AUTOBYTEL COM INC, S-1/A, 1999-02-09

AUTOBYTEL COM INC
S-1/A, 1999-02-09
MISCELLANEOUS RETAIL

Previous: ECHELON INTERNATIONAL CORP, SC 13G/A, 1999-02-09

Next: AQUAPRO CORP, 10QSB/A, 1999-02-09

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 9, 1999.

REGISTRATION NO. 333-70621

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

-------------------------

AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------

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 CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
ORGANIZATION)
</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)

------------------------

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. [ ]

------------------------

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.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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

FEBRUARY 9, 1999

4,500,000 SHARES

[LOGO]

AUTOBYTEL.COM INC.

COMMON STOCK

We are offering 3,500,000 shares of common stock in this offering. 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 $ and
$ 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.

We have applied to list the common stock 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 7.

<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 675,000 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

[The inside front cover of the prospectus depicts various screen-shots of the
Company's Web site showing aspects of the consumer process and the dealer
process. It also contains the following text describing parts of these
processes:

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 automotive information sources.

Dealer Real Time(tm) is a proprietary extranet 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 Internet.

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.]

We have the registered service mark Auto-By-Tel and have applied for the
registered service marks Autobytel.com, 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. This prospectus also includes
trademarks and tradenames of companies other than autobytel.com inc.
2
<PAGE> 4

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. Except as otherwise
noted or where the context otherwise requires, all information in this
prospectus assumes:

- no exercise of 2,859,340 options to purchase our common stock outstanding
as of December 31, 1998 under our 1996 Stock Option Plan, Amended and
Restated 1996 Stock Incentive Plan and 1998 Stock Option Plan,

- no exercise of 773,133 warrants to purchase our common stock as of
December 31, 1998,

- no exercise of the underwriters' over-allotment option, and

- the conversion of all our outstanding shares of preferred stock into
shares of common stock upon closing of the offering.

AUTOBYTEL.COM

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 (e.g., pricing, features,
specifications, colors, etc.). 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
3
<PAGE> 5

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 photograph of all vehicles that satisfy the
consumer's search parameters.

According to CNW Marketing/Research, an independent research organization,
U.S. consumers spent over $670 billion on new and pre-owned vehicles in 1997,
representing the sale of over 50 million vehicles. 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.

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. According to a survey released by J.D. Power & Associates in
September 1998, our dealer network experienced the highest sales closing rate
per purchase request in the online vehicle purchasing industry. We believe that
our dealer network experiences a high closing ratio due to the quality of
purchase requests generated through our Web site, our high quality dealer
network, and our dealer training and support. The dealers in our network use our
online information platform, the Dealer Real Time (DRT) system, which 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 DRT 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 portals, such as Excite, Inc.,

- broadband 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.

Our primary objective is to be the leading global Internet brand for
vehicle information and purchasing services. Our strategy to achieve this
objective includes the following:

- build brand equity to drive incremental traffic to our Web site,

- assure consumers a quality experience by aggregating relevant information
and providing a convenient alternative to the traditional vehicle buying
process,
4
<PAGE> 6

- increase the number of purchase requests and, in turn, attract additional
dealers,

- expand and improve the dealer network through technology-based tools
(such as the DRT system) and continued training and support programs,

- expand and enrich our breadth of online automotive information, products
and services for consumers in the United States and abroad,

- invest in ancillary products and services, and

- expand internationally through relationships with strategic partners.

We are a Delaware corporation incorporated on May 17, 1996. We were
formerly incorporated 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.

THE OFFERING

<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(1).....................
17,858,745 shares
Use of proceeds.......................
For working capital and general
corporate purposes
Proposed Nasdaq National Market
symbol..............................
"ABTL"
</TABLE>

- ---------------

(1) Based on shares outstanding as of December 31, 1998. Excludes (a) 2,859,340
shares of common stock issuable upon exercise of options as of December 31,
1998 at a weighted average exercise price of $10.87 per share, (b) 773,133
shares of common stock issuable upon exercise of warrants outstanding as of
December 31, 1998 at a weighted average exercise price of $13.12 per share,
and (c) 3,723,433 shares of common stock reserved for issuance under all
stock option grants.

5
<PAGE> 7

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<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(1)........................... $ (0.12) $ (0.68) $ (1.53) $ (1.49)
======= ======= ======== ========
Shares used in computing pro forma
basic net loss per share(1)........ 8,250 8,849 10,967 13,008
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1998
-------------------------
PRO FORMA
ACTUAL AS ADJUSTED(2)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 27,984
Working capital........................................ 23,436
Total assets........................................... 34,207
Accumulated deficit.................................... (43,273)
Stockholders' equity................................... 25,868
</TABLE>

- -------------------------
(1) Pro forma 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.

(2) Reflects the conversion of all outstanding shares of preferred stock
concurrent with the closing of the offering and receipt by Autobytel.com of
the estimated net proceeds of $ million from the sale of 3,500,000
shares of common stock offered hereby at an assumed initial public offering
price of $ per share net of estimated underwriting discount and
estimated offering expenses.
6
<PAGE> 8

RISK FACTORS

You should read the following risk factors carefully before purchasing our
common stock. This prospectus contains certain 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
below 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.

RISK DUE TO OUR LIMITED OPERATING HISTORY AND CONTINUED LOSSES

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 $23.9 million and $43.3
million as of December 31, 1997 and 1998, 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.

DEALER TURNOVER AND DEPENDENCE ON RELATIONSHIPS WITH SUBSCRIBING DEALERS

Substantially all of our revenues are derived from fees paid by subscribing
dealerships under written marketing agreements with us having terms of one year
or five years. These marketing agreements are cancelable at the option of either
party upon 30 days notice. 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

7
<PAGE> 9

programs. Our business is dependent upon our ability to 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 cannot assure that dealers will not
terminate their agreements with us. In addition, 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 and 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 slower than expected growth in the
number of subscribing dealers, or litigation with dealers could have a material
adverse effect on our business, results of operations and financial condition.

In addition, 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.

POTENTIAL FLUCTUATIONS AND SEASONALITY IN OUR QUARTERLY OPERATING RESULTS

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,

- 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,

8
<PAGE> 10

- 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.

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, 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 typically declines during the summer.
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.

SIGNIFICANT COMPETITION IN OUR INDUSTRY

Our vehicle purchasing services compete against a variety of Internet and
traditional vehicle purchasing services and automotive brokers. The market for
Internet-based commercial services is new, and competition among commercial Web
sites is expected to increase significantly in the future. The Internet is
characterized by minimal barriers to entry, and new competitors can launch new
Web sites at relatively low cost. To compete successfully as an Internet-based
commercial entity, we must significantly increase awareness of our services and
brand name. If we do not achieve our competitive objectives, such failure may
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 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,

9
<PAGE> 11

- 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.

DEPENDENCE ON STRATEGIC RELATIONSHIPS

We depend on a number of strategic relationships to direct a substantial
amount of traffic to our Web site. These include online automotive information
providers, such as Edmund's and Kelley Blue Book, and Internet portals, such as
Excite. A number of our agreements with online service providers may be
terminated without cause. In addition, 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 Netcenter agreement between Excite and Netscape can be terminated in the
event of certain changes in control which may be triggered if America Online's
proposed acquisition of Netscape occurs. We cannot be certain that such online
service providers will not terminate their agreements with us. In addition, we
periodically negotiate revisions to existing agreements and these revisions
could increase our costs in future periods.

We receive a significant number of purchase requests through a limited
number of such Web sites. In 1997 and 1998, approximately 49% and 34%,
respectively, of our purchase requests came through Edmund's. Our agreement with
Edmund's extends to July 31, 2000 and provides that we are the only online
vehicle marketing service to which Edmund's will refer prospective buyers of new
vehicles, although Edmund's may refer prospective buyers directly to automotive
manufacturers' Web sites, which in many cases include dealer locator services.

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. 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 have a material adverse effect on our business, results of operations and
financial condition.

As a part of our strategy, we develop new services by entering into
alliances with other companies engaged in complementary businesses, such as
vehicle financing and leasing, and insurance. Some of our relationships prohibit
or limit us from referring consumers to other potential sources of financing,
such as our agreements with Chase. We are therefore dependent on those companies
with which we have developed strategic relationships. We cannot assure that the
relationship with Chase, or any other strategic relationships will continue or
that we will be able to develop new strategic relationships.

10
<PAGE> 12

UNCERTAIN ACCEPTANCE OF OUR BRAND

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.

INABILITY TO HIRE AND RETAIN HIGHLY QUALIFIED PERSONNEL

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.

INABILITY TO MANAGE GROWTH AND ENTRY INTO NEW BUSINESS AREAS

We are expanding our operations in order to establish ourselves as a leader
in the evolving market for Internet-based vehicle purchasing services. 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. We believe
establishing industry leadership 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 may not be able to expand our operations in a cost-effective or timely
manner or increase overall market acceptance. Our inability to generate
satisfactory revenues from such expanded services or products to offset their
cost could have a material adverse effect on our business, financial condition
and results of operations.

11
<PAGE> 13

REGULATORY UNCERTAINTIES AND GOVERNMENT REGULATION

Our operations may be subject, both directly and indirectly, to various
laws and regulations. Government authorities may also take the position that
federal and/or state franchise laws, automobile brokerage laws, insurance
licensing laws, motor vehicle dealership laws or related consumer protection or
product liability laws apply to aspects of our business. As we introduce new
services and expand our operations to other countries, we will need to comply
with additional licensing and regulatory requirements. Due to the increasing
popularity and use of the Internet, it is possible that a number of new laws and
regulations may be adopted with respect to this rapidly developing environment
for conducting business.

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 motor vehicle dealer
licensing laws. 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 other 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. In the event that any state's regulatory requirements 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 may undermine the program's attractiveness to consumers
or dealers, or, 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.

We are currently in the process of applying for financial broker licenses
in Indiana and have been approved for such license in Rhode Island. We believe
these are the only states which require us to have licenses in order to market
our vehicle financing operations. It may be an expensive and time-consuming
process which could divert the efforts of management from day-to-day operations
if we are required to be licensed elsewhere. 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, our business, results of operations and financial condition
could be materially and adversely affected.

We market insurance online, offered by New Hampshire Insurance Corporation,
a member company of the American Insurance Group (AIG), and receive referral
fees from AIG in connection with this 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. If we were required to comply with
such licensing laws, compliance could be costly or not possible. This could have
a material adverse effect on our business, results of operations or financial
condition.

12
<PAGE> 14

There are currently few laws or regulations which apply directly to the
Internet. Due to the increasing popularity of the Internet, however, it is
likely that a number of laws and regulations may be adopted at the local, state,
national or international levels with respect to commerce over the Internet,
potentially covering issues such as the pricing of services and products,
advertising, user privacy, intellectual property, information security, or anti-
competitive practices. In addition, 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. Because our business is dependent on the Internet,
the adoption of any such 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.

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.

DEPENDENCE ON CHANGING TECHNOLOGY

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. 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, DRT 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, DRT system, or other
proprietary technology to customer requirements or to emerging industry
standards. If we are unable to adapt to changing technologies, our business,
results of operations and financial condition could be materially and adversely
affected.

SYSTEMS INTERRUPTIONS

We host our Web site and DRT 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. 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. In the event that
we experience significant system disruptions, our business, results of
operations and financial condition would be materially and adversely affected.

13
<PAGE> 15

DEPENDENCE ON GROWTH AND ACCEPTANCE OF INTERNET COMMERCE

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.

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 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 (including 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.

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 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.

RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION

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 certain foreign markets. As of December 31, 1998, approximately 161 Canadian
dealerships belonged to our network. We have entered into a licensing
relationship with Auto by Tel UK Limited, an affiliate of Inchcape Motors, the
United Kingdom's largest independent automobile distributor. We have also
entered an agreement with Auto-By-Tel Nordic, an affiliate of Bilia, AB, to
launch Autobytel.com-licensed Web sites in Sweden, Norway, Denmark and Finland.

In addition, we have entered into an arrangement with affiliates of METRO
Holding AG, a Swiss-based finance and holding company, relating to the
establishment of Web sites using Autobytel.com's vehicle marketing systems
throughout the rest of Europe. We intend to enter into similar relationships in
other countries with strong automobile markets. However, we have had limited
experience in providing our Internet-based

14
<PAGE> 16

marketing service abroad and we cannot be certain that we will be successful in
introducing or marketing our services abroad. In addition, there are certain
risks inherent in doing 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, seasonal reductions in business activities
during summer months in Europe and other areas, 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.

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 therein.

RISKS ASSOCIATED WITH SECURITY BREACHES INVOLVING CONFIDENTIAL INFORMATION
TRANSMITTED VIA THE INTERNET

We rely on technology licensed from third parties that is designed to
facilitate the secure transmission of confidential information. Nevertheless,
our computer infrastructure is potentially vulnerable to physical or electronic
computer break-ins, viruses and similar disruptive problems. 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. Any such security
breach would have a material adverse effect on our business, results of
operations and financial condition.

INTERNET CAPACITY CONSTRAINTS

Our success will depend, in large part, upon a robust communications
industry and infrastructure for providing Internet access and carrying Internet
traffic. The Internet may not prove to be a viable commercial medium because of
inadequate development of the necessary infrastructure (e.g., reliable network
backbone), timely development of complementary products (e.g., 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. 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.

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

15
<PAGE> 17

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.

NO SPECIFIC PLAN FOR SIGNIFICANT PORTION OF PROCEEDS

We currently have no specific plans for a significant portion of 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.

RISKS ASSOCIATED WITH THE YEAR 2000

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 (DRT) system or normal business activities.

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:

- We are in the process of obtaining Year 2000 compliance confirmation from
our third-party vendors (including hardware, software, network
communications, facility/utility vendors, and data suppliers) as well as
our Autobytel.com accredited dealers. We expect to receive a reply to our
Year 2000 requests from third party vendors and accredited dealers in
early 1999.

- We are implementing a test lab environment to simulate the Year 2000
rollover with hardware, software, network communications vendors and
certain key data suppliers.

In the event we decide any of our vendors are not Year 2000 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 gate to screen all non-compliant data or to receive
the data and modify it so that the data is Year 2000 compliant. We may spend up
to $116,000 towards addressing the Year 2000 issue in fiscal year 1999.

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 subject to the Year 2000 issue to convert their systems on a
timely basis or effect a conversion that is compatible with our systems 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 DRT
system, such failures would have a material adverse effect on our business,
results of operations, or financial condition.

16
<PAGE> 18

PROTECTION OF INTELLECTUAL PROPERTY

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. 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. 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 could have a material adverse
effect on our business, results of operations and financial condition.

NO PUBLIC MARKET FOR THE COMMON STOCK AND POSSIBLE VOLATILITY OF STOCK PRICE

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,

17
<PAGE> 19

following periods of volatility in the market price of a company's securities,
securities class action litigation has often been instituted against such a
company. 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.

SUBSTANTIAL CONTROL BY OUR FOUNDERS, OFFICERS AND DIRECTORS AND THEIR AFFILIATES

Following this offering (whether or not the underwriters' over-allotment
option is exercised), our executive officers and directors will beneficially own
or control approximately 4,696,378 shares or 25% 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 20% 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 18% and 15%, respectively, of the
outstanding shares of our common stock. Our officers, directors, founders and
their affiliates 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. This control could have an
adverse effect on the market price of our common stock.

EFFECT ON MARKET PRICE OF FUTURE SHARES BEING AVAILABLE

Sale of substantial numbers of shares of common stock in the public market
could adversely affect the market price of the 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 subject to 180-day lock-up agreements
with the underwriters, and 6,590,112 shares held by the selling stockholders are
subject to 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, subject to the provisions of Rules 144(k), 144
and 701 under the Securities Act of 1933, as amended, and any contractual
restrictions on their transfer. 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.

UNCERTAINTY OF ADDITIONAL FINANCING FOR FUTURE CAPITAL NEEDS

We currently anticipate that the net proceeds of this offering, 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 additional funds sooner,

18
<PAGE> 20

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.

EFFECT OF ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS

Certain provisions of our Amended and Restated Certificate of Incorporation
and Bylaws could make it difficult for a third party to acquire, and could
discourage a third party from attempting to acquire control of us. Certain of
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.
Certain of 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 within three years prior, did own) 15% or more of the
corporation's voting stock.

RISK RELATING TO STOCK OPTIONS

Our Amended and Restated 1996 Stock Incentive Plan has a grant limit of
833,333 shares of Common Stock. From October 1996 through January 1999, we
purported to grant 689,406 incentive stock options above the 833,333 share limit
to employees. We have determined that these grants were not made under the
Incentive Plan and do not qualify as incentive stock options. We are notifying
all affected optionholders that they hold nonqualified stock options. We have
adopted, subject to shareholder approval, the 1999 Stock Option Plan pursuant to
which we may re-grant to affected optionholders incentive stock options. We plan
to offer affected optionholders the rescission of the grant of their option for
either a cash payment or additional options under our 1999 Stock Option Plan.

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 we plan to

19
<PAGE> 21

make to those affected optionholders holding options covering 689,406 shares of
common stock. The rescission offer will provide each affected optionholder with
three choices. The first choice will be to continue to hold his or her existing
options. The second choice will be to pay the optionholder a cash payment of 10%
in respect of the aggregate exercise price per share of the vested portion of
the option plus 7% statutory interest since the date of grant of the option, and
a cash payment of 5% in respect of the aggregate exercise price per share of the
unvested portion of the option plus 7% interest. The third choice will be a new
grant of incentive stock options under the 1999 Stock Option Plan, the terms of
which are similar to the terms of their original stock options with an exercise
price equal to the fair market value on the date of grant; however,
optionholders who choose this alternative will be 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 would be 35,000 shares. We estimate that the maximum
liability to us pursuant to the cash offer is $620,406, assuming all
optionholders who have not released the Company choose this option. If we pay
cash to optionholders, such amounts will be treated as additional compensation
expense.

We will seek liability waivers from affected optionholders in exchange for
cash or option re-grants. We are unable to determine if any of the affected
optionholders will accept our proposal to rectify their situation and waive any
liability we may have to them and we cannot assure that our liability to
affected optionholders would not be material. Our inability to obtain waivers of
liability from affected optionholders could have a material adverse effect on
our business, results of operations, and financial condition.

USE OF PROCEEDS

We estimate that the proceeds from the sale by us of the 3.5 million shares
of common stock offered hereby at an assumed initial public offering price of
$ per share (the mid-point of the anticipated range of between
$ and $ per share), after deducting estimated underwriting discounts
and estimated offering expenses, will be approximately $ million. The
selling stockholders will receive $ million from the sale of one million
shares of common stock, after deducting estimated underwriting discounts, and
approximately $ 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 substantially all of the net
proceeds from the offering for general corporate purposes, including 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 DRT 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, 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 (i) actual capitalization of Autobytel.com
derived from its audited financial statements as of December 31, 1998, and (ii)
as adjusted capitalization of Autobytel.com to reflect (a) the conversion of all
outstanding shares of Preferred Stock into 5,852,290 shares of common stock and
(b) the sale by Autobytel.com of 3,500,000 shares of common stock pursuant to
the offering at an assumed public offering price of $ (the mid-point of
the anticipated range of between $ and $ per share) and the receipt by
Autobytel.com of the estimated net proceeds therefrom, after deducting estimated
underwriting discounts and estimated offering expenses. The capitalization
information set forth in the table below is qualified by the more detailed
Consolidated Financial Statements and Notes thereto included elsewhere in this
prospectus and should be read in conjunction with such Consolidated Financial
Statements and Notes.

<TABLE>
<CAPTION>
DECEMBER 31, 1998
--------------------------
AS
ACTUAL ADJUSTED
-------------- --------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents.............................. $ 27,984 $
======== =======
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(1)........ 8
Warrants............................................... 1,332
Additional paid-in capital............................. 67,813
Cumulative translation adjustment...................... (19)
Accumulated deficit.................................... (43,273)
-------- -------
Total stockholders' equity............................. 25,868
======== =======
Total capitalization................................... $ 25,868
======== =======
</TABLE>

- ---------------
(1) Reflects the conversion of all outstanding shares of preferred stock
concurrent with the closing of the offering and receipt by Autobytel.com of
the estimated net proceeds of $ million from the sale of 3,500,000
shares of common stock offered hereby at an assumed initial public offering
price of $ per share net of estimated underwriting discount and
estimated offering expenses.

21
<PAGE> 23

DILUTION

The pro forma net tangible book value of the Company 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 the Company'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 hereby at an assumed initial public offering price of $ (the
mid-point in the anticipated range of between $ and $ per share) and
the receipt by Autobytel.com of the estimated net proceeds therefrom, 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
$ million, or $ per share. This represents an immediate increase in
pro forma net tangible book value of $ per share to existing stockholders
and an immediate dilution of $ per share to new investors. The following
table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.... $
Pro forma net tangible book value per share before
the offering..................................... $ 1.80
Increase per share attributable to purchases of
common stock offered hereby......................
-------- --------
Pro forma net tangible book value per share after
the offering.....................................
Dilution per share to purchasers of common stock
offered hereby................................... $
========
</TABLE>

The following table summarizes, on a pro forma basis (as described above)
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):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- -------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
----------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Existing stockholders..... 14,358,745 80.4 $ $
New investors............. 3,500,000 19.6
----------- ------- ---------- ------- ----------
Total................... 17,858,745 100.0 $ $
=========== ======= ========== ======= ==========
</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 the Consolidated Financial Statements and related notes thereto
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 the Consolidated
Financial Statements of the Company 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."

<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(2) 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 (1)............. $ (0.12) $ (0.68) $ (1.53) $ (1.49)
======= ======= ======== ========
Shares used in computing pro forma basic net loss
per share(1)..................................... 8,250 8,849 10,967 13,008
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------
1995 1996 1997 1998 AS ADJUSTED(3)
------- ------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:

Cash and cash equivalents................... $ 48 $ 9,062 $ 15,813 $ 27,984
Working capital............................. (1,099) 5,977 10,938 23,436
Total assets................................ 285 12,298 20,513 34,207
Accumulated deficit......................... (1,030) (7,065) (23,875) (43,273)
Stockholders' equity (deficit).............. (990) 7,996 13,259 25,868
</TABLE>

- -------------------------
(1) 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.

(2) The amounts include a non-recurring $1.1 million charge associated with a
proposed initial public offering that was withdrawn in March 1997.

(3) As adjusted for the offering.

23
<PAGE> 25

MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONDITION

AND RESULTS OF OPERATIONS

The following discussion of the results of operations and financial
condition of the Company should be read in conjunction with our Consolidated
Financial Statements and Notes thereto 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 exclusive
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 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.

We were formerly incorporated in January 1995 under the name Auto-By-Tel
LLC, and first recognized revenues from operations in March 1995. Accordingly,
we have only a limited operating history to evaluate our future prospects. As a
result of our limited operating history, period-to-period comparisons of our
financial results are not necessarily meaningful and you should not rely on them
as an indication of our future performance. We have incurred losses every
quarter since inception and expect to continue to incur losses for the
foreseeable future. We had an accumulated deficit as of December 31, 1997 and
1998 of $23.9 million and $43.3 million, respectively. Our prospects 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 consumer traffic to our Web site and continue to send vehicle
purchase requests to our dealers that result in adequate dealer sales (or
leases) to justify fees, and continue to expand the number of dealers in our
network and enhance the quality of our participating dealers so that our brand
recognition with consumers continues to grow. There can be no assurance that we
will successfully generate sufficient revenues from these services to achieve
profitability. Although we have experienced revenue growth in recent periods,
historical growth rates may not be sustainable and are not indicative of future
operating results, and there can be no assurance that we will achieve or
maintain profitability.

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. We also derive some revenue on a per
transaction basis from 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.

24
<PAGE> 26

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. The monthly fee is
recognized in the period the service is provided. Amortized revenues from
initial subscription fees were $4.7 million, $4.9 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. 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 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 coming to 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 pay for our service (Core
Dealers) and 332 dealers are affiliated with Core Dealers (Non-core Dealers) in
North America. 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. 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 DRT 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, a practice we discontinued 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

25
<PAGE> 27

sponsorship and partnership agreements with Internet portals and advertising and
marketing affiliations with online automotive information providers. 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 an
increase in the average fee charged to subscribing dealers. The 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 higher numbers of
purchase requests provided by strategic referral relationships and higher
expenses developing our brand equity. We expect to continue to increase our
marketing and advertising budget in the foreseeable future.

26
<PAGE> 28

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 DRT 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 hiring and training of additional product and technology development
support staff.

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 March 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, along with increased legal, rent and depreciation expenses.

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 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 an increase in the average 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. 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 (consisting only of normal recurring 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 the notes thereto. 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 DRT system in February 1998, we
discontinued the sale of computer equipment. In the third and fourth quarters of
1997, we recognized non-recurring revenue of $250,000 received from First

29
<PAGE> 31

USA Bank in connection with our customer rewards program and we recognized
revenue received from charging CyberStore initial subscription fees, a practice
we discontinued in the fourth quarter of 1997. Our financial statements include
non-recurring revenue for the DRT system hardware sales, CyberStore initial
fees, and fees paid by First USA in connection with the Mobalist program (our
Internet customer rewards program) in the amount of $147,000 in revenue in 1996,
$2.2 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 DRT 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 March 1997. In the quarter ended December 31, 1997, general and
administrative expenses included legal, severance and bonuses incurred during
the period.

POTENTIAL FLUCTUATIONS AND SEASONALITY IN QUARTERLY OPERATING RESULTS

Our quarterly operating results may fluctuate due to many factors and
therefore we cannot assure future financial results. In addition, our expense
levels are based in part on our expectations of future revenues which may vary
significantly. If our revenues do not increase as projected against our increase
in 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, but are not limited to (i) our ability to
retain existing dealers, attract new dealers and maintain dealer and customer
satisfaction, (ii) the announcement or introduction of new or enhanced sites,
services and products by us or our competitors, (iii) general economic
conditions and economic conditions specific to the Internet, online commerce or
the automobile industry, (iv) the level of use 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, (v) our ability to
upgrade and develop our systems and infrastructure and to attract new personnel
in a timely and effective manner, (vi) the level of traffic on our online sites
and other sites that refer traffic to our Web site, (vii) technical
difficulties, system downtime or Internet brownouts, (viii) the amount and
timing of operating costs and capital expenditures relating to expansion of our
business, operations and infrastructure, (ix) governmental regulation, and (x)
unforeseen events affecting the industry.

30
<PAGE> 32

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.

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 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. However, 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,

31
<PAGE> 33

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.

YEAR 2000 ISSUES

- We are in the process of obtaining Year 2000 compliance confirmation from
our third-party vendors (including, but not limited to, hardware,
software, network communications, facility/utility vendors, and data
suppliers) as well as our Autobytel.com accredited dealers. We expect to
receive a reply to our Year 2000 requests from third party vendors and
accredited dealers in early 1999.

- We are implementing a test lab environment to simulate the Year 2000
rollover with hardware, software, network communications vendors and
certain key data suppliers.

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
32
<PAGE> 34

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.

33
<PAGE> 35

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. 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 highly qualified purchase requests,
thereby enabling them 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 (e.g., pricing, features, specifications,
colors, etc.). 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
DRT 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, the Company offers a
number of automotive finance and insurance services in conjunction with
strategic partners, including automobile financing through Chase, GE Capital and
Provident Bank and automotive insurance through New Hampshire Insurance Company,
a member company of the American Insurance 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.
International Data Corporation (IDC) estimates that the number of Web users
worldwide will grow from approximately 69 million in 1997 to approximately 320
million by 2002. This growth is driven by 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 content and the increasing familiarity and acceptance
of the Internet by businesses and consumers.

34
<PAGE> 36

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. According to IDC, the total value of goods and services purchased
worldwide over the Web will increase from approximately $12.4 billion in 1997 to
approximately $425 billion in 2002.

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 (i) a perceived
overabundance of dealerships, (ii) competitive sales within regional markets,
(iii) increasing advertising and marketing costs that continue to reduce dealer
profits, (iv) high-pressure sales tactics with consumers, and (v) 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 U.S. consumer makes. According to CNW
Marketing/Research, over $670 billion was spent on new and pre-owned vehicles in
the United States in 1997, representing the sale of over 50 million vehicles.
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 the Company's Web site to
assist consumers with specific vehicle and related automotive decisions such as
insurance and financing. Armed with such information, the consumer should be
more confident and capable of making an informed and intelligent vehicle buying
decision.

35
<PAGE> 37

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 DRT 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. For these reasons, we also
believe that the Internet represents the most efficient method of directing
purchase requests to local markets and dealers.

36
<PAGE> 38

We 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 party sources on our site, including information from Edmund's,
IntelliChoice, Carprices.com and Kelley Blue Book. We believe that consumer
satisfaction with the

37
<PAGE> 39

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 (i) increasing the volume and quality of
purchase requests, (ii) advertising in trade publications aimed at dealers and
participating in industry trade shows, (iii) maintaining our extensive training
and support program to participating dealers, and (iv) providing our DRT 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 DRT 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 these arrangements with strategic partners such as Inchcape
Motors, Bilia AB, Invision AG and Aureus Private Equity AG to launch
international automotive information and purchasing services throughout the
United Kingdom, Scandinavia and the rest of Europe, respectively. We are
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 (e.g., 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

38
<PAGE> 40

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 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 and be covered by a 72-hour money-back guarantee and three-month,
3,000-mile warranty which is honored nationally by all CyberStore dealers. We
charge each new vehicle dealer that participates in the CyberStore program a
separate additional monthly fee. The CyberStore program uses the DRT 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. We make purchase and lease financing available to
consumers through various Autobytel.com financing programs offered by third
parties 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
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 and GE Capital.

We market vehicle accident, extended warranty and mechanical breakdown
insurance to consumers through New Hampshire Insurance Company, a member company
of the American Insurance Group (AIG). Our Web site currently features a direct
hyperlink to the specific Web site for AIG member companies through which
consumers submit requests for insurance quotes and obtain approval. Our
agreement with AIG provides that AIG pay us fees based on a percentage of the
net premiums earned and collected by AIG on all policies issued to Autobytel.com
referred consumers.

39
<PAGE> 41

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 DRT system. We believe the DRT system
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. The DRT system is designed to enable dealers to communicate in real
time with potential customers, better track their inventory and customer
contacts and perform related tasks. In March 1998, as part of our new Dealer
Agreement, we began requiring our dealers to use the DRT system, and have
converted substantially all of our dealers to the DRT 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.

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 an agreement with Inchcape Motors, the United Kingdom's largest
independent automobile distributor, to 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 similar
arrangements with Auto-By-Tel Nordic, an affiliate of Bilia AB, to license our
technology, business processes, and trade names in Sweden, Norway, Denmark and
Finland. In addition, we have entered into an arrangement with Aureus Private
Equity AG and Invision AG relating to the establishment of Web sites using
Autobytel.com's vehicle marketing systems throughout the rest of Europe. We
intend to enter into similar relationships with strategic partners in other
countries that have attractive automobile markets.

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

40
<PAGE> 42

services provider is critical to our efforts to increase the number of vehicle
purchase and ancillary service requests, as well as the number and quality of
subscribing dealerships. We have invested significant resources to date in
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.

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, however, is cancelable by Kelley Blue Book on 60 days notice. Under
the agreements, we typically pay the automotive information provider a monthly
fee based on the number of users who submit purchase requests after having
visited the provider's Web site. 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,
unless terminated earlier by either party on 90 days notice. 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 endeavor to position ourselves as the leading vehicle and related
services purchasing program by affiliating ourselves with online services and
Internet portals. For example, we have agreements with AT&T Corp. and
CLASSIFIEDS2000 and exclusive relationships with Excite and, through Excite, the
automotive channel of Netscape's NetCenter. 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. 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 during 1999 to
strengthen our brand awareness.

In addition to our consumer-oriented marketing activities, we also market
our programs directly to dealerships, participate in trade shows, advertise in
trade publications

41
<PAGE> 43

and major automotive magazines and encourage subscribing dealerships to
recommend our program to other dealerships.

DEALER RELATIONSHIPS AND SERVICES

Dealer Network. 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, consisting of 2,386 core dealers and 332
non-core dealers. Core 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. 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 monthly subscription fees to the
Company. 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.

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 the
Autobytel.com 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 typically have a five-year term but 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 the Autobytel.com 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 DRT 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 the
Autobytel.com 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

42
<PAGE> 44

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:

- 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
Tier I Internet Service Providers utilizing four T-1 lines (approximately 6 Mbps
capacity) with our primary provider and two T-1 lines (3 Mbps) with the
secondary provider. Our primary servers are housed in one climate-controlled,
raised floor computer room with back-up power systems. We use industry-standard
servers and routers in our network. We have also installed industry-standard
firewall products to secure our entire network nationwide. 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 and there can be no assurance
that such enhancements
43
<PAGE> 45

will prevent or not cause unanticipated system disruptions. Although we maintain
local offsite system backups, all of our primary servers are located at our
corporate headquarters and are vulnerable to interruption and damage from fire,
earthquake, flood, power loss, telecommunications failure and other events
beyond our control. We have implemented an out-of-state disaster recovery plan
to safeguard dealer and consumer information. 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.

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 leased through August 2001. We have
options to renew the leases on each floor for an additional 5-year term, and
also hold an option to lease additional floor space in the building. We also
lease office space in Houston, Texas, consisting of less than 5,000 square feet
through Kre8.net, Inc., an Internet software company for dealer Web site design
and systems backup.

GOVERNMENT REGULATION

We believe that our dealer marketing service does not constitute
franchising or qualify as a brokerage activity which would subject us to federal
and state franchise, motor vehicle dealer or broker licensing laws. A federal
court in Michigan has ruled that our dealer subscription services agreement is
not a "franchise" under Michigan law. If our relationship or written agreement
with our dealers were found to be a "franchise" under federal or other state
franchise laws, we could be subjected to, among other items, franchise
disclosure and registration requirements and limitations on our ability to
effectuate changes to our relationships with our dealers. Pursuant to an
agreement with the Texas Department of Transportation, we cannot grant exclusive
territories to its Texas dealers. In addition, we are required to modify our
marketing program in Texas to include a pricing model under which all
subscribing dealerships in Texas are charged uniform fees based on the
population density of their geographic area and to make its program open to all
dealerships who wish to apply. The Department also requires us to configure our
Texas dealers' territories in such a way that each dealer's territory has at
least 250,000 residents. If individual state regulatory requirements change or
additional requirements are imposed on us, 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. If we determine that the licensing and
related requirements are overly burdensome, we may elect to terminate operations
in such state. In addition, in the event that a state deems that we are acting
as a broker, we may be required to comply with burdensome licensing requirements
of such state or terminate operations in such state. In each case, our business,
results of operations and financial condition could be materially and adversely
affected.

Our marketing service may result in changes in the way vehicles are 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 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.

44
<PAGE> 46

We expect to expand our operations to various other countries that may have
laws or be subject to treaties that regulate the marketing, distribution and
sale of motor vehicles. As we consider specific foreign operations, we will be
required to expend the resources necessary 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 other countries may impose
licensing, bonding or similar requirements on us as a condition to doing
business therein.

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.

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 (JDF), 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 JDF's territory. JDF objected to the realignment and
ceased payment of its monthly subscription fee to us. Unable to resolve the
matter, we terminated JDF's subscription Dealer Agreement. JDF then sued us in
Michigan State Court and sought an injunction to prevent us from cancelling
JDF's subscription services agreement. JDF 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 JDF 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. (Halrec), 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 Auto-By-Tel
Marketing Corporation 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 certain geographic territories
that were contractually the property of Halrec to other car dealers. We believe
Halrec's claims are without merit and are in negotiations to resolve this
lawsuit. In January 1999, we extended a settlement offer that would grant Halrec
a new territory.

From time to time, we are involved in other litigation matters relating to
claims arising out of the ordinary course of business. We believe that there are
no other 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.

45
<PAGE> 47

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information with respect to the
executive officers and directors of the Company.

<TABLE>
<CAPTION>
OFFICERS AND DIRECTORS AGE POSITION
---------------------- --- --------
<S> <C> <C>
Michael J. Fuchs(1)(2)(3)................. 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............................. 56 Senior Vice President and Chief
Financial Officer
Ann M. Delligatta......................... 51 Executive Vice President and Chief
Operating Officer
Jeffrey H. Coats(1)(2)(3)................. 41 Director
Mark N. Kaplan(1)......................... 68 Director
Kenneth J. Orton(2)....................... 47 Director
Peter Titz................................ 45 Director
</TABLE>

- -------------------------
(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

(3) Designated Director of the holders of Series A Preferred Stock.

Michael J. Fuchs was elected as a director of the Company 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 the Company 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
the Company 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 the Company 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 Philips Corp., a New York
Stock Exchange listed company, since April 1998.

46
<PAGE> 48

Hoshi Printer joined the Company 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 the Company 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.

Jeffrey H. Coats was elected a director of the Company 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 the Company, 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 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 the Company in June 1998. Mr.
Kaplan has been a member of the law firm Skadden, Arps, Slate, Meagher & Flom
LLP since 1980. 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. and J.D. from Columbia College.

47
<PAGE> 49

Kenneth J. Orton was elected a director of the Company in June 1998. Mr.
Orton is the President and Chief Executive Officer and a director 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 M/A/R/C 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 the Company in January 1999. Mr. Titz
is a manager of Metro International Dienstleistung Beteiligungs AG ("Metro") 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.

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 the
Company's Certificate of Incorporation. Messrs. Coats and 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 consummation of this
offering. Members of the Board of Directors are elected each year at the
Company's 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 the Company'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 Messrs. Lorimer and Titz, the Class
II directors will be Messrs. Kaplan and Orton and the Class III directors will
be Messrs. Grimes, Fuchs and 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, the Company's
Restated Certificate of Incorporation provides that the authorized number of
directors shall be designated by the Bylaws of the Company. 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 the Company. Directors of the Company 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 the Company.

48
<PAGE> 50

BOARD COMMITTEES

The Audit Committee consists of Messrs. Coats, Fuchs and 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 the Company's independent public
accountants and reviews and evaluates the Company's control functions.

The Compensation Committee consists of Messrs. Coats, Fuchs and Orton. The
Compensation Committee administers the issuance of stock under the Company'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 the Company's various incentive compensation and benefit plans and
determines salaries for the executive officers and incentive compensation for
employees and consultants of the Company.

DIRECTOR COMPENSATION

The Company's non-employee directors do not currently receive any cash
compensation for service on the Company's Board of Directors or any committee
thereof, but directors may be reimbursed for certain expenses incurred in
connection with attendance at Board and committee meetings. The Company's 1999
Stock Option Plan provides for automatic grants of stock options to non-employee
directors. See "Stock Plans -- 1999 Stock Option Plan."

The Company has entered into indemnification agreements with each member of
the Board of Directors and its officers providing for the indemnification of
such person to the fullest extent authorized, permitted or allowed by law.

49
<PAGE> 51

EXECUTIVE COMPENSATION

The following table sets forth information regarding the compensation
(rounded to the nearest thousand) paid during each of the Company's last three
completed fiscal years to the Chief Executive Officer of the Company and each of
the other five most highly compensated executive officers of the Company as of
December 31, 1998 (collectively, the Named Officers).

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(1).......... 1998 $219,000 $ -- $522,000(2) --
Former Chief Executive 1997 275,000 100,000 15,000(3) --
Officer and President 1996 123,000 321,000 11,000(4) --
Mark W. Lorimer............ 1998 316,000 150,000 9,000(3) 750,000(5)
Chief Executive Officer
and 1997 200,000 100,000 70,000(6) 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(7)
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(6) 33,333
Marketing
</TABLE>

- -------------------------

(1) Resigned as Chief Executive Officer in June 1998.

(2) Represents a one-time payment of $500,000, $14,000 car allowance and $8,000
legal expenses. See "Certain Transactions."

(3) Car allowance and lease payments.

(4) Represents certain health benefits, insurance payments and $5,000 car
allowance and lease payments.

(5) 500,000 shares of such securities underlying options are contingent on the
performance of the Company's market trading price after the closing of the
offering.

(6) Relocation expense reimbursement.

(7) 200,000 shares of such securities underlying options are contingent on the
performance of the Company's market trading price after the closing of the
offering.

50
<PAGE> 52

OPTION GRANTS DURING 1998

The following table sets forth the Named Officers and certain information
concerning stock options granted to them during 1998. The Company has never
issued stock appreciation rights ("SARs").

<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(5)
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------------
NAME GRANTED(#)(1) 1998(2) ($/SHARE)(3) DATE(4) 5%($) 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
Peter R. Ellis....... -- -- -- -- -- --
</TABLE>

- -------------------------
(1) Represents options granted under the Company's Amended and Restated 1996
Stock Incentive Plan and the 1998 Stock Option Plan.

(2) Based on an aggregate 1,630,340 shares of Company common stock subject to
options granted to employees during fiscal 1998.

(3) 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 the Company's 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.

(4) 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.

(5) 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 the Company's estimate or projection of the Company's future
common stock prices.

51
<PAGE> 53

AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES

The following table sets forth for each of the Named 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. Also reported are values for "in-the-money" options that
represent the positive spread between the respective exercise prices of
outstanding options and the fair market value of the common stock as of December
31, 1998. The Company has never issued SARs.

<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($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) 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 -- --
Peter R. Ellis......... -- -- -- -- -- --
</TABLE>

- -------------------------
(1) 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 the Company's
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.

STOCK PLANS

1996 Stock Option Plan. The Company's 1996 Stock Option Plan (the Option
Plan) was approved by the Board of Directors on May 18, 1996 and the
stockholders on May 31, 1996. The 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 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 (the Code), and
for the grant to employees, consultants and directors of nonstatutory stock
options. The Company reserved 1,194,444 shares of common stock for issuance
under the Option Plan. Under the Option Plan, the exercise price of any
incentive stock options granted under the 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 Option Plan were not
less than 85% of the fair market value of the common stock at the date of the
grant. The term of all options granted under the 1996 Option Plan did not exceed
10 years. Options granted under the Option Plan are administered by the Board of
Directors or a committee of the Board (the "Administrator"). Any options granted
under the Option Plan are exercisable at such times as determined by the
Administrator, but in no case at a rate 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 Option Plan generally must be exercised within 30 days following
termination of the

52
<PAGE> 54

optionee's status as an employee, directors or consultant of the Company, or
within 12 months following such optionee's termination by death or disability.
Any optionee holding options granted under the 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
Company's 1996 Stock Incentive Plan (the 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, the Company 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 optionee, and each option is exercisable during the lifetime of the optionee
only by such optionee. Options granted under the Incentive Plan must generally
be exercised within three months of the end of the optionee's status as an
employee or consultant of the Company, or within twelve months after such
optionee's termination by death or disability, but in no event later than the
expiration of the option's ten year term.

The exercise price of nonstatutory stock options granted under the
Incentive Plan was determined by the Board of Directors, and in all cases, 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 the Company
with or into another corporation, a sale of substantially all of the Company's
assets or a like transaction involving the Company, 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 shall provide for each optionee 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 optionee 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, the Company purported to grant
incentive stock options to employees, of which 689,406 shares of their grants
exceeded the Incentive Plan limit of 833,333 shares. As of January 29, 1999,
688,921 options, and 485 shares which were acquired upon the exercise of excess
options were outstanding in excess of the Incentive Plan limit. Because these
grants exceed the plan's limit, they do not qualify as incentive stock options,
which have more favorable tax treatment for employees than nonqualified stock
options. The Company is notifying all affected optionholders that the options
they hold are, therefore, nonqualified stock options rather than incentive stock
options.. The Company adopted, subject to shareholder approval, the 1999 Stock
Option

53
<PAGE> 55

Plan pursuant to which it may re-grant to affected optionholders incentive stock
options. The Company will seek liability waivers from affected optionholders in
exchange for re-grants. At this time the Company is unable to determine what
liability, if any, the Company will have to the optionholders in the event that
it does not obtain waivers from all affected optionholders.

In connection with these matters, on January 29, 1999, the Company filed an
application with the California Department of Corporations for approval of a
rescission offer the Company plans to make to those affected optionholders
holding options covering 689,406 shares of common stock. The rescission offer
will provide each affected optionholder with three choices. The first choice
will be to continue to hold his or her existing options. The second choice will
be to pay the optionholder a cash payment of 10% in respect of the aggregate
exercise price per share of the vested portion of the option plus 7% statutory
interest since the date of grant of the option, and a cash payment of 5% in
respect of the aggregate exercise price per share of the unvested portion of the
option plus 7% interest. The third choice will be a new grant of incentive stock
options under the 1999 Stock Option Plan, the terms of which are similar to the
terms of their original stock options, with an exercise price equal to the fair
market value on the date of grant; however, optionholders who choose this
alternative will be 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 would be
35,000 shares. The Company estimates that the maximum liability to the Company
pursuant to the cash offer is $620,406, assuming all optionholders who have not
released the Company choose this option. If the Company pays cash to
optionholders, such amounts will be treated as additional compensation expense.

1996 Employee Stock Purchase Plan. The Company's 1996 Employee Stock
Purchase Plan (the 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
the Company 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 the
Company 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 the Company. 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. The Board may amend or modify the Purchase
Plan at any time. The Purchase Plan will terminate 10 years from the date of its
adoption.

54
<PAGE> 56

1998 Stock Option Plan. The Company's 1998 Stock Option Plan (the 1998
Option Plan) was adopted by the Board of Directors in December 1998. The Plan
provides that an aggregate of 1,500,000 shares of the Company's common stock is
available to be granted subject to options to key employees of the Company (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 the shares of the Company's 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 the Company
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 the Company's 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 the Company's 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. With
respect to any optionee who beneficially owns more than 10% of the total
combined voting power of all classes of outstanding shares of capital stock of
the Company, any incentive stock option must have an exercise price that is no
less than 110% of the fair market value of the Company's 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 the
1998 Option Plan and all other stock plans of the Company 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 the Company's 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, certain nonstatutory
stock options (Performance Options) vest over a time period determined by the
Administrator, however, the vesting could accelerate based on the performance of
the Company's common stock. All other stock options granted under the 1998
Option Plan vest according to time-based vesting schedules determined by the
Administrator; provided, that an optionee 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 provided in the stock
option agreement, upon any merger, consolidation, or sale or transfer of all or
any part of the Company'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
the Company with respect to the 1998 Option Plan. In addition, unless otherwise
provided in the stock option agreement for any given option, upon any
liquidation or dissolution of the Company, all rights of the optionee with
respect to the unexercised portion of any option will terminate and all options
will be canceled at the time of any such liquidation or dissolution, except to
the extent that any plan pursuant to which such liquidation or dissolution is
effected, makes specific provisions with respect to 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 such merger, consolidation, sale or
transfer of assets, liquidation or dissolution to exercise such option without
regard to any

55
<PAGE> 57

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
thereof.

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 optionee and designate such options as incentive stock options or
nonstatutory stock options. The Board of 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 the Company, (i) increase the number of shares
issued under the 1998 Option Plan, (ii) modify the requirements as to
eligibility for participation in the 1998 Option Plan or (iii) change the option
price provisions of the 1998 Option Plan so as to have a material adverse effect
on the Company other than to conform with any applicable provisions of the Code
or regulations or rulings thereunder. Unless terminated earlier, the 1998 Option
Plan terminates ten years from the date it is adopted by the Board of Directors.

1999 Stock Option Plan. The Company's 1999 Stock Option Plan (the "1999
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 the Company's common
stock are available to be granted subject to options to employees of the
Company; provided that after March 31, 1999, not more than 1,000,000 options may
be granted under the plan. The 1999 Option Plan provides that, unless otherwise
provided in the stock option agreement, upon any merger, consolidation, or sale
or transfer of all or any part of the Company'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 the Company with respect to the 1999 Option
Plan.

Non-employee directors are entitled to participate in the Company's 1999
Stock Option Plan. The 1999 Stock Option Plan provides for an automatic grant of
an option to purchase 20,000 shares of common stock (the First Option) 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 less than 20,000 shares on the date
such person became a member of the Board, 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 an option to
purchase 5,000 shares (a Subsequent Option) 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 subject 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 optionee 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.

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,

56
<PAGE> 58

nor has any such interlocking relationship existed in the past. The Compensation
Committee of the Board of Directors currently consists of Mr. Orton, Mr. Coats
and Mr. Fuchs.

EMPLOYMENT AGREEMENTS

On January 1, 1998, the Company entered into a two year severance agreement
with Mr. Michael J. Lowell, the Company's Senior Vice President, Development.
Under this agreement, Mr. Lowell is entitled to a base salary of $190,000 per
year and to all ordinary and customary perquisites afforded to executive
employees of the Company and, if Mr. Lowell's employment is terminated without
cause, he is entitled to a lump sum severance payment equal to two years'
salary. In the event of death or disability, Mr. Lowell's successors, heirs,
designees or assigns are entitled to the amount that would have been due to Mr.
Lowell for the remainder of the term of the agreement.

On July 1, 1998, the Company entered into a three year employment agreement
with Mr. Mark W. Lorimer, the Company's President and Chief Executive Officer.
Under this agreement, Mr. Lorimer is entitled to a base salary of $325,000, a
bonus, 200,000 options which vest over two years, 500,000 Performance Options
which vest over seven years unless accelerated upon the earlier accomplishment
of certain goals, and all ordinary and customary perquisites afforded to
executive employees of the Company. 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 aggregate annual base
salary, which annual base salary shall be the highest annual base salary in
effect during the term of his employment, that would have been received by Mr.
Lorimer if he had remained employed by the Company for the greater of (i) the
remaining balance of the three year term or (ii) two years. In the event of a
change of control of the Company prior to January 1, 2000, and while Mr. Lorimer
remains employed by the Company, 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 the Company other than for
cause, disability or death, Mr. Lorimer is entitled to (i) 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 of two years. In the event of a change of control
while Mr. Lorimer is employed by the Company or if Lorimer's employment is
terminated by the Company without cause or by Mr. Lorimer for good reason during
the six month period prior to a change of control, certain unvested
performance-based options shall become vested and exercisable to the extent
certain performance targets are met. In the event of the death or disability of
Mr. Lorimer during the term of this employment agreement, the Company shall
provide Mr. Lorimer or his successors, heirs, designees or assigns, with
continued payment of Mr. Lorimer's then current base salary and all benefits for
a period of two years.

On December 17, 1998, the Company entered into a three year employment
agreement with Ms. Ann Marie Delligatta, the Company's Executive Vice President
and Chief Operating Officer. Under this agreement, Ms. Delligatta is entitled to
a base salary of $225,000, a bonus, 100,000 options which vest fully by June
2000, 200,000 Performance Options which vest over seven years unless accelerated
upon the earlier accomplishment of certain goals, and all ordinary and customary
perquisites afforded to executive employees of the Company. 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

57
<PAGE> 59

Ms. Delligatta if she had remained employed by the Company for the remaining
balance of the three year term. Ms. Delligatta's employment with the Company
shall terminate automatically in the event of death or upon 30 days' written
notice of termination by the Company in the event of a disability.

On August 20, 1998, the Company entered into a two year Advisory Agreement
with Mr. Peter R. Ellis, the former Chairman and Chief Executive Officer of the
Company. Under this agreement, Mr. Ellis serves as Special Advisor to the Chief
Executive Officer, and is entitled to participate in all employee welfare
benefit plans for the term of the agreement and to receive a car allowance in
the amount of $1,000 dollars per month until April 30, 1999. In consideration
for entering the Advisory Agreement, Mr. Ellis was paid a one time $500,000 lump
sum payment and the Company has agreed to pay Mr. Ellis $5,000 per month
beginning on the thirteenth month anniversary of the date of this agreement.
Upon the death or disability of Mr. Ellis, the Company shall pay to Ellis or his
successors, heirs, designees or assigns, the amount that would have been due and
owing to Ellis for the remainder of the Term.

INDEMNIFICATION AND LIMITATION OF DIRECTOR AND OFFICER LIABILITY

The Company's Amended and Restated Certificate of Incorporation limits the
liability of directors to the maximum extent permitted by Delaware law. Delaware
law provides that a corporation's certificate of incorporation may contain a
provision eliminating or limiting the personal liability of a director for
monetary damages for breach of their fiduciary duties as directors, except for
liability (i) for any breach of their duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit.

The Company's Amended and Restated Bylaws provide that the Company shall
indemnify its directors and officers and may indemnify its employees and agents
to the fullest extent permitted by law. The Company believes that
indemnification under its Amended and Restated Bylaws covers at least negligence
and gross negligence on the part of indemnified parties.

The Company has entered into agreements to indemnify its directors and
officers, in addition to the indemnification provided for in the Company's
Amended and Restated Bylaws. These agreements, among other things, indemnify the
Company's directors and officers for certain expenses (including attorneys'
fees), judgments, fines and settlement amounts incurred by any such person in
any action or proceeding, including any action by or in the right of the
Company, arising out of such person's services as a director or officer of the
Company, any subsidiary of the Company or any other company or enterprise to
which the person provides services at the request of the Company. The Company
believes that these provisions and agreements are necessary to attract and
retain qualified directors and officers.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed 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.

58
<PAGE> 60

CERTAIN TRANSACTIONS

Series A Preferred Stock

On August 23, 1996, in a private placement transaction, the Company 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 certain registration rights with respect to the shares of common
stock issued or issuable upon conversion thereof. See "Description of Capital
Stock--Registration Rights." All shares of Series A Preferred Stock will
automatically convert into shares of common stock upon the closing of the
offering. Investors in this financing consisted of General Electric Capital
Corporation (800,000 shares of Series A Preferred Stock), National Union Fire
Insurance Company of Pittsburgh, PA, an affiliate of AIG (400,000 shares of
Series A Preferred Stock), ContiTrade Services L.L.C. (200,000 shares of Series
A Preferred Stock) and Michael Fuchs (100,000 shares of Series A Preferred
Stock).

From July 9, 1996 through August 13, 1996, Michael Fuchs made loans to the
Company 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 the Company's
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 Capital Electric Corporation has designated Michael
Fuchs and Jeffrey Coats to the Board of Directors.

Series B Preferred Stock

On January 30, 1997, in a private placement transaction the Company 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
certain registration rights with respect to the shares of common stock issued or
issuable upon conversion thereof. See "Description of Capital
Stock--Registration Rights." All shares of Series B Preferred Stock will
automatically convert into shares of common stock upon the closing of the
offering. Investors in this financing consisted of General Electric Capital
Corporation (534,760 shares of Series B Preferred Stock), National Union Fire
Insurance Company of Pittsburgh, PA, an affiliate of AIG (267,380 shares of
Series B Preferred Stock), ContiTrade Services L.L.C. (133,690 shares of Series
B Preferred Stock) and Michael Fuchs (32,085 shares of Series B Preferred
Stock).

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, the Company 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. 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

59
<PAGE> 61

Preferred Stock are entitled to certain registration rights with respect to the
shares of common stock issued or issuable upon conversion thereof. See
"Description of Capital Stock--Registration Rights". All shares of Series C
Preferred Stock will automatically convert into shares of common stock upon the
closing of the offering. Investors in these financings consisted of General
Electric Capital Corporation (681,819 shares of Series C Preferred Stock),
National Union Fire Insurance Company of Pittsburgh, PA, an affiliate of AIG
(227,273 shares of Series C Preferred Stock), Tozer Kimsley and Millbourn
Automotive, Ltd., a unit of Inchcape Motors (568,182 shares of Series C
Preferred Stock), Bilia (568,182 shares of Series C Preferred Stock), National
Broadcasting Company, Inc., an affiliate of General Electric Capital Corporation
(121,009 shares of Series C Preferred Stock), Invision AG (568,182 shares of
Series C Preferred Stock), Aureus Private Equity AG (1,097,727 shares of Series
C Preferred Stock) and MediaOne, (1,136,364 shares of Series C Preferred Stock).
NBC acquired its shares by providing national spot advertising to the Company.

Other Transactions

From time to time, the Company has advanced funds to Peter R. Ellis, the
former Chairman of the Board and Chief Executive Officer of the Company. As of
December 31, 1998, Mr. Ellis was indebted to the Company 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.
The Company has received a pledge of 100,657 of Mr. Ellis' shares of common
stock to secure this loan.

The Company and John M. Markovich, the Company's former Senior Vice
President and Chief Financial Officer, are parties to a Severance and General
Release Agreement dated January 30, 1998 (the Severance Agreement). Pursuant to
the terms of the Severance Agreement, in connection with his resignation from
the Company, the Company 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 unless exercised prior thereto.

The Company and Mr. Ellis, the Company's former Chief Executive Officer and
Chairman of the Board are parties to a two year advisory agreement dated as of
August 20, 1998 (the Ellis Advisory Agreement). Under the Ellis Advisory
Agreement, Mr. Ellis received $500,000 on the date of execution and 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. Mr. Ellis' advisory agreement may be terminated by the Company for cause
(as defined in such agreement) or upon 30 days prior written notice without
cause. In the event Mr. Ellis' advisory agreement is terminated without cause by
the Company 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 his advisory
agreement on 90 days prior written notice to the Company.

In addition, on January 11, 1999, in consideration of the Company
permitting the sale of $1.4 million of common stock of the Company to certain
"accredited investors" as such term is defined under Rule 501 of the Securities
Act, Mr. Ellis transferred to the Company the voting power of 593,175 shares
(the Proxy Shares) of common stock of the

60
<PAGE> 62

Company owned by Mr. Ellis for a period that is the earlier of five years from
the date thereof or until such time as Mr. Ellis sells the Proxy Shares to a
person not affiliated with Mr. Ellis.

Pursuant to a Marketing and Application Processing Agreement dated February
1, 1997, among GE Capital, Auto-By-Tel Acceptance Corporation (ABTAC) and the
Company, ABTAC and the Company agreed to refer customers seeking vehicle
financing with favorable credit ratings to GE Capital. In return, GE Capital
agreed to pay ABTAC 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, ABTAC 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.

Pursuant to a Marketing Agreement dated July 22, 1996, among Auto-By-Tel
Acceptance Corporation (ABTAC), New Hampshire Insurance Corporation, a member
company of the American International Group (AIG), and the Company, the Company,
through ABTAC, authorizes and provides AIG access to its Internet server, for
the publication, display, and exhibition of AIG's direct response automobile
insurance sales materials to the Company's users. In return, ABTAC is paid
compensation based on a flat fee on the basis of the premium collected.

On November 10, 1998, the Company issued to Invision AG a warrant to
purchase an aggregate of 150,000 shares of common stock of the Company at an
exercise price of $13.20 per share. This warrant is exercisable as of the date
thereof and expires on November 10, 2001.

On December 16, 1998 and December 23, 1998, the Company issued to Aureus
Private Equity AG warrants to purchase 169,800 and 120,000 shares, respectively,
of common stock of the Company at an exercise price of $13.20 per share. Each of
these warrants are exercisable as of the date thereof and expires 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 the Company's Board of Directors.

On December 21, 1998, the Company issued to MediaOne Interactive Services,
Inc. a warrant to purchase an aggregate of 300,000 shares of common stock of the
Company at an exercise price of $13.20 per share. This warrant is exercisable as
of the date thereof and expires on December 21, 2001.

All future transactions between the Company and interested directors and
stockholders, if any, will be approved by the disinterested directors or
stockholders, as appropriate in accordance with Delaware law and the Company's
Certificate of Incorporation and Bylaws.

61
<PAGE> 63

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the common stock as of December 31, 1998, as adjusted to
reflect the conversion of the Preferred Stock into common stock concurrently
with the offering and sale of common stock offered hereby for (i) each person or
entity who is known by the Company to beneficially own five percent or more of
the outstanding common stock, (ii) each of the Company's directors, (iii) each
of the Named Officers, (iv) each stockholder who is selling shares of common
stock in this offering, and (v) all directors and executive officers of the
Company as a group. As of December 31, 1998, there were 14,358,745 shares of
common stock outstanding.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING(1) NUMBER OF AFTER OFFERING(1)
--------------------- SHARES BEING -------------------
NUMBER PERCENT OFFERED(2) NUMBER PERCENT
---------- -------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
Peter R. Ellis(3)................. 4,020,667 28.0% 500,000 3,520,667 19.7%
c/o Autobytel.com
18872 MacArthur Boulevard
Irvine, California 92612-1400
John C. Bedrosian(4).............. 3,569,445 24.9% 500,000 3,069,445 17.2%
c/o Autobytel.com
18872 MacArthur Boulevard
Irvine, California 92612-1400
General Electric Capital
Corporation(5).................. 1,831,903 12.8% 1,831,903 10.3%
260 Long Ridge Road
Stamford, Connecticut 06927
Peter Titz(6)..................... 1,550,406 10.5% 1,550,406 8.5%
c/o Aureus Private Equity AG
Zugerstrasse 766
CH-6340 Baar
Switzerland
MediaOne Interactive
Services(7)..................... 1,057,576 7.2% 1,057,576 5.8%
9000 E. Nichols Avenue
Englewood, Colorado 80112
Aureus Private Equity AG(6)....... 1,021,618 7.0% 1,021,618 5.6%
Zugerstrasse 766
CH-6340 Baar
Switzerland
National Union Fire Insurance
Company of Pittsburgh, PA....... 837,157 5.8% 837,157 4.7%
200 Liberty Street
New York, New York 10281
Robert S. Grimes(8)............... 803,472 5.5% 803,472 4.4%
c/o R.S. Grimes & Co., Inc.
152 West 57th Street
New York, NY 10019
Mark W. Lorimer(9)................ 214,165 1.5% 214,165 1.2%
Michael J. Fuchs(10).............. 146,130 1.0% 146,130 *
Michael J. Lowell(11)............. 106,944 * 106,944 *
Ann M. Delligatta(12)............. 32,637 * 32,637 *
Anne Benvenuto(13)................ 9,721 * 9,721 *
Mark N. Kaplan.................... 1,000 * 1,000 *
Kenneth J. Orton.................. -- * -- *
Hoshi Printer..................... -- * -- *
All directors and executive
officers as a group (12
persons)(14).................... 8,717,045 56.5% 8,217,045 43.4%
</TABLE>

- ---------------
* Less than 1%

62
<PAGE> 64

(1) 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 December
31, 1998 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
pursuant to 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.

(2) Assumes no exercise of the underwriters' over-allotment option.

(3) Includes 46,110 shares held by certain trusts established for family
members of Mr. Ellis as to which Mr. Ellis' spouse maintains sole voting
power. Includes 118,635 shares Mr. Ellis sold on January 11, 1999 and
593,175 shares as to which Mr. Ellis granted voting power to the Company
pursuant to 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 Peter Ellis after the
offering would be 3,183,167 and the percentage would be 17.8%.

(4) All shares are held in the John C. Bedrosian and Judith D. Bedrosian
Revocable Trust in which Mr. Bedrosian maintains shared voting powers. If
the underwriters' over-allotment option were exercised in full, the number
of shares beneficially owned by Mr. Bedrosian after the offering would be
2,731,945 and the percentage would be 15.3%.

(5) 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. 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 the Company. Also includes 6,075 shares issuable upon
exercise of options exercisable within 60 days of December 31, 1998 which
were granted to Mr. Coats, and subsequently assigned to General Electric
Capital Corporation. Mr. Coats disclaims beneficial ownership of such 6,075
shares.

(6) Mr. Peter Titz is a director of Aureus Private Equity AG, a manager of
Invision AG, and a director of the Company. 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.

(7) Includes 757,576 shares held by MediaOne following the conversion of the
Series C Preferred Stock and 300,000 shares issuable upon exercise of
warrants.

(8) Includes an aggregate of 5,554 shares held in irrevocable trusts as to
which Mr. Grimes' spouse maintains sole voting power. Includes 247,917
shares issuable upon exercise of options exercisable within 60 days of
December 31, 1998.

(9) Represents 214,165 shares issuable upon exercise of options exercisable
within 60 days of December 31, 1998.

(10) Includes 6,076 shares issuable upon exercise of options exercisable within
60 days of December 31, 1998 and 111,111 shares held by Mr. Fuchs following
the conversion

63
<PAGE> 65

of the Series A Preferred Stock and 28,943 shares following the conversion
of the Series B Preferred Stock.

(11) Represents 106,944 shares issuable upon exercise of options exercisable
within 60 days of December 31, 1998.

(12) Represents 32,637 shares issuable upon exercise of options exercisable
within 60 days of December 31, 1998.

(13) Represents 9,721 shares issuable upon exercise of options exercisable
within 60 days of December 31, 1998.

(14) Includes 623,535 shares issuable upon exercise of options and 439,800
shares issuable upon exercise of warrants exercisable within 60 days of
December 31, 1998. Peter Ellis resigned as Chief Executive Officer of the
Company 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 4,696,378 shares or 30.5% of the shares of common
stock outstanding, and after the offering would be 4,696,378 shares or
24.8% 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 38
stockholders.

COMMON STOCK

The Company 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. Subject to 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 Policy." In the event of a
liquidation, dissolution or winding up of the Company, the holders of common
stock are entitled to share ratably in all assets remaining after payment of
liabilities, subject to 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

Pursuant to the Company's 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 and to fix the designations, powers, preferences, privileges, and
relative participating, optional or special rights and the qualifications,
limitations or restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption and liquidation preferences, any or
all of which may be greater than the rights of the common stock. The Board of
Directors, without stockholder approval, can issue Preferred Stock with voting,
conversion or other rights that could adversely affect the voting power and
other rights of the holders of common stock. Preferred Stock could thus be
issued quickly with terms calculated to delay
64
<PAGE> 66

or prevent a change in control of the Company 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 the Company has
no plans to issue any of the Preferred Stock.

REGISTRATION RIGHTS

Pursuant to the Amended and Restated Investors' Rights Agreement, dated May
7, 1998, among the Company and the holders (the "Holders") of approximately
12,997,957 shares of common stock and securities convertible into common stock
(collectively, and as converted, the "Registrable Securities"), the Holders are
entitled to certain rights with respect to the registration of such shares under
the Act. If the Company proposes to register any of its securities under the
Act, either for its own account or for the account of other Holders exercising
registration rights, the Holders are entitled to notice of such registration and
are entitled to include shares of Registrable Securities therein. Additionally,
the Holders are also entitled to certain demand registration rights pursuant to
which they may require the Company to file a registration statement under the
Act at the Company's expense with respect to their shares of Registrable
Securities, and the Company is required to use its best efforts to effect such
registration. All of these registration rights are subject to certain conditions
and limitations, among them the right of the underwriters of an offering to
limit the number of shares included in such registration and the right of the
Company not to effect a requested registration within one year of an initial
public offering of the Company's securities, such as the Offering made hereby,
or if such requested registration would have an anticipated aggregate offering
to the public of less than $30 million. The Holders have waived all such rights
in connection with the Offering.

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS

Anti-Takeover Law

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law. 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 certain 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 stockholder. Subject to certain exceptions,
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

The Company's Amended and Restated Certificate of Incorporation and Bylaws
contain certain provisions relating to the limitation of liability and
indemnification of directors and officers. The Company's Amended and Restated
Certificate of Incorporation provides that directors of the Company may not be
held personally liable to the Company or its stockholders for a breach of
fiduciary duty, except for liability (i) for any breach of

65
<PAGE> 67

the director's duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law, (iii) under Section 174 of the Delaware General
Corporation Law, relating to prohibited dividends, distributions and repurchases
or redemptions of stock, (iv) for any transaction from which the director
derives an improper benefit. In addition, the Company's Amended and Restated
Certificate of Incorporation and Bylaws provide that the Company shall indemnify
directors and officers to the fullest extent authorized by Delaware law.

No Stockholder Action by Written Consent

The Company's 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 the Company 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 the Company.

Staggered Board of Directors

The Company's 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 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.

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, the Company 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 Act, except that
any shares purchased by "affiliates" of the Company, as that term is defined in
Rule 144 of the Act ("Affiliates"), 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 ("Restricted Shares").
The number of shares of common stock available for sale in the public market is
limited by restrictions under the Act and lock-up agreements under which the
holders of such shares have agreed not to

66
<PAGE> 68

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, and 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 offered hereby will be
eligible for sale. In addition, 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
of such shares will have been held for more than one year at the end of
such 180-day period).

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person (or persons whose shares are aggregated)
who has beneficially owned Restricted Shares for at least one year (including
the holding period of any prior owner, except if the prior owner was an
Affiliate) would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of: (i) one percent of the number of
shares of common stock then outstanding (which will equal approximately 178,587
shares immediately after the Offering); or (ii) 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. Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about the Company. Under Rule 144(k), a person who is not deemed to have been an
Affiliate of the Company 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
(including the holding period of any prior owner except if the prior owner was
an Affiliate), 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.

Upon completion of the Offering, the holders of 12,997,957 shares of common
stock, or their transferees, will be entitled to certain rights with respect to
the registration of such shares under the 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 Stock -- Registration Rights." Registration of such
shares under the Act would result in such shares becoming freely tradeable
without restriction under the Act (except for shares purchased by Affiliates)
immediately upon the effectiveness of such registration.

OPTIONS AND RESTRICTED STOCK

The Company intends to file a registration statement under the 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, subject 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 the Company or the lock-up agreements
described above. A total of 3,723,433 shares have been reserved for issuance
under such plans. As of December 31, 1998, no options have been granted under
the 1999 Stock Option Plan, 1,125,000 options have been granted under the 1998
Stock Option Plan, no shares have been purchased under the 1998 Employee Stock
Purchase Plan, options to purchase 833,333 shares of common stock have been
granted under the 1996 Stock Incentive Plan,

67
<PAGE> 69

options to purchase 889,163 shares of common stock 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 Act as currently in effect, any
employee, consultant or advisor of the Company who is not an Affiliate who
purchased shares from the Company in connection with a compensatory stock or
option plan or other written agreement is eligible to resell such shares 90 days
after the effective date of the Offering, subject to all provisions of Rule 144
except its minimum holding period.

LOCK-UP AGREEMENTS

All officers, directors, and certain other stockholders of the Company have
agreed not to sell, offer, contract or grant any option to sell, make any short
sale, pledge, transfer, establish an open "put equivalent position" within the
meaning of the Rule 16a-1(h) under the Securities Exchange Act of 1934, as
amended, or otherwise dispose of any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock for a period of
180 days after the date of this prospectus, without the prior written consent of
BT Alex. Brown Incorporated, and the selling stockholders have agreed to the
same lock-up period except for a period of 270 days after the date of this
prospectus. In addition, under the terms of the 1996 Option Plan and the Amended
and Restated 1996 Incentive Plan, holders of options to purchase common stock
are obligated not to sell or transfer any shares of the Company during such
180-day period if so requested by the Company or the underwriters. See
"Underwriting."

68
<PAGE> 70

CERTAIN UNITED STATES TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS

GENERAL

The following is a general discussion of the principal 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 herein, the term
"Non-U.S. Holder" means a holder that for United States federal income tax
purposes is an individual or entity other than (i) a citizen or individual
resident of the United States, (ii) a corporation or partnership created or
organized in or under the laws of the United States or of any political
subdivision thereof (other than a partnership treated as foreign under U.S.
Treasury regulations), (iii) an estate, the income of which is subject to U.S.
federal income taxation regardless of its source, or (iv) a trust if both (A) a
U.S. court is able to exercise primary supervision over the administration of
the trust and (B) one or more U.S. persons have the authority to control all
substantial decisions of the trust.

This discussion does not address all aspects of United States federal
income and estate taxes that may be relevant to Non-U.S. Holders in light of
their personal circumstances (including the fact that in the case of a Non-U.S.
Holder that is a partnership, the U.S. tax consequences of holding and disposing
of shares of common stock may be affected by certain determinations made at the
partner level), or to certain types of Non-U.S. Holders which may be subject to
special treatment under United States federal income tax laws (for example,
insurance companies, tax-exempt organizations, financial institutions, dealers
in securities and holders of securities held as part of a "straddle", "hedge",
or "conversion transaction") and does not address U.S. state or local or foreign
tax consequences. Furthermore, this discussion is based on provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed
regulations promulgated thereunder and administrative and judicial
interpretations thereof, all as of the date hereof and all of which are subject
to change, possibly with retroactive effect. The following summary is included
herein for general information. ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO
CONSULT THEIR TAX ADVISERS REGARDING THE UNITED STATES FEDERAL, STATE, LOCAL AND
NON-U.S. INCOME AND OTHER TAX CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING
OF SHARES OF COMMON STOCK.

An individual may, subject to certain exceptions, 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 (counting for such purposes 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). Resident aliens are subject to
U.S. federal tax as if they were U.S. citizens.

LIMITATION ON NET OPERATING LOSS CARRYFORWARDS

The Company has net operating loss ("NOL") carryforwards as of September
30, 1998 which may, depending upon the circumstances, be available to reduce
U.S. federal income taxes payable by the Company in the future. However, if the
Company undergoes an "ownership change" within the meaning of Section 382 of the
Code, the Company's utilization of its NOL carryforwards could be subject to
limitation. In general, an ownership change under Section 382 of the Code will
occur if, over a three-year period (or

69
<PAGE> 71

over a shorter period if there has been a prior ownership change within the
immediately preceding three-year period), certain stockholders who own directly
or indirectly 5% or more of the capital stock of the corporation (including the
so-called "public group") increase their percentage ownership by more than 50
percentage points in the aggregate. In general, if such an ownership change
occurs, Section 382 of the Code limits the amount of NOLs carried over from
pre-ownership change years that can be used in any post-ownership change year to
an amount equal to the product obtained by multiplying (1) the value of the
Company's capital stock (with certain adjustments) at the time of the ownership
change and (2) an interest rate determined by the Internal Revenue Service for
the month of the ownership change (the "Section 382 Limitation").

The Company believes that it will undergo an ownership change for purposes
of Section 382 of the Code. As a result, the use of the Company's pre-ownership
change NOL carryforwards will be limited annually by the Section 382 Limitation
pursuant to the rules described above.

DIVIDENDS

The Company does not anticipate paying cash dividends on its 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 withholding of United States
federal income tax at a 30% rate, or such lower rate as may be provided by an
income tax treaty between the United States and a foreign country if the
Non-U.S. Holder is treated as a resident of such foreign country within the
meaning of the applicable treaty. Non-U.S. Holders should consult their tax
advisors regarding their entitlement to benefit under a relevant income tax
treaty.

Under currently applicable U.S. Treasury regulations, dividends paid to an
address in a foreign country are presumed (absent actual knowledge to the
contrary) to be paid to a resident of such country for purposes of the
withholding discussed above and for purposes of determining the applicability of
a tax treaty rate. However, under recently finalized U.S. Treasury regulations
(the "Final Regulations"), in the case of dividends paid after December 31,
1999, a Non-U.S. Holder generally would be subject to U.S. backup withholding
tax at a 31% rate under the backup withholding rules described below, rather
than at a 30% rate or a reduced rate under an income tax treaty, unless certain
certification procedures (or, in the case of payments made outside the U.S. with
respect to an offshore account, certain documentary evidence procedures) are
satisfied, directly or through an intermediary. Further, under the Final
Regulations, a Non-U.S. Holder of common stock who wishes to claim the benefit
of an applicable treaty rate and to avoid backup withholding as discussed below,
for dividends paid after December 31, 1999 generally will be required to satisfy
applicable certification and other requirements. In addition, under the Final
Regulations, in the case of common stock held by a foreign partnership, (i) the
certification requirement will generally be applied to the partners of the
partnership and (ii) the partnership will be required to provide certain
information, including a United States taxpayer identification number. The Final
Regulations also provide look-through rules for tiered partnerships.

The Final Regulations also provide special rules for dividend payments made
to foreign intermediaries, U.S. or foreign wholly owned entities that are
disregarded for U.S. 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 foreigners

70
<PAGE> 72

receiving income derived through a partnership (or otherwise fiscally
transparent entity) in certain circumstances. Prospective investors should
consult with their own tax advisers concerning the effect, if any, of these
Final 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
U.S. 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.

Dividends that are effectively connected with: (i) a Non-U.S. Holder's
conduct of a trade or business in the United States (or, if an income tax treaty
applies, attributable to a permanent establishment), or, in the case of the
individual, a "fixed base" in the United States ("U.S. trade or business
income"), are generally subject to U.S. federal income tax on a net income basis
at regular graduated rates, but are not generally subject to the 30% withholding
tax if the Non-U.S. Holder files the appropriate U.S. Internal Revenue Service
("IRS") form with the payor (currently Form 4224). However, under the Final
Regulations the Non-U.S. Holder will be required to provide a U.S. taxpayer
identification number. Any U.S. trade or business income received by a Non-U.S.
Holder that is a corporation may also, under certain circumstances, 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 be subject to U.S. federal income or
withholding tax in respect of gain recognized on a disposition of common stock
unless: (i) the gain is effectively connected with the conduct of a trade or
business (or, if an income tax treaty applies, is attributable to a "permanent
establishment," as defined therein) of the Non-U.S. Holder within the U.S. or of
a partnership, trust or estate in which the Non-U.S. Holder is a partner or
beneficiary within the U.S., (ii) 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
Code (generally, property held for investment), is present in the United States
for 183 or more days in the taxable year of the disposition and meets certain
other requirements, (iii) the Non-U.S. Holder is subject to tax pursuant to the
provisions of the U.S. tax law applicable to certain United States expatriates,
or (iv) the Company is or has been a "U.S. 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 "U.S. real property holding
corporation" if the fair market value of its "U.S. 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. The Company believes that it has not been, is not currently, and does
not anticipate becoming, a "U.S. real property holding corporation" for U.S.
federal income tax purposes. The tax with respect to stock in a "U.S. real
property holding corporation" does not apply to a Non-U.S. Holder whose
holdings, direct and indirect, at all times during the applicable period,
constitute 5% or less of the common stock, provided that the common stock was
regularly traded on an established securities market for U.S. federal income tax
purposes. If the Company were, or were to become, a U.S. real property holding
corporation, the Company believes that the common stock would be treated as
"regularly traded on an established securities market." If the common stock were
not so treated, on a sale or disposition of the common stock, the transferee of
such stock would be required to withhold 10% of the proceeds of such
dispositions unless the Company was to provide

71
<PAGE> 73

certification that it is not (and has not been during a specific period) a
United States real property holding company or another exemption applied.

If a Non-U.S. Holder who is an individual is subject to tax under clauses
(i) or (iii) above, such individual generally will be taxed 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 is subject to tax
under clause (ii) above, such individual generally will be subject to a flat 30%
tax on the gain derived from a sale, which may be offset by certain United
States capital losses (notwithstanding the fact that such individual is not
considered a resident alien of the United States). Thus, individual Non-U.S.
Holders who have spent (or expect to spend) more than a de minimis period of
time in the United States in the taxable year in which they contemplate a sale
of common stock are urged to consult their tax advisers prior to the sale
concerning the U.S. tax consequences of such sale.

If a Non-U.S. Holder that is a foreign corporation is subject to tax under
clause (i) above it generally will be taxed on its net gain under regular
graduated United States federal income tax rates and, in addition, will be
subject to the branch profit tax equal to 30% of its "effectively connected
earnings and profits," within the meaning of the Code for the taxable year, as
adjusted for certain items, unless it qualifies for a lower rate under an
applicable tax treaty.

FEDERAL ESTATE TAX

Common stock owned or treated as owned by an individual who is neither a
United States citizen nor a United States resident (as defined for United States
federal estate tax purposes) at the time of death will be included in the
individual's gross estate for United States federal estate tax purposes unless
an applicable estate tax or other treaty provides otherwise and, therefore, may
be subject to United States federal estate tax.

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

Under United States Treasury regulations, the Company must report annually
to the IRS and to each Non-U.S. Holder the amount of dividends paid to such
holder and the 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, United States backup withholding (which generally is a
withholding tax imposed at the rate of 31% on certain payments to persons that
fail to furnish certain information under the United States information
reporting requirements) generally will not apply (i) to dividends paid to
Non-U.S. Holders that are subject to the 30% withholding discussed above (or
that are not so subject because a tax treaty applies that reduces such 30%
withholding) or (ii) 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 U.S. 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, certain
identifying information.

The Final Regulations alter the foregoing rules in certain respects for
dividends paid after December 31, 1999. Among other things, such regulations
provide certain
72
<PAGE> 74

presumptions under which a Non-U.S. Holder is subject to backup withholding at
the rate of 31% and information reporting unless the Company receives
certification from the holder of Non-U.S. status. Depending on the
circumstances, this certification will need to be provided (i) directly by the
Non-U.S. Holder, (ii) 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 (iii) by certain qualified financial
institutions or other qualified entities on behalf of the Non-U.S. Holder.

The payment of the proceeds of the disposition of common stock by a holder
to or through the U.S. office of a broker or through a non-U.S. branch of a U.S.
broker generally will be subject to information reporting and backup withholding
at a rate of 31% 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-U.S. office of a non-U.S. broker will not be subject to
backup withholding or information reporting unless the non-U.S. broker has
certain U.S. relationships. 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
U.S. person or a "U.S. related person", existing regulations require information
reporting on the payment unless (i) the broker receives a statement from the
owner, signed under penalty of perjury, certifying its non-U.S. 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 certain
other conditions are met or (ii) the beneficial owner otherwise establishes an
exemption. For this purpose, a "U.S. related person" is (i) a "controlled
foreign corporation" for U.S. federal income tax purposes or (ii) 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 (or for
such part of the period that the broker has been in existence) is derived from
activities that are effectively connected with the conduct of a U.S. trade or
business. Further, after December 31, 1999, under the Final Regulations referred
to above, information reporting and backup withholding may apply to payments of
the gross proceeds from the sale or redemption of the common stock effected
through foreign offices of brokers having any of a broader class of connections
with the U.S. unless certain IRS certification requirements are complied with.
Prospective investors should consult with their own tax advisers regarding the
Final Regulations 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 refunded (or credited against the holder's U.S. federal
income tax liability, if any) provided that the required information is
furnished to the IRS.

73
<PAGE> 75

UNDERWRITING

Subject to the terms of the Underwriting agreement (the "Underwriting
Agreement"), the underwriters named below (the Underwriters), through their
representatives BT Alex. Brown Incorporated, Lehman Brothers Inc. and
PaineWebber Incorporated (the Representatives), have severally agreed to
purchase from the Company 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.............................................
========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the shares of common stock offered hereby 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.

Selling Stockholders have granted the Underwriters an option, exercisable
not later than 30 days after the date of this Prospectus, to purchase up to
675,000 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 thereof that the number of shares of common stock to be purchased by
it in the above table bears to 4,500,000, and the stockholders will be
obligated, pursuant to 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 hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 4,500,000 shares are being offered.

The Company 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 certain stockholders of the Company,
holding in the aggregate shares of common stock, have agreed not to
offer, sell, contract to sell or otherwise dispose of (or enter into any
transaction which is designed to, or could be expected to, result in the
disposition of any portion of) any common stock for a period of 180 days after
the date of the Company's public offering, without the prior written consent of
BT Alex. Brown Incorporated, and the selling stockholders have agreed to a
lock-up for a period of 270 days after the date of the Company's public
offering. Such consent may be given at any time without public notice and may be
given for certain stock holders and not others. The Company has entered into a
similar agreement, except that it may issue, and

74
<PAGE> 76

grant options or warrants to purchase, shares of common stock or any securities
convertible into, exercisable for or exchangeable for shares of common stock,
pursuant to the exercise of outstanding options and warrants and the Company's
issuance of options and stock granted under the existing stock and stock
purchase plans.

The Representatives have advised the Company 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, thereby 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.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for the Company by Paul, Hastings, Janofsky & Walker LLP, New York, New
York. Certain legal matters in connection with the common stock offered hereby
will be passed upon for the Underwriters by Latham & Watkins, Menlo Park,
California.

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 with respect
thereto and are included herein in reliance upon the authority of said firm as
experts in giving said report.

ADDITIONAL INFORMATION

A Registration Statement on Form S-1, including amendments thereto,
relating to the common stock offered hereby has been filed by the Company with
the Securities and Exchange Commission (the Commission), Washington, D.C. This
prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. 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. For further information with respect to the Company and the common
stock offered hereby, 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 Commission's principal office, 450 Fifth Street, N.W.,
Washington, D.C. 20549, the New

75
<PAGE> 77

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
thereof, including any exhibit thereto, may be obtained from the Commission upon
the payment of certain fees prescribed by the Commission. The public may obtain
information on the operation of the Public Reference room by calling the SEC at
1-800-SEC-0330. The Commission maintains a World Wide Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
site is http://www.sec.gov.

76
<PAGE> 78

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> 79

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> 80

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> 81

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> 82

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)
========= == ========= == ====== ======= ==== ====

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> 83

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> 84

AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data.)

1. ORGANIZATION AND OPERATIONS OF THE COMPANY

autobytel.com inc. (the Company) 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 the Company's network of
participating dealers. The Company also provides other related services such as
financing, leasing, vehicle warranties and insurance. The Company's services are
free to consumers and, to date, the Company 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), the Company'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 the Company at their historical cost.

Since inception, the Company has invested the majority of its efforts in
marketing the Company's brand name and developing infrastructure to support
anticipated future operating growth. As a result, the Company 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
the Company, 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> 85

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, the Company 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 the Company 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. The Company
generally requires no collateral to support customer receivables. The Company
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, the Company adopted Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation." The Company 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, the Company 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.

The Company conducts its business within one industry segment within the
United States, Canada and the United Kingdom. Revenues from customers outside of
the United

F-8
<PAGE> 86

AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

States were less than 10% of total revenues for all periods presented in the
accompanying consolidated statements of operations.

Sales and Marketing

Sales and marketing expense primarily includes advertising and marketing
expenses paid to purchase request providers and developing the Company's brand
equity, as well as personnel and other costs associated with sales, training and
support of the Company's dealer network. Sales and marketing expense also
includes cost of sales associated with the sale of computers, which was
discontinued in February 1999. Sales and marketing costs are recorded as
expenses in the period services are provided. 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 the
Company's Web site and its online dealer information platform (DRT), as well as
expenses associated with the Company's 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 March 1997.

Foreign Currency Translation

The functional currency of the Company's subsidiaries is the local
currency. Accordingly, all assets and liabilities are translated into U.S.
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. The Company evaluated the requirements of the
Securities and Exchange Commission Staff Accounting Bulletin

F-9
<PAGE> 87

AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(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.

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 the Company 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." The Company 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. The Company
expenses software development costs as incurred. Management believes that the
adoption of SOP 98-1 will not have a material effect on the Company's
consolidated financial statements.

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 the Company'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. The Company does not have any derivative instruments as of

F-10
<PAGE> 88

AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 1998. Management believes that the adoption of SFAS No. 133 will
not have a material effect on the Company's consolidated financial statements.

3. BUSINESS ACQUISITION

In May 1997, one of the Company's subsidiaries, Kre8.net, Inc., entered
into an asset purchase agreement with Internet Development Corporation (IDC) 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 the Company's accumulated deficit beginning in May 1997. IDC'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>

F-11
<PAGE> 89

AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company 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>

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, the Company entered into a three year Internet marketing
agreement with a company that operates a search engine. The agreement permits
the Company to maintain certain exclusive promotional rights and linkage with
the search engine, and provides for certain advertising. As of December 31,
1998, the agreement requires minimum future payments of $3.6 million. The
Company expenses these amounts on a straight-line basis over the term of the
agreement.

In June 1998, the Company entered into a two year Internet marketing
agreement with another company that operates a search engine. The agreement
permits the Company to maintain certain exclusive promotional rights and linkage
with the search engine. As of December 31, 1998, the agreement requires minimum
future payments of $1.2 million. The Company expenses these amounts on a
straight-line basis over the term of the agreement.

The Company also has multi-year 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 three
years and require that the Company pay fees to these companies based on the
volume of referrals received by the Company from these services. As of December
31, 1998, the minimum future commitments under these agreements were $0.7
million. The Company expenses these amounts on a straight-line basis over the
terms of the agreements.

The Company has agreements with network and cable television stations under
which the Company has the right to purchase television advertising. As of
December 31, 1998, the minimum future commitments under these agreements were
$1.7 million. The Company expenses these amounts as advertising is aired.

F-12
<PAGE> 90

AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Employment Agreements

The Company 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, the Company 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 the Company's financial position, liquidity or results of
operations.

6. RETIREMENT SAVINGS PLAN

The Company 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 the Company
who are over 21 years of age and have worked for the Company 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. The Company 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 of the Company authorized 1,500,000
shares of Series A convertible preferred stock (Series A Preferred), and the
Company 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
the Company under three notes payable. In addition, $1,081 of the proceeds were
used to repay notes due to the Company'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 closing of an underwritten public offering of the Company'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. The Company has
reserved 1,666,667 shares of common stock to permit the conversion of the Series
A Preferred.

F-13
<PAGE> 91

AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 of the Company authorized 967,915
shares of Series B convertible preferred stock (Series B Preferred), and the
Company 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 the Company'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. The Company 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.

Series C Convertible Preferred Stock

In October 1997, the Board of Directors of the Company authorized 2,840,909
shares of Series C convertible preferred stock (Series C Preferred), and the
Company 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 of the
Company authorized an additional 1,136,363 and 3,000,000 shares of Series C
Preferred in February and December 1998, respectively.

F-14
<PAGE> 92
AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

In April 1998, the Company 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, the Company sold 568,182 shares of the Series C Preferred at
$8.80 per share through a private placement.

In October 1998, the Company 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, the Company sold 568,182 shares of Series C Preferred at
$8.80 per share through a private placement.

In December 1998, the Company 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 the Company entered into a Directed
Proceeds Agreement. Under the Directed Proceeds Agreement, the Company is
committed to expend up to $1,000 for the development of technology for broadband
applications. In addition, the Company 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 the Company 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 the Company'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. The Company 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.

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.

F-15
<PAGE> 93
AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 the Company.

Warrants

In November 1998, the Company 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 fund organizational and start-up activities related to
a Pan-European entity in which the Company 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 the three months ended
December 31, 1998.

In December 1998, the Company 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 fund organizational and start-up activities related to
Pan-European entity in which the Company 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 the three months ended
December 31, 1998.

In December 1998, the Company 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.

8. STOCK OPTION PLANS

1996 Stock Option Plan

The Company'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 stock options. The Company
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 the Company, 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.

F-16
<PAGE> 94
AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

The Company'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. The Company 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 the
Company, 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.

From October 1996 to January 1999, the Company approved grants of incentive
stock options in excess of the Incentive Plan limit of 833,333 shares. The stock
options granted in excess of the Incentive Plan limit do not qualify as
incentive stock options. The Company plans to offer affected optionholders the
rescission of the grant of their options for a cash payment or a new grant of
incentive stock options. The Company believes that the resolution of this matter
will not have a material adverse impact on its consolidated financial
statements. The Company has adopted the 1999 Stock Option Plan under which new
grants of incentive stock options, if required, will be made at the fair market
value at the date of new grants (See Note 13).

1998 Stock Option Plan

In December 1998, the Company adopted the 1998 Stock Option Plan (the 1998
Option Plan). The Company 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 the Company, 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> 95
AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

time period determined by the Board of Directors, however, the vesting could
accelerate based on the performance of the Company's common stock. 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 the Company'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 the Company with respect to the 1998 Option Plan.

During the year ended December 31, 1996, the Company 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, the Company recorded, based upon an
independent appraisal obtained by the Company'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, the Company 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, the Company 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, the Company 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

The Company'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
the Company to purchase shares of common stock through payroll deductions of up
to ten percent of their compensation, up to a certain maximum amount for all
purchase periods ending within any calendar year. The Company 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 the Company. 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-18
<PAGE> 96

AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

A summary of the status of the Company'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-19
<PAGE> 97

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 the Company's stock option grants for its
stock-based compensation plans been determined consistent with SFAS No. 123, the
Company'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

In November 1998, the Company entered into an agreement with Inchcape
Automotive Limited to sell 100 percent 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 addition, the Company entered into a
License and Service Agreement with Auto by Tel UK, under which it is entitled to
minimum annual license and maintenance payments of $850 and $250, respectively,
over a 20-year period.

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, the Company was not subject to corporate income taxes on its taxable
income. Instead, the Company'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 the Company adopt SFAS No. 109,

F-20
<PAGE> 98

AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

"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 the Company
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, the Company 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 the Company'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 the Company.

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. The Company has provided
a full valuation allowance on these deferred income tax assets because of the
uncertainty regarding their realization.

11. RELATED PARTY TRANSACTIONS

Peter R. Ellis

In March 1998, the Company extended a $250 loan to co-founding member and
stockholder, Peter R. Ellis. The loan bears interest at 8% per annum compounded
annually and principal and accrued interest are due in full in March 2003. The
loan is secured by Mr. Ellis's stock in the Company. In June 1998, Mr. Ellis
resigned from the Company as Chief Executive Officer. In August 1998, the
Company 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

The Company 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 the
Company to sell shares of its common stock in connection with the proposed
initial public offering (IPO).

F-21
<PAGE> 99

AUTOBYTEL.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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). The Company 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 the Company. 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 the Company's common stock on the date of grant. The 1999
Option Plan is identical in all other material respects to the 1998 Option Plan.

[The inside back cover of the prospectus depicts a map of the United States
with dots generally representing the territories covered by United States
autobytel.com inc. dealers.]

F-22
<PAGE> 100

- ------------------------------------------------------
- ------------------------------------------------------

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............................ 7
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................................ 33
Management.............................. 45
Certain Transactions.................... 58
Principal and Selling Stockholders...... 61
Description of Capital Stock............ 63
Shares Eligible for Future Sale......... 65
Certain United States Tax Considerations
for Non-United States Holders......... 68
Underwriting............................ 73
Legal Matters........................... 74
Experts................................. 74
Additional Information.................. 74
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.

- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------

[LOGO]

AUTOBYTEL.COM INC.

COMMON STOCK
-------------------
PROSPECTUS
-------------------
BT ALEXS BROWN
LEHMAN BROTHERS
PAINEWEBBER INCORPORATED

------------------

, 1999

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 101

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........................................ $23,018
NASD filing fee............................................. 8,780
Nasdaq National Market listing fee.......................... 95,000
Blue Sky fees and expenses.................................. 5,000
Accounting fees and expenses................................ *
Legal fees and expenses..................................... *
Transfer agent and registrar fees........................... *
Printing and engraving expenses............................. *
Miscellaneous expenses...................................... *
-------
Total............................................. $ *
=======
</TABLE>

- -------------------------
* To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware Law General Law ("Delaware Law") and the
Company's Certificate of Incorporation provide for indemnification of the
Company's directors and officers in a variety of circumstances which may include
liabilities under the Act. Article IX of the Company's Certificate of
Incorporation provides that the Company 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 the Company's Certificate of
Incorporation and Delaware Law is to provide that the Company shall indemnify
its 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 the Company.
With respect to legal proceedings by or in the right of the Company in which a
director or officer is adjudged liable for improper performance of his duty to
the Company or another enterprise which such person served in a similar capacity
at the request of the Company, indemnification is limited by such provisions to
that amount which is permitted by the court.

The Company will maintain officers' and directors' liability insurance
which will insure against liabilities that officers and directors of the Company
may incur in such capacities. The Company has 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
the Company signing the Registration Statement and certain controlling persons
of the Company against

II-1
<PAGE> 102

certain liabilities, including those arising under the Act in certain instances,
of the Underwriters.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since the Company's inception, the Company has made the following sales of
securities that were not registered under the Act:

1. On May 31, 1996, the Company issued and sold 8,250,000 shares of
common stock in exchange for membership interests in Autobytel LLC and
Autobytel Acceptance Corporation LLC, in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act.

2. During the period from May 18, 1996 through December 31, 1998, the
Company 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 and issued by the Company in reliance on Rule 701 promulgated
under the Act.

3. On August 20, 1996, the Company 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, the Company 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. Sales of Series A Preferred Stock were made
in reliance on the exemption from registration provided by Section 4(2) of
the Act.

4. On August 26, 1996, the Company issued and sold 6,667 shares to a
consultant of the Company in reliance on Rule 701 promulgated under the
Act.

5. On January 30, 1997, the Company 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,
the Company 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. Sales of Series B Preferred Stock were
made in reliance on the exemption from registration provided by Section
4(2) of the Act.

6. On October 21, 1997, the Company 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,
the Company 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 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.

II-2
<PAGE> 103

Sales of Series C Preferred Stock were made in reliance on the exemption
from registration provided by Section 4(2) of the Act.

7. On January 30, 1998, the Company issued to John M. Markovich a
warrant to purchase 33,333 shares of common stock of the Company (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, the Company entered into a transaction with
National Broadcasting Company, Inc. ("NBC") whereby the Company 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. The
sale of Series C Preferred Stock was made in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act.

9. On May 7, 1998 the Company 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. The sale of Series C
Preferred Stock was made in reliance on the exemption from registration
provided by Section 4(2) of the Act.

10. On October 30, 1998, the Company entered into another transaction
with NBC whereby the Company 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. The sale of Series C Preferred Stock was
made in reliance on the exemption from registration provided by Section
4(2) of the Securities Act.

11. On November 10, 1998, the Company issued and sold 568,182 shares
of Series C Stock to Invision AG for a total consideration of approximately
$5,000,000 in cash. The sale of Series C Preferred Stock was made in
reliance on the exemption from registration provided by Section 4(2) of the
Securities Act.

12. On November 10, 1998, the Company issued to Invision AG a warrant
to purchase an aggregate of 150,000 shares of common stock of the Company
at an exercise price of $13.20 per share. This warrant expires on November
10, 2001.

13. On December 16, 1998, the Company issued and sold 643,182 shares
of Series C Stock to Aureus Private Equity AG for a total consideration of
approximately $5,660,000 in cash. The sale of Series C Preferred Stock was
made in reliance on the exemption from registration provided by Section
4(2) of the Securities Act.

14. On December 16, 1998, the Company issued to Aureus Private Equity
AG a warrant to purchase an aggregate of 169,800 shares of common stock of
the Company at an exercise price of $13.20 per share. This warrant expires
on December 16, 2001.

15. On December 21, 1998, the Company issued and sold 1,136,364 shares
of Series C Stock to MediaOne Interactive Services, Inc. for a total
consideration of approximately $10,000,000 in cash. The sale of Series C
Preferred Stock was made in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act.

16. On December 21, 1998, the Company issued to MediaOne Interactive
Services, Inc. a warrant to purchase an aggregate of 300,000 shares of
common stock of the Company at an exercise price of $13.20 per share. This
warrant expires on December 21, 2001.

II-3
<PAGE> 104

17. On December 23, 1998, the Company issued an additional warrant to
Aureus Private Equity AG to purchase 120,000 shares of common stock of the
Company at an exercise price of $13.20 per share. This warrant expires on
December 23, 2001.

18. On December 24, 1998, the Company issued and sold an additional
454,545 shares of Series C Stock to Aureus Private Equity AG for a total
consideration of approximately $4,000,000 in cash. The sale of Series C
Preferred Stock was made in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act.

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)
3.2* Amended and Restated Bylaws of autobytel.com inc. (adopted
February , 1999)
4.1* Form of Stock Certificate
4.2** Amended and Restated Investors' Rights Agreement dated May
7, 1998 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 January , 1999 between
autobytel.com and Anne Delligatta
10.4* Severance Agreement dated January 1, 1998 between
Auto-By-Tel Corporation 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.
</TABLE>

II-4
<PAGE> 105

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
10.11 Amendment to Marketing Agreement dated February 8, 1996
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
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
10.18** Listings Distribution, Sponsorship, Display Advertising and
Network Affiliation Agreement dated May 29, 1997 between
Classifieds2000, Inc. and Auto-By-Tel
10.19** License Agreement dated June 4, 1998 among J.D. Power and
Associates, Auto-By-Tel Marketing Corporation, and the
Registrant
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
</TABLE>

II-5
<PAGE> 106

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
11.1 Statement Regarding Computation of Per Share Earnings
21.1** Subsidiaries of the Company
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)
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.

(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> 107

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 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 February 9, 1999.

autobytel.com inc.

By: /s/ MARK W. LORIMER
-----------------------------------
Name: Mark W. Lorimer
Title: Chief Executive Officer,
President and
Director

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that Peter Titz constitutes and
appoints Mark W. Lorimer and Hoshi Printer, and each of them, as his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for Peter Titz and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission and any other regulatory authority, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as Peter Titz might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their or such person's
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

<TABLE>
<C> <S> <C>
/s/ PETER TITZ Director February 9, 1999
- ------------------------------------------------
Peter Titz
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 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 February 9, 1999
- ------------------------------------------------ and Director
Michael Fuchs

* Director February 9, 1999
- ------------------------------------------------
Jeffrey H. Coats

* Director February 9, 1999
- ------------------------------------------------
Mark N. Kaplan
</TABLE>

II-7
<PAGE> 108

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Director February 9, 1999
- ------------------------------------------------
Kenneth J. Orton

* Executive Vice February 9, 1999
- ------------------------------------------------ President and Director
Robert S. Grimes

/s/ MARK W. LORIMER Chief Executive February 9, 1999
- ------------------------------------------------ Officer, President and
Mark W. Lorimer Director (Principal
Executive Officer)

/s/ HOSHI PRINTER Senior Vice President February 9, 1999
- ------------------------------------------------ and Chief Financial
Hoshi Printer Officer (Principal
Financial Officer and
Principal Accounting
Officer)

* Executive Vice February 9, 1999
- ------------------------------------------------ President and Chief
Ann M. Delligatta Operating Officer

/s/ PETER TITZ Director February 9, 1999
- ------------------------------------------------
Peter Titz

*By: /s/ HOSHI PRINTER
---------------------------------------
Hoshi Printer, Attorney-in-Fact
</TABLE>

II-8
<PAGE> 109

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
PAGE
NUMBER DESCRIPTION NUMBER
------ ----------- ------------
<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)
3.2* Amended and Restated Bylaws of autobytel.com inc.
(adopted January , 1999)
4.1* Form of Stock Certificate
4.2** Amended and Restated Investors' Rights Agreement dated
May 7, 1998 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 January , 1999 between
autobytel.com and Anne Delligatta
10.4* Severance Agreement dated January 1, 1998 between
Auto-By-Tel Corporation 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 dated February 8,
1996 between Edmund Publications Corp. and the
Registrant
10.12** Form of Dealership Agreements
</TABLE>

<PAGE> 110

<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
PAGE
NUMBER DESCRIPTION NUMBER
------ ----------- ------------
<S> <C> <C>
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
10.18** Listings Distribution, Sponsorship, Display
Advertising and Network Affiliation Agreement dated
May 29, 1997 between Classifieds2000, Inc. and
Auto-By-Tel
10.19** License Agreement dated June 4, 1998 among J.D. Power
and Associates, Auto-By-Tel Marketing Corporation, and
the Registrant
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> 111

<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
PAGE
NUMBER DESCRIPTION NUMBER
------ ----------- ------------
<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
11.1 Statement Regarding Computation of Per Share Earnings
21.1** Subsidiaries of the Company
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)
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 3.1

AUTOBYTEL.COM INC.

FIFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

Autobytel.com inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies under penalty of perjury under the laws of the State of Delaware as
follows:

FIRST: That this Corporation was originally incorporated on May 17,
1996 under the name of Auto-By-Tel Corporation, pursuant to the General
Corporation Law of the State of Delaware (the "Delaware General Corporation
Law").

SECOND: That pursuant to Section 141 and 242 of the Delaware General
Corporation Law, the Board of Directors has duly adopted resolutions proposing
to amend and restate the Amended and Restated Certificate of Incorporation filed
with the Secretary of State of Delaware on April 16, 1998, as amended on July
22, 1998, declaring said amendment and restatement to be advisable and in the
best interests of this Corporation and its stockholders.

THIRD: That pursuant to Section 228 and 242 of the Delaware General
Corporation Law, the changes to be effected by this Fifth Amended and Restated
Certificate of Incorporation have been duly approved by the holders of the
requisite number of shares of this Corporation.

FOURTH: That pursuant to Section 242 and 245 of the General
Corporation Law of the State of Delaware, this Fifth Amended and Restated
Certificate of Incorporation restates and amends the provisions of this
Corporation's Amended and Restated Certificate of Incorporation.

FIFTH: That the text of the Amended and Restated Certificate of
Incorporation is hereby restated and amended in its entirety as set forth in
Exhibit A attached hereto.

<PAGE> 2

IN WITNESS WHEREOF, this Fifth Amended and Restated Certificate of
Incorporation has been signed this 14th day of December, 1998.

AUTOBYTEL.COM INC.

By: /s/ Mark W. Lorimer
-------------------------------
Title: President

ATTEST:

By: /s/ Craig S. Frost
-------------------------------
Title: Secretary

2
<PAGE> 3

Exhibit A
---------

FIFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
AUTOBYTEL.COM INC.
A Delaware Corporation

ARTICLE I

The name of the corporation is autobytel.com inc. (the "Corporation").

ARTICLE II

The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, zip code 19801. The name of its registered
agent at such address is The Corporation Trust Company.

ARTICLE III

The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.

ARTICLE IV

A. Classes of Stock. This Corporation is authorized to issue two
classes of stock, to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares that this Corporation is authorized to issue
is sixty-one million four hundred forty-five thousand one hundred eighty-seven
(61,445,187). The number of shares of Preferred Stock authorized to be issued is
eleven million four hundred forty-five thousand one hundred eighty-seven
(11,445,187), par value $0.001 per share, one million five hundred thousand
(1,500,000) of which have been designated Series A Preferred Stock (the "Series
A Preferred Stock"), nine hundred sixty-seven thousand nine hundred fifteen
(967,915) of which have been designated Series B Preferred Stock (the "Series B
Preferred Stock"), six million nine hundred seventy-seven thousand two hundred
seventy-two (6,977,272) of which have been designated Series C Preferred Stock
(the "Series C Preferred Stock") and two million (2,000,000) of which shall be
undesignated. The Series A Preferred Stock, the Series B Preferred Stock and the
Series C Preferred Stock shall be hereinafter referred to collectively as the
"Preferred Stock." The number of shares of Common Stock authorized to be issued
is fifty million (50,000,000), par value $0.001 per share.

3
<PAGE> 4

B. Rights, Preferences and Restrictions of the Preferred Stock.

The undesignated shares of Preferred Stock may be issued from time
to time in one or more series pursuant to a resolution or resolutions providing
for such issue duly adopted by the Board of Directors (authority to do so being
hereby expressly vested in the Board). The Board of Directors is further
authorized to determine or alter the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued series of Preferred
Stock and, to fix the number of shares of any series of Preferred Stock and the
designation of any such series of Preferred Stock. The Board of Directors,
within the limits and restrictions stated in any resolution or resolutions of
the Board of Directors originally fixing the number of shares constituting any
series, may increase or decrease (but not below the number of shares in any such
series then outstanding) the number of shares of any series subsequent to the
issue of shares of that series.

The rights, preferences, privileges, and restrictions granted to and
imposed on the Preferred Stock are as set forth below in this Article IV(B).

Section 1. Dividends.

(a) The holders of outstanding shares of Series C Preferred Stock
shall be entitled to receive, when and as declared by the Board of Directors out
of funds legally available therefor, payable in preference and priority to any
declaration or payment of any dividend on the Series A Preferred Stock, Series B
Preferred Stock or Common Stock of the Corporation, dividends in cash at an
annual rate of $0.80 per share of Series C Preferred Stock. The holders of
outstanding shares of Series A Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors out of funds legally available
therefor, payable in preference and priority to any declaration or payment of
any dividend on the Series B Preferred Stock or Common Stock of the Corporation,
dividends in cash at an annual rate of $0.80 per share of Series A Preferred
Stock. The holders of outstanding shares of Series B Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors out of funds
legally available therefor, payable in preference and priority to any
declaration or payment of any dividend on the Common Stock of the Corporation,
dividends in cash at an annual rate of $0.80 per share of Series B Preferred
Stock. The right to such dividends shall not be cumulative and no right to such
dividends shall accrue to holders of Preferred Stock by reason of the fact that
dividends on such shares are not declared in any prior year. No dividend or
other distribution shall be made with respect to the Series B Preferred Stock in
any fiscal year until full dividends at the rate set forth in this Section 1(a)
have been paid on the Series C Preferred Stock and Series A Preferred Stock. No
dividend or other distribution shall be made with respect to the Series A
Preferred Stock in any fiscal year until full dividends at the rate set forth in
this Section 1(a) have been paid on the Series C Preferred Stock. No dividend or
other distribution shall be made with respect to the Common Stock in any fiscal
year until full dividends at the rate set forth in this Section 1(a) have been
paid on the Preferred Stock.

4
<PAGE> 5

(b) Definition of Distribution. For purposes of this Section 1,
unless the context otherwise requires, a "distribution" shall mean the transfer
of cash or other property without consideration whether by way of dividend or
otherwise, payable other than in Common Stock, or the purchase or redemption of
shares of the Corporation (other than repurchases at cost of Common Stock issued
to or held by employees, officers, directors or consultants of the Corporation
or its subsidiaries upon termination of their employment or services pursuant to
agreements providing for the right of said repurchase) for cash or property.

Section 2. Liquidation Preference.

(a) In the event of any liquidation, dissolution, or winding up
of the Corporation, either voluntary or involuntary, the holders of Series C
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Series A Preferred Stock, Series B Preferred Stock or Common
Stock, an amount equal to $8.80 per share for each share of Series C Preferred
Stock then held by them (as adjusted for any stock split, combination,
consolidation, or stock distributions or stock dividends effected with respect
to such shares after the Original Issue Date) plus all declared but unpaid
dividends, if any (the "Series C Liquidation Preference"); provided that upon
the occurrence of any event described in Section 2(e) below, the holders of
Series C Preferred Stock shall be entitled to receive, at their option, either
the Series C Liquidation Preference described above or the consideration, if
any, which would be payable to such holders as if they had converted their
shares of Series C Preferred Stock into Common Stock immediately prior to such
event. If the assets and funds thus distributed among the holders of Series C
Preferred Stock shall be insufficient to permit the payment to such holders of
the full aforesaid preferential amount, then the entire assets and surplus funds
of the Corporation legally available for distribution shall be distributed
ratably among the holders of the Series C Preferred Stock in proportion to the
number of shares of Series C Preferred Stock then held by them.

(b) After payment has been made to the holders of Series C
Preferred Stock of the full amounts to which they shall be entitled as set forth
in subparagraph (a) of this Section 2, the holders of Series A Preferred Stock
shall be entitled to receive, prior and in preference to any distribution of any
of the assets or surplus funds of the Corporation to the holders of Series B
Preferred Stock or Common Stock, an amount equal to $10.00 per share for each
share of Series A Preferred Stock then held by them (as adjusted for any stock
split, combination, consolidation, or stock distributions or stock dividends
effected with respect to such shares after the Original Issue Date) plus all
declared but unpaid dividends, if any (the "Series A Liquidation Preference");
provided that upon the occurrence of any event described in Section 2(e) below,
the holders of Series A Preferred Stock shall be entitled to receive, at their
option, either the Series A Liquidation Preference described above or the
consideration, if any, which would be payable to such holders as if they had
converted their shares of Series A Preferred Stock into Common Stock immediately
prior to such event.

5
<PAGE> 6

If the assets and funds thus distributed among the holders of Series A Preferred
Stock shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amount, then the entire assets and surplus funds of the
Corporation legally available for distribution to the holders of Series A
Preferred Stock shall be distributed ratably among the holders of the Series A
Preferred Stock in proportion to the number of shares of Series A Preferred
Stock then held by them.

(c) After payment has been made to the holders of Series C
Preferred Stock and Series A Preferred Stock of the full amounts to which they
shall be entitled as set forth in subparagraphs (a) and (b) of this Section 2,
the holders of Series B Preferred Stock shall be entitled to receive, prior and
in preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of Common Stock, an amount equal to $9.35 per share
for each share of Series B Preferred Stock then held by them (as adjusted for
any stock split, combination, consolidation, or stock distributions or stock
dividends effected with respect to such shares after the Original Issue Date)
plus all declared but unpaid dividends, if any (the "Series B Liquidation
Preference"); provided that upon the occurrence of any event described in
Section 2(e) below, the holders of Series B Preferred Stock shall be entitled to
receive, at their option, either the Series B Liquidation Preference described
above or the consideration, if any, which would be payable to such holders as if
they had converted their shares of Series B Preferred Stock into Common Stock
immediately prior to such event. If the assets and funds thus distributed among
the holders of Series B Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amount, then the
entire assets and surplus funds of the Corporation legally available for
distribution to the holders of Series B Preferred Stock shall be distributed
ratably among the holders of the Series B Preferred Stock in proportion to the
number of shares of Series B Preferred Stock then held by them.

(d) After payment has been made to the holders of Preferred Stock
of the full amounts to which they shall be entitled as set forth in
subparagraphs (a), (b) and (c) of this Section 2, then the entire remaining
assets and surplus funds of the Corporation legally available for distribution,
if any, shall be distributed ratably among the holders of Common Stock based
upon the number of shares of Common Stock then held by them.

(e) A merger or consolidation of the Corporation with or into any
other corporation or corporations, or the merger of any other corporation or
corporations into the Corporation, in which the stockholders of the Corporation
receive distributions in cash or securities of another corporation or
corporations as a result of such consolidation or merger and in which the
stockholders of the Corporation do not own at least 50% of the voting power of
the surviving corporation after the consolidation or merger, or a sale of all or
substantially all of the assets of the Corporation, shall be treated as a
liquidation, dissolution or winding up of the Corporation within the meaning of
this Section 2.

6
<PAGE> 7

Section 3. Conversion. The holders of the Preferred Stock shall have
conversion rights (the "Conversion Rights") as follows:

(a) Right to Convert. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of this Corporation or any transfer agent
for the Preferred Stock, into such number of fully paid and nonassessable shares
of Common Stock as is determined by dividing $10.00 in the case of the Series A
Preferred Stock, $9.35 in the case of the Series B Preferred Stock, or $8.80 in
the case of the Series C Preferred Stock by the Conversion Price, determined as
hereinafter provided, in effect for such series of Preferred Stock at the time
of conversion. The initial Conversion Price per share shall be $9.00 for the
Series A Preferred Stock, $10.36 for the Series B Preferred Stock and $13.20 for
the Series C Preferred Stock. The Conversion Price per share of the Series A
Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock
shall be subject to adjustment as hereinafter provided. Upon conversion, all
declared and unpaid dividends on the Preferred Stock shall be paid in cash, to
the extent legally permitted and in accordance with Section 4(B)(1)(a) hereof.

(b) Automatic Conversion.

(i) Each share of Preferred Stock shall, with notice to the
holders thereof delivered promptly thereafter, automatically be converted into
shares of Common Stock at the applicable Conversion Price then in effect upon
the earlier of (A) the date upon which this Corporation obtains the consent of
the holders of two-thirds of the then outstanding shares of Preferred Stock,
voting together as a single class, (B) (1) in the case of Series A Preferred
Stock, the date on which fewer than 300,000 shares of Series A Preferred Stock
(appropriately adjusted for any stock splits, combinations, consolidations, or
stock distributions or dividends effected with respect to such shares after the
Original Issue Date) remain outstanding, (2) in the case of Series B Preferred
Stock, the date on which fewer than 200,000 shares of Series B Preferred Stock
(appropriately adjusted for any stock splits, combinations, consolidations, or
stock distributions or dividends effected with respect to such shares after the
Original Issue Date) remain outstanding, (3) in the case of Series C Preferred
Stock, the date on which fewer than 250,000 shares of Series C Preferred Stock
(appropriately adjusted for any stock splits, combinations, consolidations, or
stock distributions or dividends effected with respect to such shares after the
Original Issue Date) remain outstanding, or (C) the closing of an underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of Common Stock
for the account of the Corporation to the public at a price per share (before
deduction of underwriter discounts and commissions and offering expenses) of not
less than $13.50 per share (appropriately adjusted for any stock splits,
combinations, consolidations, or stock distributions or dividends effected with
respect to such shares after the date of the filing of this Certificate of
Incorporation) and an aggregate offering price to the public of not less than
$30,000,000 (the "Initial Public Offering").

7
<PAGE> 8

(ii) In the event of the automatic conversion of the
Preferred Stock as set forth in Section 3(b)(i)(C) above, the person(s) entitled
to receive the Common Stock issuable upon such conversion shall not be deemed to
have converted such shares until immediately prior to the closing of such sale
of securities.

(c) Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of Preferred Stock. In lieu of any fractional
shares to which the holder would otherwise be entitled, the Corporation shall
pay cash equal to such fraction multiplied by the then current fair value of the
Common Stock, as determined in good faith by the Board of Directors. Before any
holder of Preferred Stock shall be entitled to convert the same into full shares
of Common Stock and to receive certificates therefor, such holder shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the Corporation or of any transfer agent for the Preferred Stock, and shall
give written notice to the Corporation at such office of the election to convert
the same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued; provided, however,
that in the event of an automatic conversion pursuant to Section 3(b)(i), the
outstanding shares of Preferred Stock shall be converted automatically without
any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Corporation or its
transfer agent. The Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such automatic conversion
unless the certificates evidencing such shares of Preferred Stock are either
delivered to the Corporation or its transfer agent as provided above, or the
holder notifies the Corporation or its transfer agent that such certificates
have been lost, stolen or destroyed and executes an agreement satisfactory to
the Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificates. The Corporation shall, as soon as practicable
after such delivery, or such agreement and indemnification in the case of a lost
certificate, issue and deliver at such office to such holder of Preferred Stock,
a certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid and a check payable to the holder in
the amount of any cash amounts payable as the result of a conversion into
fractional shares of Common Stock. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the shares of Preferred Stock to be converted, or in the case of automatic
conversion on the record date for such conversion, which shall not be earlier
than the date notice of conversion is received by holders, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.

(d) Adjustments to Conversion Price for Stock Splits,
Distributions and Recapitalizations.

(i) Stock Splits, Subdivisions, Dividends and Distributions.
In the event this Corporation should at any time or from time to time after the
Original Issue

8
<PAGE> 9

Date (as defined below), fix a record date for the effectuation of a split or
subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the Conversion
Price in effect for each series of Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of Preferred Stock shall be increased in proportion to such increase
of the aggregate of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents.

(ii) Combinations. If the number of shares of Common Stock
outstanding at any time after the Original Issue Date is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination (or the date of such combination if no record
date is fixed), the Conversion Price in effect for each series of Preferred
Stock shall be appropriately increased so that the number of shares of Common
Stock issuable on conversion of each share of Preferred Stock shall be decreased
in proportion to such decrease in outstanding shares.

(iii) Other Distributions. In the event this Corporation
shall at any time or from time to time after the Original Issue Date, fix a
record date for the determination of holders of Common Stock entitled to receive
a distribution payable in securities of the Corporation or other persons,
evidences of indebtedness issued by this Corporation or other persons, assets or
options or rights not referred to in Section 3(d)(i), then, in each such case
for the purpose of this Section 3(d)(iii), the holders of shares of Preferred
Stock shall, as of such record date, be entitled to a proportionate share of any
such distribution as though they were the holders of the number of shares of
Common Stock of the Corporation into which their shares of Preferred Stock are
convertible as of such record date.

(iv) Recapitalization. If at any time or from time to time
there shall be a recapitalization of the Common Stock whereby the Common Stock
issuable upon conversion of the Preferred Stock shall be changed into the same
or a different number of shares of any other class or classes of stock, whether
by reorganization, reclassification or otherwise, (other than a subdivision,
dividend, combination or merger or sale of assets transaction provided for
elsewhere in this Section 3), provision shall be made so that the holders of the
Preferred Stock shall thereafter be entitled to receive upon conversion of the
shares of Preferred Stock the number of shares of stock or other securities or
property of the Corporation which a holder of Common Stock deliverable upon
conversion would have been entitled to receive on such recapitalization. In any
such case, appropriate adjustment shall be made in the

9
<PAGE> 10

application of the provisions of this Section 3 with respect to the rights of
the holders of Preferred Stock after the recapitalization to the end that the
provisions of this Section 3 (including adjustment of the Conversion Price then
in effect for each series of Preferred Stock and the number of shares issuable
upon conversion of shares of Preferred Stock) shall be applicable after that
event as nearly equivalent as may be practicable.

(e) Adjustments to Conversion Price. Subject to the terms of
Section 6 hereof, the Conversion Price in effect from time to time for each
series of Preferred Stock shall be subject to adjustment in certain cases as
follows:

(i) Special Definitions. For purposes of this Section 3, the
following definitions shall apply:

(A) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities.

(B) "Original Issue Date" shall mean the date on which
the first share of such series of Preferred Stock was first issued.

(C) "Convertible Securities" shall mean any evidences of
indebtedness, Preferred Stock or other securities convertible into or
exchangeable for Common Stock.

(D) "Additional Shares of Common" shall mean all shares
of Common Stock issued (or, pursuant to Section 3(e)(iii), deemed to be issued)
by the Corporation after the Original Issue Date, other than shares of Common
Stock issued or issuable:

(1) upon conversion of shares of Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock;

(2) up to a maximum of 3,333,333 shares (as
appropriately adjusted for any stock splits, combinations, consolidations, or
stock distributions or dividends effected with respect to such shares after the
date of the filing of this Certificate of Incorporation) to officers, directors
or employees of, or consultants to, the Corporation (other than Peter Ellis or
John Bedrosian) pursuant to a stock grant, stock option plan or stock purchase
plan or other stock incentive agreement or arrangement approved by the Board of
Directors;

(3) as a dividend or distribution on Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock;

10
<PAGE> 11

(4) in connection with any transaction for which
adjustment is made pursuant to Section 3(d) hereof;

(5) upon the exercise of warrants granted incidental
to a bona fide commercial transaction (unless the grant of such warrant is
opposed by the holders of more than two-thirds of the Preferred Stock, voting
together as a single class, following notice from the Corporation to the holders
of Preferred Stock to be delivered to such holders at least ten (10) business
days prior to such grant; provided further that no notice need be given and the
holders of the Preferred Stock shall not have the right to object to the
issuance of warrants to purchase up to a maximum of 3,333 shares so long as they
are granted incidental to a bona fide commercial transaction and approved by the
Board of Directors); and

(6) any shares of Common Stock issued, issuable or,
pursuant to Section 3(e)(iii), deemed to be issued, if the holders of a majority
of the Series A Preferred Stock and Series B Preferred Stock and Series C
Preferred Stock, voting together as a class, agree in writing that such shares
shall not constitute Additional Shares of Common.

(ii) No Adjustment of Conversion Price. Subject to the terms
of Section 6 hereof, no adjustment in the Conversion Price for each series of
Preferred Stock shall be made in respect of the issuance of Additional Shares of
Common unless the consideration per share for an Additional Share of Common
issued or deemed to be issued by the Corporation is less than the Conversion
Price for such series in effect on the date of, and immediately prior to, such
issue.

(iii) Options and Convertible Securities. In the event the
Corporation at any time or from time to time after the Original Issue Date shall
issue any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number, including
provisions designed to protect against dilution) of Common Stock issuable upon
the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common issued as of the time of such
issue or, in case such a record date shall have been fixed, as of the close of
business on such record date, provided that Additional Shares of Common shall
not be deemed to have been issued unless the consideration per share (determined
pursuant to Section 3(e)(v) hereof) of such Additional Shares of Common would be
less than the Conversion Price for such series of Preferred Stock in effect on
the date of, and immediately prior to, such issue, or such record date, as the
case may be, and provided further that in any such case in which Additional
Shares of Common are deemed to be issued:

11
<PAGE> 12

(A) no further adjustment in the Conversion Price for a
series of Preferred Stock shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;

(B) if such Options or Convertible Securities by their
terms provide, with the passage of time, by reason of antidilution provisions or
otherwise, for any change in the consideration payable to the Corporation, or
change in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such change
becoming effective, be recomputed to reflect an appropriate increase or decrease
reflecting such change insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities; provided, however,
that no such adjustment of the Conversion Price shall affect Common Stock
previously issued upon conversion of the Preferred Stock;

(C) upon the expiration or cancellation of any such
Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Conversion Price computed
upon the original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon such
expiration or cancellation, be recomputed as if:

1) in the case of Convertible Securities or Options
for Common Stock, the only Additional Shares of Common issued were shares of
Common Stock, if any, actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the Corporation for
the issue of all such Options, whether or not exercised, plus the consideration
actually received by the Corporation upon such exercise, or for the issue of all
Convertible Securities which were actually converted or exchanged plus the
additional consideration, if any, actually received by the Corporation upon such
conversion or exchange; and

2) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and the
consideration received by the Corporation for the Additional Shares of Common
deemed to have been then issued was the consideration actually received the
Corporation for the issue of all such Options, whether or not exercised, plus
the consideration deemed to have been received by the Corporation upon the issue
of the Convertible Securities with respect to which such Options were actually
exercised; and

<PAGE> 13

(D) no readjustment pursuant to clause (B) or (C) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (1) the applicable Conversion Price on the original
adjustment date, or (2) the applicable Conversion Price that would have resulted
from any issuance of Additional Shares of Common between the original adjustment
date and such readjustment date.

(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common. In the event this Corporation shall issue
Additional Shares of Common (including Additional Shares of Common deemed to be
issued pursuant to Section 3(e)(iii)) for a consideration per share less than
the Conversion Price for a particular series of Preferred Stock in effect on the
date of, and immediately prior to, such issue, then and in such event, the
Conversion Price of such series of Preferred Stock shall be reduced,
concurrently with such issue, to a price (calculated to the nearest cent)
determined by multiplying such Conversion Price by a fraction, (x) the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of shares of Common Stock which the
aggregate consideration received by the Corporation for the total number of
Additional Shares of Common so issued would purchase at such Conversion Price,
and (y) the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of such Additional
Shares of Common so issued; provided, that, for the purposes of this Section
3(e)(iv), all shares of Common Stock issuable upon exercise, conversion or
exchange of outstanding Options or Convertible Securities or Preferred Stock
shall be deemed to be outstanding; and, further provided, that immediately after
any Additional Shares of Common are deemed issued pursuant to Section 3(e)(iii),
such Additional Shares of Common shall be deemed to be outstanding.

(v) Determination of Consideration. For purposes of this
Section 3(e), the consideration received by the Corporation for the issue of any
Additional Shares of Common shall be computed as follows:

(A) Such consideration shall:

1) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Corporation excluding amounts paid
or payable for accrued interest or accrued dividends;

2) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith in the exercise of reasonable business judgment by the
Board of Directors of the Corporation; and

3) in the event Additional Shares of Common are
issued together with other shares or securities or other assets of the
Corporation for

13
<PAGE> 14

consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (1) and (2) above, as determined in
good faith by the Board of Directors of the Corporation.

(B) Options and Convertible Securities.

1) The consideration per share received by the
Corporation for Additional Shares of Common deemed to have been issued pursuant
to Section 3(e)(iii) shall be the sum of (x) the total amount, if any, received
or receivable by the Corporation as consideration for the issue of such Options
or Convertible Securities plus (y) the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration, including any provisions designed to protect against dilution)
payable to the Corporation upon the exercise of such Options or the conversion
or exchange of such Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible Securities.

2) The number of Additional Shares of Common deemed
to have been issued pursuant to Section 3(e)(iii) hereof shall be the maximum
number of shares of Common Stock (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such number, including any provisions designed to protect against
dilution) issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.

(f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price in effect for a series of
Preferred Stock pursuant to this Section 3, the Corporation at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each holder of shares of such series of Preferred Stock a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Corporation
shall, upon the written request at any time of any holder of Preferred Stock,
furnish or cause to be furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) the Conversion Price at the time in
effect, and (iii) the number of shares of Common Stock and the amount, if any,
of other property which at the time would be received upon the conversion of a
share of such series of Preferred Stock.

Section 4. Redemption. The Preferred Stock shall not be redeemable.

14
<PAGE> 15

Section 5. Voting Rights.

(a) General. Except as otherwise required by law or as set forth
herein, each holder of shares of Preferred Stock shall be entitled to vote in
all matters for which shareholders are entitled to vote, that number of votes
equal to the whole number of shares of the Corporation's Common Stock issued or
issuable upon the conversion of such holder's shares of Preferred Stock
immediately after the close of business on the record date fixed for a
shareholder meeting or the effective date of such written consent.

(b) Board of Directors. The authorized number of directors of the
Corporation shall be set forth in the Bylaws of the Corporation and may be
increased or decreased by an amendment to such Bylaws in accordance with their
provisions. As long as 600,000 or more of the shares (appropriately adjusted for
any stock splits, combinations, consolidations, or stock distributions or
dividends effected with respect to such shares after the Original Issue Date) of
Series A Preferred Stock remain outstanding, the holders of shares of Series A
Preferred Stock, voting separately as a class, shall be entitled to elect one
(1) director of the Corporation at each annual election of directors (and to
fill any vacancies with respect thereto); provided that if the authorized number
of directors is increased to greater than five (5) members, the holders of
shares of Series A Preferred Stock, voting separately as a class, shall be
entitled to elect two (2) directors at each annual election of directors (and to
fill any vacancies with respect thereto).

Section 6. Covenants. In addition to any other rights provided by
law, so long as at least an aggregate of 600,000 shares of Preferred Stock are
outstanding, this Corporation shall not, without first obtaining the affirmative
vote or written consent of the holders of two-thirds of the outstanding shares
of the Preferred Stock, voting as a single class:

(a) amend or repeal any provision of, or add any provision to,
this Corporation's Certificate of Incorporation or Bylaws if such action would
alter or change the preferences, rights, privileges, or powers of, or the
restrictions provided for the benefit of, any series of Preferred Stock in an
adverse manner;

(b) increase the number of directors to greater than ten (10)
members;

(d) sell any shares for consideration other than cash or the
forgiveness of debt;

(e) authorize any new shares or reclassify any Common Stock into
shares of any class of stock having any preference or priority as to dividends,
redemption rights, liquidation preferences, conversion rights, voting rights or
rights otherwise superior to or on a parity with any such preference or priority
of any series of outstanding Preferred Stock;

15
<PAGE> 16

(f) sell or otherwise dispose of all or substantially all of the
assets or business of the Corporation;

(g) effect a consolidation, reorganization or merger (including,
without limitation, the issuance of any shares of stock, or rights to acquire
shares of stock, which would result in the stockholders of the Corporation
immediately prior to such issuance owning less than two-thirds of the voting
power of the Corporation on a fully diluted basis after such issuance) of the
Corporation with or into any other corporation;

(h) declare or pay any dividends, in cash or otherwise, or make
any distributions to its shareholders, or purchase, redeem or otherwise acquire
any of its outstanding capital stock, or set apart assets for a sinking or other
analogous fund for the purchase, redemption, retirement or other acquisition of,
any shares of its capital stock;

(i) purchase, acquire or agree to purchase or acquire or invest
in the business, property or assets of, or any securities of, any other company
or business, except that the Corporation may (A) invest its excess cash in Cash
Equivalents and (B) make such purchase, acquisition or investment with respect
to a wholly-owned subsidiary of the Corporation to the extent otherwise
permitted hereunder;

(j) create, assume, incur, issue, guarantee or otherwise become
directly or indirectly liable in respect of any Indebtedness;

(k) sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any properties or assets from, or enter
into any contract, agreement, understanding, loan, advance or guarantee with, or
for the benefit of, any Affiliate other than in the ordinary course of business.

For purposes of this Section 6:

1) the term "Cash Equivalents" means (i) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof having maturities of not more than six months
from the date of acquisition, (ii) certificates of deposit or Eurodollar time
deposits having maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500 million and a Keefe Bank Watch Rating of "B" or
better, (iii) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (i) and (ii) entered
into with any financial institution meeting the qualifications described in
clause (ii) above, and (iv) commercial paper of any person that is not a
subsidiary or an Affiliate of the Corporation having the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's Ratings
Group, and maturing within six months after the date of acquisition;

16
<PAGE> 17

2) the term "Indebtedness" means, with respect to any person
or entity, calculated without duplication, any indebtedness of such person or
entity, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or bankers' acceptances or
representing capital lease obligations or the balance deferred and unpaid of the
purchase price of any property, or guarantees of any of the foregoing, except
any such balance that constitutes an accrued expense or trade payable to the
extent that any such accrued expense or trade payable is not more than 90 days
overdue or is otherwise being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted; and

3) the term "Affiliate" means, with respect to any person or
entity, any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with, such person or
entity (for purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a person or entity, whether
through the ownership of voting securities, by agreement or otherwise); provided
that no holder of Preferred Stock (or Common Stock issued upon conversion
thereof) shall be deemed to be an Affiliate.

Notwithstanding the foregoing, the Corporation may undertake an
initial public offering unless the initial public offering is opposed in writing
by the holders of two-thirds of the Preferred Stock, voting as a single class,
following notice to such holders at least 30 days prior to the filing of a
registration statement with the Securities and Exchange Commission relating to
such initial public offering. In addition, in connection with any such initial
public offering, unless the holders of two-thirds of the Preferred Stock shall
have opposed such initial public offering as aforesaid, the holders of the
Preferred Stock shall not have a separate vote as a single class with respect to
amendments to the Certificate of Incorporation in connection with such initial
public offering to increase the authorized Common Stock, create a class of
undesignated Preferred Stock, or effect a stock split, which amendments are
proposed in connection with such initial public offering.

Notwithstanding any other provision herein, the requirement of the
approval of the holders of two-thirds of the holders of Preferred Stock in this
Section 6 shall not be amended or modified without the unanimous approval of the
holders of Preferred Stock.

Section 7. Reacquired Shares. Any shares of Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.

17
<PAGE> 18

Section 8. Status of Converted or Redeemed Stock. In the event any
shares of Preferred Stock shall be redeemed or converted, the shares so
converted or redeemed shall be canceled and shall not have the status of
authorized but unissued shares of Preferred Stock and shall not be issuable by
the Corporation and the Certificate of Incorporation of this Corporation shall
be amended to effect the corresponding reduction in the Corporation's capital
stock.

ARTICLE V

The Corporation is to have perpetual existence.

ARTICLE VI

The election of directors need not be by written ballot unless a
stockholder demands election by written ballot at a meeting of stockholders and
before voting begins or unless the Bylaws of the Corporation shall so provide.

ARTICLE VII

The number of directors which constitute the whole Board of
Directors of the Corporation shall be designated in the Bylaws of the
Corporation.

ARTICLE VIII

In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly authorized to
adopt, alter, amend or repeal the Bylaws of the Corporation.

ARTICLE IX

(A) No director shall be personally liable to the Corporation
or any stockholder for monetary damages for breach of fiduciary duty as a
director, except for any matter in respect of which such director (1) shall be
liable under Section 174 of the General Corporation Law of the State of Delaware
or any amendment thereto or successor provision thereto, or (2) shall be liable
by reason that, in addition to any and all other requirements for liability, he:

(i) shall have breached his duty of loyalty to the
Corporation or its stockholders;

(ii) shall not have acted in good faith or, in failing to
act, shall not have acted in good faith;

18
<PAGE> 19

(iii) shall have acted in a manner involving intentional
misconduct or a knowing violation of law or, in failing to act, shall have acted
in a manner involving intentional misconduct or a knowing violation of law; or

(iv) shall have derived an improper personal benefit.

If the Delaware General Corporation Law is amended after the
date hereof to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.

(B) The Corporation shall indemnify to the fullest extent
permitted under and in accordance with the laws of the State of Delaware any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

(C) Expenses incurred in defending a civil, criminal,
administrative or investigative action, suit or proceeding shall (in the case of
any action, suit or proceeding against a director of the Corporation) or may (in
the case of any action, suit or proceeding against an officer, employee or
agent) be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding as authorized by the Board upon receipt of an
undertaking by or on behalf of the indemnified person to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article IX.

(D) The indemnification and other rights set forth in this
Article IX shall not be exclusive of any provisions with respect thereto in the
By-Laws or any other contract or agreement between the Corporation and any
officer, director, employee or agent of the Corporation.

(E) Neither the amendment nor repeal of this Article IX,
paragraph (B), (C) or (D), nor the adoption of any provision of this Certificate
of Incorporation inconsistent with Article IX, paragraph (B), (C) or (D), shall
eliminate or reduce the effect of this Article IX, paragraphs (B), (C) or (D),
in respect of any matter occurring before such amendment, repeal or adoption of
an inconsistent provision or in respect of any cause of

19
<PAGE> 20

action, suit or claim relating to any such matter which would have given rise to
a right of indemnification or right to receive expenses pursuant to this Article
IX, paragraph (B), (C) or (D), if such provision had not been so amended or
repealed or if a provision inconsistent therewith had not been so adopted.

ARTICLE X

At the election of directors of the Corporation, each holder of
stock of any class or series shall be entitled to one vote for each share held.
No stockholder will be permitted to cumulate votes at any election of directors.

ARTICLE XI

Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the laws of the State of Delaware)
outside of the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the Bylaws of the Corporation.

ARTICLE XII

Effective upon the Initial Public Offering (as defined in Article IV
Section 3(b)(i) above), the stockholders of the Corporation may not take action
by written consent without a meeting but must take such action at a duly called
annual or special meeting of stockholders.

ARTICLE XIII

Subject to the limitations set forth herein, the Corporation
reserves the right to amend, alter, change or repeal any provision contained in
this Certificate of Incorporation, in the manner now or hereafter prescribed by
the laws of the State of Delaware, and all rights conferred herein are granted
subject to this reservation."

<PAGE> 1
EXHIBIT 5.1

PAUL, HASTINGS, JANOFSKY & WALKER LLP
399 Park Avenue
New York, New York 10022

February 8, 1999

autobytel.com inc.
18872 MacArthur Boulevard
Irvine, California 92612-1400

Re: autobytel.com inc.
Registration Statement on Form S-1

Ladies and Gentlemen:

This opinion is delivered in our capacity as counsel to
autobytel.com inc., a Delaware corporation ("the Company"), in connection with
the Company's registration statement on Form S-1 (the "Registration Statement")
filed with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration by the Company of up to 5,175,000 shares of common stock, par value
$.001 per share (the "Shares").

In connection with this opinion, we have examined copies or
originals of such documents, resolutions, certificates and instruments of the
Company as we have deemed necessary to form a basis for the opinion hereinafter
expressed. In addition, we have reviewed such other instruments and documents as
we have deemed necessary to form a basis for the opinion hereinafter expressed.
In our examination of the foregoing, we have assumed, without independent
investigation, (i) the genuineness of all signatures, and the authority of all
persons or entities signing all documents examined by us and (ii) the
authenticity of all documents submitted to us as originals and the conformity to
authentic original documents of all copies submitted to us as certified,
conformed or photostatic copies. With regard to certain factual matters, we have
relied, without independent investigation or verification, upon statements and
representations of representatives of the Company.

Based upon and subject to the foregoing, we are of the opinion,
as of the date hereof, that the Shares, when issued and delivered in the manner
set forth in the Registration Statement, will be validly issued, fully paid and
nonassessable.

We hereby consent to being named as counsel to the Company in the
Registration Statement, to the references therein to our firm under the caption
"Legal Matters" and to the inclusion of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Securities Act or the rules and regulations of the Commission thereunder.

Very truly yours,

/s/ Paul, Hastings, Janofsky & Walker LLP

<PAGE> 1

EXHIBIT 10.5

AUTO-BY-TEL CORPORATION

1996 STOCK OPTION PLAN

1. Purposes of the Plan. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or nonstatutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder.

2. Definitions. As used herein, the following definitions shall apply:

(a) "Administrator" means the Board or any of its Committees appointed
pursuant to Section 4 of the Plan.

(b) "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code and the applicable laws of any
foreign country or jurisdiction where Options will be or are being granted under
the Plan.

(d) "Code" means the Internal Revenue Code of 1986, as amended.

(e) "Committee" means a Committee appointed by the Board of Directors
in accordance with Section 4 of the Plan.

(f) "Common Stock" means the Common Stock of the Company.

(g) "Company" means Auto-By-Tel Corporation, a Delaware corporation.

(h) "Consultant" means any person who is engaged by the Company or any
Parent or Subsidiary to render consulting or advisory services and is
compensated for such services, and any director of the Company whether
compensated for such services or not. If and in the event the Company registers
any class of any equity security pursuant to the Exchange Act, the term
Consultant shall thereafter not include directors who are not compensated for
their services or are paid only a director's fee by the Company.

(i) "Continuous Status as an Employee or Consultant" means that the
employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. Continuous Status as an Employee
or Consultant shall not be considered interrupted in

<PAGE> 2

the case of (i) any leave of absence approved by the Company or (ii) transfers
between locations of the Company or between the Company, its Parent, any
Subsidiary, or any successor. A leave of absence approved by the Company shall
include sick leave, military leave, or any other personal leave approved by an
authorized representative of the Company. For purposes of Incentive Stock
Options, no such leave may exceed 90 days, unless reemployment upon expiration
of such leave is guaranteed by statute or contract, including Company policies.
If reemployment upon expiration of a leave of absence approved by the Company is
not so guaranteed, on the 181st day of such leave any Incentive Stock Option
held by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Nonstatutory Stock Option.

(j) "Employee" means any person, including Officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.

(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

(l) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;

(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of determination, or;

(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.

(m) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

(n) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

(o) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

-2-
<PAGE> 3

(p) "Option" means a stock option granted pursuant to the Plan.

(q) "Optioned Stock" means the Common Stock subject to an Option.

(r) "Optionee" means an Employee or Consultant who receives an Option.

(s) "Parent" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.

(t) "Plan" means this 1996 Stock Option Plan.

(u) "Section 16(b)" means Section 16(b) of the Securities Exchange Act
of 1934, as amended.

(v) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 below.

(w) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 1,075,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.

If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an option exchange program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated); provided,
however, that Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if unvested Shares are repurchased by the Company at
their original purchase price, and the original purchaser of such Shares did not
receive any benefits of ownership of such Shares, such Shares shall become
available for future grant under the Plan. For purposes of the preceding
sentence, voting rights shall not be considered a benefit of Share ownership.

4. Administration of the Plan.

(a) Initial Plan Procedure. Prior to the date, if any, upon which the
Company becomes subject to the Exchange Act, the Plan shall be administered by
the Board or a committee appointed by the Board.

(b) Plan Procedure after the Date, if any, upon Which the Company
becomes Subject to the Exchange Act.

-3-
<PAGE> 4

(i) Administration with Respect to Directors and Officers. With
respect to grants of Options to Employees who are also Officers or directors of
the Company, the Plan shall be administered by (A) the Board if the Board may
administer the Plan in compliance with the rules under Rule 16b-3 promulgated
under the Exchange Act or any successor thereto ("Rule 16b-3") relating to the
disinterested administration of employee benefit plans under which Section 16(b)
exempt discretionary grants and awards of equity securities are to be made, or
(B) a Committee designated by the Board to administer the Plan, which Committee
shall be constituted to comply with the rules under Rule 16b-3 relating to the
disinterested administration of employee benefit plans under which Section 16(b)
exempt discretionary grants and awards of equity securities are to be made. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. From time to time the Board may increase
the size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
rules under Rule 16b-3 relating to the disinterested administration of employee
benefit plans under which Section 16(b) exempt discretionary grants and awards
of equity securities are to be made.

(ii) Multiple Administrative Bodies. If permitted by Rule 16b-3,
the Plan may be administered by different bodies with respect to directors,
non-director Officers and Employees who are neither directors nor Officers.

(iii) Administration With Respect to Consultants and Other
Employees. With respect to grants of Options to Employees or Consultants who are
neither directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a committee designated by the Board, which committee shall
be constituted in such a manner as to satisfy Applicable Laws. Once appointed,
such Committee shall continue to serve in its designated capacity until
otherwise directed by the Board. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
Applicable Laws.

(c) Powers of the Administrator. Subject to the provisions of the Plan
and, in the case of a Committee, the specific duties delegated by the Board to
such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any stock exchange upon which the Common
Stock is listed, the Administrator shall have the authority, in its discretion:

(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(l) of the Plan;

(ii) to select the Consultants and Employees to whom Options may
from time to time be granted hereunder;

-4-
<PAGE> 5

(iii) to determine whether and to what extent Options are granted
hereunder;

(iv) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;

(v) to approve forms of agreement for use under the Plan;

(vi) to determine the terms and conditions of any award granted
hereunder;

(vii) to determine whether and under what circumstances an Option
may be settled in cash under subsection 9(f) instead of Common Stock;

(viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option has declined since the date the Option was granted; and

(ix) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.

(d) Effect of Administrator's Decision. All decisions, determinations
and interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options.

5. Eligibility.

(a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if otherwise
eligible, be granted additional Options.

(b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

(c) The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his or her right or the Company's right to
terminate his or her employment or consulting relationship at any time, with or
without cause.

-5-
<PAGE> 6

(d) Upon the Company or a successor corporation issuing any class of
common equity securities required to be registered under Section 12 of the
Exchange Act or upon the Plan being assumed by a corporation having a class of
common equity securities required to be registered under Section 12 of the
Exchange Act, the following limitations shall apply to grants of Options to
Employees:

(i) No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 25,000 Shares.

(ii) In connection with his or her initial employment, an
Employee may be granted Options to purchase up to an additional 100,000 Shares
which shall not count against the limit set forth in subsection (i) above.

(iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 11.

(iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 11), the cancelled Option will be counted against the limit
set forth in subsection (i) above. For this purpose, if the exercise price of an
Option is reduced, the transaction will be treated as a cancellation of the
Option and the grant of a new Option.

6. Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the shareholders of
the Company, as described in Section 17 of the Plan. It shall continue in effect
for a term of ten (10) years unless sooner terminated under Section 13 of the
Plan.

7. Term of Option. The term of each Option shall be the term stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.

8. Option Exercise Price and Consideration.

(a) The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:

(i) In the case of an Incentive Stock Option

-6-
<PAGE> 7

(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.

(B) granted to any Employee other than an Employee described
in the preceding paragraph, the per Share exercise price shall be no less than
100% of the Fair Market Value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option

(A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of the grant.

(B) granted to any person, the per Share exercise price
shall be no less than 85% of the Fair Market Value per Share on the date of
grant.

(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option have been owned by the Optionee for more
than six months on the date of surrender and (y) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (6) any combination of the foregoing methods of payment. In
making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.

9. Exercise of Option.

(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan, but in no case at a rate of less than 20% per year over five (5)
years from the date the Option is granted.

An Option may not be exercised for a fraction of a Share.

-7-
<PAGE> 8

An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.

Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

(b) Termination of Employment or Consulting Relationship. In the event
of termination of an Optionee's Continuous Status as an Employee or Consultant
with the Company (but not in the event of an Optionee's change of status from
Employee to Consultant (in which case an Employee's Incentive Stock Option shall
automatically convert to a Nonstatutory Stock Option on the date three (3)
months and one day from the date of such change of status) or from Consultant to
Employee), such Optionee may, but only within such period of time as is
determined by the Administrator, of at least thirty (30) days, with such
determination in the case of an Incentive Stock Option not exceeding three (3)
months after the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that Optionee was entitled
to exercise it at the date of such termination. To the extent that Optionee was
not entitled to exercise the Option at the date of such termination, or if
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.

(c) Disability of Optionee. In the event of termination of an
Optionee's consulting relationship or Continuous Status as an Employee as a
result of his or her disability, Optionee may, but only within twelve (12)
months from the date of such termination (and in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination; provided, however, that if such disability is
not a "disability" as such term is defined in Section 22(e)(3) of the Code, in
the case of an Incentive Stock Option such Incentive Stock Option shall
automatically convert to a Nonstatutory Stock Option on the day three months and
one day following such termination. To the extent that Optionee is not entitled
to exercise the Option at the date of termination, or if Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

-8-
<PAGE> 9

(d) Death of Optionee. In the event of the death of an Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

(e) Rule 16b-3. Options granted to persons subject to Section 16(b) of
the Exchange Act must comply with Rule 16b-3 and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.

(f) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

10. Non-Transferability of Options. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

11. Adjustments Upon Changes in Capitalization or Merger.

(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.

-9-
<PAGE> 10

(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the extent
it has not been previously exercised, the Option will terminate immediately
prior to the consummation of such proposed action.

(c) Merger. In the event of a merger of the Company with or into
another corporation, the Option may be assumed or an equivalent option may be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation. If, in such event, the Option is not assumed or
substituted, the Option shall terminate as of the date of the closing of the
merger. For the purposes of this paragraph, the Option shall be considered
assumed if, following the merger, the option confers the right to purchase, for
each Share of Optioned Stock subject to the Option immediately prior to the
merger, the consideration (whether stock, cash, or other securities or property)
received in the merger by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger was not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option for
each Share of Optioned Stock subject to the Option to be solely common stock of
the successor corporation or its Parent equal in fair market value to the per
share consideration received by holders of Common Stock in the merger.

12. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.

13. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the NASD or an established stock exchange), the
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.

(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by the Optionee
and the Company.

-10-
<PAGE> 11

14. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.

15. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

16. Agreements. Options shall be evidenced by written agreements in such
form as the Administrator shall approve from time to time.

17. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under Applicable Laws and the rules of any
stock exchange upon which the Common Stock is listed.

18. Information to Optionees and Purchasers. The Company shall provide to
each Optionee, not less frequently than annually, copies of annual financial
statements. The Company shall also provide such statements to each individual
who acquires Shares pursuant to the Plan while such individual owns such Shares.
The Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.

-11-
<PAGE> 12
AUTO-BY-TEL CORPORATION

1996 STOCK PLAN

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT

[Optionee's Name and Address]

You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

Date of Grant FIELD(2)
--------
Vesting Commencement Date FIELD(2)
--------
Exercise Price per Share $FIELD(3)
--------
Total Number of Shares Granted FIELD(4)
--------
Total Exercise Price $FIELD(5)
--------
Type of Option: -- Incentive Stock Option

-- Nonstatutory Stock Option

Term/Expiration Date: FIELD(6)

Vesting Schedule:

You may exercise this Option, in whole or in part, according to the
following vesting schedule:

One-third (1/3) of the Shares subject to the Option shall vest on October
31, 1996, one-third (1/3) of the Shares subject to the Option shall vest one
year from the Vesting Commencement Date, and the remaining one-third (1/3) of
the Shares subject to the Option shall vest two years from the Vesting
Commencement Date.

<PAGE> 13

Termination Period:

You may exercise this Option for three months after your employment or
consulting relationship with the Company terminates, or for such longer period
upon your death or disability as provided in the Plan. If your status changes
from Employee to Consultant or Consultant to Employee, this Option Agreement
shall remain in effect. In no case may you exercise this Option after the
Term/Expiration Date as provided above.

II. AGREEMENT

1. Grant of Option. Auto-By-Tel Corporation, a Delaware corporation (the
"Company"), hereby grants to the Optionee named in the Notice of Grant (the
"Optionee"), an option (the "Option") to purchase the total number of shares of
Common Stock (the "Shares") set forth in the Notice of Grant, at the exercise
price per share set forth in the Notice of Grant (the "Exercise Price") subject
to the terms, definitions and provisions of the 1996 Stock Plan (the "Plan")
adopted by the Company, which is incorporated herein by reference. Unless
otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Option Agreement.

If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds
the $100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").

2. Exercise of Option.

(a) Right to Exercise. This Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the applicable provisions of the Plan and this Option Agreement. In the
event of Optionee's death, disability or other termination of the employment or
consulting relationship, this Option shall be exercisable in accordance with the
applicable provisions of the Plan and this Option Agreement.

(b) Method of Exercise. This Option shall be exercisable by written
notice (in the form attached as Exhibit A) which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as may be
required by the Company pursuant to the provisions of the Plan. Such written
notice shall be signed by the Optionee and shall be delivered in person or by
certified mail to the Secretary of the Company. The written notice shall be
accompanied by payment of the Exercise Price. This Option shall be deemed to be
exercised upon receipt by the Company of such written notice accompanied by the
Exercise Price.

-2-
<PAGE> 14

No Shares will be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares may then be
listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.

3. Optionee's Representations. In the event the Shares purchasable pursuant
to the exercise of this Option have not been registered under the Securities Act
of 1933, as amended, at the time this Option is exercised, Optionee shall, if
required by the Company, concurrently with the exercise of all or any portion of
this Option, deliver to the Company his or her Investment Representation
Statement in the form attached hereto as Exhibit B, and shall read the
applicable rules of the Commissioner of Corporations attached to such Investment
Representation Statement.

4. Lock-Up Period. Optionee hereby agrees that if so requested by the
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
longer period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall apply only to the
first registration statement of the Company to become effective under the
Securities Act that includes securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such Market Standoff Period.

5. Method of Payment. Payment of the Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:

(a) cash;

(b) check;

(c) surrender of other shares of Common Stock of the Company which (A)
in the case of Shares acquired pursuant to the exercise of a Company option,
have been owned by the Optionee for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised; or

(d) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the Exercise Price.

-3-
<PAGE> 15

6. Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board.

7. Termination of Relationship. In the event an Optionee's Continuous Status
as an Employee or Consultant terminates, Optionee may, to the extent otherwise
so entitled at the date of such termination (the "Termination Date"), exercise
this Option during the Termination Period set out in the Notice of Grant. To the
extent that Optionee was not entitled to exercise this Option at the date of
such termination, or if Optionee does not exercise this Option within the time
specified herein, the Option shall terminate.

8. Disability of Optionee. Notwithstanding the provisions of Section 6
above, in the event of termination of an Optionee's consulting relationship or
Continuous Status as an Employee as a result of his or her disability, Optionee
may, but only within twelve (12) months from the date of such termination (and
in no event later than the expiration date of the term of such Option as set
forth in the Option Agreement), exercise the Option to the extent otherwise
entitled to exercise it at the date of such termination; provided, however, that
if such disability is not a "disability" as such term is defined in Section
22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive
Stock Option shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option on the day three months
and one day following such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

9. Death of Optionee. In the event of termination of Optionee's Continuous
Status as an Employee or Consultant as a result of the death of Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the date of expiration of the term of this
Option as set forth in Section 10 below), by Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent the Optionee could exercise the Option at the date of death.

10. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.

11. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Section 7 of the Plan regarding Options designated as

-4-
<PAGE> 16

Incentive Stock Options and Options granted to more than ten percent (10%)
shareholders shall apply to this Option.

12. Tax Consequences. Set forth below is a brief summary as of the date of
this Option of some of the federal and state tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.

(a) Exercise of ISO. If this Option qualifies as an ISO, there will be
no regular federal income tax liability or state income tax liability upon the
exercise of the Option, although the excess, if any, of the Fair Market Value of
the Shares on the date of exercise over the Exercise Price will be treated as an
adjustment to the alternative minimum tax for federal tax purposes and may
subject the Optionee to the alternative minimum tax in the year of exercise.

(b) Exercise of ISO Following Disability. If the Optionee's Continuous
Status as an Employee or Consultant terminates as a result of disability that is
not total and permanent disability as defined in Section 22(e)(3) of the Code,
to the extent permitted on the date of termination, the Optionee must exercise
an ISO within three months of such termination for the ISO to be qualified as an
ISO.

(c) Exercise of Nonstatutory Stock Option. There may be a regular
federal income tax liability and state income tax liability upon the exercise of
a Nonstatutory Stock Option. The Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price. If Optionee is an Employee or a former Employee, the Company
will be required to withhold from Optionee's compensation or collect from
Optionee and pay to the applicable taxing authorities an amount in cash equal to
a percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.

(d) Disposition of Shares. In the case of an NSO, if Shares are held
for at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal and state income tax purposes. In
the case of an ISO, if Shares transferred pursuant to the Option are held for at
least one year after exercise and are disposed of at least two years after the
Date of Grant, any gain realized on disposition of the Shares will also be
treated as long-term capital gain for federal and state income tax purposes. If
Shares purchased under an ISO are disposed of within such one-year period or
within two years after the Date of Grant, any gain realized on such disposition
will be treated as compensation income (taxable at ordinary income rates) to the
extent of the difference between the Exercise Price and the lesser of (1) the
Fair Market Value of the Shares on the date of exercise, or (2) the sale price
of the Shares. Any additional gain will be taxed as capital gain, short-term or
long-term depending on the period that the ISO Shares were held.

-5-
<PAGE> 17

(e) Notice of Disqualifying Disposition of ISO Shares. If the Option
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.

13. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by Delaware law except for that body of law
pertaining to conflict of laws.

AUTO-BY-TEL CORPORATION
a Delaware corporation

By:
--------------------

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL
OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL
IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT
CAUSE.

-6-
<PAGE> 18

Optionee acknowledges receipt of a copy of the Plan and represents that he
is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof. Optionee has reviewed
the Plan and this Option in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option and fully understands all
provisions of the Option. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon
any questions arising under the Plan or this Option. Optionee further agrees to
notify the Company upon any change in the residence address indicated below.

Dated:
--------------------------- -------------------------
Optionee

Residence Address:
-------------------------

-------------------------

-7-
<PAGE> 19

EXHIBIT A

1996 STOCK PLAN

EXERCISE NOTICE

Auto-By-Tel Corporation
18872 MacArthur Boulevard, Suite 200
Irvine, CA 92612-1400

Attention: Secretary

1. Exercise of Option. Effective as of today,________________,19 __, the
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_______________ shares of the Common Stock (the "Shares") of Auto-By-Tel
Corporation (the "Company") under and pursuant to the 1996 Stock Option Plan
(the "Plan") and the [_] Incentive [_] Nonstatutory Stock Option Agreement dated
_______________, 19__ (the "Option Agreement").

2. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.

3. Rights as Shareholder. Until the stock certificate evidencing such Shares
is issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly after the Option
is exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in Section 12 of the Plan.

Optionee shall enjoy rights as a shareholder until such time as
Optionee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder. Upon such exercise, Optionee shall have no
further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing
the Shares so purchased to be surrendered to the Company for transfer or
cancellation.

4. Company's Right of First Refusal. Before any Shares held by Optionee or
any transferee (either being sometimes referred to herein as the "Holder") may
be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").

<PAGE> 20

(a) Notice of Proposed Transfer. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer such Shares; (ii) the name of
each proposed purchaser or other transferee ("Proposed Transferee"); (iii) the
number of Shares to be transferred to each Proposed Transferee; and (iv) the
bona fide cash price or other consideration for which the Holder proposes to
transfer the Shares (the "Offered Price"), and the Holder shall offer the Shares
at the Offered Price to the Company or its assignee(s).

(b) Exercise of Right of First Refusal. At any time within thirty (30)
days after receipt of the Notice, the Company and/or its assignee(s) may, by
giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.

(c) Purchase Price. The purchase price ("Purchase Price") for the
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.

(d) Payment. Payment of the Purchase Price shall be made, at the
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.

(e) Holder's Right to Transfer. If all of the Shares proposed in the
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice and provided further
that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section shall continue to apply to the Shares in the
hands of such Proposed Transferee. If the Shares described in the Notice are not
transferred to the Proposed Transferee within such period, a new Notice shall be
given to the Company, and the Company and/or its assignees shall again be
offered the Right of First Refusal before any Shares held by the Holder may be
sold or otherwise transferred.

(f) Exception for Certain Family Transfers. Anything to the contrary
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so

-2-
<PAGE> 21

transferred subject to the provisions of this Section, and there shall be no
further transfer of such Shares except in accordance with the terms of this
Section.

(g) Termination of Right of First Refusal. The Right of First Refusal
shall terminate as to any Shares 90 days after the first sale of Common Stock of
the Company to the general public pursuant to a registration statement filed
with and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.

5. Tax Consultation. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.

6. Restrictive Legends and Stop-Transfer Orders.

(a) Legends. Optionee understands and agrees that the Company shall
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE
ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN
THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH
MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF
THESE SHARES.

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE

-3-
<PAGE> 22

ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS
PERMITTED IN THE COMMISSIONER'S RULES.

Optionee understands that transfer of the Shares may be restricted by
Section 260.141.11 of the Rules of the California Corporations Commissioner, a
copy of which is attached to Exhibit B, the Investment Representation Statement.

(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

(c) Refusal to Transfer. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

7. Successors and Assigns. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.

8. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Optionee.

9. Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

10. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.

-4-
<PAGE> 23

11. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

12. Delivery of Payment. Optionee herewith delivers to the Company the full
Exercise Price for the Shares.

13. Entire Agreement. The Plan and Notice of Grant/Option Agreement are
incorporated herein by reference. This Agreement, the Plan, the Option Agreement
and the Investment Representation Statement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.

Submitted by: Accepted by:

OPTIONEE: FIELD(1) Auto-By-Tel Corporation

By:
- ----------------------------------- ----------------------------------
(Signature)
Title:
-------------------------------

Address: Address:

- ----------------------------------- 18872 MacArthur Boulevard, Suite 200
Irvine, CA 92612-1400

- -----------------------------------

-5-
<PAGE> 24

EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE : FIELD(1)

COMPANY : AUTO-BY-TEL CORPORATION

SECURITY : COMMON STOCK

AMOUNT :

DATE :

In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:

(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.

(c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to

<PAGE> 25

the satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the Optionee,
the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or
such longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including: (1) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, (3) the amount of Securities being
sold during any three month period not exceeding the limitations specified in
Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than two years after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than three years, the satisfaction of the conditions set forth
in sections (1), (2), (3) and (4) of the paragraph immediately above.

(e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.

(f) Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities without the consent of the Commissioner of Corporations of
California. Optionee has read the applicable Commissioner's Rules with respect
to such restriction, a copy of which is attached.

Signature of Optionee:

------------------------------------

Date:_______________________ , 19__

-2-
<PAGE> 26
ATTACHMENT 1
STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE

Title 10. Investment - Chapter 3. Commissioner of Corporations

260.141.11: Restriction on Transfer. (a) The issuer of any security
upon which a restriction on transfer has been imposed pursuant to Sections
260.102.6, 260.141.10 or 260.534 shall cause a copy of this section to be
delivered to each issuee or transferee of such security at the time the
certificate evidencing the security is delivered to the issuee or transferee.

(b) It is unlawful for the holder of any such security to consummate a
sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:

(1) to the issuer;

(2) pursuant to the order or process of any court;

(3) to any person described in Subdivision (i) of Section 25102 of
the Code or Section 260.105.14 of these rules;

(4) to the transferor's ancestors, descendants or spouse, or any
custodian or trustee for the account of the transferor or the
transferor's ancestors, descendants, or spouse; or to a transferee by a
trustee or custodian for the account of the transferee or the
transferee's ancestors, descendants or spouse;

(5) to holders of securities of the same class of the same issuer;

(6) by way of gift or donation inter vivos or on death;

(7) by or through a broker-dealer licensed under the Code (either
acting as such or as a finder) to a resident of a foreign state,
territory or country who is neither domiciled in this state to the edge
of the broker-dealer, nor actually present in this state if the sale of
such securities is not in violation of any securities law of the foreign
state, territory or country concerned;

(8) to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or member of an underwriting syndicate
or selling group;

(9) if the interest sold or transferred is a pledge or other lien
given by the purchaser to the seller upon a sale of the security for
which the Commissioner's written consent is obtained or under this rule
not required;

(10) by way of a sale qualified under Sections 25111, 25112, 25113
or 25121 of the Code, of the securities to be transferred, provided that
no order under Section 25140 or subdivision (a) of Section 25143 is in
effect with respect to such qualification;

(11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a corporation to such
corporation;

(12) by way of an exchange qualified under Section 25111, 25112 or
25113 of the Code, provided that no order under Section 25140 or
subdivision (a) of Section 25143 is in effect with respect to such
qualification;

(13) between residents of foreign states, territories or countries
who are neither domiciled nor actually present in this state;

(14) to the State Controller pursuant to the Unclaimed Property Law
or to the administrator of the unclaimed property law of another state;
or

(15) by the State Controller pursuant to the Unclaimed Property Law
or by the administrator of the unclaimed property law of another state
if, in either such case, such person (i) discloses to potential
purchasers at the sale that transfer of the securities is restricted
under this rule, (ii) delivers to each purchaser a copy of this rule,
and (iii) advises the Commissioner of the name of each purchaser;

(16) by a trustee to a successor trustee when such transfer does not
involve a change in the beneficial ownership of the securities;

(17) by way of an offer and sale of outstanding securities in an
issuer transaction that is subject to the qualification requirement of
Section 25110 of the Code but exempt from that qualification require
ment by subdivision (f) of Section 25102; provided that any such
transfer is on the condition that any certificate evidencing the
security issued to such transferee shall contain the legend required by
this section.

(c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as follows:

"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT
THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."

<PAGE> 1
EXHIBIT 10.6

AUTO-BY-TEL CORPORATION

1996 STOCK INCENTIVE PLAN

1. Purposes of the Plan. The purposes of this Stock Plan are:

- to attract and retain the best available personnel for positions
of substantial responsibility,

- to provide additional incentive to Employees, Directors and
Consultants, and

- to promote the success of the Company's business.

Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.

2. Definitions. As used herein, the following definitions shall apply:

(a) "Administrator" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.

(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.

(d) "Code" means the Internal Revenue Code of 1986, as amended.

(e) "Committee" means a committee of Directors appointed by the Board
in accordance with Section 4 of the Plan.

(f) "Common Stock" means the Common Stock of the Company.

(g) "Company" means Auto-By-Tel Corporation, a Delaware corporation.

(h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.

<PAGE> 2

(i) "Director" means a member of the Board.

(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.

(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

(m) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.

(n) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

(o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

-2-
<PAGE> 3

(p) "Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement.

(q) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

(r) "Option" means a stock option granted pursuant to the Plan.

(s) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.

(t) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.

(u) "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.

(v) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.

(w) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

(x) "Plan" means this Auto-By-Tel Stock Incentive Plan.

(y) "Restricted Stock" means shares of Common Stock acquired pursuant
to a grant of Stock Purchase Rights under Section 11 below.

(z) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.

(aa) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

(bb) "Section 16(b)" means Section 16(b) of the Exchange Act.

(cc) "Service Provider" means an Employee, Director or Consultant.

-3-
<PAGE> 4

(dd) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.

(ee) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

(ff) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 750,000 Shares. The Shares may be authorized, but unissued, or
reacquired Common Stock.

If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.

4. Administration of the Plan.

(a) Procedure.

(i) Multiple Administrative Bodies. The Plan may be administered
by different Committees with respect to different groups of Service Providers.

(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.

(iii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule 16b-3.

(iv) Other Administration. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which committee shall
be constituted to satisfy Applicable Laws.

-4-
<PAGE> 5

(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:

(i) to determine the Fair Market Value;

(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;

(iii) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;

(iv) to approve forms of agreement for use under the Plan;

(v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option or Stock Purchase Right granted hereunder.
Such terms and conditions include, but are not limited to, the exercise price,
the time or times when Options or Stock Purchase Rights may be exercised (which
may be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;

(vi) to reduce the exercise price of any Option or Stock Purchase
Right to the then current Fair Market Value if the Fair Market Value of the
Common Stock covered by such Option or Stock Purchase Right shall have declined
since the date the Option or Stock Purchase Right was granted;

(vii) to institute an Option Exchange Program;

(viii)to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;

(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;

(x) to modify or amend each Option or Stock Purchase Right
(subject to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;

(xi) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option or Stock

-5-
<PAGE> 6

Purchase Right that number of Shares having a Fair Market Value equal to the
amount required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined. All elections by an Optionee to have Shares withheld for
this purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable;

(xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option or Stock Purchase Right
previously granted by the Administrator;

(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.

(c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options or Stock Purchase Rights.

5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Service Providers. Incentive Stock Options may be granted only to
Employees.

6. Limitations.

(a) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.

(i) No Service Provider shall be granted, in any fiscal year of
the Company, Options to purchase more than 100,000 Shares.

-6-
<PAGE> 7

(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 350,000 Shares
which shall not count against the limit set forth in subsection (i) above.

(iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 13.

(iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 13), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.

7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 15 of the Plan.

8. Term of Option. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall be five (5) years from the date of grant or such shorter term
as may be provided in the Option Agreement.

9. Option Exercise Price and Consideration.

(a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.

(B) granted to any Employee other than an Employee described
in paragraph (A) immediately above, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

-7-
<PAGE> 8

(iii) Notwithstanding the foregoing, Options may be granted with a
per Share exercise price of less than 100% of the Fair Market Value per Share on
the date of grant pursuant to a merger or other corporate transaction.

(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.

(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:

(i) cash;

(ii) check;

(iii) promissory note;

(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;

(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;

(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;

(vii) any combination of the foregoing methods of payment; or

(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.

-8-
<PAGE> 9

10. Exercise of Option.

(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.

An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.

Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.

(b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain

-9-
<PAGE> 10

exercisable for twelve (12) months following the Optionee's termination. If, on
the date of termination, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert to
the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

(d) Death of Optionee. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in the
Option Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution. If the
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

(e) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

11. Stock Purchase Rights.

(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically, by means of a Notice of Grant, of the
terms, conditions and restrictions related to the offer, including the number of
Shares that the offeree shall be entitled to purchase, the price to be paid, and
the time within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.

(b) Repurchase Option. Unless the Administrator determines otherwise,
the Restricted Stock Purchase Agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.

-10-
<PAGE> 11

(c) Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.

(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.

12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.

13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.

(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.

(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the

-11-
<PAGE> 12

Option would not otherwise be exercisable. In addition, the Administrator may
provide that any Company repurchase option applicable to any Shares purchased
upon exercise of an Option or Stock Purchase Right shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not been previously
exercised, an Option or Stock Purchase Right will terminate immediately prior to
the consummation of such proposed action.

(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall fully vest in and have the right to
exercise the Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable. If
an Option or Stock Purchase Right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Stock Purchase Right shall be fully vested and exercisable for a
period of fifteen (15) days from the date of such notice, and the Option or
Stock Purchase Right shall terminate upon the expiration of such period. For the
purposes of this paragraph, the Option or Stock Purchase Right shall be
considered assumed if, following the merger or sale of assets, the option or
right confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.

14. Date of Grant. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.

15. Amendment and Termination of the Plan.

-12-
<PAGE> 13

(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.

(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to options granted under the
Plan prior to the date of such termination.

16. Conditions Upon Issuance of Shares.

(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

(b) Investment Representations. As a condition to the exercise of an
Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.

17. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

18. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

19. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.

-13-
<PAGE> 14

1996 AUTO-BY-TEL CORPORATION STOCK INCENTIVE PLAN

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT

[Optionee's Name and Address]

You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

Grant Number _________________________

Date of Grant _________________________

Vesting Commencement Date _________________________

Exercise Price per Share $________________________

Total Number of Shares Granted _________________________

Total Exercise Price $_________________________

Type of Option: ___ Incentive Stock Option

___ Nonstatutory Stock Option

Term/Expiration Date: _________________________

Vesting Schedule:

This Option may be exercised, in whole or in part, in accordance with the
following schedule:

[25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 1/48 of the Shares subject to the Option
shall vest each month thereafter, subject to the Optionee continuing to be a
Service Provider on such dates].

<PAGE> 15

Termination Period:

This Option may be exercised for _____ [days/months] after Optionee
ceases to be a Service Provider. Upon the death or Disability of the Optionee,
this Option may be exercised for such longer period as provided in the Plan. In
no event shall this Option be exercised later than the Term/Expiration Date as
provided above.

II. AGREEMENT

1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 15(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.

If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").

2. Exercise of Option.

(a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.

(b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to [Title] of the Company. The Exercise Notice
shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.

No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.

-2-
<PAGE> 16

3. Method of Payment. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:

(a) cash; or

(b) check[; or

(c) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan][; or

(d) surrender of other Shares which (i) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
(6) months on the date of surrender, AND (ii) have a Fair Market Value on the
date of surrender equal to the aggregate Exercise Price of the Exercised
Shares][; or

(e) with the Administrator's consent, delivery of Optionee's
promissory note (the "Note") in the form attached hereto as Exhibit C, in the
amount of the aggregate Exercise Price of the Exercised Shares together with the
execution and delivery by the Optionee of the Security Agreement attached hereto
as Exhibit B. The Note shall bear interest at the "applicable federal rate"
prescribed under the Code and its regulations at time of purchase, and shall be
secured by a pledge of the Shares purchased by the Note pursuant to the Security
Agreement].

4. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.

6. Tax Consequences. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.

(a) Exercising the Option.

(i) Nonstatutory Stock Option. The Optionee may incur regular
federal income tax liability upon exercise of a NSO. The Optionee will be
treated as having received

-3-
<PAGE> 17

compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Exercised Shares on the date of exercise
over their aggregate Exercise Price. If the Optionee is an Employee or a former
Employee, the Company will be required to withhold from his or her compensation
or collect from Optionee and pay to the applicable taxing authorities an amount
in cash equal to a percentage of this compensation income at the time of
exercise, and may refuse to honor the exercise and refuse to deliver Shares if
such withholding amounts are not delivered at the time of exercise.

(ii) Incentive Stock Option. If this Option qualifies as an ISO,
the Optionee will have no regular federal income tax liability upon its
exercise, although the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of
exercise. In the event that the Optionee ceases to be an Employee but remains a
Service Provider, any Incentive Stock Option of the Optionee that remains
unexercised shall cease to qualify as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.

(b) Disposition of Shares.

(i) NSO. If the Optionee holds NSO Shares for at least one year,
any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes.

(ii) ISO. If the Optionee holds ISO Shares for at least one year
after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price. Any additional gain will be taxed
as capital gain, short-term or long-term depending on the period that the ISO
Shares were held.

(c) Notice of Disqualifying Disposition of ISO Shares. If the Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to an ISO on
or before the later of (i) two years after the grant date, or (ii) one year
after the exercise date, the Optionee shall immediately notify the Company in
writing of such disposition. The Optionee agrees that he or she may be subject
to income tax withholding by the Company on the compensation income recognized
from such early disposition of ISO Shares by payment in cash or out of the
current earnings paid to the Optionee.

-4-
<PAGE> 18

7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws, but not
the choice of law rules, of [state].

8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.

By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.

-5-

<PAGE> 19

OPTIONEE: AUTO-BY-TEL CORPORATION

- ------------------------------------ -----------------------------------
Signature By

- ------------------------------------ -----------------------------------
Print Name Title

- ------------------------------------
Residence Address

- ------------------------------------

-6-

<PAGE> 20

CONSENT OF SPOUSE

The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.

---------------------------------------
Spouse of Optionee

-7-

<PAGE> 21

EXHIBIT A

1996 AUTO-BY-TEL CORPORATION STOCK INCENTIVE PLAN

EXERCISE NOTICE

Auto-By-Tel Corporation
18872 MacArthur Blvd., Suite 200
Irvine, California 92612-1400

Attention: [Title]

1. Exercise of Option. Effective as of today, ________________, 199__,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Auto-By-Tel Corporation (the "Company")
under and pursuant to the 1996 Auto-By-Tel Corporation Stock Incentive Plan (the
"Plan") and the Stock Option Agreement dated ___________, 19___ (the "Option
Agreement"). The purchase price for the Shares shall be $______, as required by
the Option Agreement.

2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.

3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in [Section 13] of the
Plan.

5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

<PAGE> 22

6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
[state].

Submitted by: Accepted by:

PURCHASER: AUTO-BY-TEL CORPORATION

- ---------------------------------- -------------------------------------
Signature By

- ---------------------------------- -------------------------------------
Print Name Its

Address: Address:

- ---------------------------------- 18872 MacArthur Blvd., Suite 200
Irvine, California 92612-1400
- ----------------------------------

------------------------------------
Date Received

-2-

<PAGE> 23

EXHIBIT B

SECURITY AGREEMENT

This Security Agreement is made as of __________, 19___ between
Auto-By-Tel Corporation, a Delaware corporation ("Pledgee"), and
_________________________ ("Pledgor").

Recitals

Pursuant to Pledgor's election to purchase Shares under the Option
Agreement dated ________ (the "Option"), between Pledgor and Pledgee under
Pledgee's 1996 Auto-By-Tel Stock Incentive Plan, and Pledgor's election under
the terms of the Option to pay for such shares with his promissory note (the
"Note"), Pledgor has purchased _________ shares of Pledgee's Common Stock (the
"Shares") at a price of $________ per share, for a total purchase price of
$__________. The Note and the obligations thereunder are as set forth in Exhibit
C to the Option.

NOW, THEREFORE, it is agreed as follows:

1. Creation and Description of Security Interest. In consideration of the
transfer of the Shares to Pledgor under the Option Agreement, Pledgor, pursuant
to the [state] Commercial Code, hereby pledges all of such Shares (herein
sometimes referred to as the "Collateral") represented by certificate number
______, duly endorsed in blank or with executed stock powers, and herewith
delivers said certificate to the Secretary of Pledgee ("Pledgeholder"), who
shall hold said certificate subject to the terms and conditions of this Security
Agreement.

The pledged stock (together with an executed blank stock assignment for
use in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and any extensions or renewals
thereof, to be executed by Pledgor pursuant to the terms of the Option, and the
Pledgeholder shall not encumber or dispose of such Shares except in accordance
with the provisions of this Security Agreement.

2. Pledgor's Representations and Covenants. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:

a. Payment of Indebtedness. Pledgor will pay the principal sum of the
Note secured hereby, together with interest thereon, at the time and in the
manner provided in the Note.

b. Encumbrances. The Shares are free of all other encumbrances,
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.

<PAGE> 24

c. Margin Regulations. In the event that Pledgee's Common Stock is now
or later becomes margin-listed by the Federal Reserve Board and Pledgee is
classified as a "lender" within the meaning of the regulations under Part 207 of
Title 12 of the Code of Federal Regulations ("Regulation G"), Pledgor agrees to
cooperate with Pledgee in making any amendments to the Note or providing any
additional collateral as may be necessary to comply with such regulations.

3. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.

4. Stock Adjustments. In the event that during the term of the pledge any
stock dividend, reclassification, readjustment or other changes are declared or
made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.

5. Options and Rights. In the event that, during the term of this pledge,
subscription Options or other rights or options shall be issued in connection
with the pledged Shares, such rights, Options and options shall be the property
of Pledgor and, if exercised by Pledgor, all new stock or other securities so
acquired by Pledgor as it relates to the pledged Shares then held by
Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.

6. Default. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:

a. Payment of principal or interest on the Note shall be delinquent
for a period of 10 days or more; or

b. Pledgor fails to perform any of the covenants set forth in the
Option or contained in this Security Agreement for a period of 10 days after
written notice thereof from Pledgee.

In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the [state]
Commercial Code.

7. Release of Collateral. Subject to any applicable contrary rules under
Regulation G, there shall be released from this pledge a portion of the pledged
Shares held by Pledgeholder here-

-2-

<PAGE> 25

under upon payments of the principal of the Note. The number of the pledged
Shares which shall be released shall be that number of full Shares which bears
the same proportion to the initial number of Shares pledged hereunder as the
payment of principal bears to the initial full principal amount of the Note.

8. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.

9. Term. The within pledge of Shares shall continue until the payment of
all indebtedness secured hereby, at which time the remaining pledged stock shall
be promptly delivered to Pledgor, subject to the provisions for prior release of
a portion of the Collateral as provided in paragraph 7 above.

10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.

11. Pledgeholder Liability. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.

12. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.

13. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.

14. Governing Law. This Security Agreement shall be interpreted and
governed under the internal substantive laws, but not the choice of law rules,
of [state].

-3-
<PAGE> 26

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

"PLEDGOR" ---------------------------------
Signature

---------------------------------
Print Name

Address: ---------------------------------

---------------------------------

"PLEDGEE" Auto-By-Tel Corporation,
a Delaware corporation

--------------------------------
Signature

--------------------------------
Print Name

--------------------------------
Title

"PLEDGEHOLDER" --------------------------------
Secretary of
Auto-By-Tel Corporation

-4-

<PAGE> 27
EXHIBIT C

NOTE

$_______________ [City, State]

______________, 19___

FOR VALUE RECEIVED, _______________ promises to pay to Auto-By-Tel
Corporation, a Delaware corporation (the "Company"), or order, the principal sum
of _______________________ ($_____________), together with interest on the
unpaid principal hereof from the date hereof at the rate of _______________
percent (____%) per annum, compounded semiannually.

Principal and interest shall be due and payable on __________, 19___.
Should the undersigned fail to make full payment of principal or interest for a
period of 10 days or more after the due date thereof, the whole unpaid balance
on this Note of principal and interest shall become immediately due at the
option of the holder of this Note. Payments of principal and interest shall be
made in lawful money of the United States of America.

The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.

This Note is subject to the terms of the Option, dated as of
________________. This Note is secured in part by a pledge of the Company's
Common Stock under the terms of a Security Agreement of even date herewith and
is subject to all the provisions thereof.

The holder of this Note shall have full recourse against the undersigned,
and shall not be required to proceed against the collateral securing this Note
in the event of default.

In the event the undersigned shall cease to be an employee, director or
consultant of the Company for any reason, this Note shall, at the option of the
Company, be accelerated, and the whole unpaid balance on this Note of principal
and accrued interest shall be immediately due and payable.

Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.

------------------------------------

<PAGE> 28

1996 AUTO-BY-TEL CORPORATION STOCK INCENTIVE PLAN

NOTICE OF GRANT OF STOCK PURCHASE RIGHT

Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Notice of Grant.

[Grantee's Name and Address]

You have been granted the right to purchase Common Stock of the Company,
subject to the Company's Repurchase Option and your ongoing status as a Service
Provider (as described in the Plan and the attached Restricted Stock Purchase
Agreement), as follows:

Grant Number _________________________

Date of Grant _________________________

Price Per Share $________________________

Total Number of Shares Subject _________________________
to This Stock Purchase Right

Expiration Date: _________________________

YOU MUST EXERCISE THIS STOCK PURCHASE RIGHT BEFORE THE EXPIRATION DATE OR
IT WILL TERMINATE AND YOU WILL HAVE NO FURTHER RIGHT TO PURCHASE THE SHARES. By
your signature and the signature of the Company's representative below, you and
the Company agree that this Stock Purchase Right is granted under and governed
by the terms and conditions of the 1996 Auto-By-Tel Corporation Stock Incentive
Plan and the Restricted Stock Purchase Agreement, attached hereto as Exhibit
A-1, both of which are made a part of this document. You further agree to
execute the attached Restricted Stock Purchase Agreement as a condition to
purchasing any shares under this Stock Purchase Right.

GRANTEE: AUTO-BY-TEL CORPORATION

- -------------------------------- --------------------------------
Signature By

- -------------------------------- --------------------------------
Print Name Title

<PAGE> 29

EXHIBIT A-1

1996 AUTO-BY-TEL CORPORATION STOCK INCENTIVE PLAN

RESTRICTED STOCK PURCHASE AGREEMENT

Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Restricted Stock Purchase Agreement.

WHEREAS the Purchaser named in the Notice of Grant, (the "Purchaser") is
an Service Provider, and the Purchaser's continued participation is considered
by the Company to be important for the Company's continued growth; and

WHEREAS in order to give the Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for the Purchaser to participate
in the affairs of the Company, the Administrator has granted to the Purchaser a
Stock Purchase Right subject to the terms and conditions of the Plan and the
Notice of Grant, which are incorporated herein by reference, and pursuant to
this Restricted Stock Purchase Agreement (the "Agreement").

NOW THEREFORE, the parties agree as follows:

1. Sale of Stock. The Company hereby agrees to sell to the Purchaser and
the Purchaser hereby agrees to purchase shares of the Company's Common Stock
(the "Shares"), at the per Share purchase price and as otherwise described in
the Notice of Grant.

2. Payment of Purchase Price. The purchase price for the Shares may be
paid by delivery to the Company at the time of execution of this Agreement of
cash, a check, or some combination thereof.

3. Repurchase Option.

(a) In the event the Purchaser ceases to be a Service Provider for any
or no reason (including death or disability) before all of the Shares are
released from the Company's Repurchase Option (see Section 4), the Company
shall, upon the date of such termination (as reasonably fixed and determined by
the Company) have an irrevocable, exclusive option (the "Repurchase Option") for
a period of sixty (60) days from such date to repurchase up to that number of
shares which constitute the Unreleased Shares (as defined in Section 4) at the
original purchase price per share (the "Repurchase Price"). The Repurchase
Option shall be exercised by the Company by delivering written notice to the
Purchaser or the Purchaser's executor (with a copy to the Escrow Holder) AND, at
the Company's option, (i) by delivering to the Purchaser or the Purchaser's
executor a check in the amount of the aggregate Repurchase Price, or (ii) by
cancelling an amount of the Purchaser's indebtedness to the Company equal to the
aggregate Repurchase Price, or (iii) by a combination of

<PAGE> 30

(i) and (ii) so that the combined payment and cancellation of indebtedness
equals the aggregate Repurchase Price. Upon delivery of such notice and the
payment of the aggregate Repurchase Price, the Company shall become the legal
and beneficial owner of the Shares being repurchased and all rights and
interests therein or relating thereto, and the Company shall have the right to
retain and transfer to its own name the number of Shares being repurchased by
the Company.

(b) Whenever the Company shall have the right to repurchase Shares
hereunder, the Company may designate and assign one or more employees, officers,
directors or shareholders of the Company or other persons or organizations to
exercise all or a part of the Company's purchase rights under this Agreement and
purchase all or a part of such Shares. If the Fair Market Value of the Shares to
be repurchased on the date of such designation or assignment (the "Repurchase
FMV") exceeds the aggregate Repurchase Price of such Shares, then each such
designee or assignee shall pay the Company cash equal to the difference between
the Repurchase FMV and the aggregate Repurchase Price of such Shares.

4. Release of Shares From Repurchase Option.

(a) _______________________ percent (______%) of the Shares shall be
released from the Company's Repurchase Option [one year] after the Date of Grant
and __________________ percent (______%) of the Shares [at the end of each month
thereafter], provided that the Purchaser does not cease to be a Service Provider
prior to the date of any such release.

(b) Any of the Shares that have not yet been released from the
Repurchase Option are referred to herein as "Unreleased Shares."

(c) The Shares that have been released from the Repurchase Option
shall be delivered to the Purchaser at the Purchaser's request (see Section 6).

5. Restriction on Transfer. Except for the escrow described in Section 6
or the transfer of the Shares to the Company or its assignees contemplated by
this Agreement, none of the Shares or any beneficial interest therein shall be
transferred, encumbered or otherwise disposed of in any way until such Shares
are released from the Company's Repurchase Option in accordance with the
provisions of this Agreement, other than by will or the laws of descent and
distribution.

6. Escrow of Shares.

(a) To ensure the availability for delivery of the Purchaser's
Unreleased Shares upon repurchase by the Company pursuant to the Repurchase
Option, the Purchaser shall, upon execution of this Agreement, deliver and
deposit with an escrow holder designated by the Company (the "Escrow Holder")
the share certificates representing the Unreleased Shares, together with the
stock assignment duly endorsed in blank, attached hereto as Exhibit A-2. The
Unreleased Shares and

-2-
<PAGE> 31

stock assignment shall be held by the Escrow Holder, pursuant to the Joint
Escrow Instructions of the Company and Purchaser attached hereto as Exhibit A-3,
until such time as the Company's Repurchase Option expires. As a further
condition to the Company's obligations under this Agreement, the Company may
require the spouse of Purchaser, if any, to execute and deliver to the Company
the Consent of Spouse attached hereto as Exhibit A-4.

(b) The Escrow Holder shall not be liable for any act it may do or
omit to do with respect to holding the Unreleased Shares in escrow while acting
in good faith and in the exercise of its judgment.

(c) If the Company or any assignee exercises the Repurchase Option
hereunder, the Escrow Holder, upon receipt of written notice of such exercise
from the proposed transferee, shall take all steps necessary to accomplish such
transfer.

(d) When the Repurchase Option has been exercised or expires
unexercised or a portion of the Shares has been released from the Repurchase
Option, upon request the Escrow Holder shall promptly cause a new certificate to
be issued for the released Shares and shall deliver the certificate to the
Company or the Purchaser, as the case may be.

(e) Subject to the terms hereof, the Purchaser shall have all the
rights of a shareholder with respect to the Shares while they are held in
escrow, including without limitation, the right to vote the Shares and to
receive any cash dividends declared thereon. If, from time to time during the
term of the Repurchase Option, there is (i) any stock dividend, stock split or
other change in the Shares, or (ii) any merger or sale of all or substantially
all of the assets or other acquisition of the Company, any and all new,
substituted or additional securities to which the Purchaser is entitled by
reason of the Purchaser's ownership of the Shares shall be immediately subject
to this escrow, deposited with the Escrow Holder and included thereafter as
"Shares" for purposes of this Agreement and the Repurchase Option.

7. Legends. The share certificate evidencing the Shares, if any, issued
hereunder shall be endorsed with the following legend (in addition to any legend
required under applicable state securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.

8. Adjustment for Stock Split. All references to the number of Shares and
the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.

-3-
<PAGE> 32

9. Tax Consequences. The Purchaser has reviewed with the Purchaser's own
tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The Purchaser is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Purchaser understands that the Purchaser
(and not the Company) shall be responsible for the Purchaser's own tax liability
that may arise as a result of the transactions contemplated by this Agreement.
The Purchaser understands that Section 83 of the Internal Revenue Code of 1986,
as amended (the "Code"), taxes as ordinary income the difference between the
purchase price for the Shares and the Fair Market Value of the Shares as of the
date any restrictions on the Shares lapse. In this context, "restriction"
includes the right of the Company to buy back the Shares pursuant to the
Repurchase Option. The Purchaser understands that the Purchaser may elect to be
taxed at the time the Shares are purchased rather than when and as the
Repurchase Option expires by filing an election under Section 83(b) of the Code
with the IRS within 30 days from the date of purchase. The form for making this
election is attached as Exhibit A-5 hereto.

THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON THE PURCHASER'S BEHALF.

10. General Provisions.

(a) This Agreement shall be governed by the internal substantive laws,
but not the choice of law rules of [state]. This Agreement, subject to the terms
and conditions of the Plan and the Notice of Grant, represents the entire
agreement between the parties with respect to the purchase of the Shares by the
Purchaser. Subject to Section 15(c) of the Plan, in the event of a conflict
between the terms and conditions of the Plan and the terms and conditions of
this Agreement, the terms and conditions of the Plan shall prevail. Unless
otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Agreement.

(b) Any notice, demand or request required or permitted to be given by
either the Company or the Purchaser pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally or
deposited in the U.S. mail, First Class with postage prepaid, and addressed to
the parties at the addresses of the parties set forth at the end of this
Agreement or such other address as a party may request by notifying the other in
writing.

Any notice to the Escrow Holder shall be sent to the Company's address
with a copy to the other party hereto.

(c) The rights of the Company under this Agreement shall be
transferable to any one or more persons or entities, and all covenants and
agreements hereunder shall inure to the benefit of,

-4-
<PAGE> 33

and be enforceable by the Company's successors and assigns. The rights and
obligations of the Purchaser under this Agreement may only be assigned with the
prior written consent of the Company.

(d) Either party's failure to enforce any provision of this Agreement
shall not in any way be construed as a waiver of any such provision, nor prevent
that party from thereafter enforcing any other provision of this Agreement. The
rights granted both parties hereunder are cumulative and shall not constitute a
waiver of either party's right to assert any other legal remedy available to it.

(e) The Purchaser agrees upon request to execute any further documents
or instruments necessary or desirable to carry out the purposes or intent of
this Agreement.

(f) PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED OR
PURCHASING SHARES HEREUNDER). PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT
THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE
SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND SHALL NOT INTERFERE WITH PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE PURCHASER'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.

By Purchaser's signature below, Purchaser represents that he or she is
familiar with the terms and provisions of the Plan, and hereby accepts this
Agreement subject to all of the terms and provisions thereof. Purchaser has
reviewed the Plan and this Agreement in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Agreement and fully
understands all provisions of this Agreement. Purchaser agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Agreement.
Purchaser further agrees to notify the Company upon any change in the residence
indicated in the Notice of Grant.

DATED:
-----------------------

PURCHASER: AUTO-BY-TEL CORPORATION

- ------------------------------ ----------------------------------
Signature By

- ------------------------------ ----------------------------------
Print Name Title

-5-
<PAGE> 34

EXHIBIT A-2

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I, __________________________, hereby sell, assign and
transfer unto

(__________) shares of the Common Stock of Auto-By-Tel Corporation standing in
my name of the books of said corporation represented by Certificate No. _____
herewith and do hereby irrevocably constitute and appoint ___________ to
transfer the said stock on the books of the within named corporation with full
power of substitution in the premises.

This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement (the "Agreement") between________________________ and
the undersigned dated ______________, 19__.

Dated: _______________, 19

Signature:______________________________

INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise the
Repurchase Option, as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.

<PAGE> 35

EXHIBIT A-3

JOINT ESCROW INSTRUCTIONS

____________________, 19__

Corporate Secretary
Auto-By-Tel Corporation
18872 MacArthur Blvd., Suite 200
Irvine, California 92612-1400

Dear _________________:

As Escrow Agent for both [Company Name], a [state] corporation (the
"Company"), and the undersigned purchaser of stock of the Company (the
"Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Restricted Stock Purchase
Agreement ("Agreement") between the Company and the undersigned, in accordance
with the following instructions:

1. In the event the Company and/or any assignee of the Company (referred
to collectively as the "Company") exercises the Company's Repurchase Option set
forth in the Agreement, the Company shall give to Purchaser and you a written
notice specifying the number of shares of stock to be purchased, the purchase
price, and the time for a closing hereunder at the principal office of the
Company. Purchaser and the Company hereby irrevocably authorize and direct you
to close the transaction contemplated by such notice in accordance with the
terms of said notice.

2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's Repurchase Option.

3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities.

<PAGE> 36

Subject to the provisions of this paragraph 3, Purchaser shall exercise all
rights and privileges of a shareholder of the Company while the stock is held by
you.

4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's Repurchase Option has been exercised, you
shall deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's Repurchase Option.
Within 90 days after Purchaser ceases to be a Service Provider, you shall
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's Repurchase
Option.

5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.

6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.

7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.

8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.

9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.

10. You shall not be liable for the outlawing of any rights under the
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.

11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.

-2-
<PAGE> 37

12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer or agent of the Company or if you shall resign
by written notice to each party. In the event of any such termination, the
Company shall appoint a successor Escrow Agent.

13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.

14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.

COMPANY: Auto-By-Tel Corporation
18872 MacArthur Blvd., Suite 200
Irvine, California 92612-1400

PURCHASER: ---------------------------------

---------------------------------

ESCROW AGENT: Corporate Secretary
Auto-By-Tel
18872 MacArthur Blvd., Suite 200
Irvine, California 92612-1400

16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.

-3-
<PAGE> 38

17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.

18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the internal substantive laws, but not the
choice of law rules, of [state].

Very truly yours,

AUTO-BY-TEL CORPORATION

-------------------------------------
By

-------------------------------------
Title

PURCHASER:

-------------------------------------
Signature

-------------------------------------
Print Name

ESCROW AGENT:

- ---------------------------------
Corporate Secretary

-4-

<PAGE> 39

EXHIBIT A-4

CONSENT OF SPOUSE

I, ____________________, spouse of ___________________, have read and
approve the foregoing Restricted Stock Purchase Agreement (the "Agreement"). In
consideration of the Company's grant to my spouse of the right to purchase
shares of Auto-By-Tel Corporation, as set forth in the Agreement, I hereby
appoint my spouse as my attorney-in-fact in respect to the exercise of any
rights under the Agreement and agree to be bound by the provisions of the
Agreement insofar as I may have any rights in said Agreement or any shares
issued pursuant thereto under the community property laws or similar laws
relating to marital property in effect in the state of our residence as of the
date of the signing of the foregoing Agreement.

Dated: _______________, 19___

______________________________________
Signature of Spouse

<PAGE> 40

EXHIBIT A-5
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with his or her receipt of the property described below:

1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:

NAME: TAXPAYER: SPOUSE:

ADDRESS:

IDENTIFICATION NO.: TAXPAYER: SPOUSE:

TAXABLE YEAR:

2. The property with respect to which the election is made is described as
follows: shares (the "Shares") of the Common Stock of Auto-By-Tel
Corporation (the "Company").

3. The date on which the property was transferred is: _____________ , 19__.

4. The property is subject to the following restrictions:

The Shares may be repurchased by the Company, or its assignee, upon
certain events. This right lapses with regard to a portion of the Shares
based on the continued performance of services by the taxpayer over time.

5. The fair market value at the time of transfer, determined without regard
to any restriction other than a restriction which by its terms will never
lapse, of such property is:

$_______________.

6. The amount (if any) paid for such property is:

$_______________.

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.

Dated: ___________________, 19____ _________________________________________
Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated: ___________________, 19____ _________________________________________
Spouse of Taxpayer

<PAGE> 1

EXHIBIT 10.7

AUTO-BY-TEL CORPORATION

1996 EMPLOYEE STOCK PURCHASE PLAN

The following constitute the provisions of the 1996 Employee Stock
Purchase Plan of Auto-By-Tel Corporation.

1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.

2. Definitions.

(a) "Board" shall mean the Board of Directors of the Company.

(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.

(d) "Company" shall mean Auto-By-Tel Corporation and any
Designated Subsidiary of the Company.

(e) "Compensation" shall mean all base straight time gross
earnings and commissions, but exclusive of payments for overtime, shift premium,
incentive compensation, incentive payments, bonuses and other compensation.

(f) "Designated Subsidiary" shall mean the Subsidiary which has
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.

(g) "Employee" shall mean any individual who is an Employee of
the Company for tax purposes whose customary employment with the Company is at
least twenty (20) hours per week and more than five (5) months in any calendar
year. For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.

(h) "Enrollment Date" shall mean the first day of each Offering
Period.

(i) "Exercise Date" shall mean the last day of each Purchase
Period.

(j) "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined as follows:

<PAGE> 2
(1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable, or;

(2) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;

(3) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.

(4) For purposes of the Enrollment Date of the first
Offering Period under the Plan, the Fair Market Value shall be the initial price
to the public as set forth in the final prospectus included within the
registration statement in Form S-1 filed with the Securities and Exchange
Commission for the initial public offering of the Company's Common Stock (the
"Registration Statement").

(k) "Offering Periods" shall mean the periods of approximately
six (6) months during which an option granted pursuant to the Plan may be
exercised, commencing on the first Trading Day on or after January 1 and July 1
of each year and terminating on the last Trading Day in the periods ending six
months later; provided, however, that the first Offering Period under the Plan
shall commence with the first Trading Day on or after the date on which the
Securities and Exchange Commission declares the Company's Registration Statement
effective and ending on the last Trading Day on or after June 30, 1997. The
duration and timing of Offering Periods may be changed pursuant to Section 4 of
this Plan.

(l) "Plan" shall mean this Employee Stock Purchase Plan.

(m) "Purchase Price" shall mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.

(n) "Purchase Period" shall mean the approximately six month
period commencing after one Exercise Date and ending with the next Exercise
Date, except that the first Purchase Period of any Offering Period shall
commence on the Enrollment Date and end with the next Exercise Date.

-2-

<PAGE> 3
(o) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.

(p) "Subsidiary" shall mean a corporation, domestic or foreign,
of which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.

(q) "Trading Day" shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading.

3. Eligibility.

(a) Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.

(b) Any provisions of the Plan to the contrary notwithstanding,
no Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the fair market value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.

4. Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after January 1 and July 1 each year, or on such other date as
the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or after
June 31, 1997. The Board shall have the power to change the duration of Offering
Periods (including the commencement dates thereof) with respect to future
offerings without shareholder approval if such change is announced at least five
(5) days prior to the scheduled beginning of the first Offering Period to be
affected thereafter.

-3-

<PAGE> 4
5. Participation.

(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.

(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.

6. Payroll Deductions.

(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding ten (10%) of the
Compensation which he or she receives on each pay day during the Offering
Period.

(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such
account.

(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing or filing
with the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.

(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at any
time during a Purchase Period. Payroll deductions shall recommence at the rate
provided in such participant's subscription agreement at the beginning of the
first Purchase Period which is scheduled to end in the following calendar year,
unless terminated by the participant as provided in Section 10 hereof.

(e) At the time the option is exercised, in whole or in part, or
at the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the

-4-

<PAGE> 5
Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.

7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than
Thirty Thousand (30,000) shares (subject to any adjustment pursuant to Section
19), and provided further that such purchase shall be subject to the limitations
set forth in Sections 3(b) and 12 hereof and in Section 423(b)(8) of the Code.
Exercise of the option shall occur as provided in Section 8 hereof, unless the
participant has withdrawn pursuant to Section 10 hereof. The option shall expire
on the last day of the Offering Period.

8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier with drawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.

9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.

10. Withdrawal.

(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account shall be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made for such Offering Period. If
a participant withdraws from an Offering Period, payroll deductions shall

-5-

<PAGE> 6
not resume at the beginning of the succeeding Offering Period unless the
participant delivers to the Company a new subscription agreement.

(b) A participant's withdrawal from an Offering Period shall not
have any effect upon his or her eligibility to participate in any similar plan
which may hereafter be adopted by the Company or in succeeding Offering Periods
which commence after the termination of the Offering Period from which the
participant withdraws.

11. Termination of Employment.

Upon a participant's ceasing to be an Employee, for any reason,
he or she shall be deemed to have elected to withdraw from the Plan and the
payroll deductions credited to such participant's account during the Offering
Period but not yet used to exercise the option shall be returned to such
participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 15 hereof, and such participant's option shall be
automatically terminated. The preceding sentence notwithstanding, a participant
who receives payment in lieu of notice of termination of employment shall be
treated as continuing to be an Employee for the participant's customary number
of hours per week of employment during the period in which the participant is
subject to such payment in lieu of notice.

12. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.

13. Stock.

(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 400,000 shares,
all of which shares are subject to adjustment upon changes in capitalization of
the Company as provided in Section 19 hereof. The Shares may be authorized, but
unissued, or reacquired Common Stock. If, on a given Exercise Date, the number
of shares with respect to which options are to be exercised exceeds the number
of shares then available under the Plan, the Company shall make a pro rata
allocation of the shares remaining available for purchase in as uniform a manner
as shall be practicable and as it shall determine to be equitable.

(b) The participant shall have no interest or voting right in
shares covered by his option until such option has been exercised.

(c) Shares to be delivered to a participant under the Plan shall
be registered in the name of the participant or in the name of the participant
and his or her spouse.

-6-

<PAGE> 7
14. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.

15. Designation of Beneficiary.

(a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such partici pant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant may file a
written designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death
prior to exercise of the option. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for such
designation to be effective.

(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.

16. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.

17. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.

18. Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.

-7-

<PAGE> 8
19. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.

(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the Reserves, as well as the price per share
and the number of shares of Common Stock covered by each option under the Plan
which has not yet been exercised, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of shares of Common Stock effected without receipt of consideration by
the Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an option.

(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Periods shall terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.

(c) Merger or Asset Sale. In the event of a proposed sale of all
or substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, any Purchase Periods then in progress shall be
shortened by setting a new Exercise Date (the "New Exercise Date") and any
Offering Periods then in progress shall end on the New Exercise Date. The New
Exercise Date shall be before the date of the Company's proposed sale or merger.
The Board shall notify each participant in writing, at least ten (10) business
days prior to the New Exercise Date, that the Exercise Date for the
participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.

20. Amendment or Termination.

(a) The Board of Directors of the Company may at any time and for
any reason terminate or amend the Plan. Except as provided in Section 19 hereof,
no such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Plan is in the best
interests of the Company and its shareholders. Except as provided in Section 19
hereof, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with Section 423 of the Code (or any successor rule or provision or any
other applicable law, regulation or stock exchange rule), the Company shall
obtain shareholder approval in such a manner and to such a degree as required.

-8-

<PAGE> 9
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.

21. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.

23. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 20 hereof.

24. Automatic Transfer to Low Price Offering Period. To the extent
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.

-9-

<PAGE> 10
EXHIBIT A
---------

AUTO-BY-TEL CORPORATION

1996 EMPLOYEE STOCK PURCHASE PLAN

SUBSCRIPTION AGREEMENT

_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)

1. _____________________________________________________ hereby elects to
participate in the Auto-By-Tel Corporation 1996 Employee Stock Purchase
Plan (the "Employee Stock Purchase Plan") and subscribes to purchase
shares of the Company's Common Stock in accordance with this
Subscription Agreement and the Employee Stock Purchase Plan.

2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (from 1 to 10%) during the
Offering Period in accordance with the Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.)

3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise my
option.

4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is
in all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is
subject to shareholder approval of the Employee Stock Purchase Plan.

5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse only):
____________________________________________________________________

6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after
the Exercise Date, I will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares at the
time such shares were purchased by me over the price which I paid for
the shares. I hereby agree to notify the Company in writing within 30
days after the date of any disposition of my shares and I will make
adequate provision for Federal, state or other tax withholding
obligations, if any, which arise upon the disposition of the Common
Stock. The Company may, but will not be obligated to, withhold from my
compensation the amount necessary to meet any applicable withholding
obligation including any withholding necessary to make available to the
Company any tax deductions or benefits attributable to sale or early
disposition of Common Stock by me. If I dispose of such shares at any
time after the expiration of the 2-year and 1-year holding periods, I
understand that I will be treated for federal income tax purposes as
having received income only at the time of such disposition, and that
such income will be taxed as ordinary income only to the extent of an
amount equal to the lesser of (1) the excess of the fair market value of
the shares at the time of such disposition over the purchase price which
I paid for the shares, or (2) 15% of the fair market value of the shares
on the first day of the Offering Period. The remainder of the gain, if
any, recognized on such disposition will be taxed as capital gain.

7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent upon
my eligibility to participate in the Employee Stock Purchase Plan.

8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:

NAME: (Please print)______________________________________________
(First) (Middle) (Last)

____________________________ ______________________________________________
Relationship

______________________________________________
(Address)

-2-

<PAGE> 11
Employee's Social
Security Number: ____________________________________

Employee's Address: ____________________________________

____________________________________

I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

Dated:_________________________ ________________________________________
Signature of Employee

________________________________________
Spouse's Signature (If beneficiary other than
spouse)

-3-

<PAGE> 12
EXHIBIT B
---------

AUTO-BY-TEL CORPORATION
-----------------------

1996 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

The undersigned participant in the Offering Period of the Auto-By-Tel
Corporation 1996 Employee Stock Purchase Plan which began on ____________,
19____ (the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically termi nated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.

Name and Address of Participant:

________________________________

Signature:

________________________________

Date:___________________________

<PAGE> 1
EXHIBIT 10.8

autobytel.com inc.
1998 STOCK OPTION PLAN

PLAN SUMMARY

The Plan is designed to advance the Company's interests by
encouraging employees of the Company and any future Parent Corporations or
Subsidiary Corporations to acquire a proprietary interest in the Company. It
provides that an aggregate of 1,500,000 shares of the Company's Common Stock may
be optioned to employees of the Employer Company. Options granted under the Plan
may be either Incentive Stock Options, which qualify for favorable federal
income tax treatment, or Nonstatutory Stock Options. All employees of the
Employer Company are eligible to receive Incentive Stock Options or Nonstatutory
Stock Options, but the Administrator is entitled to select the individuals to
whom such options actually will be granted and to determine whether the options
will be Incentive Stock Options or Nonstatutory Stock Options.

To meet the statutory requirements for Incentive Stock Options
under Section 422 of the Internal Revenue Code of 1986, as amended, the Plan
provides the purchase price of the optioned stock must be fixed at no less than
the fair market value of the Company's Common Stock as of the time the Option is
granted (or in the case of an Optionee who beneficially owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
shares of capital stock of the Employer Company or its Parent or Subsidiary, no
less than one hundred ten percent (110%) of the fair market value of the
Company's Common Stock as of the time the Option is granted). 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 all plans of the Employer Company and
any Parent Corporation and Subsidiary Corporation exceeds $100,000, options for
such shares shall not be considered Incentive Stock Options but instead shall be
considered Nonstatutory Stock Options granted under the Plan. Incentive Stock
Options granted under the Plan are nontransferable (other than by will or the
laws of descent and distribution) and Incentive Stock Options may not be
exercised more than ten years (five years in the case of an Optionee who
beneficially owns more than ten percent (10%) of the total combined voting power
of all classes of outstanding shares of capital stock of the Employer Company or
Parent Corporation or Subsidiary Corporation) after the date they are granted.

The Company will receive no cash consideration for granting
Options under the Plan. However, when an Option is exercised, the holder is
required to pay the Option Price for the number of shares of stock to be issued
under the exercised Option.

<PAGE> 2

The Plan will be administered by the Administrator and will
terminate ten years after the earlier of the date it is adopted by the Board of
Directors or the date it is approved by the Company's stockholders, unless
earlier terminated by the Administrator.

<PAGE> 3

autobytel.com inc.

1998 STOCK OPTION PLAN

SECTION 1
DEFINITIONS

As used herein, the following terms have the meanings hereinafter
set forth unless the context clearly indicates to the contrary:

(a) "Act" means the Securities Act of 1933, as amended.

(b) "Administrator" means the Board or the Committee, whichever
shall be administering the Plan from time to time in the discretion of the
Board, as described in Section 3 of the Plan.

(d) "Code" means the Internal Revenue Code of 1986, as amended.

(e) "Committee" means the committee appointed by the Board in
accordance with Section 3 of the Plan.

(f) "Company" means autobytel.com,inc., a Delaware corporation.

(g) "Employee" means an individual who is employed (within the
meaning of Section 3401 of the Code and the regulations thereunder) by the
Company or any future Parent Corporation or Subsidiary Corporation of the
Company.

(h) "Employer Company" means the company, whether the Company or
a Parent Corporation or Subsidiary Corporation of the Company, which employs the
Employee.

(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

(j) "Fair Market Value of Shares" shall mean (i) if the Shares
are not publicly traded on the day in question, the fair market value of the
Shares on the day in question as determined and set forth in writing by the
Administrator (which, in making such determination, shall make a good faith
effort to establish the true fair market value

1
<PAGE> 4

of the Shares as of such date using such methods as it deems appropriate,
including independent appraisals, and taking into consideration any requirements
set forth in the Code or the regulations thereunder), (ii) if the Shares are
publicly traded on the day in question, the closing price of the Shares on the
day in question. The closing price shall be the average of the highest and
lowest quoted selling prices on the New York Stock Exchange or, if the Shares
are not listed or admitted to trading on such Exchange, on the principal
national securities exchange on which the Shares are listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, as reported by the Nasdaq Stock Market's National Market on the day in
question, or (iii) if the Shares are not listed or admitted to trading on any
national securities exchange or reported by the Nasdaq Stock Market's National
Market, the closing price of the Shares shall be the average of the highest and
lowest quoted selling prices as reported by The Wall Street Journal for the
over-the-counter market on the day in question.

(k) "Incentive Stock Option" means an Option for Shares which is
intended to be, designated in writing as, and qualifies as an Incentive Stock
Option within the meaning of Section 422 of the Code.

(l) "Key Employee" means any Employee so designated pursuant to
Section 3.2 by the Administrator to receive Options.

(m) "Nonstatutory Stock Option" means an Option which is not an
Incentive Stock Option and which is designated as a Nonstatutory Stock Option by
the Board.

(n) "Option" means an option to purchase a Share pursuant to the
provisions of this Plan.

(o) "Optionee" means an Employee to whom an Option has been
granted hereunder.

(p) "Option Price" means the price per share of the Shares
subject to each Option as provided in Section 6.4.

(q) "Option Term" means the maximum period of time during which
an Option may be exercised as set forth in Section 6.5 below.

(r) "Parent Corporation" shall have the meaning assigned to that
term under Section 424 of the Code.

2
<PAGE> 5

(s) "Plan" means the Auto-By-Tel Corporation 1998 Stock Option
Plan, the terms of which are set forth herein.

(t) "Share" or "Shares" means Common Stock of the Company, par
value $___ per share, or, in the event that the outstanding Shares are hereafter
changed into or exchanged for different shares or securities of the Company or
some other corporation or other entity, such other shares or securities.

(u) "Stock Option Agreement" means the agreement described in
Section 6.1 between the Company and the Optionee under which the Optionee may
purchase Shares hereunder.

(v) "Subsidiary Corporation" shall have the meaning assigned to
that term under Section 424 of the Code.

(w) "Total and Permanent Disability", unless otherwise specified
in the applicable Stock Option Agreement, means the inability of an Employee to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than twelve months.

SECTION 2

THE PLAN

2.1. Name. This Plan shall be known as "autobytel.com,inc. 1998
Stock Option Plan."

2.2. Purpose. The purpose of this Plan is to advance the
interests of the Company and its stockholders by affording Employees of the
Employer Company an opportunity to acquire or increase their proprietary
interest in the Company by the grant to such individuals of Options under the
terms set forth herein. By thus encouraging such individuals to acquire or
increase their proprietary interest in the Company, the Company seeks to
attract, motivate and retain those highly competent individuals upon whose
judgment, initiative, leadership, and continued efforts the success of the
Company in large measure depends.

2.3. Intention. It is intended that any Options (if any) issued
as Incentive Stock Options under this Plan will qualify as Incentive Stock
Options under Section 422 of the Code and the terms of this Plan shall be
interpreted in accordance with such intention.

3
<PAGE> 6

SECTION 3

ADMINISTRATION

3.1. Administration. The Plan shall be administered, in the
discretion of the Board from time to time, by the Board or by the Committee
acting as the Administrator. The Committee shall be appointed by the Board, in a
manner consistent with the Company's Bylaws, and shall consist of not less than
three (3) members of the Board provided, however, that, after the Company
effects an initial public offering, the Committee will be comprised of solely
three (3) or more members, each of who is an outside director (within the
meaning of Code Section 162(m) and the Treasury Regulations thereunder) as well
as a non-employee director (within the meaning of Rule 16(b)-3 of the Securities
and Exchange Commission adopted under the Securities Exchange Act of 1934, as
amended). The Board may from time to time remove members from, or add members
to, the Committee. Vacancies on the Committee, however caused, shall be filled
by the Board. The Board may appoint one (1) of the members of the Committee as
Chairman. The Administrator shall hold meetings at such times and places as it
may determine. Acts of a majority of the Administrator at which a quorum is
present, or acts reduced to or approved in writing by the unanimous consent of
the members of the Administrator, shall be the valid acts of the Administrator.

3.2. Duties. The Administrator shall from time to time at its
discretion select the Employees who are to be granted Options, determine the
number of Shares to be subject to Options to be granted to each Optionee and
designate such Options as Incentive Stock Options or Nonstatutory Stock Options.
The interpretation and construction by the Administrator of any provisions of
the Plan or of any Option granted thereunder shall be final. No member of the
Administrator shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted hereunder.

SECTION 4

PARTICIPATION

4.1. Eligibility. The Optionees shall be such persons
(collectively, "Participants"; individually a "Participant") as the
Administrator may select from among the following classes of persons, subject to
the terms and conditions of Section 4.2 below:

4
<PAGE> 7

(a) Key Employees of the Company; and

(b) Key Employees of the Company's Parent Corporations or
Subsidiary Corporations.

4.2. Ten-Percent Stockholders. A Participant who beneficially
owns more than ten percent (10%) of the total combined voting power of all
classes of outstanding stock of the Company, as determined under Sections 422
and 424 of the Code, shall not be eligible to receive an Incentive Stock Option
unless (i) the Option Price of the Shares subject to such Option is at least one
hundred ten percent (110%) of the Fair Market Value of such Shares on the date
of grant and (ii) such Option by its terms is not exercisable after the
expiration of five (5) years from the date of grant.

(a) Stock Ownership. For purposes of Section 4.2 above, in
determining stock ownership, a Participant's beneficial ownership of any class
of outstanding stock of the Employer Company or a Parent Corporation or a
Subsidiary Corporation shall be determined as provided in Rule 16a-1(a) of the
Securities and Exchange Commission adopted under the Exchange Act, and in any
event (i) such Participant shall be considered as owning the stock owned,
directly or indirectly, by or for his or her brothers and sisters, spouse,
ancestors and lineal descendants; (ii) stock owned, directly or indirectly, by
or for a corporation, partnership, estate or trust shall be considered as being
owned proportionately by or for its stockholders, partners or beneficiaries; and
(iii) stock with respect to which such Participant holds an Option shall not be
counted.

(b) Outstanding Stock. For purposes of Section 4.2 above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant of the Option to the Optionee. "Outstanding stock"
shall not include shares authorized for issue under outstanding Options held by
the Optionee or by any other person.

SECTION 5

SHARES SUBJECT TO PLAN

5.1. Shares Available for Options. Subject to adjustment pursuant
to the provisions of Section 5.2 hereof, the total number of Shares which may be
issued upon the exercise of all Options shall not exceed 1,500,000 Shares. Such
Shares may be either authorized and unissued Shares or issued Shares which have
been reacquired by the Company (pursuant to Section 6.7(d) or otherwise). If any
Option shall expire or terminate for any reason without having been exercised in
full, new Options may be

5
<PAGE> 8

granted covering Shares originally set aside for the unexercised portion of such
expired or terminated Option.

5.2. Adjustments.

(a) Stock Splits and Dividends. Subject to any required
action by the Board, the number of Shares covered by the Plan as provided in
Section 5.1 hereof, the number of Shares covered by each outstanding Option and
the Option Price thereof shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a recapitalization,
reclassification, subdivision or consolidation of Shares or the payment of a
stock dividend (but only if paid in Shares), a stock split or any other increase
or decrease in the number of issued Shares effected without receipt of
consideration by the Company.

(b) Mergers. Subject to any required action by the Board
and/or stockholders, if the Company shall merge with another corporation and the
Company is the surviving corporation in such merger and under the terms of such
merger the Shares outstanding immediately prior to the merger remain outstanding
and unchanged, each outstanding Option shall continue to apply to the Shares
subject thereto and shall also pertain and apply to any additional securities
and other property, if any, to which a holder of the number of Shares subject to
the Option would have been entitled as a result of the merger.

(c) Adjustment Determination. To the extent that the
foregoing adjustments relate to securities of the Company, such adjustments
shall be made by the Administrator, whose determination shall be conclusive and
binding on all persons. In computing any adjustment under this Section 5.2, any
fractional Share which might otherwise become subject to an Option shall be
eliminated.

(d) Special Dividends. Subject to any required action by the
Board, the Administrator shall be entitled to determine whether any adjustment
shall be made with respect to the number of Shares covered by the Plan as
provided in Section 5.1 hereof, the number of Shares covered by each outstanding
Option and the Option Price thereof if the Company pays a special or
extraordinary dividend.

SECTION 6

OPTIONS

6.1. Option Grant and Agreement.

6
<PAGE> 9

(a) The Administrator may from time to time, subject to the
terms of this Plan, grant to any Participant one or more Options but in
no event may any Participant receive Options under this Plan on more
than 700,000 Shares during any one calendar year. Each Option grant
shall be evidenced by a written Stock Option Agreement, dated as of the
date of grant and executed by the Company and the Optionee, which Stock
Option Agreement shall set forth the number of Options granted, whether
the Options are Incentive Stock Options or Nonstatutory Stock Options,
the Option Price, the Option Term and such other terms and conditions as
may be determined appropriate by the Administrator, provided that such
terms and conditions are not inconsistent with the Plan. The Stock
Option Agreement shall incorporate this Plan by reference and provide
that any inconsistencies or disputes shall be resolved in favor of the
Plan language.

(b) Grants under the Plan shall be made by the Administrator
selectively among the Participants and the terms and provisions of such
grants and the agreements evidencing the same (including, without
limitation, the form, the amount, the timing, the exercisability and the
vesting schedule of such grants) need not be uniform, whether or not the
Optionees are similarly situated.

6.2. Conditions with Respect to Non-Statutory Stock Options.
Certain Non-Statutory Stock Options ("Performance Grants") shall be subject to
the following conditions, which conditions shall be stated within the applicable
Stock Option Agree ment.

(a) At the time of grant, the Administrator may, in its
discretion, place additional restrictions on Performance Grants
requiring that the Option will vest only if and when, or on an
accelerated basis if and when, the Common Stock price exceeds a specific
amount. Generally, Performance Grants will be subject to the same
requirements described herein, unless the Administrator decides
otherwise.

(b) At the time of grant, the Administrator may, in its
discretion, place additional restrictions on the Performance Grants
requiring that on the exercise of such a grant an Employee will purchase
Shares that will be forfeited if the Optionee terminates employment
within a certain number of years. Additional transferability
restrictions may be imposed in connection with Performance Grants.

6.3. Conditions with Respect to Incentive Stock Options. Each
Incentive Stock Option shall be subject to the following conditions, which
conditions

7
<PAGE> 10

shall be stated within the applicable Stock Option Agreement. Any Incentive
Stock Option which does not comply with these provisions shall not be considered
an Incentive Stock Option and instead shall be considered a Nonstatutory Option
issued under the Plan:

(a) To the extent that the aggregate Fair Market Value of
Shares (determined as of the time an Option is granted) exercisable for
the first time by an Optionee during any calendar year under such
Incentive Stock Option and any other Incentive Stock Option issued by
the Company or any Subsidiary Corporation or Parent Corporation exceeds
$100,000, such excess Incentive Stock Options shall be deemed
Nonstatutory Stock Options.

(b) No Incentive Stock Option may be assigned or transferred
by an Optionee other than by will or by the laws of descent and
distribution. During the lifetime of an Incentive Stock Optionee, the
Option may be exercisable only by the Optionee. Transfer of an Incentive
Stock Option by will or by the laws of descent and distribution shall
not be effective to bind the Company unless the Company shall have been
furnished with written notice thereof and an authenticated copy of the
will or such other evidence as the Administrator may deem necessary to
establish the validity of the transfer and the acceptance by the
transferee of the terms and conditions of such Incentive Stock Option.

6.4. Option Price. The Option Price shall be determined by the
Administrator, subject to any limitations imposed by this Plan and, in any
event, shall not be less than eighty-five (85) percent of the Fair Market Value
on the date of grant. The Option Price for Incentive Stock Options shall not be
less than the Fair Market Value of Shares on the date such Incentive Stock
Options are granted and, in the case of Incentive Stock Options granted to an
Optionee described in Section 4.2 hereof, the Option Price shall not be less
than one hundred ten percent (110%) of the Fair Market Value of Shares on the
date of grant.

6.5. Option Term. The Option Term shall be determined by the
Administrator at the time of grant, subject to any limitations imposed by this
Plan, but in any event shall not be more than ten years from the date such
Option is granted, and, in the case of an Incentive Stock Option granted to an
Optionee described in Section 4.2 hereof, shall not be more than five years from
the date such Option is granted. Options may be subject to earlier termination
as provided in this Plan.

6.6. Limitations on Exercise of Options. Notwithstanding anything

8
<PAGE> 11

contained in this Plan to the contrary:

(a) Options may not be exercised until the Plan has been
ratified by the a majority of the stockholders as provided in Section
9.8.

(b) Options shall be exercisable in full or in such equal or
unequal installments as the Administrator shall determine; provided that
if an Optionee does not purchase all of the Shares which the Optionee is
entitled to purchase on a certain date or within an established
installment period, the Optionee's right to purchase any unpurchased
Shares shall continue during the Option Term (taking into account any
early termination of such Option Term which may be provided for under
the Plan); provided, further that an Optionee who is not an officer,
director or consultant shall have the right to exercise at least 20% of
the options granted per year over five (5) years from the grant date.

6.7. Method of Exercising Options; Withholding Tax.

(a) Options shall be exercised by a written notice,
delivered to the Company at its principal office located at 18872
MacArthur Blvd., Second Floor, Irvine, California, 92612-1400, Attn: Mr.
Craig S. Frost, Esq. or such other address that may be designated by the
Company, specifying the number of Shares to be purchased and tendering
payment in full for such Shares. Payment may be tendered in cash or by
certified, bank cashier's or teller's check or by Shares (valued at Fair
Market Value as of the date of tender), or some combination of the
foregoing or such other form of consideration which has been approved by
the Board or the Committee, including any approved cashless exercise
mechanism or a promissory note given by the Optionee. The right to
deliver in full or partial payment of such Option Price any
consideration other than cash shall be limited to such frequency as the
Board or the Committee shall determine in its absolute discretion from
time to time. In the event all or part of the Option Price is paid in
Shares, any excess of the value of such Shares over the Option Price
will be returned to the Optionee as follows: (i) any whole Share
remaining in excess of the Option Price will be returned in kind, and
may be represented by one or more share certificates; and (ii) any
partial Shares remaining in excess of the Option Price will be returned
in cash.

(b) In the event an Optionee pays all or part of the Option
Price in Shares, the Administrator shall be entitled as it deems
appropriate to award to the Optionee additional Options equal to the
number of Shares tendered to exercise, provided such Option has an
Option Price equal to Fair Market Value.

9
<PAGE> 12

withhold state or Federal income tax as a result of the exercise of an
Option, as a condition to the exercise thereof, the Optionee may be
required to make arrangements satisfactory to the Company to enable it
to satisfy such withholding requirements. Payment of such withholding
requirements may be made, in the discretion of the Administrator, (i) in
cash, (ii) by delivery of Shares registered in the name of the Optionee
having a Fair Market Value at the time of exercise equal to the amount
to be withheld, (iii) by the Company retaining or not issuing such
number of Shares subject to the Option as have a Fair Market Value at
the time of exercising equal to the amount to be withheld or (iv) any
combination of (i), (ii) and (iii) above.

(d) The Administrator shall be entitled as it deems
appropriate to make available for issuance under the Plan Shares
tendered by an Optionee as payment of the Option Price or Shares used to
satisfy the Company's withholding requirements.

6.8. Rights in the Event of Sale, Merger or Other Reorganization.
Except as expressly provided in Section 5.2 and this Section 6.8, the Optionee
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class, the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of assets or stock
of another corporation, and any issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or Option Price of Shares subject to an Option. The grant of an Option
pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure, to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets. In any
such event (other than a merger in which the Company is the surviving
corporation as described in Section 5.2(b) and under the terms of which the
shares of Common Stock outstanding immediately prior to the merger remain
outstanding and unchanged):

(a) Unless otherwise provided in the Stock Option Agreement for
any given Option, upon any such merger, consolidation, or sale or transfer of
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, shall make specific
provision for the assumption of the obligations of the Company with respect to
the Plan and the rights of Optionees with respect to

10
<PAGE> 13

Options granted thereunder.

(b) Unless otherwise provided in the Stock Option Agreement for
any given Option, upon any such liquidation or dissolution, all rights of the
Optionee with respect to the unexercised portion of any Option shall wholly and
completely terminate and all Options shall be canceled at the time of any such
liquidation or dissolution, except to the extent that any plan pursuant to which
such liquidation or dissolution is effected, shall make specific provision with
respect to the Plan and the rights of Optionees with respect to Options granted
thereunder.

Notwithstanding the foregoing, the holder of any such Option or right
theretofore granted and still outstanding shall have the right immediately prior
to the effective date of such merger, consolidation, sale or transfer of assets,
liquidation or dissolution to exercise such Option in whole or in part without
regard to any installment provision that may have been made part of the terms
and conditions of such Option or right; provided, that any conditions precedent
to such exercise set forth in the Stock Option Agreement other than the passage
of time, have occurred or been waived. In no event, however, may any Incentive
Stock Option which becomes exercisable pursuant to this Section 6.8 be
exercised, in whole or in part, later than the date preceding the tenth
anniversary date of the grant thereof.

6.9. Rights in the Event of Death. Unless otherwise provided in
the Stock Option Agreement for any given Option, if an Optionee's employment
with the Employer Company is terminated on account of death, the person or
persons who shall have acquired the right, by will or the laws of descent and
distribution, to exercise the Optionee's Options shall continue to have (subject
to Sections 6.3 and 6.6 above) the right, for a period of at least six (6)
months from the date of termination by death or such longer period (if any) as
may be specified in the applicable Stock Option Agreement, to exercise any
Options which such Optionee would have been entitled to exercise on the
Optionee's death or during the first year thereafter. At the expiration of such
period any such Options which remain unexercised shall expire. Unless the
Administrator provides otherwise in the Stock Option Agreement, any Options that
could not have been exercised by an Optionee as of the Optionee's death or
during the first year thereafter may not be exercised.

11
<PAGE> 14

disability or such longer period (if any) as may be specified in the applicable
Stock Option Agreement, to exercise any Options which such Optionee would have
been entitled to exercise on the date of such Optionee's Total and Permanent
Disability. At the expiration of such period any such Options which remain
unexercised shall expire. Unless the Administrator provides otherwise in the
Stock Option Agreement, any Options that could not have been exercised by an
Optionee on the date of such Optionee's Total and Permanent Disability may not
be exercised.

6.11. Rights in the Event of Termination of Employment or
Service. Unless otherwise provided in the Stock Option Agreement for any given
Option, in the event that an Optionee's employment with the Employer Company
terminates, other than by reason of death or Total and Permanent Disability and
other than due to termination for "Cause," the Optionee shall have (subject to
Sections 6.3 and 6.6 above) the right, for a period of at least thirty (30) days
from the date of such termination or such longer period (if any) as may be
specified in the applicable Stock Option Agreement, to exercise any Options
which such Optionee would have been entitled to exercise on the date of such
Optionee's termination. At the expiration of such period any such Options which
remain unexercised shall expire. Unless the Administrator provides otherwise in
the Stock Option Agreement, any Options that could not have been exercised by an
Optionee on the date of such Optionee's termination of employment or service may
not be exercised. Notwithstanding the foregoing, if an Optionee's employment or
service is terminated for "Cause," the Company may notify the Optionee that any
Options not exercised prior to the termination are canceled, provided, however,
that such Optionee shall have fifteen (15) days to cure such termination for
"Cause." For purposes hereof and unless the Administrator provides otherwise in
the Stock Option Agreement, a termination of employment or service for "Cause"
shall include dismissal as a result of (1) Optionee's conviction of any crime or
offense involving money or other property of the Company or its subsidiaries or
which constitutes a felony in the jurisdiction involved; (2) Optionee's gross
negligence, gross incompetence or willful gross misconduct in the performance of
his or her duties; or (3) Optionee's willful failure or refusal to perform his
or her duties.

SECTION 7

SHARES ISSUED PURSUANT TO AN OPTION

7.1. Issuance of Certificates. The Company shall not be required
to issue or deliver any certificate for Shares purchased upon the exercise of
any Option, or any portion thereof, prior to fulfillment of all of the following
applicable conditions:

(a) The admission of such Shares to listing on all stock
exchanges or markets on which the Shares are then listed to the extent
such

12
<PAGE> 15

admission is necessary;

(b) The completion of any registration or other
qualification of such Shares under any federal or state securities laws
or under the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body, which the Board
shall in its sole discretion deem necessary or advisable, or the
determination by the Board in its sole discretion that no such
registration or qualification is required;

(c) The obtaining of any approval or other clearance from
any federal or state governmental agency which the Board shall, in its
sole discretion, determine to be necessary or advisable; and

(d) The lapse of such reasonable period of time following
the exercise of the Option as the Board from time to time may establish
for reasons of administrative convenience.

7.2. Compliance with Securities and Other Laws. In no event shall
the Company be required to sell, issue or deliver Shares pursuant to Options if
in the opinion of the Company the issuance thereof would constitute a violation
by either the Optionee or the Company of any provision of any law or regulation
of any governmental authority or any securities exchange. As a condition of any
sale or issuance of Shares pursuant to Options, the Company may place legends on
the Shares, issue stop-transfer orders and require such agreements or
undertakings from the Optionee as the Company may deem necessary or advisable to
assure compliance with any such law or regulation, including if the Company or
its counsel deems it appropriate, representations from the Optionee that the
Optionee is acquiring the Shares solely for investment and not with a view to
distribution and that no distribution of the Shares acquired by the Optionee
will be made unless registered pursuant to applicable federal and state
securities laws or unless, in the opinion of counsel to the Company, such
registration is unnecessary.

7.3. Requirements in the Event of a Disposition of Shares. Any
Optionee, or person representing such Optionee, who sells, exchanges, transfers
or otherwise disposes of any Shares acquired pursuant to the exercise of an
Incentive Stock Option within two (2) years following the grant of such
Incentive Stock Option or within one (1) year following the actual transfer of
such Shares to the Optionee, shall be obligated to notify the Company in writing
of the date of disposition, the number of Shares so disposed and the amount of
consideration received as a result of such disposition. The Company shall have
the right to take whatever reasonable action it deems appropriate against an
Optionee, including early termination of any Options which

13
<PAGE> 16

remain outstanding, in order to recover any additional taxes the Company incurs
as a result of such Optionee's failure to so notify the Company.

7.4. Legend. All certificates for Shares purchased upon the
exercise of an Incentive Stock Option shall bear a legend indicating that such
Shares were issued pursuant to an Incentive Stock Option grant.

SECTION 8

TERMINATION, AMENDMENT AND MODIFICATION OF PLAN

8.1. Board Termination, Amendment and Modification of Plan. The
Board may at any time amend or modify the Plan; provided, however, that no such
action of the Board, without approval of the stockholders of the Company (in the
same manner as provided in Section 9.8), may:

(a) Increase the number of Shares which may be issued under
the Plan;

(b) Modify the requirements as to eligibility for
participation in the Plan;

(c) Change the Option Price provisions in Sections 1.(p) or
6.4 other than to change the manner of determining the Fair Market Value
of the Shares to conform with any then applicable provisions of the Code
or regulations or rulings thereunder, unless such change does not have a
materially adverse effect on the Company; or

(d) Amend this Section 8.1 to defeat its purpose.

Notwithstanding anything above to contrary, the Board shall be entitled adjust
the Option Price with respect to any outstanding Option at any time provided
that the Optionee shall so consent.

8.2. Plan Termination. Subject to Section 9.8 below, unless
terminated earlier as provided in Section 8.1, the Plan shall terminate ten (10)
years from the date it is adopted by the Board and no Option shall be granted
under this Plan after such expiration date. Termination of the Plan shall not
alter or impair any of the rights or obligations under any Option theretofore
granted under the Plan unless the Optionee shall so consent.

8.3. Effect of Termination, Amendment or Modification of Plan.

14
<PAGE> 17

Notwithstanding Sections 8.1 and 8.2, no termination, amendment or modification
of the Plan shall in any manner affect any Option theretofore granted under the
Plan without the written consent of the Optionee or a person who shall have
acquired the right to exercise the Option by will or the laws of descent and
distribution.

SECTION 9

MISCELLANEOUS

9.1. Non-assignability of Options. No Option shall be assignable
or transferable by the Optionee except by will or by the laws of descent and
distribution. During the lifetime of the Optionee, the Option shall be
exercisable only by the Optionee.

9.2. Leaves of Absence. Unless the Administrator determines
otherwise, the vesting of an Option granted under the Plan shall not be tolled
during any unpaid leave of absence taken by an Optionee.

9.3. No Employment Rights. Nothing in the Plan or in any Option
granted hereunder or in any Stock Option Agreement relating thereto shall confer
upon any individual the right to continue in the employ or service of the
Employer Company.

9.4. Purchase Offer. The Administrator may offer to purchase, for
cash or Shares, any Option granted hereunder and such offer to purchase any
Option shall be on such terms and conditions as the Administrator establishes
and communicates to the Optionee at the time the offer is extended to the
Optionee.

9.5. Binding Effect. The Plan shall be binding upon the
successors and assigns of the Company.

9.6. Singular, Plural, Gender. Whenever used herein, except where
the context clearly indicates to the contrary, nouns in the singular shall
include the plural, and the masculine pronoun shall include the feminine gender.

9.7. Headings. Headings of the Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.

15
<PAGE> 18

outstanding shares of capital stock within 12 months following such adoption. If
this Plan is not so approved by the stockholders this Plan shall become null and
void and of no force or effect. Any Options granted pursuant to the Plan may not
be exercised until the Plan shall have been ratified and approved by the
stockholders pursuant to this Section.

9.9. Rights as Stockholder. An Optionee or transferee of an
Option shall have no rights as a stockholder with respect to any Shares subject
to such Option prior to the purchase of such Shares by exercise of such Option
as provided herein.

9.10. Applicable Law. This Plan and the Options granted hereunder
shall be interpreted, administered and otherwise subject to the laws of the
State of California, without giving effect to the principles of conflict of laws
thereof.

9.11. Reports. The Company will comply with all applicable
reporting requirements applicable to Incentive Stock Options under the Code.

9.12. Information to Employees. All Optionees shall be provided
with financial statements of the Company annually unless the Optionee is a key
employee whose duties in connection with the Company assure him or her access to
equivalent information.

<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.
<PAGE> 2

[*] 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 [*] and shall expire
on [*]; 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 [*],
Edmund's may terminate this Agreement on not less than 10 days' prior written
notice given to ABT on or before [*]. 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

[*]

<PAGE> 3

[*] 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 [*] in any
calendar year, ABT shall pay Edmund's [*] for each ABT Purchase Request in
excess of [*] 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 [*] 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 [*] days of the signing of this Agreement.

2. ABT shall pay Edmund's [*] 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

<PAGE> 4

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

4
<PAGE> 5

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

<PAGE> 6

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
--------------------------- -------------------------------

<PAGE> 1

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 [*]. "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) [*] during the twelve months commencing with the first full
calendar month after Edmund begins submitting used car request
forms to ABT, (ii) [*] during the second such twelve-month
period, or (iii) [*] during any subsequent twelve-month period.

c. No exclusivity re financing.

3. Fees:

a. [*] for each new car request form for the first [*] per
calendar month. [*] for the next [*] per month, [*] for
the next [*] per month, [*] for the next [*] per month,
and [*] for any forms in excess of [*] 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 [*] per twelve months, [*] for the next [*] per
twelve months, [*] for the next [*] per twelve months,
[*] for the next [*] per twelve months, and [*] for any
forms in excess of [*] 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 though
September 30 [*]. 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 [*] per calendar month, while exclusivity is in
effect. Thereafter, [*] for each used car request form plus
[*] for each form in excess of [*] per calendar month.
Similar reconciliation as for the new car request forms.

c. [*] of net origination fees paid to ABT from [*] 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 [*] as a deposit against
future payments (to be offset by ABT in 10 installments of [*]
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.

<PAGE> 2

[*] 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 [*].

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 [*]:

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

<PAGE> 1

EXHIBIT 10.30

autobytel.com inc.
1999 STOCK OPTION PLAN

PLAN SUMMARY

The Plan is designed to advance the Company's interests by
encouraging employees and non-employee directors of the Company and any future
Parent Corporations or Subsidiary Corporations to acquire a proprietary interest
in the Company. It provides that an aggregate of 1,800,000 shares of the
Company's Common Stock may be optioned to employees and non-employee directors
of the Employer Company; provided that after March 31, 1999 not more than
1,000,000 shares of the Company's Common Stock may thereafter be optioned to
employees and non-employee directors of the Employer Company hereunder. Options
granted under the Plan may be either Incentive Stock Options, which qualify for
favorable federal income tax treatment, or Nonstatutory Stock Options. All
employees of the Employer Company are eligible to receive Incentive Stock
Options or Nonstatutory Stock Options, but the Administrator is entitled to
select the individuals to whom such options actually will be granted and to
determine whether the options will be Incentive Stock Options or Nonstatutory
Stock Options. Non-employee directors are automatically entitled to participate
in the Plan.

The Company will receive no cash consideration for granting
Options

<PAGE> 2

under the Plan. However, when an Option is exercised, the holder is required to
pay the Option Price for the number of shares of stock to be issued under the
exercised Option.

The Plan will be administered by the Administrator and will
terminate ten years after the date it is adopted by the Board of Directors,
unless earlier terminated by the Administrator.

<PAGE> 3

autobytel.com inc.

1999 STOCK OPTION PLAN

SECTION 1
DEFINITIONS

As used herein, the following terms have the meanings hereinafter
set forth unless the context clearly indicates to the contrary:

(a) "Act" means the Securities Act of 1933, as amended.

(b) "Administrator" means the Board or the Committee, whichever
shall be administering the Plan from time to time in the discretion of the
Board, as described in Section 3 of the Plan.

(d) "Code" means the Internal Revenue Code of 1986, as amended.

(e) "Committee" means the committee appointed by the Board in
accordance with Section 3 of the Plan.

(f) "Company" means autobytel.com inc., a Delaware corporation.

(g) "Director" means a member of the Board of Directors of the
Company.

(h) "Employee" means an individual who is employed (within the
meaning of Section 3401 of the Code and the regulations thereunder) by the
Company or any future Parent Corporation or Subsidiary Corporation of the
Company.

(i) "Employer Company" means the company, whether the Company or
a Parent Corporation or Subsidiary Corporation of the Company, which employs the
Employee.

(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

(k) "Fair Market Value of Shares" shall mean (i) if the Shares
are not

1
<PAGE> 4

publicly traded on the day in question, the fair market value of the Shares on
the day in question as determined and set forth in writing by the Administrator
(which, in making such determination, shall make a good faith effort to
establish the true fair market value of the Shares as of such date using such
methods as it deems appropriate, including independent appraisals, and taking
into consideration any requirements set forth in the Code or the regulations
thereunder), (ii) if the Shares are publicly traded on the day in question, the
closing price of the Shares on the day in question. The closing price shall be
the average of the highest and lowest quoted selling prices on the New York
Stock Exchange or, if the Shares are not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which the Shares are
listed or admitted to trading or, if not listed or admitted to trading on any
national securities exchange, as reported by the Nasdaq Stock Market's National
Market on the day in question, or (iii) if the Shares are not listed or admitted
to trading on any national securities exchange or reported by the Nasdaq Stock
Market's National Market, the closing price of the Shares shall be the average
of the highest and lowest quoted selling prices as reported by The Wall Street
Journal for the over-the-counter market on the day in question.

(l) "Incentive Stock Option" means an Option for Shares which is
intended to be, designated in writing as, and qualifies as an Incentive Stock
Option within the meaning of Section 422 of the Code.

(m) "Inside Director" means a Director who is an Employee.

(n) "Key Employee" means any Employee so designated pursuant to
Section 3.2 by the Administrator to receive Options.

(o) "Nonstatutory Stock Option" means an Option which is not an
Incentive Stock Option and which is designated as a Nonstatutory Stock Option by
the Board.

(p) "Option" means an option to purchase a Share pursuant to the
provisions of this Plan.

(q) "Optionee" means an Employee or Outside Director to whom an
Option has been granted hereunder.

(r) "Option Price" means the price per share of the Shares
subject to each Option as provided in Section 6.4.

(s) "Option Term" means the maximum period of time during which

2
<PAGE> 5

an Option may be exercised as set forth in Section 6.5 below.

(t) "Outside Director" means a Director who is not an Employee.

(u) "Parent Corporation" shall have the meaning assigned to that
term under Section 424 of the Code.

(v) "Plan" means the Auto-By-Tel Corporation 1999 Stock Option
Plan, the terms of which are set forth herein.

(w) "Share" or "Shares" means Common Stock of the Company, par
value $.001 per share, or, in the event that the outstanding Shares are
hereafter changed into or exchanged for different shares or securities of the
Company or some other corporation or other entity, such other shares or
securities.

(x) "Stock Option Agreement" means the agreement described in
Section 6.1 between the Company and the Optionee under which the Optionee may
purchase Shares hereunder.

(y) "Subsidiary Corporation" shall have the meaning assigned to
that term under Section 424 of the Code.

(z) "Total and Permanent Disability", unless otherwise specified
in the applicable Stock Option Agreement, means the inability of an Employee to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than twelve months.

SECTION 2

THE PLAN

2.1. Name. This Plan shall be known as "autobytel.com inc. 1999
Stock Option Plan."

2.2. Purpose. The purpose of this Plan is to advance the
interests of the Company and its stockholders by affording Employees of the
Employer Company and Outside Directors an opportunity to acquire or increase
their proprietary interest in the Company by the grant to such individuals of
Options under the terms set forth herein. By thus encouraging such individuals
to acquire or increase their proprietary interest in the Company, the Company
seeks to attract, motivate and retain those highly competent individuals upon
whose judgment, initiative, leadership, and continued

3
<PAGE> 6

efforts the success of the Company in large measure depends.

2.3. Intention. It is intended that Options (if any) issued to
Employees as Incentive Stock Options under this Plan will qualify as Incentive
Stock Options under Section 422 of the Code and the terms of this Plan shall be
interpreted in accordance with such intention. Options issued to Outside
Directors shall be Non-Statutory Stock Options.

SECTION 3

ADMINISTRATION

3.1. Administration. The Plan shall be administered, in the
discretion of the Board from time to time, by the Board or by the Committee
acting as the Administrator. The Committee shall be appointed by the Board, in a
manner consistent with the Company's Bylaws, and shall consist of not less than
three (3) members of the Board; provided, however, that, after the Company
effects an initial public offering, the Committee will be comprised of solely
two (2) or more members, each of who is an outside director (within the meaning
of Code Section 162(m) and the Treasury Regulations thereunder) as well as a
non-employee director (within the meaning of Rule 16(b)-3 of the Securities and
Exchange Commission adopted under the Securities Exchange Act of 1934, as
amended). The Board may from time to time remove members from, or add members
to, the Committee. Vacancies on the Committee, however caused, shall be filled
by the Board. The Board may appoint one (1) of the members of the Committee as
Chairman. The Administrator shall hold meetings at such times and places as it
may determine. Acts of a majority of the Administrator at which a quorum is
present, or acts reduced to or approved in writing by the unanimous consent of
the members of the Administrator, shall be the valid acts of the Administrator.

3.2. Duties. The Administrator shall from time to time at its
discretion select the Employees who are to be granted Options, determine the
number of Shares to be subject to Options to be granted to each Optionee and
designate any such Options granted to Employees as Incentive Stock Options or
Non-Statutory Stock Options. The interpretation and construction by the
Administrator of any provisions of the Plan or of any Option granted thereunder
shall be final. No member of the Administrator shall be liable for any action or
determination made in good faith with respect to the Plan or any Option granted
hereunder.

SECTION 4

4
<PAGE> 7

PARTICIPATION

4.1. Eligibility. The Optionees shall be:

(a) such persons (collectively, "Participants"; individually
a "Participant") as the Administrator may select from among the following
classes of persons, subject to the terms and conditions of Section 4.2 below:

(1) Key Employees of the Company;

(2) Key Employees of the Company's Parent Corporations
or Subsidiary Corporations; and

(b) Outside Directors, who shall automatically be eligible
to participate in the Plan in accordance with Section 6.12 below.

4.2. Ten-Percent Stockholders. An Employee who beneficially owns
more than ten percent (10%) of the total combined voting power of all classes of
outstanding stock of the Company, as determined under Sections 422 and 424 of
the Code, shall not be eligible to receive an Incentive Stock Option unless (i)
the Option Price of the Shares subject to such Option is at least one hundred
ten percent (110%) of the Fair Market Value of such Shares on the date of grant
and (ii) such Option by its terms is not exercisable after the expiration of
five (5) years from the date of grant.

(a) Stock Ownership. For purposes of Section 4.2 above, in
determining stock ownership, an Employee's beneficial ownership of any class of
outstanding stock of the Employer Company or a Parent Corporation or a
Subsidiary Corporation shall be determined as provided in Rule 16a-1(a) of the
Securities and Exchange Commission adopted under the Exchange Act, and in any
event (i) such Participant shall be considered as owning the stock owned,
directly or indirectly, by or for his or her brothers and sisters, spouse,
ancestors and lineal descendants; (ii) stock owned, directly or indirectly, by
or for a corporation, partnership, estate or trust shall be considered as being
owned proportionately by or for its stockholders, partners or beneficiaries; and
(iii) stock with respect to which such Participant holds an Option shall not be
counted.

5
<PAGE> 8

shares authorized for issue under outstanding Options held by the Optionee or by
any other person.

SECTION 5

SHARES SUBJECT TO PLAN

5.1. Shares Available for Options. Subject to adjustment pursuant
to the provisions of Section 5.2 hereof, the total number of Shares which may be
issued upon the exercise of all Options shall not exceed 1,800,000 Shares
provided that after March 31, 1999, not more than 1,000,000 Shares may
thereafter be issued pursuant to grants of Options made hereunder after March
31, 1999. Such Shares may be either authorized and unissued Shares or issued
Shares which have been reacquired by the Company (pursuant to Section 6.7(d) or
otherwise). If any Option shall expire or terminate for any reason without
having been exercised in full, new Options may be granted covering Shares
originally set aside for the unexercised portion of such expired or terminated
Option.

5.2. Adjustments.

6
<PAGE> 9

foregoing adjustments relate to securities of the Company, such adjustments
shall be made by the Administrator, whose determination shall be conclusive and
binding on all persons. In computing any adjustment under this Section 5.2, any
fractional Share which might otherwise become subject to an Option shall be
eliminated.

SECTION 6

OPTIONS

6.1. Option Grant and Agreement.

(a) The Administrator may from time to time, subject to the
terms of this Plan, grant to any Participant (other than a person who is
an Outside Director) one or more Options but in no event may any such
Participant receive Options under this Plan on more than 700,000 Shares
during any one calendar year. Each Option grant shall be evidenced by a
written Stock Option Agreement, dated as of the date of grant and
executed by the Company and the Optionee, which Stock Option Agreement
shall set forth the number of Options granted, whether the Options are
Incentive Stock Options or Nonstatutory Stock Options, the Option Price,
the Option Term and such other terms and conditions as may be determined
appropriate by the Administrator, provided that such terms and
conditions are not inconsistent with the Plan. The Stock Option
Agreement shall incorporate this Plan by reference and provide that any
inconsistencies or disputes shall be resolved in favor of the Plan
language.

(b) Except as provided in Section 6.12 below, grants under
the Plan shall be made by the Administrator selectively among the
Participants and the terms and provisions of such grants and the
agreements evidencing the same (including, without limitation, the form,
the amount, the timing, the exercisability and the vesting schedule of
such grants) need not be uniform, whether or not the Optionees are
similarly situated.

7
<PAGE> 10

6.3. Conditions with Respect to Incentive Stock Options. Each
Incentive Stock Option shall be subject to the following conditions, which
conditions shall be stated within the applicable Stock Option Agreement. Any
Incentive Stock Option which does not comply with these provisions shall not be
considered an Incentive Stock Option and instead shall be considered a
Nonstatutory Option issued under the Plan:

8
<PAGE> 11

6.6. Limitations on Exercise of Options. Notwithstanding anything
contained in this Plan to the contrary:

(a) Options may not be exercised until the Plan has been
ratified by the a majority of the stockholders as provided in Section
9.8.

6.7. Method of Exercising Options; Withholding Tax.

9
<PAGE> 12

the Board or the Committee, including any approved cashless exercise
mechanism or a promissory note given by the Optionee. The right to
deliver in full or partial payment of such Option Price any
consideration other than cash shall be limited to such frequency as the
Board or the Committee shall determine in its absolute discretion from
time to time. In the event all or part of the Option Price is paid in
Shares, any excess of the value of such Shares over the Option Price
will be returned to the Optionee as follows: (i) any whole Share
remaining in excess of the Option Price will be returned in kind, and
may be represented by one or more share certificates; and (ii) any
partial Shares remaining in excess of the Option Price will be returned
in cash.

(c) In the event the Company determines that it is required
to withhold state or Federal income tax as a result of the exercise of
an Option, as a condition to the exercise thereof, the Optionee may be
required to make arrangements satisfactory to the Company to enable it
to satisfy such withholding requirements. Payment of such withholding
requirements may be made, in the discretion of the Administrator, (i) in
cash, (ii) by delivery of Shares registered in the name of the Optionee
having a Fair Market Value at the time of exercise equal to the amount
to be withheld, (iii) by the Company retaining or not issuing such
number of Shares subject to the Option as have a Fair Market Value at
the time of exercising equal to the amount to be withheld or (iv) any
combination of (i), (ii) and (iii) above.

10
<PAGE> 13

issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Option Price of Shares
subject to an Option. The grant of an Option pursuant to the Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets. In any such event (other than a
merger in which the Company is the surviving corporation as described in Section
5.2(b) and under the terms of which the shares of Common Stock outstanding
immediately prior to the merger remain outstanding and unchanged):

6.9. Rights in the Event of Death. Unless otherwise provided in
the Stock Option Agreement for any given Option, if an Optionee's employment
with the Employer Company or service as a member of the Board is terminated on
account of

11
<PAGE> 14

death, the person or persons who shall have acquired the right, by will or the
laws of descent and distribution, to exercise the Optionee's Options shall
continue to have (subject to Sections 6.3 and 6.6 above) the right, for a period
of at least six (6) months from the date of termination by death or such longer
period (if any) as may be specified in the applicable Stock Option Agreement, to
exercise any Options which such Optionee would have been entitled to exercise on
the Optionee's death or during the first year thereafter. At the expiration of
such period any such Options which remain unexercised shall expire. Unless the
Administrator provides otherwise in the Stock Option Agreement, any Options that
could not have been exercised by an Optionee as of the Optionee's death or
during the first year thereafter may not be exercised.

6.10. Rights in the Event of Total and Permanent Disability.
Unless otherwise provided in the Stock Option Agreement for any given Option, if
an Optionee's employment with the Employer Company or service as a member of the
Board is terminated on account of Total and Permanent Disability, the Optionee
shall have (subject to Sections 6.3 and 6.6 above) the right, for a period of at
least six (6) months from the date of termination by disability or such longer
period (if any) as may be specified in the applicable Stock Option Agreement, to
exercise any Options which such Optionee would have been entitled to exercise on
the date of such Optionee's Total and Permanent Disability. At the expiration of
such period any such Options which remain unexercised shall expire. Unless the
Administrator provides otherwise in the Stock Option Agreement, any Options that
could not have been exercised by an Optionee on the date of such Optionee's
Total and Permanent Disability may not be exercised.

12
<PAGE> 15

"Cause," the Company may notify the Optionee that any Options not exercised
prior to the termination are canceled, provided, however, that such Optionee
shall have fifteen (15) days to cure such termination for "Cause." For purposes
hereof and unless the Administrator provides otherwise in the Stock Option
Agreement, a termination of employment or service for "Cause" shall include
dismissal as a result of (1) Optionee's conviction of any crime or offense
involving money or other property of the Company or its subsidiaries or which
constitutes a felony in the jurisdiction involved; (2) Optionee's gross
negligence, gross incompetence or willful gross misconduct in the performance of
his or her duties; or (3) Optionee's willful failure or refusal to perform his
or her duties.

6.12. Automatic Option Grants to Outside Directors.

(a) First Option. Each person who becomes an Outside Director
after January 14, 1999 shall be automatically granted an Option to purchase
twenty thousand (20,000) Shares (the "First Option") on the date on which such
person first becomes an Outside Director, whether through election by the
stockholders of the Company or appointment by the Board to fill a vacancy;
provided, however, that an Inside Director who ceases to be an Inside Director
but who remains a member of the Board shall not receive the grant of a First
Option; provided further, that if any person serving as an Outside Director on
January 14, 1999 received less that 20,000 shares (as adjusted for any stock
splits or combinations subsequent to the date of such grant) on the date such
person became a member of the Board, such person shall be granted an Option to
purchase a number of Shares equal to the difference between twenty thousand
(20,000) Shares and the Shares actually granted (as adjusted).

(b) Subsequent Option. Each Outside Director shall be
automatically granted an Option to purchase five thousand (5,000) Shares (a
"Subsequent Option") on November 1 of each year; provided that he or she is then
an Outside Director and, provided further, that as of such date, he or she shall
have served on the Board for at least the preceding six (6) months.

(i) Term. The term of the Option shall be ten (10) years.

(ii) Exercise Price. The exercise price per Share shall be
one hundred percent (100%) of the Fair Market Value on
the date of grant. In the event that the date of grant
is not a trading day, the exercise price per Share
shall be the Fair Market Value on the next trading day
immediately following the date of grant.

13
<PAGE> 16

(iii) Vesting Schedule. Each grant of Shares subject to the
Option shall vest in its entirety and become
exercisable on the first anniversary of the grant
date, subject to the Optionee remaining an Outside
Director as of the applicable vesting date.

(iv) Changes in Control of Company. In the event there
occurs a change in control of the Company (as
hereafter defined) one half (1/2) of all Shares
subject to the Option shall vest and become
exercisable upon the effective date of any such change
in control.

(v) Definition of "Change in Control." For purposes of the
Plan, "Change in Control" shall be defined as:

(a) When any "person" as defined in Section 3(a)(9)
of the Exchange Act and as used in Sections 13(d)
and 14(d) thereof (including a "group" as defined
in Section 13(d) of the Exchange Act, but
excluding the Company, any Subsidiary or any
employee benefit plan sponsored or maintained by
the Company or any Subsidiary (including any
trustee of such plan acting as trustee), and also
excluding Peter R. Ellis or John C. Bedrosian)
directly or indirectly, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the
Exchange Act, as amended from time to time), of
securities of the Company representing 50% or
more of the combined voting power of the
Company's then outstanding securities.

(b) The individuals who, as of January 14, 1999,
constitute the Board (the "Incumbent Board"),
cease for any reason to constitute at least a
majority of the Board; provided however, that any
individual becoming a director subsequent to the
Effective Date, whose election, or nomination for
election by the Company's stockholders, was
approved by a vote of at least a majority of the

14
<PAGE> 17

directors then comprising the Incumbent Board
shall not, for purposes of this section, be
counted in determining whether the Incumbent
Board constitutes a majority of the Board.

(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all
or substantially all of the assets of the Company
or the acquisition of assets of another
corporation (a "Business Combination"), in each
case, unless, following such Business
Combination:

i. all or substantially all of the individuals
and entities who were the beneficial owners
of the then outstanding shares of common
stock of the Company and the beneficial
owners of the combined voting power of the
then outstanding voting securities of the
Company entitled to vote generally in the
election of directors immediately prior to
such Business Combination beneficially own,
directly or indirectly, more than fifty
percent (50%) of the then outstanding shares
of common stock and the combined voting power
of the then outstanding securities entitled
to vote generally in the election of
directors, respectively, as the case may be,
of the corporation resulting from such
Business Combination (including, without
limitation, a corporation which as a result
of such transaction owns the Company or all
or substantially all of the Company's assets
either directly or indirectly or through one
or more subsidiaries); and

ii. no person (excluding any employee benefit
plan or related trust) of the Company or such
corporation resulting from such Business
Combination beneficially owns, directly or
indirectly, fifty percent (50%) or more of
the then outstanding shares of common stock
of the corporation resulting from such
Business Combination or the combined voting
power of the corporation except to the extent
that such ownership existed prior to the
Business

15
<PAGE> 18

Combination; or

(d) Approval by the stockholders of the Company
of a complete liquidation or dissolution of
the Company.

(vi) Stock Option Agreement. Each Option granted to
Outside Directors shall be evidenced by a Stock
Option Agreement, which shall contain such other
provisions as may be applicable to such Options
under this Plan.

SECTION 7

SHARES ISSUED PURSUANT TO AN OPTION

(a) The admission of such Shares to listing on all stock
exchanges or markets on which the Shares are then listed to the extent
such admission is necessary;

(c) The obtaining of any approval or other clearance from
any federal or state governmental agency which the Board shall, in its
sole discretion, determine to be necessary or advisable; and

(d) The lapse of such reasonable period of time following
the exercise of the Option as the Board from time to time may establish
for reasons of administrative convenience.

16
<PAGE> 19

or the Company of any provision of any law or regulation of any governmental
authority or any securities exchange. As a condition of any sale or issuance of
Shares pursuant to Options, the Company may place legends on the Shares, issue
stop-transfer orders and require such agreements or undertakings from the
Optionee as the Company may deem necessary or advisable to assure compliance
with any such law or regulation, including if the Company or its counsel deems
it appropriate, representations from the Optionee that the Optionee is acquiring
the Shares solely for investment and not with a view to distribution and that no
distribution of the Shares acquired by the Optionee will be made unless
registered pursuant to applicable federal and state securities laws or unless,
in the opinion of counsel to the Company, such registration is unnecessary.

SECTION 8

TERMINATION, AMENDMENT AND MODIFICATION OF PLAN

(a) Increase the number of Shares which may be issued under
the Plan;

(b) Modify the requirements as to eligibility for
participation in the Plan;

17
<PAGE> 20

(d) Amend this Section 8.1 to defeat its purpose.

Notwithstanding anything above to contrary, the Board shall be entitled adjust
the Option Price with respect to any outstanding Option at any time provided
that the Optionee shall so consent.

8.3. Effect of Termination, Amendment or Modification of Plan.
Notwithstanding Sections 8.1 and 8.2, no termination, amendment or modification
of the Plan shall in any manner affect any Option theretofore granted under the
Plan without the written consent of the Optionee or a person who shall have
acquired the right to exercise the Option by will or the laws of descent and
distribution.

SECTION 9

MISCELLANEOUS

9.2. Leaves of Absence. Unless the Administrator determines
otherwise, the vesting of an Option granted under the Plan shall not be tolled
during any unpaid leave of absence taken by an Optionee.

9.3. No Employment Rights. Nothing in the Plan or in any Option
granted hereunder or in any Stock Option Agreement relating thereto shall confer
upon

18
<PAGE> 21

any individual the right to continue in the employ or service of the Employer
Company.

9.5. Binding Effect. The Plan shall be binding upon the
successors and assigns of the Company.

9.7. Headings. Headings of the Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.

9.8. Effective Date; Ratification by Stockholders. This Plan
shall become effective upon its adoption by the Board but is subject to the
ratification and approval by the affirmative vote of the holders of a majority
of the Company's outstanding shares of capital stock within 12 months following
such adoption. If this Plan is not so approved by the stockholders this Plan
shall become null and void and of no force or effect. Any Options granted
pursuant to the Plan may not be exercised until the Plan shall have been
ratified and approved by the stockholders pursuant to this Section.

9.11. Reports. The Company will comply with all applicable
reporting requirements applicable to Incentive Stock Options under the Code.

<PAGE> 1

[*] Confidential treatment has been requested for certain portions
of this exhibit.

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 [*] for the subscribed new vehicle franchises of [FRANCHISES].
This [*] 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 [*] will remain in effect for
[*] 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;

[*] Confidential treatment requested

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 [*]. 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;

(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.

1
<PAGE> 2

[*] Confidential treatment requested

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, [*] 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 [*]. 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 [*] 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;

(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 [*]. 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 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

[*] Confidential treatment requested

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 [*] 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 [*] 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

[*] Confidential treatment requested

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:

[*]

The amount of fees charged for your subscription is determined by several
factors, including but not limited to your [*] for the year in question.
The above stated fees shall remain unchanged during the first [*] 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 [*] such fee changes take place within the initial
[*] 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]

5
<PAGE> 6

[*] Confidential treatment requested

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]

6
<PAGE> 7

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> 8

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> 9

[*] Confidential treatment requested

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]

<PAGE> 10
135 POINT CERTIFIED PRE-OWNED CYBERSTORE(R) VEHICLE CHECKLIST

<TABLE>
==================================================================================================================
<S> <C> <C> <C> <C> <C>
ADDRESS/LOCATION:

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>

<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 [*] 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 [*]. You further agree to maintain an ABT Satisfaction Index
Performance (ABTSSI) level of [*] 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.

1
<PAGE> 2

[*] Confidential treatment requested

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, [*] 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 [*]. 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 [*] 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 [*] will remain in
effect for at least [*] 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 [*]
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

[*] Confidential treatment requested

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 [*] 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 [*] 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 [*]

3
<PAGE> 4

[*] Confidential treatment requested

[*]

ABT shall review such factors at [*] 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 [*] take place within a [*] 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:

[*]

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 [*]. 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

[*] Confidential treatment requested

APPENDIX "B"

CERTIFIED PRE-OWNED CYBERSTORE(R) ELECTION

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]

5
<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.
----- ---

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.

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

6
<PAGE> 7

BACK SIDE OF FORM
- --------------------------------------------------------------------------------

FULL X LIMITED WARRANTY.
----- ---

Systems Covered: Parts Covered:

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.

- ---------------------------------------- ------------------------------------
Autobytel.com Accredited Dealer/Date Customer Signature/Date

- --------------------------------------------------------------------------------

7
<PAGE> 8

[*] Confidential treatment requested

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
OTHER: Repair $ ODOMETER Repair $
Replace Replace
==================================================================================================================
CIRCLE CHOICE: TOTAL: $

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 [*] 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]

8
<PAGE> 9
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> 10

<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 11.1

autobytel.com inc.
Computation of Net Loss Per Share
(Amounts in thousands, except per share data)

<TABLE>
<CAPTION>
Inception Years Ended
(January 31, 1995) December 31,
To -----------------------------------
December 31, 1995 1996 1997 1998
----------------- ------- --------- -------------
<S> <C> <C> <C> <C>
Basic:
Net loss $(1,030) $(6,035) $(16,810) $(19,398)
Basic weighted average shares outstanding 8,250 8,252 8,291 8,423
------- ------- -------- --------
Basic net loss per share $ (0.12) $ (0.73) $ (2.03) $ (2.30)
======= ======= ======== ========
Diluted:
Net loss $(1,030) $(6,035) $(16,810) $(19,398)
Basic weighted average shares outstanding 8,250 8,252 8,291 8,423
Net effect of dilutive convertible preferred
stock, stock options and warrants -- -- -- --
------- ------- -------- --------
Diluted weighted average shares outstanding 8,250 8,252 8,291 8,423
------- ------- -------- --------
Diluted net loss per share $ (0.12) $ (0.73) $ (2.03) $ (2.30)
======= ======= ======== ========
</TABLE>

<PAGE> 1
EXHIBIT 23.1

[LETTERHEAD OF ARTHUR ANDERSEN LLP]

Consent of Independent Public Accountants

As independent public accountants, we hereby consent to the inclusion in
Amendment No. 1 to the registration statement on Form S-1 of our report dated
February 3, 1999 on our audit of the consolidated balance sheets of
autobytel.com inc. as of December 31, 1996, 1997 and 1998, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years then ended. We also consent to the reference to our firm under the
caption "Experts."

/s/ ARTHUR ANDERSEN LLP

Los Angeles, California
February 8, 1999

<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 27,984
<SECURITIES> 0
<RECEIVABLES> 2,315
<ALLOWANCES> 402
<INVENTORY> 0
<CURRENT-ASSETS> 31,112
<PP&E> 2,208
<DEPRECIATION> (2,359)
<TOTAL-ASSETS> 33,667
<CURRENT-LIABILITIES> 8,216
<BONDS> 0
0
7
<COMMON> 8
<OTHER-SE> 25,313
<TOTAL-LIABILITY-AND-EQUITY> 33,667
<SALES> 23,826
<TOTAL-REVENUES> 23,826
<CGS> 0
<TOTAL-COSTS> 30,033
<OTHER-EXPENSES> 8,528
<LOSS-PROVISION> 187
<INTEREST-EXPENSE> 3
<INCOME-PRETAX> (19,363)
<INCOME-TAX> 35
<INCOME-CONTINUING> (19,398)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,398)
<EPS-PRIMARY> (2.30)
<EPS-DILUTED> (2.30)

</TABLE>