business in the Territory. Notwithstanding the above, ABT/Nordic may,
through a subsidiary or affiliate, provide Internet based marketing of products
and services related to trucks and construction vehicles for vehicle dealers
located in the Territory; so long as such business does not infringe ABT's
trademarks or other intellectual property rights. If ABT/Nordic assigns this
Agreement to another party with ABT's consent under Section 12, this obligation
will run to ABT/Nordic, and to such assignee.
11.6 License if ABT Enters Bankruptcy. If, at any time during the term
of this Agreement, ABT (a) files a voluntary petition in bankruptcy under
Chapter 7 of 11 United States Code (the "Bankruptcy Code"); or (b) has an
involuntary petition in bankruptcy filed against it under Chapter 7 of the
Bankruptcy Code, which petition is not dismissed within ninety (90) days,
ABT/Nordic may elect to
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<PAGE> 18
retain its right in the licenses granted in this Agreement, subject to the terms
of this Agreement, in accordance with Chapter 3, Section 365(n) of the
Bankruptcy Code. The licenses granted in this Agreement will be deemed licenses
of "intellectual property" under Section 365(n) of the Bankruptcy Code.
12. Nonassignment/Binding Agreement. Neither this Agreement, nor any rights
under this Agreement, may be assigned or otherwise transferred by ABT/Nordic, in
whole or in part, whether voluntary, or by operation of law, including by way of
sale of assets, merger or consolidation, without the prior written consent of
ABT. Any permitted assignee (including without limitation ABT/Nordic) must agree
in writing to be bound by all the terms and conditions of this Agreement.
Subject to the foregoing, this Agreement will be binding upon and inure to the
benefit of the parties and their respective successors and assigns.
13. Bilia Obligations. Concurrently with the execution of the Agreement, and as
a condition to its effectiveness, ABT, ABT/Nordic and Bilia AB shall enter into
an Investment Rights Agreement, in the form attached hereto as Attachment E,
setting forth the terms and conditions pursuant to which ABT will have the right
to make certain investments in ABT/Nordic and the associated rights that ABT
will obtain in connection with such investment. In addition, ABT/Nordic shall
cause Bilia AB to enter into the side letter agreement attached hereto as
Attachment F guaranteeing certain of ABT/Nordic's obligations under this
Agreement.
14. Notices
Any notice, submission, or communication required or permitted under the terms
of this Agreement, or required by law, whether or not so required elsewhere in
this Agreement, must be in writing and must be (a) delivered in person, (b) sent
by first class registered mail, return receipt requested, or air mail, as
appropriate, or (c) sent by overnight air courier; in each case properly posted
and fully prepaid to the appropriate address set forth below. Either party may
change its address for notice by notice to the other party given in accordance
with this Section 14. Notices will be considered to have been given at the time
of the earlier of (p) actual delivery in person, (q) the date of a receipt of
such notice signed by an authorized representative of the party being notified,
(r) the date of a written confirmation of receipt by the party being notified,
or (s) thirty (30) days after deposit in the mail as set forth above.
15. Miscellaneous
15.1 Force Majeure. Neither party will incur any liability to the other
party on account of any loss or damage resulting from any delay or failure to
perform all or any part of this Agreement if such delay or failure is caused, in
whole or in part, by events, occurrences, or causes beyond the control, and
without negligence of, the parties. Such events, occurrences, or causes will
include, without limitation, acts of God, strikes, lockouts, riots, acts of war,
fires and explosions, but the inability to meet financial obligations is
expressly excluded.
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15.2 No Waiver; Amendment. Any waiver of the provisions of this
Agreement or of a party's rights or remedies under this Agreement must be in
writing to be effective. Failure, neglect, or delay by a party to enforce the
provisions of this Agreement or its rights or remedies at any time will not be
construed and will not be deemed to be a waiver of such party's rights under
this Agreement and will not in any way affect the validity of the whole or any
part of this Agreement or prejudice such party's right to take subsequent
action. This Agreement may not be amended, except by a writing signed by both
parties.
15.3 Severability. If any term, condition, or provision of this
Agreement is found to be invalid, unlawful or unenforceable to any extent, the
parties shall endeavor in good faith to agree to such amendments that will
preserve, as far as possible, the intentions expressed in this Agreement. If the
parties fail to agree on such an amendment, such invalid term, condition or
provision will be severed from the remaining terms, conditions and provisions,
which will continue to be valid and enforceable to the fullest extent permitted
by law.
15.4 Entire Agreement. This Agreement (including the Attachments and any
addenda hereto signed by both parties) contains the entire agreement of the
parties with respect to the subject matter of this Agreement and supersedes all
previous communications, representations, understandings and agreements, either
oral or written, between the parties with respect to said subject matter, except
as provided in Section 1.3 with respect to the definition of "Confidential
Information."
15.5 No Conflicting Provisions. No terms, provisions or conditions of
any purchase order, acknowledgment or other business form that ABT/Nordic may
use in connection with the acquisition or licensing of the Software will have
any effect on the rights, duties or obligations of the parties under, or
otherwise modify, this Agreement, regardless of any failure of ABT to object to
such terms, provisions or conditions.
15.6 Consent. Unless expressly provided otherwise in this Agreement, any
prior consent of ABT that is required before ABT/Nordic may take an action may
be granted or withheld in ABT's sole and absolute discretion.
15.7 Export Restrictions. ABT/Nordic understands that ABT is subject to
regulation by agencies of the U.S. government, including, but not limited to,
the U.S. Department of Commerce, which prohibit export or diversion of certain
technical products to certain countries. ABT/Nordic warrants that it will comply
in all respects with the Export Administration Regulations and all other export
or re-export restrictions applicable to the technology and Documentation
licensed hereunder. Further, ABT/Nordic shall cooperate as requested by ABT to
ensure compliance with any export restrictions or licenses relating to the
Software, including the designation of a structurally independent contact
regarding each installation of the Software.
15.8 Press Releases. Neither party shall disclose to any third party the
terms and conditions of this Agreement, except as required by law, or by rules
of a securities exchange in which either party's, or
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its parent company's, securities are traded, or to legal or business advisors
with a need to know acting under a duty of confidentiality. Notwithstanding the
above, at a mutually agreed time, as soon as possible after the Effective Date,
ABT and ABT/Nordic shall issue a joint press release announcing the relationship
contemplated by this Agreement.
15.9 Rights and Remedies. No exercise or enforcement by either party of
any right or remedy under this Agreement will preclude the enforcement by such
party of any other right or remedy under this Agreement or that such party is
entitled by law to enforce.
15.10 Counterparts. This Agreement may be executed in counterparts, each
of which so executed will be deemed to be an original and such counterparts
together will constitute one and the same agreement.
15.11 Governing Law. This Agreement will be interpreted and construed in
accordance with the laws of the State of California and the United States of
America, without regard to conflict of law principles and excluding the 1980
United Nations Convention on Contracts for the International Sale of Goods. Any
dispute arising out of this Agreement will be subject to the exclusive venue of
the state and federal courts in California.
15.12 Language. This Agreement is in the English language only, which
language shall be controlling in all respects, and all versions hereof in any
other language shall not be binding on the parties hereto. All communications
and notices to be made or given pursuant to this Agreement shall be in the
English language.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by duly
authorized representatives on the dates set forth below.
<TABLE>
<S> <C>
autobytel.com inc.("ABT") Auto-By-Tel AB ("ABT/Nordic")
By: /s/ ROBERT S. GRIMES By: /s/ JOHAN ROHSS LARS ANDERSSON
--------------------------------- ------------------------------------
Name: Robert S. Grimes Name: Johan Rohss Lars Andersson
------------------------------- ----------------------------------
Title: Executive V.P. Title: Chairman Director
------------------------------ ---------------------------------
Date: August 7, 1998 Date: August 7, 1998
------------------------------- ----------------------------------
Address: 18872 MacArthur Blvd. Address: Haradsvagen 255
---------------------------- -------------------------------
Irvine, CA 92612 14172 Huddinge Sweden
- ------------------------------------- ----------------------------------------
</TABLE>
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ATTACHMENT A
SOFTWARE:
The Software will include all core business applications, including:
<TABLE>
<CAPTION>
APPLICATION
CATEGORY NAME DESCRIPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
Consumer Affinity Restricted view of Consumer Web Interface
Product Programs customized for Affinity Partners. Users are
limited to the web pages (functionality)
specified by Affinity Partner.
- --------------------------------------------------------------------------------
Finance Used by End-User Customers to apply for credit to
buy/lease an automobile.
- --------------------------------------------------------------------------------
Information Used to provide New/Used Car Information to
Provider customers via links to various information
Links providers
- --------------------------------------------------------------------------------
Insurance Hyperlink to Insurance Site(s).
- --------------------------------------------------------------------------------
Mobalist Used by End-User Customers to sign-up for and
monitor Mobalist Rewards account.
- --------------------------------------------------------------------------------
New Car Request Used by End-User Customers to gather new car
Process information and request a price quote.
(FasTrak)
- --------------------------------------------------------------------------------
Online Customer Used by End-Users to check on status of Purchase
Service Center and Finance Requests.
- --------------------------------------------------------------------------------
Quality Allow End-Users to answer QA survey questions.
Assurance
Survey(QA)
- --------------------------------------------------------------------------------
Used Car Used by End-User Customers to gather used car
Request Process information, review dealer used car inventories,
(FasTrak) and make a used car purchase request.
- --------------------------------------------------------------------------------
Dealer Dealer Used by ABT Contracted Dealers to manage purchase
Interface Communications requests and customer contact information;
System (DRT) Maintain Used Car Inventory information for
Dealership(s).
- --------------------------------------------------------------------------------
Dealer Contract Used by ABT Contract Administration department
Management Management to manage contracts with subscribers including
(CM) New Car (Postal), Used Car, Finance and DRT.
- --------------------------------------------------------------------------------
Distribution Used by ABT Dealer Support Services (DSS) to
[Dealer] set-up and maintain relationship with Dealers.
Management (RD)
- --------------------------------------------------------------------------------
QA Survey (QA) Used by ABT DSS/Training to monitor customer
satisfaction and closure rates; Dealer
Performance.
- --------------------------------------------------------------------------------
Financial Car Match vehicle make, model, series in ABT_PROD
Processing matching database to vehicles in GE Capital database in
order to determine residual values.
- --------------------------------------------------------------------------------
Credit Union Faxes consumer purchase requests to Credit Unions
Faxing for processing.
- --------------------------------------------------------------------------------
</TABLE>
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<PAGE> 23
<TABLE>
<CAPTION>
<S> <C> (CU FX) <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Customer Financial Fax Faxes credit decisions to dealers for finance requests submitted by consumers.
to Dealer
(FinFaxDealer)
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Status Provides system operations with access to processing statistics, error logging
Monitor and recovery procedures for financial request processing system.
(FinancialStatus)
- -----------------------------------------------------------------------------------------------------------------------------------
Finance/Customer E-mails credit decisions/information from financial institutions to consumers.
Email (FML2)
- -----------------------------------------------------------------------------------------------------------------------------------
Bank Matcher, Bank Sends financial requests to and receives credit decision from financial
Transfer, Bank Watcher institutions.
(FSMFrame)
- -----------------------------------------------------------------------------------------------------------------------------------
Information
Provider Interface Postal Code Updates Import Postal Code related data from Postal Service, GDT. Import Postal Code
Centroids (Longitude, Latitude of center of zip codes).
- -----------------------------------------------------------------------------------------------------------------------------------
Used Car Import/Export Import/Export Used Car data to/from information providers.
- -----------------------------------------------------------------------------------------------------------------------------------
VIN Decoding Import Import Vintek data. Vintek provides the information required to Decode VINs.
- -----------------------------------------------------------------------------------------------------------------------------------
New/Used Car Import Intellichoice data including make, model, series, options and pricing
Information Import information.
- -----------------------------------------------------------------------------------------------------------------------------------
MIS Financial Reports Reporting on Financial Requests. Reports are summarized by various
(Financial) dimensions including:
Time - day, week, month, quarter, year
Type - Lease, Retail
- -----------------------------------------------------------------------------------------------------------------------------------
Intranet Basic management reporting, system operation monitoring, data maintenance
and company/employee information.
- -----------------------------------------------------------------------------------------------------------------------------------
MIS/Billing Interface Used by ABT internal staff to pass billing data from ABT Core system to
Dynamics (ABT's Internal Financial Accounting Application).
- -----------------------------------------------------------------------------------------------------------------------------------
QA Reports (QA) Reporting on Customer Satisfaction, Closure rates
Time - day, week, month, quarter, year
Geography - region, state, dealer
Vehicle - make, model, series
PR Type - New car or Used Car
Contract - Paying, Non-Paying Dealers
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 24
[*] Confidential Treatment Requested
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Standard Reports Reporting on Purchase Requests. Reports are summarized by various dimensions including:
(Standard)
Time - day, week, month, quarter, year
Geography - region, state, dealer
Vehicle - make, model, series
PR Type - New car or Used Car
Contract - Paying, Non-Paying Dealers
- ---------------------------------------------------------------------------------------------------------------------------------
Various Base Network Much of the core functionality of the systems described above is encapsulated in stored
Architecture & procedures/data tables in the following SQL databases: ABT_PROD, ABT_FINANCE, ABT_INTERFACE.
Supporting Systems
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
MINIMUM ANNUAL LICENSE FEE:
The annual Minimum Annual License Fee will be [*] payable in four (4)
Fiscal Quarterly installments of [*].
ANNUAL MAINTENANCE FEE:
The annual Maintenance Fee will be [*].
<PAGE> 25
ATTACHMENT B
GLOBAL BRANDING PROTOCOL:
INTRODUCTION TO GUIDELINES, PRACTICES AND PROCEDURES
Introduction
The Auto-By-Tel Corporation has recently changed its name to autobytel.com inc.
and is currently in the process of conducting brand positioning research, which
will be complete in September of 1995. Upon completion of this research,
autobytel.com inc. will issue an update to it's global brand standards protocol
(and look book), containing all of the new brand identity materials. In the
interim the old book is attached as an example of its contents as well as this
introductory document which is designed to address some of the more immediate
needs.
New Logo
Our new logo embodies some of our initial learning. We have chosen a mark
symbolizing a road, which signifies a destination that leads to Autobytel.com as
opposed to an automobile icon, which is more predictable. This mark is highly
differentiated from other companies in the category and positions autobytel.com
inc. as the leader. The new logo is reliable, innovative, trustworthy,
contemporary yet timeless. The idea of a road leading to a destination is
empowering for the consumer, reminding them that they are in the driver's seat
when buying through autobytel.com inc. The conveying of the concept of a
destination will create an association with the brand over time.
The logo will be adapted to each country by replacing the domain type that is
relevant to that country; for example, autobytel.se, autobytel.ca, autobytel.uk,
etc. Also the selling line can be inserted immediately in the lower left. Full
treatments of the logo will be reviewed when the new look book is issued.
Purpose and Function of Global Standards
The purpose of the global brand standards is to clearly define and articulate
the brand's core values and ensure that the brand's positioning remains
consistent and properly communicated throughout all forms of marketing
communication across the globe.
Since a brand is a promise of an experience, it is important that it be
comprised of the intangible as well as the tangible values in order to best
create an enduring relationship between Autobytel.com and it's stakeholder
target constituencies - shareholders, consumers and dealers alike.
What Does the Standard Address
<PAGE> 26
The image below graphically illustrates the intangible components (on the
right), which the global brand protocol is designed to address.
[CHART]
Purpose and Intent of autobytel.com inc.'s "Global Brand Protocol and Look Book"
The purpose of the global brand protocol and "Look Book" when complete, will be
to aid Autobytel.com, all it's companies, subsidiaries, partners, and licensees
to properly administer and steward autobytel.com inc.'s intangible assets - the
brand. It is not designed to police licensees: but rather to ensure that the
tenants of strong branding be observed for Autobytel.com so that all collateral,
business, advertising, and web site creative and content guarantee quality and
consistency of message. This will ensure that the net impression left in the
mind of target audience is relevant, differentiated, and enduring.
Differentiating
<PAGE> 27
Autobytel.com by experience (emotional bond) with the customer, versus just the
key rational benefits (e.g. low-cost, haggle-hassle-free, etc.) will ensure the
success of Autobytel.com.
Role of Autobytel.com Brand Management
It is the role of Autobytel.com Corporate Marketing to clearly articulate and
communicate the brand's core value, identity, positioning, and Global Brand
Protocol to all autobytel.com inc. companies, subsidiaries, divisions, partners
and licensees.
Role of the Autobytel.com Global Brand Agency
It is the role of the global brand agency to develop, create, recommend and
steward autobytel.com inc.'s brand positioning so that it conforms to
autobytel.com inc.'s brand values. They have the responsibility of managing the
Autobytel.com brand communications on a global scale while recognizing local
needs. In this role the agency will steward the brand with regards to the
quality and consistency of the brand's global advertising.
Role of the Local Agency
It is the role of the local country agency to create successful advertising that
conforms to autobytel.com inc.'s brand positioning.
A LOOK AT THE REQUIREMENTS, PROCESS AND INTERACTION BETWEEN AUTOBYTEL.COM INC.'S
GLOBAL BRAND AGENCY AND THE LOCAL COUNTRY'S AGENCY AS IT RELATES TO ADVERTISING
Generally speaking, autobytel.com inc.'s advertising (visual and copy content)
must be in synergy with the brand's core values and comply with the brand's
positioning strategy as will be stated in the "Global Brand Protocol & Look
Book" (after the brand positioning project is completed in September).
While this book is dynamic and periodic updates should be expected, it is our
intent to develop an enduring brand positioning, which should remain in effect
over a number of years. All decisions regarding the appropriateness of
Autobytel.com advertising will be measured against this benchmark.
Some general requirements and procedures which you should expect to see outlined
in the Global Brand Protocol about Autobytel.com advertising follows:
Creative
All creative formats and units must:
<PAGE> 28
Feature the appropriate upper and lower case treatment of the company name (e.g.
autobytel.com inc., and Autobytel.com, etc.)
Feature the autobytel.com inc. logo
Feature the Autobytel.com tag-line (which will be translated by the global brand
agency into the appropriate language for each county in a way that is mutually
agreeable so that it mutually satisfies the requirements of both the brand and
country's cultural environment.)
Feature the appropriate Autobytel.com URL (Uniform Resource Locator) for the
country involved (e.g. autobytel.com, autobytel.ca, autobytel.uk, etc.)
reflect the highest level of moral and ethical standards within the community to
which the commercial's message is to be conveyed
reflect the brand's recommended look and feel (e.g. color palettes, typefaces,
imagery, etc.) of which examples will be provided in the look book.
Autobytel.com strongly urges all licensees to use the network affiliate of the
global brand agency. If for any reason, the licensee utilizes an agency that is
not part of the global brand agency's network, the following will apply.
Creative Procedure
Each licensee does not need to submit creative concepts and executions to
Autobytel.com for prior approval. But it is required that each country submit
copies of all creative materials to autobytel.com inc.'s global brand agency at
least quarterly. While it is not autobytel.com inc.'s intention to police
creative, should the marketing materials not conform to the brand's positioning,
Autobytel.com reserves the right to advise the country to discontinue the use of
any creative that does not properly comply. In the unlikely event that this
should occur, the country will be required to discontinue use of the materials
within 45 days. Autobytel.com strongly encourages the country's local agency to
implement an on-going dialogue with the global brand agency (a contact name will
be issued). The frequency and format for this communication can be mutually
agreeable to suit the needs and requirements of both parties, and may expand and
contract based upon the need of each party.
Media Procedure
Each country can determine the specific marketing communications mix (e.g. PR,
Advertising, Promotion, etc.) selection of media (e.g. Internet, TV, Radio,
etc), and selection of specific media vehicles (e.g. stations, publications,
etc). that is most appropriate for it's culture and environment. autobytel.com
inc. may volunteer from time to time, the sharing of information about media
that has been particularly successful in other countries across the globe. We
will
<PAGE> 29
encourage that all partners and licensees share information about what is/isn't
working for the benefit of aggregated learning.
However, it will be required that information about marketing communication mix
and media plans be shared and submitted to Autobytel.com Corporation on at least
a bi-annual basis. This may be submitted either in a written or digital format.
Fees for Global Brand Management
(For countries not using the local affiliate of autobytel.com inc.'s global
agency)
autobytel.com inc.'s global brand agency will be appropriately organized to
steward the brand, bring strategic value to autobytel.com inc. and its
licensees, and to facilitate communication among the parties. If the licensee
does not use a local agency that is an affiliate of the global agency,
autobytel.com inc. will charge the licensee for any expenses associated with
stewarding the brand.
ADVERTISING OPPORTUNITY ON AUTOBYTEL.COM INC.'S WEBSITE
autobytel.com inc. will offer its licensees an opportunity to participate in its
global web site advertising initiative. autobytel.com inc. plans to offer
advertising on its U.S. site, and on each country's local site if the country
chooses to participate. If the licensee participates, autobytel.com inc. will
require to country's site to allocate 50% of the total pages serves and
inventory. In return, autobytel.com inc. will offer licensees the opportunity to
share in 50% of the revenues generated after expenses through this sale.
If the licensee is interested, additional details will be provided after this
program is finalized. In the interim, here are some examples of the guidelines:
Site must be constructed to accommodate advertising
Screen real estate positioning must conform to autobytel.com inc.'s global
advertising standards (currently this is a top right position and 3 IAB unit
sizes will be utilized
50% of ad inventory (equal to approximately 50% of total pages served) will be
allocated to this effort.
Licensee has 6 months after launch of site to have prepared for advertising
In Closing, please refer to the attached Global Brand Protocol and Look Book,
which is currently in development. A number of sections have been added since
the last submission.
<PAGE> 30
autobytel.com inc.'s new U.S. Web site, launched 07/31/98
[PICTURE OF WEBSITE OF AUTOBYTEL.COM]
Note: Upon completion of the brand positioning, the new selling line will appear
below in the top ledge frame of the site.
<PAGE> 31
ATTACHMENT C
ESCALATION PROCEDURES
ABT - International Technical Support Escalation Procedure
There will be one named primary technical support contact and one named backup
support contact. All requests for technical support must come from the primary
support contact. In the event the primary contact is not available, the backup
contact may submit the technical support request. The primary support contact
will be _______________________________ and the backup support contract will be
_______________________________.
Changes to the primary and/or backup support contacts must be received by ABT in
writing 1 business day prior to them being effective.
All local Technical Support escalation will occur prior to any escalation to
Auto-By-Tel - International Technical Support team by either the primary or
backup support contact. All infrastructure (Hardware/Network/Operating
System/SQL Server/IIS Server) errors must be corrected prior to escalation.
All Technical Support calls related to remaining APPLICATION ERRORS or SYSTEM
ERRORS with severity level of ERROR or HIGHER should be routed through the ABT -
Corporate NTS Support person at 1-949-xxx-xxxx. Response time will be as
specified in table below.
All Technical Support calls that related to errors with severity level of
WARNING or APPLICATION PROBLEMS (as defined below) should be referred to the ABT
- - International Technology Support Coordinator at l-949-xxx-xxxx.
The quoted response times relate to the time required to have a qualified
technical support person contact the person who made the technical support
request. Depending on the severity of the problem, commercially reasonable
efforts will be made to resolve the problem as soon as possible within the
guidelines under RESPONSE LEVEL.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CATEGORY DESCRIPTION
- --------------------------------------------------------------------------------
<S> <C>
Application Problem Problem related to the use of a specific application
program or module. The program does not appear to be
functioning correctly, however, no error messages have
been received.
- --------------------------------------------------------------------------------
Application Error An application program or module has issued an error
message. The error was not issued by the underlying
technology, (i.e. the network, operating system,
database management system server or internet server.
- --------------------------------------------------------------------------------
System Error An error message has been received when executing an
application or web page. The error message originated
from the underlying technology, not the application
itself.
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 32
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
SEVERITY DESCRIPTION RESPONSE TIME RESPONSE LEVEL
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
WARNING Provides information or warning message only. 72 hours Effort during
Does not impact the overall operation of the Normal Bus.
system. Hours
- ----------------------------------------------------------------------------------------------------------------
ERROR Error interrupts processing of a single 12 hours (Next Effort during 7
application or module. System operation Business Day) days/week 8am-
continues to support primary business functions. 5pm, until
resolved
- ----------------------------------------------------------------------------------------------------------------
SEVERE ERROR Error interrupts processing of multiple and/or 4 hours Effort 7
primary business applications. Primary business days/week 5am
operations are impacted. - 9 pm, until
resolved
- ----------------------------------------------------------------------------------------------------------------
FATAL ERROR Error causes system to become unavailable. All 1 hour Effort 7 x 24,
business processing is aborted. until resolved
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Applications Errors in the following applications will always be classified as
at least "Severe Errors": Finance, New Car Request, Online Customer Service
Center, Used Car Request, DRT, and Financial Status Monitor.
<PAGE> 33
ATTACHMENT D
SERVICES AGREEMENT
AGREEMENT FOR CONSULTING BY AUTO-BY-TEL
This Agreement for Consulting ("Agreement") is made and entered into as of
the _____ day of ________, 199__ by and between autobytel.com, a Delaware
corporation with offices at _______________ ("Consultant"), and Auto-By-Tel AB,
a ____________ corporation with offices at _________________("Company"). The
Company desires to retain Consultant as an independent contractor to perform
consulting services for the Company and Consultant is willing to perform such
services on terms set forth more fully below. In consideration of the mutual
promises contained herein, the parties agree as follows:
1. SERVICES. Consultant agrees to perform for the Company the services
described in Exhibit A ("Services") on the terms and conditions set forth
therein.
2. COMPENSATION
(a) Services. Company shall pay Consultant for performing the
Services as shown in Exhibit A.
(b) Expenses. The Company shall also reimburse Consultant for the
reasonable actual travel and living expenses of its personnel engaged in the
performance of Services at locations other than Consultant facilities, together
with other reasonable out-of-pocket expenses incurred in connection with
performance of the Services. Consultant shall adhere to any travel policy
reasonably promulgated by Company, provided that Consultant may incur expenses
up to a total of _____ dollars without Company's prior approval.
(c) Payments. Consultant shall invoice Company for all amounts on or
after the due date. Payment terms shall be net _____ days. Any amounts due
Consultant under this Agreement not received by the date due shall be subject to
a service charge of one and one-half percent (1.5%) per month, or the maximum
charge permitted by law, whichever is less.
3. CONFIDENTIALITY
(a) "Confidential Information" means any information disclosed by
either party to the other party, either directly or indirectly, in writing,
orally or by inspection of tangible objects (including without limitation
documents, prototypes, samples, plant and equipment), which is designated as
"Confidential," "Proprietary" or some similar designation. Information
communicated orally shall be considered Confidential Information if such
information is confirmed in writing as being Confidential Information within a
reasonable time after the initial disclosure. Confidential Information may also
include information disclosed to a disclosing party by third parties.
Confidential Information shall not, however, include any
<PAGE> 34
information which (i) was publicly known and made generally available in the
public domain prior to the time of disclosure by the disclosing party; (ii)
becomes publicly known and made generally available after disclosure by the
disclosing party to the receiving party through no action or inaction of the
receiving party; (iii) is already in the possession of the receiving party at
the time of disclosure by the disclosing party as shown by the receiving party's
files and records immediately prior to the time of disclosure; (iv) is obtained
by the receiving party from a third party without a breach of such third party's
obligations of confidentiality; (v) is independently developed by the receiving
party without use of or reference to the disclosing party's Confidential
Information, as shown by documents and other competent evidence in the receiving
party's possession; or (vi) is required by law to be disclosed by the receiving
party, provided that the receiving party gives the disclosing party prompt
written notice of such requirement prior to such disclosure and assistance in
obtaining an order protecting the information from public disclosure.
(b) Non-use and Non-disclosure. Each party agrees not to use any
Confidential Information of the other party for any purpose except to perform
its obligations or exercise its rights under this Agreement. Each party agrees
not to disclose any Confidential Information of the other party to third parties
or to such party's employees, except to those employees of the receiving party
who are required to have the information in order perform such party's
obligations under this Agreement. Neither party shall reverse engineer,
disassemble or decompile any prototypes, software or other tangible objects
which embody the other party's Confidential Information and which are provided
to the party hereunder.
(c) Maintenance of Confidentiality. Each party agrees that it shall take
reasonable measures to protect the secrecy of and avoid disclosure and
unauthorized use of the Confidential Information of the other party. Without
limiting the foregoing, each party shall take at least those measures that it
takes to protect its own most highly confidential information and shall ensure
that its employees who have access to Confidential Information of the other
party have signed a non-use and non-disclosure agreement in content similar to
the provisions hereof, prior to any disclosure of Confidential Information to
such employees. Neither party shall make any copies of the Confidential
Information of the other party unless the same are previously approved in
writing by the other party. Each party shall reproduce the other party's
proprietary rights notices on any such approved copies, in the same manner in
which such notices were set forth in or on the original.
4. OWNERSHIP. The work product resulting from the Services shall consist
of, and shall operate in conjunction with, multiple elements of intellectual
property, as set forth in Exhibit B. The parties' respective rights with respect
to such intellectual property shall be as set forth below. For purposes of this
Agreement, the term "ownership" shall refer to ownership of all intellectual
property rights including, but not limited to, all patent, copyright, trade
secret and trademark rights, as applicable, with respect to the subject
intellectual property:
(a) Company Materials. For all materials designated as "Company
Materials" in Exhibit B, Consultant agrees that such materials are the sole
property of the Company, and shall be considered "works made for hire" as that
term is defined in the United States Copyright Act. Consultant further agrees to
assign
<PAGE> 35
(or cause to be assigned) and does hereby assign fully to the Company all such
works and the intellectual property rights relating thereto.
(b) Third Party Materials. For all materials designated as "Third
Party Materials" on Exhibit B, the parties hereby agree that such materials
shall be necessary for Company to use the Company Materials or Consultant
Materials, and Company shall be solely responsible for obtaining necessary
licenses to the Third Party Materials.
(c) Pre-existing Materials and Consultant Materials. For all
materials designated as "Pre-existing Materials" or "Consultant Materials" in
Exhibit B, Company agrees that such materials are the sole property of the
Consultant. Consultant hereby grants to Company a worldwide, perpetual,
royalty-free license to use the Consultant Materials, solely for its own
internal purposes. No other grants of licenses or rights to Company shall be
implied from the provisions stated in this Agreement. Company shall not
obliterate or remove and will reproduce Consultant's intellectual property
notices contained in the Consultant Materials or Pre-existing Materials. Company
shall not reverse engineer, decompile, or otherwise attempt to derive source
code from any portions of the Consultant Materials or Pre-existing Materials
delivered in object code form.
(d) Further Assurances. Each party agrees to execute any additional
documents deemed reasonably necessary to effect and evidence the other party's
rights with respect to the intellectual property elements set forth above.
5. REPORTS. Consultant agrees that it will from time to time during the
term of this Agreement or any extension thereof keep the Company advised as to
Consultant's progress in performing the Services hereunder and that Consultant
will, as requested by the Company, prepare written reports with respect thereto.
It is understood that the time required in the preparation of such written
reports shall be considered time devoted to the performance of Consultant's
Services.
6. TERM AND TERMINATION
(a) Term. This Agreement will commence on the date first written
above and will continue until final completion of the Services or termination as
provided below.
(b) Termination. The Company may terminate this Agreement at any
time upon giving ten (10) days' prior written notice thereof to Consultant,
provided, however, that Company shall pay Consultant for any Services performed
up to the effective date of termination. Either party may terminate this
Agreement upon thirty (30) days' notice of any uncured material breach of this
Agreement by the other party.
(c) Survival. Upon such termination all rights and duties of the
parties toward each other shall cease except Sections 3, 4, 8, 9, 10, 11, 12,
13, 14, and 15 shall survive termination of this Agreement.
7. ASSIGNMENT. Neither this Agreement nor any right hereunder or interest
herein may be assigned or transferred by either party without the express
written consent of the other.
<PAGE> 36
8. INDEPENDENT CONTRACTOR. Nothing in this Agreement shall in any way be
construed to constitute Consultant as an agent, employee or representative of
the Company, but Consultant shall perform the Services hereunder as an
independent contractor.
9. ARBITRATION. The parties agree that any dispute or controversy arising
out of or relating to any interpretation, construction, performance or breach of
this Agreement, shall be settled by arbitration to be held in Santa Clara or San
Mateo County, California, in accordance with the rules then in effect of the
American Arbitration Association. The arbitrator may grant injunctions or other
relief in such dispute or controversy. The decision of the arbitrator shall be
final, conclusive and binding on the parties to the arbitration. Judgement may
be entered on the arbitrator's decision in any court of competent jurisdiction.
Company and Consultant shall each pay one-half of the costs and expenses of such
arbitration, and each shall separately pay its respective counsel fees and
expenses. Notwithstanding the above, the parties may seek injunctive relief in
any court of competent jurisdiction for a breach of Sections 3 or 4 of this
Agreement.
10. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applied to agreements entered into and performed within
California by residents of that state. Each party hereby expressly consents to
the nonexclusive personal jurisdiction and venue of the state and federal courts
located in the federal Northern District of California for any lawsuit filed
there against me by the Company arising from or relating to this Agreement.
11. NON-SOLICITATION. Company acknowledges and agrees that the employees
and consultants of Consultant who perform the Services are a valuable asset to
Consultant and are difficult to replace. Accordingly, Company agrees that, for
the term of this Agreement and for a period of _________ months thereafter, it
will not offer employment as an employee, independent contractor, or consultant
to any Consultant employee or consultant. In the event Company breaches the
provisions of this Section 11, the parties agree that it would be difficult to
determine the amount of actual damages to Consultant that would result from such
breach. The parties further agree that in the event Company breaches the
provisions of this Section 11, Company shall pay Consultant liquidated damages
of $__________ for each such breach, which is the parties' good faith estimate
of the amount of damages to Consultant from such breach.
12. WARRANTY DISCLAIMER. CONSULTANT DISCLAIMS ALL IMPLIED WARRANTIES,
INCLUDING ANY AND ALL IMPLIED WARRANTIES OF TITLE MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, AND NON-INFRINGEMENT.
13. LIMITATION OF REMEDIES AND DAMAGES THE LIABILITY OF CONSULTANT ARISING
HEREUNDER SHALL BE LIMITED TO FEES PAID BY COMPANY HEREUNDER. CONSULTANT SHALL
NOT BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES, INCLUDING
WITHOUT LIMITATION DAMAGES FOR LOSS OF BUSINESS PROFITS AND/OR BUSINESS
INTERRUPTION, WHETHER FORESEEABLE OR NOT, AND WHETHER ARISING IN CONTRACT, TORT,
OR NEGLIGENCE, EVEN IF A REPRESENTATIVE OF CONSULTANT HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. THESE
<PAGE> 37
LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY
LIMITED REMEDY.
14. ENTIRE AGREEMENT. This Agreement and the Exhibits hereto form the
entire agreement of the parties and supersede any prior agreements between them
with respect to the subject matter hereof.
15. WAIVER. Waiver of any term or provision of this Agreement or
forbearance to enforce any term or provision by either party shall not
constitute a waiver as to any subsequent breach or failure of the same term or
provision or a waiver of any other term or provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Company: Consultant:
By: ______________________________ By: _______________________________
Print Name:_______________________ Print Name:________________________
Title:____________________________ Title:_____________________________
<PAGE> 38
EXHIBIT A
Services to be performed by Consultant:
Compensation of Consultant:
(a) Rate of pay: ___________________ per ___________________________
(b) Total payment limitation: ______________________________________
(c) Advance payment: _______________________________________________
(d) Expenses authorized for reimbursement by the Company:
(e) Other: _________________________________________________________
(f) Expected duration of project: __________________________________
Company: Consultant:
By: ______________________________ By: _______________________________
Print Name:_______________________ Print Name:________________________
Title:____________________________ Title:_____________________________
<PAGE> 39
EXHIBIT B
COMPANY MATERIALS
CONSULTANT MATERIALS
THIRD PARTY MATERIALS
PRE-EXISTING MATERIALS
<PAGE> 40
ATTACHMENT E
INVESTMENT RIGHTS AGREEMENT
<PAGE> 41
[*] Confidential Treatment Requested
INVESTMENT RIGHTS AGREEMENT
This INVESTMENT RIGHTS AGREEMENT (the "Investment Rights Agreement") is entered
into as of August 7, 1998 (the "Effective Date") by and between autobytel.com
inc., a Delaware corporation with offices at 18872 MacArthur Blvd., Irvine,
California 92612 ("ABT"), Bilia AB, a Swedish corporation with offices at Box
9003, 40091 Goteborg, Sweden ("Bilia"), and Auto-By-Tel AB, a Swedish
corporation with offices at Haradsvagen 255, 14172 Huddinge, Sweden
("ABT/Nordic"), and describes the terms and conditions pursuant to which ABT
will have the right to make certain investments in ABT/Nordic and the associated
rights that ABT will obtain in connection with such investment.
BACKGROUND
WHEREAS, ABT and ABT/Nordic have entered into a License and Service
Agreement of even date herewith (the "License Agreement"), providing for the
grant by ABT to ABT/Nordic of certain rights to use ABT proprietary software,
technology, and business procedures in Finland, Norway, Sweden and Denmark.
WHEREAS, ABT desires to have the right to invest in ABT/Nordic at one or
more times in the future.
NOW, THEREFORE, in consideration of the mutual promises and upon the terms
and conditions set forth below, the parties agree as follows:
1. Definitions. All capitalized terms not defined herein shall have the
meaning specified in the License Agreement.
2. Purchase of Debenture. Simultaneously with the execution of this
Agreement, ABT/Nordic is issuing to ABT, at par, a debenture (the "Debenture")
in the principal amount of SEK 7,000, which grants ABT optional rights to
subscribe for new shares in ABT/Nordic (the "Option"). The Debenture shall not
bear interest. It shall mature on December 31, 1998.
3. Terms of the Option. The Option shall survive the maturity and repayment
of the Debenture. The Option shall entitle ABT to subscribe for what, at the
time the Option is exercised (or, in the case of multiple exercises, the last
exercise), and giving effect to the issuance of shares upon exercise of the
Option, will be 20% of the outstanding voting shares of ABT/Nordic on the
following terms:
(a) ABT may exercise the Option at any time during the term of the
License Agreement, in one or more installments, as to all or any portion of the
shares that are subject to the Option when it is exercised, provided that no
such installment shall be less than the lesser of (i) 5% of the outstanding
voting shares of ABT/Nordic, or (ii) the entire remaining amount of ABT/Nordic
shares which ABT may purchase through exercise of the Option.
<PAGE> 42
(b) The Option shall be exercised by written notice given to
ABT/Nordic during the term of the License Agreement. Such notice shall specify
the number of shares for which the Option is being exercised and a date and a
time during normal business hours in Goteborg, Sweden (the "Subscription Time")
for the consummation of ABT's purchase of ABT/Nordic shares through exercise of
the Option. The specified Subscription Time shall not be later than 3:00 P.M.
Goteborg time on the 30th day after the day on which the notice of exercise of
the Option is given.
(c) The class, series and type of shares issuable upon each exercise
of the Option shall be (i) if the Option is exercised at a time when shares of
ABT/Nordic are not quoted on a securities exchange or in another organized
securities market, the class, series and type of voting shares then most
recently issued to either (at ABT's option) Bilia or one or more Third Party
Investors (as defined below) as part of the investment by such persons in
ABT/Nordic, in one or more related transactions, of at least US$300,000 in the
aggregate (the "Then Most Recent Financing"), or (ii) if the Option is exercised
at a time when shares of ABT/Nordic are quoted on a securities exchange or in
another organized securities market, the class, series and type of shares so
quoted.
(d) The exercise price to be paid for the shares issuable upon each
exercise of the Option shall be (i) if the Option is exercised at a time when
securities of ABT/Nordic are not quoted on a securities exchange or in another
organized securities market, the price at which shares of such class, series and
type were issued in the Then Most Recent Financing, or (ii) if the Option is
exercised at a time when shares of ABT/Nordic are quoted on a securities
exchange or in another organized securities market, an amount per share equal to
the lesser of (A) the price at which shares of ABT/Nordic were initially sold to
the public plus an amount equal to interest on that price at the rate of 10% per
annum, compounded quarterly from the date on which the shares were initially
sold to the public, or (B) 90% of the average of the last sale price of the
ABT/Nordic stock on each of the 20 trading days before the day on which the
notice of exercise of the Option is given, as reported on the principal stock
exchange, or in the other principal market, in which ABT/Nordic shares are
traded.
(e) At the Subscription Time specified in the notice of exercise of
the Option, ABT/Nordic shall deliver to ABT certificates representing the shares
ABT is purchasing through exercise of the Option, and ABT shall pay the purchase
price for such shares to ABT/Nordic by wire transfer of funds which are
immediately available in the place of payment, or by another means agreed to by
ABT and ABT/Nordic.
(f) If the Option is exercised at a time when shares of ABT/Nordic
are not quoted on a securities exchange or in another organized securities
market, then, at the time of exercise, ABT and ABT/Nordic shall negotiate in
good faith and enter into an agreement providing ABT the right to require
ABT/Nordic to take all steps required to enable ABT to sell its ABT/Nordic
shares without restriction in any public market in which ABT/Nordic shares are
regularly traded, in compliance with applicable securities laws (including, if
applicable, terms for exchanging shares held by ABT on an equitable basis for
shares of the type which subsequently become regularly traded in a public
market).
(g) If the Option is exercised at a time when shares of ABT/Nordic
are quoted on a securities exchange or in another organized securities market,
then ABT/Nordic shall take all steps required to give ABT the ability,
immediately following such exercise, to sell its ABT/Nordic shares
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<PAGE> 43
[*] Confidential Treatment Requested
without restriction in any public market in which ABT/Nordic shares are
regularly traded, in compliance with applicable securities laws.
(h) ABT agrees not to sell its ABT/Nordic shares, without the
consent of Bilia, prior to the later of (i) three years after the date of this
Agreement and (ii) two years from the date of purchase of such shares.
4. Security Issuances by ABT/Nordic.
(a) ABT/Nordic shall not issue any equity securities (or securities
convertible into or exercisable for equity securities) to any person other than
Bilia or an affiliate of Bilia (such other type of person being referred to as a
"Third Party Investor"), other than in a public offering, unless (i) at least 15
days before such securities are expected to be issued, ABT/Nordic notifies ABT
of the proposed issuance, including a description of the securities to be
issued, a description of the price and terms upon which the securities are
proposed to be issued, the identity of each Third Party Investor to whom the
securities are proposed to be issued, and any other reasonably relevant details
regarding the proposed transaction, and (ii) ABT does not, during the 15 days
after ABT/Nordic notifies ABT about the proposed issuance, reasonably object to
the issuance. An objection to the issuance of securities to a firm that operates
a competing Internet-based system for marketing automobiles or trucks, or to an
affiliate of such a firm. will under no circumstances be unreasonable. An
objection to issuance of securities based upon the identity of the Third Party
Investor will not be reasonable if the Third Party Investor is, or controls, a
dealer who will participate in the Local Business. An objection to an issuance
of securities will be reasonable if it (i) would reduce Bilia's ownership in
ABT/Nordic to below 3 1.25% (or to below 25% if ABT has exercised the Option in
full, or a pro-rated percentage between 31.25% and 25% if ABT has exercised the
option in part), or (ii) would cause anyone other than Bilia to have directly or
indirectly (other than as a shareholder of Bilia) a greater percentage ownership
in ABT/Nordic than Bilia's.
(b) Each Third Party Investor to whom ABT/Nordic issues securities,
other than in a public offering, must agree (i) not to sell those securities for
at least three years from the date of acquisition of such securities and (ii)
that if the Third Party Investor desires to sell, in a single transaction or a
series of related transactions, securities which constitute more than 5% of the
outstanding securities of any class of stock of ABT/Nordic, (x) such Third Party
Investor shall give each of Bilia and ABT at least 10 days prior written notice
of the sale and shall consider any purchase proposals which Bilia or ABT may
make during that 10 day period, and (y) if neither Bilia nor ABT makes a
purchase proposal during such 10 day period, or if either or both of them makes
a purchase proposal but the Third Party Investor rejects that purchase proposal,
the Third Party Investor may sell the securities described in the notice at any
time within 120 days after the end of the 10 day period. Any such sale permitted
by the foregoing sentence shall be (A) if neither Bilia nor ABT made a purchase
proposal, on any terms that the Third Party Investor is willing to accept, or
(B) if Bilia or ABT made a purchase proposal which the Third Party Investor did
not accept, on terms which are no less favorable to the Third Party Investor
than the terms of the proposal by Bilia or ABT which was most favorable to the
Third Party Investor.
(c) ABT/Nordic may issue securities in one or more public offerings,
without prior notice to or consent from ABT, provided that (i) the securities
sold in the initial public offering do not
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<PAGE> 44
[*] Confidential Treatment Requested
represent more than 25% of the voting equity securities of ABT/Nordic which will
be outstanding immediately after the public offering, and (ii) the public
offering will not reduce Bilia's ownership in ABT/Nordic to less than [*] (or
less than 25% if ABT has exercised the Option in full, or a prorated percentage
between 31.25% and 25% if ABT has exercised the option in part).
5. Bilia Sales of ABT/Nordic Securities.
(a) Bilia shall not sell, transfer or otherwise dispose of any
equity securities of ABT/Nordic to anyone other than a majority owned subsidiary
of Bilia (i) at any time prior to three years after the date hereof, and (ii) at
any time thereafter and prior to five years after the date hereof, if such sale,
transfer or other disposition (A) would reduce Bilia's ownership in ABT/Nordic
to below 31.25% (or to below 25% if ABT has exercised the Option in full, or a
pro-rated percentage between 31.25% and 25% if ABT has exercised the option in
part), or (B) would cause anyone other than Bilia to have directly or indirectly
(other than as a shareholder of Bilia) a greater percentage ownership in
ABT/Nordic than Bilia's.
(b) If at any time after three years after the date hereof, and
subject to the prohibition contained in Section 5(a)(ii), Bilia desires to sell
ABT/Nordic securities to anyone other than a majority owned subsidiary of Bilia,
before doing so, Bilia shall notify ABT of its desire to sell such securities,
the number and class, series and type of the securities it desires to sell, and
the minimum price or other minimum consideration that Bilia will accept for such
securities. ABT shall then have an option, exercisable by written notice given
to Bilia within 15 days after Bilia gives its notice to ABT, to purchase all,
but not less than all, of the securities specified in Bilia's notice for the
minimum price specified in such notice (or, if the minimum consideration
specified in the notice is other than cash, for the cash value of that minimum
consideration). If ABT exercises the option as to the securities specified in
Bilia's notice, ABT shall purchase such securities, and pay for those
securities, on a day specified in ABT's notice of exercise which is not fewer
than 10 nor more than 30 days after the day on which ABT's notice of exercise is
given. If ABT does not exercise the option, Bilia may, at any time within 120
days after the option expires, sell such securities for a price which is not
less than the minimum price specified in Bilia's notice.
6. Board Seats. So long as the License Agreement is in effect, Bilia shall
vote all securities of ABT/Nordic owned by it for the election to the
Supervisory Board (or similar ultimate governing body) of ABT/Nordic of one
person designated by ABT, and Bilia and ABT/Nordic shall do all other things
which are reasonably in their respective powers to cause that person to be
elected to the Supervisory Board (or similar body) of ABT/Nordic. ABT
acknowledges that meetings of the ABT/Nordic Supervisory Board (or similar body)
may be conducted in Swedish.
7. Shareholder Agreement. If, before ABT/Nordic securities have been
offered to the public or otherwise become quoted on a securities exchange or in
another organized securities market, ABT acquires any securities of ABT/Nordic,
then ABT, Bilia and ABT/Nordic shall negotiate in good faith and enter into an
investor rights agreement which is typical for an investment by a corporate
investor in a privately held company. Such agreement shall provide for, at a
minimum, (i) rights of ABT to receive periodic financial statements, budgets and
other financial information (or, after securities of ABT/Nordic are quoted on a
securities exchange or in another organized securities market, all
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<PAGE> 45
information which is provided to public shareholders), and (ii) access at
reasonable times to ABT/Nordic's management.
8. Non-Competition Covenant of Bilia. During the term of the License
Agreement and for any additional period during which ABT/Nordic is limited from
competing with ABT pursuant to Section 11.5(c) thereof, Bilia shall not, either
for its own account, or through any parent, subsidiary or affiliate, operate a
Local Business in the Territory (as such terms are defined in the License
Agreement). Notwithstanding the above, nothing contained herein shall prohibit
Bilia from marketing automobiles which it sells as a dealer nor from marketing
trucks (gross weight of at least 3.5 tons) and construction vehicles which it
sells as a distributor, nor from marketing parts and/or services for each of the
foregoing; so long as such business does not infringe ABT's trademarks or other
intellectual property rights. If Bilia assigns this Agreement to another party
with ABT's consent under Section 10, this obligation will continue to bind Bilia
and shall also bind such assignee.
9. Notices. Any notice, submission, or communication required or permitted
under the terms of this Investment Rights Agreement, or required by law, whether
or not so required elsewhere in this Investment Rights Agreement, must be in
writing and must be (a) delivered in person, (b) sent by first class registered
mail, return receipt requested, or air mail, as appropriate, or (c) sent by
overnight air courier; in each case properly posted and fully prepaid to the
appropriate address set forth below. Either party may change its address for
notice by notice to the other party given in accordance with this Section 9.
Notices shall be considered to have been given at the time of the earlier of (p)
actual delivery in person, (q) the date of a receipt of such notice signed by an
authorized representative of the party being notified, (r) the date of a written
confirmation of receipt by the party being notified, or (s) thirty (30) days
after deposit in the mail as set forth above.
10. Nonassignment/Binding Agreement. Neither this Investment Rights
Agreement, nor any obligation or right under this Investment Rights Agreement,
may be assigned or otherwise transferred (i) by ABT/Nordic or Bilia (except to
each other), in whole or in part, whether voluntarily, or by operation of law,
other than as part of a sale of its business substantially as an entirety,
without the prior written consent of ABT, or (ii) by ABT, in whole or in part,
whether voluntarily, or by operation of law, other than as part of a sale of its
business substantially as an entirety, without the prior written consent of
ABT/Nordic and Bilia. Any permitted assignee (including without limitation
ABT/Nordic) must agree in writing to be bound by all the terms and conditions of
this Investment Rights Agreement. Subject to the foregoing, this Investment
Rights Agreement shall be binding upon and inure to the benefit of the parties
and their respective successors and assigns.
11. Miscellaneous
(a) No Waiver; Amendment. Any waiver of the provisions of this
Investment Rights Agreement or of a party's rights or remedies under this
Investment Rights Agreement must be in writing to be effective. Failure,
neglect, or delay by a party to enforce the provisions of this Investment Rights
Agreement or its rights or remedies at any time shall not be construed and shall
not be deemed to be a waiver of such party's rights under this Investment Rights
Agreement and shall not in any way affect the validity of the whole or any part
of this Investment Rights Agreement or prejudice such party's right
-5-
<PAGE> 46
to take subsequent action. This Investment Rights Agreement may not be amended,
except by a writing signed by all parties.
(b) Severability. If any term, condition or provision of this
Investment Rights Agreement is found to be invalid, unlawful or unenforceable to
any extent, the parties shall endeavor in good faith to agree to such amendments
that will preserve, as far as possible, the intentions expressed in this
Investment Rights Agreement. If the parties fail to agree on such an amendment,
such invalid term, condition or provision shall be severed from the remaining
terms, conditions and provisions, which shall continue to be valid and
enforceable to the fullest extent permitted by law.
(c) Entire Agreement. This Investment Rights Agreement contains the
entire agreement of the parties with respect to the subject matter of this
Investment Rights Agreement and supersedes all previous communications,
representations, understandings and agreements, either oral or written, between
the parties with respect to said subject matter.
(d) Consent. Unless expressly provided otherwise in this Investment
Rights Agreement, any prior consent of any party that is required before another
party may take an action may be granted or withheld in the sole and absolute
discretion of the party whose consent is required.
(e) Rights and Remedies. No exercise or enforcement by any party of
any right or remedy under this Investment Rights Agreement shall preclude the
enforcement by such party of any other right or remedy under this Investment
Rights Agreement or that such party is entitled by law to enforce.
(f) Counterparts. This Investment Rights Agreement may be executed
in counterparts, each of which so executed shall be deemed to be an original and
such counterparts together shall constitute one and the same agreement.
(g) Governing Law. This Investment Rights Agreement shall be
interpreted and construed in accordance with the laws of the State of California
and the United States of America, without regard to conflict of law principles,
except insofar as it involves Swedish corporate law relating to the issuance of
securities by ABT/Nordic. [Any dispute arising out of this Investment Rights
Agreement shall be subject to the exclusive venue of the state and federal
courts in California.]
(h) Language. This Investment Rights Agreement is in the English
language only, which language shall be controlling in all respects, and all
versions hereof in any other language shall not be binding on the parties
hereto. All communications and notices to be made or given pursuant to this
Investment Rights Agreement shall be in the English language.
IN WITNESS WHEREOF, the parties have caused this Investment Rights Agreement to
be signed by duly authorized representatives on the dates set forth below.
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<PAGE> 47
autobytel.com inc. ("ABT") Auto-By-Tel AB ("ABT/Nordic")
By: /s/ ROBERT S. GRIMES By: /s/ JOHAN ROHSS & LARS ANDERSSON
------------------------------ --------------------------------
Name: ROBERT S. GRIMES Name: JOHAN ROHSS & LARS ANDERSSON
----------------------------- -------------------------------
Title: Executive V.P. Title: Chairman & Director
---------------------------- ------------------------------
Date: August 7, 1998 Date: August 7, 1998
----------------------------- -------------------------------
Address: 18872 MacArthur Blvd. Address: HARADSVAGEN 255
-------------------------- ----------------------------
Irvine, CA 92612 141 72 Huddinge, Sweden
-------------------------- ----------------------------
BILIA AB ("Bilia")
By: /s/ MATS JANSSON
------------------------------
Name: MATS JANSSON
-----------------------------
Title: President & CEO
----------------------------
Date: August 7, 1998
-----------------------------
Address: Box 9003 40091
--------------------------
Goteborg, Sweden
--------------------------
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<PAGE> 48
ATTACHMENT F
BILIA GUARANTEE LETTER
WHEREAS, Auto-By-Tel AB, a Swedish corporation with offices at Haradsvagen 255,
14172 Huddinge, Sweden ("ABT/Nordic") and auto-by-tel inc., a Delaware
corporation with offices at 18872 MacArthur Boulevard, Irvine, California, 92612
("ABT") have entered into a License and Services Agreement of even date herewith
("Agreement"); and
WHEREAS, ABT/Nordic and ABT wish Bilia AB, a Swedish company with an address at
Box 9003, 40091 Goteborg, Sweden ("Bilia"), to guarantee certain obligations
under the Agreement, and Bilia is willing to do so;
NOW, THEREFORE, Bilia hereby unconditionally guarantees to ABT the obligations
of ABT/Nordic to pay (a) the Minimum Annual License Fee due under the Agreement
with regard to the first three (3) Fiscal Years; and (b) and Maintenance Fees
due under the Agreement for the first three (3) years after the Effective Date.
All capitalized terms not defined herein will have the meaning assigned to them
in the Agreement.
Bilia AB
By: _____________________________
Title: __________________________
Date: ___________________________
<PAGE> 49
AUTOBYTEL.COM INC.
August 7, 1998
Johan Rohss
Auto-By-Tel AB
Haradsvagen 255,
14172 Huddinge,
Sweden
RE: LICENSE AND SERVICES AGREEMENT
Dear Mr. Rohss:
This letter supplements the terms of that certain License and Services
Agreement dated [8/7/98] (the "Agreement") between autobytel.com inc. ("ABT")
and Auto-By-Tel AB ("ABT/Nordic") with respect to the marketing obligations and
expenses in the Global Brand Protocols. Capitalized terms used in this letter
agreement and not otherwise defined herein shall have the meanings specified in
the Agreement.
ABT/Nordic will designate a person with marketing and advertising
experience that will communicate, on a weekly basis, if necessary, with ABT's
designated marketing brand steward contact.
ABT, Nordic and ABT will share expenses on an annual basis with respect to
stewarding the brand as follows: To the extent the invoices for these annual
expenses are up to and including the first $15,000, ABT/Nordic shall be
responsible for all payments within 30 days after receipt of such invoices; To
the extent the invoices for these annual expenses are from $15,001 up to and
including $30,000, ABT will be responsible for such payments; and To the extent
the invoices for these annual expenses exceed $30,000. ABT/Nordic and ABT will
mutually resolve a solution for the payment of these expenses.
If the foregoing correctly states your understanding of our agreement,
please execute both copies of this letter in the appropriate space below, and
return one copy to me.
Very truly yours,
autobytel.com inc.
/s/ ROBERT S. GRIMES
Robert S. Grimes
Executive Vice President
<PAGE> 50
BILIA GUARANTEE LETTER
WHEREAS, Auto-By-Tel AB, a Swedish corporation with offices at Haradsvagen 255,
14172 Huddinge, Sweden ("ABT/Nordic") and autobytel.com inc., a Delaware
corporation with offices at 18872 MacArthur Boulevard, Irvine, California, 92612
("ABT") have entered into a License and Services Agreement of even date herewith
("Agreement"); and
WHEREAS, ABT/Nordic and ABT wish Bilia AB, a Swedish company with an address at
Box 9003, 40091 Goteborg, Sweden to guarantee certain obligations under the
Agreement, and Bilia is willing to do so;
NOW, THEREFORE. Bilia hereby unconditionally guarantees to ABT the obligations
of ABT/Nordic to pay (a) the Minimum Annual License Fee due under the Agreement
with regard to the first three (3) Fiscal Years; and (b) and Maintenance Fees
due under the Agreement for the first three (3) years after the Effective Date.
All capitalized terms not defined herein will have the meaning assigned to them
in the Agreement.
Bilia AB
By: [ILLEGIBLE]
-------------------------------
Title: President & CEO
----------------------------
Date: August 2, 1998
-----------------------------
<PAGE> 51
Accepted and agreed:
Auto-By-Tel AB
By: /s/ JOHAN ROHSS
-------------------------------
Name: Mr. Johan Rohss
Title: Chairman
-----------------------------
Date: August 7, 1998
------------------------------
<PAGE> 1
EXHIBIT 10.24
[*] Confidential Treatment has been requested for certain portions of this
exhibit.
AUTOBYTEL.COM
LICENSE AND SERVICES AGREEMENT
This LICENSE AND SERVICES AGREEMENT (this "Agreement") is entered into as of
November 23, 1998, (the "Effective Date") by and between autobytel.com inc., a
Delaware corporation with offices at 18872 MacArthur Boulevard, Irvine,
California, 92612 ("APT"), and Auto by Tel UK Limited, a corporation organized
under the laws of the United Kingdom with offices at _______________ ("ABT/UK"),
and describes the terms and conditions pursuant to which ABT will grant to
ABT/UK a license to use and modify the Software and Business Procedures (as
defined below) and to use certain related technology, to deploy, develop and
support a localized version of such Software and Business Procedures.
BACKGROUND
WHEREAS, ABT is engaged in an Internet-based marketing business for new
and used vehicles in North America that provides Internet users with fast,
haggle-free, and courteous purchasing and related services designed to improve
consumers' overall vehicle buying experience:
WHEREAS, ABT/UK desires to market new and used vehicles, in the United
Kingdom using the ABT proprietary Software, technology, and ABT Business
Procedures;
WHEREAS, ABT/UK desires to develop a localized version of ABT's
proprietary Software and Business Procedures applicable to the United Kingdom;
WHEREAS, ABT/UK is a wholly-owned subsidiary of Inchcape Automotive
Limited, registered number 3580629 whose registered office is 33 Cavendish
Square, London W1M 9HF, a corporation organized under the laws of the United
Kingdom; and
WHEREAS, ABT and Inchcape have entered into a Share Purchase Agreement of
even date herewith memorializing certain arrangements between ABT and Inchcape
plc regarding the ownership of ABT/UK.
NOW, THEREFORE, in consideration of the mutual promises and upon the terms
and conditions set forth below, the parties agree as follows:
1 Definitions
1.1 "ABT Brand" means the "Auto-By-Tel" trademark, service mark and
logo, and the ABT/UK Domain, and does not include the mark DealerSites.com.
1
<PAGE> 2
1.2 "ABT/UK Domain" means the Uniform Resource Locator "autobytel.uk.co"
1.3 "Affiliate" of a party means (i) any entity controlled by,
controlling, or under common control with such party, where "control" means
ownership, either direct or indirect, of more than 50% of the equity interest
entitled to vote for the election of directors or equivalent governing body
and/or (ii) any entity of which such party has possession, either direct or
indirect, of the power to direct or cause the direction of management and
policies of the entity through ownership of voting securities, by contract or
otherwise.
1.4 "Business Procedures" means the general proprietary business
procedures for operating the Local Business described on Attachment B, and any
updates or new revisions thereof provided by ABT in accordance with this
Agreement from time to time upon ninety (90) days prior notice, which, may be
supplemented by ABT with more specific procedures as described in Section 2.9.
1.5 "Confidential Information" means this Agreement and all its
Attachments, any addenda hereto signed by both parties, all Software listings,
Documentation, information, data, drawings, benchmark tests, specifications,
trade secrets, object code and machine-readable copies of the Software, Business
Procedures, and any other proprietary information disclosed by one party to the
other.
1.6 "Consumer Price Index" means the Consumer Price Index, for All Urban
Consumers, Subgroup AA11 Items=, for the Los Angeles-Riverside-Orange County
Area (Base Year 1982-84=100), which is currently being published by the United
States Department of Labor, Bureau of Labor Statistics. If, however, this
Consumer Price Index is changed so that the base year is altered from that used
as of the Commencement Date, then the Consumer Price Index will be converted in
accordance with the conversion factor published by the United States Department
of Labor, Bureau of Labor Statistics, to obtain the same results that would have
been obtained had the base year not been changed. If no conversion factor is
available or if the Consumer Price Index is otherwise changed, revised or
discontinued for any reason, the term "Consumer Price Index" will thereafter
refer to the most nearly comparable official price index of the United States
Government to obtain substantially the same result as would have been obtained
had the original Consumer Price Index not been changed, revised or discontinued.
1.7 "Derivative Work" means a derivative work within the meaning of 17
U.S.C. Section 101 of the U.S. copyright law (even if the term is not
capitalized when used herein).
1.8 "Documentation" means any electronic instructions, manuals or other
materials, including without limitation on-line help files, regarding the
development or use of the Software provided by ABT under this Agreement.
1.9 "DRT" means the Dealer Communication System portion of the Software.
2
<PAGE> 3
1.10 "Error" means a material, reproducible failure of the Software to
perform in substantial conformity with the functional specifications in the
Documentation.
1.11 "Error Correction" means a release or version of the Software
containing corrections or fixes of Errors which may be indicated by a change in
the numeric identifier to the Software in the digit to the right of the decimal.
1.12 "Fees" mean all minimum and monthly license, maintenance and other
fees payable to ABT hereunder.
1.13 "Global Brand Protocols" means the procedures for use of the ABT
Brand set forth on Attachment C along with any revisions thereof, which ABT may,
subject to Section 2.9, provide from time to time in its sole discretion upon
ninety (90) days prior notice.
1.14 "Gross Revenues" means all payments actually received by ABT/UK with
regard to the Local Business, including without limitation fees received from
dealers for participating in the Internet referral system, payments received
from dealers as a result of Internet inquiries referred to them, sums received
as payments for advertising on internet sites which are part of the Local
Business, gross revenues from providing maintenance of, and training regarding,
the DRT, and all other revenues arising directly out of the Local Business.
Gross revenues will not include revenues from sales of cars, from servicing of
cars or from other activities by ABT/UK or any of its affiliates other than the
operation of the Local Business.
1.15 "Launch Date" means the earlier of (a) the first date ABT/UK makes
the World Wide Web site for the Local Business generally available on the World
Wide Web; (b) thirty (30) days after completion of Initial Localization Services
under Section 3.1(c); and (c) June 1, 1999.
1.16 "Local Business" means a business providing Internet-based
automotive and automotive related products and services relating to vehicle
dealers located in the Territory.
1.17 "Localized Version" means a Derivative Work of the Software and
Business Procedures that implements the core functionality of the Software and
Business Procedures, but incorporates the language, currency and functional
variations for the Territory, which Derivative Works are in each case created by
or for use by ABT/UK
1.18 "Localize, or Localization" means any modifications to the Software
or Business Procedures necessary to facilitate the operation and functionality
of the Software on the operating systems or platforms within the Territory, or
the modification of the Business Procedures to meet local custom or
technological or regulatory requirements.
3
<PAGE> 4
1.19 "Fiscal Quarter" means a period of three (3) consecutive calendar
months which period commences upon the Launch Date, or three (3), six (6), or
nine (9) months thereafter; or the anniversary of any of the foregoing.
1.20 "Fiscal Year" means a period of four (4) consecutive Fiscal Quarters
commencing on the Launch Date or the anniversary thereof.
1.21 "Software" means ABT's existing proprietary Software products
specified on Attachment A hereto, in source code form, and object code form
(where applicable), together with any Error Corrections, Updates or Upgrades
thereof provided to ABT/UK pursuant to this Agreement.
1.22 "Territory" means the United Kingdom as constituted on the Effective
Date.
1.23 "Update" means a release or version of the Software, in source code
form, and object code form (where applicable), containing minor functional
enhancements, extensions, error corrections or fixes, which may be indicated by
a change in the numeric identifier to the Software in the digit to the right of
the decimal.
1.24 "Upgrade" means any version of the Software, in source code form,
and object code form (where applicable), designated as such by ABT, which
contains new functionality or significantly enhanced operation and may be
indicated by a change in the numeric identifier to the Software in the digit to
the left of the decimal.
1.25 "Use" means utilization of the Software by ABT/UK solely in
accordance with this Agreement.
2. Grant of License
2.1 License. Subject to the terms and conditions of this Agreement, ABT
hereby grants to ABT/UK:
(a) an exclusive, non-transferable license in the Territory to
copy and create Derivative Works of the Software, Business Procedures and
Derivative Works thereof, in each case solely for the development of a Localized
Version. In this Section 2.1 (a), "exclusive" means that ABT shall not for its
own account, nor grant to any third party in the Territory a license to create
derivative works of the Software or the Business Procedures in order to create a
Localized Version in connection with the operation of a Local Business.
(b) an exclusive, non-transferable license to Use the Software and
Business Procedures in connection with the operation of the Local Business in
the Territory; provided, however, that ABT/UK will not have the right to use the
Software with respect to vehicle dealers outside the Territory. In this Section
2.1(b), "exclusive" means that ABT shall not for its own account, nor grant to
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<PAGE> 5
any third party a license to use the Software or the Business Procedures in
connection with the operation of a Local Business.
(c) an exclusive, non-transferable license in the Territory to Use
the Business Procedures and the Documentation solely for the operation of the
Local Business, provided that ABT/UK operates the Local Business solely in the
accordance with the Business Procedures; and provided that ABT/UK does not use
the Business Procedures and Documentation with respect to vehicle dealers
outside the Territory.
2.2 Sublicenses. ABT/UK may grant non-exclusive sublicenses to vehicle
dealers in the Territory to use copies of the DRT in object code format, solely
for use in connection with the Local Business, and solely in connection with an
end user license in a form as protective of ABT's rights as the form set forth
in Attachment H. ABT/UK may grant sublicenses of the rights granted in Section
2.1 only upon the prior written approval of ABT.
2.3 Copies. ABT shall deliver to ABT/UK, as soon as practicable, one (1)
copy of the Software, one (1) copy of the related Documentation and one (1) copy
of the Business Procedures. ABT/UK will be entitled: (a) to make two (2) copies
of the Software solely for backup or archival purposes, (b) to retain one (1)
copy of the Software for production purposes, and (c) to make and retain such
copies of the Software as reasonably necessary for ABT/UK to Use the Software in
connection with the Local Business; provided, however, that ABT/UK shall
immediately advise ABT of any such copies made and their location. Except as
otherwise set forth herein, ABT/UK may not copy, distribute, reproduce, use or
allow access to the Software and Business Procedures. All copies of the Software
will be subject to the terms and conditions of this Agreement. Whenever ABT/UK
is permitted to copy or reproduce all or any part of the Software and Business
Procedures, all titles, trademark symbols, copyright symbols and legends, and
other proprietary markings must be reproduced. ABT/UK shall not alter or remove
any of ABT's trademarks, copyright notices or other proprietary notices affixed
to the Software by ABT.
2.4 Ownership. ABT owns all right, title and interest in and to the
Software and Business Procedures, together with any Localized Version or other
modifications to the Software and Business Procedures made by either ABT or
ABT/UK in connection with Localization of the Software or Business Procedures.
The licenses granted herein transfers to ABT/UK neither title, nor any
proprietary or intellectual property rights to the Software, Business
Procedures, or Documentation, or any copyrights, patents, or trademarks,
embodied or Used in connection therewith, except for the rights expressly
granted herein. Upon development of any Localized Version by ABT/UK, ABT/UK
hereby assigns all right, title and interest to such Localized Version to ABT.
Such Localized Version will be included as, and incorporated in, the Software
for the purposes of the license grant in this Section 2. For any Localizations
or Extensions incorporated into ABT's generally available version of the
Software, ABT shall promptly incorporate related Documentation. Except as
otherwise set forth in the applicable Work Order for the Localization services
(as such term is defined in the "Services Agreement" in
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<PAGE> 6
Attachment D, any modifications that are not Derivative Works of the Software or
Business Procedures and that contain no part of the Software or Business
Procedures (such modifications to be referred to as "Extensions"), ABT hereby
grants ABT/UK an irrevocable, non-exclusive, fully paid-up, nontransferable
license to reproduce, distribute, publicly perform and display, transmit, and
prepare derivative works of the Extensions in connection with the Local
Business. This license to use Extensions will survive the termination of this
Agreement. All rights not expressly granted hereunder are reserved to ABT. To
the extent that a Localized Version, or any Extension prepared by ABT/UK's
employees or Contractors (as defined in Section 10.4) and provided to ABT
hereunder, embody patentable methods of doing business, inventions, or
algorithms ("ABT/UK Inventions"), then ABT/UK retains all right, title and
interest in and to such ABT/UK Inventions, and ABT/UK hereby grants ABT an
irrevocable, non-exclusive, fully paid-up, royalty-free, non-transferable
license to make, have made, use, sell, import, and otherwise exploit products
embodying such ABT/UK Inventions. ABT may sublicense such rights in connection
with licenses of the Software and ABT's trademarks. This license to ABT/UK
Inventions will survive the termination of this Agreement.
2.5 Software and Business Procedure Localizations and Extensions. Except
as otherwise set forth in this Agreement or as otherwise agreed by the parties,
as between the parties, ABT/UK is responsible for any changes to the Software,
Documentation, or Business Procedures necessary to Localize them in accordance
with the operation of the Local Business. All such Localization changes, and the
development of any Extensions, must be approved by ABT prior to development and
implementation, as set forth in this Section. All such Localization changes and
the development of any Extensions must be either: (i) performed by ABT in
accordance with Section 3.1 below; or (ii) performed by ABT/UK, or by its
independent contractor approved by ABT, under the technical oversight and
subject to the approval of ABT, subject to Section 3.1 below. ABT's approval of
such Localizations or Extensions shall not be unreasonably withheld, and without
limiting the above, will not be withheld where the requested Localization or
Extension: (x) is required to comply with the laws and regulations of the
Territory, or (y) is in current use in ABT's United States version of the
Software. Further, subject to the above provisions of this Section 2.5, ABT may
withhold approval for any implementation of a Localization or Enhancement which
would materially impair the value of the ABT Brand, cause the Local Business not
to be in accordance with the Business Procedures, or require a change in the
technical architecture of the Software. Any modifications made to the Software,
Documentation, or Business Procedures without the approval of ABT as set forth
herein will be a material breach of this Agreement. Upon completion of any
Localized Version or Extension (other than by ABT), ABT/UK must disclose to ABT
a copy of such Localized Version or Extension. Any such disclosure of Localized
Software or Extension must be in source code format.
2.6 Updates and Upgrades. During the Term, and (except as required in
Section 11.2(d)) subject to ABT/UK's payment to ABT of the Minimum Maintenance
Fees and Maintenance and Support Fees set forth in Sections 5.3 and 6.2 below,
ABT will deliver to ABT/UK any Error Corrections, Updates or Upgrades to the
Software or Business Procedures that it releases to any of ABT's other local
country affiliates or United States licensees within a reasonable time after
such Error
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<PAGE> 7
Correction, Update, or Upgrade is released in the United States. ABT/UK shall
implement all Error Corrections, Updates, or Upgrades provided by ABT under this
Agreement, no later than one (1) year after delivery thereof to ABT/UK.
Notwithstanding the above, ABT will not be obligated to provide such Error
Corrections, Updates or Upgrades during the period during which, in the
reasonable discretion of ABT's project manager, they are in release for testing
purposes or otherwise not suitable for release outside the United States.
2.7 License Restrictions. ABT/UK shall not:
(a) sell, lease, license, sublicense or distribute the Software,
Documentation, or Business Procedures except in accordance with this Agreement;
(b) provide, disclose, divulge or make available to, or permit use
of the Software, Documentation, Business Procedures, or Localized Version by any
third party without ABT's prior written consent, except as specifically
authorized by this Agreement; or
(c) use the Software for any purpose except as expressly provided
for in this Agreement.
2.8 Third Party Technology. The parties acknowledge that certain
software, equipment, or technology of third parties, including without
limitation server equipment, server software, and database software, may be
required to operate the Software. ABT shall cooperate reasonably with ABT/UK to
identify any such third-party technology, but ABT will not be obligated to
provide any such third party technology to ABT/UK.
2.9 Changes to Business Procedures and Global Branding Protocols. ABT
may only make those changes to the Business Procedures and Global Branding
Protocols that ABT makes generally for ABT's and ABT's licensees using the
Software and Business Procedures. Where feasible, ABT shall seek comments and
suggestions of ABT/UK regarding such changes. ABT shall discuss in good faith
any concerns ABT/UK may have with respect to such changes.
3. Obligations.
3.1 Services. Upon mutual agreement, ABT may, from time to time, perform
services and provide support to ABT/UK that will be subject to the Services
Agreement included on Attachment D hereto (the "Services" as further defined
below).
(a) In addition to the compensation set forth in the definitive
Services Agreement, ABT/UK shall reimburse ABT for the reasonable actual travel
and living expenses of ABT's personnel engaged in performing the Services at
locations other than ABT's facilities, together with other reasonable
out-of-pocket expenses incurred in connection with the performance of such
Services, subject to ABT's adherence to any travel policy reasonably promulgated
by ABT/UK in connection therewith.
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(b) ABT/UK shall pay ABT for any Services provided under this
Section 3.1 in accordance with the payment terms set forth in Section 5 below.
(c) ABT shall provide initial Services to Localize the Software
(the "Initial Localization Services") in accordance with the initial Work Order
(as such term is defined in the Services Agreement) set forth in Attachment E.
ABT shall provide further Services to Localize the Software in accordance with
such subsequent Work Orders agreed to by the parties in writing according to the
software development procedures described in Attachment G.
(d) Notwithstanding the above, ABT shall provide ABT/UK with a
one-time, three (3) day "train the trainer" session at ABT's office in Irvine,
California, at no charge to ABT/UK. ABT/UK will be responsible for any travel,
living, and related expenses of any persons it sends to such training session.
3.2 Scope of Services. The parties currently anticipate that the
Services that may be performed in accordance with Section 3.1 above may include
the following. However, nothing in this Section 3.2 will be deemed to create any
binding obligation on either party.
(a) Hardware selection and configuration consulting services;
(b) Business model conversion support for software systems and
operating procedures;
(c) Marketing, sales and information technology training;
(d) Support for training of vehicle dealers in the use of the DRT
portions of the Software; and
(e) Business Procedures marketing support, including support
regarding know-how, cooperative advertising or other co-marketing activities.
3.3 ABT/UK Obligations. ABT/UK shall operate the Local Business solely
in accordance with the Business Procedures, which the parties acknowledge set
forth general principles for operation of the Local Business. The parties shall
agree in good faith upon more detailed business procedures, and ABT/UK shall use
reasonable efforts to abide by the business procedures generally provided by ABT
to its licensees. ABT/UK shall operate the Local Business solely in accordance
with the laws, regulations, and other requirements of the Territory and of the
European Union. During the Term, ABT/UK will devote sufficient resources and
personnel to the Local Business to market, promote and operate the Local
Business. ABT/UK will be responsible for training vehicle dealers in the use of
the DRT portions of the Software and will be solely responsible for all costs
and expenses related to the marketing, promotion and operation of the Local
Business and for performing its obligations hereunder. ABT/UK
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will ensure that only properly trained and qualified persons perform ABT/UK's
technical obligations under this Agreement.
3.4 Hyperlinks. ABT shall, on and after the first date ABT/UK makes the
World Wide Web site for the Local Business generally available on the World Wide
Web, display a hypertext link on its Web page at the location where ABT provides
links to its local country affiliates, pointing toward ABT/UK's home Web page
for the Local Business, and ABT/UK shall, on and after the first date ABT/UK
makes the World Wide Web site for the Local Business generally available on the
World Wide Web, display a hypertext link on the home Web page for the Local
Business pointing to such location.
3.5 Territory and Sales. The parties acknowledge that ABT/UK may receive
inquiries or orders for sales of products or services from persons outside the
Territory. In such case, ABT/UK shall respond to such inquiries only in
accordance with the laws of the Territory and the European Union. In addition,
ABT/UK acknowledges that ABT may enter into agreements with other parties who
will operate a Local Business outside the Territory. ABT/UK shall use its best
efforts to resolve any channel conflicts with such third parties relating to
such inquiries.
3.6 Reports. No less frequently than each month, as reasonably requested
by ABT, ABT Entity (as defined in Attachment B) will provide to ABT, in a format
reasonably acceptable to ABT, a summary report of business data regarding the
operation of the business of the ABT Entity, including without limitation the
number of purchase requests and finance requests, Web statistics, and revenue
data, as required for the ABT global data warehouse and reporting system.
4. Warranty and Disclaimer
4.1 ABT Warranty.
(a) ABT represents and warrants to ABT/UK that during the Term,
the Software in the form delivered to ABT/UK will perform in substantial
accordance with the Documentation.
(b) Without limitation to any other warranty, ABT represents and
warrants to ABT/UK that the Software in the form delivered to ABT/UK is Year
2000 Compliant. "Year 2000 Compliant" means that the Software, when used in
accordance with the Documentation and with the hardware and operating systems
approved by ABT, will: (a) initiate and operate; (b) correctly store, represent
and process dates; and (c) not cause or result in an abnormal termination or
ending or degradation of performance; when processing data containing dates in
the Year 2000 and in any preceding and following years, including leap years,
provided that all third party products that exchange date data with the Software
do so in a form and format compatible with the Software.
(c) ABT warrants and represents to ABT/UK that the Software, in
the form delivered to ABT/UK and on the media delivered to ABT/UK does not
contain any virus, codes, commands or
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instructions that alter, delete, erase, damage, disable, disrupt, or otherwise
interfere with A.BT/UK's use of, the Software.
(d) If the Software does not perform as warranted under Sections
4.1(a), 4.1(b), or 4.1(c), ABT shall, at no charge to ABT/UK, use reasonably
diligent efforts to correct the Software in accordance with the escalation
procedures in Attachment F, and include the correction thereof in the next Error
Correction released by ABT and provided to ABT/UK under Section 6.2 below. The
foregoing are ABT/UK's sole and exclusive remedies for breach of warranties. The
warranty will apply only if the then-current version of the Software has been
properly installed and Used at all times and in accordance with the instructions
for Use.
(e) ABT represents and warrants to ABT/UK that ABT has full power,
right and authority to enter into this Agreement, to carry out its obligations
under this Agreement and to grant the rights granted to ABT/UK herein.
(f) ABT represents and warrants to ABT/UK that all Services
performed by ABT under this Agreement shall be performed in a professional
manner consistent with industry standards by personnel with the required
training, background and experience to perform such services. In the event of a
breach of such warranty, ABT shall re-perform the non-conforming services at no
charge. The foregoing is ABT/UK's sole and exclusive remedy for breach of such
warranty.
4.2 ABT/UK Warranty. ABT/UK represents and warrants to ABT that ABT/UK
has MI power, right and authority to enter into this Agreement, to carry out its
obligations under this Agreement and to grant the rights granted to ABT herein.
ABT/UK represents and warrants to ABT that ABT/UK is sufficiently capitalized to
undertake the business transaction contemplated hereunder.
4.3 Disclaimer. EXCEPT FOR THE EXPRESS LIMITED WARRANTY SET FORTH IN
SECTION 4.1 ABOVE, THE SOFTWARE, DOCUMENTATION AND BUSINESS PROCEDURES ARE
PROVIDED "AS-IS" AND WITHOUT WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED,
STATUTORY OR OTHERWISE. ABT HEREBY DISCLAIMS ANY WARRANTY THAT THE OPERATION OF
THE SOFTWARE WILL BE UNINTERRUPTED OR ERROR-FREE. ABT SPECIFICALLY DISCLAIMS ALL
IMPLIED WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY, AND FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE SOFTWARE, DOCUMENTATION, BUSINESS
PROCEDURES AND ANY SERVICES PROVIDED BY ABT HEREUNDER.
4.4 Additional Disclaimer. The success of the business venture
contemplated to be undertaken by ABT/UK by virtue of this Agreement is
speculative and depends, to a large extent, upon the ability of ABT/UK as an
independent business operator and the active participation of ABT/UK in the
daily affairs of the Local Business, as well as other factors. ABT does not make
any representation or warranty, express, or implied, as to the potential success
of the business venture contemplated by this Agreement.
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[*] Confidential Treatment Requested
5. Compensation.
5.1 Minimum License Fee. In consideration of the licenses granted
herein, ABT/UK shall pay to ABT the minimum license fee specified on Attachment
A ("Minimum Annual License Fee"). The Minimum Annual License Fee will be payable
in four (4) equal installments, in advance of each Fiscal Quarter.
5.2 Additional License Fees. In consideration of the licenses granted
herein, ABT/UK shall pay to ABT the following fees ("Additional License Fees"):
(a) For the [*].
(b) For the sixth (6th) Fiscal Year and each Fiscal Year
thereafter, ABT/UK shall, no later than fifteen (15) days after the end of each
month pay to ABT an amount equal to [*] of Gross Revenues received by ABT/UK
during such month in connection with the operation of the Local Business. Such
fees will be in addition to any fees due under Section 5.1. For purposes of this
Section 5.2, the "Credit Amount" means one million one hundred thousand dollars
($1,100,000); however, if ABT/UK terminates the maintenance portion of this
Agreement under Section 11.2(d), the Credit Amount for each Fiscal Year ending
after such termination will be eight hundred fifty thousand dollars ($850,000).
ABT/UK may credit up to the Credit Amount each Fiscal Year against Additional
License Fees payable under this Section 5.2(b). Such credits may only be applied
against ABT/UK's payment of Additional License Fees under this Section 5.2(b)
and in no event will be refundable to ABT/UK or reduce the amount of fees
payable under Section 5.1.
(c) For the fourth (4th) and fifth (5th) Fiscal Years, ABT/UK
shall pay ABT the fees set forth in Section 5.2(b). Notwithstanding the monthly
payment and calculation of such fees under Section 5.2(b), in the fourth (4th)
or fifth (5th) Fiscal Years, such fees will be calculated and paid on a Fiscal
Quarterly basis. However, ABT/UK will not be required under this Section 5.2(c)
to pay more than one-half (1/2) of its cumulative Gross Profit to date during
such Fiscal Year. For purposes of this section, "Gross Profits" for a Fiscal
Quarter means Gross Revenues for such Fiscal Quarter, less trading expenses
(i.e., all expenses of ABT/UK during the Fiscal Quarter, but not including
interest expenses or taxes), less 1/4 of the Credit Amount for the Fiscal Year.
For example:
<TABLE>
<CAPTION>
All figures in US $1,000 QUARTER FISCAL
1 2 3 4 YEAR
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A Gross Revenues [*] [*] [*] [*] [*]
B Fees due to ABT [*] of Gross [*] [*] [*] [*] [*]
Revenue
</TABLE>
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[*] Confidential Treatment Requested
<TABLE>
<S> <C> <C> <C> <C> <C>
C Trading Expenses [*] [*] [*] [*] [*]
D [*] of Credit Amount [*] [*] [*] [*] [*]
E Gross Profit (=A-C-D) [*] [*] [*] [*] [*]
F Cumulative Gross Profit for Fiscal [*] [*] [*] [*]
Year to date
G [*] Cumulative Gross Profit [*] [*] [*] [*] [*] [*]
H Credit Amount [*] [*] [*]
I Additional License Fees, Less Credit [*] [*] [*] [*] [*]
[*]
J Additional License Fee Payable (at [*] [*] [*] [*] [*]
the end of the Fiscal Quarter)
K Cumulative License Fee Payable to [*] [*] [*] [*] [*]
date for Fiscal Year (which cannot be
more than [*])
</TABLE>
If, in the last Fiscal Quarter of the fourth (4th) Fiscal Year, ABT/UK has a
negative Gross Profit for such Fiscal Quarter which will result in a negative
cumulative Gross Profit for the fourth (4th) Fiscal Year, then ABT/UK may credit
up to one-half (1/2) of the amount of such negative Gross Profit for such Fiscal
Year against payments of the Additional License Fee (after deduction of the
Credit Amount), if any, due under this Section 5.2 for the fifth (5th) Fiscal
Year. Such credits may only be applied against ABT/UK's payment of Additional
License Fees under this Section 5.2(c) and in no event will be refundable to
ABT/UK or reduce the amount of fees payable under Section 5.1. If, in the last
Fiscal Quarter of the fifth (5th) Fiscal Year, ABT/UK has a negative Gross
Profit for such Fiscal Quarter which will result in a negative cumulative Gross
Profit for the fifth (5) Fiscal Year, then there will be no credit to the
Additional License Fee due by ABT/UK in the sixth (6th) Fiscal Year.
(d) No later than ninety (90) days after the end of each ABT/UK
Fiscal Period during the Term, ABT/UK shall pay to ABT (by way of a fee payable,
as set forth in this Section 5.2(d), in the ABT/UK Fiscal Period after that
which has expired) [*] of any Aggregate Profits, where "Aggregate Profits" means
aggregate profits of ABT/UK and its subsidiaries shown by the audited accounts
of ABT/UK (and any subsidiary thereof, as applicable), that are available for
distribution as defined in section 263(3) of the UK Companies Act 1985, (i)
after adding thereto any amounts distributed or repaid as premium in respect of
share capital to the shareholders of ABT/UK on or prior to the end of such
ABT/UK Fiscal Period and (ii) after deducting any amounts owed by ABT/UK to its
shareholders and the amount paid up in respect of the share capital of ABT/UK at
the end of such ABT/UK Fiscal Period, less any amounts previously paid under
this Section 5.2(d). No amount payable under this Section will be repayable to
ABT/UK regardless of whether the calculation of Aggregate Profits for any later
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[*] Confidential Treatment Requested
ABT/UK Fiscal Period would result in an a fee under this Section 5.2(d) of zero
or less. If this Agreement is terminated other than at the end of a Fiscal
Period, then no later than ninety (90) days after the termination of this
Agreement, ABT/UK shall pay [*] of Aggregate Profits as defined above, as
calculated as of the date of termination. For purposes of this Section 5.2(d),
"ABT Fiscal Period" means a regular fiscal reporting period, no less frequent
that an annual period, for which ABT/UK chooses to conduct its financial
accounting. ABT/UK shall select the frequency and ending date of the ABT Fiscal
Period, and notify ABT thereof in writing no later than one (1) year after the
Effective Date.
(e) Minimum Fee. Notwithstanding anything else in this Agreement,
if ABT/UK pays to ABT less than one million one hundred thousand dollars
$1,100,000) in Total Fees for any Fiscal Year, where "Total Fees" for a Fiscal
Year means Minimum License Fees, Additional License Fees, and Minimum
Maintenance Fees for such Fiscal Year, ABT/UK shall, within ninety (90) days
after the end of such Fiscal Year, pay to ABT the difference between one million
one hundred thousand dollars ($1,100,000) and such Total Fees.
5.3 Maintenance Fee. In consideration of the services to be provided by
ABT under Section 6, ABT/UK shall pay to ABT the maintenance fee specified on
Attachment A (the "Minimum Maintenance Fee"). The Minimum Maintenance Fee will
be payable in equal monthly installments in advance. ABT may increase the
Minimum Maintenance Fee after the first year of the Term, in proportion to any
increase in the Consumer Price Index over the previous year.
5.4 Taxes. All charges and Fees provided for in this Agreement are
exclusive of, and do not include, any taxes, duties, or similar charges imposed
by any government. ABT/UK shall pay or reimburse ABT for all federal, state,
dominion, provincial, or local sales, use, personal property, excise or other
taxes, fees, or duties arising out of this Agreement or the transactions
contemplated by this Agreement (other than taxes on the net income of ABT).
5.5 Payment. ABT/UK shall calculate, denominate, and make all payments
in U.S. Dollars by wire transfer to an account designated by ABT. Any payments
due under this Agreement which are not paid when due will bear interest, to the
extent permitted by applicable law, at the prime rate as reported by the Chase
Manhattan Bank, New York, New York, beginning on the date such payment is due,
plus an additional three percent (3%), calculated on the number of days such
payment is delinquent. This Section 5.5 will not limit any other remedies
available to any party.
5.6 Records. ABT/UK shall make and maintain, and shall cause its
subsidiaries to make and maintain, an accounting and record keeping system,
including the basic accounting information necessary to prepare sufficient
financial statements and a general ledger in accordance with the United
Kingdom's Generally Accepted Accounting Principles (UKGAAP) with adequate and
verifiable records and supporting documentation, including, without limitation,
invoices, payroll records, check registers, sales tax records, cash receipts and
disbursements journals, and general ledgers in order to calculate and confirm
ABT/UK's payment obligations hereunder. At a minimum, ABT/UK will maintain such
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[*] Confidential Treatment Requested
records until the expiration of three (3) years after the year to which such
records pertain. ABT will have the right, at its own expense, to inspect,
through either its employees or agents, and upon reasonable notice in writing,
and during regular business hours, such records to verify the accuracy of fees
paid by ABT/UK under the terms of this Agreement; provided, however, that any
third party auditors must sign a non-disclosure agreement reasonably acceptable
to ABT/UK. If any such examination discloses a shortfall in the fees due to ABT
hereunder, ABT/UK shall reimburse ABT for the full amount of such shortfall plus
interest and if the amount of the underpayment for any period is more than five
percent (5%) ABT/UK shall pay ABT's costs of performing that audit with respect
to such period.
6. Maintenance and Support.
6.1 Support. For so long as ABT/UK is current in payment of all fees,
ABT shall provide Maintenance and Support as described in Section 6.2 below.
ABT's provision of Maintenance and Support to ABT/UK will commence upon payment
of the Maintenance Fee and will continue for as long as ABT/UK continues to pay
the annual Maintenance Fee.
6.2 Maintenance and Support Services. For purposes of this Agreement,
"Maintenance and Support" means that ABT will: (a) use reasonably diligent
efforts to correct and resolve Errors that ABT/UK reports to ABT in accordance
with the escalation procedures set forth in Attachment F and (b) provide Error
Corrections, Updates and Upgrades, if any, to the Software, Business Procedures
and Documentation that ABT releases during the current period covered by the
Minimum Maintenance Fee, in accordance with Section 2.6; and (c) up to
twenty-five hundred (2,500) hours of technical support per year, in English,
pursuant to the escalation procedures in Attachment F, and the software
development resource commitment guidelines in Attachment G. The parties
acknowledge that such technical support services may be applied to any Services
performed by ABT pursuant to the Services Agreement in Attachment D and will not
include any time spent by ABT to create or provide Error Corrections, Updates,
or Upgrades, or to provide telephone support related thereto, except as mutually
agreed in a Work Order as specified in Attachment D. ABT shall provide ABT/UK
with a monthly report of the hours of technical support provided by ABT under
this Section 6.2. Each month, ABT shall invoice ABT/UK in arrears for Fees for
any Maintenance and Support services in excess of one-twelfth of the allotted
twenty-five hundred (2,500) hours for the year, in reasonable detail showing
such additional hours to the nearest quarter hour, and Customer shall pay such
Fees no later than fifteen (15) days after the invoice date. Any such additional
Maintenance and Support services will be billed at a rate equal to [*] per hour.
ABT may increase such rate after the first year of the Term, in proportion to
any increase in the Consumer Price Index over the previous year.
6.3 Project Managers and Staff. Each party shall designate a project
manager to administer Maintenance and Support under this Agreement. The parties
shall coordinate all Maintenance and Support work under this Agreement through
such project managers. Each party may change its project manager upon written
notice. ABT will ensure that only properly trained and qualified persons perform
its technical obligations under this Agreement.
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7. Trademarks and Domain Names.
7.1 Trademarks. ABT hereby grants to ABT/UK the exclusive right to use
the ABT Brand in connection with a Local Business in the Territory. The above
license will include, without limitation, the right to indicate to the public
that ABT/UK is an authorized licensee of ABT and to advertise ABT/UK's products
and services in connection with the Local Business under the ABT Brand. ABT/UK
shall fully comply with the Global Brand Protocols in relation to ABT/UK's use
of the ABT Brand. All representations of the ABT Brand that ABT/UK intends to
use must first be submitted to ABT for approval of design, color and other
details, subject to the following limitations: (a) ABT's approval will not be
unreasonably withheld or delayed; (b) such approval, once given, will not be
unreasonably withdrawn; and (c) once ABT has approved a particular use, ABT/UK
need not re-submit for approval any substantially similar use.
7.2 Restrictions. Except as set forth in this Section 7, nothing
contained in this Agreement will grant or will be deemed to grant to ABT/UK any
right, title or interest in or to the ABT Brand. ABT/UK shall not challenge or
assist others to challenge the ABT Brand (except to the extent such restriction
is expressly prohibited by applicable law) or the registration thereof or
attempt to register any trademarks, marks trade names, Uniform Resource
Locators, or other designations confusingly similar to those of ABT. If ABT/UK,
in the course of exercising its rights hereunder, acquires any goodwill or
reputation in the ABT Brand, all such goodwill or reputation will automatically
vest in ABT when and as, on an on-going basis, such acquisition of goodwill or
reputation occurs, as well as at the expiration or termination of this
Agreement, without any separate payment or other consideration of any kind to
A.BT/UK, and ABT/UK agrees to take all such actions necessary to effect such
vesting, including without limitation the transfer to ABT of rights in any
filings or registrations made under Section 7.3 below, and including without
limitation the transfer from ABT/UK to ABT the ABT Domain upon termination of
this Agreement. Upon termination of this Agreement, ABT/UK shall immediately
cease to use the ABT Brand.
7.3 Trademark Registrations in the Territory. ABT/UK shall advise ABT
regarding the appropriate registrations or filings appropriate to protect the
use of the ABT Brand in the Territory. ABT shall make, and ABT/UK shall
cooperate with ABT to make such registrations or filings with the appropriate
authorities. ABT shall pay all costs or fees associated with such filing.
7.4 Registered User Agreements. ABT/UK shall cooperate with ABT to make
any registrations or filings with the appropriate authorities referenced in
Section 7.3, including without limitation entering into registered user
agreements with respect to the ABT Brand pursuant to applicable trademark law
requirements in the Territory. ABT will be responsible for proper filing of
registered user agreements with appropriate government authorities and shall pay
all costs or fees associated with such filing.
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7.5 Name Branding; Product Protection. On any promotional materials used
or disseminated by ABT/UK relating to the Local Business, ABT/UK shall display
the ABT Brand. Where both ABT/UK's marks and the ABT Brand are displayed, the
marks will be presented equally legibly, and in a size and style in accordance
with ABT's then-current Global Brand Protocols.
7.6 Domain Names. ABT hereby grants to ABT/UK the right to use the
ABT/UK Domain, solely for the operation of a Local Business. ABT shall, prior to
the first date ABT/UK makes the World Wide Web site for the Local Business
generally available on the World Wide Web, register the ABT/UK Domain name with
InterNIC or its successor Internet name assignment authority, and shall pay the
registration fees for one year. Thereafter, ABT/UK shall in a timely fashion
renew such registration with such authority at its own expense each time such
registration becomes due during the Term.
8. Limitation of Liability
EXCEPT FOR LIABILITY FOR THIRD PARTY CLAIMS ARISING OUT OF SECTIONS
9 OR 10, (A) IN NO EVENT WILL EITHER PARTY'S TOTAL LIABILITY ARISING OUT OF OR
RELATED TO THIS AGREEMENT EXCEED THE TOTAL AMOUNTS PAID OR PAYABLE BY ABT/UK TO
ABT UNDER THIS AGREEMENT, AND (B) IN NO EVENT WILL EITHER PARTY HAVE ANY
LIABILITY FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES,
HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER FOR BREACH OF CONTRACT,
TORT OR OTHERWISE, ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING BUT
NOT LIMITED TO, LOSS OF. ANTICIPATED PROFITS, LOSS OF DATA, OR LOSS OF USE, EVEN
IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
9. Indemnification for Infringement
9.1 ABT Indemnity for Infringement. ABT shall, at its expense, defend or
settle any claim, action or allegation brought against ABT/UK that the Software,
or any Localization or Extension developed by ABT, or the use of the ABT Brand
in the Territory, infringes any copyright, patent, trademark or trade secret
right of any third party, or that any Localization or Extension not developed by
ABT/UK infringes such rights as a necessary result of specifications required by
ABT, and shall pay any final judgments awarded or settlements entered into;
provided that ABT/UK gives prompt written notice to ABT of any such claim,
action or allegation of infringement and gives ABT the authority to proceed as
contemplated herein. ABT will have the exclusive right to defend any such claim,
action or allegation and make settlements thereof in its own discretion, and
ABT/UK may not settle or compromise such claim, action or allegation, except
with the prior written consent of ABT. ABT/UK shall give such assistance and
information as ABT may reasonably require to settle, or oppose such claims. In
the event any such infringement, claim, action or allegation is brought or
threatened, ABT shall, at its sole option and expense:
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(a) procure for ABT/UK the right to continue use of the Software
or Business Procedures or infringing part thereof,
(b) modify or amend the Software or Business Procedures or
infringing part thereof, or replace the Software or Business Procedures or
infringing part thereof with other Software or Business Procedures having
substantially the same or better capabilities; or if neither (a) nor (b) is
reasonably possible,
(c) terminate this Agreement and repay to ABT/UK a portion of the
Minimum Annual License Fee equal to the amount paid by ABT/UK less an amount
equal to one twelfth (1/12) of the total Minimum Annual License Fee for each
month or portion thereof of the current one (1) year term to account for use by
ABT/UK.
The foregoing obligations will not apply to the extent the infringement
arises as a result of modifications to the Software not made by or for ABT. The
foregoing states the entire liability of ABT with respect to infringement of any
patent, copyright, trademark, trade secret or other proprietary right.
9.2 ABT/UK Indemnity. ABT/UK shall, at its expense, defend or settle any
claim, action or allegation brought against ABT (to the extent not covered by
Section 9.1) arising from the act or omission of ABT/UK, where a third party
alleges fraud, misrepresentation, or unfair business practices arising from the
operation of the Local Business, or those that arise from a third party
allegation that a Localized Version or Extension, infringes any copyright,
patent, trademark, or trade secret or other intellectual property right of any
third party, or that any Localization or Extension developed by ABT/UK infringes
such rights as a necessary result of specifications required by ABT/UK, and
shall pay any final judgments awarded or settlements entered into; provided that
ABT gives prompt written notice to ABT/UK of any such claim, action or
allegation of infringement and gives ABT/UK the authority to proceed as
contemplated herein. ABT/UK will have the exclusive right to defend any such
claim, action or allegation and make settlements thereof in its own discretion,
and ABT may not settle or compromise such claim, action or allegation, except
with the prior written consent of ABT/UK. ABT shall give such assistance and
information as ABT/UK may reasonably require to settle or oppose such claims. In
the event any such infringement, claim, action or allegation is brought or
threatened, ABT/UK may, at its sole option and expense:
(a) procure for ABT the right to continue use of the Localized
Version or Extension or infringing part thereof; or
(b) modify or amend the Localized Version or Extension or
infringing part thereof, or replace the Localized Version or Extension or
infringing part thereof with other materials having substantially the same or
better capabilities.
9.3 Prosecution of Infringers. ABT and ABT/UK shall give each other
written notice of any acts of infringement by third parties involving
intellectual property rights relating to the Localized
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Version, Extensions, Software, Business Procedures, or ABT Brand anywhere in the
Territory of which ABT or ABT/UK has knowledge, and the parties shall consult
together with a view to determine the course of action, if any, to be taken in
such circumstances. ABT will have the right to take action to enforce such
rights. If the parties are unable to agree on any such course of action to be
taken, then ABT shall authorize ABT/UK to take such actions as ABT/UK considers
necessary or appropriate and ABT/UK will be entitled to take such actions at
ABT/UK's expense. Each party shall render to the other any assistance requested
by the other in proceedings against an infringer within the Territory, at the
other party's expense. Any damage that might be awarded will, after deduction of
actual costs, be awarded to the party that undertakes legal action.
10. Confidential Information
10.1 Obligations. The parties acknowledge and agree that the Confidential
Information disclosed by one party (the "Disclosing Party") to the other party
(the "Receiving Party") directly or indirectly (which information is marked as
"proprietary" or "confidential" or, if disclosed orally, is designated as
confidential or proprietary at the time of disclosure) hereunder constitutes the
confidential and proprietary information of the Disclosing Party. The Receiving
Party shall retain in strict confidence and not disclose to any third party any
Confidential Information without the Disclosing Party's express written consent,
and the Receiving Party shall not use such Confidential Information except to
exercise the rights and perform its obligations under this Agreement. Without
limiting the foregoing, each party shall use at least the same procedures and
degree of care which it uses to protect its own Confidential Information of like
importance, and in no event less than reasonable care.
10.2 Exceptions. The Receiving Party shall be relieved of this obligation
of confidentiality to the extent it can demonstrate that any such information
is: publicly available, already in the Receiving Party's possession at the time
of disclosure and not subject to a confidentiality obligation, obtained by the
Receiving Party from third parties without restrictions on disclosure,
independently developed by the Receiving Party without reference to Confidential
Information, or required to be disclosed by order of a court or other
governmental entity or stock exchange, or disclosed to business or legal
advisors acting under a duty of confidentiality.
10.3 Source Code Protections. ABT/UK shall not under any circumstances
distribute the source code for the Software in any manner. ABT/UK shall
reproduce and shall not obscure or remove any marking on any copy or Derivative
Work of the source code for the Software. In addition, each copy or Derivative
Work of the source code for the Software must be marked as the confidential and
proprietary property of ABT to which access is restricted, and ABT/UK shall keep
and use the source code for the Software solely at ABT/UK's secure development
facilities under password protection. ABT/UK agrees to limit access to the
source code for the Software twenty-four (24) hours a day, and strictly to those
employees or Contractors to whom access is reasonably necessary in order to
carry out the permitted uses of the source code for the Software hereunder.
ABT/UK shall keep records of all
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persons who have access to the source code for the Software. At ABT's request,
ABT/UK agrees to provide such records to ABT for review.
10.4 Contractors. ABT/UK may appoint a third party contractor
("Contractor") to assist ABT/UK in ABT/UK's modification or implementation of
the Localized Version as authorized hereunder; provided, however, that any such
Contractor's access to and use of the Software (including the Localized
Version): (a) will only be permitted pursuant to a signed written agreement
between ABT/UK and such Contractor that contains terms at least as restrictive
as those set forth in this Section 10, (b) protects ABT's proprietary rights in
the Software to the degree set forth in this Agreement, and (c) grants the
Contractor no rights in the Localized Version beyond those expressly granted
hereunder ("Contractor Agreement"). Such agreement must be approved in writing
by ABT prior to its execution. ABT may perform technical oversight of all work
performed by a Contractor in accordance with this Section 10.4.
10.5 Notification of Security Breach. ABT/UK shall notify ABT promptly in
the event of any breach of its security of which ABT/UK becomes aware, under
conditions in which it would appear that the trade secrets contained in the
source code for the Software or the Localized Version were prejudiced or exposed
to loss. ABT/UK shall, upon request of ABT, take all other reasonable steps
necessary to recover any compromised trade secrets disclosed to or placed in the
possession of ABT/UK by virtue of this Agreement. The cost of taking such steps
will be borne solely by ABT/UK, unless ABT willfully caused the breach.
10.6 Injunctive Relief In the event of breach of the provisions of
Section 10.1 or 10.3, the non-breaching party will have no adequate remedy at
law and will be entitled to seek immediate injunctive and other equitable
relief, without the necessity of showing actual money damages.
11. Term and Termination
11.1 Term. This Agreement and the licenses granted hereunder will be
effective as of the Effective Date and will continue in full force and effect
for a term of twenty (20) years (the "Term") after the Launch Date, unless
terminated as set forth in this Section 11.
11.2 Termination. This Agreement may be terminated only as follows, if
any of the following events ("Termination Events") occur:
(a) Termination at Will. ABT/UK may terminate this Agreement, for
any reason or no reason, upon no less than one hundred eighty (180) days prior
written notice to ABT; however, such notice may not be given before the date one
(1) year after the Launch Date.
(b) Nonpayment of Fees. In the event that: (i) ABT/UK fails to pay
the Fees as they become due, in accordance with Section 5 above, and (ii) fails
to do so after sixty (60) days written
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notice thereof, ABT may terminate this Agreement upon written notice to ABT/UK;
provided, however, that:
(i) ABT may terminate this Agreement based on non-payment of
Fees only if. (A) the cumulative amount of unpaid Fees is more than sixty-two
thousand five hundred dollars ($62,500); or (B) any Fees in excess of ten
thousand dollars ($10,000) are unpaid for more than ninety (90) days.
Notwithstanding the above, ABT shall continue to have the right to seek damages
from ABT/UK, and seek attorneys' fees under Section 15.14.
(ii) In all events, if ABT attempts to terminate this
Agreement under this Section 11.2(b), and the Fees due to ABT are subject to a
good faith dispute, then either party may initiate an arbitration proceeding in
accordance with Section 15.13(c), and the Agreement shall remain in force during
such arbitration provided that ABT/UK continues to pay ongoing Fees into an
escrow account to be distributed based on the findings of the arbitrator.
(c) Default. In the event that either party defaults in the
performance of a material non-monetary obligation under this Agreement (other
than nonpayment of Fees as set forth in Section 11.2(b)(i) above, then the
non-defaulting party may provide written notice to the defaulting party
indicating: (i) the nature and basis of such default with reference to the
applicable provisions of this Agreement; and (ii) the non-defaulting party's
intention to terminate this Agreement. If such default is amenable to cure
within thirty (30) days, the non-defaulting party may seek to terminate this
Agreement under this Section 11.2(c) in the event that such material default is
not cured within such thirty (30) day period. If such default is not amenable to
cure within thirty (30) days, then the non-defaulting party may seek to
terminate this Agreement if the defaulting party has not made significant and
ongoing attempts to cure such default within thirty (30) days, or if the
defaulting party has not cured such default as soon as possible thereafter. In
either case, upon the expiration of such cure periods the non-defaulting party
may initiate an arbitration proceeding to terminate this Agreement in accordance
with Section 15.13(c). The parties shall instruct the arbitrators to make a
determination as to whether a material default has occurred within thirty (30)
days after the arbitration proceeding is initiated. If the arbitrators
deter-mine that a material default has occurred, the non-defaulting party may
terminate this Agreement immediately upon written notice.
(d) Severable Termination for ABT/UK. In the event that ABT
breaches and fails to cure its obligations under this Agreement and ABT/UK
obtains the right to terminate this Agreement as contemplated in Section 11.2(c)
above, ABT/UK shall have the right, after the date three (3) years after the
Effective Date, to terminate this Agreement as to its obligation to pay Minimum
Services Fees under Sections 3, 5.3, and the Services Agreement, and as to ABT's
obligation to provide Services thereunder, but that all other provisions of this
Agreement shall remain in force, however, each party will continue to be
obligated to perform its duties under Section 2.6; or
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(e) ABT may terminate this Agreement immediately upon written
notice if ABT/UK: (i) terminates or suspends its business; (ii) admits in
writing its inability to pay its debts as they Mature, makes an assignment for
the benefit of creditors, or becomes subject to direct control of a trustee,
receiver or similar authority; or (iii) becomes subject to any bankruptcy or
insolvency proceeding under federal, foreign, or state statutes; or
(f) ABT/UK may terminate this Agreement immediately upon written
notice to ABT in the event that the final Deliverable (as defined in the initial
Work Order referenced in Section 3.1(c)) is not accepted by March 31, 1999. Such
termination will be deemed a termination at will, and will be ABT/UK's sole
remedy and ABT's sole liability for ABT's failure to deliver conforming Initial
Localization Services under Section 3.1(c). ABT/UK's ability to terminate under
this Section 11.2(f) will cease upon the Launch Date. If ABT/UK terminates this
Agreement under this Section 11.2(f), ABT/UK will not be obligated to pay any
amounts not already due as of the date of termination under the Services
agreement or under this Agreement; however, ABT/UK will not be entitled to any
refund of any amount payable under this Agreement or the Services agreement.
11.3 Effect of Termination.
(a) Unwind Services. Upon any expiration or termination of this
Agreement in accordance with Sections 11.2(a), (b), or (c) that takes place
after the first date ABT/UK makes the World Wide Web site for the Local Business
generally available on the World Wide Web, each party shall continue to perform
its obligations under this Agreement, for a period of up to one hundred eighty
(180) days following the effective date of termination ("Unwind Services"). In
consideration of the performance by ABT of such services and ABT/UK's continued
use of the Localized Version, Business Procedures and ABT Brand during such
period, ABT/UK shall continue to pay ABT the amounts set forth in Section 5, and
the Agreement shall be deemed to continue in force until the termination of the
Unwind Services.
(b) Survival. Upon termination of this Agreement in accordance
with the above provisions, the rights and licenses granted under this Agreement
will immediately terminate except as otherwise stated herein. The terms and
conditions of the following Sections will survive termination or expiration of
this Agreement: 1, 2.3, 2.7, 4.3, 4.4, 5.6, 7.2, 8, 9, 10, 11.2, 11.3, 11.4, 13
and 15, as well as any payment obligations in accordance with Section 5 which
accrued prior to expiration or termination hereof.
(c) Return of Materials. Within thirty (30) days after the date of
termination or discontinuance of this Agreement for any reason whatsoever,
ABT/UK shall, at ABT's option, return or destroy any copies of the Software,
Documentation, Business Procedures and any other Confidential Information in its
possession that is in tangible form. ABT/UK shall furnish ABT with a certificate
signed by an executive officer of ABT/UK verifying that the same has been done.
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(d) Non-Competition. If this Agreement is terminated by ABT/UK
under Section 11.2(a), or if this Agreement is terminated by ABT under Section
11.2(b), (c) or (e) before the end of the Term, then during the period between
termination of this Agreement and two (2) years after termination of the
Agreement, ABT/UK shall not operate a Local Business. If ABT/UK assigns this
Agreement to another party in accordance with the terms of Section 12, this
obligation will ran to ABT/UK, and to such assignee. Nothing in this Section
11.3(d) will be construed to limit the ability of ABT/UK or its affiliates to
operate Web sites that primarily promote the automobiles and related products of
a particular manufacturer, for instance, an Internet site promoting automobiles
featuring the brand of Chrysler Corporation.
11.4 License if ABT Enters Bankruptcy. If, at any time during the Term,
ABT: (a) files a voluntary petition in bankruptcy under Chapter 7 of 11 United
States Code (the "Bankruptcy Code"); or (b) has an involuntary petition in
bankruptcy filed against it under Chapter 7 of the Bankruptcy Code, which
petition is not dismissed within ninety (90) days, ABT/UK may elect to retain
its right in the licenses granted in this Agreement, subject to the terms of
this Agreement, in accordance with Chapter 3, Section 365(n) of the Bankruptcy
Code. The licenses granted in this Agreement will be deemed licenses of
"intellectual property" under Section 365(n) of the Bankruptcy Code.
12. Nonassignment/Binding Agreement. Neither this Agreement, nor any rights
under this Agreement, may be assigned or otherwise transferred by ABT/UK, in
whole or in part, whether voluntary, or by operation of law, including by way of
sale of assets, merger or consolidation, without the prior written consent of
ABT. ABT may assign all its rights and obligations under this Agreement to an
Affiliate of ABT. Any permitted assignee must agree in writing to be bound by
all the terms and conditions of this Agreement. Subject to the foregoing, this
Agreement will be binding upon and inure to the benefit of the parties and their
respective successors and assigns.
13. Non-Solicitation. Each party acknowledges and agrees that the technical
and development employees and consultants of the other party are a valuable
asset of such party and are difficult to replace. Accordingly, each party agrees
that, for the Term and for a period of two (2) years thereafter, it will not
offer employment as an employee, independent contractor, or consultant to any
such employee or consultant of the other party. In the event of a breach of the
provisions of this Section 13, the parties agree that it would be difficult to
determine the amount of actual damages that would result from such breach. The
parties further agree that in the event of a breach of the provisions of this
Section 13, the breaching party shall pay the non-breaching party liquidated
damages of $25,000 for each such breach, which is the parties' good faith
estimate of the amount of damages to the non-breaching party from such breach.
14. Notices. Any notice, submission, or communication required or permitted
under the terms of this Agreement, or required by law, whether or not so
required elsewhere in this Agreement, must be in writing and must be: (a)
delivered in person, (b) sent by first class registered mail, return receipt
requested, or air mail, as appropriate, or (c) sent by overnight air courier; in
each case properly posted and fully
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prepaid to the appropriate address set forth below. Either party may change its
address for notice by notice to the other party given in accordance with this
Section 14. Notices will be considered to have been given at the time of the
earlier of: (p) actual delivery in person, (q) the date of a receipt of such
notice signed by an authorized representative of the party being notified, (r)
the date of a written confirmation of receipt by the party being notified, or
(s) thirty (30) days after deposit in the mail as set forth above.
15. Miscellaneous
15.1 Force Majeure. Neither party will incur any liability to the other
party on account of any loss or damage resulting from any delay or failure to
perform all or any part of this Agreement if such delay or failure is caused, in
whole or in part, by embargoes, floods, acts of civil or military authority,
fuel crisis, acts of God, strikes, lockouts, riots, acts of war, fires and
explosions, but the inability to meet financial obligations is expressly
excluded ("Force Majeure"). The time for performance will be extended for a
period equal to the duration of the delay, but in no event longer than one
hundred eighty (180) days. If, as a result of a Force Majeure, a party is unable
to resume performance within such one hundred eighty (ISO) day period, the other
party will have the right to terminate this Agreement.
15.2 No Waiver; Amendment. Any waiver of the provisions of this Agreement
or of a party's rights or remedies under this Agreement must be in writing to be
effective. Failure, neglect, or delay by a party to enforce the provisions of
this Agreement or its rights or remedies at any time will not be construed and
will not be deemed to be a waiver of such party's rights under this Agreement
and will not in any way affect the validity of the whole or any part of this
Agreement or prejudice such party's right to take subsequent action. This
Agreement may not be amended, except by a writing signed by both parties.
15.3 Severability. If any term, condition, or provision of this Agreement
is found to be invalid, unlawful or unenforceable to any extent, the parties
shall endeavor in good faith to agree to such amendments that will preserve, as
far as possible, the intentions expressed in this Agreement. If the parties fail
to agree on such an amendment, such invalid term, condition or provision will be
severed from the remaining terms, conditions and provisions, which will continue
to be valid and enforceable to the fullest extent permitted by law.
15.4 Entire Agreement. This Agreement (including the Attachments and any
addenda hereto signed by both parties) contains the entire agreement of the
parties with respect to the subject matter of this Agreement and supersedes all
previous communications, representations, understandings and agreements, either
oral or written, between the parties with respect to said subject matter.
15.5 No Conflicting Provisions. No terms, provisions or conditions of any
purchase order, acknowledgment or other business form that either party may use
in connection with this Agreement have any effect on the rights, duties or
obligations of the parties under, or otherwise modify, this Agreement,
regardless of any failure of the other party to object to such terms, provisions
or conditions.
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15.6 Consent. Unless expressly provided otherwise in this Agreement, any
prior consent of ABT that is required before ABT/UK may take an action may be
granted or withheld in ABT's sole and absolute discretion.
15.7 Export Restrictions. ABT/UK understands that ABT is subject to
regulation by agencies of the U.S. government, including, but not limited to,
the U.S. Department of Commerce, which prohibit export or diversion of certain
technical products to certain countries. ABT/UK warrants that it will comply in
all respects with the Export Administration Regulations and all other export or
re-export restrictions applicable to the technology and Documentation licensed
hereunder. Further, ABT/UK shall cooperate as requested by ABT to ensure
compliance with any export restrictions or licenses relating to the Software.
15.8 Press Releases. Neither party shall disclose to any third party the
terms and conditions of this Agreement, except as required by the law, of any
relevant jurisdiction, or to any securities exchange or regulatory authority or
governmental body or quasi-governmental department or agency to which either
party is subject, wherever situated (including without limitation the London
Stock Exchange Limited, the Panel on Takeovers and Mergers, the Securities and
Exchange Commission, and the U.S. Department of Justice) whether or not the
requirement has force of law, in which case the party making such disclosure
shall take all such steps as are reasonable and practicable in the circumstances
to agree upon the contents of such disclosure with the other party before
marking such disclosure. Either party may disclose the terms and conditions of
this Agreement to their respective legal or business advisors with a need to
know acting under a duty of confidentiality. Notwithstanding the above, at a
mutually agreed time, as soon as possible but no later than sixty (60) days
after the Effective Date, ABT and ABT/UK shall issue a mutually acceptable joint
press release announcing the relationship contemplated by this Agreement.
15.9 Rights and Remedies. No exercise or enforcement by either party of
any right or remedy under this Agreement will preclude the enforcement by such
party of any other right or remedy under this Agreement or that such party is
entitled by law to enforce.
15.10 Counterparts. This Agreement may be executed in counterparts, each
of which so executed will be deemed to be an original and such counterparts
together will constitute one and the same agreement.
15.11 Governing Law. This Agreement will be interpreted and construed in
accordance with the laws of the State of California and the United States of
America, without regard to conflict of law principles and excluding the 1980
United Nations Convention on Contracts for the International Sale of Goods.
15.12 Language. This Agreement is in the English language only, which
language shall be controlling in all respects, and all versions hereof in any
other language shall not be binding on the
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parties hereto. All communications and notices to be made or given pursuant to
this Agreement shall be in the English language.
15.13 Dispute Resolution.
(a) Escalation. If a dispute otherwise arises under this
Agreement, it should be referred to the President of each of the parties for
resolution, and such persons shall use their best efforts to resolve the matter
for no less than thirty (30) days. Any matter such persons are unable to resolve
within such period may be submitted to the dispute resolution procedure set
forth in Section 15.13 (b) or (c), as applicable.
(b) Fast Track Resolution for Technical Disputes. For all disputes
between the parties that relate to technical issues under this Agreement, which
disputes cannot be resolved under Section 15.13(a), the parties shall refer the
dispute to a single third party individual mutually agreed to by the parties,
who possesses such technical expertise and impartiality to resolve the dispute,
such approval of such individual not to be unreasonably withheld (the "Expert").
The parties shall each bear fifty percent (50%) of the Expert's expenses, and
shall direct the Expert to issue a decision on the matter within fifteen (15)
days, which decision shall be final and binding on both parties. If the parties
are unable to agree upon an Expert, or upon whether a dispute is a technical
dispute, notwithstanding the good faith efforts to do so, then the dispute shall
be submitted to arbitration as set forth in Section 15.13(c). Except as
expressly set forth to the contrary in this Section 15.13(b), any such fast
track resolution will take place according to the procedures set forth in
Section 15.13(c).
(c) Arbitration. Any dispute or claim arising out of or in
relation to this Agreement not resolved by Sections 15.13(a) or 15.13(b) above
must be settled by binding arbitration under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce as presently in force
("Rules") and by one (1) arbitrator appointed in accordance with said Rules.
Judgment on the award rendered may be entered in any court having jurisdiction
thereof. The place of arbitration will be Orange County, California, U.S.A. Any
monetary award must be calculated and denominated in U.S. dollars and the
arbitration must be conducted in the English language. Notwithstanding the other
provisions of this Section 15.13, either party may apply to any court of
competent jurisdiction for injunctive or equitable relief
15.14 Legal Expenses. If there is a successful action by one party against
the other party to enforce this Agreement or obtain damages as a result of any
breach of this Agreement, then the prevailing party shall be entitled to recover
from the other party, in addition to any damages, all costs and expenses
incurred by the prevailing party in connection with the action, including
reasonable attorneys' fees and court costs.
25
<PAGE> 26
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by duly
authorized representatives on the dates set forth below.
autobytel.com inc. ABT/UK
By: By:
-------------------------------- ---------------------------------
Name: Name:
------------------------------ --------------------------------
Title: Title:
----------------------------- -------------------------------
Date: Date:
------------------------------ --------------------------------
Address: Address:
--------------------------- -----------------------------
- ----------------------------------- -------------------------------------
26
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ATTACHMENT A
SOFTWARE:
The Software will include all core business applications, including:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
CATEGORY APPLICATION NAME DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Product Affinity Programs Restricted view of Consumer Web Interface customized for Affinity Partners. Users are
limited to the web pages (functionality) specified by Affinity Partner.
- ---------------------------------------------------------------------------------------------------------------------------------
Finance Used by End-User Customers to apply for credit to buy/lease an automobile.
- ---------------------------------------------------------------------------------------------------------------------------------
Information Provider Used to provide New/Used Car Information to customers via links to various information
Links providers.
- ---------------------------------------------------------------------------------------------------------------------------------
Insurance Hyperlink to Insurance Site(s).
- ---------------------------------------------------------------------------------------------------------------------------------
Mobalist Used by End-User Customers to sign-up for and monitor Mobalist Rewards account.
- ---------------------------------------------------------------------------------------------------------------------------------
New Car Request Used by End-User Customers to gather new car information and request a price quote.
Process (FasTrak)
- ---------------------------------------------------------------------------------------------------------------------------------
Online Customer Used by End-Users to check on status of Purchase and Finance Requests.
Service Center
- ---------------------------------------------------------------------------------------------------------------------------------
Quality Assurance Allow End-Users to answer QA survey questions.
Survey (QA)
- ---------------------------------------------------------------------------------------------------------------------------------
Used Car Request Used by End-User Customers to gather used car information, review dealer used car
Process (FasTrak) inventories, and make a used car purchase request.
- ---------------------------------------------------------------------------------------------------------------------------------
Dealer Interface Dealer Communication Used by ABT Contracted Dealers to manage purchase requests and customer contact
System (DRT) information; Maintain Used Car Inventory information for Dealership(s).
- ---------------------------------------------------------------------------------------------------------------------------------
Dealer Management Contract Management Used by ABT Contract Administration department to manage contracts with subscribers
(CM) including New Car (Postal), Used Car, Finance and DRT.
- ---------------------------------------------------------------------------------------------------------------------------------
Distribution [Dealer] Used by ABT Dealer Support Services (DSS) to set-up and maintain relationship with
Management (RD) dealers.
- ---------------------------------------------------------------------------------------------------------------------------------
QA Survey (QA) Used by ABT DSS/Training to monitor customer satisfaction and closure rates; Dealer
Performance.
- ---------------------------------------------------------------------------------------------------------------------------------
Financial Car matching Match vehicle make, model, series in ABT_PROD database to vehicles in GE Capital
Processing database in order to determine residual values.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<S> <C> <C>
Credit Union Faxing Faxes consumer purchase requests to Credit Unions for processing.
(CU FX)
Customer Financial Fax Faxes credit decisions to dealers for finance requests submitted by consumers.
to Dealer
(FinFaxDealer)
Financial Status Provides system operations with access to processing statistics, error logging
Monitor and recovery procedures for financial request processing system.
(Financial Status)
Finance/Customer E-mails credit decisions/information from financial institutions to consumers.
Email (FML2)
Bank Matcher, Bank Sends financial requests to and receives credit decision from financial institutions.
Transfer, Bank Watcher
(FSMFrame)
Information Postal Code Updates Imports Postal Code related data from Postal Service, GDT. Import Postal Code
Provider Centroids (Longitude, Latitude of center of zip codes).
Interface
Used Car Import/Export Import/Export Used Car data to/from information providers.
VIN Decoding Import Import Vintek data. Vintek provides the information required to Decode VIN's.
New/Used Car Import Intellichoice data including make, model, series, options and pricing
Information Import information.
MIS Financial Reports Reporting on Financial Requests. Reports are summarized by various
(Financial) dimensions including:
Time - day, week, month, quarter, year
Type - Lease, Retail
Intranet Basic management reporting, system operation monitoring, data maintenance
and company/employee information.
MIS/Billing Interface Used by ABT internal staff to pass billing data from ABT Core system to
Dynamics (ABT's Internal Financial Accounting Application).
QA Reports (QA) Reporting on Customer Satisfaction, Closure rates
Time - day, week, month, quarter, year
Geography - region, state, dealer
Vehicle - make, model, series
PR Type - New car or Used Car
Contract - Paying, Non-Paying Dealers
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Standard Reports Reporting on Purchase Requests. Reports are summarized by various
(Standard) dimensions including:
Time - day, week, month, quarter, year
Geography - region, state, dealer
Vehicle - make, model, series
PR Type - New Car or Used Car
Contract - Paying, Non-Paying Dealers
Various Base Network Much of the core functionality of the systems described above is
Architecture & encapsulated in stored procedures/data tables in the following SQL
Supporting Systems databases: ABT_PROD, ABT_FINANCE, ABT_INTERFACE.
</TABLE>
MINIMUM ANNUAL LICENSE FEE:
The annual Minimum Annual License Fee will be Eight Hundred Fifty Thousand
Dollars ($850,000) payable in four (4) Fiscal Quarterly installments of Two
Hundred Twelve Thousand Five Hundred Dollars ($212,500).
ANNUAL MAINTENANCE FEE:
The annual Minimum Maintenance Fee will be Two Hundred Fifty Thousand
dollars ($250,000) payable in advance.
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ATTACHMENT B
ABT BUSINESS PROCEDURES
The following general principles will apply, in ABT/UK is described as the
"ABT Entity." The parties will agree in good faith upon more detailed business
procedures, and ABT/UK will use reasonable efforts to abide by the business
procedures generally provided by ABT to its licensees.
GENERAL
ABT Entity will have a consumer focus and will supply consumer products and
services at competitive prices, in a hassle free, haggle free environment.
("Universal Autobytel.com Philosophy")
ABT Entity will strive to offer all automotive related products and services,
including the purchase or lease of new and used vehicles from dealers,
financing, insurance and the sale of warranty services, and after market
products, if applicable. Additional products and services may be added to the
basic model, but only in accordance with universal ABT philosophy (for example,
consumer to consumer used car sales, dealer to dealer auctions and the
Mobalist).
CONSUMER
ABT Entity will supply consumer with access to information on automotive
products and services, including pricing information, specifications and other
useful information to educate the consumer on automotive related matters.
ABT Entity is to use a purchase request concept under which a consumer provides
pertinent information and specifications on the vehicle the consumer wishes to
purchase or lease. In addition, the ABT Entity will notify the consumer of
purchase request's receipt, the dealer to whom the request was forwarded and
provide a toll free number to call if purchase request is not responded to
within a defined period of hours.
Consumer personal information will be considered confidential and treated as
such. It should not be sold or supplied to external sources without the
permission of the consumer. Any such distribution of data should be made to
reputable external partners only.
DEALER
The goal of the Universal Autobytel.com Philosophy is that dealers and
manufacturer will benefit from supplying consumer products and services at
competitive prices, in a hassle free, haggle free environment.
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ABT Entity must require each dealer to appoint at least one dedicated ABT
Manager who is a salaried employee (not a commission salesman) whose function is
to interact with the consumer from receipt of purchase request to delivery of
the vehicle. The ABT Manager must respond to purchase requests within a defined
period of hours.
For new car transactions, there will be exclusive geographic (e.g. postal code
based) territories for each auto manufacturer franchise; one dealer per
territory for each auto manufacturer franchise. The size of each territory will
be based on criteria such as population, average driving distance, auto
manufacturer franchise popularity (based on new vehicle registrations), Internet
penetration and household income levels.
Dealers will be selected based on criteria such as reputation in community,
consumer satisfaction, inventory, financial strength and ability to handle large
volume of business.
Each dealer will sign a contract (with rights of ABT Entity to cancel if the
dealer does not meet certain minimum performance requirements) paying ABT Entity
monthly marketing and software fees (the determination of the fees being made on
a country by country basis). The ABT Entity may also receive additional fees
from the offering of various complementary products and services to the
consumer.
ABT Entity will require the dealer to use the DRT system to process requests,
manage customer contacts and record status of purchase requests through
completion.
The ABT Entity will train the ABT Manager, educate the owner of the dealership,
the manager and other relevant personnel on all ABT procedures. Such training
sessions will include periodic visits to dealerships, classes, updates and
reviews of ABT systems and software.
For used car transactions, the ABT Entity may include both dealers and
independent dealers meeting ABT Entity standards (in accordance with the
Universal Autobytel Philosophy). Used cars sold under ABT brand will be sold
under a customer assurance program, which may include a money-back return or
vehicle exchange policy and limited warranty policy. However, such a requirement
will not apply to any "back lot" or exotic used car sales programs. ABT Entity
will require dealers to maintain used car data in a timely manner. Dealers will
be responsible for ensuring used car information is updated to reflect sales
and/or availability.
ABT ENTITY OPERATIONS
ABT Entity will maintain a dealer relations organization to communicate with
dealers and their ABT Managers.
ABT Entity will maintain a consumer communication organization to answer
consumer questions and complaints.
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ABT Entity will survey each consumer within a defined time after a purchase
request is received. Surveys will be reviewed and the conclusions sent to the
participating dealers on a monthly basis.
ABT Entity will remove ABT dealers who do not comply with ABT standards set by
ABT in each country (but adhering to universal ABT philosophy).
ABT Entity will review all technical modifications/extensions with Autobytel.com
CTO prior to the design, coding and implementation phases of each project. ABT
Entity will abide to technology standards and direction provided by
Autobytel.com. Any deviations from standards must be approved by the
Autobytel.com CTO in advance of development and implementation. ABT Entity will
ensure all Autobytel.com confidential proprietary and copyrighted materials are
secured and used with at least the same care and procedures that the ABT Entity
would use to protect its own confidential proprietary and copyrighted materials.
ABT Entity will provide for 24x7 system availability to the consumer (Web Site)
and dealers (DRT), with only short, off-peak downtime for planned or unscheduled
maintenance. Additionally, ABT Entity will implement a disaster
recovery/business continuity plan to handle potential system/facility outages.
ABT Entity will, as soon as reasonably possible, implement a defined technical
quality assurance process that provides for at least unit and system level
testing of each significant system change. Autobytel.com will reserve the right
to oversee QA procedures as necessary to ensure quality of customer/dealer
experience with ABT systems.
<PAGE> 33
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ATTACHMENT C
ABT'S GLOBAL BRAND PROTOCOLS
GLOBAL BRANDING PROTOCOL:
INTRODUCTION TO GUIDELINES, PRACTICES AND PROCEDURES
Introduction
The Auto-By-Tel Corporation has recently changed its name to autobytel.com inc.
and is currently in the process of conducting brand positioning research, which
will be complete in September of 1995. Upon completion of this research,
autobytel.com inc. will issue an update to its global brand standards protocol
(and look book), containing all of the new brand identity materials. In the
interim the old book is attached as an example of its contents as well as this
introductory document which is designed to address some of the more immediate
needs.
New Logo
Our new logo embodies some of our initial learning. We have chosen a mark
symbolizing a road, which signifies a destination that leads to Autobytel.com as
opposed to an automobile icon, which is more predictable. This mark is highly
differentiated from other companies in the category and positions autobytel.com
inc. as the leader. The new logo is reliable, innovative, trustworthy,
contemporary yet timeless. The idea of a road leading to a destination is
empowering for the consumer, reminding them that they are in the driver's seat
when buying through autobytel.com inc. The conveying of the concept of a
destination will create an association with the brand over time.
The logo will be adapted to each country by replacing the domain type that is
relevant to that country; for example, autobytel.se, autobytel.ca, autobytel.uk,
etc. Also the selling line can be inserted immediately in the lower left. Full
treatments of the logo will be reviewed when the new look book is issued.
Purpose and Function of Global Standards
The purpose of the global brand standards is to clearly define and articulate
the brand's core values and ensure that the brand's positioning remains
consistent and properly communicated throughout all forms of marketing
communication across the globe.
Since a brand is a promise of an experience, it is important that it be
comprised of the intangible as well as the tangible values in order to best
create an enduring relationship
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between Autobytel.com and its stakeholder target constituencies - shareholders,
consumers and dealers alike.
What Does the Standard Address
The image below graphically illustrates the intangible components (on the
right), which the global brand protocol is designed to address.
Purpose and Intent of autobytel.com inc.'s "Global Brand Protocol and Look Book"
The purpose of the global brand protocol and "Look Book" when complete, will be
to aid Autobytel.com, all its companies, subsidiaries, partners, and licensees
to properly administer and steward autobytel.com inc.'s intangible assets - the
brand. It is not designed to police licensees: but rather to ensure that the
tenets of strong branding be observed for Autobytel.com so that all collateral,
business, advertising, and web site creative and content guarantee quality and
consistency of message. This will ensure that the net impression left in the
mind of target audience is relevant, differentiated, and enduring.
Differentiating Autobytel.com by experience (emotional bond) with the customer,
versus just the key rational benefits (e.g. low-cost, haggle-hassle-free, etc.)
will ensure the success of Autobytel.com.
Role of Autobytel.com Brand Management
It is the role of Autobytel.com Corporate Marketing to clearly articulate and
communicate the brand's core value, identity, positioning, and Global Brand
Protocol to all autobytel.com inc. companies, subsidiaries, divisions, partners
and licensees.
Role of the Autobytel.com Global Brand Agency
It is the role of the global brand agency to develop, create, recommend and
steward autobytel.com inc.'s brand positioning so that it conforms to
autobytel.com inc.'s brand values. They have the responsibility of managing the
Autobytel.com brand communications on a global scale while recognizing local
needs. In this role the agency will steward the brand with regards to the
quality and consistency of the brand's global advertising.
Role of the Local Agency
It is the role of the local country agency to create successful advertising that
conforms to autobytel.com inc.'s brand positioning.
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A LOOK AT THE REQUIREMENTS, PROCESS AND INTERACTION BETWEEN autobytel.com inc.'s
GLOBAL BRAND AGENCY AND THE LOCAL COUNTRY'S AGENCY AS IT RELATES TO ADVERTISING
Generally speaking, autobytel.com inc.'s advertising (visual and copy content)
must be in synergy with the brand's core values and comply with the brand's
positioning strategy as will be stated in the "Global Brand Protocol & Look
Book" (after the brand positioning project is completed in September).
While this book is dynamic and periodic updates should be expected, it is our
intent to develop an enduring brand positioning, which should remain in effect
over a number of years. All decisions regarding the appropriateness of
Autobytel.com advertising will be measured against this benchmark.
Some general requirements and procedures which you should expect to see outlined
in the Global Brand Protocol about Autobytel.com advertising follows:
Creative
All creative formats and units must:
Feature the appropriate upper and lower case treatment of the company name (e.g.
autobytel.com inc., and Autobytel.com, etc.)
Feature the autobytel.com inc. logo
Feature the Autobytel.com tag-line (which will be translated by the global brand
agency into the appropriate language for each county in a way that is mutually
agreeable so that it mutually satisfies the requirements of both the brand and
country's cultural environment.)
Feature the appropriate Autobytel.com URL (Uniform Resource Locator) for the
country involved (e.g. autobytel.com, autobytel.ca, autobytel.uk, etc.)
reflect the highest level of moral and ethical standards within the community to
which the commercial's message is to be conveyed
reflect the brand's recommended look and feel (e.g. color palettes, typefaces,
imagery, etc.) of which examples will be provided in the look book.
Autobytel.com strongly urges all licensees to use the network affiliate of the
global brand agency. If for any reason, the licensee utilizes an agency that is
not part of the global brand agency's network, the following will apply.
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Creative Procedure
Each licensee does not need to submit creative concepts and executions to
Autobytel.com for prior approval. But it is required that each country submit
copies of all creative materials to autobytel.com inc.'s global brand agency at
least quarterly. While it is not autobytel.com inc.'s intention to police
creative, should the marketing materials not conform to the brand's positioning,
Autobytel.com reserves the right to advise the country to discontinue the use of
any creative that does not properly comply. In the unlikely event that this
should occur, the country will be required to discontinue use of the materials
within 45 days. Autobytel.com strongly encourages the country's local agency to
implement an on-going dialogue with the global brand agency (a contact name will
be issued). The frequency and format for this communication can be mutually
agreeable to suit the needs and requirements of both parties, and may expand and
contract based upon the need of each party.
Media Procedure
Each country can determine the specific marketing communications mix (e.g. PR,
Advertising, Promotion, etc.) selection of media (e.g. Internet, TV, Radio,
etc), and selection of specific media vehicles (e.g. stations, publications,
etc), that is most appropriate for its culture and environment. autobytel.com
inc. may volunteer from time to time, the sharing of information about media
that has been particularly successful in other countries across the globe. We
will encourage that all partners and licensees share information about what
is/isn't working for the benefit of aggregated learning.
However, it will be required that information about marketing communication mix
and media plans be shared and submitted to Autobytel.com Corporation on at least
a bi-annual basis. This may be submitted either in a written or digital format.
Fees for Global Brand Management
(For countries not using the local affiliate of autobytel.com inc.'s global
agency)
autobytel.com inc.'s global brand agency will be appropriately organized to
steward the brand, bring strategic value to autobytel.com inc. and its
licensees, and to facilitate communication among the parties. If the licensee
does not use a local agency that is an affiliate of the global agency,
autobytel.com inc. will charge the licensee for any expenses associated with
stewarding the brand.
ADVERTISING OPPORTUNITY ON autobytel.com inc.'s WEBSITE
autobytel.com inc. will offer its licensees an opportunity to participate in its
global web site advertising initiative. autobytel.com inc. plans to offer
advertising on its U.S. site, and on each
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country's local site if the country chooses to participate. If the licensee
participates, autobytel.com inc. will require to country's site to allocate 50%
of the total pages served and inventory. In return, autobytel.com inc. will
offer licensees the opportunity to share in 50% of the revenues generated after
expenses through this sale.
If the licensee is interested, additional details will be provided after this
program is finalized. In the interim, here are some examples of the guidelines:
Site must be constructed to accommodate advertising
Screen real estate positioning must conform to autobytel.com inc.'s global
advertising standards (currently this is a top right position and 3 IAB unit
sizes will be utilized
50% of ad inventory (equal to approximately 50% of total pages served) will be
allocated to this effort.
Licensee has 6 months after launch of site to have prepared for advertising
In Closing, please refer to the attached Global Brand Protocol and Look Book,
which is currently in development. A number of sections have been added since
the last submission.
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autobytel.com inc.'s new U.S. Web site, launched 07/31/98
[GRAPHIC]
Note: Upon completion of the brand positioning, the new selling line will appear
below in the top ledge frame of the site.
<PAGE> 39
ATTACHMENT D
SERVICES AGREEMENT
AGREEMENT FOR CONSULTING BY AUTO-BY-TEL
This Agreement for Consulting ("Agreement") is made and entered into as of the
___ day of ___________, 199_ by and between autobytel.com inc., a Delaware
corporation with offices at 18872 MacArthur Boulevard, Irvine, California, 92612
("APT"), and Auto by Tel UK Limited, a ___________ corporation with offices at
_____________ ("ABT/UK"). The ABT/UK desires to retain ABT as an independent
contractor to perform certain development and consulting services for the ABT/UK
as described in the License and Services Agreement between the parties dated
_______________ ("License and Services Agreement"), and ABT is willing to
perform such services on terms set forth more fully below. In consideration of
the mutual promises contained herein, the parties agree as follows:
1. SERVICES.
(a) Work Orders. The parties may from time to time agree upon
certain software development and related services to be provided by ABT under
this Agreement ("Services"). The parties shall develop a description of such
Services in reasonable detail ("Work Order") in a form substantially as set
forth in the Work Order. ABT agrees to perform for the ABT/UK the services
described in each Work Order on the terms and conditions set forth therein. The
parties acknowledge that ABT/UK may have certain obligations under each Work
Order, and all of ABT's obligations will be subject to the prompt performance of
ABT/UK's obligations thereunder. In addition, any delays in ABT's performance of
the Services due to allocation of ABT's development resources in accordance with
requests of ABT/UK for additional Services will not be deemed a breach of this
Agreement. The parties expressly agree that ATTACHMENT E to the License and
Services Agreement will be the initial Work Order for this Agreement.
(b) Change Orders. Any changes to Specifications ("Change
Orders") are subject to mutual agreement. All Change Orders must be coordinated
through a single point of contact for each party, and approved in advance in
writing by CEO of ABT/UK and the CTO of ABT. The parties will discuss any
proposed Change Order, and ABT will use reasonable efforts to estimate any
additional fees that would result from changed or additional Services to be
performed under the Work Order. If the parties cannot agree on whether a Change
Order should be implemented, or upon the related fees, ABT/UK may, at its sole
option and discretion, continue with the Work Order as specified before the
Change Order, or terminate the Work Order and pay ABT for all services performed
up to the effective date of termination. In such a case, ABT shall deliver to
ABT/UK all work in process not yet delivered to ABT/UK under the Work Order;
provided, however, that such work in process will be provided "as is," not
subject to the warranty in Section 10(a).
(c) Change Orders due to Technical Infeasibility. If ABT
decides, in its reasonable discretion, during performance of a Work Order, that
the Work Order is technically infeasible or that ABT, despite using its best
efforts, will not be able to complete the Work Order, ABT shall notify ABT/UK
that a Change Order is required to complete the development, and shall propose a
Change Order to ABT/UK. ABT/UK may, at its sole option and discretion, agree to
the Change Order, or terminate the Work Order,
<PAGE> 40
in which case, (a) ABT shall deliver to ABT/UK all work in process not yet
delivered to ABT/UK under the Work Order; provided, however, that such work in
process will be provided "as is," not subject to the warranty in Section 10(a);
(b) ABT/UK will not be obligated to pay for the work performed on that Work
Order after the last-completed Milestone; and (c) ABT shall provide a reasonable
number of hours of free technical support to assist ABT/UK to perform the
remainder of the Work Order by itself or through a third party, up to 10% of the
total hours for which ABT/UK has paid in connection with the Work Order.
2. COMPENSATION
(a) Services. ABT/UK shall pay ABT for performing the Services
as shown in the Work Order.
(b) Expenses. The ABT/UK shall also reimburse ABT for the
reasonable actual travel and living expenses of its personnel engaged in the
performance of Services at locations other than ABT facilities, together with
other reasonable out-of-pocket expenses incurred in connection with performance
of the Services. ABT shall adhere to any travel policy reasonably promulgated by
ABT/UK, provided that ABT may incur expenses up to a total of ________ dollars
without ABT/UK's prior approval.
(c) Payments. ABT shall invoice ABT/UK for all amounts on or
after the due date. Payment terms shall be net ____ days. Any amounts due ABT
under this Agreement not received by the date due shall be subject to a service
charge of one and one-half percent (1.5%) per month, or the maximum charge
permitted by law, whichever is less. Any payment terms set forth in the
applicable Work Order will take precedence over this Section 2(c).
3. CONFIDENTIALITY. All information disclosed under this Agreement will
be subject to Section 10 of the License and Services Agreement.
4. OWNERSHIP. The work product resulting from the Services shall consist
of, and shall operate in conjunction with, multiple elements of intellectual
property, as set forth in the Work Order, approximately in the form set forth in
Exhibit B. The parties' respective rights with respect to such intellectual
property shall be as set forth below. For purposes of this Agreement, the term
"ownership" shall refer to ownership of all intellectual property rights
including, but not limited to, all patent, copyright, trade secret and trademark
rights, as applicable, with respect to the subject intellectual property:
(a) ABT/UK Materials and Pre-Existing ABT/UK Materials. For all
materials designated as "ABT/UK Materials" in the Work Order, ABT agrees that
such materials are the sole property of the ABT/UK, and shall be considered
"works made for hire" as that term is defined in the United States Copyright
Act. ABT further agrees to assign (or cause to be assigned) and does hereby
assign fully to the ABT/UK all such works and the intellectual property rights
relating thereto. For all materials designated as "Pre-Existing ABT/UK
Materials" in the Work Order, ABT agrees that such materials are the sole
property of the ABT/UK, and ABT/UK hereby grants to ABT a non-exclusive,
non-transferable, royalty-free, fully paid up license to use, reproduce, and
prepare derivative works of such materials solely for the purpose of performing
ABT's obligations under this Agreement.
(b) Third Party Materials. For all materials designated as
"Third Party Materials" on the Work Order, the parties hereby agree that such
materials shall be necessary for ABT/UK to use the ABT/UK
<PAGE> 41
Materials or ABT Materials, and ABT/UK shall be solely responsible for obtaining
necessary licenses to the Third Party Materials.
(c) Pre-existing Materials and ABT Materials. For all materials
designated as "Pre-existing Materials" or "ABT Materials" in the Work Order,
ABT/UK agrees that such materials are the sole property of the ABT. All work
product resulting from the Services will be deemed "ABT Materials" unless
otherwise designated in the Work Order. ABT hereby grants to ABT/UK a license to
use the ABT Materials as part of the Software, set forth in the License and
Services Agreement. No other grants of licenses or rights to ABT/UK shall be
implied from the provisions stated in this Agreement. ABT/UK shall not
obliterate or remove and will reproduce ABT's intellectual property notices
contained in the ABT Materials or Pre-existing Materials.
(d) Further Assurances. Each party agrees to execute any
additional documents deemed reasonably necessary to effect and evidence the
other party's rights with respect to the intellectual property elements set
forth above.
5. REPORTS. Except as otherwise set forth in the applicable Work Order,
ABT agrees that it will, approximately once per month during the term of this
Agreement or any extension thereof, keep the ABT/UK advised as to ABT's progress
in performing the Services hereunder and that ABT will, as requested by the
ABT/UK, prepare written reports with respect thereto. It is understood that the
time required in the preparation of such written reports shall be considered
time devoted to the performance of ABT's Services.
6. TERM AND TERMINATION
(a) Term. This Agreement will commence on the date first written
above and will continue until final completion of the Services or termination as
provided below.
(b) Termination. The ABT/UK may terminate this Agreement or any
Work Order at any time upon giving ten (10) days' prior written notice thereof
to ABT, provided, however, that ABT/UK shall pay ABT for any Services performed
up to the effective date of termination, and, promptly upon ABT's request, pay
all of ABT's sunk costs related to any terminated Work Order, including
without limitation any cancellation payments to third parties to terminate
contracts entered into by ABT in reliance upon the Work Order. ABT shall deliver
any work in process promptly after such payments. Such work in process will be
provided "as is," and will not be subject to the warranty in Section 10(a).
Either party may terminate this Agreement upon thirty (30) days' notice of any
uncured material breach of this Agreement by the other party.
(c) Survival. Upon such termination all rights and duties of the
parties toward each other shall cease except Sections 3, 4, 8, 9, 10, 11, 12,
and 13 shall survive termination of this Agreement.
7. ASSIGNMENT. Neither this Agreement nor any right hereunder or
interest herein may be assigned or transferred by either party without the
express written consent of the other.
8. INDEPENDENT CONTRACTOR. Nothing in this Agreement shall in any way be
construed to constitute ABT as an agent, employee or representative of the
ABT/UK, but ABT shall perform the Services hereunder as an independent
contractor.
<PAGE> 42
9. ARBITRATION. The parties agree that any dispute or controversy
arising out of or relating to any interpretation, construction, performance or
breach of this Agreement will be resolved as set forth in the License and
Services Agreement.
1O. WARRANTY AND DISCLAIMER.
(c) ABT represents and warrants to ABT/UK that all software
deliverables specified in any Work Order ("Software"), in the form delivered to
ABT/UK, will perform in substantial accordance with the specifications therefor
in the Work Order, and any other specifications developed in writing pursuant to
the Work Order. If the Software does not perform as warranted, ABT shall use
reasonably diligent efforts to correct the Software in accordance with the
escalation procedures in Attachment F to the License and Services Agreement. The
foregoing are ABT/UK's sole and exclusive remedies for breach of such warranty.
The warranty will apply only if the then-current version of the Software has
been properly installed and used in accordance with the instructions for use.
(b) OTHER THAN AS EXPLICITLY SET FORTH IN THIS SECTION 12, ABT
DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING ANY AND ALL IMPLIED WARRANTIES OF
TITLE MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT.
11. LIMITATION OF REMEDIES AND DAMAGES EXCEPT FOR CLAIMS ARISING FROM
SERVICES PROVIDED HEREUNDER THAT ARE COVERED BY SECTION 9 OF THE LICENSES AND
SERVICES AGREEMENT (A) EACH PARTY'S LIABILITY ARISING HEREUNDER SHALL BE LIMITED
TO FEES PAID BY ABT/UK HEREUNDER, AND (B) NEITHER PARTY SHALL BE LIABLE FOR ANY
CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES, INCLUDING WITHOUT LIMITATION
DAMAGES FOR LOSS OF BUSINESS PROFITS AND/OR BUSINESS INTERRUPTION, WHETHER
FORESEEABLE OR NOT, AND WHETHER ARISING IN CONTRACT, TORT, OR NEGLIGENCE, EVEN
IF A REPRESENTATIVE OF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY.
12. ENTIRE AGREEMENT. This Agreement and the Exhibits hereto form the
entire agreement of the parties and supersede any prior agreements between them
with respect to the subject matter hereof.
13. WAIVER. Waiver of any term or provision of this Agreement or
forbearance to enforce any term or provision by either party shall not
constitute a waiver as to any subsequent breach or failure of the same term or
provision or a waiver of any other term or provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ABT/UK: ABT:
By: By:
------------------------------- ----------------------------
<PAGE> 43
Print Name: Print Name:
----------------------- ---------------------
Title: Title:
----------------------- -------------------------
<PAGE> 44
EXHIBIT A
WORK ORDER FORMAT
Services to be performed by ABT:
Compensation of ABT:
(a) Rate of pay: per
--------- ----------
(b) Total payment limitation:
--------------------------------
(c) Advance payment:
-----------------------------------------
(d) Expenses authorized for reimbursement by the ABT/UK:
(e) Other:
---------------------------------------------------
(f) Expected duration of project:
----------------------------
ABT/UK: ABT:
By: By:
-------------------------------- ---------------------------
Print Name: Print Name:
----------------------- -------------------
Title: Title:
---------------------------- ------------------------
<PAGE> 45
EXHIBIT B
ABT/UK MATERIALS
ABT MATERIALS
THIRD PARTY MATERIALS
PRE-EXISTING MATERIALS
PRE-EXISTING ABT/UK MATERIALS
<PAGE> 46
[*] Confidential Treatment Requested
ATTACHMENT E
WORK ORDER FOR INITIAL LOCALIZATION SOFTWARE DEVELOPMENTS
DEVELOPMENT OF SPECIFICATIONS AND ACCEPTANCE TEST PLAN. The parties intend that
the performance of the Services will result in the production of one or more
specifications describing the requirements to modify the Software (the
"Specifications"), which will include a delivery schedule, estimated fees and
expenses relating thereto, and associated deliverables ("Deliverables") and
milestones ("Milestones"), and a plan for acceptance testing of the Software
modifications to be performed ("Acceptance Test Plan"). ABT/UK will provide a
written request for the Services to ABT in a mutually acceptable format. ABT
will prepare detailed Specifications for such Services in a mutually acceptable
format. Each Specification must be agreed upon in writing by the CEO of ABT/UK
and the CTO of ABT.
If the parties cannot agree on the Specifications or Acceptance Test Plan,
either party may terminate this Work Order upon written notice, and neither
party will have any further obligations under this Work Order. Once the
Specification is complete, the Specification will be added to this Agreement,
and ABT shall perform the Services described therein. Any changes to a
Specification after the Specification has been agreed to by the parties must be
affected in accordance with the "Change Orders" section set forth below. The
parties intend that there will be at least one Deliverable or Milestone for each
month during which Services will be performed.
ACCEPTANCE TESTING. Upon delivery by ABT of any Deliverable consisting of
software or modifications thereto, ABT/UK shall review such Deliverable
according to the Acceptance Test Plan to determine whether it conforms in all
material respects to the applicable Specifications. ABT/UK shall, no later than
ten (10) working days after receiving such Deliverable, review and accept such
Deliverable that meets the Specifications. Deliverables submitted for acceptance
that ABT/UK does not reject in writing within such period will be deemed
accepted. If ABT/UK rejects such a Deliverable, ABT/UK shall provide ABT with
written notice setting forth in reasonable detail why the Deliverable fails to
meet the Specifications. ABT will have thirty (30) days from notice of rejection
to resubmit such Deliverable to ABT/UK for acceptance. This procedure will be
repeated until the Deliverable is accepted. If any Deliverable is rejected more
than twice ABT/UK may terminate this Agreement in accordance with the provisions
of this Work Order below entitled "Termination." The Acceptance Test Plan must
include, at a minimum, for ABT to test the Deliverables according to the
then-current quality assurance procedures of ABT. Such testing must be approved
in writing by the CTO of ABT. Acceptance testing must be approved in writing by
the CEO of ABT/UK.
FEES. The fee for the Services (the "Fees") will be [*]. The development of the
Specifications and Acceptance Test Plan will be on a time and materials basis.
All work thereafter will be payable on a time and materials basis upon
completion of Milestones, as set forth in the paragraph below entitled "Fees."
As part of the Specifications, the parties will agree on a budget for each
Milestone. ABT will inform ABT/UK as soon as reasonably possible, but in no
event later than the next weekly status report, if it appears to ABT that the
Services required to complete a Milestone will exceed the amount budgeted by
more than 10%. In such event, if the parties cannot agree on a revised budget
for such Milestone, either party may terminate this Work Order immediately upon
written notice, and if this Work Order is terminated, neither party will have
any further obligations under this Work Order. ABT/UK's payment of Fees is
subject to the provisions of Attachment G entitled "Penalties for Large
Developments."
<PAGE> 47
PAYMENT. ABT shall invoice ABT/UK each month for Fees and expenses due for
Services performed during the previous month. ABT/UK shall pay ABT any expenses
set forth on each invoice, within (10) days after receipt of the invoice.
ABT/UK shall pay ABT any Fees for a particular Milestone upon acceptance of such
Milestone in accordance with the Acceptance Test Plan. ABT may credit against
any such Fees any Minimum Maintenance Fees paid under the License and Services
Agreement.
TERMINATION. If a Deliverable is rejected more than twice, as described above in
the Section entitled "Acceptance Testing," or if the final Deliverable is not
accepted by ________ , ABT/UK may provide written notice of its intent to
terminate (a) this Agreement; or (b) both, this Agreement and the License and
Services Agreement in accordance with Section 11.2(c). If ABT/UK terminates
this Agreement under this paragraph, notwithstanding Section 6(b) of this
Agreement, ABT/UK may withhold any amount associated with the current Milestone
that it has not yet paid. For avoidance of doubt, any Minimum Maintenance Fees
paid under the License and Services Agreement will not be refunded.
ABT/UK: ABT:
By: By:
-------------------------------- ---------------------------
Print Name: Print Name:
----------------------- -------------------
Title: Title:
---------------------------- ------------------------
<PAGE> 48
ATTACHMENT F
ABT ESCALATION PROCEDURES
ABT - International Technical Support Escalation Procedure
There will be one named primary technical support contact and one named backup
support contact. All requests for technical support must come from the primary
support contact. In the event the primary contact is not available, the backup
contact may submit the technical support request. The primary support contact
will be ____________ and the back-up support contract will be ______________.
Changes to the primary and/or backup support contacts must be received by ABT in
writing 1 business day prior to them being effective.
All local Technical Support escalation will occur prior to any escalation to
Auto-By-Tel International Technical Support team by either the primary or backup
support contact. All infrastructure (Hardware/Network/Operating System/SQL
Server/IIS Server) errors must be corrected prior to escalation.
All Technical Support calls related to remaining APPLICATION ERRORS or SYSTEM
ERRORS with severity level of ERROR OR HIGHER should be routed through the ABT -
Corporate NTS Support person at 1-949-xxx-xxxx. Response time will be as
specified in table below.
All Technical Support calls that related to errors with severity level of
WARNING or APPLICATION PROBLEMS (as defined below) should be referred to the ABT
- - International Technology Support Coordinator at 1-949-xxx-xxxx.
The quoted response times relate to the time required to have a qualified
technical support person contact the person who made the technical support
request. Depending on the severity of the problem, reasonably diligent efforts
will be made to resolve the problem as soon as possible within the guidelines
under RESPONSE LEVEL.
<TABLE>
<CAPTION>
CATEGORY DESCRIPTION
- --------------------------------------------------------------------------------
<S> <C>
Application Problem Problem related to the use of a specific application
program or module. The program does not appear to be
functioning correctly, however, no error messages have
been received.
Application Error An application program or module has issued an error
message. The error was not issued by the underlying
technology, (i.e. the network, operating system,
database management system server or internet server.
System Error An error message has been received when executing an
application or web page. The error message originated
from the underlying technology, not the application
itself.
</TABLE>
<TABLE>
<CAPTION>
SEVERITY DESCRIPTION RESPONSE TIME RESPONSE LEVEL
<S> <C> <C> <C>
WARNING Provides information or warning message only. 72 hours Effort during
Does not impact the overall operation of Normal Bus.
the system. Hours
ERROR Error interrupts processing of a single 12 hours (Next Effort during 7
application or module. System operation Business Day) days/week 8am-
continues to support primary business functions. 5pm, until resolved.
</TABLE>
<PAGE> 49
<TABLE>
<S> <C> <C> <C>
SEVERE ERROR Error interrupts processing of multiple and/or 4 hours Effort 7
primary business applications. Primary business days/week 5am
operations are impacted. - 9 pm, until
resolved
FATAL ERROR Error causes system to become unavailable. All 1 hour Effort 7 x 24,
business processing is aborted. until resolved
</TABLE>
ABT will provide help desk support (i.e. other than reporting of Errors) by
telephone from the hours of 2:30 p.m. to 5:30 p.m. Pacific Time on U.S. business
days. ABT will handle all help desk inquiries during other hours by U.S. next
business day fax/email back.
THE FOLLOWING CHART EXPLAINS THE RESPONSIBILITIES OF ABT AND ABT/UK REGARDING
MAINTENANCE AND SUPPORT.
TECHNICAL SUPPORT/MAINTENANCE EXAMPLES
<TABLE>
<CAPTION>
SITUATION ABT ABT/UK COMMENTS
- --------- --- ------ --------
<S> <C> <C> <C>
ABT/UK SQL Server configuration parameter Assisted if Requested Responsible for Fix Any Hardware, Operating
(e.g. number of locks) is changed by (Maintenance Hours) System, or Third-party
ABT/UK Staff for tuning purposes. SQL product configuration
Queries begin failing because there are issues/changes/problems
not enough locks available. should not be the
responsibility of ABT.
ABT/UK Servers are running the UK-English Assisted if Requested Responsible for Fix Same as above. ABT/UK should
(rather than US English) versions of (Maintenance Hours) work with Microsoft (or
the Microsoft software (NT, SQL Server, IIS). other vendor) technical
An error occurs in one of those support to resolve problem.
third-party programs that causes the system to
fail. The error is related to the fact that the
UK-English version of the software is at a
slightly different revision level than the
US version.
ABT software uses a complicated algorithm Responsible for Fix. Since this is a "bug" that
to calculate distance between two (Not counted against is part of the core system,
(longitude, latitude) points. The ABT/UK Maint Hours) then it should be fixed as
team notices that the distance calculation part of the ABT ongoing
algorithm is not implemented correctly, maintenance efforts.
which causes distances to be noticeably
incorrect. The "bug" is present in the ABT
system as well. It had not been detected.
</TABLE>
<PAGE> 50
<TABLE>
<CAPTION>
SITUATION ABT ABT/UK COMMENTS
- --------- --- ------ --------
<S> <C> <C> <C>
ABT (on behalf of ABT/UK) changes Will perform Responsible for Fix Since the ABT development team
the distance calculations throughout modifications simply made changes specified by
the system to multiply the US Miles (Maintenance Hours) ABT/UK staff, AFT/UK staff is
distance by a conversion factor to responsible for the correction. (Had
arrive at an appropriate distance in the error occurred because the ABT
UK Miles. ABT/UK analyst provided ABT Development team had not implemented
with specification for the conversion the specification correctly, the fix
calculation and factor. As it turns would be preformed by ABT at no cost
out, the specification provided by the to the UK)
UK analyst is incorrect.
ABT/UK data provider changes format Assist if Requested Responsible for Fix ABT/UK is responsible for day-to-day
of data extracts that feed ABT system. (Maintenance Hours) monitoring of systems and for all data
ABT/UK staff attempt to import data inputs/outputs. Many system problems
into ABT System. Importing this data can be traced back to problems with
corrupts data in ABT System. Corrupted improper data in the system. It is not
data causes ABT system to not operate always possible to differentiate a
correctly. Depending on the extent of programming issue from a data issue
the data corruption, this problem might up front. Sometimes, it takes several
be detected immediately or it may be hours/days to determine the root cause
so subtle that it is not detected for of a problem. ABT hours spent in this
days or weeks. Problem Identification process will be
charged as Maintenance Hours if the
root cause of the problem is found to
be ABT/UK responsibility.
</TABLE>
<PAGE> 51
<TABLE>
<CAPTION>
SITUATION ABT ABT/UK COMMENTS
- --------- --- ------ --------
<S> <C> <C> <C>
ABT/UK IT staff develop several Assist if Requested Responsible for Fix Again, the relationship between the
management reports that run against (Maintenance Hours) system performance problem and the
production data. System performance execution of the management reports
is significantly impacted by execution may not be clearly understood. For
of the management reports. example, in the first month or two of
operation, ABT/UK staff may develop
these reports and the reports may run
quickly because there is a relatively
small amount of data in the database.
Twelve (12) months into the operation
of the system, the performance seems
to be very poor compared to user
expectations. Since those reports were
written 9-12 months ago, the ABT/UK
staff don't relate the performance
problems to those reports. They
complain to ABT (Technical Support)
about the performance issues. ABT
spends two weeks trying to analyze the
problem. Eventually, the source of the
problem is identified. ABT/UK should
be responsible for the ABT efforts.
ABT staff train ABT/UK IT staff on Assist if Requested Responsible for Re- ABT/UK is responsible for paying for
operating procedures for software. (Maintenance Hours) Training re-training.
ABT/UK IT turnover occurs, requiring
additional training.
Suppose ABT has a report that shows Assist if Requested Responsible for ABT/UK management notice a
summary level purchase request (Maintenance Hours) Development of discrepancy between the overall
counts sorted by dealer within sales new report without purchase request report and the
region. Further, suppose the report exclusion summary report that excludes green
excludes requests that are for green cars. They report it as a bug.
cars because the ABT sales However, ABT technical support
organization requested that exclusion doesn't consider this a bug because it
when the report was originally meets the original specification. So it
defined. (For whatever reason). is not changed. IF ABT/UK management
required a new report that did not
exclude green cars, that would
constitute development work and be
paid for with development hours.
ABT/UK does not have access to Provide development License new Where a UK specific piece of third
Infopower Delphi libraries. ABT/UK support per services product, pay for party software requires enhancements
finds another product that provides agreement. development per to ABT/UK code ABT could do this
similar functionality. ABT asks ABT services agreement. work under the Services Agreement,
to incorporate this new product in but this would be chargeable to ABT/UK.
place of the Infopower library.
Microsoft introduces a new version of Upgrade to core Responsible for Where an upgrade to third party
SQL Server. ABT incorporates new system provided to obtaining license for software demands adjustment to the
version of SQL Server into ABT core UK for free under upgraded version of standard ABT system in order for it to
</TABLE>
<PAGE> 52
<TABLE>
<CAPTION>
SITUATION ABT ABT/UK COMMENTS
- --------- --- ------ --------
<S> <C> <C> <C>
system. ABT Releases new version of Maintenance and SQL Server from operate effectively, this should be
core system. Support Services. Microsoft. treated as an upgrade to the ABT
Re-localization is ABT/UK would also system and therefore passed on to
performed at pay for any ABT/UK free of charge under
ABT/UK's cost per localization related Maintenance and Support Services.
services agreement. to the new upgrade
of the ABT system
per services
agreement.
</TABLE>
<PAGE> 53
ATTACHMENT G
SOFTWARE DEVELOPMENT RESOURCE COMMITMENT PROCEDURES
1. PURPOSE. This document is designed to govern the processes for planning
software Localization for ABT/UK, and to describe when ABT will be obligated
to assign software engineers and other technical and management personnel to
perform such Localization. In this document, assigning software engineers
and other technical and management personnel to a project, and providing the
services of those personnel, will be described as "committing resources."
For avoidance of doubt, ABT has already agreed to its commitment of
resources for the Work Order for the Initial Localization Services.
2. MAINTENANCE AND SUPPORT. This document describes the obligations of ABT to
commit resources covered by the 2,500 annual pre-paid hours of Maintenance
and Support services ABT is required to commit under the License and
Services Agreement, as well as other resources that may be committed by ABT
as described in this Attachment G. ABT will commit resources up to 1/12 of
such 2500 hours (i.e. 208 hours) (the "Minimum Monthly Commitment") each
month upon ABT/UK's request in its sole discretion. If ABT/UK does not
request a resource commitment in a given month, or requests less than the
Minimum Monthly Commitment in a given month, ABT/UK may carry forward each
month's Minimum Monthly Commitment into the next 2 months. Any requests by
ABT/UK for development that would require ABT to carry forward more hours,
or carry forward any hours for more than one month, will be subject to the
resource commitment requirements for small and large developments set forth
in this Attachment G.
3. SMALL AND LARGE DEVELOPMENTS. Two processes will exist - one to manage small
developments, where "small developments" means those that ABT estimates will
be performed in 10 man days or less; and another to manage large
developments, where "large developments" means those that ABT estimates will
be performed in more than 10 man days.
4. MONTHLY MEETINGS. The parties will meet monthly to plan large and small
developments. Progress on all developments will be monitored at such monthly
meetings. All such meetings will take place at ABT corporate headquarters in
Irvine. For large developments, ABT shall provide weekly updates by
telephone or email.
5. SMALL DEVELOPMENTS. Small developments will have a lead time of 1 month;
i.e. ABT may, if resources are available, but will not be obligated to,
commit resources for any small development sooner than 1 month after the
initial request by ABT/UK. ABT will be obligated to commit resources of a
minimum of 20 man days in such month; 40 man days in the next month; and 60
man days in the next month. For example, if ABT/UK requests on January 1 for
ABT to perform a small development, then ABT shall commit resources of 20
man days in February, 40 man days in March, and 60 man days in April.
6. LARGE DEVELOPMENTS. Large developments will have a lead time of 3 months;
i.e. ABT may, if resources are available, but will not be obligated to,
provide services for any Large Development any sooner than 3 months after
the initial request by ABT/UK. ABT will be obligated to commit resources of
a minimum of 60 man days in such month; 80 man days in the next month; and
100 man days in the next month. For example, if ABT/UK requests on January 1
for ABT to perform a
<PAGE> 54
large development, ABT shall commit resources of 60 man days in April, 80
man days in May, and 100 man days in June.
7. OVERALL COMMITMENTS. For large and small developments combined, ABT will not
be obligated to commit resources of more than 200 man days in any month. Of
these 200 man days, ABT will not be obligated to commit resources of more
than 60 man days to small developments.
8. PRIORITY OF DEVELOPMENTS. For each new development, ABT/UK must specify
which ongoing developments, if any, will be prioritized above and below the
new development. Any changes to priority of developments must be agreed in
writing between the parties. Unless otherwise agreed, ABT may prioritize
large developments over small developments, and may further prioritize
resources that it is required to commit under this Attachment G using its
professional judgment. For any development that takes priority over another,
ABT may, in its sole discretion, use resources that would be otherwise
committed to the lower priority development to finish the higher priority
development in a timely fashion, if in ABT's reasonable discretion, it is
necessary to do so.
9. PENALTIES FOR LARGE DEVELOPMENTS. For a large development, if ABT fails to
complete the Work Order by the estimated completion date because ABT failed
to commit the resources it was required to commit under this Attachment G,
ABT shall, upon ABT/UK's request, complete the development, but ABT/UK will
not be obligated to pay ABT for the price of the "undelivered hours," which
means resources required to be committed under Attachment G, less the
resources actually provided at the estimated project completion date.
10. TECHNICAL FEASIBILITY. If ABT, in its reasonable discretion, determines that
a requested Localization is not technically feasible, ABT will not be
obligated to commit resources to perform such Localization.
<PAGE> 55
ATTACHMENT H
DRT END USER LICENSE
DRT
DEALER REAL TIME ACCESS AGREEMENT
THIS AGREEMENT IS ENTERED INTO THIS _____, DAY OF _____ BETWEEN
AUTO-BY-TEL MARKETING CORPORATION, A DELAWARE CORPORATION WITH ITS PRINCIPAL
PLACE OF BUSINESS LOCATED AT 18872 MACARTHUR BOULEVARD, IRVINE, CALIFORNIA
92612-1400 ("LICENSOR"), AND __________ A(N) ____________ LIMITED LIABILITY
CORPORATION, WITH ITS PRINCIPAL PLACE OF BUSINESS LOCATED AT ___________________
("LICENSEE").
WHEREAS, LICENSEE HAS EXECUTED AN AUTO-BY-TEL MARKETING CORPORATION NEW
CAR SUBSCRIPTION AGREEMENT AND/OR "USED CAR CYBERSTORE(TM)" SUBSCRIPTION
AGREEMENT; AND
WHEREAS, LICENSOR HAS DEVELOPED AND OWNS THE RIGHT TO LICENSE CERTAIN
PROPRIETARY SOFTWARE PROGRAMS COMMONLY REFERRED TO AS THE AUTO-BY-TEL DEALER
REAL TIME (DRT) PROGRAM AS WELL AS RELATED INFORMATION AND DOCUMENTATION
CURRENTLY RESIDING EXCLUSIVELY WITH LICENSOR; AND
WHEREAS, LICENSEE HAS REPRESENTED TO LICENSOR THAT THEY WILL PROVIDE FOR
THEMSELVES A PERSONAL COMPUTER, AND CERTAIN ANCILLARY EQUIPMENT RELATED THERETO
WHICH MEETS THE MINIMUM SPECIFICATIONS SET FORTH HEREIN (TOGETHER, THE
"EQUIPMENT") FOR USE IN CONNECTION WITH DRT AND
WHEREAS, LICENSOR WILL PROVIDE DATA ACCESS, PROGRAM MAINTENANCE, UPDATING AND
HELP-LINE TECHNICAL SERVICES TO LICENSEE TO ASSIST LICENSEE IN THE USE OF THE
PROGRAMS;
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND PREMISES HEREIN
RECITED AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES, INTENDING TO BE
LEGALLY BOUND HEREBY, WARRANT, COVENANT AND AGREE AS FOLLOWS:
GRANT OF LICENSE. LICENSOR HEREBY GRANTS TO LICENSEE A NON-EXCLUSIVE,
NON-TRANSFERABLE LICENSE TO ACCESS AND USE THE DRT PROPRIETARY PROGRAM AND ANY
RELATED INFORMATION AND DOCUMENTATION SUPPLIED BY LICENSOR SUBJECT TO THE TERMS
AND CONDITIONS CONTAINED IN THIS AGREEMENT.
TERM OF THIS AGREEMENT: EXCEPT AS PROVIDED HEREIN, THE RIGHTS AND OBLIGATIONS
CONFERRED BY THIS AGREEMENT SHALL RUN CONCURRENTLY WITH THE TERM OF THE ABT
MASTER SUBSCRIPTION AGREEMENT EXECUTED BETWEEN THE PARTIES. LICENSOR MAY
IMMEDIATELY TERMINATE THIS AGREEMENT IN THE EVENT OF A MATERIAL BREACH BY
LICENSEE OF ANY PROVISION OF THIS AGREEMENT, OR ANY OTHER AGREEMENT BETWEEN
LICENSEE AND LICENSOR OR ANY OF THEIR RESPECTIVE AFFILIATES, INCLUDING WITHOUT
LIMITATION THE ABT MASTER SUBSCRIPTION AGREEMENT. EITHER PARTY MAY VOLUNTARILY
TERMINATE THIS AGREEMENT UPON 30 DAYS' WRITTEN NOTICE TO THE OTHER PARTY. UPON
TERMINATION OF THIS AGREEMENT FOR ANY REASON, LICENSEE SHALL PROMPTLY
DISCONTINUE USE OF THE PROGRAMS, DELETE ALL COPIES OF THE DRT PROGRAM, IF ANY,
IN WHATEVER FORM, RESIDING ON ITS COMPUTERS, STORAGE MEDIA AND/OR ON HARD COPY.
RIGHT OF USE. DURING THE TERM OF THIS AGREEMENT, LICENSEE SHALL HAVE THE RIGHT
TO ACCESS THE DRT PROGRAM IN CONNECTION WITH THE INTERNAL OPERATION AND
MANAGEMENT OF LICENSEE'S OWN BUSINESS. LICENSEE IS PROHIBITED FROM RESELLING OR
OTHERWISE ALLOWING ACCESS BY THIRD PARTIES NOT AFFILIATED WITH LICENSEE'S AUTO
DEALERSHIP BUSINESS.
LICENSE FEE. LICENSEE SHALL PAY LICENSOR THE INITIAL SUM OF ____________ DOLLAR
($_________ AS CONSIDERATION FOR THE LICENSE GRANTED HEREUNDER.
<PAGE> 56
MONTHLY ACCESS FEE. LICENSEE SHALL PAY LICENSOR A MONTHLY ACCESS FEE OF ONE
HUNDRED AND FIFTY DOLLARS ($150.00) AND BE ENTITLED TO AN ACCESS VIA UNIQUE
PASSWORD(S) ALLOWING SIMULTANEOUS LOGON FOR A MAXIMUM OF TWO USERS PER SESSION.
SYSTEM REQUIREMENTS. DEALER SHALL PROVIDE AT THEIR OWN EXPENSE A PERSONAL
COMPUTER AND RELATED EQUIPMENT THAT MEETS OR EXCEEDS THE FOLLOWING MINIMUM
SPECIFICATIONS:
133 Pentium Processor; 32MB RAM; 33.6 Modem (The faster the better!); 2GB Hard
Drive; Windows '95; ISP (Internet Service Provider - ie: AT & T, Netcom, MCI
.... ); Netscape Navigator Web Browser Software (version 3.0 or later).
TECHNICAL SUPPORT. LICENSOR SHALL MAINTAIN FOR THE BENEFIT OF THE LICENSEE A
TECHNICAL SUPPORT HELP-LINE. LICENSOR SHALL ESTABLISH AND STAFF SUCH HELP-LINE
WITH PERSONS KNOWLEDGEABLE ABOUT THE DRT PROGRAM. THE HOURS OF AVAILABILITY
SHALL BE BETWEEN 6:00 A.M. AND 5:00 P.M. PST, EXCLUDING SATURDAYS AND SUNDAYS.
TECHNICIANS WILL PROVIDE ASSISTANCE TO LICENSEE WITH RESPECT TO ACCESSING AND
USING THE DRT PROGRAM ONLY. TECHNICAL ASSISTANCE AND SUPPORT REGARDING COMPUTER
OR RELATED HARDWARE ARE BEYOND THE SCOPE OF THIS AGREEMENT AND WILL NOT BE
PROVIDED BY LICENSOR. THE HOURS OF THE AVAILABILITY OF THE HELP-LINE ARE SUBJECT
TO CHANGE AT THE SOLE DISCRETION OF THE LICENSOR.
COVENANTS OF LICENSEE. DURING THE TERM OF THIS AGREEMENT:
LICENSEE SHALL ADOPT AND ENFORCE SUCH INTERNAL POLICIES, PROCEDURES AND
MONITORING MECHANISMS AS ARE NECESSARY TO ENSURE THAT THE DRT PROGRAM IS USED
ONLY IN ACCORDANCE WITH THIS AGREEMENT AND THAT ALL STEPS NECESSARY TO ENSURE
THAT NO PERSON OR ENTITY WILL HAVE UNAUTHORIZED ACCESS TO THE PROGRAMS ARE
TAKEN.
LICENSEE SHALL NOT: ASSIGN, SUBLICENSE, LEASE, ENCUMBER OR OTHERWISE TRANSFER OR
ATTEMPT TO TRANSFER THE DRT PROGRAM OR ANY PORTION THEREOF; PERMIT ANY THIRD
PARTY OTHER THAN THE LICENSEE OR ITS AUTHORIZED AGENT ACTING IN BEHALF OF
LICENSEE, TO HAVE ACCESS TO THE DRT PASSWORDS OR TO USE PROGRAMS, WHETHER BY
TIMESHARING, NETWORKING, OR ANY OTHER MEANS; DUPLICATE, MODIFY, TRANSLATE,
REVERSE, ENGINEER, DECOMPILE OR DISASSEMBLE THE DRT PROGRAM; POSSESS OR USE THE
PROGRAMS OR ANY PORTION THEREOF, OTHER THAN IN MACHINE READABLE OBJECT CODE;
REMOVE ANY COPYRIGHT, TRADEMARK, PATENT OR OTHER PROPRIETARY NOTICES FROM THE
DRT PROGRAM(S), OR ANY PORTION THEREOF WITHOUT THE EXPRESS WRITTEN CONSENT OF
LICENSOR.
PROGRAM MODIFICATIONS: ONLY THE LICENSOR SHALL MAKE PROGRAM MODIFICATIONS.
LICENSOR SHALL FROM TIME TO TIME PROVIDE UPGRADES AND/OR MODIFICATIONS TO THE
DRT PROGRAM TO LICENSEE. LICENSEE SHALL ACCEPT ANY UPGRADES OR OTHER
MODIFICATION MADE BY LICENSOR TO THE PROGRAMS.
NO WARRANTY. THE PROGRAMS ARE PROVIDED ON AN "AS-IS" BASIS. LICENSOR MAKES NO
WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO
ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
LIMITATION OF REMEDIES. REGARDLESS OF WHETHER ANY REMEDY SET FORTH HEREIN FAILS
OF ITS ESSENTIAL PURPOSE, IN NO EVENT WILL THE LICENSOR BE LIABLE THE DAMAGES TO
THE LICENSEE FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT OR SIMILAR DAMAGES,
INCLUDING ANY LOST PROFITS OR LOST DATA BEYOND THE ACCESS FEE PAID FOR THE MONTH
IN WHICH THEY OCCURRED, ARISING OUT OF THE USE OR INABILITY TO USE THE DRT
PROGRAM OR ANY DATA SUPPLIED THEREWITH.
PROPRIETARY DATA. LICENSEE ACKNOWLEDGES THAT THE PROGRAMS ARE PROPRIETARY TO
LICENSOR AND THAT IT HAS (AND WILL HAVE) NO INTEREST THEREIN OR IN ANY
MODIFICATIONS OR IMPROVEMENTS THERETO, AND HEREBY ASSIGNS TO LICENSOR ALL RIGHTS
IN ANY SUCH MODIFICATIONS OR IMPROVEMENTS MADE BY OR ON BEHALF OF LICENSEE.
CONFIDENTIALITY. FOR THE PURPOSE OF THIS AGREEMENT, CONFIDENTIAL INFORMATION
INCLUDES THE DRT PROGRAMS AND ALL OTHER INFORMATION PROVIDED BY LICENSOR MARKED
"CONFIDENTIAL." INFORMATION SHALL NOT BE DEEMED CONFIDENTIAL INFORMATION AND
LICENSEE AND LICENSEE'S EMPLOYEES SHALL HAVE NO OBLIGATION WITH RESPECT TO ANY
SUCH INFORMATION IF SUCH INFORMATION: (A) IS OR FALLS INTO THE PUBLIC DOMAIN
THROUGH NO WRONGFUL ACT OF LICENSEE OR THE LICENSEE'S EMPLOYEES; (B) IS
RIGHTFULLY RECEIVED FROM A THIRD PARTY WHO IS WITHOUT RESTRICTION AND WITHOUT
BREACH OF THIS AGREEMENT; (C)
<PAGE> 57
IS APPROVED FOR RELEASE BY WRITTEN AUTHORIZATION OF AN OFFICER OF LICENSOR; OR
(D) IS DISCLOSED PURSUANT TO THE REQUIREMENTS OF A GOVERNMENTAL AGENCY OR
OPERATION OF LAW.
Should the licensee or licensee's employees learn of confidential information
from licensor or any other source, neither licensee nor licensee's employees
shall, at any time during the term, or for one year thereafter, disclose such
information to any individual, agency, company or other entity. Licensee shall
not use such confidential information for licensee's own advantage other than as
permitted by this agreement.
BOTH PARTIES RECOGNIZE AND ACKNOWLEDGE THAT BREACH OF THIS SECTION 13 WOULD
CAUSE IRREPARABLE INJURY INADEQUATELY COMPENSABLE IN DAMAGES. ACCORDINGLY,
LICENSOR MAY SEEK AND OBTAIN INJUNCTIVE RELIEF AGAINST A BREACH OR THREATENED
BREACH HEREOF, IN ADDITION TO ANY OTHER LEGAL REMEDIES THAT MAY BE AVAILABLE AT
LAW OR IN EQUITY.
14. ASSIGNMENT. EXCEPT FOR ASSIGNMENTS TO AFFILIATES, PROVIDED EACH SUCH
AFFILIATE AGREES TO BE BOUND BY THE TERMS HEREOF, LICENSEE MAY NOT, WITHOUT
LICENSOR'S PRIOR WRITTEN CONSENT, ASSIGN ITS RIGHTS OR DELEGATE ITS OBLIGATIONS
UNDER THIS AGREEMENT.
SEVERABILITY. IF ANY PROVISION OF THIS AGREEMENT SHALL BE HELD TO BE INVALID,
ILLEGAL OR ENFORCEABLE, SUCH DETERMINATION SHALL IN NOR WAY ALTER OR IMPAIR THE
VALIDITY, LEGALITY AND ENFORCEABILITY OF THE REMAINING PROVISIONS OF THIS
AGREEMENT.
GOVERNING LAW. THE FORMATION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS IN EFFECT IN THE STATE OF
CALIFORNIA.
ENTIRE AGREEMENT. THIS AGREEMENT AND ITS PREAMBLE CONSTITUTE THE ENTIRE
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
SHALL SUPERSEDE ALL PREVIOUS ORAL AND WRITTEN PROPOSALS, NEGOTIATIONS,
REPRESENTATIONS, COMMITMENTS AND OTHER COMMUNICATIONS BETWEEN THE PARTIES. THIS
AGREEMENT MAY NOT BE RELEASED, DISCHARGED, CHANGED OR MODIFIED EXCEPT BY A
WRITTEN INSTRUMENT THAT IS SIGNED BY DULY AUTHORIZED REPRESENTATIVES OF EACH
PARTY AND THAT EXPRESSLY INTENDS SUCH RELEASE, DISCHARGE, CHANGE OR
MODIFICATION.
INDEPENDENT CONTRACTORS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR CONSTRUED
BY THE PARTIES OR ANY THIRD PERSON TO CREATE A FRANCHISE, AGENCY, PARTNERSHIP OR
JOINT VENTURE BETWEEN LICENSOR AND LICENSEE.
WAIVER. A FAILURE OF THIS LICENSOR TO ENFORCE AT ANY TIME ANY PROVISION OF THIS
AGREEMENT SHALL IN NO WAY AFFECT THE FULL RIGHT OF THE LICENSOR TO ENFORCE SUCH
PROVISION AT ANY TIME THEREAFTER.
<PAGE> 1
EXHIBIT 10.25
[*] Confidential treatment has been requested for certain portions of this
exhibit.
DATED 23rd NOVEMBER, 1998
autobytel.com inc.
and
INCHCAPE AUTOMOTIVE LIMITED
------------------------
SHARE PURCHASE AGREEMENT
------------------------
Slaughter and May
35 Basinghall Street
London EC2V 5DB
(NPB/NSXM)
CD982390.004
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. Interpretation 1
2. Sale and Purchase 5
3. Repayment of Indebtedness by the Company to ABT 5
4. Consideration 5
5. Completion 6
6. ABT's Warranties and Covenants 7
7. Restrictions on ABT's Business Activities 8
8. Restrictions on the activities of the Company, Inchcape and
the Inchcape Group 9
9. Access 10
10. Effect of Completion 10
11. Remedies and Waivers 10
12. Restrictions on Share Transfers 10
13. Further Assurance 13
14. Entire Agreement 13
15. Notices 14
16. Announcements 15
17. Restrictive Trade Practices Act 1976 16
18. Costs and Expenses 16
19. Counterparts 16
20. Time of Essence 16
21. Invalidity 16
22. Choice of Governing Law 17
23. Jurisdiction 17
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
24. Agent for Service 17
</TABLE>
SCHEDULES
<TABLE>
<S> <C>
Schedule 1 (Completion Arrangements) 19
Schedule 2 (Representations and Warranties) 21
Schedule 3 (Ownership of the Shares) 24
Schedule 4 (Basic Information about the Company) 25
Schedule 5 (List of Commitments and Liabilities of the Company) 27
</TABLE>
<PAGE> 4
THIS AGREEMENT is made on the 23rd day of November, 1998
BETWEEN:-
1. autobytel.cominc., a company incorporated in Delaware whose principal
office is at 18872 MacArthur Boulevard, Irvine, California 92612, USA
("ABT")
AND
2. INCHCAPE AUTOMOTIVE LIMITED, a company incorporated in England under
number 3580629 whose registered office is at 33 Cavendish Square, London
W1M 9HF ("INCHCAPE")
WHEREAS:-
(A) Particulars of the Company (as defined in this agreement) are set out in
Schedule 4 (Basic Information about the Company).
(B) ABT has agreed to sell or procure the sale of, and Inchcape has agreed to
purchase, the Shares (as defined in this agreement) on the terms and
subject to the conditions of this agreement.
(C) The Company has entered into a License and Services Agreement with ABT of
even date herewith.
(D) The business of the Company is to conduct and develop an electronic
commerce business in connection with the sale in the Territory of new and
used cars through the Internet.
IT IS HEREBY AGREED as follows:-
1. INTERPRETATION
1.1 In this agreement and the Schedules to it:-
<TABLE>
<S> <C>
"ABT'S SOLICITORS" means Skadden, Arps, Slate, Meagher & Flom LLP;
"BOOKS AND RECORDS" has its common law meaning and includes, without
limitation, all notices, correspondence, orders,
inquiries, drawings, plans, books of account and
other documents and all computer disks or tapes or
other machine legible programs or other records;
"BUSINESS DAY" means a day (other than a Saturday or a Sunday) on which
banks are open for business in London and New York;
</TABLE>
<PAGE> 5
2
<TABLE>
<S> <C>
"BUSINESS INFORMATION" means all information and records (whether or not
confidential and in whatever form held) including
(without limitation) all business plans and
forecasts, monthly financial statements and contact
lists of motor dealers contacted or visited by the
Company;
"BUSINESS PLAN" means the business plan for the five year period to
31st December 2003 to be adopted by the Company
prepared by, inter alia, Inchcape and ABT and any
drafts thereof;
"COMPANIES ACTS" means the Companies Act 1985, the Companies Consolidation
(Consequential Provisions) Act 1985, the Companies Act 1989 and
Part V of the Criminal Justice Act 1993;
"COMPANY" means Auto-by-Tel UK Limited, basic information concerning which
is set out in Schedule 4 (Basic Information about the Company);
"COMPLETION" means completion of the sale and purchase of the Shares under
this agreement;
"COMPLETION DATE" means the date of this agreement;
"CONFIDENTIAL BUSINESS means Business Information (other than the Business
INFORMATION" Plan and any information contained therein) which is confidential
or not generally known;
"GROUP" means in relation to any body corporate, any
subsidiary undertaking for the time being of that
body corporate, any parent undertaking for the time
being of that body corporate and any subsidiary
undertaking for the time being of such a parent
undertaking;
"INCHCAPE'S SOLICITORS" means Slaughter and May;
"INTERNET" means the global collection of telecommunications and information
computer networks known as the Internet as may be constituted
from time to time;
"LICENSE AND SERVICES means the License and Services Agreement to be
AGREEMENT" entered into between ABT and the Company of even date herewith to
which is attached, inter alia, The Work Order for Initial
Localization Software Development;
</TABLE>
<PAGE> 6
3
<TABLE>
<S> <C>
"PERMITTED SECURITY means a mortgage, charge or pledge of all or any of the
INTEREST" Shares to a credit institution authorised for the purpose of
deposit-taking business by the Financial Services
Authority pursuant to the Banking Act 1987 provided
that any such mortgage, charge or pledge provides
that the provisions of clause 12 shall be applicable
to such Shares if such Shares are to be foreclosed
upon by a mortgagee, chargee or pledgee;
"PROCEEDINGS" means any proceeding, suit or action arising out of or in
connection with this agreement;
"PROPERTY" means freehold, leasehold or other immovable property in any part
of the world;
"RETAINED GROUP" means, in relation to its subsidiaries and
subsidiary undertakings from time to time, any
holding company of ABT and all other subsidiaries or
subsidiary undertakings of any such holding company
(except of the Company);
"RTPA 1976" means the Restrictive Trade Practices Act 1976;
"SERVICE DOCUMENT" has the meaning given in clause 24 (Agent for Service);
"SHARES" means all the issued ordinary shares of Ll each in the capital of
the Company;
"SHARE PURCHASE has the meaning given to it in clause 14 (Entire
DOCUMENTS" Agreement);
"TAX" OR "TAXATION" means and includes all forms of
taxation and statutory, governmental,
supra-governmental, state, principal, local
governmental or municipal impositions, duties,
contributions and levies, in each case whether of
the United Kingdom or elsewhere and whenever
imposed, and all penalties, charges, costs and
interest relating thereto and without limitation all
employment taxes and any deductions or withholdings
of any sort;
"TERRITORY" means the United Kingdom;
</TABLE>
<PAGE> 7
4
<TABLE>
<S> <C>
"WARRANTIES" means the representations and warranties set
out in Schedule 2 (Representations and
Warranties) given by ABT and any other
representations or warranties made by or on
behalf of ABT in this agreement or which have
become terms of this agreement and "WARRANTY"
shall be construed accordingly;
"WORKING HOURS" means 2.30 p.m. to 5.30 p.m. (London time) on a Business
Day;
</TABLE>
1.2 in this agreement, unless otherwise specified:-
(A) references to clauses, sub-clauses and Schedules are to clauses,
sub-clauses and Schedules to, this agreement;
(B) a reference to any statute or statutory provision shall be construed
as a reference to the same as it may have been, or may from time to
time be, amended, modified or re-enacted;
(C) references to a "COMPANY" shall be construed so as to include any
company, corporation or other body corporate, wherever and however
incorporated or established;
(D) references to a "PERSON" shall be construed so as to include any
individual, firm, company, government, state or agency of a state or
any joint venture, association or partnership (whether or not having
separate legal personality);
(E) references to "INDEMNIFY" and "INDEMNIFYING" any person against any
circumstance include indemnifying and keeping him harmless from all
actions, claims and proceedings from time to time made against that
person and all loss or damage and all payments, costs or expenses
made or incurred by that person as a consequence of or which would
not have arisen but for that circumstance;
(F) the expressions "BODY CORPORATE", "SUBSIDIARY", "SUBSIDIARY
UNDERTAKING" and "PARENT UNDERTAKING" shall have the meaning given
in the Companies Acts;
(G) references to writing shall include any modes of reproducing words
in a legible and non-transitory form;
(H) references to times of the day are to London time;
(I) headings to clauses and Schedules are for convenience only and do
not affect the interpretation of this agreement;
<PAGE> 8
5
(J) the Schedules form part of this agreement and shall have the same
force and effect as if expressly set out in the body of this
agreement, and any reference to this agreement shall include the
Schedules;
(K) (i) the rule known as the ejusdem generis rule shall not apply and
accordingly general words introduced by the word "other" shall
not be given a restrictive meaning by reason of the fact that
they are preceded by words indicating a particular class of
acts, matters or things; and
(ii) general words shall not be given a restrictive meaning by
reason of the fact that they are followed by particular
examples intended to be embraced by the general words.
2. SALE AND PURCHASE
2.1 ABT hereby agrees to sell or procure the sale of and Inchcape agrees to
purchase the Shares with all rights attached or accruing to them at
Completion.
2.2 ABT has the right to transfer or procure the transfer of legal and
beneficial title to the Shares.
2.3 The Shares shall be free from all charges and encumbrances and from all
other rights exercisable by or claims by third parties.
3. REPAYMENT OF INDEBTEDNESS BY THE COMPANY TO ABT
3.1 As at the date of this agreement, the Company owes L136,243 to ABT which
ABT confirms is an interest free loan repayable on demand. Inchcape
undertakes that, provided the License and Services Agreement has been
executed and delivered, it will procure the valid repayment by the Company
of such indebtedness, without interest, to ABT at Completion or within 2
Business Days of Completion.
3.2 Inchcape confirms that until such time as the License and Services
Agreement is validly terminated or, if earlier, until such time as
Inchcape ceases to own the entire beneficial interest in 50% or more of
the issued share capital of the Company or at least 50% of the votes
generally exercisable at any general meeting thereof, it will provide or
procure for the Company such finance as shall be necessary to ensure the
adequate funding of the Company to enable it to meet its obligations under
the License and Services Agreement.
4. CONSIDERATION
4.1 The total consideration for the sale of the Shares to Inchcape shall be
the payment by Inchcape of the sum of L2.00 in accordance with clause 5
(Completion).
4.2 In the event that, prior to the termination or expiry of the License and
Services Agreement, Inchcape or any member of the Inchcape Group sells any
or all of the
<PAGE> 9
6
Shares or any interest therein to a third party, otherwise than pursuant
to clause 12.8, ABT shall be entitled to receive, as additional
consideration for the sale of the Shares pursuant to clause 2, an amount
equal to 15% of any consideration paid pursuant to such sale. Such amount
shall be paid no later than five days following the completion of such
sale. If the consideration for the Shares or interest therein to be
received pursuant to such sale is other than cash, unless otherwise agreed
by ABT and Inchcape, an independent valuer (who shall be an
internationally recognised investment banking or accountancy firm,
experienced in the valuation of companies carrying on a similar business
to that of the relevant third party) shall be appointed by Inchcape to
assess the cash equivalent of such non-cash consideration and ABT shall be
entitled to receive an amount equal to 15% of the amount of the cash
equivalent so determined.
4.3 Inchcape shall notify ABT within five days following the appointment of an
independent valuer pursuant to clause 4.2 and, in the event that ABT shall
object to the appointment of such independent valuer within five days of
being so notified by Inchcape, either Inchcape or ABT may request the
President of the Institute of Chartered Accountants in England and Wales
to nominate a suitable independent valuer for the purpose of assessing the
cash equivalent of the non-cash consideration referred to in clause 4.2
who shall thereupon be appointed by Inchcape as aforesaid.
4.4 Prior to the termination or expiry of the License and Services Agreement,
except with the prior consent in writing of ABT (such consent not to be
unreasonably withheld or delayed), Inchcape shall not procure or permit
any change in the constitution or reorganisation of the affairs of the
Company the primary purpose of which is to undermine the commercial intent
of the parties as reflected in clause 4.2 above and clause 5.2(b) of the
License and Services Agreement. Nothing in this clause 4.4 shall be
construed as prohibiting the carrying on of the business of the Company in
the ordinary course. Furthermore, nothing in this clause 4.4 shall be
construed as prohibiting the directors of the Company from declaring a
dividend at any time or incurring borrowings for the purpose of paying
such a dividend or as requiring ABT's prior written consent in relation
thereto.
5. COMPLETION
5.1 Completion shall take place immediately after signature of this agreement
at the offices of Inchcape's Solicitors at 35 Basinghall Street, London
EC2V 5DB.
5.2 At Completion ABT shall do those things listed in Schedule 1 (Completion
Arrangements).
5.3 Inchcape shall not be obliged to complete this agreement unless ABT
complies fully with the requirements of sub-clause 5.2 and Schedule 1
(Completion Arrangements).
5.4 Payment of the amount stated in clause 4 (Consideration) in accordance
with Schedule 1 (Completion Arrangements) shall constitute payment of the
consideration
<PAGE> 10
7
for the Shares and shall discharge the obligations of Inchcape under
clause 2 (Sale and Purchase).
6. ABT'S WARRANTIES AND COVENANTS
6.1 ABT represents and warrants to Inchcape that each of the Warranties is
accurate in all respects and not misleading at the date of this agreement
and accepts that Inchcape is entering into this agreement in reliance upon
each of the Warranties.
6.2 ABT undertakes to disclose in writing to Inchcape anything which is or may
constitute a breach of or be inconsistent with any of the Warranties as
soon as reasonably practicable after it comes to the notice of ABT both
before, at the time of and after Completion.
6.3 ABT undertakes (if any claim is made against it in connection with the
sale of the Shares to Inchcape) not to make any claim against the Company
or any director, employee or adviser of the Company on whom it may have
relied before agreeing to any terms of this agreement.
6.4 Each of the Warranties shall be construed as a separate and independent
warranty and (except where expressly provided to the contrary) shall not
be limited or restricted by reference to or inference from the terms of
any other Warranty or any other term of this agreement.
6.5 No claim shall be brought under any of the Warranties unless the aggregate
liability of ABT in respect of all claims thereunder exceeds L5,000 (in
which event Inchcape shall be entitled to damages in respect of the full
amount of such claims and not just the excess) provided that the total
liability of ABT under the Warranties shall not in any event exceed
L136,243. No claim shall be brought against ABT in respect of any of the
Warranties unless Inchcape shall have given ABT written notice of such
claim specifying (in reasonable detail) the matter which gives rise to the
claim, the nature of the claim (but not necessarily the amount claimed in
respect thereof) on or before the date falling eighteen months after the
Completion Date PROVIDED THAT the liability of ABT in respect of any such
claim shall absolutely determine if such claim has not previously been
satisfied, settled or withdrawn unless legal proceedings in respect
thereof shall have been commenced against ABT within 9 months of the
giving of the notice as aforesaid.
6.6 Upon Inchcape becoming aware of any possible claim in respect of any of
the Warranties, Inchcape shall:
(A) as soon as practicable notify ABT thereof by written notice;
(B) subject to ABT indemnifying Inchcape in a form satisfactory to
Inchcape against any liability, cost, damage or expense which may be
incurred thereby, take such action and give such information, access
and assistance as ABT may reasonably request and ABT shall be
entitled to require Inchcape to take or
<PAGE> 11
8
procure to be taken such reasonable action and give such reasonable
information and assistance in order to avoid, dispute, resist,
mitigate, settle, compromise, defend or appeal any matter in respect
thereof or adjudication with respect thereto and Inchcape shall make
no, nor permit any, admission of liability, agreement, settlement or
compromise with any third party in relation to any matter giving
rise to such claim without the prior written consent of ABT such
consent not to be unreasonably withheld or delayed and shall take
all action to mitigate any loss suffered by it in respect of which a
claim could be made under the Warranties.
6.7 Inchcape shall not be entitled to recover damages or otherwise obtain
reimbursement or restitution more than once in respect of any individual
breach of the Warranties.
6.8 Inchcape shall not be entitled to claim that any fact, matter or
circumstance causes any of the Warranties to be breached if in relation to
any fact, matter or circumstance forming the basis of the claim Inchcape
or its officers or advisers had actual knowledge of it on or before the
date of this agreement.
7. RESTRICTIONS ON ABT'S BUSINESS ACTIVITIES
7.1 Without prejudice to the terms of the License and Services Agreement, ABT
undertakes to procure that each member of the Retained Group of which ABT
forms part will not, either alone or in conjunction with or on behalf of
any other person, do any of the following things:-
(A) for so long as the License and Services Agreement is in force,
either for its own account, or grant to any third party a licence
to, use the Software, or the Business Procedures in connection with
the operation of a Local Business in the Territory (and for the
purposes of this clause 7.1 (A), "Software", "Business Procedures"
and "Local Business" shall have the meaning attributed to them in
the License and Services Agreement);
(B) pass on any copy of the Business Plan to any third party or disclose
information derived therefrom concerning numbers of dealers,
proposed charges to dealers, amounts paid to any Internet on-line or
search engine providers and employee emoluments or Confidential
Business Information received by it from the Company to any third
party without such third party first having entered into a
confidentiality agreement providing, inter alia, that such
information shall not be used in any way for the purposes of
competing with the Company in the Territory during a minimum period
expiring on the earlier of 12 months following the entry into of
such confidentiality agreement and 31 December 2000 or during such
longer period as ABT using its reasonable endeavours is able to
negotiate but in any event not by virtue of this provision expiring
later than 31 March 2001.
(C) for so long as the License and Services Agreement is in force,
either for its own account, or grant to any Third Party the right
to, use the ABT Brand in
<PAGE> 12
9
connection with a Local Business in the Territory (and for the
purposes of this clause 7.1 (C), "ABT Brand" and "Local Business"
shall have the meaning attributed to them in the License and
Services Agreement);
(D) neither pending nor within two years after Completion, solicit or
entice away from the employment of the Company any person at present
an employee of the Company; nor
(E) assist any other person to do any of the foregoing things.
7.2 Each undertaking contained in this clause shall be construed as a separate
undertaking and if one or more of the undertakings is held to be against
the public interest or unlawful or in any way an unreasonable restraint of
trade, the remaining undertakings shall continue to bind ABT.
8. RESTRICTIONS ON THE ACTIVITIES OF THE COMPANY, INCHCAPE AND THE INCHCAPE
GROUP
8.1 For the avoidance of doubt and without prejudice to the terms of the
License and Services Agreement, nothing in this agreement shall be
construed to prohibit Inchcape, any member of the Inchcape Group or the
Company from competing with ABT or any member of the ABT Group outside the
Territory provided that it or they, as the case may be, do not utilise the
ABT Brand, Documentation, Global Brand Protocols and Software (in each
case as defined in the License and Services Agreement) in the Territory or
otherwise other than as permitted pursuant to the License and Services
Agreement.
8.2 Inchcape undertakes to procure that no information disclosed to it or to
the Company or any of their respective directors officers employees agents
representatives affiliates auditors or other persons acting on their
behalf (which information is confidential and not generally known other
than as a result of any breach of this undertaking) by ABT or any licensee
of ABT and no analyses, compilations, studies, notes or other documents
prepared by or for Inchcape or the Company which contain or are based upon
such information (including, without limitation, any information which is
the subject matter of the License and Services Agreement) shall be
disclosed (i) to any other member of the Inchcape Group save that Inchcape
shall be permitted to supply such information regarding the financial
position and affairs of the Company as shall reasonably be necessary for
the purposes of preparation of management and audited accounts of the
Inchcape Group of which the Company is a member and otherwise as may be
required to enable any holding company thereof to perform its legal and
regulatory obligations or (ii) to any third party other than by the
Company in accordance with the License and Services Agreement.
8.3 In the event that the License and Services Agreement shall be terminated
or upon the Company ceasing to carry on business or being placed into
liquidation, Inchcape shall procure that the name of the Company (and any
entity controlled thereby) is changed so as no longer to include the name,
initials, trademark, service mark or logo or any reference to the name,
initials, trademark, service mark or logo of ABT or any
<PAGE> 13
10
variation thereof or name, initials, trademark, service mark or logo that
may reasonably be confused therewith.
9. ACCESS
As from the date of this agreement, Inchcape and any persons authorised by
it will be given full access to the premises at Central Business Exchange
II, West Wing 382-390 Midsummer Boulevard, Central Milton Keynes, MK9 2RG
or any other premises from where the Company carries on business and all
the Books and Records and title deeds of the Company and the directors and
employees of the Company and the Company will be instructed to give
promptly all information and explanations to Inchcape or any such persons
as they may request.
10. EFFECT OF COMPLETION
Any provision of this agreement and any other documents referred to in it
which is capable of being performed after but which has not been performed
at or before Completion and all Warranties and covenants and other
undertakings contained in or entered into pursuant to this agreement shall
remain in full force and effect notwithstanding Completion.
11. REMEDIES AND WAIVERS
11.1 No delay or omission by any party to this agreement in exercising any
right, power or remedy provided by law or under this agreement shall:-
(A) impair such right, power or remedy; or
(B) operate as a waiver thereof
11.2 The single or partial exercise of any right, power or remedy provided by
law or under this agreement shall not preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
11.3 The rights, powers and remedies provided in this agreement are cumulative
and not exclusive of any rights, powers and remedies provided by law.
12. RESTRICTIONS ON SHARE TRANSFERS
12.1 Inchcape shall not (other than to a Group Transferee (as defined in clause
12.8 below)) transfer, by one or more transactions, 50% or more of the
Shares or any interest therein for a period of 365 days from the Launch
Date (as defined in the License and Services Agreement). Subject to the
provisions of this clause 12, Inchcape is and shall be entitled to
transfer up to (but not including) 50% of the Shares or any interest
therein by one or more transactions at any time after Completion.
<PAGE> 14
11
12.2 If, without prejudice to clause 12.1 and subject to clause 12.8, prior to
or within the one year period following the termination or expiry of the
License and Services Agreement, Inchcape wishes to transfer any Shares or
any interest therein (the "SALE SHARES") to a third party, Inchcape shall
give to ABT notice in writing (a "TRANSFER NOTICE") of such desire
together with details of any proposed third party purchaser thereof (the
"THIRD PARTY PURCHASER"), the purchase price and other material terms
agreed between Inchcape and the Third Party Purchaser and such Transfer
Notice shall constitute an offer made by Inchcape to ABT to acquire the
Sale Shares on the terms specified in the Transfer Notice. A Transfer
Notice shall, except as hereinafter provided, be irrevocable.
12.3 On receipt of the Transfer Notice, ABT shall have the right to purchase
all (but not some only) of the Sale Shares on the terms specified in the
Transfer Notice by giving written notice (the "ACCEPTANCE NOTICE") to
Inchcape within 1 month of the later of receipt of the Transfer Notice and
the delivery to ABT of a copy of the report of any independent valuer
appointed pursuant to clause 12.5.
12.4 ABT shall become bound to purchase the Sale Shares following the giving of
the Acceptance Notice to Inchcape. In such event, completion of the sale
and purchase of the Sale Shares shall take place within thirty days after
the giving of such Acceptance Notice. At such completion the transferor
shall deliver the Sale Shares free and clear of any liens, claims,
options, charges, encumbrances and third party rights howsoever arising.
ABT shall deliver, at closing, payment due from it in full in immediately
available funds for the Sale Shares. Each of the parties shall use its
reasonable endeavours to take or procure the taking of all such actions
and to execute or procure the execution of such additional documents as
are otherwise necessary or appropriate in connection therewith.
12.5
(i) In the event that the consideration for the Sale Shares to be
offered by the Third Party Purchaser is other than cash, an
independent valuer (who shall be an internationally recognised
investment banking or accountancy firm, experienced in the valuation
of companies carrying on a similar business to that of the Third
Party Purchaser) shall be appointed by Inchcape to assess the cash
equivalent of such non-cash consideration and if, pursuant to clause
12.4, ABT shall become bound to purchase the Sale Shares, ABT shall
deliver at closing to Inchcape an amount equal to the amount of the
cash equivalent so determined.
(ii) Inchcape shall notify ABT within five days following the appointment
of an independent valuer pursuant to clause 12.5(i) and, in the
event that ABT shall object to the appointment of such independent
valuer within five days of being so notified by Inchcape, either
Inchcape or ABT may request the President of the Institute of
Chartered Accountants in England and Wales to nominate a suitable
independent valuer for the purpose of assessing the cash
<PAGE> 15
12
equivalent of the non-cash consideration referred to in clause
12.5(i) who shall thereupon be appointed by Inchcape as aforesaid.
12.6 In the event that ABT do not exercise their pre-emption rights pursuant to
clauses 12.2, 12.3 and 12.4 to acquire all (but not some only) of the Sale
Shares, Inchcape shall (subject as hereinafter provided and to clause 4.2
(deferred consideration) be entitled to transfer the Sale Shares on a bona
fide arm's length sale for the consideration, whether cash or non-cash
consideration and other terms and, to the Third Party Purchaser if any
specified in the Transfer Notice PROVIDED THAT
(A) such transfer shall have been completed within a period of 180 days
after the date of the Transfer Notice; and
(B) if, as a result of such proposed transfer (and subject to sub-clause
(D) below) Inchcape shall cease to own the entire beneficial
interest in 50% or more of the issued share capital of the Company
or at least 50% of the votes generally exercisable at any general
meeting thereof, Inchcape shall obtain ABT's prior written consent
to such transfer, such consent not to be withheld where evidence and
commitments are provided to the reasonable satisfaction of ABT that
the Third Party Purchaser is financially able and willing to
guarantee the actual and contingent payment obligations of the
Company to ABT pursuant to the License and Services Agreement;
(C) if, as a result of such proposed transfer (and subject to sub-clause
(D) below) Inchcape shall continue to own the entire beneficial
interest in 50% or more of the issued share capital of the Company
or at least 50% of the votes generally exercisable at any general
meeting thereof, Inchcape shall obtain ABT's prior written consent
to such transfer, such consent not to be unreasonably withheld or
delayed; and
(D) with respect to any proposed transfer of Shares permitted pursuant
to this clause 12.6, Inchcape shall not transfer the Shares to a
competitor.
For the purposes of this clause 12.6 "COMPETITOR" means any entity either
in or outside the Territory which provides an independent (meaning an
entity not primarily concerned with the sale of products of the Group of
which it is a member) Internet on-line car buying service for new and used
cars at the time the Transfer Notice is served by Inchcape on ABT (the
"RESTRICTED BUSINESS") (except that the definition of "competitor" shall
not in any circumstances apply to a body corporate which holds not more
than 10 per cent. of any class of voting shares, or securities which are
convertible into securities which themselves carry voting rights, or
options to acquire any class of securities which themselves carry voting
rights in an entity carrying on the Restricted Business).
12.7 Without prejudice to clause 12.5, each of the parties hereby agrees that,
as between themselves, all transfers provided for in this clause 12 shall
be made only for consideration payable in cash (U.S. dollars and/or UK
pounds sterling).
<PAGE> 16
13
12.8 Inchcape shall be entitled at any time to transfer any of the Shares held
by it to a company which is a member of its Group ("GROUP TRANSFEREE").
Any Group Transferee acquiring Shares pursuant hereto shall be deemed to
enjoy the same rights and be deemed to be subject to the same obligations
as Inchcape under this clause 12. Inchcape shall remain a party to this
agreement and undertakes to ABT to procure the performance by such Group
Transferee of such obligations as if such Group Transferee were a party to
this agreement and to indemnify ABT from and against the breach by such
Group Transferee of any of its deemed obligations under this agreement.
Inchcape undertakes to procure that, if any such Group Transferee is to
cease at any time to be a member of such Group, such Group Transferee
prior to so ceasing shall have transferred all of the Shares held by it at
the time in question to Inchcape or to another member of such Group
pursuant to and in accordance, mutatis mutandis, with the provisions of
this clause 12.
12.9 For the purposes of this clause 12, "transfer" shall include, without
limitation: sale, assignment, transfer and creating or permitting to
subsist any mortgage, charge, pledge or lien or other security interest or
encumbrance other than a Permitted Security Interest. Inchcape shall at
any time be entitled to create a Permitted Security Interest in respect of
all or any of the Shares provided that it shall have given prior written
notice to ABT of its intention to make such mortgage, charge or pledge
prior to effecting the same, specifying the name and address of the
mortgagee, chargee or pledgee and representing that such mortgagee,
chargee or pledgee has agreed that the provisions of this clause 12 shall
be applicable to such Shares.
13. FURTHER ASSURANCE
ABT shall from time to time at its own cost, on being required to do so by
Inchcape, now or at any time in the future, do or procure the doing of all
such acts and/or execute or procure the execution of all such documents in
a form reasonably satisfactory to Inchcape as Inchcape may reasonably
request and consider necessary for giving full effect to this agreement
and securing to Inchcape the full benefit of the rights, powers and
remedies conferred upon Inchcape in this agreement.
14. ENTIRE AGREEMENT
14.1 For the purpose of this clause, "PRE-CONTRACTUAL STATEMENT" means a draft,
agreement, undertaking, representation, warranty, promise, assurance or
arrangement of any nature whatsoever, whether or not in writing, relating
to the Share Purchase Documents or any of them (as defined in sub-clause
14.2) made or given by a party to any of the Share Purchase Documents or
any other person at any time prior to execution of the Share Purchase
Documents.
14.2 This agreement, any disclosures notified by ABT to Inchcape in writing in
relation to the Company, and any other documents referred to in this
agreement (the "SHARE PURCHASE DOCUMENTS") constitute the whole and only
agreement between the parties relating to the sale and purchase of the
Shares.
12.10 Inchcape undertakes to procure that, during such time as it controls 50%
or more of the Shares, no change shall be made in the rights conferred by
the Shares and no shares in the capital of the Company shall be allotted
or issued without the prior written consent of ABT such consent not to be
unreasonably withheld or delayed PROVIDED THAT nothing in this clause
shall present an increase in the authorised share capital of the Company
or the allotment and/or issue of any additional Shares to Inchcape.
<PAGE> 17
14
14.3 Except to the extent repeated in any of the Share Purchase Documents, the
Share Purchase Documents supersede and extinguish any prior
Pre-contractual Statement relating thereto.
14.4 Each party acknowledges that in entering into the Share Purchase Documents
or any of them on the terms set out therein, it is not relying upon any
Pre-contractual Statement which is not expressly set out therein.
14.5 None of the parties shall have any right of action against any other party
to this agreement arising out of or in connection with any Pre-contractual
Statement (except in the case of fraud).
14.6 This agreement may only be varied in writing signed by each of the
parties.
15. NOTICES
15.1 Any notice or other communication given or made under or in connection
with the matters contemplated by this agreement shall be in writing (other
than writing on the screen of a visual display unit or other similar
device which shall not be treated as writing for the purposes of this
clause). For the avoidance of doubt, faxes are permitted.
15.2 Any such notice or other communication shall be addressed as provided in
sub-clause 15.3 and, if so addressed, shall be deemed to have been duly
given or made as follows:-
(A) if sent by personal delivery, upon delivery at the address of the
relevant party;
(B) if sent by first class post, four Business Days after the date of
posting; and
(C) if sent by facsimile, when despatched;
PROVIDED THAT if, in accordance with the above provisions, any such notice
or other communication would otherwise be deemed to be given or made
outside Working Hours, such notice or other communication shall be deemed
to be given or made at the start of Working Hours on the next Business
Day.
15.3 The relevant addressee, address and facsimile number of each party for the
purposes of this agreement, subject to sub-clause 15.4, are:-
<TABLE>
<CAPTION>
Name of Party Name of addressee Address Facsimile No.
------------- ----------------- ------- -------------
<S> <C> <C> <C>
Inchcape F.A.O. Managing 33 Cavendish Square, 0171 546 8444
Automotive Director London, W1M 9HF
Limited
</TABLE>
<PAGE> 18
15
<TABLE>
<S> <C> <C> <C>
autobytel.cominc. F.A.O. Chief Executive 11872 MacArthur 001949 225
Officer Boulevard 4401
Irvine
and California 92612
autobytel.cominc F.A.O. Senior Resident One Canada Square, 0171 519 7070
Partner, Skadden, Canary Wharf,
Arps, Slate, Meagher London E14 5DS
& Flom LLP
</TABLE>
15.4 A party may notify the other parties to this agreement of a change to
its name, relevant addressee, address or facsimile number for the
purposes of sub-clause 15.3 PROVIDED THAT such notification shall only
be effective on:-
(A) the date specified in the notification as the date on which the
change is to take place; or
(B) if no date is specified or the date specified is less than five
clear Business Days after the date on which notice is given, the
date falling five clear Business Days after notice of any such
change has been given.
15.5 The provisions of this clause 15 (Notices) shall not apply in relation to
the service of Service Documents.
16. ANNOUNCEMENTS
16.1 Subject to sub-clause 16.2, no announcement concerning the sale of the
Shares by ABT to Inchcape or any ancillary matter shall be made by either
party without the prior written approval of the other, such approval not
to be unreasonably withheld or delayed.
16.2 Either party may make an announcement concerning the sale of the Shares or
any ancillary matter if required by:-
(A) the law of any relevant jurisdiction; or
(B) any securities exchange or regulatory authority or governmental body
or quasi-governmental department or agency to which either party is
subject, wherever situated, including (without limitation) the
London Stock Exchange Limited or The Panel on Takeovers and Mergers,
whether or not the requirement has the force of law,
in which case the party concerned shall take all such steps as are
reasonable and practicable in the circumstances to agree the contents of
such announcement with the other party before making such announcement.
<PAGE> 19
16
16.3 The restrictions contained in this clause shall continue to apply after
Completion without limit in time.
17. RESTRICTIVE TRADE PRACTICES ACT 1976
If there is any provision of this agreement, or of any agreement or
arrangement of which this agreement forms part, which causes or would
cause this agreement or that agreement or arrangement to be subject to
registration under RTPA 1976, and this agreement or that agreement or
arrangement is not a non-notifiable agreement under RTPA 1976 then that
provision shall not take effect until the day after particulars of this
agreement or of that agreement or arrangement (as the case may be) have
been furnished to the Director General of Fair Trading pursuant to section
24 RTPA 1976.
18. COSTS AND EXPENSES
Except as otherwise stated in this agreement, each party shall pay its own
costs and expenses in relation to the negotiations leading up to the sale
of the Shares and to the preparation, execution and carrying into effect
of this agreement and all other documents referred to in it and ABT
confirms that no expense of whatever nature relating to the sale of the
Shares has been or is to be borne by the Company.
19. COUNTERPARTS
This agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, but shall not be effective until each
party has executed at least one counterpart. Each counterpart shall
constitute an original of this agreement, but all the counterparts shall
together constitute but one and the same instrument.
20. TIME OF ESSENCE
Except as otherwise expressly provided, time is of the essence of this
agreement.
21. INVALIDITY
If at any time any provision of this agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction,
that shall not affect or impair:-
(A) the legality, validity or enforceability in that jurisdiction of any
other provision of this agreement; or
(B) the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this agreement.
provided that the commercial affect of this agreement shall not be
materially altered as a result thereof.
<PAGE> 20
17
22. CHOICE OF GOVERNING LAW
This agreement shall be governed by and construed in accordance with
English law.
23. JURISDICTION
The parties to this agreement irrevocably agree for the exclusive benefit
of Inchcape that the courts of England are to have jurisdiction to settle
any disputes which may arise out of or in connection with this agreement
and that accordingly any Proceedings may be brought in the English courts.
Nothing contained in this clause 23 shall limit the right of Inchcape to
take Proceedings against ABT in any other court of competent jurisdiction,
nor shall the taking of Proceedings in one or more jurisdictions preclude
the taking of Proceedings in any other jurisdiction, whether concurrently
or not, to the extent permitted by the law of such other jurisdiction.
24. AGENT FOR SERVICE
24.1 ABT irrevocably appoints Skadden, Arps, Slate, Meagher & Flom LLP of One
Canada Square, Canary Wharf, London E14 5DS to be its agent for the
service of process in England. It agrees that any writ, summons, order,
judgment or other document relating to or in connection with any
Proceedings ("SERVICE DOCUMENT") may be effectively served on it in
connection with Proceedings in England and Wales by service on its agent.
24.2 Any Service Document shall be deemed to have been duly served if marked
for the attention of the Senior Resident Partner, Skadden, Arps, Slate,
Meagher & Flom LLP at One Canada Square, Canary Wharf, London E14 5DS or
such other address within England or Wales as may be notified and:
(A) left at the specified address; or
(B) sent to the specified address by first class post.
In the case of (A), the Service Document shall be deemed to have been duly
served when it is left. In the case of (B), the Service Document shall be
deemed to have been duly served two clear Business Days after the date of
posting.
24.3 If the agent at any time ceases for any reason to act as such, ABT shall
appoint a replacement agent having an address for service in England or
Wales and shall notify Inchcape of the name and address of the replacement
agent. Failing such appointment and notification, the Company shall be
entitled by notice to ABT to appoint a replacement agent to act on ABT's
behalf. The provisions of this clause 24 applying to service on an agent
apply equally to service on a replacement agent.
<PAGE> 21
18
24.4 A copy of any Service Document served on an agent shall be sent by post to
ABT. Failure or delay in so doing shall not prejudice the effectiveness of
service of the Service Document.
<PAGE> 22
19
SCHEDULE 1
(COMPLETION ARRANGEMENTS)
At Completion:-
1. ABT shall deliver to Inchcape or Inchcape's Solicitors a duly executed
transfer in respect of the Shares in favour of Inchcape or such person as
Inchcape may nominate and share certificates for the Shares in the name of
ABT (or other relevant transferor) and any power of attorney under which
any transfer is executed on behalf of ABT or nominee;
2. ABT shall deliver to Inchcape (or to any person whom Inchcape may
nominate) such of the following as Inchcape may require:-
(A) the statutory books (which shall be written up to but not including
the Completion Date), the certificate of incorporation (and any
certificate of incorporation on change of name) and common seal (if
any) of the Company; and
(B) a copy of the minutes of a duly held meeting of the directors of ABT
authorising the execution by ABT of this agreement (such copy
minutes being certified as correct by an officer of ABT);
3. ABT shall procure the present directors and secretary of the Company
(other than Kevin Turnbull) to resign their offices as such and to
relinquish any rights which they may have under any contract of employment
with the Company or under any statutory provision including any right to
damages for wrongful dismissal, redundancy payment or compensation for
loss of office or unfair dismissal, such resignations to be tendered at
the board meetings referred to in paragraph 4;
4. ABT shall procure a board meeting of the Company to be held at which:-
(A) it shall be resolved that the transfers relating to the Shares
delivered pursuant hereto shall be approved for registration and
(subject only to the transfers being duly stamped) Inchcape (or such
person as Inchcape may nominate) be registered as the holder of the
Shares concerned in the register of members;
(B) each of the persons nominated by Inchcape shall be appointed
directors and/or secretary, as Inchcape shall direct, such
appointments to take effect on the Completion Date;
(C) the resignations of the directors and secretary referred to in
paragraph 3 above shall be tendered and accepted so as to take
effect at the later of Completion and the close of the meeting and
each of the persons tendering his resignation shall deliver to the
Company an acknowledgement executed as a deed that he has no claim
against the Company for breach of contract, compensation for loss of
office, redundancy or unfair dismissal or on any
<PAGE> 23
20
other account whatsoever and that no agreement or arrangement is
outstanding under which the Company has or could have any obligation to
him;
(D) all existing instructions to banks shall continue. However, the existing
bank mandates will be amended to reflect the appointment of new directors;
(E) the situation of the registered office shall be changed to such address as
Inchcape may nominate and (subject to the provisions of the Companies
Acts) the accounting reference date shall be changed to 31st December;
(F) PricewaterhouseCoopers be appointed auditors of the Company.
ABT shall procure that minutes of the duly held board meeting, certified as
correct by the secretary of the Company and the resignations and
acknowledgements, referred to are delivered to Inchcape or Inchcape's
Solicitors;
Inchcape shall pay the sum of L2.00 to ABT being the total consideration payable
in respect of the Shares.
<PAGE> 24
21
SCHEDULE 2
(REPRESENTATIONS AND WARRANTIES)
The Sellers represent and warrant to Inchcape as follows:-
1. OWNERSHIP OF THE SHARES
ABT is the sole beneficial owner of the Shares set opposite its name in
Schedule 3 (Ownership of the Shares), and such shares in aggregate
constitute the entire issued and allotted share capital of the Company.
2. CAPACITY OF ABT
2.1 ABT is duly incorporated and has the requisite power and authority to
enter into and perform this agreement.
2.2 This agreement constitutes binding obligations of ABT in accordance with
its terms.
2.3 The execution and delivery of, and the performance by ABT of its
obligations under, this agreement is within its powers, has been duly
authorised by all necessary action on its part and so far as it is aware
does not, and will not, violate any provision of law or any rule,
regulation, order, writ, judgment, decree or other determination presently
in effect applicable to it or its constitutional documents.
3. ARRANGEMENTS BETWEEN THE COMPANY AND ABT
Save in respect of indebtedness of L136,243 referred to herein owing by
the Company to ABT (to be repaid in accordance with clause 3 (Repayment of
Indebtedness by the Company to ABT)), no indebtedness (actual or
contingent) and no contract or arrangement other than at arm's length is
outstanding between the Company and ABT or any person required to resign
as a director of the Company pursuant to Schedule 1.
4. GROUP STRUCTURE, ETC.
4.1 The Shares are fully paid up.
4.2 There is no agreement or commitment outstanding with or by the Company
which calls for the allotment, issue or transfer of, or accords to any
person the right to call for the allotment or issue of, any shares
(including the Shares) or debentures in or securities of the Company.
5. OPTIONS, MORTGAGES AND OTHER ENCUMBRANCES
5.1 There is no option, right to acquire, mortgage, charge, pledge, lien or
other form of security or encumbrance or equity on, over or affecting the
Shares or any of them and
<PAGE> 25
22
there is no agreement or commitment to give or create any and no claim has
been made by any person to be entitled to any.
5.2 So far as ABT is aware, no option, right to acquire, mortgage, charge,
pledge, lien (other than a lien arising by operation of law in the
ordinary course of trading) or other form of security or encumbrance or
equity on, over or affecting the whole or any part of the undertaking or
assets of the Company is outstanding and there is no agreement or
commitment to give or create any and no claim has been made by any person
to be entitled to any.
6. CONTRACTS AND COMMITMENTS, LIABILITIES
6.1 So far as ABT is aware (having made no specific enquiry other than of
Kevin Turnbull), the Company has no material liabilities (whether actual,
contingent, unqualified, disputed or otherwise) including, without
limitation, contracts, arrangements with, and commitments to, third
parties, insurance policies and borrowings which are not disclosed by ABT
in Schedule 5 (List of Commitments and Liabilities of the Company).
6.2 ABT has not entered into any agreement with the Company other than the
subscription of the Shares, the memorandum and articles of association of
the Company (as amended by written resolution dated 29th October 1998),
the License and Services Agreement and matters concerning the indebtedness
referred to in clause 3.1 and the indebtedness of the Company to Inchcape
Motors International plc or Inchcape as the case may be referred to in
paragraph 1.2 of Schedule 5.
7. INSOLVENCY
7.1 So far as ABT is aware (having made no specific enquiry other than of
Kevin Turnbull), no order has been made and no resolution has been passed
for the winding up of the Company or for a provisional liquidator to be
appointed in respect of the Company and no petition has been presented and
no meeting has been convened for the purpose of winding up the Company.
7.2 So far as ABT is aware (having made no specific enquiry other than of
Kevin Turnbull), no administration order has been made and no petition for
such an order has been presented in respect of the Company and no receiver
(which expression shall include an administrative receiver) has been
appointed in respect of the Company or all or any of its assets.
7.3 So far as ABT is aware (having made no specific enquiry other than of
Kevin Turnbull), no unsatisfied judgment is outstanding against the
Company.
8. LITIGATION
So far as ABT is aware (having made no specific enquiry other than of
Kevin Turnbull), the Company is not engaged in any litigation or
arbitration, administrative
<PAGE> 26
23
or criminal proceedings, whether as plaintiff, defendant or otherwise, and
no litigation or arbitration, administrative or criminal proceedings by or
against the Company is pending, threatened or expected and so far as ABT
is aware (having made no specific enquiry other than of Kevin Turnbull),
there is no fact or circumstance likely to give rise to any such
litigation or arbitration, administrative or criminal proceedings or to
any proceedings against any director or employee (past or present) of the
Company in respect of any act or default for which the Company might be
vicariously liable.
9. DELINQUENT AND WRONGFUL ACTS
9.1 So far as ABT is aware (having made no specific enquiry other than of
Kevin Turnbull), the Company has not committed or is liable for any
criminal, illegal, unlawful or unauthorised act or breach of any
obligation or duty whether imposed by or pursuant to statute, contract or
otherwise.
9.2 So far as ABT is aware (having made no specific enquiry other than of
Kevin Turnbull), the Company has not received notification that any
investigation or inquiry is being or has been conducted by any
governmental or other body in respect of the affairs of the Company and
ABT (having made no specific enquiry other than of Kevin Turnbull) is not
aware of any circumstances which would give rise to such investigation or
inquiry.
10. INTELLECTUAL PROPERTY
The Company has applied for registration as a data user and so far as ABT
is aware (having made no specific enquiry other than of Kevin Turnbull)
the Company has complied with the Data Protection Principles as set out in
the Data Protection Act 1984.
11. THE ACCOUNTS AND TAX
The Company not realised any taxable profits other than the invoice dated
19th October 1998 from the Company to Inchcape or chargeable gains since
incorporation and the Company has not engaged in any transactions or
agreements with ABT or any member of the ABT Group other than those
transactions and agreements referred to in Warranty 6.2 above.
<PAGE> 27
24
SCHEDULE 3
(OWNERSHIP OF THE SHARES)
Name and address of, and numbers of Shares beneficially owned by, ABT
<TABLE>
<CAPTION>
Number of
Ordinary
Full name Registered address Shares owned
--------- ------------------ ------------
<S> <C> <C>
autobytel.cominc. 18872 MacArthur 2
Boulevard, Irvine,
California 92612, USA
</TABLE>
Name and address of registered holder of Shares in the Company
<TABLE>
<CAPTION>
Number of
Ordinary
Full name Registered address Shares owned
--------- ------------------ ------------
<S> <C> <C>
Auto-by-Tel International 18872 MacArthur 2
LLC Boulevard, Irvine,
California 92612, USA
</TABLE>
<PAGE> 28
25
SCHEDULE 4
(BASIC INFORMATION ABOUT THE COMPANY)
<TABLE>
<S> <C> <C> <C>
1. Registered number : 03470555
2. Date of incorporation : 19th November, 1997
3. Place of incorporation : England
4. Address of registered office : One Canada Square
39th Floor
London
E14 5DS
5. Class of company : Private company limited by shares
6. Authorised share capital : L1,000 divided into 1000 ordinary shares of
L1.00 each
7. Issued share capital : 2 ordinary shares of L1.00 each
8. Directors:
Full name Usual residential address Nationality
Mark Wayne Lorimer 18872 MacArthur Blvd. American
Suite 200
Irvine
California
USA 92612
Robert Steven Grimes 152 West 57th Street American
24th Floor
New York
New York 10019
USA
Kevin Hugh Burgoyne 9, Cedar Grange British
Turnbull Harrogate
N. Yorks HG2 9NY
9. Secretary:
Full name Usual residential address
Mark Wayne Lorimer 18872 MacArthur Blvd. American
Suite 200
Irvine
California
USA 92612
</TABLE>
<PAGE> 29
26
<TABLE>
<S> <C> <C>
10. Accounting reference date : 30th November
11. Tax residence : UK
12. Business activities : Electronic commerce
</TABLE>
<PAGE> 30
27
SCHEDULE 5
(LIST OF COMMITMENTS AND LIABILITIES OF THE COMPANY)
1. Indebtedness of the Company
1.1 The Company has an interest-free loan, repayable on demand from ABT in the
amount of L136,243 to be repaid in accordance with clause 3.1.
1.2 The Company has an interest-free loan, repayable on demand from Inchcape
Motors International plc in the amount of L200,000 and an interest-free
loan from Inchcape Motors International plc in the amount of L245,372 (as
at 31st October, 1998) relating to payroll and other expenses for K.
Turnbull and S. Butler who are at present on the payroll of Inchcape
Motors International plc. On Completion, both such debts will be assigned
by Inchcape Motors International plc to Inchcape Automotive Limited.
2. Assets
The following assets were purchased and acquired by Inchcape Motors
International p1c. The costs of the following assets will be reimbursed to
Inchcape Motors International plc on or after Completion.
<TABLE>
<CAPTION>
ITEM OF HARDWARE QUANTITY PRICE EACH(L) VALUE(L)
---------------- -------- ------------- --------
<S> <C> <C> <C>
Deskpro EP6266X with 5 1,096.84 5,484.20
monitor, keyboard, modem,
multimedia 32mb 5dram
Satellite Pro 480CDT with 5 1,991.39 9,956.95
modem, 32mb
HP 670C Deskjet 8 112.15 897.20
Laserjet 6NP 1 564.51 564.51
Laserjet 3100 1 473.44 473.44
Tecra 780DVD with modem 3
and E link card 2,788.80 11,155.20
Infocus 420 PC Projector 2 3,063.33 6,126.66
HP Scanjet 5100C 1 149.78 149.78
HP Deskjet 720C 1 157.31 157.31
2 laptops from Inchcape 2 Value not known Value not known
Kevin Turnbull
Keyboard 1 66.00 66.00
Monitor 1 165.95 165.95
</TABLE>
<PAGE> 31
28
<TABLE>
<S> <C> <C> <C>
Card Station 1 236.55 236.55
Printer Switch 2 125.00 250.00
Mouse 6 25.00 150.00
SUB-TOTAL L35,833.75
==========
Brought forward total L35,833.75
==========
</TABLE>
<TABLE>
<CAPTION>
Software/Other items Quantity Price each(L) Value(L)
- -------------------- -------- ------------- --------
<S> <C> <C> <C>
MS Office Standard 14 319.56 4,474.72
MS Access 1 330.00 330.00
MS Project 1 308.00 308.00
Corel Draw 1 261.00 261.00
MS Schedule 1 73.00 73.00
Configuration of PC's 1 1,960.00 1,960.00
Modem Cards 7 131.18 918.26
Extra 32mb RAM 5 91.40 457.00
Network Cards 5 80.55 402.75
Cables and sundry equipment 108.50
Sub-total L 9,293.23
==========
TOTAL L45,126.98
==========
</TABLE>
3. Summary of Employees' Contracts
<TABLE>
<CAPTION>
Date of
Date of offer acceptance Starting date Summary of employment
Name of of of for terms including annual
Employee employment employment employment Position salary & bonus
- ------------ ------------- ------------ -------------- ---------- ----------------------------
<S> <C> <C> <C> <C> <C>
1. Kevin 13th January, N/A 15th January, Chief L125,000 plus bonus in the
Turnbull 1998 1998 Executive two calendar years (i.e.
1998 and 1999) of up to
40% of base salary; in third
to fifth calendar years of
</TABLE>
<PAGE> 32
29
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Date of offer Date of Starting date Summary of employment
Name of of acceptance for terms including annual
Employee employment of employment employment Position salary & bonus
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
employment, a profit share
of 5% of profit before tax
capped at L250,000 per
annum. Pension contribution
is 15% of base salary per
annum; two company cars.
Employment contract is
terminable on six months'
notice.
Salary is currently being
paid by Inchcape Motors
International plc.
- ---------------------------------------------------------------------------------------------------------------------
2. Suzanne 19th March, 23rd March, 24th March, Manager, PR L30,000 plus bonus of
Butler 1998 1998 1998 & Events of up to 20% of base salary;
company car. Salary is
currently being paid by
Inchcape Motors
International plc.
- ---------------------------------------------------------------------------------------------------------------------
3. Nicola 29th 30th 26th October, Operations/ L16,000. No pension
Young September, September, 1998 Customer benefits.
1998 1998 service
- ---------------------------------------------------------------------------------------------------------------------
4. Jordanna 10th May, 12th May, 18th May, Regional L30,000 plus bonus of up
Goswell 1998 1998 1998 Training to 20% of base salary;
Manager company car.
- ---------------------------------------------------------------------------------------------------------------------
5. Jonathan 17th May, 10th July, Operations L75,000 plus bonus of
Beveridge 1998 1998 Director up to L25,000. During
first year of employment,
L10,000 of the potential
bonus payment is guaranteed;
pension contribution is 10%
of base salary per annum;
company car. Employment
contract is terminable on
six months' notice.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 33
30
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Name of Date of offer Date of Starting date Position Summary of employment
Employee of acceptance for terms including annual
employment of employment salary & bonus
employment
6. Alan 17th May, 18th May, 18th May, Regional L35,000 plus bonus of up to
Crane 1998 1998 1998 Sales 20% of base salary;
Manager company car
7. Derek 28th May, 28th May, 1st July, Regional L30,000 plus bonus of up to
Mars 1998 1998 1998 Training 20% of base salary;
Manager company car
8. Marianne 10th June, 20th June, 29th June, Call Centre L25,000 plus bonus of
Kilsby 1998 1998 1998 Manager Pound 3,000 based on agreed
achievement objectives
9. Nigel 16th June, -- -- Regional L36,000 plus bonus of up to
White 1998 Sales 20% of base salary;
Manager company car
10. Roger 24th June, 4th July, 17th August, Financial L40,000 plus bonus of up to
Keith 1998 1998 1998 Controller 20% of base salary;
11. Peter 30th June, 2nd July, 6th July, Regional L35,000 plus bonus of up to
Bradshaw 1998 1998 1998 Sales 20% of base salary;
Manager company car
12. Nick 3rd July, 6th July, 3rd August, Regional L37,000 plus bonus of up to
Deacon 1998 1998 1998 Sales 20% of base salary; pension
Manager contribution of 5% of base
salary; company car
13. Paul 7th July, -- -- Business L40,000 plus bonus of up to
Donaldson 1998 Development 20% of base salary;
Manager company car
14. Roger 20th August, 24th August, 21st September, Regional L30,000 plus bonus of up to
Haymer 1998 1998 1998 Training 20% of base salary; pension
Manager contribution of 5% of base
salary per annum; company car
</TABLE>
<PAGE> 34
31
<TABLE>
<S> <C> <C> <C> <C> <C>
Name of Date of offer Date of Starting date Position Summary of employment
Employee of acceptance for terms including annual
employment of employment salary & bonus
employment
15. Jonathan 4th 7th 12th October, IT Manager L40,000 plus bonus of up to
Matthews September, September, 1998 20% of base salary; pension
1998 1998 contribution of 5% of base
salary; company car
allowance of L4,000 per annum.
16. Dharmesh 30th October, 2nd 1st Database L20,000 plus bonus of up to
Chudasama 1998 November, December, Administrator 20% of base salary; pension
1998 1998 contribution of 5% of base salary.
</TABLE>
Unless otherwise stipulated above, all employment contracts are terminable
by either party on one month's notice in writing. Unless otherwise
stipulated, the above employment contracts provide for pension
contributions on terms to be agreed as and when the pension scheme is
established. There will be a period of service requirement before
employees will be eligible to join the proposed scheme.
4. PAYE/National Insurance
All liabilities in respect of PAYE and National Insurance contributions in
respect of all employees of the Company (other than Kevin Turnbull and
Suzanne Butler who are on the payroll of Inchcape Motors International p1c
as at the date of this agreement) have been fully-paid and no liabilities
in respect of PAYE and National Insurance are outstanding as at the date
of this agreement.
5. List of motor dealers visited and details of commitments (if any) made
Document 5A shows the list of motor dealers who have been visited by the
Company. Those dealers who are highlighted have made a verbal commitment
to the Company to operate the ABT service and to reserve the appropriate
postcode territory for the supply of new car sales. One dealer, Elt
Brothers (AC) in the Birmingham postal district has written to the Company
agreeing to operate the ABT service. However, the terms on which Elt
Brothers (AC) would be involved are contingent upon a formal dealer
agreement being signed.
No dealer has yet entered into a legally binding contract with the
Company.
6. Direct Marketing programme
A direct marketing campaign has been commenced in-house by the Company
which targets the top car dealer groups and resulted in up to 200 direct
mail pieces being
<PAGE> 35
[*] Confidential Treatment Requested
32
sent out. The mailing comprised a letter, corporate brochure and one
colour advert of the Company. Each of the mailing pieces cost L0.40. This
direct marketing campaign commenced at the beginning of September 1998 and
continued through October 1998. This campaign will be extended through the
November/December 1998 period to the next volume tier of car dealer
groups. Up to 2,500 direct mail pieces will be sent out during this
period.
7. Public relations cost
The Company has employed the services of a public relations agency,
Quadrangle Communications Limited who receive a monthly retainer of L7,000
excluding VAT. A spreadsheet for the trade launch campaign is attached as
Document 5B.
8. Information providers; Finance & Insurance Companies
The Company has contacted CAP (emap National Publications Limited),
Glass's Guides (Glass's Information Services Limited), JATO (Jato Dynamics
Limited) and the BBC (British Broadcasting Corporation) with a view to
such companies and corporation becoming involved in the capacity of
information providers to the Company to support the information content on
the Company's website. No formal agreement has been entered into with any
of the parties.
The Company is currently in discussions with certain finance and insurance
companies who could supply services for the Company's website: GE Capital
AFS, Capital Bank, Alliance & Leicester Bank, Citibank, General Accident,
Eagle Star and London & General Holdings. As at the date of this
agreement, no formal agreement has been entered into with any of these
finance and insurance companies.
9. Manufacturers visited
A large number of car manufacturers have been visited by the Company but
there are no contractual agreements sought or entered into between the
Company and any such car manufacturers.
10. Bank Account Details
The Company has one current account and one premium account with [*].
There is one standing order on the Company's Current Account whereby
L850.00 per month excluding VAT is paid in respect of Kevin Turnbull's
accommodation at "Carriers Cottage". In addition, the Company has issued
Kevin Turnbull with a company credit card (Barclaycard DD no. 706602066).
The average monthly bill on this credit card is L1,000 including VAT.
Otherwise, there are no direct debit or standing order arrangements in
relation to either of the Company's accounts.
<PAGE> 36
33
As at 23rd November, 1998, the cash ledger amount on the Current Account
was L36,322.00. As at 23rd November, 1998, the cash ledger amount on the
Business Premium Account was nil.
11. Data Protection Act
The Company applied for registration under the Data Protection Act 1984 in
the last week of August 1998 and has been granted a temporary registration
number PX 3892703.
12. Premises
The Company has an outstanding liability of two months' rent for the
months of November and December 1998 to Regus UK Limited in the amount of
L12,540.
<PAGE> 37
34
IN WITNESS WHEREOF this agreement has been executed and delivered as a deed on
the day and year first before written:
Executed as a deed by /s/ MARK WAYNE LORIMER
autobytel.cominc. acting by ---------------------------------------
Mark Wayne Lorimer
Executed as a deed by INCHCAPE
AUTOMOTIVE LIMITED ---------------------------------------
Director
---------------------------------------
Director/Secretary
<PAGE> 38
34
IN WITNESS WHEREOF this agreement has been executed and delivered as a deed on
the day and year first before written:
Executed as a deed by
autobytel.cominc. acting by ---------------------------------------
Mark Wayne Lorimer
Executed as a deed by INCHCAPE [SIG]
AUTOMOTIVE LIMITED ---------------------------------------
Director
/s/ R.C. WILLIAMS
---------------------------------------
Director
<PAGE> 39
AUTO-BY-TEL UK LTD
<TABLE>
<CAPTION>
TIER 2 FORD VAUXHALL ROVER
<S> <C> <C> <C>
1 West London Dagenham Motors Sutton Sutton
Currie Motors/
2 North London. Dagenham Motors West End
3 East London. Dagenham Motors
4 SouthEast London. Dagenham Motors Penfold Motors Beadle/Sarg&Collins
5 Southwest London. Dagenham Motors Masters Inchcape
6 Bucks.
7 Berks. Inchcape
8 Oxon. City Motors
9 Beds/North Herts. Dagenham Motors Marshall
10 Herts. (Rest). Dagenham Motors Inchcape
11 NorthEast Essex. Dover Court
12 SouthWest Essex. Dover Court Inchcape/Bristol St. Bristol Street
13 East Kent. Dagenham Motors
14 West Kent. Dagenham Motors Beadles Group
15 East Sussex. Dagenham Motors
16 West Sussex. Dagenham Motors Inchcape/Harwood
17 West Surrey/NorthEast Hants Doves (Summit Grp) Whichford
18 Surrey (Rest). Doves (Summit Grp)
19 Hants (Rest). Inchcape/Wessex Whichford
20 Dorset. Vospers Tice Poole Bristol Street
21 Cornwall & Plymouth Vospers Dale Centre
22 Devon (Rest). Inchcape
23 Somerset/South Avon.
24 North Avon. Quartic
25 Wilts. Approach UK
26 Gloucs. Bristol Street Haines & Strange
27 Hereford & Worcs. Brooklyn (AC)
28 Warwick & Coventry. Brooklyn/Corner Cov
29 Birmingham. Bristol Street(2)/Quartic Elt Brothers (AC) Colliers
30 Black Country. Inchcape
31 Shropshire & Stoke-on-Trent Bristol Street
32 Staffs (Rest). Bristol Street
33 Leicester. Sandcliffe (AC) Marshall
</TABLE>
1
<PAGE> 40
AUTO-BY-TEL UK LTD
<TABLE>
<CAPTION>
TIER 2 FORD VAUXHALL ROVER
<S> <C> <C> <C>
34 North Notts. & Chesterfield Blake (AC)
35 Derby's (Rest).
36 Notts. (Rest). Sandicliffe (AC)
37 Lincs. Inchcape
38 Northants.
39 Sheffield & Rotherham Inchcape
40 Barnsley & Doncaster
41 East Yorks. Rydales
42 North Yorks. Crystal Motor Group Rydales
43 Leeds & Bradford
44 Huddersfield & Wakefield.
45 Cleveland. South Cleveland
46 Durham. M.S.F.
47 Northumberland & Tyneside (Part).
48 Tyneside (Rest) & Wearside Bristol Street
49 Cumbria
50 North & West Lancs.
51 South & East Lancs. M.S.F. Duerdens
52 North Merseyside. Peoples (AC) Duerdens
53 Bolton & Wigan. M.S.F. Duerdens
54 Manchester & Salford. Bristol Street
55 Stockport & East Cheshire Quartic
56 South Merseyside & West Cheshire M.S.F.
57 Gwent & South Glamorgan. Thorne (AC)/Inchcape
58 Mid & West Glamorgan.
59 West & Mid Wales.
60 North Wales.
61 Lothian. Peoples (AC) John Martin
62 Dumfries, Galloway & Borders.
63 Ayr.
64 Glasgow. Peoples (AC)
65 Outer Strathclyde.
66 Grampian.
67 Highlands & Islands.
</TABLE>
2
<PAGE> 41
AUTO-BY-TEL UK LTD
<TABLE>
<CAPTION>
TIER 2 FORD VAUXHALL ROVER
<S> <C> <C> <C>
68 Tayside & Fife.
69 Belfast & N Ireland East.
70 Derry & North Ireland West.
71 Norfolk John Grose Ford Inchcape
72 Suffolk John Grose Ford Marshall
73 Cambs Part Taken John Grose Inchcape/ Marshall
Marshall
</TABLE>
3
<PAGE> 42
AUTO-BY-TEL UK LTD
<TABLE>
<CAPTION>
Tier 3 Renault Peugeot VW
------ ------- ------- --
<S> <C> <C> <C> <C>
1 North & West London Dovercourt
2 North East London
3 South London. Inchcape/Whitehouse Charters Dovercourt
4 Essex. Whichford
5 Kent. Whitehouse Whitehouse Whitehouse
6 West/East Sussex. Charters
7 Hants. Inchcape Inchcape/Whichford
8 Herts./South Beds. Hunts Garage
9 Berks./South Bucks/South Oxon.
10 Norfolk/Suffolk.
11 Cambs./Lincs. Marshall
12 Northants/North Bucks/North Beds/North Oxon Bristol(2)/Inchcape
13 Leics./South Derby's Ilkeston Co-op(2)
14 Notts./North Derby's Blake/Ilkeston Co-op(2)
15 Devon/Cornwall Plymouth Renault Cntr. Inchcape
16 Dorset/Somerset/South Wilts.
17 Avon/North Wilts. Craze Bros. Inchcape/Dovercourt
18 Hereford & Worcs./South Warwick/Gloucs
19 West Midlands (Birmingham & Coventry)North Warwick Colliers
20 West Midlands (Black Country) South Staffs TG Holdcroft
21 Shropshire/North Wales. Inchcape
22 South Yorks.
23 Humberside. Crystal Motor Group
24 West Yorks. M.S.F/Sunwin Motors Sunwin Motors
25 North York's/Cleveland. Sinclair Garages
26 Gwent/South & Mid Glamorgan. Sinclair Garages
27 West Glamorgan/West & Mid Wales.
28 Durham/Wearside.
29 Northumberside/Tyneside.
30 Cumbria/North Lancs.
31 North Merseyside/Southwest Lancs.
32 Greater Manchester/South & East Lancs. Radcliffe Smith Knight Fay
</TABLE>
1
<PAGE> 43
AUTO-BY-TEL UK LTD
<TABLE>
<CAPTION>
Tier 3 Renault Peugeot VW
------ ------- ------- --
<S> <C> <C> <C> <C>
33 Greater Manchester/South & East Cheshire Radcliffe Smith Knight Fay
34 South Merseyside/West & Central Cheshire Smith Knight Fay
35 Lothian/Borders. John Martin
36 South Strathclyde/Dumfries & Galloway
37 North Strathclyde.
38 Grampian/Highlands.
39 Tayside/Fife/Central. Barnetts Barnetts
40 Northern Ireland.
</TABLE>
2
<PAGE> 44
AUTO-BY-TEL UK LTD
<TABLE>
<CAPTION>
Tier 3 Nissan Toyota Fiat Citroen BMW Honda
- ------------------------------------------ ------------ -------------- ---------- ------------ ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
1 North & West London Inchcape/DNR Currie Motors
Toyota
2 North East London Currie
3 South London. Pinewood Pinewood/Inch/ Sheerwater Inchcape
Currie
4 Essex. Whichford Whichford
5 Kent. Whitehouse Whitehouse Whitehouse
6 West/East Sussex. Whitehouse
7 Hants. Whichford Whichford
8 Herts./South Beds. Currie Motors
9 Berks/South Bucks/South Oxon. Whichford Whichford Inchcape Marshall/WFord
10 Norfolk/Suffolk.
11 Cambs./Lincs. Marshall Marshall Marshall Marshall Marshall
12 Northants/North Bucks/North Beds/
North Oxon Marshall
13 Leics./South Derby's M.Pritchard
14 Notts./North Derby's Inchcape Bristol St.
15 Devon/Cornwall
16 Dorset/Somerset/South Wilts. Bristol St.
17 Avon/North Wilts.
18 Hereford & Worcs./South Warwick/
Gloucs
19 West Midlands (Birmingham &
Coventry)/North Warwick Colliers Colliers
20 West Midlands (Black Country) TG H/croft TG Holdcroft TG Holdcroft(2)
South Staffs
21 Shropshire/North Wales.
22 South Yorks.
23 Humberside.
24 West Yorks.
25 North York's/Cleveland. S Cleveland
26 Gwent/South & Mid Glamorgan.
27 West Glamorgan/West & Mid Wales.
28 Durham/Wearside.
29 Northumberside/Tyneside. NE Garages
30 Cumbria/North Lancs. Masons
31 North Merseyside/Southwest Lancs.
32 Greater Manchester/South &
East Lancs. Radcliffe
</TABLE>
3
<PAGE> 45
AUTO-BY-TEL UK LTD
<TABLE>
<CAPTION>
Tier 3 Nissan Toyota Fiat Citroen BMW Honda
----------------------- ----------- -------------------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
33 Greater Manchester/ Radcliffe/Smith Kni TG Holdcroft TG Holdcroft Mainland Inv
South & East Cheshire
34 South Merseyside/ Mainland Investments Mainland Inv
West & Central Cheshire
35 Lothian/Borders. John Martin John Martin
36 South Strathclyde/
Dumfries & Galloway
37 North Strathclyde. John Martin John Martin
38 Grampian/Highlands.
39 Tayside/Fife/Central. John Martin John Martin John Martin
40 Northern Ireland.
</TABLE>
4
<PAGE> 46
AUTO-BY-TEL UK LTD
------------------
<TABLE>
<CAPTION>
Tier 4 Mercedes Mazda Hyundai Volvo Skoda Audi
------------------------------- ----------- ------------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 North & West London/Herts. Ickleford Dovercourt
2 South London. Marshall Currie Dovercourt
3 Kent/East Sussex. Whouse Whitehouse
4 Surrey/West Sussex/ Pinewood ???
North & East Hants.
5 Berks./Oxon./South & Whichford 1/2 Squire &
Central Bucks. 1/2 Fawcetts
6 Northeast London/South Essex. LondonRd
7 Norfolk/Suffolk/Cambs./
North Essex.
8 Dorset/South West Hants/South & Mistral Hyfer Bros.
Central/Wilts/E. Somerset.
9 Devon/Cornwall/West Somerset. Inchcape
10 Avon/Gloucs./North Wilts./ Wford InchcapeDovercourt
Hereford/Worcs.
11 South & Central Wales. Sinclair Sinclair
12 West Midlands/Warwick's. Inchcape
13 Northants./Beds./North Ilkeston Co-op
Bucks./Leics.
14 Notts./Derby's/Lincs. Speeds Ilkeston Co-op Ilkeston Co-op
15 Staffs./Shropshire/North Wales. Brooklyn TG Holdcoft TG H/Croft Inchcape
16 Merseyside/West Cheshire.
17 Greater Manchester/East Cheshire. Smith Knight Duerden
Fay
18 South Yorks./East Yorks.
19 North Yorks./West Yorks.
20 Lancs./Cumbria. Speeds
21 Northumberland/Tyne & Wear/ N.E Gar
Durham/Cleveland.
22 Strathclyde/Dumfries & Galloway. J.Martin
23 Lothian/Central/Fife/Borders. John Martin
24 Gramplan/Tayside/Highlands/ Barnetts Barnetts Barnetts
Islands.
25 Northern Ireland.
</TABLE>
<PAGE> 47
AUTO-BY-TEL UK LTD
------------------
<TABLE>
<CAPTION>
Tier 4 Lexus MG
<S> <C> <C> <C>
1 North & West London/Herts. Currie/Inchcape
2 South London. Pinewood/Currie ???
3 Kent/East Sussex.
4 Surrey/West Sussex/North & East Hants. Inchcape Inchwoods
5 Berks./Oxon./South & Central Bucks.
6 Northeast London/South Essex.
7 Norfolk/Suffolk/Cambs./North Essex. Marshall Inchape
8 Dorset/South West Hants/South & Central/Wilts/E. Somerset. Bristol Street
9 Devon/Cornwall/West Somerset. Dale Motors
10 Avon/Gloucs./North Wilts./Hereford/Worcs.
11 South & Central Wales.
12 West Midlands/Warwick's. Colliers
13 Northants./Beds./North Bucks./Leics.
14 Notts./Derby's/Lincs. Inchcape
15 Staffs./Shropshire/North Wales. TG Holdcroft
16 Merseyside/West Cheshire. Mainland Inv
17 Greater Manchester/East Cheshire. Radcliffe
18 South Yorks./East Yorks. Inchcape
19 North Yorks./West Yorks.
20 Lancs./Cumbria.
21 Northumberland/Tyne & Wear/Durham/Cleveland
22 Strathclyde/Dumfries & Galloway.
23 Lothian/Central/Fife/Borders. J. Martin
24 Gramplan/Tayside/Highlands/Islands.
25 Northern Ireland.
</TABLE>
4
<PAGE> 48
AUTO-BY-TEL UK LIMITED - LAUNCH ACTIVITIES
PRE-LAUNCH ACTIVITY:
18th/19th MAY - AUTO BUSINESS CONVENTION organised by Automotive
Management
- KT to speak on the panel: 'Dawn of the digital dealer'
- ABT stand 6m by 2m, theme: 'car selling paradise'
- ABT held one-to-one press briefings
17th SEPTEMBER - NON-STOP SHOPPING conference
- KT to speak on a panel: 'Home Shopping & Influence of
Internet, Digital TV'
23rd SEPTEMBER - CONGRESS 98, Automotive Management one day conference
- ABT have a stand 3m by 2m, 'car selling paradise' set to
be used
20th OCTOBER - MOTORTRADER ONE DAY CONFERENCE
- US ABT Dealer, Thomas Vann, to be on the speaking panel
21st OCTOBER - INCHCAPE CONFERENCE. KT to be present with the ABT stand
27th JANUARY - USED CARS 99 conference
- KT to speak: 'How is the internet being exploited and
used?'
DEALER RECRUITMENT CAMPAIGN:
- ---------------------------
Phase 1: Completed: one page adverts in MotorTrader and Automotive Management
on 29th June.
Phase 2: (i) Adverts published are as follows:
. MOTOR INDUSTRY MANAGEMENT - back page advert for September issue
. MOTORTRADER - one page advert in the 24th August publication
(page 7)
. AUTOMOTIVE MANAGEMENT - back page advert, 'Technology Made
Easy' supplement, published 7th September
(ii) INSERT in Automotive Management on the 5th Oct and MotorTrader
insert on 19th Oct.
(ii) A YEARS LIST RENTAL from MotorTrader of 3,000 UK: MDs, GMs, DPs,
Chairman & Owners.
(iii) TELEMARKETING CAMPAIGN - being done by Jon Costin who joined on
28th Sept for 5 weeks.
(iv) DIRECT MARKETING CAMPAIGN = '123' campaign commences 24/08/98
and is successfully targeting the 123 groups after the top 40
that we had not previously spoken to.
(v) MOTOR SHOW MEETING, 21st October, at the Stakis Metropole Hotel,
Birmingham in the Norfolk Suite. The event was SMMT approved and
commenced at 9am with hourly presentations by ABT and Thomas Vann
(US Dealer), with the opportunity to view the website, light food
and beverage available throughout the day. There were senior
representatives from a large number of the top 40 Dealer Groups
and the event which finished at 5:30 p.m.
AUTO-BY-TEL LAUNCH PROGRAMME TIMING
-----------------------------------
JANUARY/FEBRUARY - US PRESS TRIP (NON-TRADE)
- --------------------------------------------
The format will be to take 3 or 4 key journalists out to Irvine. Each
journalist selected will specialise in a different consumer area and
therefore will receive an exclusive story - eg. an IT angle, the
business success/profile angle, a car focus, etc.
MARCH - DEALER LAUNCH EVENT/BUSINESS MEETING
- --------------------------------------------
FORMAT:
1. To involve all the dealers/groups signed up to the service
2. To be held in London (venue & timing to be decided)
3. Purpose to the event:
- To introduce the new UK site prior to the launch
- To inform dealers about the partners we have: eg. Glass's, CAP, F&I,
etc.
- To outline the advertising about to commence (sneak preview of ads
perhaps)
- Information on the internet service provider deals/partnerships we
have struck
- Motivate dealers and gain their enthusiasm and involvement in ABT
MARCH - PRESS CONFERENCE/LAUNCH TO JOURNALISTS
- ----------------------------------------------
FORMAT:
1. To be held in London (venue & timing to be decided)
2. Purpose: - To gain maximum coverage of the ABT launch in all media - trade &
consumer - press, radio, TV, magazines
3. To be invited: key consumer & Trade journalists from IT, Car, Business,
Women's, Men's and lifestyle magazines and press
APRIL (TO BE CONFIRMED) 1999 - ABT "LAUNCH"
-------------------------------------------
START OF MEDIA/ADVERTISING CAMPAIGN
-----------------------------------
<PAGE> 49
DEALER RECRUITMENT CAMPAIGN
<TABLE>
<CAPTION>
DATE ACTIVITY COST VAT TOTAL COMMIT INVOICE PAID
- ---- -------- ---- --- ----- ------ ------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
29th June MotorTrade Advert - one page, 4 colour 2900 507.05 3407.5 C R P
29th June Automotive Management - one page, 4 colour 2900 507.05 3407.5 C R P
24th August MotorTrade Advert - one page, 4 colour 2647.5 463.31 3110.81 C R P
7th September Automotive Management Advert - TME back page 3000 525 3525 C R P
September Motor Industry Management Advert 1300 227.5 1527.5 C R P
5th October Automotive Management cost of Inserts - 18260 circ 1940 339.5 2279.5 C
18th August 12 month List Rental from MotorTrader, 3000 names 1822.8 318.99 2141.79 C R P
23rd September Automotive Management Congress 98 - stand & tickets 995 174.13 1169.13 C
23rd September Exhibitions Company costs for Congress 98 Conference 1823.3 319.09 2142.39 C R
28th September Operations Meeting Venue 400 C R P
Sub Total 14688 2570.3
TOTAL: 23111.1
September 50,000 Leaflets for Inserting in MT and AM 2971 519.93 3490.93 C R
19th October Motor Trader cost of Inserts - 25,225 circ 1400 245 1645 C R P
14th August Colour copy of the advert (150 quantity) 130 22.75 152.75 C P
September D/Marketing Pack - quantity 200 post - at 40p 80 80 C P
28th Sept-Nov Jon Costin, Telemarketing - L180 pd. & 25 days booked 4500 4500 C
28th Sept-Nov Jon Costin - Expenses (Phone, Travel) 400 400 C
21st October Motor Show - Stakis Metropole, Norfolk Suite 1580.04 C R P
21st October Motor Show - Stakis Metropole - Stand/Exhib Costs 2000 350 2350 C
21st October Motor Show - Stakis - Invitation cards (500) 451 79.45 530.45 C
October Operations Meeting Venue 800 NO
19-23 October Tom Vann (US Dealer) Flight: Detroit to HRW rtn 3272.7 3272.7 C
19-23 October Tom Vann (US Dealer) Hotel 3 nights @ L105 + val 321.38 56.24 377.63 C R P
TOTAL: 42290.6
</TABLE>
<PAGE> 50
AUTO-BY-TEL UK LIMITED
MONTHLY FINANCIAL STATEMENTS (POUNDS STERLING)
<TABLE>
<CAPTION>
JANUARY FEBRUARY MARCH APRIL MAY
--------------- --------------- ----------------- ---------------- -----------------
MONTH YTD MONTH YTD MONTH YTD MONTH YTD MONTH YTD
------- ------- ------- ------- -------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME (INTEREST) 0 0 0 0 0 0 0 0 0 0
EXPENSES:
(MARKETING)
MARKETING/ADVERTISING 0 0 0 0 0 0 0 0 0 0
PUBLIC RELATIONS 0 0 0 0 0 0 7,000 7,000 7,000 14,000
------- ------- ------- ------- -------- -------- -------- ------- -------- --------
TOTAL 0 0 0 0 0 0 7,000 7,000 7,000 14,000
------- ------- ------- ------- -------- -------- -------- ------- -------- --------
CONSULTANCY 16,450 35,450 7,500 42,950 8,550 51,550 9,100 60,600 21,662 82,262
(OPERATIONS)
TRAINING 0 0 0 0 0 0 0 0 3,534 3,534
------- ------- ------- ------- -------- -------- -------- ------- -------- --------
TOTAL 0 0 0 0 0 0 0 0 3,534 3,534
------- ------- ------- ------- -------- -------- -------- ------- -------- --------
EMPLOYMENT
PAYROLL 6,346 6,346 11,458 17,804 11,496 29,300 14,949 44,249 14,208 58,457
RECRUITMENT 0 0 0 0 42,857 42,857 34,475 77,332 6,366 83,698
TRAVEL/SUBSISTENCE 4,705 4,705 4,502 9,207 1,593 10,800 727 11,527 973 12,500
------- ------- ------- ------- -------- -------- -------- ------- -------- --------
(TOTAL) 11,051 11,051 15,960 27,011 55,946 82,957 50,151 133,108 21,547 154,655
------- ------- ------- ------- -------- -------- -------- ------- -------- --------
(PREMISES & OTHER)
RENT 0 0 0 0 0 0 4,680 4,680 4,804 9,484
PRINTING/STATIONARY 0 0 0 0 0 0 158 158 4,205 4,363
IT / SUNDRIES 0 0 1,252 1,252 848 2,100 2,399 4,499 1,395 5,894
------- ------- ------- ------- -------- -------- -------- ------- -------- --------
(TOTAL) 0 0 1,252 1,252 848 2,100 7,237 9,337 10,404 19,741
------- ------- ------- ------- -------- -------- -------- ------- -------- --------
TOTAL EXPENSES 27,501 46,501 24,712 71,213 65,344 136,557 73,488 210,045 64,147 274,192
------- ------- ------- ------- -------- -------- -------- ------- -------- --------
LOSS FOR PERIOD -27,501 -24,712 -65,344 -73,488 -64,147
------- ------- -------- -------- --------
CUMULATIVE LOSS -46,501 -71,213 -136,557 -210,045 -274,192
------- ------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
JUNE JULY AUGUST SEPTEMBER
---------------- ---------------- ----------------- -----------------
MONTH YTD MONTH YTD MONTH YTD MONTH YTD
------- -------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME INTEREST 0 0 0 0 0 0 337 337
EXPENSES
MARKETING
MARKETING/ADVERTISING 8,745 8,745 3,150 11,895 10,350 22,245 8,258 30,504
PUBLIC RELATIONS 7,000 21,000 7,172 28,172 10,000 38,172 7,000 45,172
------- -------- ------- -------- -------- -------- -------- --------
TOTAL 15,745 29,745 10,322 40,067 20,350 60,417 15,258 75,676
------- -------- ------- -------- -------- -------- -------- --------
CONSULTANCY 14,378 96,640 -7,428 89,212 11,270 100,482 33,334 133,816
OPERATIONS
TRAINING 0 3,534 0 3,534 0 3,534 0 3,534
------- -------- ------- -------- -------- -------- -------- --------
TOTAL 0 3,534 0 3,534 0 3,534 0 3,534
------- -------- ------- -------- -------- -------- -------- --------
EMPLOYMENT
PAYROLL 14,243 72,700 54,692 127,392 43,490 170,682 46,884 217,765
RECRUITMENT 5,500 89,198 1,800 90,798 12,590 103,388 2,300 105,688
TRAVEL/SUBSISTENCE 6,600 19,100 8,771 27,871 14,509 42,380 7,833 50,213
------- -------- ------- -------- -------- -------- -------- --------
TOTAL 26,343 180,998 65,063 246,061 70,589 316,650 57,017 373,667
------- -------- ------- -------- -------- -------- -------- --------
PREMISES & OTHER
RENT 7,327 16,811 3,124 19,935 9,397 29,332 10,661 40,193
PRINTING/STATIONARY 0 4,363 509 4,872 0 4,872 552 5,424
IT / SUNDRIES 2,306 8,200 3,766 11,966 3,999 15,965 1,512 17,476
------- -------- ------- -------- -------- -------- -------- --------
TOTAL 9,633 29,374 7,399 36,773 13,396 50,169 12,925 63,094
------- -------- ------- -------- -------- -------- -------- --------
TOTAL EXPENSES 66,099 340,291 75,356 415,647 115,605 531,252 118,534 649,786
------- -------- ------- -------- -------- -------- -------- --------
LOSS FOR PERIOD -66,099 -75,356 -115,605 -118,197
------- ------- -------- --------
CUMULATIVE LOSS -340,291 -415,647 -531,252 -649,450
-------- -------- -------- --------
</TABLE>
1
<PAGE> 51
AUTO-BY-TEL UK LIMITED
BALANCE SHEETS AT MONTH-END (POUND'S)
<TABLE>
<CAPTION>
JANUARY FEBRUARY MARCH APRIL MAY
------- -------- ----- ----- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET FIXED ASSETS 0 0 0 0 8,950
CURRENT ASSETS
CASH AT BANK 0 0 0 20,871 59,261
RENT DEPOSIT 0 0 0 9,360 9,360
TAX REFUNDS DUE 0 0 7,500 19,650 27,689
OTHER 2 2 2 2 2
----- ------ ------- ------- ------
TOTAL 2 2 7,502 49,883 96,312
----- ------ ------- ------- ------
CURRENT LIABILITIES
CREDITORS AND
ACCRUALS 0 0 50,357 107,275 106,447
OTHER 0 0 0 0 0
----- ------ ------- ------- -------
TOTAL 0 0 50,357 107,275 106,447
----- ------ ------- ------- -------
NET CURRENT ASSETS/
LIABILITIES 2 2 -42,855 -57,392 -10,135
------- ------- -------- -------- -------
NET ASSETS 2 2 -42,855 -57,392 -1,185
======= ======= ======== ======== =======
SHAREHOLDERS' FUNDS
SHARE CAPITAL 2 2 2 2 2
LOANS ON DEMAND
LOAN-ABT INC 0 0 0 35,730 136,243
LOAN-INCHCAPE
INCHCAPE INTERCO DEBT 46,501 71,213 93,700 116,921 136,762
PROFIT AND LOSS A/C -46,501 -71,213 -136,557 -210,045 -274,192
------- ------- -------- -------- -------
NET FUNDS 2 2 -42,855 -57,392 -1,185
======= ====== ======== ======== =======
<CAPTION>
JUNE JULY AUGUST SEPTEMBER
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET FIXED ASSETS 28,950 28,950 39,012 41,937
CURRENT ASSETS
CASH AT BANK 216,092 103,346 90,794 9,366
RENT DEPOSIT 12,540 12,540 6,270 12,540
TAX REFUNDS DUE 31,980 42,214 16,953 30,632
OTHER 2 2 2 11,559
------- ------- ------- -------
TOTAL 260,614 158,102 114,019 64,097
------- ------- ------- -------
CURRENT LIABILITIES
CREDITORS AND
ACCRUALS 124,010 76,554 110,407 151,304
OTHER 0 0 3,430 11,013
------- ------- ------- -------
TOTAL 124,010 76,554 113,837 162,317
------- ------- ------- -------
NET CURRENT ASSETS/
LIABILITIES 136,604 81,548 182 -98,220
-------- -------- -------- --------
NET ASSETS 165,554 110,498 39,195 -56,283
======== ======== ======== ========
SHAREHOLDERS' FUNDS
SHARE CAPITAL 2 2 2 2
LOANS ON DEMAND
LOAN-ABT INC 136,243 136,243 136,243 136,243
LOAN-INCHCAPE 200,000 200,000 200,000 200,000
INCHCAPE INTERCO DEBT 169,600 189,900 234,202 256,922
PROFIT AND LOSS A/C -340,291 -415,647 -531,252 -649,450
-------- -------- -------- --------
NET FUNDS 165,554 110,498 39,195 -56,283
======== ======== ======== ========
</TABLE>
2
<PAGE> 1
[*] Confidential treatment has been requested for certain portions of this
exhibit.
EXHIBIT 10.26
FINANCING INQUIRY REFERRAL AGREEMENT
THIS FINANCING INQUIRY REFERRAL AGREEMENT ("Agreement"), dated as of
December 31, 1998, is made between PROVIDENT Bank dba: Provident Automotive
Financial Services and Provident Auto Leasing Company, an Ohio banking
corporation ("PROVIDENT"), with its principal place of business at One East
Fourth Street, Cincinnati, Ohio 45202, and Auto-By-Tel Acceptance Corporation
("ABTAC"), a Delaware corporation, with its principal place of business at 18872
MacArthur Blvd., Irvine, CA 92612, and autobytel.com inc. (collectively, "ABT"),
a Delaware corporation located at 18722 MacArthur Blvd., Irvine, CA 92612, as
guarantor of the obligations of ABTAC under this Agreement, (in such capacity,
the "Guarantor").
WITNESSETH
WHEREAS, ABTAC is in the business of, among other things, identifying
persons interested in arranging financing for the lease of new and used
automobiles and trucks ("Vehicles") who visit the ABT Internet website and lease
a Vehicle ("Customers"); and
WHEREAS, PROVIDENT is in the business of extending financing to credit
worthy persons for the lease of Vehicles; and
WHEREAS, ABTAC desires to refer such Customers to PROVIDENT and
PROVIDENT desires to purchase from Autobytel.com subscribing dealers ("Dealers")
in accordance with Schedule A attached hereto, retail vehicle leases originated
by such Dealers (excluding recreational vehicles) (such transactions referred to
as "RFTs") and to pay marketing fees in connection with RFTs purchased by
PROVIDENT as a result of ABTAC's referrals;
NOW, THEREFORE, in consideration of the foregoing premises, and for
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, ABTAC and
PROVIDENT agree as follows:
SECTION 1. FINANCING PROGRAM
(a) ABTAC shall cause to be included on the ABT Website an application
for credit (the "Application"). The Application shall request the information
specified by PROVIDENT and shall be in a form reasonably satisfactory to
PROVIDENT. PROVIDENT may request changes from time to time in the information
solicited by the Application and, provided such requests are made in writing and
with reasonable notice, ABTAC shall use its best efforts to promptly accommodate
such requests; provided however, that PROVIDENT shall use its best efforts not
to request changes to the information requested by, or form of, the Application
(unless such changes are required by law) more often than once in any
three-month period; provided further, that if such changes are required by law
and PROVIDENT gives ABTAC thirty (30) days notice, ABTAC shall honor such
requested change within such thirty (30) day period.
(b) Unless it already has done so, PROVIDENT will attempt to enter into
its standard dealer agreement ("Dealer Agreement") with each Dealer in their
designated area as set forth in Schedule A (the "Territory") who has executed an
on-line purchase referral agreement with ABT
Page 1 of 14
<PAGE> 2
(each, a "Dealer," and together the "Dealers"). The Dealer Agreement shall
contain customary terms no less favorable to the Dealers than PROVIDENT's
customary Dealer agreements in use with its other Vehicle Lease financing
programs and shall govern the terms upon which the Dealer and PROVIDENT will
close Vehicle Lease financing transactions referred through this Agreement. Upon
execution of a Dealer Agreement, PROVIDENT shall assign such Dealer an
identifying number (the "Dealer ID") and inform ABTAC of such number. PROVIDENT
may terminate its relationship with any Dealer at any time, subject to the terms
and conditions of its Dealer Agreement with such Dealer. PROVIDENT shall notify
ABTAC if it terminates any such Dealer under the provisions of its Dealer
Agreement with such Dealer. Notwithstanding the foregoing, PROVIDENT shall not
be obligated to enter into a Dealer Agreement or otherwise do business with any
Dealer, which PROVIDENT has determined in good faith it will not do any
business.
(c) Except as specified to the contrary in this Agreement, ABTAC (i)
shall not be a party to, (ii) shall not have any obligations with respect to,
and (iii) shall be held harmless by PROVIDENT with respect to any losses or
liabilities arising from or in connection with, the Dealer Agreements. If for
any reason the Dealer Agreement between a Dealer and PROVIDENT is terminated,
then PROVIDENT shall be under no obligation to approve any Application received
from Customers of such Dealer.
(d) For each Customer credit application approved, PROVIDENT agrees to
inform ABTAC of the lease terms offered to the Customer.
(e) PROVIDENT agrees to offer competitive lease terms and conditions to
Dealers who have executed a Dealer Agreement. Competitive shall mean that
PROVIDENT will offer monthly payments on comparable leases, and to comparable
lessees with comparable credit qualifications within ten dollars ($10) per month
of the least expensive lessor located within the Territory. These terms will be
extended to Dealers representing eighty percent (80%) of the vehicles sold in
the Territory. For purposes of the $10/month and the 80% test, lease terms
offered by manufacturers or their representatives shall be excluded. The
$10/month test shall be measured utilizing "LeaseLink," an automotive leasing
software provider, or other comparable information supplier if LeaseLink no
longer provides such data.
(f) For so long as the Exclusivity Conditions (as defined below) are
met, PROVIDENT shall not enter into any agreement or arrangement similar to this
Agreement with any other Internet automobile leasing program, or service,
whereby the Internet program or service provider receives or solicits credit
information from its customers to finance the lease of vehicles (excluding
recreational vehicles), forwards that information for credit review to PROVIDENT
and PROVIDENT purchases that customer's lease contract originated by an
automobile dealer that has executed an on-line purchase or financing referral
agreement or similar agreement with the Internet program or service provider;
provided, however, that (i) PROVIDENT's rights to and/or use of CMSI's Auto Loan
Exchange System, credit connection, or other similar system for indirect dealer
lease financing; shall not violate the provisions of this Section 1(f); and
(ii) PROVIDENT, any affiliate of PROVIDENT, or any person controlled by or under
common control (including partnership and joint ventures) with PROVIDENT may,
after the date hereof, acquire control through merger, acquisition,
consolidation or purchase of all or substantially all of the assets or other
arrangements of any corporation or other entity shall not violate the provisions
of this Section 1(f): and (iii) PROVIDENT shall not use or participate in the
use
Page 2 of 14
<PAGE> 3
of the ABTAC Marks or the ABT Marks in conjunction with the offering or making
of any automobile finance product or product related thereto on the Internet.
(g) For purposes of this Agreement, the term "Exclusivity Conditions"
shall mean, as it relates to ABTAC, the occurrence of the
following:
(i) ABTAC forwards to PROVIDENT all of the Applications
for RFTs in the agreed Territory as defined in Schedule A, that
ABTAC receives from Customers who request vehicle lease financing
from or through ABTAC.
(ii) ABTAC shall forward to PROVIDENT Applications
received from Customers within the Territory. PROVIDENT shall
review each forwarded Application and, if such Application does
not represent a credit, which PROVIDENT will approve, PROVIDENT
shall so inform ABTAC and ABTAC may forward such Application to
another vehicle lease financing source.
(iii) ABTAC will be responsible for informing Dealers of
the nature of PROVIDENT's vehicle lease financing program. ABTAC
will provide PROVIDENT with a list of the Dealers with addresses
so that PROVIDENT may forward Dealer Agreements to them for
signature. PROVIDENT shall provide ABTAC with a copy of the form
of Dealer Agreement.
(iv) ABTAC will attempt, when practicable, during the
course of this Agreement, to telemarket dealers and customers
with the intended purpose of attempting to close the fundings for
approved vehicle leases.
(v) ABTAC will, during the course of this Agreement, make
available to PROVIDENT brand identifying website space for its
market area (Territory) in a fashion and manner equal to its
other institutions having similar agreements, under similar terms
and conditions.
(vi) ABTAC shall upon executing this Agreement, completion
of electronic connectivity and during the course of this
Agreement with PROVIDENT, provide press releases that contain
mention of the PROVIDENT ABTAC partnership.
(h) ABTAC shall comply at all times with the provisions of the Federal
Fair Credit Reporting Act and the Equal Credit Opportunity Act as well as the
so-called "fair lending" laws, in each case pertaining to the performance of
its obligations under this Agreement. Further, ABTAC will not submit any
Application or credit information to PROVIDENT with respect to applicants if
ABTAC has any knowledge that such Application, credit information or
applicant is fraudulent, or that the Application or credit information
contains information which ABTAC has reasonable information to cause it to
believe that such credit information is untrue.
(i) PROVIDENT shall not be responsible for paying or reimbursing dealers
or ABTAC for any document programming.
Page 3 of 14
<PAGE> 4
SECTION 2. RECEIPT AND TRANSMISSION OF APPLICANT INFORMATION
(a) Subject to the provisions of Section 1 (g), ABTAC will transmit each
completed Application to PROVIDENT via the Internet or other electronic means as
mutually agreed. When transmitting an Application to PROVIDENT, ABTAC will also
designate the Dealer that is to be notified of the credit decision.
(b) ABTAC will not use any such information in any manner which violates
applicable law in effect from time to time.
SECTION 3. UNDERWRITING
(a) Upon receipt, PROVIDENT will review each Application in accordance
with its underwriting criteria in effect from time to time. ABTAC acknowledges
that PROVIDENT has sole discretion in determining whether or not to approve an
Application, which discretion PROVIDENT agrees to exercise in a manner
consistent with its company-wide or market-wide underwriting procedures, as the
case may be. PROVIDENT shall inform ABTAC whether an Applicant has been
approved, conditionally approved or denied, but shall not reveal the reasons it
has denied any Application.
(b) PROVIDENT will process no less than fifty percent (50%) of the
Applications within the two (2) business hours after electronic receipt of the
Application. Compliance with this performance standard regarding processing time
for applications shall be measured pursuant to Section 8(b) on a monthly basis.
If PROVIDENT fails to comply with this performance standard, ABTAC's sole remedy
shall be to terminate this Agreement pursuant to Section 10(b). [Subject to the
mutual agreement of the parties, the parties shall review the foregoing business
hours and expand same if justified economically by business volume.]
(c) PROVIDENT reserves the sole right and power to change the
Underwriting Criteria in accordance with sound lending practices consistent with
PROVIDENT's normal business practices and subject to applicable law, and further
to suspend, restrict or modify the purchase of RFTs from Dealers in any portion
of the Territory for any reason. PROVIDENT shall provide ABTAC with advance
written notice, given as early as practicable, of any actions under this clause
it plans to implement. Any such actions shall be taken in good faith and only if
consistent with actions taken by PROVIDENT on a company-wide basis.
SECTION 4. COMMUNICATION OF CREDIT DECISIONS
At the completion of underwriting, subject to the time-frames set forth
in Paragraph 3(b) of this Agreement, PROVIDENT will notify ABTAC, via the
Internet or such other method as agreed upon by the parties from time to time,
of PROVIDENT's credit decision, and ABTAC shall use its best efforts to promptly
notify the Dealer and the Applicant on behalf of the Dealer of PROVIDENT's
credit decision. If PROVIDENT declines a request for credit, PROVIDENT will send
to the Applicant any and all notices required pursuant to federal or applicable
state law or regulation including, but not limited to, those required under the
federal Equal Credit Opportunity Act and Federal Reserve Regulation B.
[PROVIDENT shall not provide Applications received from ABTAC which do not
result in an RFT purchase from a Dealer to any other financing source.]
Page 4 OF 14
<PAGE> 5
SECTION 5. CLOSING AND FUNDING
PROVIDENT and the Dealer shall use its best efforts to close approved
financing within twenty-four (24) business hours after receipt from the Dealer
of all properly completed and required documentation pursuant to the terms of
the Dealer Agreement. PROVIDENT will remit the proceeds to the Dealer by means
of a sight draft drawn on PROVIDENT from standard draft stock or by ACH
electronic transfer of funds or by other means as established by PROVIDENT from
time to time for each purchased RFT.
SECTION 6. COMPENSATION
(a) During the term of this Agreement, PROVIDENT shall pay ABTAC a
service fee, in the amounts determined by reference to Schedule B, for each RFT
purchased under the terms of this Agreement. The payments to ABTAC shall be made
on or before the fifteenth (15th) of the following month for the prior month's
production booked the prior month by PROVIDENT.
(b) ABTAC may appoint public accountants of its choice no more than once
during any twelve (12) month period, and at its sole expense, for the purpose of
auditing PROVIDENT's compliance with the compensation provisions specified in
Section 6(a) of this Agreement, and PROVIDENT agrees to grant such accountants
access, during normal business hours and upon reasonable notice, to all records
necessary to determine the compliance of PROVIDENT with the compensation
provisions of Section 6(a) of this Agreement. If the results of such audit
reveal a discrepancy between the amounts paid by PROVIDENT to ABTAC hereunder
and the amounts which should have been paid hereunder, than the appropriate
payments shall be made immediately to the party entitled to such additional
amounts.
SECTION 7. USER DATA
(a) The parties agree that any and all "user data" compiled as a
result of this Agreement shall remain the sole and exclusive
property of ABT and its subsidiaries and affiliates, and that
PROVIDENT shall not acquire any right, title or interest in or to
such information.
For the purposes of this Agreement, "User" shall be defined as
any consumer visiting the ABT web site for the purposes of, among
other things, inquiring about leasing a vehicle that does not
transact the lease of a vehicle through PROVIDENT. (Such
transaction referred to as RFT's).
For the purposes of this Agreement, "User Data" shall be defined
as:
The name, address, telephone number, email address and any
additional data provided by a user including but not limited to
personal financial information, place of employment, or other
demographic data as provided during the process of submitting an
application for the lease of a Vehicle.
Page 5 OF 14
<PAGE> 6
(b) Accordingly, PROVIDENT agrees that it will not sell, disclose,
transfer or rent any User Data obtained from users referred from
the ABT which could reasonably be used to identify a specific
named individual to any third party.
SECTION 8. REPORTS
(a) Each business day, via facsimile or such other method as agreed upon
by the parties from time to time, PROVIDENT will send to ABTAC a report
identifying each RFT to an Applicant, that was booked by PROVIDENT the prior
business day.
(b) On or before the 15th day of each month, via facsimile or such other
method as agreed upon by the parties from time to time, PROVIDENT will send to
ABTAC a report, sorted by Dealer ID, outlining for the preceding month (i) the
number of Applications received from ABTAC, (ii) the number of Applications that
were approved, (iii) the number of Applications that were denied, (iv) the
number of Applications pending at month-end, (v) the number of RFT's booked by
PROVIDENT, and (vi) the average processing time for Applications. Processing
time for Applications shall be measured from the point in time the Application
is received by PROVIDENT's application system and the time its credit decision
is transmitted back to ABTAC. In the case of the information set forth in
clauses (i), (ii), (iii) and (v) of the preceding sentence, the report shall
identify each Application by name of applicant. PROVIDENT shall include with
such report, a report indicating any Dealer added or deleted.
(c) ABTAC agrees to maintain complete and accurate books and records and
procedures concerning the taking and referral of Applications and credit
information and compliance with applicable law. Throughout the term of this
Agreement, and for a period of twenty five (25) months after the termination of
this Agreement, PROVIDENT, its duly authorized agents, representatives or
employees or federal or state agencies having jurisdiction over PROVIDENT, may
from time to time, upon reasonable notice and during normal business hours,
inspect such books, records and procedures to ensure compliance with ABTAC's
obligations concerning the taking and referral of Applications and credit
information under this Agreement and compliance with all applicable law.
SECTION 9. INDEMNIFICATION
(a) ABTAC shall defend, indemnify and hold harmless PROVIDENT and its
affiliates and all of its and their officers, directors, owners, agents,
attorneys, and employees from and against any and all loss, liability, claims
counterclaims, damages, cost or expense (including reasonable attorney's fees
and costs), whether asserted in a judicial or administrative proceeding, arising
out of either (i) a breach of the representations and warranties of ABTAC in
Section 13; (ii) a breach of the provisions of Section 1(h); (iii) the receipt
of a Customer's Application information by any person or entity other than
PROVIDENT or another entity that has a business relationship with ABTAC and a
permissible purpose to receive such information, by hacking or by any other
authorized or unauthorized method; unless such person or entity obtained or
received such information directly or indirectly from PROVIDENT; or (iv) any
negligence or intentional misconduct of ABTAC in connection with ABTAC's
performance of its obligations under this Agreement.
Page 6 OF 14
<PAGE> 7
(b) PROVIDENT shall defend, indemnify and hold harmless ABTAC and its
affiliates and all of its and their officers, directors, owners, agents,
attorneys, and employees, from and against any and all loss, liability, claims,
counterclaims, damage, cost or expense (including reasonable attorney's fees and
costs), whether asserted in a judicial or administrative proceeding, arising out
of either (i) a breach of the representations and warranties of PROVIDENT
designated in Section 13; or (ii) any gross negligence or intentional misconduct
of PROVIDENT in connection with PROVIDENT's performance of its obligations under
this Agreement.
(c) Promptly after the receipt by either party hereto of notice of any
claim, action, suit or proceeding of any third party which is subject to
indemnification hereunder, such party (the "Indemnified Party") shall give
written notice of such claim to the party obligated to provide indemnification
hereunder (the "Indemnifying Party"), stating the nature and basis of such claim
and the amount thereof, to the extent known. Failure of the Indemnified Party to
give such notice shall not relieve the Indemnifying Party from any liability
which it may have on account of this indemnification or otherwise, except to the
extent that the Indemnifying Party is materially and adversely prejudiced
thereby. The Indemnifying Party shall be entitled to participate in the defense
of and, if it so chooses, to assume the defense of, or otherwise contest, such
claim, action, suit or proceeding with counsel selected by the Indemnifying
Party and reasonably satisfactory to the Indemnified Party. Upon the election by
the Indemnifying Party to assume the defense of, or otherwise contest, such
claim, action, suit or proceeding, the Indemnifying Party shall not be liable
for any legal or other expenses subsequently incurred by the Indemnified Party
in connection with the defense thereof The Indemnified Party shall have the
right to participate in the defense thereof and to employ counsel at its own
expense, and separate from the counsel employed by the Indemnifying Party.
Notwithstanding the foregoing, the Indemnifying Party shall be liable for the
reasonable fees and expenses of counsel employed by the Indemnified Party, if,
and only to the extent that (i) the Indemnifying Party has not employed counsel
or counsel that is reasonably acceptable to the Indemnified Party to assume the
defense of any such action within a reasonable time after receiving notice of
the commencement of the action; (ii) the employment of counsel and the amount
reimbursable therefor by the Indemnified Party has been authorized in writing by
the Indemnifying Party or (iii) representation of the Indemnifying Party and the
Indemnified Party by the same counsel would, in the opinion of such counsel,
constitute a conflict of interest (in which case the Indemnifying Party will not
have the right to direct the defense of such action on behalf of the Indemnified
Party). The parties shall use commercially reasonable efforts to minimize Losses
from claims by third parties and shall act in good faith in responding to,
defending against, settling or otherwise dealing with such claims,
notwithstanding any dispute as to liability as between the parties under this
Section 8. The parties shall also cooperate in any such defense, give each other
full access to all information relevant thereto and make employees and other
representatives available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Whether or not
the Indemnifying Party shall have assumed the defense, the Indemnifying Party
shall not be obligated to indemnify the other party hereunder for any settlement
entered into without the Indemnifying Party's prior written consent which
consent shall not be unreasonably withheld or delayed. The Indemnifying Party
shall not compromise or settle any claim, action, suit or proceeding, without
the consent of the indemnified Party (which consent shall not be unreasonably
withheld) unless the terms of such settlement or compromise release the
Indemnified Party from any and all liability with respect to such claim, action,
suit or proceeding.
Page 7 of 14
<PAGE> 8
SECTION 10. TERM AND TERMINATION
(a) This Agreement shall remain in effect for a term of one (1) year
from the date hereof (the "Initial Term") and shall automatically renew for
subsequent one (1) year periods a "(Renewal Term") unless terminated by either
party upon ninety (90) days written notice prior to the expiration of the
Initial Term or any Renewal Term. This Agreement shall also terminate if
required by governmental authority or court of law, but only insofar as this
Agreement applies to such jurisdiction affected.
(b) If any party shall be in breach of any material obligation under
this Agreement and such breach shall remain uncured for a period of thirty (30)
days after written notice thereof from the other party (or, if such breach is
curable and requires more than thirty (30) days to cure, if such cure is not
commenced within thirty (30) days and thereafter diligently prosecuted), then
the other party may, by written notice, terminate this Agreement upon thirty
(30) days after delivery of such notice. Nonpayment of amounts' due under this
Agreement shall be deemed to be a breach of a material obligation if suit or
payment of amounts due under this Agreement shall not be deemed to be an
automatic termination hereunder. Notwithstanding anything in this Agreement to
the contrary, either party has the right to terminate this Agreement
immediately, upon written notice to the other party, if the other party's breach
of any material obligation of this Agreement causes the non-breaching party to
be in violation of any applicable law, rule, regulation or order.
(c) At any party's option, and upon written notice of exercise of the
option, this Agreement shall terminate upon the voluntary or involuntary
bankruptcy or insolvency of a party, the voluntary or involuntary dissolution or
liquidation of a party, the admission in writing by a party of its inability to
pay its debts as they mature, or the assignment by a party for the benefit of
creditors.
SECTION 11. NOTICES
All notices or transmissions pursuant to this Agreement, unless
otherwise specified, shall be by facsimile transmission, by personal delivery,
or by registered, or certified mail, return receipt requested, to the addresses
of the parties listed on page 1, or such other address as any party listed below
shall specify in writing to the others in a notice conforming to this Section.
SECTION 12. GUARANTEE
The Guarantor hereby unconditionally and irrevocably guarantees to
PROVIDENT its successors, endorsees and assigns, the performance when due of all
present and future obligations and liabilities of all kinds of ABTAC arising out
of or in connection with the Agreement, whether due or to become due, secured or
unsecured, absolute or contingent, joint or several ("Obligations"). The
Guarantor agrees that PROVIDENT and ABTAC may mutually agree to modify the
Obligations or any agreement between PROVIDENT and ABTAC without in any way
impairing or affecting this Guarantee Notice. The Guarantor agrees that the
liability hereunder will not be affected by any settlement, extension, renewal,
or modification of this Agreement or by the discharge or release of the
Obligations of ABTAC, whether by operation of law or otherwise. The Guarantor
agrees to also be liable for all fees and costs, including reasonable attorney's
fees, incurred by PROVIDENT in enforcing the terms of this Guarantee.
Page 8 of 14
<PAGE> 9
SECTION 13. REPRESENTATIONS, GENERAL
A. Representations and Warranties of ABTAC ABTAC hereby makes the
following representations and warranties to PROVIDENT:
(1) ABTAC has been duly organized and is validly existing as a
corporation under the laws of the state of Delaware and is duly licensed where
required as a "licensee" to conduct its business or is otherwise qualified in
each state in which it transacts business and is not in default of such state's
applicable laws, rules and regulations, except where the failure to so qualify
or such default would not have a material adverse effect on its ability to
conduct its business or to perform its obligations under this Agreement.
(2) ABTAC has the requisite power and authority and legal right to
execute and deliver the Agreement, engage in the transactions contemplated by
the Agreement, and perform and observe those terms and conditions of the
Agreement to be performed or observed by it hereunder. The person signing this
Agreement, and any document executed pursuant to it, on behalf of ABTAC has full
power and authority to bind ABTAC. The execution, delivery and performance of
this Agreement, and the performance by ABTAC of all transactions contemplated
herein, have been duly authorized by all necessary and appropriate corporate
action on the part of ABTAC.
(3) This Agreement been duly authorized and executed by ABTAC and is
valid, binding and enforceable against ABTAC in accordance with its terms,
except that such enforcement may be subject to, and automatically stayed by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally, and the execution, delivery and
performance by ABTAC of this Agreement do not conflict with any term or
provision of (i) its certificate of incorporation or bylaws, (ii) any law, rule,
regulation, order, judgment, writ, injunction or decree applicable to ABTAC of
any court, regulatory body, administrative agency or governmental body having
jurisdiction over ABTAC or (iii) any agreement to which ABTAC is a party or by
which its property is bound.
(4) No consent, approval, authorization or order of, registration or
filing with, or notice to any governmental authority or court is required under
applicable law in connection with the execution, delivery and performance by
ABTAC of this Agreement.
(5) There is no action, proceeding or investigation pending or, to
the best knowledge of ABTAC, threatened against it before any court,
administrative agency or other tribunal (i) asserting the invalidity of this
Agreement, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, or (iii) which could reasonably be expected to
materially and adversely affect its performance of its respective obligations
under, or the validity or enforceability of, this Agreement.
(6) ABTAC has all regulatory approvals, authorizations, licenses,
permits and other permissions, consents and authorities whatsoever needed to
operate the ABT Website and perform ABTAC's obligations under this Agreement.
(7) ABTAC warrants that it has the legal and valid right to use any
registered or unregistered trademark, tradename, service mark, logo, emblem or
other proprietary designation, or
Page 9 OF 14
<PAGE> 10
any variations, derivatives and modifications thereof, used by it in the
materials provided to PROVIDENT or used by ABTAC in connection with this
Agreement (the "ABTAC Marks").
(8) ABTAC represents and warrants that its computer systems, software
and the services offered (collectively referred to as the "Services") under this
Agreement are designed to be used prior to, during and after calendar year 2000
A.D. and that its computer systems, software and the Services will operate
during each such time period without error relating to the date data, provided
that any other software used by PROVIDENT that interconnects or works in
connection with ABTAC's computer system, software and the Services including,
without limitation, hardware, software and firmware, properly exchange date data
with ABTAC's Services. Without limiting the generality of the foregoing, ABTAC
further represents and warrants that (a) its computer systems and the Services
will not abnormally end or provide invalid or incorrect results relating to date
data, including date data century recognition, calculations which accommodate
same century and multi-century formulas and date values and date data interface
values that reflect the century; and (b) any provision of the Agreement which
tends to limit or eliminate liability or responsibility of either party shall
have no application with respect to this Year 2000 compliance set forth herein.
Further, ABTAC agrees to provide PROVIDENT any testing results and
certifications as may be reasonably requested.
B. Representations and Warranties of PROVIDENT. PROVIDENT hereby makes
the following representations and warranties to ABTAC,
(1) PROVIDENT is duly licensed where and as required in each state in
which it transacts business and is not in default of such states applicable
laws, rules and regulations, except where such default would not have a material
adverse effect on the ability of PROVIDENT to conduct its business or to perform
its obligations under the Agreement.
(2) PROVIDENT has the requisite power and authority and legal right
to execute and deliver, engage in the transactions contemplated by, and perform
and observe the terms and conditions of, this Agreement. The person(s) signatory
to this Agreement and any document executed pursuant to it on behalf of
PROVIDENT have full power and authority to bind PROVIDENT.
(3) This Agreement has been duly authorized and executed by PROVIDENT
and is valid, binding and enforceable against PROVIDENT in accordance with its
terms, except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws (whether statutory, regulatory
or decisional) now or hereafter in effect relating to creditors' rights
generally, and the execution, delivery and performance by PROVIDENT of this
Agreement do not conflict with any term or provision of the certificate of
incorporation or bylaws of PROVIDENT, or any law, rule, regulation, order,
judgment, writ, injunction or decree applicable to PROVIDENT of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over PROVIDENT.
(4) No consent, approval, authorization or order of, registration or
filing with, or notice to any governmental authority or court is required under
applicable law in connection with the execution, delivery and performance by
PROVIDENT of this Agreement.
(5) There is no action, proceeding or investigation pending or, to
the best knowledge of PROVIDENT, threatened against it before any court,
administrative agency or other
Page 10 of 14
<PAGE> 11
tribunal (i) asserting the invalidity of the Agreement, (ii) seeking to prevent
the consummation of any of the transactions contemplated by the Agreement, or
(iii) which could reasonably be expected to materially and adversely affect the
performance by PROVIDENT of its obligations under, or the validity or
enforceability of, the Agreement.
(6) PROVIDENT warrants that it has all regulatory approvals,
authorizations, licenses, permits and other permissions, consents and
authorities whatsoever, as needed (i) to offer and enter into the financing
arrangements with Customers contemplated by this Agreement in each jurisdiction
in the Territory and to otherwise perform its obligations under this Agreement,
and (ii) to use any materials developed, provided or used by PROVIDENT, in
connection with this Agreement.
(7) PROVIDENT warrants that it has the legal and valid right to use
any registered trademark, service mark, logo, emblem or other proprietary
designation, or any variations, derivatives and modifications thereof, used by
it in any materials provided to ABTAC or used by PROVIDENT in connection with
this Agreement.
SECTION 14. CONFIDENTIALITY
Both ABTAC and PROVIDENT have made and will continue throughout the term
of the Agreement to make available to the other party confidential and
proprietary materials and information ("Proprietary Information").
Prospectively, each party shall advise the other of material and information
that is confidential and/or proprietary. Proprietary Information does not
include materials or information that: (a) are already, or otherwise become,
generally known by third parties as a result of no act or omission of the
receiving party; (b) subsequent to disclosure hereunder are lawfully received
from a third party having the right to disseminate the information and without
restriction on disclosure; (c) are generally furnished to others by the
disclosing party without restriction on disclosure; (d) were already known by
the receiving party prior to receiving them from the disclosing party and were
not received from a third party in breach of that third party's obligations or
confidentiality; or (e) are independently developed by the receiving party
without use of, confidential information of the disclosing party.
Each party shall maintain the confidentiality of the other's Proprietary
Information and will not disclose such Proprietary Information without the
written consent of the other party unless required to by law, rule, regulation
or court been duly authorized by all necessary and appropriate and corporate
action on the part of PROVIDENT.
Page 11 of 14
<PAGE> 12
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed by their duly authorized officer on the date first above written.
THE PROVIDENT BANK
DBA: PROVIDENT AUTOMOTIVE FINANCIAL SERVICES AND
PROVIDENT AUTO LEASING COMPANY
By: [SIG]
-------------------------------------------
Title: Vice President
----------------------------------------
AUTO-BY-TEL ACCEPTANCE CORPORATION AUTOBYTEL.COM INC.
By: [SIG]
-------------------------------------------
Title: Executive Vice President &
Chief Operating Officer
----------------------------------------
Page 12 of 14
<PAGE> 13
SCHEDULE A
To
Financing Inquiry Referral Agreement,
Dated as of December 22, 1998
Between
PROVIDENT Bank dba PROVIDENT Automotive Financial Services
And
Provident Auto Leasing Company
And
Auto-By-Tel Acceptance Corporation
And
autobytel.com inc. as guarantor (the "Agreement")
PROVIDENT TERRITORY
-------------------
Florida
Georgia
Indiana
Kentucky
Michigan
Minnesota
North Carolina
Ohio
Pennsylvania
Tennessee
POLICY FOR TERRITORY EXPANSION:
As PROVIDENT expands its auto lease business into additional states
other than the states listed above, ABTAC may upon management approval grant
PROVIDENT the additional territory provided PROVIDENT provides and maintains its
level of competitiveness as described in paragraph 1(e).
Page 13 of 14
<PAGE> 14
[*] Confidential Treatment Requested
SCHEDULE B
To
Financing Inquiry Referral Agreement,
Dated as of December 22, 1998
Between
PROVIDENT Bank dba PROVIDENT Automotive Financial Services
And
Provident Auto Leasing Company
And
Auto-By-Tel Acceptance Corporation
And
autobytel.com. inc. as guarantor (the "Agreement")
COMPENSATION SCHEDULE
---------------------
NEW VEHICLES
<TABLE>
<CAPTION>
AMOUNT LEASED FLAT FEE TO ABTAC
------------- -----------------
<S> <C>
$25,000 + $100
$15,001 - $25,000 $100
$10,000 - $15,000 $ 50
</TABLE>
USED VEHICLES
<TABLE>
<CAPTION>
AMOUNT LEASED FLAT FEE TO ABTAC
------------- -----------------
<S> <C>
$25,000 + $100
$15,001 - $25,000 $100
$10,000 - $15,000 $ 50
</TABLE>
AMOUNT LEASED = Adjusted capitalized cost minus any acquisition fee.
Page 14 OF 14
<PAGE> 1
EXHIBIT 10.27
[*] Confidential Treatment has been requested for certain portions of this
exhibit.
PROCUREMENT AND TRAFFICKING AGREEMENT
This PROCUREMENT AND TRAFFICKING AGREEMENT ("Agreement") is entered into
this 24 day of September, 1998 by and between DoubleClick Inc., a Delaware
corporation ("DoubleClick") having its principal place of business at 41 Madison
Avenue, 32nd Floor, New York, NY 10010, and autobytel.com inc., a Delaware
corporation ("Company") having its principal place of business at 18872
MacArthur Boulevard, Second Floor, Irvine, CA 92612, and is made in connection
with the following:
WHEREAS, Company is in the business of, among other things, the
operation and maintenance of a site on the World Wide Web having the URL of
www.autobytel.com (the "Web Site") for the purposes of providing online
information and related data to prospective purchasers of new and used
automobiles and facilitating the purchase and sale thereof through a network of
subscribing dealers;
WHEREAS, DoubleClick is in the business of, among other things,
delivering advertising to pages of a customer's Web site based on certain
predetermined criteria; and
WHEREAS, Company desires to retain DoubleClick to deliver advertising to
Pages (as defined below) of the Web Site and DoubleClick desires to accept such
engagement subject to the terms and conditions as set forth below;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
1. DEFINITIONS
All terms used in this Agreement shall bear the meaning as such terms
are defined in Paragraph 11 of the Standard Terms and Conditions
attached hereto, marked EXHIBIT A and incorporated herein by this
reference.
II. DESCRIPTION OF SERVICES
A. DoubleClick hereby agrees to link Pages to the Service and through
such Service, DoubleClick shall deliver Advertisers' Advertising to
users accessing Pages. DoubleClick and Company shall mutually agree
upon the number and type of Pages to be linked to the Service. It
is understood and agreed that all unsold inventory on Company's
Pages shall be made available for delivery of Direct Advertising.
B. During the Term (as defined below), the Company shall not place, or
permit the placement or delivery of, any Advertising on the Web
Site except through DoubleClick or DoubleClick's authorized
representatives, licensees and assigns which shall be Company's
sole and exclusive representative for the placement and delivery of
all Advertising on the Web Site. For clarity, the parties
acknowledge that the Company may, from time to time, enter into a
co-branded content or syndicated content relationship with a third
party ("Product
<PAGE> 2
[*] Confidential Treatment Requested
Marketing Partner"); it being understood that no such arrangement
will be bundled with the delivery of Advertisements of a Product
Marketing Partner to the Web Site. If such arrangement provides
that the co-branded or syndicated Pages of the Web Site will be
delivered to users by Company, then all Advertising (if any) on
such Pages shall be placed and delivered by DoubleClick, and
neither Company nor its Product Marketing Partner shall be
permitted to place or deliver, or permit the placement or delivery
of, any Advertising to such Pages. However, if such arrangement
provides that such co-branded or syndicated Pages of the Web Site
will be delivered to users by the Product Marketing Partner from
its own server, then the parties agree that, notwithstanding the
foregoing, the Company shall be permitted to allow a Product
Marketing Partner to place and deliver Advertising for such Pages
only.
C. Notwithstanding the foregoing paragraph, DoubleClick acknowledges
and agrees that Company may develop and launch, from time to time
during the Term of this Agreement, an additional page or pages to
the Web Site for the purposes of, among other things, joint or
cooperative advertising or promotion of products and services of
the Company or other third parties. DoubleClick further
acknowledges that such additional page or pages shall not be
subject to this Agreement and that any and all such advertising
shall be placed exclusively by the Company from its own facility.
D. Company reserves the right, at its sole discretion, to withhold up
to a maximum of ten per cent (10%) of the total advertising spot
inventory available on the Web Site (the "Reserved Inventory") for
the purposes of placing Advertisements by or through Company on
behalf of third parties as a result of a barter, exchange of
services or other non-monetary arrangements entered into between
Company and such third parties. Company agrees to use its
reasonable best efforts to provide notice to DoubleClick of any
such intended use of the Reserved Inventory prior to the placement
of any such Advertising.
i. Company agrees that it shall designate specific pages within
the Web Site wherein such advertisements as a result of a
barter, exchange of services of other non-monetary
arrangements shall be placed.
ii. Company agrees that any and all advertisements placed within
the Reserved Inventory as a result of a barter, exchange of
services or other non-monetary arrangements shall be placed
and delivered by DoubleClick at the rate of [*] per thousand
(the "Serving Fee"). Notwithstanding the foregoing,
DoubleClick agrees that in the event Company purchases "Dart
for Agencies" from DoubleClick, then DoubleClick shall waive
any and all Serving Fees due as a result of this
Section II (C).
2
<PAGE> 3
iii. Company hereby authorizes DoubleClick to withhold from amounts
payable to Company pursuant to Section 4 of this Agreement, all
amounts due and owing from Company for Serving Fees Incurred
during the applicable billing period.
iv. DoubleClick agrees that in the event Company determined that
Serving Fees are not cost effective, Company may, upon fourteen
(14) days written notice to DoubleClick, "de-link" the Reserved
Inventory and place and deliver such advertisements on its own
behalf. Company agrees that it shall place and deliver all such
advertisements itself from its corporate facility, and shall not
engage the services of any third party for placement or delivery
of such advertisements.
V. DoubleClick further agrees that, in the event Company determines
that it requires additional Reserved Inventory, Company shall
provide fourteen (14) days written notice to DoubleClick, and
DoubleClick shall make available an additional five percent (5%)
of unsold Inventory to Company for the purposes of placing
advertisement as a result of a barter, exchange of services or
other non-monetary arrangements. Company agrees that such
additional five percent (5%) of Reserved Inventory shall be made
available to Company on an "as-needed" basis, and the Reserved
Inventory shall revert to ten percent (10%) of unsold Inventory
upon completion of the subject advertising flight.
E. DoubleClick shall promptly inform Company in the event that
DoubleClick enters into a Procurement and Trafficking Agreement
with an online automotive buying service including, but no
limited to the entities listed on Exhibit B (which list may be
amended by Company in writing from to time) to perform services
substantially similar to the services set forth in this
Agreement. Company shall have thirty (30) days upon receipt of
such notice to give written notice of its intent to terminate
this Agreement. The effective date of any such termination shall
be not less than thirty (30) days from DoubleClick's receipt of
Company's notice to terminate.
III TERM AND TERMINATION
A. The term (the "Term") of this Agreement shall commence on
September 24, 1998 and shall continue for a period of two (2)
years or until such time that it is terminated by either party on
not less than one hundred and eighty (180) days prior written
notice to the other party; provided, however, that in no event
may this Agreement be terminated effective prior to the first
anniversary of such commencement date.
3
<PAGE> 4
[*] Confidential Treatment Requested
B. This Agreement may be terminated immediately by either party upon the
occurrence of any of the following events:
i. Upon the breach of any material term of this Agreement which
remains uncured for thirty (30) days following written notice to
the breaching party; or
ii. In the event the other party suffers any insolvency proceeding,
either voluntary or involuntary, that is not dismissed within
sixty (60) days following filing, or is adjudicated bankrupt or
makes any assignment for the benefit of creditors. Such
termination shall not relieve the party in proceedings from
liability for the performance of its obligations arising prior to
such termination and shall be in addition to all other rights and
remedies the terminating party may have available to it under
this Agreement at law or in equity.
IV. COMPENSATION/PAYMENT
A. With respect to the placement and delivery of Advertising (other than
Direct Advertising), DoubleClick shall pay Company, and Company agrees
to accept the following:
<TABLE>
<CAPTION>
TOTAL IMPRESSIONS IN A CALENDAR MONTH PERCENTAGE OF NET REVENUES GENERATED FROM
ADVERTISING DELIVERED THROUGH THE SERVICE
TO THE PAGES
- --------------------------------------------------------------------------------------------
<S> <C>
5,000,000 or fewer [*]
5,000,001 to 10,000,000 [*]
over 10,000,000 [*]
</TABLE>
B. DoubleClick shall pay Company within five (5) days of DoubleClick's
Day's Sales Outstanding (as defined herein) following the end of the
month in which Advertisers' Advertising is delivered to Pages. For
purposes of calculating Impressions (defined in Section II of the
General Terms and Conditions) under this Section IV.A., no more than
one Advertisement shall be deemed to be on the user's screen at any
one time.
C. With respect to the placement and delivery of Direct Advertising,
DoubleClick shall pay Company and Company agrees to accept, the same
percentage payable to Company pursuant to Section III.A. hereof of the
DoubleClick Adjusted Commissions. Company acknowledges that the
DoubleClick Commissions are contingent on Completed Actions occurring
on Advertisers' Web Sites. DoubleClick shall pay this compensation
within sixty-five (65) days of each Completed Action.
D. Company shall be solely responsible for any costs or expenses it
incurs in connection with the Service or performance of its
obligations under this Agreement including, without limitation,
expenses associated with any HTML programming and linking Pages to the
Service.
4
<PAGE> 5
E. Notwithstanding anything to the contrary contained herein, in the
event Company terminates this Agreement in accordance with Section II
above and DoubleClick, prior to said termination, has entered into
agreements with Advertisers ("Advertiser Contracts") for the delivery
of Advertising to the Pages, the duration of which Advertiser
Contracts extend beyond the date on which this Agreement has been
terminated by Company, and Company or a third party (other than
DoubleClick) continues to deliver said Advertising after the
termination of this Agreement, then notwithstanding the fact that
DoubleClick does not deliver said Advertising after the termination of
this Agreement, DoubleClick shall be entitled to receive twenty-five
percent of the revenues derived from the continued delivery of said
Advertising by Company or such third party as consideration for
DoubleClick's solicitation and procurement of said Advertiser.
V. COMPANY OBLIGATIONS AND RIGHTS
A. Company agrees to effect all necessary HTML programming with respect
to the Web Site and Pages in accordance with the HTML modifications
(the "HTML Modifications") designated by DoubleClick so as to enable
DoubleClick to perform its obligations under this Agreement.
B. Spots must be within the first screen of a Page and otherwise conform
to the HTML Modifications unless otherwise agreed upon by Company and
DoubleClick.
C. Promptly after the execution of this Agreement, Company agrees to the
following:
(i) Include Advertising in rotation within one (1) of three (3)
advertising environments on the home page of the Web Site, which
shall rotate with promotional information displayed by the
Company. Due to the nature of display rotation, Company makes no
guaranty that Advertising will always be displayed in one of the
advertising environments. DoubleClick further acknowledges that
such advertising environments are presently 112x82 pixels in
size, and that Company reserves the right to change the size
and/or number of such advertising environments at its sole
discretion.
(ii) At the discretion of the Company, Include frames, I-frames or
layers on all Pages to permit delivery of enhanced creative;
(iii) At the discretion of the Company, allow for double Spots on
Pages.
(iv) Include a text link on the Web Site's home page and/or on
another heavily-trafficked Page on the Web Site to facilitate
advertiser inquiry and to direct any such inquiries to
DoubleClick.
(v) Reserve space for a full banner (468x60 pixels) Advertisement
within the top frame on the main channels of the Web Site which
are currently identified as tabs and as are more particularly
identified on the attached EXHIBIT C.
(vi) Reserve space for a full banner (468x60 pixels) Advertisement
within the top frame on subsequent Pages of the Web Site.
5
<PAGE> 6
D. Notwithstanding the foregoing, DoubleClick agrees that:
(i) No Advertising shall be placed on any Page within the
Web Site wherein the Company engages a customer in a
transaction (hereinafter, a "Transactional Page"). By
way of example but not by way of limitation, those Pages
wherein a Customer completes and submits a Purchase
Request, a request for vehicle financing, an insurance
quote request, or submits an inquiry regarding
after-market products or services shall be deemed to be
a Transactional Page.
(ii) No Advertising shall be placed on any content
integration Page wherein (1) the subject content is
owned by a third party content provider; or (2) Company
is in partnership with a third party for such content.
Notwithstanding the foregoing, Company agrees that in
the event any such third party consents to displaying
Advertising on any such Page, a commission or
compensation arrangement shall be entered into between
DoubleClick, the Company and such third party separate
and independent from this Agreement.
E. At such time, if ever, that DoubleClick is able to sell
sponsorship Advertising to an Advertiser for a designated area
on a Page which DoubleClick has determined is suitable and
appropriate for sponsorship Advertising, Company shall affect
all necessary HTML and technical modifications necessary to
accommodate said sponsorship Advertising.
F. Company will maintain its Pages and Web Site at a quality
standard that is no less than the standard that exists as of the
date of this Agreement and in a manner in keeping with the
quality of other web sites in the Service.
G. Company agrees that DoubleClick has no responsibility to review
the contents of Pages or the Web Site.
H. Company agrees that it shall not delink or remove more than five
percent (5%) of the Pages from the Service during any
consecutive thirty (30) day period without DoubleClick's prior
written consent.
I. Company shall have the right to ban and remove Advertising from
the Web Site, and to establish domain restrictions to prevent
delivery of Advertising linked to certain domains, by accessing
the Manage Site Application (located at www.doubleclick.net).
DoubleClick shall use reasonable commercial efforts to prevent
the delivery of Advertising that advertises or promotes the
products and services listed on EXHIBIT C attached hereto or
otherwise poses a general conflict with the business of the
Company. (the "Prohibited Advertising"). By way of example, but
not by way of limitation, a "general conflict" shall be (i)
advertising for an online automotive buying service; (ii) the
creation of a link on the Web site to a site which provides
listings of used vehicles and/or sales of used vehicles directly
to consumers; (iii) establishing a direct link on the Web site
to an automobile manufacturer's buying service.
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VI. DOUBLECLICK OBLIGATIONS AND RIGHTS
A. DoubleClick shall have the right to refuse to include in the
Service, and to require Company to remove from the Service, any
Pages (including its contents) that DoubleClick determines do
not meet the standards of the Service or which do not comply
with the HTML Modifications, as DoubleClick deems reasonable and
necessary in its sole good faith discretion, or in the event of
any material change in the nature of the Web Site or the Page
from that set forth in Company's application.
B. Subject to the provisions of Section V (H) of this Agreement,
DoubleClick shall determine in its sole discretion which
Advertisers shall have access to the Service.
C. Company acknowledges and agrees that promotion of the Service is
critical to enhance usage by Advertisers and in connection
therewith Company agrees that (i) DoubleClick shall have the
right to use Company's name and Pages in advertising and
promoting the Service in any media now or hereafter known and
(ii) Company shall, upon DoubleClick's reasonable request,
supply DoubleClick with a reasonable amount of Company's
promotional materials so as to facilitate DoubleClick's sales
efforts to prospective Advertisers.
D. DoubleClick shall have the right to use for DoubleClick's own
use or for use in connection with potential Advertisers on the
Service, information concerning Pages, Impressions and users
accessing Pages obtained through the Service, provided
DoubleClick does not reproduce any Pages without Company's prior
consent and DoubleClick shall not disclose to any third party
any such current information specifically pertaining to such
users.
E. DoubleClick will make site reports available to Company through
DoubleClick's web site (www.doubleclick.net) listing the number
of Impressions and click-over rates by Page.
F. It is understood and agreed that DoubleClick shall determine the
rate card (and any applicable discount) charged to said
Advertisers for delivery of Advertising. It is further
understood and agreed that DoubleClick shall have the right, in
its sole discretion, to provide Advertisers with bonus
Impressions free of charge.
G. At the beginning of each calendar quarter, DoubleClick shall
furnish to Company a list of those suppliers of automotive
products and services that are among DoubleClick's top prospects
for the purchase of Advertising (including sponsorships) on the
Web Site. Company agrees, promptly following receipt of such
notice or otherwise upon DoubleClick's request, to share with
DoubleClick all discussions or arrangements (in each case, both
pending or past) between Company and such entities that would be
relevant to DoubleClick's discussions with such entities.
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<PAGE> 8
IN WITNESS WHEREOF, the Parties have entered into this Agreement, effective as
of the date first written above.
DOUBLECLICK COMPANY
DOUBLECLICK, INC. AUTOBYTEL.COM
By: /s/ [ILLEGIBLE] By: /s/ ANNE BENVENUTO
----------------------------- --------------------------------
(Signature) Anne Benvenuto
Senior Vice President, Marketing
[ILLEGIBLE] autobytel.com inc.
- -------------------------------
(Printed/Typed Name)
VP Business Development
- -------------------------------
(Official Title)
9/24/98
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<PAGE> 9
EXHIBIT A
STANDARD TERMS AND CONDITIONS
1. No Assignment. Neither party to this Agreement shall sell, transfer or
assign this Agreement or the rights or obligations hereunder, other than to
a parent or whollyowned subsidiary, without the prior written consent of the
other party. Notwithstanding the foregoing, either party shall have the
right to transfer or assign this Agreement to a third party
successor-in-interest, which for the purposes of this Section shall mean any
third party which acquires all or substantially all of the assets of either
party, or more than 75% of the outstanding stock of such party, whether by
sale, consolidation, merger or otherwise. Any act in derogation of the
foregoing shall be null and void.
2. Proprietary Rights. Company understands and agrees that Company shall not
have, nor will it claim, any right, title or interest in and to any
Advertising (other than its own Advertising), the Service or any elements
thereof (including, without limitation, the grant of a license in or to the
Service or any software, source codes, modifications, updates and
enhancements thereof or any other aspect of the Service), the name
"DoubleClick" or any derivatives thereof, or any other trademarks and logos
which are owned or controlled by DoubleClick and made available to Company
through the Service or otherwise.
3. Representation and Indemnity. Company warrants and represents at all times
that Company (i) owns the Web Site, (ii) has the right and full power and
authority to enter into this Agreement, to grant the rights herein granted
and fully to perform its obligations hereunder, (iii) owns and/or has the
right to use all materials contained on the Web Site or Pages, including,
without limitation, all copyrights, trademarks and other proprietary rights
in and to such materials, and (iv) has secured the requisite permission to
use any person's name, voice, likeness and performance as embodied in such
materials, or any other element contained in said material. In furtherance
of the foregoing, Company agrees to indemnify and hold DoubleClick and the
Advertisers harmless from and against any and all claims, actions, losses,
damages, liability, costs and expenses (including reasonable attorneys'
fees) arising out of or in connection with (i) the breach of any
representation, warranty or agreement made by Company hereunder and/or (ii)
the Web Site or Pages, including, without limitation, claims for
infringement of copyright or other intellectual property rights and
violation of rights of privacy or publicity. DoubleClick shall promptly
notify Company of all claims and proceedings related thereto of which
DoubleClick becomes aware. DoubleClick warrants and represents at all times
that DoubleClick owns the Service and that such Service will not infringe
upon or conflict with the copyright held by any third party. In furtherance
of the foregoing, DoubleClick shall indemnify, defend and hold Company
harmless from and against any and all claims, actions, losses, damages.
liabilities, costs and expenses (including reasonable attorneys' fees)
resulting from or arising out of or in connection with any breach of the
foregoing representations and warranties. Company shall promptly notify
DoubleClick of all claims and proceedings related thereto of which Company
becomes aware.
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4. No Warranties/Liabilities. EXCEPT AS EXPRESSLY PROVIDED ABOVE, NEITHER PARTY
MAKES ANY WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS OF THE SERVICE OR THE WEB
SITE FOR A PARTICULAR PURPOSE INCLUDING, WITHOUT LIMITATION, THE TYPE OF
ADVERTISING OR AMOUNT OF ADVERTISING WHICH WILL BE DELIVERED TO PAGES
THROUGH THE SERVICE. DOUBLECLICK SHALL NOT BE LIABLE FOR ANY ADVERTISERS
WHOSE ADVERTISING APPEARS ON THE SERVICE, NOR THE CONTENTS OF ANY
ADVERTISING, NOR SHALL DOUBLECLICK BE LIABLE FOR ANY LOSS, COST, DAMAGE OR
EXPENSE (INCLUDING COUNSEL FEES) INCURRED BY COMPANY IN CONNECTION WITH
COMPANY'S PARTICIPATION IN THE SERVICE. NEITHER PARTY SHALL BE LIABLE TO THE
OTHER PARTY FOR ANY TECHNICAL MALFUNCTION, COMPUTER ERROR OR LOSS OF DATA OR
OTHER INJURY, DAMAGE OR DISRUPTION TO COMPANY'S PAGES OR WEB SITE OR THE
SERVICE. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY
INDIRECT, INCIDENTAL OR CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES ARISING
OUT OF OR IN RELATION TO THIS AGREEMENT.
5. Confidentialitv. Any information relating to or disclosed in the course of
this Agreement by either party (the "Disclosing Party") to the other party
(the "Receiving Party"), which is or should be reasonably understood to be
confidential or proprietary to the Disclosing Party, including but not
limited to, the material terms of this Agreement, information about the
Service and technical processes and formulas, source code, product designs,
sales, cost and other unpublished financial information, product and
business plans, projections, and marketing data shall be deemed
"Confidential Information" and shall not be used, disclosed or reproduced by
the Receiving Party without the Disclosing Party's prior written consent.
"Confidential Information" shall not include information (a) already
lawfully known to or independently developed by the Receiving Party, (b)
disclosed in published materials, (c) generally known to the public, (d)
lawfully obtained from any third party, or (e) required to be disclosed by
law.
6. Breach. Either party shall have the right to immediately terminate this
Agreement in the event the other party commits a material breach of this
Agreement and such breach is not cured by the breaching party within thirty
(30) days of its receipt of notice of such breach from the non breaching
party.
7. Independent parties. Notwithstanding any provision hereof, for the purpose
of this Agreement each party shall be and act as an independent contractor
and not as an employee, partner, joint venturer, or agent of the other and
shall not bind nor attempt to bind the other to any contract.
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<PAGE> 11
8. No Modification. This Agreement, including the Standard Terms and
Conditions, represents the entire understanding between DoubleClick and
Company regarding DoubleClick's services and supersedes all prior
agreements. No waiver, modification or addition to this Agreement shall be
valid unless in writing and signed by the parties to this Agreement.
Notwithstanding the foregoing, Doubleclick shall have the right to modify or
make additions to the placement algorithm governing Advertising delivery,
and the HTML Modifications, from time to time upon reasonable prior notice
to Company.
9. Severability. If any provision of this Agreement shall be adjudicated by any
court of competent jurisdiction to be unenforceable or invalid, that
provision shall be limited or eliminated to the minimum extent necessary so
that this Agreement shall otherwise remain in full force and effect and the
other provisions shall be unaffected.
1O. Applicable Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of New York and Company
agrees that jurisdiction and venue of all matters relating to this Agreement
shall be vested exclusively in the federal, state or local courts within the
State of New York.
11. Definitions. The following terms, as used in the Agreement, shall have the
following meanings:
a. "ADVERTISER" is defined as a company, entity or individual, which provides
Advertising to DoubleClick for distribution through the Service.
b. "ADVERTISER'S WEB SITE" is defined as the web site linked to Direct
Advertising and where a Completed Action occurs.
c. "ADVERTISING" OR "ADVERTISEMENT" is defined as third party materials
including two "banners", "pop-up windows", "buttons", "roadblocks",
"tickers". "intermercials". "incentives" and any other forms of
advertisements and their contents, including sponsorships of any type or
form.
d. "COMPLETED ACTION" is defined as users' activities, as determined by
DoubleClick in its sole discretion, after clicking through on Direct
Advertising, which actions may include, but not be limited to users (i)
completing a form or survey, (ii) making a purchase; (iii) downloading
materials; or (iv) performing a click or multiple clicks within Advertiser's
Web Site.
e. "DAY'S SALES OUTSTANDING" shall be the average number of days it takes
DoubleClick to collect its Net Accounts Receivable (as defined herein) from
Advertisers and which shall be calculated as follows: DoubleClick's
account's receivable balance from the immediately preceding semi-annual
accounting period (calculated on a calendar year basis) after adjustment for
any reserve for doubtful accounts and deferred or unbilled revenue ("Net
Accounts Receivable") shall be divided by the average daily revenue
recognized by DoubleClick for the last two months of such semiannual
accounting period. DoubleClick's Day's Sales Outstanding shall be calculated
following the end of
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<PAGE> 12
each semi-annual accounting period and shall be used in determining the date
of payment for amounts due to Company for Advertising which is delivered to
Pages in each of the months comprising the ensuing semi-annual accounting
period.
f. "DIRECT ADVERTISING" OR A "DIRECT ADVERTISEMENT" is defined as an
advertisement and its contents on which users can click-through to an
Advertiser's Web Site to perform a Completed Action.
g. "DOUBLECLICK COMMISSIONS" is defined as monies payable to DoubleClick from
an Advertiser as a result of a Completed Action.
h. "DOUBLECLICK ADJUSTED COMMISSIONS" is defined as the DoubleClick Commission
less (i) a bad debt and marketing allowance of three percent (3%) and (ii)
broker and agent fees payable by DoubleClick with respect to the Advertiser.
i "IMPRESSION" is defined as occurring each time Advertising (whether a full
banner (468 by 60 pixels) or half banner (234 by 60 pixels)) appears on a
Page resulting from a user accessing or visiting such Page.
j. "NET REVENUES" is defined as the gross billings earned from Advertisers by
DoubleClick less (i) rate card and volume discounts and agency commissions,
and (ii) a bad debt allowance of 1% of said gross billings.
k. "PAGE" is defined as a page in the Web Site designated by Company to be
linked to the Service and is accepted and approved by DoubleClick.
1. "PAID ADVERTISING" or "Paid Advertisement" is defined as any Advertising
which is paid for by an Advertiser.
m. "SERVICE" is defined as the DoubleClick service that delivers Advertising to
any Page(s) of the Web Site in the following order and manner: For users
which match the criteria selected by an Advertiser from information
currently available to DoubleClick concerning users, a Paid Advertisement
from such Advertiser will appear. If no match occurs or a Paid Advertisement
is unavailable, a Direct Advertisement will appear, pursuant to the terms or
this Agreement. If no match occurs or a Direct Advertisement is unavailable,
Advertising promoting the Service and Advertising promoting charitable
causes and non-profit organizations (e.g. public service announcements) may
appear on Pages.
n. "SPOT" is defined as the specific place on a Page where Advertising may
appear through the Service.
0. "WEB SITE" is defined as the Company's web site referred to above.
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<PAGE> 13
EXHIBIT B
CERTAIN ENTITIES
COMPANIES:
Auto By Internet
Auto Connect
AutoNation USA
AutoVantage
AutoWeb
CarPoint
Cars.com
CCC
Consumer Car Club
Consumer Car Sales
DealerNet
GM Buy Power
Kelley Blue Book
Online Auto
Price Auto Outlet
Priceline.com
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<PAGE> 14
EXHIBIT C
PROHIBITED ADVERTISING
<TABLE>
<CAPTION>
COMPANIES OR PRODUCTS SEGMENT CONFLICT AUTOBYTEL.COM INC.
BUSINESS UNIT
<S> <C> <C>
Auto By Internet Competitor ABT.com
Auto Connect Competitor ABT.com
Auto Trader Online Competitor UCC
AutoNation USA Competitor UCC
AutoVantage Competitor ABT.com
AutoWeb Competitor ABT.com
CarMax Competitor UCC
CarPoint Competitor ABT.com
CarPrices.com Competitor ABT.com
CarQwik Competitor ABT.com
Cars.com Competitor ABT.com
CCC Auto Infomercial ABT.com
Cendant Corp. (CUC) Auto Buying/CU Program ABT.com
Consumer Car Club Competitor ABt.com
Consumer Car Sales Competitor UCC
Consumer Reports Competitor ABT.com
DealerNet Competitor ABT.com
Drivers Mart Competitor UCC
Ford Pre-owned Competitor UCC
GM Buy Power Competitor ABT.com
Hertz Car Sales Competitor UCC
Kelley Blue Book Competitor ABT.com
Mannheim Auto Auctions Competitor UCC
NetMarket Competitor ABT.com
Online Auto Competitor ABT.com
Other Warranty Programs AutoByTel.com Platinum Plus ABT.com
Price Auto Outlet Competitor UCC
Priceline.com Competitor UCC
Republic Industries Competitor ABT.com
Toyota Certified Competitor UCC
World Wide Wheels Competitor ABT.com
</TABLE>
GENERAL COMPETITIVE MARKETS (THE KEY IS IF IT IS "AUTO" RELATED)
New Car Buying
Used Car Buying
Auto Insurance Services
Auto Loans/Financing
Auto Warranty Coverage
Auto Clubs
Auto Rewards Programs
In addition to the foregoing, any Advertising that advertises or promotes any
Web site displaying (i) sexually explicit content, (ii) gambling; or (iii)
distilled spirits shall be deemed to be Prohibited Advertising as used in this
Agreement.
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<PAGE> 15
EXHIBIT D
MAIN CHANNELS OF WEB SITE
{GRAPHIC]
15
<PAGE> 1
EXHIBIT 10.31
[LOGO]
GOLD TERM SUBSCRIPTION AGREEMENT
WELCOME to autobytel.com inc.'s family of accredited motor vehicle dealers. This
Agreement is entered into by and between autobytel.com inc., a Delaware
Corporation, with its principal place of business at 18872 MacArthur Blvd.,
Irvine, California 92612 ("ABT"or "Us" or "We" or "Our") and [LEGAL NAME],
a(n) [INC ST] [ENTITY] dba [DBA] with its principal place of business at
[ADDRESS], [CITY], [ST] [ZIP]("Dealer" or "You" or "Your"). (ABT and
Dealer, each a "Party" hereunder are sometimes collectively referred to herein
as the "Parties.")
In consideration of the following mutual promises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, ABT and Dealer, on their own behalf and on behalf of each of their
"d.b.a." operation(s) set forth in Appendix "A" attached hereto, intending to be
legally bound hereby, warrant, covenant and agree as follows:
I. OUR COMMITMENT TO YOU:
1. ABT promises to provide an Internet-based marketing program and Online
services to attract potential purchasers to HTTP//WWW.AUTOBYTEL.COM, (THE
"WEBSITE");
2. ABT promises to advertise in national markets the general services offered
to consumers through ABT;
3. ABT promises to use best efforts to promptly forward to You information
regarding an identified potential purchaser whose purchase/lease request
emanated from within Your assigned Primary Market Area (PMA);
4. ABT promises to provide You with technical support during regular business
hours (Pacific Standard Time) to assist You and/or Your representative(s)
in the use of Our products and services. Except where otherwise informed by
the technical support staff at the time services are requested, this
service is free of charge. As some services require substantial time and
effort to complete, ABT reserves the right to institute supplemental
charges for some services without prior notification;
5. We promise to provide consumers with assistance and support through Our
Customer WOW! Program, during normal business hours (Pacific Standard
Time);
6. We agree, subject to individual state law restrictions, to continue to
develop, maintain, and enforce uniform Customer Service Standards that will
be implemented by Our subscribing dealers. To meet such a commitment, ABT
reserves the right to amend the Customer Service Standards from time to
time to modify, eliminate or impose additional Customer Service Standards
as the law or the changing business climate may dictate;
7. We promise to promptly notify Dealer in writing of any revisions to the
Customer Service Standards outlined herein. We will not impose amendments
or additions to Our Customer Service Standards unless they are applied to
all subscribing dealers within Your state;
8. We promise to use best efforts to effectively communicate mutually
beneficial information relating to the ABT products and services provided
during the term of this subscription;
9. ABT shall use its best efforts to provide prompt transmission of data to
Dealer, but shall not be liable for any unintentional loss of data, delays
or errors in transmitting data, nor shall We be liable for any damages
arising from any data loss, delay, or error;
10. We are responsible to maintain Our own equipment at Our sole expense and
will assume all responsibility for loss, damage, and maintenance to Our own
equipment;
11. We hereby grant to You a nonexclusive, non-transferable license that will
allow up to two simultaneous users to access Our proprietary Dealer Real
Time (DRT) information communications system to receive Purchase Requests;
12. NEW VEHICLE EXCLUSIVE PRIMARY MARKET ASSIGNMENT ("PMA"): You have been
assigned an exclusive market area for the subscribed new vehicle franchises
of [FRANCHISES]. This exclusive area effects new vehicle Purchase Requests
only. The U.S. Postal Code description of this PMA assignment is set for in
Exhibit "A" attached to this Agreement and incorporated herein by this
reference. ABT has sole and complete authority to define Your PMA. Your
exclusive PMA will remain in effect for six (6) months without the
possibility of adjustment. ABT reserves the right to conduct a market
representation study to determine the effectiveness of Your PMA at least
once during the term of this Agreement. ABT in their sole discretion may
use the results of these studies to among other things, evaluate the market
value of Your PMA and Your effectiveness in servicing purchase requests
from Your PMA. ABT reserves the right to adjust Your PMA as necessary
following such studies by providing You with not less than thirty-(30) days
written notice of the pending change;
13. TERM: This Agreement shall be for a term of twelve (12) months, unless
terminated earlier pursuant to Section 14. Upon the mutual consent of
Dealer and ABT, this Agreement may be extended at ninety-(90) day
intervals, up to a maximum of one (1) year. Such consent shall be evidenced
in writing, signed by each Party hereto. If Dealer shall meet the
qualifications for the Platinum level Agreement at any time during the term
of this agreement or any extension thereof, Dealer may be converted at the
end of the twelve-month term to an extended Platinum Term Subscription for
an additional five (5) years. In the event Dealer shall fail to qualify for
a Platinum Term Subscription agreement at the end of the last available
extension, this agreement shall terminate;
14. ABT MAY TERMINATE THIS AGREEMENT:
(a) immediately for any breach of this Agreement by You which is not cured
within ten (10) days after You receive written notice of the breach
from Us;
(b) immediately if any fees due ABT under this Agreement are unpaid and
outstanding more than thirty (30) days after ABT makes a written
request for payment;
(c) immediately, if Dealer is guilty of willful misconduct in the
performance of its duties under this Agreement;
(d) immediately upon a finding of dealer's violation of state or Federal
law or conviction for such violation, whether administratively,
civilly, or criminally;
(e) Immediately upon discovery of Dealers' sale or transfer of all or
substantially all of its dealership assets and /or management and
control.
(f) immediately if an order for liquidation against You is entered and not
stayed in a bankruptcy proceeding;
(g) upon sixty (60) days' written notice to You regarding poor overall
performance, including but not limited to such areas as unsatisfactory
Purchase Requester contact rates, poor overall customer satisfaction,
poor Overall Satisfaction Index (OSI) rating.
15. TAXES: We shall be responsible for paying all taxes imposed upon Us by
reason of the compensation paid to Us for providing services to You under
this Agreement.
16. INDEMNIFICATION:
We promise to indemnify and hold You and Your subsidiaries and/or
affiliates and Your respective members, managers, directors, officers,
employees, harmless against any and all losses, liabilities, claims,
awards, damages, judgments, settlements, and costs, including fees and
expenses, arising out of Our negligence or wrongful conduct, or arising out
of or related to any third Party claim arising out of or related to Our
negligence or wrongful conduct, or from any other act done or omitted to be
done by Us in executing the terms of this Agreement.
II. YOUR COMMITMENT TO US:
1. At all times during the term of this Agreement, You and/or Your designated
representatives will abide by the terms of this Agreement and will perform
the duties as set forth herein, in accordance with the terms of this
Agreement.
2. Your Dealer Principal and General Manager will actively participate in the
application, implementation, and operation of the ABT service system within
the dealership(s).
3. You understand and agree that You are responsible for all internal costs,
if any, associated with implementation of Our systems and services within
Your facilities.
4. You will dedicate at least one (1) key employee to be responsible for the
new vehicle program and at least one (1) key employee to be responsible for
the Certified Pre-Owned CyberStore(R) program, if so elected. This
person(s) will be empowered to act as a liaison between ABT and Dealer.
This person(s) shall be referred to as the "ABT Manager." You promise to
notify Us in writing within ten (10) days with the identity of any newly
designated ABT Manager.
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<PAGE> 2
5. You will make Your ABT Manager(s) available to Us for training upon
reasonable request and notice, Your Dealer Principal and General Manager
agree to participate in at least one (1) ABT-U Basic Training program
offered by ABT either at the dealer's facility or at an offsite facility
offered by ABT, within One Hundred Twenty (120) days from the date of this
Agreement. ABT shall reserve for You, free of tuition costs, two (2) seats
for ABT Manager Training and one seat per Dealer Principal and GM per
franchise per year at an ABT-U Basic Training course. Additional seats may
be purchased at a cost of [ ] per seat. Dealer will ensure that each ABT
Manager will attend at least one ABT Phone Training Session prior to
activating our services and (1) ABT-U Basic training course within ninety
(90) days from the date of this agreement. Dealer understands that ABT will
not forward Purchase Requests under this Agreement until such time as The
ABT Manager Phone Training has been completed. ABT may suspend Purchase
Requests in the event all ABT-U Basic Training has not been completed by
the qualified ABT Manager(s), Dealer, and GM within the time frames stated
herein. Until such time as Dealer's compliance with this term has been
confirmed by ABT, ABT is hereby granted express authority and permission to
re-route any Purchase Requests received from Dealer's PMA to the nearest
qualified ABT subscribing dealer for the subject vehicle make, without
prior notice to Dealer.
6. You will set aside and designate an exclusive work area within Your
dealership wherein the ABT Manager(s) may perform his/her/their duties
under this Agreement.
7. When working with each Purchase Requester provided to You through Our
service system, You will, at all times, act in good faith and in accordance
with state and federal laws.
8. You promise to reasonably participate in ABT's program offerings, including
any programs or services developed in the future.
9. Dealer shall contact one hundred percent (100%) of the Potential Purchasers
within one (1) business day of Dealer's receipt of the inquiry from ABT.
ABT retains the right to re-route to another accredited ABT dealer, at any
time, any Purchase Requester(s) not contacted by You, without prior notice;
and
10. Dealer's initial response shall be by telephone or e-mail and shall confirm
receipt of the Purchase Request. Dealer shall at the same time, but in no
event more than two (2) business days following receipt of the Purchase
Request, disclose all of the following information (the "Dealer
Information"):
(a) the availability of the vehicle inquired about;
(b) the manufacturer's suggested retail price (MSRP) of the vehicle;
(c) availability of all requested options;
(d) the complete price that You will sell or lease the vehicle to the
Potential Purchaser, including all options requested, preparation
fees, destination fees and/or advertising costs or charges not
otherwise included in the vehicle price;
(e) all relevant financing terms and conditions which may apply to the
purchase or lease transaction requested;
(f) all other terms, costs and conditions required by law to be disclosed
to prospective purchasers; and
(g) ABT retains the right to re-route any Purchase Request(s) to another
accredited ABT Dealer in the event the information called for in this
section II(12) are not completely disclosed to a Purchase
Requester(s).
11. You agree to maintain an Overall Satisfaction Index (OSI) score as measured
by ABT at a level that is equal to or above the regional average for
comparable make dealers in Your PMA area. OSI is a quarterly scoring method
which measures and ranks performance by comparing Dealer's average Purchase
Request contact ratio, actual sales completed from Purchase Requests
provided, the number of finance transactions completed through ABT, and
customer service ratings as provided by customer surveys, with those of
other similarly situated Dealers within a region. A satisfactory OSI is
material to Your ability to receive a Platinum Term Continuation Agreement.
In the event Dealer's performance does not meet the requirements for a
Platinum Term Continuation Agreement, ABT in their sole their discretion
may extend the terms of this Gold Term Subscription Agreement as specified
in Section Section I (13) herein.
12. You promise that all Dealer Information, including the price, that You
transmitted to a Potential Purchaser shall be valid and be binding on
Dealer for a period of seven (7) days after its transmittal, provided the
identified vehicle still remains available for sale. If You relied on a
manufacturer sponsored program when quoting Your pricing, terms, incentives
or availability of vehicles, the time period in which the Dealer
Information must be valid shall coincide with the termination date of the
Manufacturer's program or seven (7) days, whichever is less. If the offer
time is less than seven (7) days for the above reason, You promise to
include a statement in the Dealer Information informing the Prospective
Purchaser of any reduction in the time period as set forth above. You agree
that any claim for damages or loss arising out of Your failure to inform
Potential Purchasers of all Dealer Information required by this section
shall be borne solely by You and not ABT.
13. You promise to adopt and abide by revisions to any Customer Service
Standard no later than thirty (30) days following notification of a change,
even though they may require additional work or expense to implement.
14. You promise to use best efforts to effectively communicate mutually
beneficial information relating to the ABT products and services provided
during the term of this subscription.
15. You agree to update, on a weekly basis, Your sales data in the Dealer Real
Time(R) System indicating the number and names of Potential Purchasers who
purchased or leased vehicles from You through Our system. You agree to
include in Your data, the number of those vehicles financed and amount
financed and such other related data as may from time to time be requested.
16. You agree to provide at Your own expense, dedicated access to an IBM
compatible personal computer with Internet access and related equipment
that meets or exceeds the minimum specifications published from time to
time, by ABT. You are solely responsible for ensuring that your computer
system is in compliance with all-relevant "Year 2000" specifications. Upon
request, you agree to provide Us with written assurances regarding your
compliance with this provision.
17. In addition to the personal computer outlined above, You agree to provide
at Your own expense, a dedicated workstation that is at a minimum,
comprised of a desk, a compatible printer, telephone, and other office
supplies and equipment as may be necessary to receive and properly
implement at Your dealership, the services contemplated by this Agreement.
18. You are responsible to maintain Your own equipment at Your sole expense and
will assume all responsibility for loss, damage, and maintenance to Your
own equipment.
19. You understand that ABT services are free of charge to a Purchase
Requester. You or any employee/agent of You, are expressly prohibited from
representing to any Purchase Requester, in any manner, either orally or in
writing, the existence of any charge or fee to be paid to You or to You on
behalf of ABT by reason of their using Our services to facilitate the
Purchase or Lease of any vehicle from You.
20. DEALER REAL TIME SYSTEM(R)U.S.PAT.PEND. (DRT): You agree to actively
utilize the DRT information system in the daily implementation of the
services contemplated by this Agreement. As an express condition of the
license hereby granted to You by ABT, You are prohibited from reselling,
loaning or otherwise sharing the use of Your password with anyone not
subject to this contract.
21. ABT ACCEPTANCE CORPORATION PRE-APPROVED FINANCING: Through Our affiliate,
Autobytel Acceptance Corporation, a Delaware Corporation ("ABTAC"), We
offer pre-approved, third-party, low-cost financing programs on Our website
for consumers from commercial lending sources arranged by ABTAC or through
federal credit unions under contract with ABTAC (the "Financing
Arrangements"). To accommodate Purchase Requesters who are pre-approved for
financing through ABTAC's lenders and to participate in the financial
rewards offered by these financing programs, You must apply on Your own to
each lender for a Dealer Participation Agreement and receive approval from
each lender independently. If You do not participate with ABTAC's lenders,
You will still receive Purchase Requests however, Purchase Requesters will
be notified that You are not participating in Our financing programs and We
will be providing them with alternative lending options, including but not
limited to direct lending, if available. If You are approved by each lender
as a participating Dealer, You agree to honor the following commitments to
Our financing program:
a. You promise to maintain a loan-closing ratio of at least ten percent
(10%) for those loans pre-approved by ABTAC lenders.
b. You promise that You will use best efforts to re-solicit for an
application to ABTAC finance programs to at least ten percent (10%) of
the non-credit Purchaser Requesters forwarded to You by ABT.
c. You promise that You or any one in Your employment will not
intentionally disparage or otherwise mislead the customer as to the
terms and conditions of Our Financing Arrangements.
2
<PAGE> 3
d. When a Purchase Requester has been pre-approved at Our lender's
prevailing buy rate or at a credit union under contract with ABT for
Our financing, You promise that You will not actively solicit the
Purchase Requester to convert to an independently promoted loan
program offered through Your dealership. Violation of this section
will be considered a breach of this contract and subject this
Agreement to termination in accordance with the terms outlined in this
Agreement.
ABT, in many cases, has arranged for You to be compensated for Your
participation in ABTAC arranged finance programs. This compensation, if
available, will come directly from the lender and not ABT or ABTAC. Any
disagreement regarding the terms and conditions of a lender's Participation
Agreement shall be dealt with exclusively between You and the lender.
Neither ABT nor ABTAC makes any guarantee that You will receive
compensation from any lender. ABTAC uses its best efforts to negotiate
advantageous terms for Our subscribing dealers and will, from time to time,
add or delete lenders, including banks, credit unions, thrift and loans and
other sources to benefit You and the Purchase Requester.
22. CERTIFIED PRE-OWNED CYBERSTORE(R) PARTICIPATION ELECTION (OPTIONAL): Your
participation in Our used vehicle program is optional and there is an
additional charge for this service. The terms and conditions of Your
participation in this program are set forth separately in Appendix "B"
attached to this Agreement and incorporated herein by this reference.
23. AFTERMARKET ACCESSORIES (OPTIONAL): Your participation in Our Aftermarket
Accessory program is optional and there is an additional charge of [ ]
dollars per Purchase Request wherein Aftermarket Accessory items are
requested. The terms and conditions of Your participation in this program
are set forth separately in attached Appendix "C" to this Agreement and
incorporated herein by this reference.
24. COMPENSATION TO ABT: You promise to pay ABT a monetary fee comprised of an
initial start-up fee and a monthly subscription fee as follows:
[SIGN UP FEE WRITTEN] Dollars ($[SIGN UP FEE]) as an initial start-up
fee. Of this fee, [ ] shall be allocated to the DRT initial start-up
fee, receipt of which is hereby acknowledged. As additional ongoing
consideration, You agree to pay ABT the amount of [MONTHLY FEE
WRITTEN] ($[MONTHLY FEE]) as a total monthly subscription fee, which
is due and payable in advance on the first day of every calendar
month. The total monthly amount due shall be allocated as follows: DRT
Access Fee, [ ]; Certified Pre-Owned CyberStore(R), [UCC MONTHLY];
[MAKE 1], [MAKE 1 MONTHLY] [MAKE 2] [MAKE 2 MONTHLY] [MAKE 3] [MAKE 3
MONTHLY] [MAKE 4] [MAKE 4 MONTHLY] [MAKE 5] [MAKE 5 MONTHLY]
The amount of fees charged for your subscription is determined by several
factors, including but not limited to your geographical location, the
franchise make of vehicle you offer through this subscription, population
concentrations, per capita vehicle registrations for your PMA, and ABT's
Seasonal Annual Adjusted Rate (SAAR) percentage share of national retail
vehicle sales for the year in question. The above stated fees shall remain
unchanged during the first six (6) months of this Gold Term Agreement.
Thereafter, ABT, in Our sole discretion, may change the fee charged to You
upon thirty- (30) days written notice, however, in no event shall more than
two (2) such fee changes take place within the initial twelve-(12) month
term of this Agreement. In the event this Gold Term Subscription agreement
is extended pursuant to section Section I(13), ABT reserves the right to
change the fee, with thirty (30) days written notice to You according to
Section Section IV(4) below. Payments received more than thirty (30) days
following the invoice date shall be subject to a late fee of $25.00 and
shall incur interest charges on the balance due at an annual percentage
rate of eighteen (18.0%) percent per annum. ABT reserves the right to
suspend services for any payment sixty (60) days or more past due until
the account is brought current.
The first month's total fee and initial sign-up fee is due and payable
concurrently with the execution of this Agreement, receipt of which is
hereby acknowledged. All fees paid to ABT under this Agreement are deemed
earned upon the execution of this Agreement or delivery of services
whichever occurs first. All fees paid to ABT pursuant to this Agreement are
non-refundable regardless of circumstances.
25. DEALER MAY TERMINATE THIS AGREEMENT :
(a) immediately, if an order for liquidation against ABT is entered and
not stayed in a bankruptcy proceeding;
(b) immediately, if ABT is guilty of willful misconduct in the performance
of its duties under this Agreement; or
(c) immediately for any breach of this Agreement by You which is not cured
within ten (10) days after You provide written notice of the breach to
Us; or
(d) immediately upon a finding of Dealer's violation of state or Federal
law or conviction for such violation, whether administratively,
civilly, or criminally;
(e) upon thirty (30) days written notice in accordance with Section
Section IV(4) of this Agreement following the effective date of any
adjustment in Dealer's PMA pursuant to Section Section I(12) of this
agreement;
(f) upon thirty (30) days written notice in accordance with Section
Section IV(4) of this Agreement following the effective date of any
increase in Dealer's monthly Subscription fee pursuant to Section
Section II(24) of this agreement;
(g) upon thirty (30) days written notice in accordance with Section
Section IV(4) of this Agreement, for any reason on or after the last
day of the sixth (6) month from the date of this agreement.
(h) Under no other circumstances may Dealer terminate this Agreement
without the prior written consent of ABT's then Chief Operating
Officer.
26. TAXES: You are solely responsible for paying all taxes (local, state and
federal) imposed as a result of the sale or lease of any vehicle(s). In the
event We are required to collect and/or pay any taxes by reason of a
consumer's purchase or lease of a vehicle from You through the services ABT
provides to You, You agree to promptly reimburse Us for those taxes We were
required to pay within ten (10) days following receipt of written
notification from ABT.
27. INDEMNIFICATION: You promise to indemnify and hold harmless Us and Our
subsidiaries and/or affiliates and Our respective members, managers,
directors, officers, employees, and agents against any and all losses,
liabilities, claims, awards, damages, judgments, settlements, and costs,
including fees and expenses, arising out of or related to Your negligence
or wrongful conduct, or arising out of any third-party claim, including,
but not limited to, any claim for damages by any person or entity regarding
the purchase, lease and/or finance of a motor vehicle from Dealer or
resulting from Dealer's utilization of ABT's services, or from any other
act done or omitted to be done by Dealer in executing the terms of this
Agreement. In the event We are served with notification of action or suit
against You, We will promptly notify You of such claim.
You promise to defend at Your sole cost and expense, all such claims,
actions, lawsuits, or proceedings. In all events, ABT, in its sole
discretion, shall have the right to participate in the defense of any such
action through counsel of its own choosing at ABT's sole expense. In the
event You are served with notification of action or suit against Us, You
promise to promptly notify Us of such claim(s), and ABT, in its sole
discretion, shall defend all such actions or suits through counsel of Our
own choosing.
3
<PAGE> 4
IV. GENERAL TERMS & CONDITIONS:
1. WARRANTY LIMITATION: ABT does not guarantee or warranty the performance of
the services provided hereunder including but not limited to the number of
Purchase Requests or vehicle sales/leases Dealer may receive from Our
service. You specifically waive all warranties, expressed or implied,
arising out of or in connection with the services to be provided by ABT
hereunder. Specifically excluded are all warranties, expressed or implied,
including but not limited to, merchantability and fitness for a particular
purpose. In no event shall ABT be liable for any loss of business profits
or for any consequential, incidental, punitive or similar damages, or for
any third-party claims of damages, even if advised of the possibility of
such damages.
2. NO WAIVER: The failures of either Party to exercise in any respect any
right provided for herein shall not be deemed a waiver of any right
hereunder.
3. INDEPENDENT CONTRACTOR ARRANGEMENT. The relationship created by this
Agreement between ABT and Dealer is intended to be and shall for all
purposes hereunder be considered as an independent contractor. Nothing
contained in this Agreement and/or any Appendices or Amendments hereto
shall be construed as intending, creating or constituting a franchise,
partnership, agency, or joint venture between ABT and Dealer.
4. NOTICES: All notices and requests in connection with this Agreement and/or
any Appendices and/or Amendments hereto shall be given or made upon the
respective Parties in writing and shall be deemed given by any of the
following means 1) on the day deposited in the U.S. mail, postage prepaid,
and addressed as designated at the top of this Agreement, or to such
address as the Party to receive the notice or request so designates by
written notice to the other. 2) by Facsimile which shall be deemed received
on the day sent when a confirming notice from the sending facsimile machine
has been generated. Or 3) by overnight delivery service or courier, which
shall be deemed received on the day of physical delivery.
5. ASSIGNMENT: This Agreement and the rights and duties hereunder, including
any Appendices or Amendments hereto shall not be assignable by Dealer,
except upon written consent of ABT. This Agreement and the rights and
duties hereunder shall be assignable by ABT without restriction ten-(10)
days written notice to Dealer.
6. PRESS RELEASES: Unless We agree in writing to the contrary, You are
prohibited from issuing any press release(s) or making any public
announcement(s) regarding Your business relationship with ABT or ABT's
services or programs provided to You. You may however, make references to
Your affiliation with autobytel.com inc. in any advertisement published by
You for Your own benefit.
7. GOVERNING LAW AND JURISDICTION: This Agreement and the performance
hereunder shall be governed and construed in accordance with the laws of
the State of California. Any dispute or claim arising between the Parties
hereto that is brought by Dealer against ABT shall be brought in a court of
competent jurisdiction located in the County of Orange in the State of
California, and the Parties hereto agree to jurisdiction in California. Any
dispute or claim arising between the Parties hereto that is brought by ABT
against Dealer shall be brought in a court of competent jurisdiction
located in the county and state wherein the principal place of business is
located and the Parties hereto agree to jurisdiction in that state and
county.
8. ATTORNEY FEES AND COSTS: In the event any action shall be instituted to
resolve a dispute between the Parties regarding this Agreement or to
enforce the terms of this Agreement, the prevailing Party in such action
shall be entitled to reasonable attorneys fees and costs incurred as a
result. As used in this section, the word "action" includes but is not
limited to any act requiring legal counsel involvement up to and including
a formal litigation filed in a court of competent jurisdiction.
9. CONFIDENTIALITY: Each of the Parties hereto, on behalf of themselves and
their employees, agree to keep all non-public information gained as a
result of the business dealings contemplated in this Agreement
confidential. Each Party may however, use such confidential information for
their internal use only to further their performance under this Agreement.
Each Party hereto understands and agrees that the sale or unauthorized use
or disclosure of any trade secrets or other confidential information,
including but not limited to private information provided by Purchase
Requester constitutes theft and will greatly damage the non-disclosing
Party and is prohibited. Dealer shall not impart ABT's services or the
concept thereof to any person or entity other than Dealer's key employee(s)
without the previous written consent of ABT. ABT reserves the right to
transmit pertinent vehicle information to consumers making inquiries
concerning the terms of purchase and financing or leasing of motor
vehicles. Notwithstanding the foregoing, if either Party is required to
produce any such information by order of any government agency, court of
competent jurisdiction, or other regulatory body, it may, upon not less
than five-(5) days written notice to the other Party, release the required
information.
10. TITLE TO SYSTEM, TRADEMARKS: To the extent permitted by law, the services
to be provided under this Agreement and any Appendices or Amendments are
proprietary to ABT, and title thereto remains in ABT. All proprietary title
and rights held by ABT extends to any extension of this Agreement and any
Appendices and Amendments, together with all copies thereof. All applicable
rights to patents, copyrights, trademarks, and trade secrets in the System
and in the name "Autobytel.com" and its logo, now and in the future, belong
exclusively to ABT. Any and all trademarks and service marks associated
with ABT are and shall forever remain the exclusive property of ABT. Upon
the written consent of ABT, Dealer is permitted to use the trademark and
service mark for inclusion on business cards, and media advertisements that
communicate Your association with ABT. You may request, in writing, a copy
of ABT's logo, trademarks, artwork, and other printed material for use in
Your advertisements. This authority to use ABT's name, logo, and other
artwork is revocable at any time by ABT. ABT reserves the right to review
such uses and if determined to be abusive of this privilege, revoke Your
permission to use the trademark in the future.
11. CONTROLLING AGREEMENT: This Agreement and all Appendices and Amendments
hereto supersedes any and all agreements, oral or written, between the
Parties, and contains all of the representations, covenants, and agreements
between the Parties with respect to services described in this Agreement.
Each Party to this Agreement acknowledges that no representations,
inducements, promises, or agreements, orally or otherwise, have been made
by any Party, or anyone acting on behalf of any Party, which are not
contained in this Agreement and/or any Appendices and/or Amendments hereto.
No other Agreement(s), statement(s), or promise(s) not contained in this
Agreement or Appendices or Amendments hereto will be valid or binding.
12. MODIFICATIONS TO AGREEMENT: Except where otherwise set forth in this
Agreement, all modifications or amendments to this Agreement shall be in
writing, properly noticed in accordance with the notice provisions of this
Agreement. Any amendment, change or modification of this Agreement will be
effective only when in writing and signed by the Party to be charged. Such
signature shall not be unreasonably withheld by the Party to be charged and
shall be returned to the maker not more than ten (10) calendar days after
receipt. Except where otherwise reserved in this Agreement, the Parties
agree that any unilateral changes, amendments or modifications made by one
Party are invalid against the other Party unless ratified in writing by the
Party to be charged.
13. APPENDICES & AMENDMENTS: All Appendices and subsequent Amendments hereto
are incorporated into this Agreement by this reference as through fully set
forth herein.
14. SEVERABILITY: If any provision of this Agreement shall be held to be
invalid, illegal or unenforceable, such determination shall in no way alter
or impair the validity, legality, and enforceability of the remaining
provisions of this Agreement and any Appendices and/or Amendments
15. REQUISITE AUTHORITY: The undersigned hereby represents that he or she is
authorized on behalf of their respective corporations to enter into this
Agreement, and that each corporation is in good standing under the laws of
the state of their incorporation.
This Agreement is executed this ________day of __________________________, 1999.
Dealer: [LEGAL NAME] autobytel.com inc
By: ___________________________________ By: ________________________________
Name: [AA 1ST NAME] [AA LAST NAME] Name: Ann Delligatta
Title: [AA TITLE] Title: Chief Operating Officer
4
<PAGE> 5
APPENDIX "A"
MARKET AREA ASSIGNMENT
(NEW VEHICLES ONLY)
Subject to the terms and conditions set forth in the foregoing ABT Subscription
Agreement between autobytel.com inc. and [LEGAL NAME], the following Postal
Codes are assigned to Dealer and shall comprise Dealer's new vehicle Market
Area:
Acknowledged: [LEGAL NAME]
Dealer Principal:_____________________________________ Date:____________________
[AA 1ST NAME] [AA LAST NAME]
[AA TITLE]
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<PAGE> 6
APPENDIX "C"
AFTERMARKET ACCESSORY OPTION ACCEPTANCE AGREEMENT
Subject to the terms and conditions set forth in Section II (23) of the ABT Gold
Term Subscription Agreement between autobytel.com inc. and [Legal Name], agrees
as follows:
(a) ABT shall provide a marketing venue whereby dealer may offer for sale
available optional equipment, service warranties, or other accessories
applicable to the vehicle described in a particular Purchase Request;
(b) Dealer shall be responsible for listing, updating and refreshing the data
listing the available accessories;
(c) Dealer shall compensate ABT [ ] containing a request for Aftermarket
Accessories, regardless of the manufacturer or supplier of the accessory.
Said amount is due to ABT upon tender of the valid Purchase Request,
regardless of whether an actual sale of said vehicle or accessory(s)
resulted from such request. ABT shall credit dealer for invalid Purchase
Requests which are defined as Purchase Requests containing bogus names,
phone number or e-mail address creating a physical inability to contact the
Purchase Requester. Credits shall also be granted for duplicate Purchase
Request from the same person for the same vehicle type. All credits shall
be applied as a offset for any amounts due and payable under the
Aftermarket program for the month immediately following the month in which
the request for credit is received.
Acknowledged and accepted: [LEGAL NAME]
Dealer Principal:_____________________________________ Date:____________________
[AA 1ST NAME] [AA LAST NAME]
[AA TITLE]
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<PAGE> 7
APPENDIX "B"
CERTIFIED PRE-OWNED CYBERSTORE(R) ELECTION
The undersigned Dealer elects to participate in the Certified Pre-Owned
CyberStore(R) services program and agrees to the following terms and conditions,
in addition to those set forth in the Gold Term Subscription Agreement:
1. CUSTOMER SERVICE GUIDELINES
Dealer agrees to abide by Certified Pre-Owned CyberStore(R) Customer
Service Guidelines ("Guidelines"). ABT in their sole discretion may, from time
to time, amend the Guidelines, or impose additional Guidelines on thirty-(30)
days' notice to Dealer. Dealer acknowledges that following the Guidelines are
crucial to the value of ABT's services and agrees to follow them and any
amendments or additions to it even though they may require extra work or
expense. The Guidelines include the following:
(i) Limited Warranty: Dealer will warranty all vehicles sold through the
Certified Pre-Owned CyberStore(R). The warranty coverage will not be less
favorable to the purchaser than the law of the where Dealer is located, and as a
minimum will be: "Three (3) months or 3,000 miles, whichever comes first." The
warranty will cover all matters governed by applicable law and by the form of
the attached warranty. Dealer will indemnify ABT for any third-party claims
arising under any warranty.
(ii) Vehicle Pricing: Dealer will provide prices ("Posted Prices") and
vehicle information for display on the ABT Website of all vehicles posted to the
Certified Pre-Owned CyberStore(R). Dealer agrees to price vehicles competitively
within the market region in which they are located. Dealer, and not ABT, shall
be solely responsible for the quality and accuracy of such information. ABT
reserves the right to monitor the quality of the photos and information
submitted. Dealer shall promptly correct any information or photo(s) deemed by
ABT to be inaccurate or below necessary quality levels set forth in This
Agreement. If Dealer fails to correct such photo image(s) or information within
72 hours of ABT's written notification thereof, ABT may remove the photo
image(s) and/or information from its Website.
(iii) Vehicle Return Policy: Except where expressly prohibited by law,
Dealer will offer, in writing, a return option allowing a purchaser to return a
vehicle to Dealer within 72 hours or 300 miles, whichever comes first. Provided
there has been no damage to the vehicle, Dealer will refund 100% of the amount
paid by the purchaser to the Dealer for the vehicle. Dealer will provide each
purchaser the name and phone number of the Dealer employee to contact to
exercise the repurchase option. Dealer will facilitate the purchaser's exercise
of the option in good faith, and will use its best efforts to maximize the
purchaser's satisfaction with the repurchase experience. Dealer agrees to refund
all amounts due to the purchaser within five (5) business days.
(iv) Out of Area Repairs: Dealer will participate in the emergency
repair system established by ABT. During the warranty period, the emergency
repair system allows a purchaser of a Certified Pre-Owned CyberStore(R) vehicle
who is more than 100 miles from their residence and encounters a situation where
the vehicle is not operational (i.e. cannot be driven), to contact the nearest
Certified Pre-Owned CyberStore(R) Dealer (the "Repairing Dealer") and have the
Repairing Dealer perform any warranted service or repair. The Repairing Dealer
will contact the dealership where the purchaser acquired its vehicle (the
"Selling Dealer") and obtain an irrevocable Repair Order (an "RO") from the
Selling Dealer authorizing the repair of the vehicle. For other covered items
other than those that disabled the vehicle, the owner should return to the
Selling Dealer. In the interest of customer satisfaction and improved
inter-dealer relations, the resulting RO will be calculated on an internal basis
of "cost plus 25%" for parts and labor in all states, except for those states
with higher mandates, in which states the applicable law will govern. In the
event of a "major" repair (i.e. engine or transmission), the Selling Dealer will
have the option of providing alternate transportation to the customer,
retrieving the affected unit, and repairing the vehicle at the Selling Dealer's
service location.
2. DIGITAL IMAGES
Dealer may publish an unlimited number of vehicles (images) on the
Certified Pre-Owned CyberStore(R). For each vehicle, Dealer shall publish one
digital image together with relevant information in accordance with the
Agreement. Dealer in accordance with the Specifications shall produce such
images and guidelines set forth in This Agreement below.
3. DIGITAL CAMERAS
ABT shall provide the dealer for their use, a Digital Camera. In the
event Dealer shall cancel this subscription before the sixth (6th) month
anniversary and only in such event, Dealer shall promptly pay ABT the sum of [ ]
in exchange for such camera. ABT will not accept a return of the camera in lieu
of such payment unless the camera is returned unused, with its original
packaging intact.
4. SPECIFICATIONS AND GUIDELINES
All vehicle images shall (i) contain the vehicle as the sole subject
matter of the image, and shall not contain any people, images of people,
graphics, photos, artwork, overlays, signs, numbers, banners, balloons or any
form of visual advertisement, or any other image that would have the effect of
distracting from the vehicle; (ii) be side or angular photographs; and (iii) be
true and correct images of the vehicle, without retouching, modification,
manipulation, or enhancement.
Accepted: [LEGAL NAME] [Legal Name]
Dealer Principal:_____________________________________ Date:____________________
[AA 1ST NAME] [AA LAST NAME]
[AA TITLE]
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ATTENTION DEALER: THIS IS A SUGGESTED SAMPLE USED VEHICLE BUYERS GUIDE FORM.
PLEASE USE FTC APPROVED FORMS THAT INCLUDE ALL STATE-MANDATED DISCLOSURES, ETC.
FRONT SIDE OF FORM
- --------------------------------------------------------------------------------
LIMITED WARRANTY
FULL X LIMITED WARRANTY.
----- ---
The dealer will pay 100% of the labor and 100% of the parts for the covered
systems that fail during the warranty period. See reverse side of this form for
the explanation of warranty coverage, exclusions, and the dealer's repair
obligations.
SYSTEMS COVERED: Duration:
Engine Power steering 90 days or 3000 miles
Transmission Power brakes whichever occurs first.
Transaxle Air Conditioning
Drive line Electrical Rear end
*See below for systems and parts coverage.
Travel Repair Provision. A vehicle purchased through the Certified Pre-Owned
CyberStore(R) that becomes inoperative when traveling over 100 miles from the
originating dealer will be eligible for repair at Autobytel.com accredited
dealerships. Travel repair service will be available throughout the U.S. and
Canada via the Autobytel.com accredited dealer network. On major repairs, the
selling dealer has the option of providing the customer with alternate
transportation and repairing the unit at the selling dealer's location. A
vehicle that is non-operational will be repaired sufficiently to return to the
originating dealer where additional repairs can be completed. To take advantage
of the Travel Repair Provision, customers may contact the originating dealer who
will direct them to the nearest Autobytel.com accredited dealership, or inquire
through the Autobytel.com website for instructions and directions:
WWW.AUTOBYTEL.COM. PLEASE NOTE: Appearance and convenience items will not be
covered by the Travel Repair Provision, nor will light bulbs, fuses, alignments,
adjustments, switches, oil filters, and other maintenance items. Failure to
strictly comply with the terms and conditions of this limited warranty will
cause this limited warranty to become null & void.
SERVICE CONTRACT. A service contract is available at an extra charge on this
vehicle. Ask Your Dealer for details as to coverage, deductible, price, and
exclusions.
PRE PURCHASE INSPECTION: Ask the dealer if You may have this vehicle inspected
by Your mechanic either on or off the lot.
- ------------- ------------ -------------------- ------- ---------------
vehicle make model dealer stock number year vin number
- --------------------------------------------------------------------------------
8
<PAGE> 9
BACK SIDE OF FORM
FULL X LIMITED WARRANTY.
----- ---
The dealer will pay 100% of the labor and 100% of the parts for the covered
systems that fail during the warranty period. The following is the entire
representation of coverage; no other systems or parts are suggested or implied.
State law may give you additional rights.
Systems Covered: Parts Covered:
Engine: All internally lubricated parts including timing chains, gears and
cover, timing belt, pulleys and cover, oil pump and gears, water pump, valve
covers, oil pan, manifolds, flywheel, harmonic balancer, engine mounts seals and
gaskets, engine block, cylinder heads and turbocharger housing if damaged by the
failure of internally lubricated parts.
Transmission/Transfer Case: All internally lubricated parts, torque converter,
vacuum modulator, transmission mounts, seals and gaskets. (Manual clutch
assembly and component parts are not covered)
Front wheel Drive: All internally lubricated parts, axle shafts, output shafts,
and constant velocity joints, front hub bearings, seals and gaskets.
Rear wheel Drive: All internally lubricated parts, propeller shafts, supports
and U-joints, drive shafts, axle shafts and bearings, seals and gaskets.
Brakes: Master cylinder, power booster, wheel cylinders, calipers, hydraulic
lines and fittings. (ABS component parts are not covered.)
Steering: Steering gear housing and all internal parts, power steering pump,
valve body and rack.
Electrical: Alternator, generator, and starter.
Air Conditioner: Compressor, evaporator core, condenser.
ALL SYSTEMS AND PARTS LISTED ABOVE ARE COVERED 90 DAYS
FROM PURCHASE OR 3000 MILES, WHICHEVER OCCURS FIRST.
NOTE: This Agreement is exclusively between the selling dealer and the customer.
By accepting this Limited Warranty, Customer agrees to release autobytel.com
inc. from all obligations with respect to the acquisition, service, or repair of
the covered vehicle. Customer's failure to strictly adhere to the terms and
conditions of this Limited Warranty shall result in loss of coverage.
- ---------------------------------------- -----------------------------------
Autobytel.com Accredited Dealer / Date Customer Signature / Date
- --------------------------------------------------------------------------------
9
<PAGE> 10
135 POINT CERTIFIED PRE-OWNED CYBERSTORE(R) VEHICLE CHECKLIST
<TABLE>
==================================================================================================================
<S> <C> <C> <C> <C> <C>
ADDRESS/LOCATION:
==================================================================================================================
YR: MAKE: MODEL: BODY TYPE: ENGINE: 4 6 8 CYL TRANS:
- ------------------------------------------------------------------------------------------------------------------
VIN: COLOR: LICENSE PLATE NO: MILEAGE:
==================================================================================================================
CIRCLE OPTIONS: WHEELS:
RADIO: AM/FM CASSETTE EQUALIZER CD ALLOY CUSTOM:______________
- ------------------------------------------------------------------------------------------------------------------
INTERIOR: VINYL CLOTH LEATHER AIR BAGS 1 OR 2 SUN ROOF AIR CONDITION: YES NO
- ------------------------------------------------------------------------------------------------------------------
POWER: WINDOWS LOCKS SEATS STEERING BRAKES/ABS TILT CRUISE REAR DEFROSTER
- ------------------------------------------------------------------------------------------------------------------
MAINTENANCE ITEMS: MECHANICAL AREA: OK OR DESCRIBE DAMAGE CIRCLE DOLLAR
ONE
==================================================================================================================
ENGINE OIL LOW DIRTY STARTING Repair $
BURNED LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
TRANS FLUID LOW DIRTY ENGINE Repair $
BURNED LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
BRAKE FLUID LOW DIRTY TRANSMISSION Repair $
BURNED LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
COOLANT LOW RUSTY DRIVE LINE Repair $
BURNED LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
PWR STEERING LOW DIRTY STEERING Repair $
BURNED LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
BATTERY CORRODED BRAKES 50% LINING Repair $
LOW CHARGE Replace
- ------------------------------------------------------------------------------------------------------------------
BELTS SERPENTINE CLIMATE CONTROL Repair $
WORN Replace
- ------------------------------------------------------------------------------------------------------------------
HOSES WORN SUSPENSION Repair $
Replace
==================================================================================================================
BODY AREA: OK OR DESCRIBE CIRCLE ONE DOLLAR ELECTRICAL OK OR DESCRIBE CIRCLE DOLLAR
DAMAGE AREA: DAMAGE ONE
==================================================================================================================
WINDSHIELD Repair $ TAIL Repair $
Replace LIGHTS Replace
- ------------------------------------------------------------------------------------------------------------------
HOOD / COWL Repair $ PARKING Repair $
Replace LIGHTS Replace
- ------------------------------------------------------------------------------------------------------------------
GRILL Repair $ TURN Repair $
Replace SIGNALS Replace
- ------------------------------------------------------------------------------------------------------------------
FRONT BUMPER Repair $ INTERIOR Repair $
Replace LIGHTS Replace
- ------------------------------------------------------------------------------------------------------------------
REAR BUMPER Repair $ HORN Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
HEADLIGHT ASSY'S Repair $ POWER Repair $
Replace WINDOWS Replace
- ------------------------------------------------------------------------------------------------------------------
RIGHT FENDER Repair $ POWER Repair $
Replace LOCKS Replace
- ------------------------------------------------------------------------------------------------------------------
RIGHT SIDE GLASS Repair $ POWER Repair $
Replace SEATS Replace
- ------------------------------------------------------------------------------------------------------------------
RIGHT DOORS Repair $ MEMORY Repair $
Replace SEAT Replace
- ------------------------------------------------------------------------------------------------------------------
RIGHT QUARTER Repair $ POWER Repair $
Replace MIRROR Replace
- ------------------------------------------------------------------------------------------------------------------
REAR GLASS Repair $ MEMORY Repair $
Replace MIRROR Replace
- ------------------------------------------------------------------------------------------------------------------
DECK LID Repair $ RADIO Repair $
Replace AM/FM Replace
- ------------------------------------------------------------------------------------------------------------------
LEFT QUARTER Repair $ TAPE Repair $
Replace PLAYER Replace
- ------------------------------------------------------------------------------------------------------------------
LEFT DOORS Repair $ CD Repair $
Replace PLAYER Replace
- ------------------------------------------------------------------------------------------------------------------
LEFT SIDE GLASS Repair $ CLOCK Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
LEFT FENDER Repair $ KEYLESS Repair $
Replace ENTRY Replace
- ------------------------------------------------------------------------------------------------------------------
ROOF Repair $ ANTI-THEFT Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
WHEELS / COVERS Repair $ WINDSHIELD Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
TIRES 5/32" TREAD Repair $ WINDSHIELD Repair $
Replace WIPER Replace
- ------------------------------------------------------------------------------------------------------------------
SPARE TIRE W/JACK Repair $ HOOD Repair $
Replace RELEASE Replace
- ------------------------------------------------------------------------------------------------------------------
FRONT/REAR SEATS Repair $ TRUNK Repair $
Replace RELEASE Replace
- ------------------------------------------------------------------------------------------------------------------
INTERIOR/DASH Repair $ GAS Repair $
Replace DOOR Replace
- ------------------------------------------------------------------------------------------------------------------
EXTERIOR PAINT Repair $ SPEEDOMETER Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
OTHER: Repair $ ODOMETER Repair $
Replace Replace
==================================================================================================================
CIRCLE CHOICE: TOTAL: $
THIS VEHICLE ------ WAS/WAS NOT TEST DRIVEN OVERALL CONDITION: GOOD FAIR POOR
==================================================================================================================
</TABLE>
10
<PAGE> 1
EXHIBIT 10.32
[*] Confidential treatment has been requested for certain portions of this
exhibit.
PLATINUM TERM CONTINUATION RIDER
Congratulations. Your performance and commitment to the success of Autobytel.com
enables you to move forward and enjoy the highest standard of service we offer
our family of accredited motor vehicle dealers.
This Platinum Term Continuation Rider ("Rider") agreement is entered into by and
between Autobytel.com, a Delaware Corporation, with its principal place of
business at 18872 MacArthur Blvd., Irvine, California 92612 ("ABT" or "us" or
"we") and [legal name], a(n) [state] with its principal place of business at
[address], (Dealer" or "you" or "Your"). This Rider amends the Gold Term
Subscription Agreement ("Agreement") entered into between ABT and Dealer on
[date].
This Rider shall supersede and prevail over any inconsistent term, provision, or
condition of the Agreement or any other related Agreement. This amendment
incorporates provisions that were expressly negotiated by the parties. In
consideration of the following mutual promises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, ABT
and Dealer, on their own behalf and on behalf of each of their d.b.a.
operation(s), intending to be legally bound hereby, amended the Agreement is as
follows:
SECTION I (12)(2) IS AMENDED AS FOLLOWS:
12. You agree to maintain an Overall Satisfaction Index (OSI) score as
measured by ABT at a level that is within the top 25% of your region
when measured against comparable make dealers in your PMA. OSI is a
quarterly scoring method which measures and ranks performance by
comparing Dealer's average Purchase Request contact ratio, actual sales
completed from Purchase Requests provided, the number of finance
transactions completed through ABT and customer service ratings as
provided by customer surveys, with those of other similarly situated
dealers within a region. You further agree to maintain an ABT
Satisfaction Index Performance (ABTSSI) level of eighty (80%) or better
but in no event shall your performance rating be less than the regional
average for all participating ABT subscribed dealers.
SECTION I (14) IS AMENDED AS FOLLOWS:
TERM & TERMINATION: This Agreement shall be for a term of Five (5) years,
unless terminated earlier pursuant to this section. During the term of this
agreement:
(A) ABT MAY TERMINATE THIS AGREEMENT:
1. except as otherwise stated herein, immediately for any breach
of this Agreement by you which is not cured within fifteen
(15) days after you receive written notice of the breach from
us;
2. immediately if any fees due ABT under this Agreement are
unpaid and outstanding more than thirty (30) days after ABT
makes a written request for payment;
3. immediately, if Dealer is guilty of willful misconduct in the
performance of its duties under this Agreement; or
4. immediately upon a finding of dealer's violation of State or
Federal law or conviction for such violation, whether
administratively, civilly, or criminally;
5. immediately, if an order for liquidation against you is
entered and not stayed in a bankruptcy proceeding;
6. upon ninety (90) days' written notice to you regarding poor
overall performance, including but not limited to such areas
as unsatisfactory Purchase Requestor contact rates, and poor
overall satisfaction index score unless Dealer provides
satisfactory proof that the situation complained of has been
cured within this ninety (90) day period.
(B) DEALER MAY TERMINATE THIS AGREEMENT:
1. immediately, if an order for liquidation against ABT is
entered and not stayed in a bankruptcy proceeding;
2. immediately, if ABT is guilty of willful misconduct in the
performance of its duties under this Agreement; or
3. upon sixty (60) days written notice to ABT in accordance with
the notice provisions of this agreement. Upon your voluntary
termination, you shall be responsible for all fees due to ABT
up to and including the effective date of said termination.
<PAGE> 2
SECTION I (17) IS ADDED AS FOLLOWS:
17. COURTESY ROUTING: Occasionally ABT may route a Purchase Requester to
Dealer from an area outside Dealers PMA. This may occur for a variety of
reasons including but limited to the lack of a subscribed dealer in the
Purchase Requesters area, customer satisfaction or other reason
determined by ABT in our sole discretion warrants such a routing. Dealer
agrees to accommodate such courtesy routings under the terms of this
agreement as though provided from within their PMA. Dealer understands
that courtesy routings are at the sole discretion of ABT. ABT makes no
guarantee as to the quantity, originating location and duration Dealer
may expect during the term of this agreement.
SECTION I (18) IS ADDED AS FOLLOWS:
18. MONITORED GROWTH AREAS: ABT reserves the right to determine
monitored growth areas when determining Primary Market Areas. A
Monitored Growth Area is defined as a designated PMA where ABT has
determined the potential for full value is insufficient at the present
time to warrant a dedicated subscribing dealer. Dealer may, but is not
guaranteed, the ability to temporarily service a monitored growth area
contiguous to Dealer's PMA if one exists. ABT in our sole discretion may
charge an additional monthly fee for such Monitored Growth Area. If
assigned a monitored growth area, Dealer agrees to service such an area
under the same terms and conditions as set forth and agreed to under
Dealer's contracted PMA.
SECTION II (5) IS AMENDED AS FOLLOWS:
5. You will at all times during this term employ at least one full-time
employee to be responsible for the new vehicle program and at least one
full-time employee to be responsible for the Certified Pre-Owned
CyberStore(R) program. This person(s) will be empowered to act as a liaison
between ABT and Dealer. This person(s) shall be referred to as the "ABT
Manager." Dealer shall, at all hours of dealership sales operation, insure a
qualified ABT Manager is on premises and capable of processing any Purchase
Requests provided to Dealer by ABT. You promise to notify us in writing
within ten (10) days with the identity of any newly designated ABT Manager.
In the event dealer does not have a qualified ABT Manager on premises, for
any reason, ABT reserves the right to re-route any Purchase Request to the
Qualified ABT subscribing dealer closest to the Purchase Requestor, offering
the same make. You will make your ABT Manager(s) available to us for basic
and advanced training offered by ABT from time to time. ABT shall reserve
for Dealer, free of tuition costs, two (2) seats per franchise per year for
ABT Managers to attend an ABT-U Basic Training Course. Additional seats for
the basic training may be purchased at a cost of [ ] per seat. Advanced
certification courses will be made available to Dealer form time to time at
an additional cost. Dealer's participation in these advanced programs is
voluntary. Dealer will insure that each ABT Manager will attend at least one
ABT-U Basic training course each year during the term of this agreement.
Dealer understands that ABT will not forward Purchase Requests under this
agreement until such time as all ABT-U Basic Training has been completed by
the qualified ABT manager(s). Until such time as Dealer's compliance with
this term has been confirmed by ABT, ABT is hereby granted express authority
and permission to re-route any Purchase Requests received from Dealers PMA
to the nearest qualified ABT subscribing dealer for the subject vehicle
make, without prior notice to Dealer.
SECTION II (6) IS AMENDED AS FOLLOWS:
6. You will establish an exclusive department within your dealership wherein
the ABT Manager(s) may perform his/her/their duties under this agreement.
Until such time as Dealer's compliance with this term has been confirmed by
ABT, ABT is hereby granted express authority and permission to re-route any
Purchase Requests received from Dealers PMA to the nearest qualified ABT
subscribing dealer for the subject vehicle make, without prior notice to
Dealer.
SECTION II (12) IS AMENDED AS FOLLOWS:
12. NEW VEHICLE EXCLUSIVE PRIMARY MARKET ASSIGNMENT ("PMA"):: You have been
assigned an exclusive market area for the subscribed new vehicle franchises
of ________, ________, _______, _______ in accordance with the market
representation study and plan conducted [date of last study]. This exclusive
area effects new vehicle Purchase Requests only. The U.S. Postal Code
description of this PMA assignment is set forth in Exhibit "A" attached to
this agreement and incorporated herein by this reference as though fully set
forth. ABT has sole and complete authority to define your PMA. Your
exclusive PMA will remain in effect for at least twelve-(12) months without
adjustment. ABT reserves the right to conduct periodic market representation
studies of your PMA. ABT in their sole discretion may use the results of
these studies to evaluate the market value of your PMA as well as your
ability to service Purchase Requests received in your PMA. In no event shall
such a study be conducted within six (6) months of any prior study within
Dealer's designated market area (DMA). Except for rural areas, ABT will
perform such studies for an entire DMA, which shall effect all similar
franchised dealers concurrently. ABT reserves the rights to conduct a single
market area study in rural areas which may effect a single dealer location
only. ABT reserves the right to adjust your PMA as necessary following such
studies. Changes in Dealers PMA as a result of these studies
<PAGE> 3
shall be implemented Three (3) months following the date the study was
conducted. ABT promises to provide you with not less than thirty- (30) days
written notice of the pending change and the effective date. Following such
PMA changes, Dealer's adjusted PMA shall remain in effect and shall not be
adjusted unless as a result of a subsequent market representation study is
completed for the DMA. [ABT retains the right to market and use its programs
and services for similar make dealers in all areas other than your PMA, and
within your PMA for all makes of motor vehicles not subscribed to by you.]
SECTION II (12) IS AMENDED AS FOLLOWS:
12. You agree to update, on a weekly basis, your sales data in the Dealer
Real Time System indicating the number and names of Potential Purchasers who
purchased or leased vehicles from you though our system. You agree to
include in your data, the number of those vehicles financed and amount of
the financed and such other related data as may from time to time be
requested. You further agree to accurately disclose in your weekly report,
data reflecting your cost of sale for each vehicle sold through the ABT
program as well as the cost of sale for all vehicles sold by means other
than ABT. All such information provided shall remain strictly confidential
and shall be used solely by ABT in evaluating your overall performance.
SECTION II (21) IS AMENDED AS FOLLOWS:
21. ABT ACCEPTANCE CORPORATION PRE-APPROVED FINANCING: To accommodate
Purchase Requestors who are pre-approved for financing though ABTAC's lenders
and to participate in the financial rewards offered by these financing
programs, you will apply for a dealer participation agreement and receive
approval from each ABTAC approved lender. You agree to maintain each of these
financing arrangements throughout the remaining term of this agreement. You
agree to honor the following commitments to our financing program:
1. You will participate in good faith by accepting ABTAC arranged
financing currently available and for programs that may be added in
the future.
2. You agree too fully complete lender participation agreements, if
required by our lenders, within ten (10) working days from receipt.
3. You will to maintain an average loan-closing ratio of at least 10%
of those loans pre-approved during the term of this subscription.
4. You agree that during the term of this agreement you will re-solicit
for an application to ABTAC finance programs, any non-credit
Purchaser Requesters forwarded to you by ABT.
5. You promise you or any one in your employment will not intentionally
disparage or otherwise mislead customer as to the terms and
conditions of our Financing Arrangements.
6. When a Purchase Requestor has been pre-approved at the Lender's
prevailing buy rate for our financing, you promise that you will not
actively solicit the Purchase Requestor to convert from our
pre-approved financing to an independently promoted loan program
offered through your dealership.
ABT, in many cases, has arranged for you to be compensated for your
participation in ABTAC arranged financing programs. This compensation, if
available, will come directly from the lender and not ABT or ABTAC. Any
disagreement regarding the terms and conditions of a lender's Participation
Agreement shall be dealt with between you and the lender. Neither ABT nor
ABTAC makes any guarantee that you will receive compensation from any
Lender. ABTAC uses its best efforts to negotiate advantageous terms for our
subscribing dealers and will, from time to time, add or delete lenders,
including banks, credit unions, thrift and loans and other sources to
benefit you and the Purchase Requestor.
SECTION II (22) IS AMENDED AS FOLLOWS:
22. CERTIFIED PRE-OWNED CYBERSTORE(R) PARTICIPATION: Throughout the term of
this agreement, dealer agrees to actively participate in the Certified
Pre-Owned Cyberstore(R) program. Dealer hereby agrees to honor the terms and
conditions of this program as set forth separately in Appendix "B" attached
to this agreement and incorporated herein by this reference.
SECTION II (23) IS AMENDED AS FOLLOWS:
23. AFTERMARKET ACCESSORIES: Throughout the term of this agreement, you
agree to actively participate in our Aftermarket Accessory program for an
additional charge of [ ] dollars per Purchase Request wherein aftermartket
accessory items are requested. The terms and conditions of your
participation in this program are set forth separately in Appendix "C"
attached to this agreement and incorporated herein by this reference as
though fully set forth.
SECTION II (24) IS AMENDED AS FOLLOWS:
24. COMPENSATION TO ABT: As consideration for the business opportunities and
promises we have made to you in this Agreement, you promise to pay ABT a
monetary fee comprised of an initial start-up fee and a monthly subscription
fee. The amount of fees charged for your subscription is determined by
several factors, including but not limited to your geographical location,
the franchise make of vehicle you offer through this
<PAGE> 4
subscription, population concentrations, per capita vehicle registrations
for your PMA, and ABT's Seasonal Annual Adjusted Rate (SAAR) percentage
share of national retail vehicle sales for the year in question.
ABT shall review such factors at twelve (12) month intervals to determine
the value of the services being provided to you. ABT, in our sole
discretion, may change the fee charged to you upon thirty- (30) days written
notice. However, in no event shall more than one (1) such fee change take
place within a twelve (12) month period.
The subscription fee(s) you hereby promise to pay as of the date of this
agreement is
[WrittenAMTInFee] Dollars ($[InFee]) as a total MONTHLY SUBSCRIPTION
FEE, Which is due and payable in advance on the first day of every
calendar month. The total monthly amount due shall be allocated as
follows:
DRT Access Fee, $150.00; Certified Pre-Owned CyberStore(R),
[UCCSMoFee]; [Make], [MoMakeFee] [Make1] [MoMkFee1] [Make2]
[MoMkFee2] [Make3] [MoMkFee3] [Make4] [MoMkFee4] [Make5]
[MoMkFee5] [Make6] [MoMkFee6] [Make7] [MoMkFee7]
All fees paid to ABT under this agreement are deemed earned upon the
execution of this agreement or delivery of services whichever occurs
first. All fees paid to ABT are non-refundable regardless of
circumstances. Payments received more than thirty (30) days following
the invoice date shall be subject to a late fee of $25.00 and shall
incur interest charges on the balance due at an annual percentage rate
of eighteen (18.0%) percent per annum.
EXCEPT TO THE EXTENT THEY ARE INCONSISTENT WITH THE PROVISIONS OF THIS RIDER,
ALL OTHER SECTIONS OF THE AGREEMENT SHALL REMAIN UNCHANGED.
This Agreement is executed this ________day of __________________________, 1999.
DEALER: [LEGAL NAME]
By:_________________________________
Name: [Auth Agnt]
Title: [Title]
AUTOBYTEL.COM
By: _________________________________
Name: Ann Delligatta
Title: Chief Operating Officer
<PAGE> 5
APPENDIX "B"
CERTIFIED PRE-OWNED CYBERSTORE(R) ELECTION
The undersigned Dealer elects to participate in the Certified Pre-Owned
CyberStore(R) services program and agrees to the following terms and conditions,
in addition to those set forth in the Term Subscription Agreement:
1. CUSTOMER SERVICE GUIDELINES
Dealer agrees to abide by Certified Pre-Owned CyberStore Customer
Service Guidelines ("Guidelines") ABT in their sole discretion may, from time to
time, amend the Guidelines, or impose additional Guidelines on thirty (30) days'
notice to Dealer. Dealer acknowledges that following the Guidelines is crucial
to the value of ABT's services and agrees to follow them and any amendments or
additions to it even though they may require extra work or expense. The
Guidelines include the following:
(i) Limited Warranty: Dealer will warranty all vehicles sold through the
Certified Pre-Owned CyberStore. The warranty coverage will not be less favorable
to the purchaser than the law of the where Dealer is located, and as a minimum
will be: "Three months or 3,000 miles, whichever comes first." The warranty will
cover all matters governed by applicable law and by the form of the attached
Warranty. Dealer will indemnify ABT for any third party claims arising under any
warranty.
(ii) Vehicle Pricing: Dealer will provide prices ("Posted Prices") and
vehicle information for display on the ABT Website of all Vehicles posted to the
Certified Pre-Owned CyberStore. Dealer agrees to price Vehicles competitively
within the market region in which they are located. Dealer, and not ABT, shall
be solely responsible for the quality and accuracy of such information. ABT
reserves the right to monitor the quality of the photos and information
submitted. Dealer shall promptly correct any information or photo(s) deemed by
ABT to be inaccurate or below necessary quality levels set forth in Section 5.
If Dealer fails to correct such photo image(s) or information within 72 hours of
ABT's written notification thereof, ABT may remove the photo image(s) and/or
information from its website.
(iii) Vehicle Return Policy: Except where expressly prohibited by law,
Dealer will offer, in writing, a return option allowing a purchaser to return a
Vehicle to Dealer within 72 hours or 300 miles, whichever comes first. Provided
there has been no damage to the Vehicle, Dealer will refund 100% of the amount
paid by the purchaser to the Dealer for the Vehicle. Dealer will provide each
purchaser the name and phone number of the Dealer employee to contact to
exercise the repurchase option. Dealer will facilitate the purchaser's exercise
of the option in good faith, and will use its best efforts to maximize the
purchaser's satisfaction with the repurchase experience. Dealer agrees to refund
all amounts due to the purchaser within five business days.
(iv) Out of Area Repairs: Dealer will participate in the emergency
repair system established by ABT. During the warranty period, the emergency
repair system allows a purchaser of a Certified Pre-Owned CyberStore Vehicle who
is more than 100 miles from their residence and encounters a situation where the
vehicle is not operational (i.e. cannot be driven), to contact the nearest
Certified Pre-Owned CyberStore Dealer (the "Repairing Dealer") and have the
Repairing Dealer perform any warranted service or repair. The repairing Dealer
will contact the dealership where the purchaser acquired its Vehicle (the
"Selling Dealer") and obtain an irrevocable Repair Order (an "R.O.") from the
Selling Dealer authorizing the repair the vehicle. For other covered items other
than those that disabled the vehicle, the owner should return to the Selling
Dealer. In the interest of customer satisfaction and improved inter-dealer
relations, the resulting R.O. will be calculated on an internal basis of "cost
plus 25%" for parts and labor in all states, except for those states with higher
mandates, in which states the applicable law will govern. In the event of a
"major" repair (i.e. engine or transmission), the Selling Dealer will have the
option of providing alternate transportation to the customer, retrieving the
affected unit, and repairing the Vehicle at the Selling Dealer's service
location.
2. DIGITAL IMAGES: Dealer may publish an unlimited number of vehicles (images)
on the Certified Pre-Owned CyberStore. For each vehicle, Dealer shall
publish one digital image together with relevant information in accordance
with the Agreement. Dealer in accordance with the Specifications shall
produce such images and guidelines set forth in Section 5 below.
3. DIGITAL CAMERAS: ABT shall provide the dealer for their use, a Digital
Camera. In the event Dealer shall cancel this subscription before the sixth
(6th) month anniversary and only in such event, Dealer shall promptly pay
ABT the sum of [ ] in exchange for such camera. ABT will not accept a
return of the camera in lieu of such payment unless the camera is returned,
unused with its original packaging in tact.
4. SPECIFICATIONS AND GUIDELINES: All vehicle images shall (i) contain the
vehicle as the sole subject matter of the image, and shall not contain any
people, images of people, graphics, photos, artwork, overlays, signs,
numbers, banners, balloons or any form of visual advertisement, or any
other image that would have the effect of distracting from the vehicle;
(ii) be side or angular photographs; and (iii) be true and correct images
of the vehicle, without retouching, modification, manipulation or
enhancement.
Accepted: [Legal Name]
Dealer Principal:_________________________________________ Date:________________
[Auth Agnt]
[Title]
<PAGE> 6
ATTENTION DEALER: THIS IS A SUGGESTED SAMPLE USED VEHICLE BUYERS GUIDE FORM.
PLEASE USE FTC APPROVED FORMS THAT INCLUDE ALL STATE-MANDATED DISCLOSURES, ETC.
FRONT SIDE OF FORM
- --------------------------------------------------------------------------------
LIMITED WARRANTY
FULL X LIMITED WARRANTY.
----- ---
The dealer will pay 100% of the labor and 100% of the parts for the covered
systems that fail during the warranty period. See reverse side of this form for
the explanation of warranty coverage, exclusions, and the dealer's repair
obligations.
SYSTEMS COVERED: Duration:
Engine Power steering 90 days or 3000 miles
Transmission Power brakes whichever occurs first.
Transaxle Air Conditioning
Drive line Electrical Rear end
*See below for systems and parts coverage.
Travel Repair Provision. A vehicle purchased through the Certified Pre-Owned
CyberStore(R) that becomes inoperative when traveling over 100 miles from the
originating dealer will be eligible for repair at Autobytel.com accredited
dealerships. Travel repair service will be available throughout the U.S. and
Canada via the Autobytel.com accredited dealer network. On major repairs, the
selling dealer has the option of providing the customer with alternate
transportation and repairing the unit at the selling dealer's location. A
vehicle that is non-operational will be repaired sufficiently to return to the
originating dealer where additional repairs can be completed. To take advantage
of the Travel Repair Provision, customers may contact the originating dealer who
will direct them to the nearest Autobytel.com accredited dealership, or inquire
through the Autobytel.com website for instructions and directions:
WWW.AUTOBYTEL.COM. PLEASE NOTE: Appearance and convenience items will not be
covered by the Travel Repair Provision, nor will light bulbs, fuses, alignments,
adjustments, switches, oil filters, and other maintenance items. Failure to
strictly comply with the terms and conditions of this limited warranty will
cause this limited warranty to become null & void.
SERVICE CONTRACT. A service contract is available at an extra charge on this
vehicle. Ask Your Dealer for details as to coverage, deductible, price, and
exclusions.
PRE PURCHASE INSPECTION: Ask the dealer if You may have this vehicle inspected
by Your mechanic either on or off the lot.
- -------------- -------- --------------------- --------- ---------------
vehicle make model dealer stock number year vin number
<PAGE> 7
BACK SIDE OF FORM
- --------------------------------------------------------------------------------
FULL X LIMITED WARRANTY.
----- ---
The dealer will pay 100% of the labor and 100% of the parts for the covered
systems that fail during the warranty period. The following is the entire
representation of coverage; no other systems or parts are suggested or implied.
State law may give you additional rights.
Systems Covered: Parts Covered:
Engine: All internally lubricated parts including timing chains, gears and
cover, timing belt, pulleys and cover, oil pump and gears, water pump, valve
covers, oil pan, manifolds, flywheel, harmonic balancer, engine mounts seals and
gaskets, engine block, cylinder heads and turbocharger housing if damaged by the
failure of internally lubricated parts.
Transmission/Transfer Case: All internally lubricated parts, torque converter,
vacuum modulator, transmission mounts, seals and gaskets. (Manual clutch
assembly and component parts are not covered)
Front wheel Drive: All internally lubricated parts, axle shafts, output shafts,
and constant velocity joints, front hub bearings, seals and gaskets.
Rear wheel Drive: All internally lubricated parts, propeller shafts, supports
and U-joints, drive shafts, axle shafts and bearings, seals and gaskets.
Brakes: Master cylinder, power booster, wheel cylinders, calipers, hydraulic
lines and fittings. (ABS component parts are not covered.)
Steering: Steering gear housing and all internal parts, power steering pump,
valve body and rack.
Electrical: Alternator, generator, and starter.
Air Conditioner Compressor, evaporator core, condenser.
ALL SYSTEMS AND PARTS LISTED ABOVE ARE COVERED 90 DAYS
FROM PURCHASE OR 3000 MILES, WHICHEVER OCCURS FIRST.
NOTE: This Agreement is exclusively between the selling dealer and the customer.
By accepting this Limited Warranty, Customer agrees to release autobytel.com
inc. from all obligations with respect to the acquisition, service, or repair of
the covered vehicle. Customer's failure to strictly adhere to the terms and
conditions of this Limited Warranty shall result in loss of coverage.
- ---------------------------------------- ------------------------------------
Autobytel.com Accredited Dealer/Date Customer Signature/Date
- --------------------------------------------------------------------------------
<PAGE> 8
135 POINT CERTIFIED PRE-OWNED CYBERSTORE(R) VEHICLE CHECKLIST
<TABLE>
==================================================================================================================
<S> <C> <C> <C> <C> <C>
ADDRESS/LOCATION:
==================================================================================================================
YR: MAKE: MODEL: BODY TYPE: ENGINE: 4 6 8 CYL TRANS:
- ------------------------------------------------------------------------------------------------------------------
VIN: COLOR: LICENSE PLATE NO: MILEAGE:
==================================================================================================================
CIRCLE OPTIONS: WHEELS:
RADIO: AM/FM CASSETTE EQUALIZER CD CUSTOM:___________________ ALLOY CUSTOM:______________
- ------------------------------------------------------------------------------------------------------------------
INTERIOR: VINYL CLOTH LEATHER AIR BAGS 1 OR 2 SUN ROOF AIR CONDITION: YES NO
- ------------------------------------------------------------------------------------------------------------------
POWER: WINDOWS LOCKS SEATS STEERING BRAKES/ABS TILT CRUISE REAR DEFROSTER
- ------------------------------------------------------------------------------------------------------------------
MAINTENANCE ITEMS: MECHANICAL AREA: OK OR DESCRIBE DAMAGE CIRCLE DOLLAR
ONE
==================================================================================================================
ENGINE OIL LOW DIRTY STARTING Repair $
BURNED LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
TRANS FLUID LOW DIRTY ENGINE Repair $
BURNED LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
BRAKE FLUID LOW DIRTY TRANSMISSION Repair $
BURNED LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
COOLANT LOW RUSTY DRIVE LINE Repair $
BURNED LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
PWR STEERING LOW DIRTY STEERING Repair $
BURNED LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
BATTERY CORRODED BRAKES 50% LINING Repair $
LOW CHARGE Replace
- ------------------------------------------------------------------------------------------------------------------
BELTS SERPENTINE CLIMATE CONTROL Repair $
WORN Replace
- ------------------------------------------------------------------------------------------------------------------
HOSES WORN SUSPENSION Repair $
Replace
==================================================================================================================
BODY AREA: OK OR DESCRIBE CIRCLE ONE DOLLAR ELECTRICAL OK OR DESCRIBE CIRCLE DOLLAR
DAMAGE AREA: DAMAGE ONE
==================================================================================================================
WINDSHIELD Repair $ TAIL Repair $
Replace LIGHTS Replace
- ------------------------------------------------------------------------------------------------------------------
HOOD / COWL Repair $ PARKING Repair $
Replace LIGHTS Replace
- ------------------------------------------------------------------------------------------------------------------
GRILL Repair $ TURN Repair $
Replace SIGNALS Replace
- ------------------------------------------------------------------------------------------------------------------
FRONT BUMPER Repair $ INTERIOR Repair $
Replace LIGHTS Replace
- ------------------------------------------------------------------------------------------------------------------
REAR BUMPER Repair $ HORN Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
HEADLIGHT ASSY'S Repair $ POWER Repair $
Replace WINDOWS Replace
- ------------------------------------------------------------------------------------------------------------------
RIGHT FENDER Repair $ POWER Repair $
Replace LOCKS Replace
- ------------------------------------------------------------------------------------------------------------------
RIGHT SIDE GLASS Repair $ POWER Repair $
Replace SEATS Replace
- ------------------------------------------------------------------------------------------------------------------
RIGHT DOORS Repair $ MEMORY Repair $
Replace SEAT Replace
- ------------------------------------------------------------------------------------------------------------------
RIGHT QUARTER Repair $ POWER Repair $
Replace MIRROR Replace
- ------------------------------------------------------------------------------------------------------------------
REAR GLASS Repair $ MEMORY Repair $
Replace MIRROR Replace
- ------------------------------------------------------------------------------------------------------------------
DECK LID Repair $ RADIO Repair $
Replace AM/FM Replace
- ------------------------------------------------------------------------------------------------------------------
LEFT QUARTER Repair $ TAPE Repair $
Replace PLAYER Replace
- ------------------------------------------------------------------------------------------------------------------
LEFT DOORS Repair $ CD Repair $
Replace PLAYER Replace
- ------------------------------------------------------------------------------------------------------------------
LEFT SIDE GLASS Repair $ CLOCK Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
LEFT FENDER Repair $ KEYLESS Repair $
Replace ENTRY Replace
- ------------------------------------------------------------------------------------------------------------------
ROOF Repair $ ANTI-THEFT Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
WHEELS / COVERS Repair $ WINDSHIELD Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
TIRES 5/32" TREAD Repair $ WINDSHIELD Repair $
Replace WIPER Replace
- ------------------------------------------------------------------------------------------------------------------
SPARE TIRE W/JACK Repair $ HOOD Repair $
Replace RELEASE Replace
- ------------------------------------------------------------------------------------------------------------------
FRONT/REAR SEATS Repair $ TRUNK Repair $
Replace RELEASE Replace
- ------------------------------------------------------------------------------------------------------------------
INTERIOR/DASH Repair $ GAS Repair $
Replace DOOR Replace
- ------------------------------------------------------------------------------------------------------------------
EXTERIOR PAINT Repair $ SPEEDOMETER Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
OTHER: Repair $ ODOMETER Repair $
Replace Replace
==================================================================================================================
CIRCLE CHOICE: TOTAL: $
THIS VEHICLE ------ WAS/WAS NOT TEST DRIVEN OVERALL CONDITION: GOOD FAIR POOR
==================================================================================================================
</TABLE>
APPENDIX "C"
AFTERMARKET ACCESSORY OPTION ACCEPTANCE AGREEMENT
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN SECTION (E) OF THE PLATINUM
TERM CONTINUATION SUBSCRIPTION AGREEMENT BETWEEN AUTOBYTEL SERVICES CORPORATION
AND [LEGAL NAME], AGREES AS FOLLOWS:
1. ABT shall provide a marketing venue whereby dealer may offer for
sale available optional equipment, service warranties, or other
accessories applicable to the vehicle described in a particular
Purchase Request;
2. Dealer shall be responsible for listing, updating and refreshing the
data listing the available accessories;
3. Dealer shall compensate ABT $______ for each purchase request
containing a request for Aftermarket Accessories, regardless of the
manufacturer or supplier of the accessory. Said amount is due to ABT
upon tender of the valid Purchase Request, regardless of whether an
actual sale of said vehicle or accessory(s) resulted from such
request. ABT shall credit dealer for invalid Purchase Requests which
are defined as Purchase Requests containing bogus names, phone
number or e-mail address creating a physical inability to contact
the Purchase Requester. Credits shall also be granted for duplicate
Purchase Request from the same person for the same vehicle type. All
credits shall be applied as a offset for any amounts due and payable
under the Aftermarket program for the month immediately following
the month in which the request for credit is received.
Acknowledged and accepted: [LEGAL NAME]
Dealer Principal:_________________________________________ Date:________________
[Auth Agnt]
[Title]
<PAGE> 10
135 POINT CERTIFIED PRE-OWNED VEHICLE CHECKLIST
<TABLE>
==================================================================================================================
<S> <C> <C> <C> <C> <C>
ADDRESS/LOCATION:
==================================================================================================================
YR: MAKE: MODEL: BODY TYPE: ENGINE: 4 6 8 CYL TRANS:
- ------------------------------------------------------------------------------------------------------------------
VIN: COLOR: LICENSE PLATE NO: MILEAGE:
==================================================================================================================
CIRCLE OPTIONS: RADIO AM/FM CASSETTE EQUALIZER CD WHEELS: ALLOY
- ------------------------------------------------------------------------------------------------------------------
INTERIOR: VINYL CLOTH LEATHER AIR BAGS 1 OR 2 SUN ROOF AIR CONDITION: YES NO
- ------------------------------------------------------------------------------------------------------------------
POWER: WINDOWS LOCKS SEATS STEERING BRAKES/ABS TILT CRUISE REAR DEFROSTER
- ------------------------------------------------------------------------------------------------------------------
MAINTENANCE ITEMS: MECHANICAL AREA: OK OR DESCRIBE DAMAGE CIRCLE DOLLAR
ONE
==================================================================================================================
ENGINE OIL LOW DIRTY STARTING Repair $
BURNED LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
TRANS FLUID LOW DIRTY ENGINE Repair $
BURNED LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
BRAKE FLUID LOW DIRTY TRANSMISSION Repair $
LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
COOLANT LOW RUSTY DRIVE LINE Repair $
LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
PWR STEERING LOW DIRTY STEERING Repair $
LEAKS Replace
- ------------------------------------------------------------------------------------------------------------------
BATTERY CORRODED BRAKES 50% LINING Repair $
LOW CHARGE Replace
- ------------------------------------------------------------------------------------------------------------------
BELTS SERPENTINE CLIMATE CONTROL Repair $
WORN Replace
- ------------------------------------------------------------------------------------------------------------------
HOSES WORN SUSPENSION Repair $
Replace
==================================================================================================================
BODY AREA: OK OR DESCRIBE CIRCLE ONE DOLLAR ELECTRICAL OK OR DESCRIBE CIRCLE DOLLAR
DAMAGE AREA: DAMAGE ONE
==================================================================================================================
WINDSHIELD Repair $ TAIL Repair $
Replace LIGHTS Replace
- ------------------------------------------------------------------------------------------------------------------
HOOD / COWL Repair $ PARKING Repair $
Replace LIGHTS Replace
- ------------------------------------------------------------------------------------------------------------------
GRILL Repair $ TURN Repair $
Replace SIGNALS Replace
- ------------------------------------------------------------------------------------------------------------------
FRONT BUMPER Repair $ INTERIOR Repair $
Replace LIGHTS Replace
- ------------------------------------------------------------------------------------------------------------------
REAR BUMPER Repair $ HORN Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
HEADLIGHT ASSY'S Repair $ POWER Repair $
Replace WINDOWS Replace
- ------------------------------------------------------------------------------------------------------------------
RIGHT FENDER Repair $ POWER Repair $
Replace LOCKS Replace
- ------------------------------------------------------------------------------------------------------------------
RIGHT SIDE GLASS Repair $ POWER Repair $
Replace SEATS Replace
- ------------------------------------------------------------------------------------------------------------------
RIGHT DOORS Repair $ MEMORY Repair $
Replace SEAT Replace
- ------------------------------------------------------------------------------------------------------------------
RIGHT QUARTER Repair $ POWER Repair $
Replace MIRROR Replace
- ------------------------------------------------------------------------------------------------------------------
REAR GLASS Repair $ MEMORY Repair $
Replace MIRROR Replace
- ------------------------------------------------------------------------------------------------------------------
DECK LID Repair $ RADIO Repair $
Replace AM/FM Replace
- ------------------------------------------------------------------------------------------------------------------
LEFT QUARTER Repair $ TAPE Repair $
Replace PLAYER Replace
- ------------------------------------------------------------------------------------------------------------------
LEFT DOORS Repair $ CD Repair $
Replace PLAYER Replace
- ------------------------------------------------------------------------------------------------------------------
LEFT SIDE GLASS Repair $ CLOCK Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
LEFT FENDER Repair $ KEYLESS Repair $
Replace ENTRY Replace
- ------------------------------------------------------------------------------------------------------------------
ROOF Repair $ ANTI-THEFT Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
WHEELS / COVERS Repair $ WINDSHIELD Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
TIRES 5/32" TREAD Repair $ WINDSHIELD Repair $
Replace WIPER Replace
- ------------------------------------------------------------------------------------------------------------------
SPARE TIRE W/JACK Repair $ HOOD Repair $
Replace RELEASE Replace
- ------------------------------------------------------------------------------------------------------------------
FRONT/REAR SEATS Repair $ TRUNK Repair $
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Replace RELEASE Replace
- ------------------------------------------------------------------------------------------------------------------
INTERIOR/DASH Repair $ GAS Repair $
Replace DOOR Replace
- ------------------------------------------------------------------------------------------------------------------
EXTERIOR PAINT Repair $ SPEEDOMETER Repair $
Replace Replace
- ------------------------------------------------------------------------------------------------------------------
ODOMETER
==================================================================================================================
Circle Choice: This vehicle WAS/ WAS NOT Test Driven Overall Condition: GOOD FAIR POOR TOTAL: $
==================================================================================================================
</TABLE>
<PAGE> 1
EXHIBIT 10.33
[*] Confidential treatment has been requested for certain portions of this
exhibit.
AGREEMENT
This Agreement, dated as of February 18, 1999 (the "Effective Date"), is
made by and between Lycos, Inc., a Delaware corporation with a principal place
of business at 400-2 Totten Pond Road, Waltham, MA 02154 ("Lycos") and
autobytel.com, Inc., a Delaware corporation with a principal place of business
at 18872 MacArthur Blvd., Suite 200, Irvine, CA, 92612. ("autobytel")
Recitals
A. Lycos is the owner or licensee of certain Web services (collectively,
the "Lycos Services"), which are accessible through the URLs www.lycos.com (the
"Lycos Site"), www.tripod.com (the "Tripod Site"), www.whowhere.com (the
"WhoWhere Site"), and www.mailcity.com (the "Mailcity Site") (all of the
above-named sites are referred to collectively as the "Lycos Network").
B. autobytel is the operator of a Web site accessible through the URL
www.autobytel.com (the "autobytel Site") on which autobytel promotes information
about car purchases, and provides referrals to, among others, new car dealers
(all the content and information on the autobytel Site shall be referred to
herein as the "Content").
C. Lycos and autobytel wish to establish a relationship through which
Lycos will integrate links throughout the Lycos Network to a co-branded version
of the autobytel Site (the "Linked Site").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lycos and autobytel hereby agree
as follows:
Terms
1. Linked Site.
a. Serving and Hosting. autobytel shall launch the Linked Site on
or before March 1, 1999 (the "Launch Date"). Each page on the Linked Site that
is related to new car buying shall identify Lycos by the placement of the Lycos
logo in a prominent position substantially in the form and dimensions as set
forth on the attached EXHIBIT C. The Lycos logo shall serve as a hyperlink to
contextually relevant pages of Lycos' choice on the Lycos Site. autobytel will
operate and serve the Linked Site in a manner consistent with the present
quality standards of Lycos and which meets response performance standards for
Lycos users at least as good as those of the Lycos Site. In addition, autobytel
will be responsible for system operation software costs, hardware costs, and
network costs. Additional services and functionality that are developed by
autobytel for the autobytel Site (or any successor to it) will be provided by
autobytel at no cost so that the Linked Site is maintained at a level
substantially equal to the
<PAGE> 2
autobytel Site as it appears from time to time. Lycos shall have the right to
provide online access to the Linked Site to Lycos' subsidiaries, joint venture
partners of Lycos, and licensees of the Lycos Services.
b. Branding. The Linked Site will have the autobytel "look and
feel" but with Lycos' logo displayed on the home page and each page related to
new car buying. Branding for Lycos on the Linked Site shall consist of a "Back
to Lycos" button in substantially the form illustrated on the attached EXHIBIT
C, incorporated herein by reference, unless otherwise agreed to by both parties.
c. Referrals. autobytel and the entities to which autobytel
refers car-buyers shall be responsible for all aspects of purchase requests
generated from the Linked Site, including, without limitation, taking orders,
processing payments, ordering and stocking inventory, etc. Lycos shall take no
part in, and have no responsibility or liability for, the actual transactions.
2. Lycos Network Integration. During the Term, commencing on the
Launch Date, Lycos shall provide autobytel with a total of 194,427,669
impressions on the Lycos Network (including 18,497,979 impressions in
yet-to-be-determined, mutually agreed, contextually relevant areas of sites
within the Lycos Network). Each impression shall link directly to the Linked
Site. Such impressions shall conform with the Placement Summary, attached hereto
as EXHIBIT D, and shall consist of the following number of links displayed in
the following places:
a. Lycos Site. Lycos shall provide autobytel with links (i) on
Web search results pages generated by queries of mutually agreed keywords and
phrases (including, without limitation, those keywords and phrases listed on the
attached Exhibit A, incorporated herein by reference) (117,221,066 impressions),
(ii) in the Autos Web Guide (19,175,064 impressions), (iii) in the Lycos
Classifieds section (1,000,000 impressions), (iv) in the Lycos Roadmaps section
(3,200,000 impressions), (v) in the Lycos Sports Web Guide (4,291,644
impressions), (vi) in the Lycos Investing section (4,231,916 impressions), and
(vii) within the Shopping Network (no guaranteed impression level).
b. Tripod Site. Lycos shall provide autobytel with links from the
Car & Truck Zone (7,000,000 impressions).
c. WhoWhere Site. Lycos shall provide autobytel with a text link
from the home page of WhoWhere for new car buying (16,457,000 impressions).
d. MailCity. Lycos shall provide autobytel with links from those
places on the MailCity Site that, at Lycos' discretion, target the automotive
profile (as determined by user input upon registration) (3,353,000 impressions).
e. Redesigning of the Lycos Site. autobytel acknowledges that,
consistent with Lycos' need for editorial discretion, Lycos may redesign, delete
or replace the pages on which the impressions described in this Section 2 will
be displayed or may redesign or
<PAGE> 3
replace the type of links and banners described above; provided, that Lycos will
use good faith efforts to provide autobytel with comparable links and banners on
any re-designed or replacement pages.
f. Redesigning of the autobytel.com Site. Lycos acknowledges
that, consistent with autobytel's need for editorial discretion, autobytel may
redesign all or part of its Site, provided, that autobytel will use good faith
efforts to provide Lycos with comparable links on any re-designed areas of the
Site subject to this Agreement.
g. Reporting. Lycos shall provide autobytel with weekly reports
regarding the impressions outlined in this Sections 2.
h. autobytel Audit Rights. autobytel will have the right, at its
expense to audit Lycos' books and records for the purpose of verifying
impressions. Such audits will be made not more than once per year, on not less
than ten (10) days written notice, during regular business hours, by auditors
reasonably acceptable to Lycos. If the auditor's figures reflect impressions
lower than those reported by Lycos, Lycos will provide autobytel with makegood
impressions. If the auditor's figures vary more than 10% from the figures
provided by Lycos, Lycos will also pay the reasonable cost of the audit.
3. Standard Terms and Conditions. Any standard advertising products
provided pursuant to this Agreement will be subject to the Terms and Conditions
outlined in the attached Exhibit B, which Terms and Conditions are incorporated
herein by reference. Throughout the Term, all advertising banners must meet the
Lycos specification found at http://adreporting.lycos.com/specs.html, as they
appear from time to time.
4. autobytel' Implementation Obligations. autobytel shall provide
Lycos with any assistance requested by Lycos in establishing the links between
the Lycos Network and the Linked Site, and with all artwork (subject to Lycos'
approval) for the advertising banners and links. autobytel also shall provide
and implement affiliate management software with which to track traffic and
transactions from the Lycos Network sites to the Linked Site.
5. Exclusivity. autobytel shall be the exclusive new car referral
service featured on those areas of the Lycos Network on which the links
described in Section 2 above appear. Notwithstanding the foregoing, the terms of
the exclusivity granted herein shall not prevent Lycos from displaying banners,
advertisements or hyperlinks to new car manufacturers, provided however, that
any such banners, advertisements or hyperlinks shall not promote, display or
feature any on-line service for the purposes of selling new vehicles directly to
consumers or distributing referrals for the purchase of new vehicles. Neither
autobytel's promotional links (including, without limitation, banner ads) nor
autobytel's "Fast Track" units (functional showcase boxes) on the Lycos Network
and Linked Sites shall include information on, or promotion of, used cars, auto
insurance, or financing/leasing options.
6. Fees and Royalties.
a. Lycos Network Integration Fees. autobytel shall pay Lycos
$1,500,000,
<PAGE> 4
[*] Confidential Treatment Requested
payable as follows: (i) $375,000 on the Effective Date; $375,000 on May 10,
1999, $375,000 on August 10, 1999; and $375,000 on November 10, 1999.
b. Lycos Transaction Royalties. In addition to the integration
fees outlined above, during the Term, autobytel shall pay Lycos [*] for each
Purchase Request over 75,000 Purchase Requests submitted from the Linked Site by
users who click through on any of the impressions outlined in Section 2 above. A
"Purchase Request" is submitted when a user completes all reasonably required
fields on a referral form, submits that form, and receives a confirmation from
autobytel. Payment will be made in the month following the month in which the
user submits such Purchase Request.
c. Reporting. autobytel shall provide Lycos with monthly reports
regarding the number of unique Purchase Requests submitted by users who click
through on any of the impressions outlined in Section 2 above. For the purposes
of this Agreement, a "Unique Purchase Request" shall be a purchase request
deemed valid by autobytel in accordance with its standard de-duping policy as
presently in effect, or as amended from time to time during the term of this
Agreement. A copy of the current de-duping policy in effect is attached hereto,
marked EXHIBIT E. autobytel shall reconcile and confirm or correct (as is
appropriate) such reports on a monthly basis.
d. Lycos Audit Rights. Lycos will have the right, at its expense
to audit autobytel's books and records relating to reports and data provided
hereunder for the purpose of verifying Purchase Requests. Such audits will be
made not more than once per year, on not less than ten (10) days written notice,
during regular business hours, by auditors reasonably acceptable to autobytel.
If the auditor's figures reflect Purchase Requests higher than those reported by
autobytel, and if the auditor's figures reflect more than 75,000 Purchase
Requests, autobytel will pay Lycos an amount equal to [*] multiplied by the
difference; provided, however, that autobytel shall not pay for any Purchase
Requests below the 75,000 threshold. If the auditor's figures vary more than 10%
from the figures provided by autobytel, autobytel will also pay the reasonable
cost of the audit.
7. Customer Profile Data. Subject to the provisions of Section 14
below, autobytel shall provide Lycos with a brief write-up that provides a
profile of autobytel's customer profile analysis created from actual purchase
requests processed through autobytel's system or the results from autobytel's
most recent research in effect.
8. Licenses. To the extent access to the Linked Site is deemed a
use, public display, transmission, distribution or reproduction of the Content,
or to the extent the Content is actually used, publicly displayed, transmitted,
distributed or reproduced on the Lycos Network sites, autobytel hereby grants
Lycos limited, revocable, non-transferable (except as provided herein),
royalty-free (except as provided herein), worldwide licenses to use, publicly
display, transmit, distribute and reproduce the Linked Site and the Content
during the Term solely for the purposes described herein.
<PAGE> 5
9. Term: The term ("Term") of this Agreement shall commence on the
Effective Date and continue until the first anniversary of the Launch Date,
unless terminated earlier as provided in Section 15 below.
10. Marks: Lycos hereby grant to autobytel a non-exclusive,
non-transferable license to reproduce and display Lycos' and Tripod's
trademarks, service marks, logos and the like solely for the purposes specified
in this Agreement. autobytel hereby grants Lycos a non-exclusive,
non-transferable license to reproduce and display autobytel's trademarks,
service marks, logos and the like solely for the purposes specified in this
Agreement. Except as expressly stated herein, neither party shall make any other
use of the other party's marks. Upon request of either party, the other party
shall provide appropriate attribution of the use of the requesting party's
marks. (e.g., "Go Get It(R) is a registered service mark of Lycos, Inc. All
Rights Reserved."). Such licenses shall terminate automatically upon the
effective date of expiration or termination of this Agreement.
11. Representations and Warranties: Each party hereby represents and
warrants as follows:
a. Corporate Power. Such party is duly organized and validly
existing under the laws of the state of its incorporation and has full corporate
power and authority to enter into this Agreement and to carry out the provisions
hereof.
b. Due Authorization. Such party is duly authorized to execute
and deliver this Agreement and to perform its obligations hereunder.
c. Binding Agreement. This Agreement is a legal and valid
obligation binding upon it and enforceable with its terms. The execution,
delivery and performance of this Agreement by such party does not conflict with
any agreement, instrument or understanding, oral or written, to which it is a
party or by which it may be bound, nor violate any law or regulation of any
court, governmental body or administrative or other agency having jurisdiction
over it.
d. Intellectual Property Rights.
i. autobytel has the full and exclusive right to grant or
otherwise permit Lycos to access the autobytel Site and the Linked Site, and to
use autobytel's intellectual property, and autobytel is aware of no claims by
any third parties adverse to any of such intellectual property rights.
ii. Lycos has the full and exclusive right to grant or
otherwise permit autobytel to access the Lycos Network and to use Lycos'
intellectual property, and Lycos is aware of no claims by any third parties
adverse to any of such intellectual property rights.
iii. If either party's (the "Infringing Party") intellectual
property rights are alleged or held to infringe the intellectual property rights
of a third party, the Infringing Party
<PAGE> 6
shall, at its own expense, and in its sole discretion, (1) procure for the
non-Infringing Party the right to continue to use the allegedly infringing
intellectual property or (2) replace or modify the intellectual property to make
it non-infringing; provided, however, if neither option is possible or
economically feasible and if the inability to use such intellectual property
would cause a material breach of this Agreement (as determined by the
non-Infringing Party), the Infringing Party may terminate this Agreement.
The representations and warranties and covenants in this Section 11 are
continuous in nature and shall be deemed to have been given by each party at
execution of this Agreement and at each stage of performance hereunder. These
representations, warranties and covenants shall survive termination or
expiration of this Agreement.
12. Limitation of Warranty. EXCEPT AS EXPRESSLY WARRANTED IN
SECTION 11 ABOVE, EACH PARTY EXPRESSLY DISCLAIMS ANY FURTHER WARRANTIES,
EXPRESS, IMPLIED, OR STATUTORY, INCLUDING BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, LYCOS MAKES NO EXPRESS OR IMPLIED
WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE LYCOS NETWORK, THE LINKED
SITE, AND LYCOS SHALL NOT BE LIABLE FOR THE CONSEQUENCES OF ANY INTERRUPTIONS OR
ERRORS RELATED THERETO. LYCOS SPECIFICALLY DISCLAIMS ALL LIABILITY FOR THE
COMPANY SITE, THE LINKED SITE, AND THE CONTENT THEREIN, AND COMPANY SPECIFICALLY
DISCLAIMS ALL LIABILITY FOR THE LYCOS NETWORK AND THE CONTENT THEREIN. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, LYCOS MAKES NO EXPRESS OR IMPLIED
WARRANTIES OR REPRESENTATIONS WITH RESPECT TO ANY PRODUCTS OFFERED OR SOLD
THROUGH THE LYCOS NETWORK, THE COMPANY SITE OR THE LINKED SITE (INCLUDING,
WITHOUT LIMITATION, WARRANTIES OF FITNESS, MERCHANTABILITY, NON-INFRINGEMENT OR
ANY IMPLIED WARRANTIES ARISING OUT OF A COURSE OF PERFORMANCE, DEALING OR TRADE
USAGE).
13. Indemnification.
a. autobytel Indemnity. autobytel will at all times defend,
indemnify and hold harmless Lycos and its officers, directors, shareholders,
employees, accountants, attorneys, agents, successors and assigns from and
against any and all third party claims, damages, liabilities, costs and
expenses, including reasonable legal fees and expenses, arising out of or
related to any breach of any warranty, representation, covenant or agreement
made by autobytel in this Agreement or the development, operation or maintenance
of the autobytel Site or the Linked Site, including the Content thereon. Lycos
shall give autobytel prompt written notice of any claim, action or demand for
which indemnity is claimed. autobytel shall have the right, but not the
obligation, to control the defense and/or settlement of any claim in which it is
named as a party and which arises as a result of autobytel's breach of any
warranty, representation, covenant or agreement under this Agreement. Lycos
shall have the right to participate in any defense of a
<PAGE> 7
claim by autobytel with counsel of Lycos' choice at Lycos' own expense. The
foregoing indemnity is conditioned upon: prompt written notice by Lycos to
autobytel of any claim, action or demand for which indemnity is claimed;
complete control of the defense and settlement thereof by autobytel; and such
reasonable cooperation by Lycos in the defense as autobytel may request.
b. Lycos Indemnity. Lycos will at all times defend, indemnify
and hold harmless autobytel and its officers, directors, shareholders,
employees, accountants, attorneys, agents, successors and assigns from and
against any and all third party claims, damages, liabilities, costs and
expenses, including reasonable legal fees and expenses, arising out of or
related to any breach of any warranty, representation, covenant or agreement
made by Lycos in this Agreement or the development, operation or maintenance of
the Lycos Network, including the content thereon (but specifically excluding any
content posted by users and appearing in search results, chat or bulletin
boards). autobytel shall give Lycos prompt written notice of any claim, action
or demand for which indemnity is claimed. Lycos shall have the right, but not
the obligation, to control the defense and/or settlement of any claim in which
it is named as a party. autobytel shall have the right to participate in any
defense of a claim by Lycos with counsel of autobytel's choice at autobytel's
own expense. The foregoing indemnity is conditioned upon; prompt written notice
by autobytel to Lycos of any claim, action or demand for which indemnity is
claimed; complete control of the defense and settlement thereof by Lycos; and
such reasonable cooperation by autobytel in the defense as Lycos may request.
c. Settlement. Neither party shall, without the prior written
consent of the other party, settle, compromise or consent to the entry of any
judgment with respect to any pending or threatened claim unless the settlement,
compromise or consent provides for and includes an express, unconditional
release of all claims, damages, liabilities, costs and expenses, including
reasonable legal fees and expenses, against the indemnified party.
14. Confidentiality, Press Releases.
a. Non-Disclosure Agreement. The parties agree and acknowledge
that, as a result of negotiating, entering into and performing this Agreement,
each party has and will have access to certain of the other party's Confidential
Information (as defined below). Each party also understands and agrees that
misuse and/or disclosure of that information could adversely affect the other
party's business. Accordingly, the parties agree that, during the Term of this
Agreement and thereafter, each party shall use and reproduce the other party's
Confidential Information only for purposes of this Agreement and only to the
extent necessary for such purpose and shall restrict disclosure of the other
party's Confidential Information to its employees, consultants or independent
contractors with a need to know and shall not disclose the other party's
Confidential Information to any third party without the prior written approval
of the other party . Notwithstanding the foregoing, it shall not be a breach of
this Agreement for either party to disclose Confidential Information of the
other party if required to do so under law or in a judicial or other
governmental investigation or proceeding, provided the other party has been
given prior notice and the disclosing party has sought all available safeguards
against widespread dissemination prior to such disclosure.
<PAGE> 8
b. Confidential Information Defined. As used in this Agreement,
the term "Confidential Information" refers to: (i) the terms and conditions of
this Agreement; (ii) each party's trade secrets, business plans, strategies,
methods and/or practices; (iii) any and all information relating to Purchase
Requests submitted through the Linked Site, including reports produced pursuant
to Section 6(c) of this Agreement; and (iv) other information relating to either
party that is not generally known to the public, including information about
either party's personnel, products, customers, marketing strategies, services or
future business plans. Notwithstanding the foregoing, the term "Confidential
Information" specifically excludes (A) information that is now in the public
domain or subsequently enters the public domain by publication or otherwise
through no action or fault of the other party; (B) information that is known to
either party without restriction, prior to receipt from the other party under
this Agreement, from its own independent sources as evidenced by such party's
written records, and which was not acquired, directly or indirectly, from the
other party; (C) information that either party receives from any third party
reasonably known by such receiving party to have a legal right to transmit such
information, and not under any obligation to keep such information confidential;
and (D) information independently developed by either party's employees or
agents provided that either party can show that those same employees or agents
had no access to the Confidential Information received hereunder.
c. Press Releases. Lycos and autobytel may jointly prepare
press releases concerning the existence of this Agreement and the terms hereof.
Otherwise, no public statements concerning the existence or terms of this
Agreement shall be made or released to any medium except with the prior approval
of Lycos and autobytel or as required by law.
15. Termination. Either party may terminate this Agreement if (a) the
other party files a petition for bankruptcy or is adjudicated bankrupt; (b) a
petition in bankruptcy is filed against the other party and such petition is not
dismissed within sixty (60) days of the filing date; (c) the other party becomes
insolvent or makes an assignment for the benefit of its creditors pursuant to
any bankruptcy law; (d) a receiver is appointed for the other party or its
business; (e) upon the occurrence of a material breach of a material provision
by the other party if such breach is not cured within thirty (30) days after
written notice is received by the breaching party identifying the matter
constituting the material breach; (f) upon thirty (30) days written notice if
the other party's service or product viewed as a whole, ceases to be competitive
with substantially similar services then being offered by third parties; or (g)
by mutual consent of the parties; (h) Lycos may terminate this Agreement upon
sixty (60) days written notice to autobytel; (i) In addition, if autobytel fails
to pay to Lycos any amount due Lycos under this Agreement when such amount is
due, Lycos may terminate this Agreement immediately upon the sending of written
notice in accordance with Section 26. The Parties agree that in the event that
this Agreement is terminated prior to the expiration of this Agreement by
autobytel pursuant to Subsection (e) or by Lycos pursuant to Subsection (h),
above, any and all unearned fees or royalties due Lycos hereunder shall be
returned to autobytel.com on a pro-rata basis on or before the effective date of
termination.
16. Force Majeure. In the event that either party is prevented from
performing,
<PAGE> 9
or is unable to perform, any of its obligations under this Agreement due to any
cause beyond the reasonable control of the party invoking this provision, the
affected party's performance shall be excused and the time for performance shall
be extended for the period of delay or inability to perform due to such
occurrence.
17. Relationship of Parties. autobytel and Lycos are independent
contractors under this Agreement, and nothing herein shall be construed to
create a partnership, joint venture or agency relationship between autobytel and
Lycos. Neither party has authority to enter into agreements of any kind on
behalf of the other.
18. Assignment, Binding Effect. Neither Lycos nor autobytel may
assign this Agreement or any of its rights or delegate any of its duties under
this Agreement without the prior written consent of the other. Notwithstanding
the foregoing, Lycos may assign this Agreement to any successor of Lycos upon
reasonable notice to autobytel.
19. Choice of Law and Forum. This Agreement, its interpretation,
performance or any breach thereof, shall be construed in accordance with, and
all questions with respect thereto shall be determined by, the laws of the
Commonwealth of Massachusetts applicable to contracts entered into and wholly to
be performed within said state. autobytel hereby consents to the personal
jurisdiction of the Commonwealth of Massachusetts, acknowledges that venue is
proper in any state or Federal court in the Commonwealth of Massachusetts,
agrees that any action related to this Agreement must be brought in a state or
Federal court in the Commonwealth of Massachusetts, and waives any objection
autobytel has or may have in the future with respect to any of the foregoing.
20. Good Faith. The parties agree to act in good faith with respect
to each provision of this Agreement and any dispute that may arise related
hereto.
21. Additional Documents/Information. The parties agree to sign
and/or provide such additional documents and/or information as may reasonably be
required to carry out the intent of this Agreement and to effectuate its
purposes.
22. Counterparts and Facsimile Signatures. This Agreement may be
executed in multiple counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument. Facsimile signatures will be considered original signatures.
23. No Waiver. The waiver by either party of a breach or a default of
any provision of this Agreement by the other party shall not be construed as a
waiver of any succeeding breach of the same or any other provision, nor shall
any delay or omission on the part of either party to exercise or avail itself of
any right, power or privilege that it has, or may have hereunder, operate as a
waiver of any right, power or privilege by such party.
24. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns; provided however
<PAGE> 10
that this Agreement shall immediately terminate should any successor or assign
of this Agreement own or operate a service deemed competitive with a party
hereto.
25. Severability. Each provision of this Agreement shall be severable
from every other provision of this Agreement for the purpose of determining the
legal enforceability of any specific provision.
26. Notices. All notice required to be given under this Agreement
must be given in writing and delivered either in hand, by certified mail, return
receipt requested, postage pre-paid, or by Federal Express or other recognized
overnight delivery service, all delivery charges pre-paid, and addressed:
If to Lycos: Lycos, Inc.
400-2 Totten Pond Road
Waltham, MA 02154
Fax No.: (781) 370-2600
Attention: General Counsel
With a copy to: Lycos, Inc.
400-2 Totten Pond Road
Waltham, MA 02154
Fax No.: (781) 370-2600
Attention: Chief Financial Officer
If to autobytel: autobytel.com inc.
18872 MacArthur Boulevard
Irvine, CA 92612-1400
Fax No.: (949) 862-1323
Attention: General Counsel
27. Entire Agreement. This Agreement contains the entire
understanding of the parties hereto with respect to the transactions and matters
contemplated hereby, supersedes all previous agreements between Lycos and
autobytel concerning the subject matter, and cannot be amended except by a
writing signed by both parties. No party hereto has relied on any statement,
representation or promise of any other party or with any other officer, agent,
employee or attorney for the other party in executing this Agreement except as
expressly stated herein.
28. LIMITATIONS OF LIABILITY. UNDER NO CIRCUMSTANCES SHALL EITHER
PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL,
SPECIAL OR EXEMPLARY DAMAGES (EVEN IF SUCH DAMAGES ARE FORSEEABLE OR THAT PARTY
HAS BEEN ADVISED OR HAS CONSTRUCTIVE KNOWLEDGE OF THE POSSIBILITY OF SUCH
DAMAGES), ARISING FROM SUCH PARTY'S PERFORMANCE OR NON-PERFORMANCE PURSUANT TO
ANY PROVISION OF THIS AGREEMENT OR THE OPERATION OF SUCH PARTY'S SITE (INCLUDING
SUCH DAMAGES INCURRED BY THIRD
<PAGE> 11
PARTIES), SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR
LOST BUSINESS. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR DAMAGES IN EXCESS OF
THE AMOUNT RECEIVED BY SUCH PARTY UNDER THIS AGREEMENT. NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, HOWEVER, THIS SECTION SHALL NOT LIMIT EITHER PARTY'S
LIABILITY TO THE OTHER FOR (A) WILLFUL AND MALICIOUS MISCONDUCT; (B) DIRECT
DAMAGES TO REAL OR TANGIBLE PERSONAL PROPERTY; (C) BODILY INJURY OR DEATH CAUSED
BY NEGLIGENCE; OR (D) INDEMNIFICATION OR CONFIDENTIALITY OBLIGATIONS HEREUNDER.
29. Survival. All terms of this Agreement which by their nature
extend beyond its termination remain in effect until fulfilled, and apply to
respective successors and assigns.
IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement
as of the date set forth above.
autobytel.com inc. LYCOS, INC.
By: ______________________________ By: ______________________________
Name: ____________________________ Name: ____________________________
Title: _____________________________ Title: _____________________________
Date: _____________________________ Date: _____________________________
<PAGE> 12
EXHIBIT A
4x4
trucks
accord
acura
alfaromeo
alfa romeo
alfa romero
audi
auto
auto nation
autobytel
autobytell
automobile
automobiles
autonation
autos
beemer
benz
bmw
bodyshop
buick
buying cars
cabriolet
cadillac
camaro
car
cars
cherokee
chevrolet
chevy
convertible
convertibles
corolla
corvette
cougar
daewo
daihatsu
delorean
explorer
ferrari
ford
general motors
gm trucks
honda
hondas
hummer
hummers
infinity
<PAGE> 13
isuzu
jaguar
jeep
kia
landcruiser
land rover
landrover
lexus
limousine
lincoln
M3
maserati
mazda
mechanics
mercedes
mercedes benz
mercury
mgb
minivan
minivans
mitsubishi
motorcycle
motorcycles
mustang
new vehicles
nissan
pickup
truck
plymouth
pontiac
range rover
rangerover
renault
rolls royce
rollsroyce
saab
saturn
sedan
sedans
sentra
station wagons
stationwagon
stationwagons
sting ray
stingray
subaru
suburban
suburban
suv
suzuki
taurus
thunderbird
toyota
<PAGE> 14
toyotas
trans am
truck
trucks
used cars
used pickup
van
vans
vans
vehicle
vehicle prices
vehicles
viper
volkswagon
volvo
vw
<PAGE> 15
EXHIBIT B
ADDITIONAL ADVERTISING TERMS
1. CHANGES AND CANCELLATIONS. All artwork must be received at least five days in
advance of publication date. Cancellations or copy changes will not be accepted
after the published closing date of the update to the Lycos site. Changes to
artwork must be received by Lycos at least five days in advance of requested
change date. Lycos' ad banner specifications are accessible through the URL
adreporting.lycos.com/specs.html; Lycos reserves the right to change any of its
ad banner specifications at any time. Any cancellations or change orders must be
made in writing and acknowledged by Lycos. Change orders cannot be submitted any
more frequently than once every fourteen days.
2. LICENSES AND INDEMNIFICATION. autobytel represents that it is the owner or is
licensed to use the entire contents and subject matter contained in its
advertising and collateral information, including, without limitation, (a) the
names and/or pictures of persons; (b) any copyrighted material, trademarks,
service marks, logos, and/or depictions of trademarked or service marked goods
or services; and (c) any testimonials or endorsements contained in any
advertisement submitted to Lycos. In consideration of Lycos' acceptance of such
advertisements and information for publication, autobytel will jointly and
severally indemnify and hold Lycos harmless against all loss, liability, damage
and expense of any nature (including attorney's fees) arising out of Lycos'
performance under this contract or the copying, printing, distributing, or
publishing of autobytel's advertisements. If autobytel possesses any preexisting
copyright interests in the advertisements, advertiser grants Lycos the right to
use, reproduce, and distribute the advertisements.
3. KEY WORDS AND PHRASES. Each advertiser may be given a "first right" to its
exact company name and trademarks for keyword/phrase advertising. Lycos may
pre-empt an existing key word/phrase advertiser by submitting a three-month
advertising contract. The existing contract-holder for the key word/phrase will
be provided with a two-week notification of preemption and will receive a
pro-rated refund for any unfulfilled number of guaranteed impressions. If two or
more advertisers have the same name or trademark, the allocation will be on a
first-come basis and the existing contract will take precedence.
4. REJECTIONS. Lycos reserves the right, without liability, to reject, omit or
exclude any advertisement or to reject or terminate any links for any reason at
any time, with or without notice to autobytel, and whether or not such
advertisement or link was previously acknowledged, accepted, or published.
5. LIMITATION OF LIABILITY. Lycos shall not be liable for any errors in content
or omissions. Should an error appear in an advertisement, Lycos' liability will
be limited to the cost of the advertisement (prorated for the publishing
completed).
<PAGE> 16
EXHIBIT C
MOCK-UP OF THE LINKED SITE
[GRAPHIC OF A WEB PAGE]
<PAGE> 17
EXHIBIT D
LYCOS PLACEMENT SUMMARY
<TABLE>
<CAPTION>
=================================================================================================================================
AREA/COMPONENT SECTION/CHANNEL UNIT/ITEM EXCLUSIVITY
=================================================================================================================================
<S> <C> <C> <C>
Lycos Automotive Autos FasTrak ENCBS
Lycos Automotive Autos>Pages Related to New Car Buying FasTrak ECBS
Lycos Automotive Autos>Makes/Models FasTrak ENCBS
Lycos Automotive Autos>Makes/Models>Automakers FasTrak ENCBS
Lycos Automotive Autos>Repairs&Customizing>Parts FasTrak ENCBS
Lycos Automotive Autos>Repairs&Customizing>Repairs FasTrak ENCBS
Lycos Automotive Autos>Motorcycles FasTrak ENCBS
Lycos Automotive Autos>Racing FasTrak ENCBS
Lycos Automotive Autos>Safety FasTrak ENCBS
Lycos Automotive Additional WebGuide opportunities (FasTraks in other wires) FasTrak ENCBS
Lycos Automotive AUTOS Web Guide Banners ENCBS
Lycos Classifieds Lycos Auto Classifieds Banners Non-Excl.
Lycos Classifieds Lycos Auto Classifieds>Main Page FasTrak ENCBS
Lycos Classifieds Lycos Auto Classifieds>New Cars FasTrak ECBS
LYCOS Reserved testing impressions (including but not limited to N/A N/A
ShopNet, Holidays, additional KITI graphics, Lycos and
Tripod newsletters, etc.)
Lycos RoadMaps RoadMaps Front Page FasTrak Non-Excl.
Lycos RoadMaps RoadMaps Site Banners Non-Excl.
Lycos Sports Lycos Sports Web Guide Premiere Graphic Non-Excl.
Tripod Automotive Tripod Car & Truck Zone and Affiliated Pods Banners ENCBS
LYCOS INVESTING LYCOS INVESTING BANNERS NON-EXCL.
WhoWhere? Home Page WhoWhere? Text Link for New Car Buying Text Link ENCBS
WhoWhere? Automotive WhoWhere? Automotive Channel FasTrak ENCBS
MailCity e-mail MailCity Automotive Profile Targeting Banners Non-Excl.
(Mail City users who indicate they plan to Purchase a New Car)
Lycos Automotive Auto Keyword Banners ENCBS
Lycos Automotive Auto Keyword Pop-Up ENCBS
Lycos Automotive Auto Keyword Kiti Links ENCBS
LYCOS AUTOMOTIVE AUTO KEYWORD GRAPHIC KITI LINKS ENCBS
<CAPTION>
==================================================================================================================================
AREA/COMPONENT SECTION/CHANNEL IMPRESSIONS % OF INVENTORY
==================================================================================================================================
<S> <C> <C> <C>
Lycos Automotive Autos 5,229,948 2.7%
Lycos Automotive Autos>Pages Related to New Car Buying 2,073,154 1.1%
Lycos Automotive Autos>Makes/Models 453,864 0.2%
Lycos Automotive Autos>Makes/Models>Automakers 152,988 0.1%
Lycos Automotive Autos>Repairs&Customizing>Parts 139,762 0.1%
Lycos Automotive Autos>Repairs&Customizing>Repairs 139,762 0.1%
Lycos Automotive Autos>Motorcycles 201,408 0.1%
Lycos Automotive Autos>Racing 172,104 0.1%
Lycos Automotive Autos>Safety 121,728 0.1%
Lycos Automotive Additional WebGuide opportunities (FasTraks in other wires) 4,490,346 2.3%
Lycos Automotive AUTOS Web Guide 6,000,000 3.1%
Lycos Classifieds Lycos Auto Classifieds 1,000,000 0.5%
Lycos Classifieds Lycos Auto Classifieds>Main Page 0 0.0%
Lycos Classifieds Lycos Auto Classifieds>New Cars 0 0.0%
LYCOS Reserved testing impressions (including but not limited to 18,497,979 9.5%
ShopNet, Holidays, additional KITI graphics, Lycos and
Tripod newsletters, etc.)
Lycos RoadMaps RoadMaps Front Page 1,200,000 0.6%
Lycos RoadMaps RoadMaps Site 2,000,000 1.0%
Lycos Sports Lycos Sports Web Guide 4,291,644 2.2%
Tripod Automotive Tripod Car & Truck Zone and Affiliated Pods 7,000,000 3.6%
LYCOS INVESTING LYCOS INVESTING 4,231,916 2.2%
WhoWhere? Home Page WhoWhere? Text Link for New Car Buying 16,457,000 8.5%
WhoWhere? Automotive WhoWhere? Automotive Channel 0 0.0%
MailCity e-mail MailCity Automotive Profile Targeting 3,353,000 1.7%
(Mail City users who indicate they plan to Purchase a New Car)
Lycos Automotive Auto Keyword 25,866,141 13.3%
Lycos Automotive Auto Keyword 32,485,630 16.7%
Lycos Automotive Auto Keyword 33,869,295 17.4%
LYCOS AUTOMOTIVE AUTO KEYWORD 25,000,000 12.9%
IMPRESSIONS
TOTAL ANNUAL IMPRESSIONS 194,427,669 100.0%
AUTO IMPRESSIONS 147,749,130 76.0%
NON-AUTO IMPRESSIONS 46,678,539 24.0%
NOTE:
ENCBS = Exclusive New Car Buying Service
ECBS = Exclusive Car Buying Service
Non-Excl. = Non-Exclusive
</TABLE>
<PAGE> 18
EXHIBIT E
UNIQUE PURCHASE REQUEST
A Unique Purchase Request shall be defined as follows:
i. The Purchase Request is the product of an end user visiting the linked
site.
ii. A Purchase Request which has been received by ABT from the linked site
for which autobytel has not, within the previous ninety (90) day period,
received a Purchase Request for the same or similar Vehicle from a
person identified by the same name and/or the same e-mail address; and
iii. The end user indicates his or her intention to purchase the desired
vehicle within forty-eight (48) hours; two (2) weeks or thirty (30) days
as prompted on the autobytel purchase request form.
iv. All fields in the present Purchase Request form presently deemed
mandatory by autobytel which are the fields currently employed in such
form, have been completed by the user including but not limited to name,
address, phone number and valid email address.
v. The end user provides a valid USPS zip code.
<PAGE> 1
EXHIBIT 10.37
autobytel.com inc.
18872 MacArthur Boulevard
Irvine, California 92612-1400
March 7, 1999
Ariel Amir
32 Evelyn Gardens, Flat 8
London SW7 3BJ
United Kingdom
Dear Ariel:
We are pleased to offer you the position of Vice President and General
Counsel of autobytel.com inc. ("ABT") with responsibilities customary for such
position. Your position will not diminish during your employment. You will
report to the President of ABT. You will use your best efforts to commence
employment with ABT prior to March 31, 1999.
You will be paid an annual base salary of not less than $175,000 payable
semimonthly and will be eligible to receive an annual bonus when, as and if
determined by the board of directors.
You will be granted stock options under ABT's 1999 Stock Option Plan to
purchase 125,000 shares of ABT common stock at an exercise price of $16 per
share. One-fourth of the option grant (31,250 shares) will vest on the first
anniversary of the date of grant and the remainder of the option grant will
vest at a rate of 1/48th of the entire grant (2,604.16 shares) per month, with
the entire grant also vesting as otherwise provided in such plan. In addition,
if your employment is terminated by ABT without Cause, by you for Good Reason
or due to death or Disability (each such capitalized term as defined in Ann M.
Delligatta's Employment Agreement), the unvested portion of such options will
become immediately and fully vested and will be exercisable from such
termination date for one year thereafter. If your employment is terminated
without Cause during the first year of employment, you will receive one year's
base salary payable monthly. If your employment is terminated without Cause
thereafter, you will receive six month's base salary payable monthly. You will
be included in any additional long-term incentive plans that are created for
senior management.
You will be entitled to participate in all employee benefit plans,
programs and policies which are available to employees of ABT, including health
and insurance plans. You will also be entitled to receive severance
arrangements similar to those available to executives of the level of Chief
Financial Officer of ABT. During the term of your employment, you will be
reimbursed for all business expenses incurred in accordance with company policy.
To the extent not reimbursed by your current employer, ABT will pay your
reasonable moving expenses up to $15,000. ABT will pay for temporary living
accommodations at the Airport Hilton, Irvine for a period of up to 60 days so
as to allow you time to complete your relocation and make arrangements for
permanent housing.
The foregoing terms are binding on ABT and all necessary approvals to bind
ABT have been obtained. If the terms of this letter are acceptable to you,
please sign below.
Very truly yours,
/s/ Mark W. Lorimer
-----------------------------------
Mark W. Lorimer
President and Chief Executive Officer
AGREED TO AND ACCEPTED
this 7th day of March, 1999:
/s/ Ariel Amir
- ---------------------------------
Ariel Amir
<PAGE> 1
EXHIBIT 10.38
December 18, 1998
VIA FEDERAL EXPRESS
- -------------------
Mr. Hoshi Printer
113 38th Street
Manhattan Beach, CA 90266
Dear Mr. Printer:
This letter will confirm our offer to you for the position of Chief
Financial Officer, AUTOBYTEL.COM INC. located at its corporate headquarters in
Irvine, California. You will be reporting to Mr. Mark Lorimer, President and
Chief Executive Officer. It is expected you will commence employment as soon as
possible and in no event later than January 11, 1999.
Base Salary: $150,000 annualized, paid on a bi-weekly basis
Bonus: A guaranteed bonus of $50,000 to be paid upon close
of an IPO.
Performance Review: You will be eligible for review of your base salary
commencing January, 2000.
Options: 150,000 - exercise price of $13.20 per share.
Vesting schedule: 1/4 on first year anniversary;
1/48th of grant per month until fully vested.
Additionally, you will be eligible to participate in the company's
health insurance plan and 401(k) plan, each in accordance with the terms of such
plan. For your review, enclosed are materials describing these plans.
Please sign, date and return one original of this letter in the envelope
provided, if the above terms are agreed to by you. This officer shall expire at
the close of business on Monday, December 21, 1998.
Page 1
<PAGE> 2
Mr. Hoshi Printer
December 18, 1998
We look forward to your joining AUTOBYTEL.COM INC.
Sincerely,
/s/ Mark W. Lorimer
---------------------------
Mark W. Lorimer
President and CEO
mwl/fr
enclosures
/s/ Hoshi Printer December 20, 1998
- ---------------------------- ----------------------------
Hoshi Printer Date
Page 2
<PAGE> 1
EXHIBIT 23.1
[ARTHUR ANDERSEN LLP LETTERHEAD]
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the inclusion in
this registration statement on Amendment No. 5 to Form S-1 (Registration No.
333-70621) of our report dated February 3, 1999 on our audits of the
consolidated balance sheets of autobytel.com inc. and subsidiaries as of
December 31, 1997 and 1998, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for the years ended
December 31, 1996, 1997 and 1998. We also consent to the reference to our firm
under the caption "Experts".
/s/ ARTHUR ANDERSEN LLP
-----------------------------------
ARTHUR ANDERSEN LLP
Los Angeles, California
March 24, 1999
