Exhibit 2.1
ACQUISITION AGREEMENT
BY AND AMONG
XXXXXXXXX.XXX INC.
AUTOBYTEL ACQUISITION I CORP.
AND
XXXXXXX.XXX, INC.
April 11, 2001
TABLE OF CONTENTS
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Page
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Article I. THE MERGER....................................................................... 2
1.1 The Merger....................................................................... 2
1.2 Closing; Effective Time.......................................................... 2
1.3 Effect of the Merger............................................................. 2
1.4 Certificate of Incorporation; Bylaws............................................. 2
(a) Certificate of Incorporation.............................................. 2
(b) Bylaws.................................................................... 2
1.5 Directors and Officers........................................................... 3
1.6 Effect on Capital Stock.......................................................... 3
(a) Conversion of Autoweb Common Stock........................................ 3
(b) Cancellation of Autoweb Common Stock Owned by Autobytel or Autoweb........ 3
(c) Autoweb Stock Option Plans................................................ 3
(d) Capital Stock of Merger Sub............................................... 4
(e) Adjustments to Exchange Ratio............................................. 4
(f) Dissenting Shares......................................................... 4
(g) Fractional Shares......................................................... 4
1.7 Surrender of Certificates........................................................ 5
(a) Exchange Agent............................................................ 5
(b) Autobytel to Provide Common Stock and Cash................................ 5
(c) Exchange Procedures....................................................... 5
(d) Distributions With Respect to Unexchanged Shares.......................... 5
(e) Transfers of Ownership.................................................... 6
(f) No Liability.............................................................. 6
1.8 No Further Ownership Rights in Autoweb Common Stock.............................. 6
1.9 Lost, Stolen or Destroyed Certificates........................................... 6
1.10 Tax Consequences................................................................. 7
1.11 Taking of Necessary Action; Further Action....................................... 7
Article II. REPRESENTATIONS AND WARRANTIES OF AUTOWEB........................................ 7
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2.1 Organization, and Qualification; No Subsidiaries................................. 8
2.2 Capitalization................................................................... 8
2.3 Authority; Governmental Consents................................................. 9
(a) Authority................................................................. 9
(b) Governmental Consents..................................................... 9
2.4 No Violation..................................................................... 9
2.5 SEC Reports and Financial Statements............................................. 10
2.6 Compliance with Applicable Laws and Permits; Regulatory Matters.................. 11
2.7 Certain Agreements Affected by the Merger........................................ 11
2.8 Litigation....................................................................... 11
2.9 Registration Statement; Proxy Statement/Prospectus............................... 12
2.10 Employee Benefit Plans........................................................... 12
(a) Plans..................................................................... 12
(b) Documents................................................................. 13
(c) Compliance................................................................ 13
(d) Contributions............................................................. 13
(e) Multi-Employer Plan Etc................................................... 13
(f) Liabilities............................................................... 13
(g) Claims.................................................................... 14
(h) COBRA etc................................................................. 14
2.11 Intellectual Property............................................................ 14
(a) Certain Definitions....................................................... 14
(b) Marks..................................................................... 15
(c) Owned Patents............................................................. 15
(d) Owned Copyrights/Maskworks................................................ 16
(e) Trade Secrets............................................................. 16
(f) Software.................................................................. 16
(g) Infringement.............................................................. 17
(h) Confidentiality........................................................... 17
2.12 Contracts........................................................................ 17
2.13 Vote Required.................................................................... 17
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2.14 Absence of Certain Changes........................................................ 17
2.15 Restrictions on Business Activities............................................... 18
2.16 Title to Property................................................................. 18
2.17 Environmental Matters............................................................. 19
(a) Hazardous Materials......................................................... 19
(b) Certain Definitions......................................................... 19
2.18 Employee Matters.................................................................. 19
2.19 Interested Party Transactions..................................................... 20
2.20 Insurance......................................................................... 20
2.21 Minute Books...................................................................... 20
2.22 Complete Copies of Materials...................................................... 20
2.23 Board Approval.................................................................... 21
2.24 State Anti-Takeover Statutes...................................................... 21
2.25 Dealers/Customers................................................................. 21
2.26 Brokers' and Finders' Fees........................................................ 21
2.27 Opinion of Financial Advisor...................................................... 21
2.28 Voting Agreement.................................................................. 21
2.29 Tax Representations............................................................... 21
2.30 Representations Complete.......................................................... 24
Article III. REPRESENTATIONS AND WARRANTIES OF AUTOBYTEL AND MERGER SUB........................ 24
3.1 Organization, and Qualification................................................... 24
3.2 Capitalization.................................................................... 25
3.3 Authority; Governmental Consents.................................................. 25
(a) Authority................................................................... 25
(b) Governmental Consents....................................................... 26
3.4 No Violation...................................................................... 26
3.5 SEC Reports and Financial Statements.............................................. 26
3.6 Compliance with Applicable Laws and Permits; Regulatory Matters................... 27
3.7 Litigation........................................................................ 27
3.8 Registration Statement; Proxy Statement/Prospectus................................ 28
3.9 Employee Benefit Plans............................................................ 28
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3.10 Intellectual Property............................................................. 28
(a) Right to Use................................................................ 29
(b) Trade Secrets............................................................... 29
(c) Software.................................................................... 29
(d) Infringement................................................................ 29
(e) Confidentiality............................................................. 29
3.11 Contracts......................................................................... 29
3.12 Vote Required..................................................................... 30
3.13 Absence of Certain Changes........................................................ 30
3.14 Restrictions on Business Activities............................................... 30
3.15 Properties........................................................................ 30
3.16 Environmental Matters............................................................. 31
3.17 Employee Matters.................................................................. 31
3.18 Interested Party Transactions..................................................... 31
3.19 Complete Copies of Materials...................................................... 32
3.20 Board Approval.................................................................... 32
3.21 State Anti-Takeover Statutes...................................................... 32
3.22 Brokers' and Finders' Fees........................................................ 32
3.23 Minute Book....................................................................... 32
3.24 Opinion of Financial Advisor...................................................... 32
3.25 Insurance......................................................................... 32
3.26 Tax Representations............................................................... 33
3.27 Representations Complete.......................................................... 35
Article IV. CONDUCT PRIOR TO THE EFFECTIVE TIME............................................... 35
4.1 Conduct of Business of Autoweb and Autobytel...................................... 35
4.2 Conduct of Business of Autoweb.................................................... 36
4.3 Conduct of Business of Autobytel.................................................. 38
4.4 No Solicitation................................................................... 39
Article V. ADDITIONAL AGREEMENTS; REPRESENTATIONS............................................ 40
5.1 Proxy Statement/Prospectus; Registration Statement................................ 40
5.2 Meeting of Autoweb Stockholders................................................... 41
5.3 Meeting of Autobytel Stockholders................................................. 41
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5.4 Access to Information................................................................ 41
(a) Access...................................................................... 41
(b) Ongoing Operations.......................................................... 42
(c) No Modification............................................................. 42
5.5 Confidentiality...................................................................... 42
5.6 Public Disclosure.................................................................... 42
5.7 Consents; Cooperation................................................................ 42
(a) Consents.................................................................... 42
(b) Cooperation................................................................. 42
(c) No Action Required.......................................................... 43
5.8 Merger Filings....................................................................... 43
5.9 Voting Agreement..................................................................... 43
5.10 Legal Requirements................................................................... 44
5.11 Blue Sky Laws........................................................................ 44
5.12 Assumed Options...................................................................... 44
5.13 Letter of Autobytel's and Autoweb's Accountants...................................... 44
(a) Autobytel................................................................... 44
(b) Autoweb..................................................................... 45
5.14 Form S-8............................................................................. 45
5.15 Listing of Additional Shares......................................................... 45
5.16 Determination Letter................................................................. 45
5.17 Increase Autobytel's Board........................................................... 45
5.18 Indemnification...................................................................... 45
(a) Indemnification............................................................. 45
(b) Directors and Officers Insurance............................................ 46
(c) Claims...................................................................... 46
(d) Successors.................................................................. 46
(e) Beneficiaries............................................................... 47
(f) Best Efforts and Further Assurances......................................... 47
Article VI. CONDITIONS TO THE MERGER............................................................. 47
6.1 Conditions to Obligations of Each Party to Effect the Merger......................... 47
(a) Stockholder Approval........................................................ 47
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(b) Registration Statement Effective............................................ 47
(c) No Injunctions or Restraints; Illegality.................................... 47
(d) Governmental Approval....................................................... 48
(e) Listing of Additional Shares................................................ 48
6.2 Additional Conditions to Obligations of Autoweb...................................... 48
(a) Representations, Warranties and Covenants................................... 48
(b) No Material Adverse Effect.................................................. 48
(c) Tax Opinion................................................................. 49
(d) Change of Control of Autobytel.............................................. 49
(e) Employment Agreements....................................................... 49
6.3 Additional Conditions to the Obligations of Autobytel and Merger Sub................. 49
(a) Representations, Warranties and Covenants................................... 49
(b) Third Party Consents........................................................ 49
(c) Injunctions or Restraints on Conduct of Business............................ 49
(d) Dissenting Shares........................................................... 50
(e) No Material Adverse Effect.................................................. 50
(f) Tax Opinion................................................................. 50
(g) Amendments to Certain Documents............................................. 50
Article VII. TERMINATION, AMENDMENT AND WAIVER.................................................... 50
7.1 Termination.......................................................................... 50
7.2 Effect of Termination................................................................ 52
7.3 Expenses and Termination Fees........................................................ 52
(a) Parties to Bear Own Expenses................................................ 52
(b) Expenses and Termination Fees Payable by Autoweb............................ 52
(c) Expenses and Termination Fees Payable by Autobytel.......................... 53
7.4 Amendment............................................................................ 53
7.5 Extension; Waiver.................................................................... 53
Article VIII. GENERAL PROVISIONS................................................................... 53
8.1 Non-Survival at Effective Time....................................................... 53
8.2 Notices.............................................................................. 54
8.3 Interpretation....................................................................... 54
8.4 Counterparts......................................................................... 55
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8.5 Entire Agreement; Nonassignability; Parties in Interest.............................. 55
8.6 Severability......................................................................... 55
8.7 Remedies Cumulative.................................................................. 55
8.8 Governing Law........................................................................ 55
8.9 Rules of Construction................................................................ 56
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INDEX OF DEFINED TERMS Section
Agreement Preamble
Antitrust Laws 5.7(b)
Assumed Options 1.6(c)
Autobytel Preamble
Autobytel Balance Sheet 3.5
Autobytel Balance Sheet Date 3.13
Autobytel Bylaws 3.1
Autobytel Certificate of Incorporation 3.1
Autobytel Common Stock Recitals
Autobytel Disclosure Schedule 3.0
Autobytel Expenses 7.2(b)(ii)
Autobytel Financial Statements 3.5
Autobytel Licensed Software 3.10(c)
Autobytel Materials Contracts 3.11
Autobytel Options 3.2
Autobytel Owned Trade Secrets 3.10(b)
Autobytel Plans 3.9
Autobytel SEC Documents 3.5
Autobytel Stockholder Meeting 5.3
Autobytel Stockholders Meeting 3.8
Autobytel Warrants 3.2
Autoweb Preamble
Autoweb Balance Sheet 2.5
Autoweb Balance Sheet Date 2.14
Autoweb Common Stock 1.6(a)
Autoweb Disclosure Schedule 2.0
Autoweb Financial Statements 2.5
Autoweb Options 1.6(c)
Autoweb Option Plans 1.6(c)
Autoweb SEC Documents 2.5
Autoweb Stockholders Meeting 2.9
Bylaws 2.1
CERCLA 2.17(b)
Certificate of Incorporation 2.1
Certificate of Merger 1.1
Certificates 1.7(c)
Change of Control 6.2(d)
Closing 1.2
Closing Date 1.2
COBRA 2.10(h)
Code Recitals
Confidentiality Agreement 5.5
Copyrights 2.11(a)(iii)
Delaware Law 1.1
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Dissenting Shares 1.6(f)
D&O Insurance 5.18(b)
Effective Time 1.2
Employment Contracts 2.10(a)
ERISA 2.10(a)
ERISA Affiliate 2.10(f)
Exchange Act 2.5
Exchange Agent 1.7(a)
Exchange Ratio 1.6(c)
Governmental Entity 2.3(b)
Hazardous Materials 2.17
HSR Act 2.3(b)
Indemnified Parties 5.18(a)
Intellectual Property Rights 2.11(a)
IRS 2.3(b)
Licensed Software 2.11(f)
Marks 2.11(a)(i)
Material Adverse Effect 2.0
Material Contracts 2.12
Merger 1.1
Merger Consideration 1.6(a)
Merger Sub Preamble
Merger Sub Common Stock 1.6(d)
Multi-Employer Plan 2.10(e)
Multiple Employer Plan 2.10(e)
Officer's Certificates 2.10(e)
Order 5.7(b)
Owned Patents 2.11(c)
Owned Marks 2.11(b)
Owned Software 2.11(f)
Owned Trade Secrets 2.11(e)
Patents 2.11(a)(ii)
Person 1.7(e)
Plans 2.10(a)
Preferred Stock 2.2
Proxy Statement 2.9
Qualified Plans 2.10(c)
Registration Statement 2.9
SEC 2.5
Securities Act 2.5
Software 2.11(a)(v)
Superior Proposal 4.4
Surviving Corporation 1.1
Takeover Proposal 4.4
Taxes 2.29(a)
Tax Returns 2.29(b)
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Trade Secrets 2.11(a)(iv)
Voting Agreement Recitals
401(k) Plan 5.16
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ACQUISITION AGREEMENT
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This ACQUISITION AGREEMENT (the "Agreement") is made and entered into as of
April 11, 2001, by and among XXXXXXXXX.XXX INC., a Delaware corporation
("Autobytel"), AUTOBYTEL ACQUISITION I CORP., a Delaware corporation ("Merger
Sub") and wholly-owned subsidiary of Autobytel, and XXXXXXX.XXX, INC., a
Delaware corporation ("Autoweb").
RECITALS
A The Board of Directors of Autoweb (i) has determined that the Merger
(as defined in Section 1.1 below) and the other transactions contemplated by
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this Agreement are advisable, fair and in the best interests of its
stockholders, (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement, and (iii) has determined to
recommend that the stockholders of Autoweb adopt and approve this Agreement and
approve the Merger.
B. The Board of Directors of Autobytel (i) has determined that the Merger
and the other transactions contemplated by this Agreement are advisable, fair
and in the best interests of its stockholders, (ii) has approved this Agreement,
the Merger and the other transactions contemplated by this Agreement, and (iii)
has determined to recommend that the stockholders of Autobytel adopt and approve
this Agreement and approve the Merger and the issuance of shares of Autobytel's
common stock, $.001 par value ("Autobytel Common Stock") pursuant to the Merger.
C. Concurrently with the execution of this Agreement, as a condition and
inducement to Autobytel's willingness to enter into this Agreement, certain
stockholders of Autoweb are entering into a Voting Agreement in the form
attached hereto as Exhibit A (the "Voting Agreement").
D. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a) of the Code.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I.
THE MERGER
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1.1 The Merger. At the Effective Time (as defined below) and subject
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to and upon the terms and conditions of this Agreement, the Certificate of
Merger attached hereto as Exhibit B (the "Certificate of Merger") and the
applicable provisions of the Delaware General Corporation Law ("Delaware Law"),
Merger Sub shall be merged with and into Autoweb (the "Merger"), the separate
corporate existence of Merger Sub shall cease and Autoweb shall continue as the
surviving corporation and a subsidiary of Autobytel. Autoweb as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation."
1.2 Closing; Effective Time. The closing of the transactions
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contemplated hereby (the "Closing") shall take place as soon as practicable
after the satisfaction or waiver of each of the conditions set forth in Article
VI hereof or at such other time as the parties hereto agree (the "Closing
Date"). The Closing shall take place at the offices of Paul, Hastings, Xxxxxxxx
& Xxxxxx LLP, Seventeenth Floor, 000 Xxxx Xxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx
00000, or at such other location as the parties hereto agree. In connection with
the Closing, the parties hereto shall cause the Merger to be consummated by
filing the Certificate of Merger with the Secretary of State of the State of
Delaware, in accordance with the relevant provisions of Delaware Law (the time
of such filing being the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the
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Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of Delaware Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of Autoweb and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Autoweb and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 Certificate of Incorporation; Bylaws.
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(a) Certificate of Incorporation. At the Effective Time, the
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certificate of incorporation of Autoweb shall be amended and restated in its
entirety to be identical to the certificate of incorporation of Merger Sub, as
in effect immediately prior to the Effective Time, which shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended as provided by Delaware Law and such certificate of incorporation,
except that Article I of the certificate of incorporation shall be amended to
read as follows: The name of this corporation is Xxxxxxx.xxx, Inc.
(b) Bylaws. The bylaws of Merger Sub, as in effect immediately
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prior to the Effective Time, shall be the bylaws of the Surviving Corporation
until thereafter amended.
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1.5 Directors and Officers. At the Effective Time, the initial
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directors of the Surviving Corporation shall be the directors of Merger Sub,
each to hold office until their respective successors are duly elected or
appointed and qualified. The initial officers of the Surviving Corporation shall
be the officers of Merger Sub until their respective successors are duly elected
or appointed and qualified.
1.6 Effect on Capital Stock. By virtue of the Merger and without any
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action on the part of Merger Sub, Autoweb or the holders of any of the following
securities:
(a) Conversion of Autoweb Common Stock. At the Effective Time,
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each share of Autoweb common stock, $.001 par value ("Autoweb Common Stock")
issued and outstanding immediately prior to the Effective Time other than the
Dissenting Shares (if applicable) and other than any shares of Autoweb Common
Stock to be canceled pursuant to Section 1.6(b) will be canceled and
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extinguished and be converted automatically into the right to receive 0.3553
shares of Autobytel Common Stock (the "Merger Consideration").
(b) Cancellation of Autoweb Common Stock Owned by Autobytel or
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Autoweb. At the Effective Time, all shares of Autoweb Common Stock that are
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owned by Autobytel or any direct or indirect wholly owned subsidiary of
Autobytel or of Autoweb immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof.
(c) Autoweb Stock Option Plans. At the Effective Time, all of
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the outstanding options to purchase Autoweb Common Stock (the "Autoweb Options")
issued pursuant to Autoweb's 1997 Stock Option Plan, 1999 Equity Incentive Plan,
1999 Employee Stock Purchase Plan and 1999 Directors Stock Option Plan (the
"Autoweb Option Plans") all of which options are listed in Section 5.12 of the
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Autoweb Disclosure Schedule (the "Assumed Options") shall be assumed by
Autobytel. Autobytel shall assume only the Assumed Options. Each Assumed Option
shall continue to have, and be subject to, the same terms and conditions set
forth in the applicable Autoweb Option Plan and the applicable stock option
agreements in effect on the date of this Agreement, except that (i) such options
will be exercisable for that number of whole shares of Autobytel Common Stock
equal to the product of the number of shares of Autoweb Common Stock that were
issuable upon exercise of such option (assuming acceleration of vesting)
multiplied by the number of shares of Autobytel Common Stock issued in exchange
for one share of Autoweb Common Stock (the "Exchange Ratio") and, in the case of
fractional shares, such number shall be rounded down to the nearest whole share
of Autobytel Common Stock, and (ii) the per share exercise price for the shares
of Autobytel Common Stock issuable upon exercise of the Assumed Option will be
equal to the quotient determined by dividing the exercise price per share of
Autoweb Common Stock at which such Assumed Option was exercisable immediately
prior to the Effective Time by the Exchange Ratio, rounded up to the nearest
whole cent.
(d) Capital Stock of Merger Sub. At the Effective Time, each
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share of Common Stock, $.001 par value, of Merger Sub ("Merger Sub Common
Stock")
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issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of Common Stock, $.001 par value, of the Surviving
Corporation, and the Surviving Corporation shall be a wholly-owned subsidiary of
Autobytel. Each stock certificate of Merger Sub evidencing ownership of any such
shares shall continue to evidence ownership of such shares of capital stock of
the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
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adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
Autobytel Common Stock or Autoweb Common Stock), reorganization,
recapitalization or other like change with respect to Autobytel Common Stock or
Autoweb Common Stock occurring on or after the date hereof and prior to the
Effective Time.
(f) Dissenting Shares. Notwithstanding any provision of this
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Agreement to the contrary, if the stockholders of Autoweb are entitled to
appraisal rights under Delaware Law, then shares of the Autoweb Common Stock
with respect to which appraisal rights have been demanded and perfected in
accordance with Section 262(d) of Delaware Law (the "Dissenting Shares") shall
not be converted into the right to receive the Merger Consideration at or after
the Effective Time, and the holder thereof shall be entitled only to such rights
as are granted by Delaware Law. Notwithstanding the preceding sentence, if any
holder of shares of the Autoweb Common Stock who demands appraisal of such
shares under Delaware Law shall effectively withdraw his demand for such
appraisal (in accordance with Section 262(k) of Delaware Law) or becomes
ineligible for such appraisal (through failure to perfect or otherwise) then, as
of the Effective Time or the occurrence of such event, whichever is the last to
occur, such holder's Dissenting Shares shall cease to be Dissenting Shares and
shall be converted into and represent the right to receive the Merger
Consideration as provided in this Section 1.6. Autoweb shall give Autobytel (i)
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prompt notice of any written demands for appraisal, withdrawals of demands for
appraisal and any other instrument served pursuant to Section 262 of Delaware
Law received by Autoweb and (ii) the opportunity to participate in all
negotiations and proceedings with respect to demands for appraisal under such
Section.
(g) Fractional Shares. No fraction of a share of Autobytel
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Common Stock will be issued, but in lieu thereof each holder of shares of
Autoweb Common Stock who would otherwise be entitled to a fraction of a share of
Autobytel Common Stock shall receive an amount of cash (rounded to the nearest
whole cent) equal to the product of (i) such fraction multiplied by (ii) the
Exchange Ratio. The number of shares of Autobytel Common Stock awardable
hereunder (after aggregating all fractional shares of Autobytel Common Stock
resulting from the application of the Exchange Ratio) shall be rounded down to
the nearest whole share of Autobytel Common Stock.
1.7 Surrender of Certificates.
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(a) Exchange Agent. U.S. Stock Transfer Corporation, or such
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other company as shall be designated by Autobytel if U.S. Stock Transfer
Corporation is
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unable or unwilling to serve, shall act as exchange agent (the "Exchange Agent")
in the Merger.
(b) Autobytel to Provide Common Stock and Cash. Promptly after
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the Effective Time, Autobytel shall make available to the Exchange Agent for
exchange in accordance with this Article I (i) the shares of Autobytel Common
Stock issuable pursuant to Section 1.6(a) in exchange for shares of Autoweb
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Common Stock outstanding immediately prior to the Effective Time, (ii) cash in
an amount sufficient to permit payment of cash in lieu of fractional shares
pursuant to Section 1.6(g) and (iii) any dividends or distributions to which
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holders of shares of Autoweb may be entitled pursuant to Section 1.7(d).
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(c) Exchange Procedures. Promptly after the Effective Time, the
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Surviving Corporation shall cause to be mailed to each holder of record
(immediately prior to the Effective Time) of a certificate or certificates (the
"Certificates") which immediately prior to the Effective Time represented
outstanding shares of Autoweb Common Stock, whose shares were converted into the
right to receive shares of Autobytel Common Stock, cash in lieu of fractional
shares and dividends or distributions, pursuant to Section 1.6(a), 1.6(g) and
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1.7(d), respectively, (i) a letter of transmittal (which shall specify that
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delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon receipt of the Certificates by the Exchange Agent, and shall be
in such form and have such other provisions as Autobytel may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Autobytel Common Stock, cash in
lieu of fractional shares and dividends or distributions, pursuant to Section
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1.6(a), 1.6(g) and 1.7(d), respectively. Upon surrender of a Certificate for
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cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Autobytel, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, the holder of
such Certificate shall be entitled to receive in exchange therefor a certificate
representing the number of whole shares of Autobytel Common Stock which such
holder has the right to receive pursuant to Section 1.6, payment in lieu of
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fractional shares pursuant to Section 1.6(g) and any dividends or distributions
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payable pursuant to Section 1.7(d), and the Certificate so surrendered shall
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forthwith be canceled. Until so surrendered, each outstanding Certificate that,
prior to the Effective Time, represented shares of Autoweb Common Stock will be
deemed from and after the Effective Time, for all corporate purposes, other than
the payment of dividends, to evidence the ownership of the number of full shares
of Autobytel Common Stock into which such shares of Autoweb Common Stock shall
have been so converted and the right to receive an amount in cash in lieu of the
issuance of any fractional shares in accordance with
Section 1.6(g).
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(d) Distributions With Respect to Unexchanged Shares. No
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dividends or other distributions with respect to Autobytel Common Stock with a
record date after the Effective Time will be paid to the holder of any
unsurrendered Certificate with respect to the shares of Autobytel Common Stock
represented thereby until the holder of record of such Certificate shall
surrender such Certificate in accordance with this Section 1.7. Subject to
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applicable law, following surrender of any such Certificate,
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the Exchange Agent shall deliver to the record holder of the certificates
representing whole shares of Autobytel Common Stock issued in exchange therefor,
without interest, at the time of such surrender, the amount of any such
dividends or other distributions with a record date after the Effective Time
theretofore payable (but for the provisions of this Section 1.7(d)) with respect
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to such shares of Autobytel Common Stock.
(e) Transfers of Ownership. If any certificate representing
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shares of Autobytel Common Stock is to be issued in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it will be
a condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the Person
requesting such exchange will have paid to Autobytel or any agent designated by
it any transfer tax or other taxes required by reason of the issuance of a
certificate for shares of Autobytel Common Stock in any name other than that of
the registered holder of the Certificate surrendered, or established to the
satisfaction of Autobytel or any agent designated by it that any such taxes have
been paid or are not payable. For purposes of this Agreement, "Person" shall
mean any individual, corporation, limited liability company, partnership, joint
venture, association, trust, unincorporated organization or other entity.
(f) No Liability. Notwithstanding anything to the contrary in
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this Section 1.7, none of the Exchange Agent, the Surviving Corporation or any
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party hereto shall be liable to any Person for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
1.8 No Further Ownership Rights in Autoweb Common Stock. All shares
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of Autobytel Common Stock issued upon the surrender for exchange of shares of
Autoweb Common Stock in accordance with the terms hereof (including any cash
paid in lieu of fractional shares and any dividends or distributions) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Autoweb Common Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Autoweb
Common Stock which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article I.
1.9 Lost, Stolen or Destroyed Certificates. In the event any
--------------------------------------
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such shares of
Autobytel Common Stock (and cash in lieu of fractional shares and any dividends
or distributions) as may be required pursuant to Section 1.6; provided, however,
-----------
that Autobytel may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Autobytel, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
-6-
1.10 Tax Consequences. It is intended by the parties hereto that the
----------------
Merger shall constitute a reorganization within the meaning of Section 368 of
the Code. It is intended by the parties hereto that the Merger shall be treated
for accounting purposes as a "purchase."
1.11 Taking of Necessary Action; Further Action. If, at any time after
------------------------------------------
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Autoweb and Merger Sub, the officers and directors of Autoweb
and Merger Sub are fully authorized in the name of their respective corporations
or otherwise to take, and will take, all such lawful and necessary action, so
long as such action is not inconsistent with this Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF AUTOWEB
-----------------------------------------
In this Agreement, any reference to any event, change, condition or effect
being "material" with respect to any Person means any material event, change,
condition or effect related to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of such Person and its subsidiaries, taken
as a whole. In this Agreement, any reference to a "Material Adverse Effect" with
respect to any Person means any effect that individually or taken together with
other effects is materially adverse to (i) the condition (financial or
otherwise), properties, assets, liabilities, business, operations or results of
operations of such Person and its subsidiaries, taken as a whole or (ii) the
ability of such Person to consummate the transactions contemplated by this
Agreement; provided, however, that no Material Adverse Effect shall be deemed to
have occurred as a result solely of (u) the termination of that certain
Agreement between Autoweb and Lycos, Inc. dated March 26, 2000 pursuant to that
certain Settlement and Termination Agreement and Release between such parties in
the form attached hereto as Exhibit C and the execution of a new agreement
between Lycos, Inc. and Autoweb in the form of Exhibit D and any payments or
other actions called for by such settlement agreement, (v) any action required
by this Agreement, including, without limitation, any adverse effect resulting
from the delivery of any notice pursuant to Section 4.2(xix), (w) a decrease in
----------------
such Person's stock price or the failure to meet or exceed Wall Street research
analysts' or such entity's internal earnings estimates or projections, (x)
general economic conditions affecting generally the industry in which such
Person competes, (y) general market conditions in the United States or (z) any
adverse effect resulting from the announcement of this Agreement or the Merger.
In this Agreement, any reference to a party's "knowledge" means such party's
actual knowledge after reasonable inquiry of employees, officers and directors
of such party charged with senior administrative or operational responsibility
for such matters. Except as disclosed for a particular statement in the
specific corresponding section of the document of even date herewith delivered
by Autoweb to Autobytel prior to the execution and delivery of this Agreement
(the "Autoweb Disclosure Schedule") corresponding to the Section of this
Agreement to which any of the following
-7-
representations and warranties specifically relate, Autoweb represents and
warrants to Autobytel and Merger Sub as follows:
2.1 Organization, and Qualification; No Subsidiaries. Autoweb is a
------------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware and is qualified to do business and in good standing as
a foreign corporation in each jurisdiction where the properties owned, leased or
operated, or the business conducted, by it require such qualification, except
where failure to so qualify or be in good standing is not reasonably likely to
have a Material Adverse Effect on Autoweb. Autoweb has the corporate power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to have such power, or authority and governmental approvals is
not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on Autoweb. Autoweb has heretofore made available to Autobytel a
complete and correct copy of its Certificate of Incorporation (including all
Certificates of Determination or the equivalent thereof) and Bylaws, each as
amended to the date hereof (the "Certificate of Incorporation" and "Bylaws",
respectively). Such Certificate of Incorporation and Bylaws are in full force
and effect. Autoweb is not in violation of any provision of its Certificate of
Incorporation or Bylaws. Autoweb does not have any subsidiaries.
2.2 Capitalization. The authorized capital stock of Autoweb consists
--------------
of 60,000,000 shares of Autoweb Common Stock and 13,649,976 shares of preferred
stock ("Preferred Stock"), 2,474,486 shares of which were formerly designated
Series A Preferred Stock, 2,550,000 shares of which were formerly designated
Series B Preferred Stock, 2,369,969 shares of which were formerly designated
Series C Preferred Stock and 1,255,521 shares of which were formerly designated
Series D Preferred Stock. As of the close of business on March 28, 2001,
29,526,453 shares of Autoweb Common Stock were issued and outstanding and no
shares of Preferred Stock were issued and outstanding. As of the close of
business on March 28, 2001, except for (a) 3,757,293 shares of Autoweb Common
Stock reserved for issuance pursuant to outstanding Autoweb Options disclosed in
Section 5.12 of the Autoweb Disclosure Schedule and (b) 951,237 shares of
------------
Autoweb Common Stock reserved for issuance pursuant to Autoweb's 1999 Employee
Stock Purchase Plan, there are not now, and other than as permitted by Section
-------
4.2(xv) hereof there will not be at the Effective Time any existing options,
-------
warrants, calls, subscriptions, or other rights, or other agreements or
commitments, obligating Autoweb to issue, transfer or sell any shares of capital
stock of Autoweb or bonds, debentures, notes or other indebtedness having voting
rights (or convertible into securities having such rights) of, or other equity
interest in, Autoweb or securities convertible into or exchangeable for such
shares or equity interest or obligating Autoweb to grant, extend or enter into
any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment. Since March 28, 2001, Autoweb has not issued any
shares of its capital stock, except pursuant to the exercise of Autoweb Options
outstanding on March 28, 2001. All issued and outstanding shares of Autoweb
Common Stock are, and all shares of Autoweb Common Stock which may be issued
pursuant to the exercise of outstanding Autoweb Options will be when issued in
accordance with the respective terms thereof, duly authorized and validly
issued, fully paid and nonassessable,
-8-
and such issuance will not violate any preemptive rights under law or otherwise.
There are no outstanding contractual obligations of Autoweb to repurchase,
redeem or otherwise acquire any shares of Autoweb Common Stock or the capital
stock or other security of Autoweb.
2.3 Authority; Governmental Consents.
--------------------------------
(a) Authority. Autoweb has the corporate power and authority to
---------
execute and deliver this Agreement and, subject only to the approval and
adoption of this Agreement and the Certificate of Merger by the stockholders of
Autoweb as contemplated by Section 6.1(a), to consummate the transactions
--------------
contemplated hereby. The execution and delivery of this Agreement by Autoweb and
the consummation by Autoweb of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of
Autoweb, subject, in the case of the Merger, to the approval thereof by the
stockholders of Autoweb. This Agreement has been duly and validly executed and
delivered by Autoweb, and, assuming this Agreement constitutes a valid and
binding obligation of Autobytel and Merger Sub, this Agreement constitutes a
valid and binding agreement of Autoweb, enforceable against Autoweb in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the enforcement of creditor's rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of any court before which any
proceeding may be brought).
(b) Governmental Consents. Other than (i) in connection with, or
---------------------
in compliance with, the provisions of Delaware Law with respect to the
transactions contemplated hereby, the federal securities laws, the securities
laws of the various states, the rules of the National Association of Securities
Dealers, Inc., (ii) notices to or filings with the Internal Revenue Service (the
"IRS") or the Pension Benefit Guaranty Corporation with respect to employee
benefit plans, or under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act") and (iii) where the failure to so have or keep
in force would not result in a penalty, fine or other payment in excess of
$50,000 or an inability to conduct Autoweb's business as presently conducted, no
authorization, consent or approval of, or filing with, any Governmental Entity
(as hereinafter defined) is necessary for the consummation by Autoweb of the
transactions contemplated by this Agreement, except for the approval of
Autoweb's stockholders. As used in this Agreement, the term "Governmental
Entity" means any government or subdivision thereof, domestic, foreign or
supranational or any administrative, governmental or regulatory authority,
agency, commission, tribunal or body, domestic, foreign or supranational.
2.4 No Violation. Neither the execution and delivery of this
------------
Agreement by Autoweb nor the consummation by Autoweb of the transactions
contemplated hereby will (i) constitute a breach or violation of any provision
of the Certificate of Incorporation or Bylaws of Autoweb, (ii) constitute a
breach, violation or default (or any event which, with notice or lapse of time
or both, would constitute a default) under, or result in the termination of or
permit any other party to terminate,
-9-
require the consent from or the giving of notice to any other party to, or
accelerate the performance required by, or result in the creation of any lien or
encumbrance upon any property or asset of Autoweb under, any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument to which Autoweb, or by which it or any of its properties or assets,
are bound, or (iii) subject to the receipt of the requisite consents, approvals,
or authorizations of, or filings with Governmental Entities under federal
securities laws, applicable corporate and securities laws, the rules of The
Nasdaq Stock Market, Inc. and the National Association of Securities Dealers,
Inc. and laws relating to employee benefit plans, conflict with or violate any
order, judgment or decree, or to the knowledge of Autoweb, any statute,
ordinance, rule or regulation applicable to Autoweb, or by which it or any of
its properties or assets may be bound or affected, other than, in the case of
the foregoing clauses (ii) or (iii), conflicts, breaches, violations, defaults,
terminations, accelerations, requirements for consent or notice or creation of
liens and encumbrances which, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect on Autoweb.
2.5 SEC Reports and Financial Statements. Autoweb has filed with the
------------------------------------
Securities and Exchange Commission (the "SEC"), and has made available to
Autobytel, copies of all forms, reports and documents (the "Autoweb SEC
Documents") required to be filed by it under the Securities Act of 1933, as
amended (the "Securities Act") or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). None of such Autoweb SEC Documents (as of their
respective filing dates) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading (except any statement or omission therein which
has been corrected or otherwise disclosed or updated in a subsequent Autoweb SEC
Document). The audited and unaudited financial statements of Autoweb included in
any Autoweb SEC Document (the "Autoweb Financial Statements") have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except as otherwise stated in such financial statements,
including the related notes), comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto and fairly present the financial position of
Autoweb as of the dates thereof and the results of its operations and changes in
financial position for the periods then ended, subject, in the case of the
unaudited financial statements, to normal year-end audit adjustments, and except
for the absence of certain footnote information in the unaudited statements.
Autoweb does not have any material liabilities or obligations of any nature
(whether absolute, accrued, contingent, unmatured, unaccrued, unliquidated,
unasserted, conditional or otherwise), except for liabilities or obligations (i)
reflected or reserved against on its balance sheet as at September 30, 2000
(including the notes thereto and the other disclosures made in Autoweb's Form
10-Q for the quarter ended September 30, 2000) (the "Autoweb Balance Sheet")
included in the Autoweb SEC Documents, or (ii) incurred in the ordinary course
of business consistent with past practice since such date. Any such liability
incurred in the ordinary course of business since September 30, 2000, which as
of the date of this Agreement individually or taken together with all related
liabilities in the aggregate
-10-
exceeds $250,000 is listed or described in Section 2.5 of the Autoweb Disclosure
-----------
Schedule.
2.6 Compliance with Applicable Laws and Permits; Regulatory Matters.
---------------------------------------------------------------
Autoweb has in effect and holds all permits, licenses, orders, authorizations,
registrations, approvals and other analogous instruments, and Autoweb has made
all filings and registrations and the like necessary or required by law to
conduct its business as presently conducted, other than such permits, licenses,
orders, authorizations, registrations, approvals, and other instruments, the
absence of which is not reasonably likely to have a Material Adverse Effect on
Autoweb. Autoweb has not received any written governmental notices within two
years prior to the date hereof alleging any violation by Autoweb of any such
laws, rules, regulations or orders that has not been cured as of the date
hereof. Autoweb is not in default or noncompliance under any (a) permits,
consents, or similar instruments, and (b) business and local and county laws,
ordinances, regulations, judgments, orders, decrees or rules of any court,
arbitrator or governmental, regulatory or administrative agency or entity, other
than such default or noncompliance which is not reasonably likely to have a
Material Adverse Effect on Autoweb.
2.7 Certain Agreements Affected by the Merger. Except as set forth in
-----------------------------------------
Section 2.7 of the Autoweb Disclosure Schedule, neither the execution and
-----------
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute, bonus or otherwise) becoming due to
any director, consultant or employee of Autoweb, (ii) increase any benefits
otherwise payable by Autoweb to any Person or result in the acceleration of the
time of payment or vesting of any such benefits, or (iii) result in any other
detriment or require any other payment under the terms, conditions or provisions
of any note, bond, mortgage or indenture or require a payment in excess of
$50,000 under the terms, conditions or provisions of any license, lease,
contract, agreement or other instrument or obligation, in either case to which
Autoweb is a party or by which it or any of its properties or assets may be
bound.
2.8 Litigation. Except as set forth in Section 2.8 of the Autoweb
---------- -----------
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Autoweb, threatened, against
Autoweb and no such item listed in such Section 2.8, individually or in the
-----------
aggregate, if adversely determined is reasonably likely to have a Material
Adverse Effect on Autoweb or would reasonably be expected to prevent or
materially delay the consummation of the transactions contemplated by this
Agreement. Autoweb is not a party to or bound by any outstanding order, writ,
injunction or decree which, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on Autoweb or would reasonably be
expected to prevent or materially delay the consummation of the transactions
contemplated hereby.
2.9 Registration Statement; Proxy Statement/Prospectus. The
--------------------------------------------------
information supplied by Autoweb for inclusion in the registration statement on
Form S-4 (or such other or successor form as shall be appropriate) pursuant to
which the shares of Autobytel Common Stock to be issued in the Merger will be
registered with the SEC (the
-11-
"Registration Statement") shall not at the time the Registration Statement
(including any amendments or supplements thereto) is declared effective by the
SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The information supplied by Autoweb for inclusion in the joint
proxy statement/prospectus to be sent to the stockholders of Autoweb in
connection with the meeting of Autoweb's stockholders to consider the Merger
(the "Autoweb Stockholders Meeting") and to the stockholders of Autobytel in
connection with the Autobytel Stockholders Meeting (as defined in Section 3.8
-----------
hereof) (such joint proxy statement/prospectus as amended or supplemented is
referred to herein as the "Proxy Statement") shall not, on the date the Proxy
Statement is first mailed to Autoweb's stockholders and Autobytel's
stockholders, at the time of the Autoweb Stockholders Meeting, the Autobytel
Stockholders Meeting or at the Effective Time, contain any statement which, at
any such time, is false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not false or
misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Autoweb Stockholders Meeting or Autobytel Stockholder Meeting
which has become false or misleading. If at any time prior to the Effective Time
any event or information should be discovered by Autoweb which should be set
forth in an amendment to the Registration Statement or a supplement to the Proxy
Statement, Autoweb shall promptly inform Autobytel and Merger Sub.
Notwithstanding the foregoing, Autoweb makes no representation, warranty or
covenant with respect to any information supplied by or respecting Autobytel or
Merger Sub (other than information supplied by and with respect to Autoweb)
which is contained in any of the foregoing documents.
2.10 Employee Benefit Plans.
----------------------
(a) Plans. Section 2.10(a) of the Autoweb Disclosure Schedule
----- ---------------
includes a complete list of all employee benefit plans and programs providing
benefits to any employee or former employee of Autoweb sponsored or maintained
by Autoweb or to which Autoweb contributes or is obligated to contribute
("Plans") and all written employment, severance, consulting and other
compensation contracts between Autoweb and any current, or former to the extent
obligations of Autoweb are outstanding, director, officer, employee or
consultant thereof as to which there is any current or potential Autoweb
liability or obligation ("Employment Contracts"). Autoweb is not party to any
oral Employment Contract that is not terminable at will. No oral Employment
Contract requires payments by Autoweb in excess of $50,000 annually. Without
limiting the generality of the foregoing, the term "Plans" includes all employee
welfare benefit plans within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended, and the regulations
thereunder ("ERISA"), and all employee pension benefit plans within the meaning
of Section 3(2) of ERISA.
(b) Documents. With respect to each Plan, Autoweb has made
---------
available to Autobytel a true, correct and complete copy of: (i) all plan
documents, benefit schedules, trust agreements, and insurance contracts and
other funding vehicles;
-12-
(ii) the most recent Annual Report (Form 5500 Series) and accompanying schedule,
if any; (iii) the current summary plan description, if any; (iv) the most recent
annual financial report, if any; (v) the most recent actuarial report, if any;
(vi) the most recent determination letter from the IRS, if any; and (vii) each
Employment Contract.
(c) Compliance. Except as set forth in Section 2.10(c) of the
---------- ---------------
Autoweb Disclosure Schedule, all Plans are in compliance with all applicable
provisions of ERISA, the Code and all laws and regulations applicable to the
Plans, except where the failure with which to comply is not reasonably likely to
have a Material Adverse Effect. With respect to each Plan that is intended to be
a "qualified plan" within the meaning of Section 401(a) of the Code ("Qualified
Plans"), either (i) the IRS has issued a favorable determination opinion,
notification or advisory letter, a copy of which has been provided to Autobytel
or (ii) such Plan has remaining a period of time specified in Section 2.10 of
the Autoweb Disclosure Schedules under applicable IRS pronouncements in which to
apply for such letter and make any amendments that are necessary to obtain a
favorable determination as to the qualified status of such Plan.
(d) Contributions. Except as set forth in Section 2.10(d) of the
-------------
Autoweb Disclosure Schedule, all contributions required to be made by Autoweb to
any Plan under applicable law or regulation or by any plan document or other
contractual undertaking, and all premiums due or payable with respect to
insurance policies funding any Plan, have been timely made or paid in full or,
to the extent not required to be made or paid, have been fully reflected in the
financial statements of Autoweb included in the Autoweb SEC Documents to the
extent required under generally accepted accounting principles.
(e) Multi-Employer Plan Etc. No Plan is subject to Title IV or
-----------------------
Section 302 of ERISA or Section 412 or 4971 of the Code. Without limiting the
generality of the foregoing, no Plan is a "multi-employer plan" within the
meaning of Section 4001(a)(3) of ERISA (a "Multi-Employer Plan") or a plan that
has two or more contributing sponsors at least two of whom are not under common
control, within the meaning of Section 4063 of ERISA and which is subject to
Title IV of ERISA (a "Multiple Employer Plan").
(f) Liabilities. There does not now exist, nor, to the knowledge
-----------
of Autoweb, do any circumstances exist that would reasonably be expected to
result in, any liability under (i) Title IV of ERISA, (ii) Section 302 of ERISA,
(iii) Sections 412 and 4971 of the Code, (iv) the continuation coverage
requirements of Section 601 et seq. of ERISA and Section 4980B of the Code, or
(v) corresponding or similar provisions of foreign laws or regulations, other
than a liability that arises solely out of, or relates solely to, the Plans,
that would be a liability of Autoweb following the Effective Time. Without
limiting the generality of the foregoing, (i) neither of Autoweb nor any ERISA
Affiliate of Autoweb has engaged in any transaction described in Section 4069 or
Section 4204 or 4212 of ERISA, (ii) no liability under Title IV or a violation
of Section 302 of ERISA has been incurred by Autoweb that has not been satisfied
in full, and Autoweb is not aware of any condition that exists that presents a
material risk to Autoweb of incurring any such liability, other than liability
for premiums due to the
-13-
Pension Benefit Guaranty Corporation (which premiums have been paid when due)
and for contributions due to a pension plan (for which a contribution has been
paid through the end of 2000), and (iii) no Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each Plan ended prior to the
Effective Time. An "ERISA Affiliate" means any entity, trade or business that is
a member of a group described in Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA that includes Autoweb, or that is a member of the
same "controlled group" as Autoweb, pursuant to Section 4001(a)(14) of ERISA.
(g) Claims. There are no pending, and to the knowledge of
------
Autoweb, no threatened or anticipated claims by or on behalf of any Plan, by any
employee or beneficiary covered under any such Plan, or otherwise involving any
such Plan (other than routine claims for benefits).
(h) COBRA etc.. With respect to each Plan, Autoweb has complied
----------
except to the extent that such failure to comply is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on Autoweb, with
(i) the applicable health care continuation and notice provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the
regulations (including proposed regulations) thereunder, (ii) the applicable
requirements of the Family Medical and Leave Act of 1993 and the regulations
thereunder, and (iii) the applicable requirements of the Health Insurance
Portability and Accountability Act of 1996 and the regulations thereunder.
2.11 Intellectual Property.
---------------------
(a) Certain Definitions. The term "Intellectual Property Rights"
-------------------
shall mean intellectual property rights arising from or in respect to the
following:
(i) fictional business names, trade names, trademarks
and service marks, logos, Internet domain names, and general intangibles of
a like nature (collectively, "Marks");
(ii) patents and applications therefor, including
continuation, divisional, continuation-in-part, or reissue patent
applications and patents issuing thereon (collectively, "Patents");
(iii) copyrights and registrations and applications
therefor (collectively, "Copyrights") and mask work rights;
(iv) know-how, inventions, discoveries, concepts,
methods, processes, designs, formulae, technical data, drawings,
specifications, data bases and other proprietary and confidential
information, including customer lists (collectively, "Trade Secrets"); and
-14-
(v) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in source
code or object code, databases and compilations, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing
(collectively, "Software").
(b) Marks. Section 2.11(b) of the Autoweb Disclosure Schedule
----- ---------------
sets forth an accurate and complete list of all registered Marks, pending
applications for registration of any Marks and material unregistered Marks, in
each case owned by Autoweb or used by Autoweb in its business as presently
conducted (collectively, "Owned Marks"). Except as set forth in Section 2.11(b)
---------------
of the Autoweb Disclosure Schedule, Autoweb has the right to use each of the
Owned Marks which are material to the operation of its business as presently
conducted in the manner in which such Owned Marks are currently being used, free
and clear of any and all liens, and Autoweb has not received any written notice
or claim challenging Autoweb's right to use such Owned Marks.
(c) Owned Patents. Section 2.11(c) of the Autoweb Disclosure
------------- ---------------
Schedule sets forth an accurate and complete list of all Patents owned by
Autoweb (collectively, "Owned Patents"). Except as set forth on Section 2.11(c)
---------------
of the Autoweb Disclosure Schedule:
(i) Autoweb is the owner of all right, title and
interest in and to all Owned Patents, in each case free and clear of any
and all liens, covenants, conditions and restrictions or other adverse
claims or interests of any kind or nature, and Autoweb has taken
commercially reasonable steps to protect Autoweb's rights in and to the
Owned Patents, and Autoweb has not received any written notice or claim
challenging Autoweb's exclusive ownership of the Owned Patents;
(ii) Autoweb has not taken any action or failed to
take any action, conducted its business, or used or enforced (or failed to
use or enforce) any of the Owned Patents in a manner that would result in
the abandonment or unenforceability of any of the Owned Patents
("abandonment" as used in this clause (ii) shall not include terminal
disclaimers and similar actions taken in connection with, and the results
of, oppositions, re-examinations, reissues, litigation, interferences and
similar proceedings);
(iii) to Autoweb's knowledge, the inventions disclosed
in the Owned Patents may be practiced by Autoweb without infringing any
other Patents owned by any other Person;
(iv) Autoweb has not granted to any other Person any
right, license or permission to practice any Owned Patents;
-15-
(v) no Owned Patent has been or is now involved in
any interference, reissue, reexamination or opposition proceeding or any
other litigation or proceeding of any kind; and
(vi) to Autoweb's knowledge, there is no Patent issued
to or filed by any other Person, which Patent is actually interfering, or
could reasonably be expected to interfere, with any Owned Patent and none
of the activities, technology, products or operations of any other Person
has infringed or is infringing on any of the Owned Patents.
(d) Owned Copyrights/Maskworks. There are no registered
--------------------------
Copyrights or mask works owned or used by Autoweb in connection with its
business.
(e) Trade Secrets. Autoweb has taken reasonable precautions in
-------------
accordance with standard industry practice to protect the secrecy,
confidentiality and value of all material Trade Secrets of Autoweb
(collectively, "Owned Trade Secrets"). Except as set forth in Section 2.11(e) of
---------------
the Autoweb Disclosure Schedule, Autoweb has the right to use all of the Owned
Trade Secrets and none of the Owned Trade Secrets is subject to any liens,
covenants, conditions and restrictions or other adverse claims or interests of
any kind or nature, and Autoweb has not received any notice or claim challenging
Autoweb's right to use any of the Owned Trade Secrets, and, to Autoweb's
knowledge, no other Person has misappropriated any of Autoweb's Owned Trade
Secrets.
(f) Software. Section 2.11(f) of the Autoweb Disclosure
-------- ---------------
Schedule sets forth a complete and accurate list of all of the Software that is
owned exclusively by Autoweb and used in the conduct of its business
(collectively, the "Owned Software"), and all Software that is used by Autoweb
in the conduct of its business that is not exclusively owned by Autoweb
(collectively, the "Licensed Software") except for software licensed pursuant to
so-called "shrinkwrap" licenses. Except as set forth in Section 2.11(f) of the
---------------
Autoweb Disclosure Schedule:
(i) Autoweb is the owner of all Owned Software,
including all Copyrights, Trade Secrets and other Intellectual Property
Rights relating thereto, in each case free and clear of any and all liens,
encumbrances, covenants, conditions and restrictions or other adverse
claims or interests of any kind or nature except as set forth in clause
(ii) below, provided that, with respect to any patents related to the Owned
Software, this representation is made to the best of Autoweb's knowledge
only, and Autoweb has not received any notice or claim challenging
Autoweb's exclusive ownership of any Owned Software or any such
Intellectual Property Rights relating thereto;
(ii) Autoweb has not assigned, licensed, transferred
or encumbered to or for the benefit of any other Person any of its rights
in or to any Software in which it has rights, excluding any non-exclusive
licenses granted to customers in the ordinary course of business;
-16-
(iii) No source code of any Owned Software has been
licensed or otherwise made available to any other Person, Autoweb has
treated the source code of the Owned Software, and the data associated
therewith, as confidential and proprietary business information, and has
taken all reasonable steps to protect the same as trade secrets of Autoweb;
and
(iv) Autoweb has lawfully acquired the right to use
the Licensed Software as it is used in the conduct of its business as
presently conducted, and has not exercised any rights in respect of any
Licensed Software, including any reproduction, distribution or derivative
work rights, outside the scope of any license expressly granted by the
Person from which the right to use such Licensed Software was obtained.
(g) Infringement. Except as set forth in Section 2.11(g) of
------------ ---------------
the Autoweb Disclosure Schedule, Autoweb is not, nor has it been, a party to any
proceeding involving a claim of infringement, misappropriation or other wrongful
use or exploitation by Autoweb of any other Person's Intellectual Property
Rights. Autoweb is not, nor will it be as a result of the execution and delivery
of this Agreement or the performance of its obligations under this Agreement, in
breach of any material license, sublicense or other agreement relating to its
Intellectual Property Rights.
(h) Confidentiality. Autoweb has taken reasonable steps to
---------------
protect its Intellectual Property Rights, including, without limitation,
requiring its employees, officers, directors and consultants to execute and
deliver confidentiality, assignment of rights and non-disclosure agreements. To
Autoweb's knowledge, no employee of Autoweb is in violation of any term (whether
written or verbal) of any confidentiality or nondisclosure agreement.
2.12 Contracts. Each material note, bond, mortgage, indenture, lease,
---------
license, contract, agreement or other instrument or obligation to which Autoweb
is a party or by which it or any of its properties or assets may be bound which
involves (i) future payments of $50,000 or more or (ii) the termination of which
is reasonably likely to have a Material Adverse Effect (the "Material
Contracts") is in full force and effect and there are no defaults by Autoweb or,
to Autoweb's knowledge, any other party thereto under any Material Contract.
2.13 Vote Required. The affirmative vote of the holders of at least a
-------------
majority of the shares of Autoweb Common Stock outstanding on the record date
set for the Autoweb Stockholders Meeting is the only vote of the holders of any
of Autoweb's capital stock necessary to approve this Agreement and the
transactions contemplated hereby.
2.14 Absence of Certain Changes. Except as disclosed in Section 2.14
-------------------------- ------------
of the Autoweb Disclosure Schedule, since September 30, 2000 (the "Autoweb
Balance Sheet Date"), Autoweb has conducted its business in the ordinary course
consistent with past practice and there has not occurred: (i) any change, event
or condition (whether or not covered by insurance) that, as of the date hereof,
has resulted in, or is reasonably
-17-
likely to result in, a Material Adverse Effect on Autoweb; (ii) any acquisition,
sale or transfer of any asset with a fair market value of greater than $50,000
of Autoweb other than in the ordinary course of business and consistent with
past practice; (iii) any change in accounting methods or practices (including
any change in depreciation or amortization policies or rates) by Autoweb or any
revaluation by Autoweb of its assets; (iv) any declaration, setting aside, or
payment of a dividend or other distribution with respect to the shares of
Autoweb, or any direct or indirect redemption, purchase or other acquisition by
Autoweb of any of its shares of capital stock or other securities; (v) the (a)
the entry by Autoweb into any material contract or (b) any amendment or
termination of, or default under, any of the foregoing or any Material Contract;
(vi) any amendment or change to its Certificate of Incorporation or Bylaws; or
(vii) any increase in or modification of the compensation or benefits payable or
to become payable by Autoweb to any of its directors or executive level
employees, other than normal length of service adjustments in accordance with
past practices. Autoweb has not agreed since the Autoweb Balance Sheet Date to
do any of the things described in the preceding clauses (i) through (vii) and is
not currently involved in any negotiations or discussions to do any of the
things described in the preceding clauses (i) through (vii) (other than
negotiations or discussions with Autobytel and its representatives regarding the
transactions contemplated by this Agreement).
2.15 Restrictions on Business Activities. There is no agreement,
-----------------------------------
judgment, injunction, order or decree binding upon Autoweb which has or
reasonably would be expected to have the effect of prohibiting or materially
impairing any business practice of Autoweb, any acquisition of property by
Autoweb or the conduct of business by Autoweb.
2.16 Title to Property. Autoweb has good and valid title to its
-----------------
properties, interests in properties and assets, real and personal, used in its
business and reflected in the Autoweb Balance Sheet or acquired after the
Autoweb Balance Sheet Date (except properties, interests in properties and
assets sold or otherwise disposed of since the Autoweb Balance Sheet Date in the
ordinary course of business), or in the case of leased properties and assets,
valid leasehold interests in such property and assets, in every case free and
clear of all mortgages, liens, pledges, charges or encumbrances of any kind or
character, except (i) the lien of current taxes not yet due and payable, (ii)
such imperfections of title, liens and easements as do not and will not
materially detract from or interfere with the use of the properties subject
thereto or affected thereby, or otherwise materially impair business operations
involving such properties, (iii) liens securing debt which are reflected on the
Autoweb Balance Sheet, and (iv) liens that in the aggregate are not reasonably
likely to have a Material Adverse Effect on Autoweb. The property and equipment
of Autoweb that is used in the operations of its business is in good operating
condition and repair, normal wear and tear excepted. All properties used in the
operation of Autoweb are reflected in the Autoweb Balance Sheet to the extent
generally accepted accounting principles require the same to be reflected.
Section 2.16 of the Autoweb Disclosure Schedule identifies each parcel of real
------------
property owned or leased by Autoweb as of the date of this Agreement.
-18-
2.17 Environmental Matters.
---------------------
(a) Hazardous Materials. During the period that Autoweb has
-------------------
owned or leased its properties and facilities, (i) there have been no disposals,
releases or threatened releases of Hazardous Materials (as defined below) on,
from or under such properties or facilities by or on behalf of Autoweb or, to
the knowledge of Autoweb, any other Person, in either case in violation of
applicable laws, and (ii) neither Autoweb nor, to Autoweb's knowledge, any other
Person, has used, generated, manufactured or stored on, under or about such
properties or facilities or transported to or from such properties or facilities
any Hazardous Materials in a manner that would be reasonably likely to result in
liability to Autoweb in excess of $50,000. Autoweb has no knowledge of any
presence, disposals, releases or threatened releases of Hazardous Materials on,
from or under any such properties or facilities, which may have occurred prior
to Autoweb having taken possession of any such properties or facilities and
which would be reasonably likely to result in liability to Autoweb in excess of
$50,000.
(b) Certain Definitions. For purposes of this Agreement, the
-------------------
terms "disposal," "release," and "threatened release" shall have the definitions
assigned thereto by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as amended ("CERCLA").
For the purposes of this Section, "Hazardous Materials" shall mean any hazardous
or toxic substance, material or waste which is regulated under, or defined as a
"hazardous substance," "toxic substance," "pollutant," "contaminant," "toxic
chemical," "hazardous materials" or "hazardous chemical" under (1) CERCLA; (2)
the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Section 1101
et seq.; (3) the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801,
et seq.; (4) the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.;
(5) the Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et
seq.; (6) regulations promulgated under any of the above statutes; or (7) any
applicable state or local statute, ordinance, rule or regulation that has a
scope or purpose similar to those statutes identified above.
2.18 Employee Matters. Except as is not reasonably likely to result,
----------------
individually or in the aggregate, in a Material Adverse Effect on Autoweb,
Autoweb is in compliance with all applicable laws and regulations respecting
employment, discrimination in employment, terms and conditions of employment,
wages, hours and occupational safety and health and employment practices, and is
not engaged in any unfair labor practice. Autoweb has withheld all amounts
required by law or by agreement to be withheld from the wages, salaries, and
other payments to employees; and is not liable for any arrears of wages, except
for arrears of wages less than $25,000 in the aggregate, or any taxes, except
for taxes less than $25,000 in the aggregate, or any penalty for failure to
comply with any of the foregoing, except for such penalties of less than $25,000
in the aggregate. Autoweb is not liable for any payment to any trust or other
fund or to any governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for employees (other than routine payments to be made in the normal
course of business and consistent with past practice), which in the aggregate
exceed $25,000. There are no pending claims against Autoweb for any amounts
under any workers compensation plan or policy or for
-19-
long term disability, which in the aggregate exceed $25,000. Autoweb does not
have any obligations under COBRA with respect to any former employees or
qualifying beneficiaries thereunder, except for obligations that are less than
$25,000 in the aggregate. There are no controversies pending or, to the
knowledge of Autoweb, threatened, between Autoweb and any of its employees or
former employees, which controversies have or would reasonably be expected to
result in an action, suit, proceeding, claim, arbitration or investigation
before any agency, court or tribunal, foreign or domestic. Autoweb is not a
party to any collective bargaining agreement or other labor union contract and
Autoweb is not aware of any activities or proceedings of any labor union to
organize any such employees. To Autoweb's knowledge, no employees of Autoweb are
in violation of any term of any employment contract, patent disclosure
agreement, noncompetition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by Autoweb
because of the nature of the business conducted or presently proposed to be
conducted by Autoweb or to the use of trade secrets or proprietary information
of others.
2.19 Interested Party Transactions. Except as disclosed in the Autoweb
-----------------------------
SEC Documents, Autoweb is not indebted to any director or officer of Autoweb
(except for amounts due as normal salaries and bonuses and in reimbursement of
ordinary expenses), and no such Person is indebted to Autoweb and there are no
other transactions of the type required to be disclosed pursuant to Items 402
and 404 of Regulation S-K under the Securities Act and the Exchange Act.
2.20 Insurance. Section 2.20 of the Autoweb Disclosure Schedule
--------- ------------
contains a complete list of all insurance policies and bonds to which Autoweb is
a party or which pertain to Autoweb's assets. There is no claim pending under
any of such policies or bonds as to which coverage has been questioned, denied
or disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and Autoweb is
otherwise in compliance in all material respects with the terms of such policies
and bonds. Autoweb has no knowledge of any threatened termination of, or premium
increase with respect to, any of such policies.
2.21 Minute Books. The minute books of Autoweb have been made
------------
available to Autobytel and contain a complete and accurate summary of all
meetings of directors, including committees of the board of directors, and
stockholders or actions by written consent since the time of incorporation of
Autoweb through the date of this Agreement, and reflect all transactions
referred to in such minutes accurately in all material respects.
2.22 Complete Copies of Materials. Autoweb has delivered or made
----------------------------
available true and complete copies of each document listed on the Autoweb
Disclosure Schedule and each other document that has been requested by Autobytel
or its counsel in connection with their legal and accounting review of Autoweb.
2.23 Board Approval. The Board of Directors of Autoweb has approved
--------------
this Agreement and the Merger, and agrees to promptly submit this Agreement
-20-
to the stockholders of Autoweb for approval, and will recommend to the
stockholders of Autoweb to approve this Agreement and the Merger.
2.24 State Anti-Takeover Statutes. No state takeover statute is applicable
----------------------------
to the merger, this Agreement or the transactions contemplated hereby.
2.25 Dealers/Customers. Autoweb has not received any notice and does not
-----------------
have any reason to believe that any dealer or category partner will seek to
terminate or modify in a manner adverse to Autoweb its relationship with
Autoweb as a result of the transactions contemplated by this Agreement.
2.26 Brokers' and Finders' Fees. Except for payment obligations to Credit
--------------------------
Suisse First Boston set forth in an engagement letter, a copy of which has
been provided to Autobytel, Autoweb has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders fees or agents
commissions or investment bankers fees or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
2.27 Opinion of Financial Advisor. Autoweb has been advised by its
----------------------------
financial advisor, Credit Suisse First Boston, that in such advisor's opinion,
as of March 31, 2001, the Exchange Ratio is fair, from a financial point of
view, to holders of the Autoweb Common Stock.
2.28 Voting Agreement. The Voting Agreement referred to in Section 5.9
---------------- -----------
hereof has been executed and delivered by Autoweb and the Persons named in
Schedule 5.9 and constitutes a valid and binding obligation of Autoweb,
------------
enforceable against Autoweb in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditor's rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of any court before which any proceeding may be brought).
2.29 Tax Representations.
-------------------
(a) The term "Taxes" means all net income, capital gains, gross
-----
income, gross receipts, sales, use, transfer, ad valorem, franchise, profits,
license, capital, withholding, payroll, employment, excise, goods and services,
severance, stamp, occupation, premium, property, assessments, or other
governmental charges of any kind whatsoever, together with any interest, fines
and any penalties, additions to tax or other additional amounts incurred,
accrued with respect thereto, assessed, charged or imposed under applicable
federal, state, local or foreign tax law, provided that any interest, penalties,
additions to tax or additional amounts that relate to Taxes for any taxable
period (including any portion of any taxable period ending on or before the
Closing Date) shall be deemed to be Taxes for such period, regardless of when
such items are incurred, accrued, assessed or charged. References to Autoweb
shall be deemed to include any predecessor to Autoweb or any Person from which
Autoweb incurs a liability for Taxes as a result of transferee liability.
-21-
(b) Autoweb has duly filed (and prior to the Closing Date will duly
file), on a timely basis taking into account extensions, all material tax
returns, reports, statements or estimates ("Tax Returns") that were due or will
be due prior to the Closing Date. Such returns, reports, statements or estimates
have been, or will be, prepared in accordance with applicable laws, for all
years and periods (and portions thereof), for all jurisdictions (whether
federal, state, local or foreign) in which any such returns, reports or
estimates were due, or will be due, prior to the Closing Date. No material
adjustments relating to such returns have been proposed formally or informally
by any taxing authority and, to the knowledge of Autoweb, no basis exists for
any material adjustment. All Taxes shown as due and payable on such returns,
reports and estimates have been paid (or will be paid prior to the Closing), and
there is no current liability for any material Taxes due and payable.
(c) The Autoweb Balance Sheet reflects adequate reserves in accordance
with generally accepted accounting principles (without regard to any amounts
reserved for deferred Taxes) for all liabilities for Taxes accrued by Autoweb
but not yet paid for all Tax periods and portions thereof through the date of
the Autoweb Balance Sheet. Since the date of the Autoweb Balance Sheet, Autoweb
has not incurred any liability for Taxes other than in the ordinary course of
business .
(d) Autoweb is not, or within the five year period preceding the
Closing Date has not been, an S corporation within the meaning of Section
1361(a) of the Code.
(e) Autoweb has withheld all required amounts from its employees,
agents, contractors, nonresidents, creditors, stockholders and third parties and
remitted such amounts to the proper authorities; paid all employer contributions
and premiums; and filed all federal, state, local and foreign returns and
reports with respect to employee income Tax withholding, and social security and
unemployment Taxes and premiums, all in compliance with the withholding
provisions of the Code, or any prior provision of the Code and other applicable
Laws, except to the extent that any failure to do so is not reasonably likely to
have a Material Adverse Effect on Autoweb .
(f) Autoweb does not have a permanent establishment in any foreign
country.
(g) There are no claims or investigations by the IRS or any other tax
authority pending or, to the knowledge of Autoweb, threatened against Autoweb
aggregate, and Autoweb has no reason to expect any taxing authority to assess
any material additional taxes for any period for which tax returns were filed;
there has been no waiver granted or requested of any applicable statute of
limitations or extension of the time for the assessment of any Tax of Autoweb
for which Autoweb could be liable under any provision of federal, state, local,
or foreign law. No closing agreement (as defined in section 7121 of the Code) or
any similar provision of any state, local, or foreign law has been entered into
by or with respect to Autoweb.
-22-
(h) There are no liens or encumbrances for any Tax that is due and
payable prior to the Closing Date upon any asset of Autoweb.
(i) No power of attorney that is currently in force has been granted
to any person with respect to any matter relating to Taxes that could materially
adversely affect Autoweb.
(j) Autoweb does not have any item of income, gain, loss or
deduction reportable in a taxable period ending after the date hereof but
attributable to a transaction that occurred in a taxable period or portion
thereof ending on or before the date hereof.
(k) Except as set forth on Section 2.29(k) of the Autoweb Disclosure
---------------
Schedule, Autoweb has never been included in nor is includible in any
consolidated, combined or unitary Tax Return with any entity.
(l) Autoweb is not a party to and is not bound by, and Autoweb does
not have any obligation under, any Tax sharing, Tax indemnity or similar
agreement.
(m) Autoweb is not a party to any agreement or arrangement which
payment thereunder would result, separately or in the aggregate, due to the
consummation of the transactions contemplated by this Agreement, in the payment
of any "excess parachute payments" within the meaning of Section 280G of the
Code or an excise Tax to the recipient of such payment pursuant to Section 4999
of the Code. No acceleration of the vesting schedule for any property of Autoweb
that is substantially unvested within the meaning of the regulations under
Section 83 of the Code will occur in connection with the transactions
contemplated by this Agreement. Autoweb is not a party to any agreement or
arrangement which, individually or collectively with respect to any person,
could give rise to the payment of any amount, due to the consummation of the
transactions contemplated by this Agreement, that would not be deductible by
Autoweb by reason of Section 162(a)(1) or 162(m) of the Code.
(n) Autoweb is not, and has not been, a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Prior
to the Closing Date, Autoweb will provide a statement to Autobytel pursuant to
Section 1.1445-2 (c)(3) of the Treasury Regulations, to that effect.
(o) There are no proposed reassessments of any property owned by
Autoweb or other proposals that could increase the amount of any Tax to which
Autoweb would be subject.
(p) Autoweb has not filed a consent pursuant to Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of
any asset owned by Autoweb.
-23-
(q) Autoweb has not constituted either a "distributing
corporation" or a "controlled corporation" in a distribution of stock qualifying
for tax free treatment under Section 355 of the Code (i) in the two years prior
to the date of this Agreement or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in connection with the Merger.
2.30 Representations Complete. None of the representations or
------------------------
warranties made by Autoweb herein or in any Schedule hereto, including the
Autoweb Disclosure Schedule, or certificate furnished by Autoweb pursuant to
this Agreement, or the Autoweb SEC Documents, when all such documents are read
together in their entirety, contains or will contain at the Effective Time any
untrue statement of a material fact, or omits or will omit at the Effective Time
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF AUTOBYTEL AND MERGER SUB
---------------------------
Except as disclosed for a particular statement in the specific
corresponding section of the document of even date herewith delivered by
Autobytel to Autoweb prior to the execution and delivery of this Agreement (the
"Autobytel Disclosure Schedule") corresponding to the Section of this Agreement
to which any of the following representations and warranties specifically
relate, Autobytel represents and warrants to Autoweb as follows:
3.1 Organization, and Qualification. Each of Merger Sub and
-------------------------------
Autobytel is a corporation duly organized, validly existing and in good standing
under the laws of the state of Delaware and is qualified to do business and in
good standing as a foreign corporation in each jurisdiction where the properties
owned, leased or operated, or the business conducted, by it require such
qualification, except where failure to so qualify or be in good standing is not
reasonably likely to have a Material Adverse Effect on Autobytel. Each of Merger
Sub and Autobytel has the corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to have such
power, or authority and governmental approvals is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on
Autobytel. Each of Merger Sub and Autobytel has heretofore made available to
Autoweb a complete and correct copy of its Certificate of Incorporation
(including all Certificates of Determination or the equivalent thereof) and
Bylaws, each as amended to the date hereof (collectively, the "Autobytel
Certificate of Incorporation" and "Autobytel Bylaws", respectively). The
Autobytel Certificate of Incorporation and Autobytel Bylaws are in full force
and effect. Neither Merger Sub nor Autobytel is in violation of any provision of
its Certificate of Incorporation or Bylaws. Autobytel does not have any
subsidiaries except Merger Sub
-24-
and as disclosed, to the extent required, in the Autobytel SEC Documents (as
defined below).
3.2 Capitalization. The authorized capital stock of Autobytel
---------------
consists of 200,000,000 shares of Autobytel Common Stock and 11,445,187 shares
of preferred stock. As of the close of business on March 28, 2001, 20,364,070
shares of Autobytel Common Stock were issued and outstanding and no shares of
Preferred Stock were issued and outstanding. The authorized capital stock of
Merger Sub consists of 100 shares of common stock, all of which are issued and
outstanding and owned by Autobytel. As of the close of business on March 15,
2001, except for (a) 6,256,509 shares of Autobytel Common Stock reserved for
issuance pursuant to outstanding options of Autobytel (the "Autobytel Options")
and outstanding warrants of Autobytel to purchase 739,800 shares of capital
stock of Autobytel (the "Autobytel Warrants") and (b) 391,826 shares of
Autobytel Common Stock reserved for issuance pursuant to Autobytel's employee
stock purchase plan, there are not now any existing options, warrants, calls,
subscriptions, or other rights, or other agreements or commitments, obligating
Autobytel or Merger Sub to issue, transfer or sell any shares of its capital
stock or bonds, debentures, notes or other indebtedness having voting rights (or
convertible into securities having such rights) of, or other equity interest in,
Autobytel or securities convertible into or exchangeable for such shares or
equity interest or obligating Autobytel or Merger Sub to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment. Since March 15, 2001, Autobytel has not issued any
shares of its capital stock, except pursuant to the exercise of Autobytel
Options, Autobytel's employee stock purchase plan and Autobytel's Retirement
Savings Plan. All issued and outstanding shares of Autobytel Common Stock are,
and all shares of Autobytel Common Stock which may be issued pursuant to the
exercise of outstanding Autobytel Options and Autobytel Warrants will be when
issued in accordance with the respective terms thereof, duly authorized and
validly issued, fully paid and nonassessable, and such issuance will not violate
any preemptive rights under law or otherwise. There are no outstanding
contractual obligations of Autobytel or Merger Sub to repurchase, redeem or
otherwise acquire any of its shares or other securities.
3.3 Authority; Governmental Consents.
---------------------------------
(a) Authority. Each of Merger Sub and Autobytel has
---------
the corporate power and authority to execute and deliver this Agreement and,
subject only to the approval by the sole stockholder of Merger Sub, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Autobytel and Merger Sub and the consummation by Autobytel and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Autobytel and Merger
Sub, subject to the approval set forth in Section 3.12. This Agreement has been
------------
duly and validly executed and delivered by Autobytel and Merger Sub, and,
assuming this Agreement constitutes a valid and binding obligation of Autoweb,
this Agreement constitutes a valid and binding agreement of Autobytel and Merger
Sub, enforceable against Autobytel and Merger Sub in accordance with its terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the
-25-
enforcement of creditor's rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is
subject to the discretion of any court before which any proceeding may be
brought).
(b) Governmental Consents. Other than (i) in connection with, or
---------------------
in compliance with, the provisions of Delaware Law with respect to the
transactions contemplated hereby, the federal securities laws, the securities
laws of the various states, the rules of the National Association of Securities
Dealers, Inc., (ii) notices to or filings with the IRS or the Pension Benefit
Guaranty Corporation with respect to employee benefit plans, or under the HSR
Act and (iii) where the failure to have or keep in force would not result in a
penalty, fine or other payment in excess of $150,000 or an inability to conduct
Autobytel's business as presently conducted, no authorization, consent or
approval of, or filing with, any Governmental Entity is necessary for the
consummation by Autobytel or Merger Sub of the transactions contemplated by this
Agreement, except for the approval of Autobytel's stockholders required under
the rules of the National Association of Securities Dealers, Inc.
3.4 No Violation. Neither the execution and delivery of this
------------
Agreement by Autobytel and Merger Sub nor the consummation by Autobytel and
Merger Sub of the transactions contemplated hereby will (i) constitute a breach
or violation of any provision of the Certificate of Incorporation or Bylaws of
either of them, (ii) constitute a breach, violation or default (or any event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in the creation of any lien or encumbrance upon any property or asset of
Autobytel or Merger Sub under, any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument to which Autobytel or
Merger Sub, or by which either of them or any of their properties or assets, are
bound, or (iii) subject to the receipt of the requisite consents, approvals, or
authorizations of, or filings with Governmental Entities under federal
securities laws, applicable corporate and securities laws, the rules of The
Nasdaq Stock Market, Inc. and the National Association of Securities Dealers,
Inc. and laws relating to employee benefit plans, conflict with or violate any
order, judgment or decree, or to the knowledge of Autobytel, any statute,
ordinance, rule or regulation applicable to Autobytel or Merger Sub, or by which
it or any of its properties or assets may be bound or affected, other than, in
the case of the foregoing clauses (ii) or (iii), conflicts, breaches,
violations, defaults, terminations, accelerations or creation of liens and
encumbrances which, individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect on Autobytel.
3.5 SEC Reports and Financial Statements. Autobytel has filed with
------------------------------------
the SEC and has made available to Autoweb, copies of all forms, reports and
documents (the "Autobytel SEC Documents") required to be filed by it under the
Securities Act or the Exchange Act. None of such Autobytel SEC Documents (as of
their respective filing dates) contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading (except any statement or omission therein
which has been corrected or otherwise disclosed or updated in a
-26-
subsequent Autobytel SEC Document). The audited and unaudited financial
statements of Autobytel included in any Autobytel SEC Document (the "Autobytel
Financial Statements") have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as otherwise stated
in such financial statements, including the related notes), comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto and fairly present the
financial position of Autobytel as of the dates thereof and the results of its
operations and changes in financial position for the periods then ended,
subject, in the case of the unaudited financial statements, to normal year-end
audit adjustments, and except for the absence of certain footnote information in
the unaudited statements. Autobytel does not have any material liabilities or
obligations of any nature (whether absolute, accrued, contingent, unmatured,
unaccrued, unliquidated, unasserted, conditional or otherwise), except for
liabilities or obligations (i) reflected or reserved against on its balance
sheet as at September 30, 2000 (including the notes thereto and the other
disclosures made in Autobytel's Form 10-Q for the quarter ended September 30,
2000) (the "Autobytel Balance Sheet") included in the Autobytel SEC Documents,
or (ii) incurred in the ordinary course of business consistent with past
practice since such date. Any such liability incurred in the ordinary course of
business since September 30, 2000, which as of the date of this Agreement
individually or taken together with all related liabilities in the aggregate
exceeds $500,000, is listed or described on Section 3.5 of the Autobytel
-----------
Disclosure Schedule.
3.6 Compliance with Applicable Laws and Permits; Regulatory Matters. Each
---------------------------------------------------------------
of Merger Sub and Autobytel has in effect and holds all permits, licenses,
orders, authorizations, registrations, approvals and other analogous
instruments, and each of Merger Sub and Autobytel has made all filings and
registrations and the like necessary or required by law to conduct its business
as presently conducted, other than such permits, licenses, orders,
authorizations, registrations, approvals, and other instruments, the absence of
which is not reasonably likely to have a Material Adverse Effect on Autobytel.
Neither Merger Sub nor Autobytel has received any written governmental notices
within two years prior to the date hereof alleging any violation by Autobytel or
Merger Sub of any such laws, rules, regulations or orders that has not been
cured as of the date hereof. Neither Merger Sub nor Autobytel is in default or
noncompliance under any (a) permits, consents, or similar instruments, and (b)
business and local and county laws, ordinances, regulations, judgments, orders,
decrees or rules of any court, arbitrator or governmental, regulatory or
administrative agency or entity, other than such default or noncompliance which
is not reasonably likely to have a Material Adverse Effect on Autobytel.
3.7 Litigation. Except as set forth on Section 3.7 of the Autobytel
----------
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Autobytel, threatened, against
Autobytel or Merger Sub that, individually or in the aggregate, if adversely
determined is reasonably likely to have a Material Adverse Effect on Autobytel
or would reasonably be expected to prevent or materially delay the consummation
of the transactions contemplated by this Agreement. Neither Merger Sub nor
Autobytel is a party to or bound by any outstanding order, writ, injunction or
decree which, individually or in the aggregate, is reasonably likely to have a
-27-
Material Adverse Effect on Autobytel or would reasonably be expected to prevent
or materially delay the consummation of the transactions contemplated hereby.
3.8 Registration Statement; Proxy Statement/Prospectus. The information
--------------------------------------------------
supplied by Autobytel for inclusion in the Registration Statement shall not at
the time the Registration Statement (including any amendments or supplements
thereto) is declared effective by the SEC contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The information
supplied by Autobytel for inclusion in the Proxy Statement to be sent to the
stockholders of Autobytel in connection with the meeting of Autobytel's
stockholders to consider the Merger (the "Autobytel Stockholders Meeting") and
the Autoweb's stockholders in connection with the Autoweb Stockholders Meeting
shall not, on the date the Proxy Statement is first mailed to Autobytel's
stockholders and Autoweb's stockholders, at the time of the Autobytel
Stockholders Meeting, the Autoweb Stockholders Meeting or at the Effective Time,
contain any statement which, at any such time, is false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they are made, not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Autobytel Stockholders Meeting or Autoweb
Stockholders Meeting which has become false or misleading. If at any time prior
to the Effective Time any event or information should be discovered by Autobytel
which should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, Autobytel shall promptly inform Autoweb.
Notwithstanding the foregoing, Autobytel makes no representation, warranty or
covenant with respect to any information supplied by or respecting Autoweb
(other than information with respect to Autobytel) which is contained in any of
the foregoing documents.
3.9 Employee Benefit Plans. The term "Autobytel Plans" shall mean all
----------------------
employee benefit plans and programs providing benefits to any employee or former
employee of Autobytel or Merger Sub sponsored or maintained by Autobytel or
Merger Sub or to which Autobytel or Merger Sub contributes or is obligated to
contribute. Without limiting the generality of the foregoing, the term
"Autobytel Plans" includes all employee welfare benefit plans within the meaning
of Section 3(1) of the ERISA, and all employee pension benefit plans within the
meaning of Section 3(2) of ERISA. All Autobytel Plans are in compliance with all
applicable provisions of ERISA, the Code and all laws and regulations applicable
to the Autobytel Plans, except where the failure with which to comply is not
reasonably likely to have a Material Adverse Effect. There does not now exist,
nor do any circumstances exist that would reasonably be expected to result in,
any liability that is not reflected in the Autobytel Balance Sheet that is
reasonably likely to have a Material Adverse Effect.
3.10 Intellectual Property.
---------------------
(a) Right to Use. Autobytel has the right to use all Marks, Patents,
------------
Copyrights and Software which are material to the operation of Autobytel's
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business, free and clear of any and all liens, covenants, conditions and
restrictions or other adverse claims or interests of any kind or nature, and has
not received any written notice or claim challenging Autobytel's right to use
such Marks, Patents, Copyrights or Software, which in any case would be
reasonably likely to have a Material Adverse Effect.
(b) Trade Secrets. Each of Merger Sub and Autobytel has taken
-------------
reasonable precautions in accordance with standard industry practice to protect
the secrecy, confidentiality and value of all material Trade Secrets of such
Person (collectively, "Autobytel Owned Trade Secrets"). Autobytel has the right
to use all of the Autobytel Owned Trade Secrets which are material to the
operation of Autobytel's business and none of the Autobytel Owned Trade Secrets
is subject to any liens, covenants, conditions and restrictions or other adverse
claims or interests of any kind or nature, and has not received any written
notice or claim challenging Autobytel's right to use any of the Autobytel Owned
Trade Secrets, which in any case would be reasonably likely to have a Material
Adverse Effect.
(c) Software. To Autobytel's knowledge, Autobytel has lawfully
--------
acquired the right to use the material Software used but not owned by Autobytel
in the conduct of its business (the "Autobytel Licensed Software") as it is used
in the conduct of its business as presently conducted, has not exercised any
rights in respect of any Autobytel Licensed Software, including any
reproduction, distribution or derivative work rights, outside the scope of any
license expressly granted by the Person from which the right to use such
Autobytel Licensed Software was obtained and has not received any written notice
or claim challenging Autobytel's right to use any of the Autobytel Licensed
Software.
(d) Infringement. Neither Merger Sub nor Autobytel is, nor has either
------------
Person been, a party to any proceeding involving a claim of infringement,
misappropriation or other wrongful use or exploitation by Autobytel or Merger
Sub of any other Person's Intellectual Property Rights which has had, or is
reasonably likely to have, a Material Adverse Effect. Neither Merger Sub nor
Autobytel is, nor will such Person be as a result of the execution and delivery
of this Agreement or the performance of its obligations under this Agreement, in
breach of any license, sublicense or other agreement relating to its
Intellectual Property Rights which breach is reasonably likely to have a
Material Adverse Effect.
(e) Confidentiality. Each of Merger Sub and Autobytel has taken
---------------
reasonable steps to protect its Intellectual Property Rights, including, without
limitation, having employee procedures requiring its employees, officers,
directors and consultants to execute and deliver confidentiality, assignment of
rights and non-disclosure agreements. To Autobytel and Merger Sub's knowledge,
no employee of Autobytel or Merger Sub is in violation of any term (whether
written or verbal) of any confidentiality or nondisclosure agreement.
3.11 Contracts. Each material note, bond, mortgage, indenture, lease,
---------
license, contract, agreement or other instrument or obligation to which
Autobytel or
-29-
Merger Sub is a party or by which it or any of its properties or assets may be
bound which involves (i) future payments of $150,000 or more or (ii) the
termination of which is reasonably likely to have a Material Adverse Effect (the
"Autobytel Material Contracts") is in full force and effect and there are no
defaults by Merger Sub or Autobytel or, to Autobytel's or Merger Sub's
knowledge, any other party thereto under any Autobytel Material Contract.
3.12 Vote Required. The affirmative vote of the holders of at least a
-------------
majority of the shares of Autobytel Common Stock outstanding on the record date
set for the Autobytel Stockholders Meeting is the only vote of the holders of
any of Autobytel's capital stock necessary to approve this Agreement and the
transactions contemplated hereby.
3.13 Absence of Certain Changes. Except as set forth in Section 3.13
-------------------------- ------------
of the Autobytel Disclosure Schedule, since September 30, 2000 (the "Autobytel
Balance Sheet Date"), each of Merger Sub and Autobytel has conducted its
business in the ordinary course consistent with past practice and there has not
occurred: (i) any change, event or condition (whether or not covered by
insurance) that as of the date hereof has resulted in, or is reasonably likely
to result in, a Material Adverse Effect on Autobytel; (ii) any acquisition, sale
or transfer of any asset with a fair market value of greater than $500,000 other
than in the ordinary course of business and consistent with past practice; (iii)
any change in accounting methods or practices (including any change in
depreciation or amortization policies or rates) or any revaluation of its
assets; (iv) any declaration, setting aside, or payment of a dividend or other
distribution with respect to its shares, or any direct or indirect redemption,
purchase or other acquisition of any of its shares of capital stock or other
securities; (v) (a) the entry by Autobytel into any contract which involves
future payments of $500,000 or more or (b) any amendment or termination of, or
default under, any of such contracts; or (vi) any amendment or change to the
Autobytel Certificate of Incorporation or Autobytel Bylaws. Neither Autobytel
nor Merger Sub has agreed since the Autobytel Balance Sheet Date to do any of
the things described in the preceding clauses (i) through (vi) and neither
Autobytel nor Merger Sub is currently involved in any negotiations or
discussions to do any of the things described in the preceding clauses (iii),
(v)(b) or (vi).
3.14 Restrictions on Business Activities. Except as set forth in
-----------------------------------
Section 3.14 of the Autobytel Disclosure Schedule, there is no judgment,
------------
injunction, order or decree binding upon Autobytel or Merger Sub and no
agreement, except for exclusive licenses granted to third parties to operate the
Autobytel business outside of the United States and related non-competition
agreements, binding upon Autobytel or Merger Sub, which in any case has or
reasonably would be expected to have the effect of prohibiting or materially
impairing any business practice of Autobytel, any acquisition of property by
Autobytel or the conduct of business by Autobytel.
3.15 Properties. Each of Autobytel and Merger Sub has good and valid
----------
title to its properties, interests in properties and assets, real and personal,
used in its business and reflected in the Autobytel Balance Sheet or acquired
after the Autobytel Balance Sheet Date (except properties, interests in
properties and assets sold or otherwise
-30-
disposed of since the Autobytel Balance Sheet Date in the ordinary course of
business), or in the case of leased properties and assets, valid leasehold
interests in such property and assets, in every case free and clear of all
mortgages, liens, pledges, charges or encumbrances of any kind or character,
except (i) the lien of current taxes not yet due and payable, (ii) such
imperfections of title, liens and easements as do not and will not materially
detract from or interfere with the use of the properties subject thereto or
affected thereby, or otherwise materially impair business operations involving
such properties, (iii) liens securing debt which are reflected on the Autobytel
Balance Sheet, and (iv) liens that in the aggregate are not reasonably likely to
have a Material Adverse Effect on Autobytel. The respective property and
equipment of Autobytel and Merger Sub that is used in the operations of its
business is in good operating condition and repair, normal wear and tear
excepted. All properties used in the operation of Autobytel and Merger Sub are
reflected in the Autobytel Balance Sheet to the extent generally accepted
accounting principles require the same to be reflected. The description of real
and personal property described in the Autobytel SEC Documents is true and
correct in all material respects and Autobytel has not acquired any material
real or personal property since the filing of such Autobytel SEC Documents.
3.16 Environmental Matters. During the period that Autobytel or
---------------------
Merger Sub has owned or leased its properties and facilities, (i) there have
been no disposals, releases or threatened releases of Hazardous Materials on,
from or under such properties or facilities by or on behalf of Autobytel or, to
the knowledge of Autobytel, any other Person, in either case in violation of
applicable laws, and (ii) neither Autobytel or Merger Sub nor, to Autobytel's or
Merger Sub's knowledge, any other Person, has used, generated, manufactured or
stored on, under or about such properties or facilities or transported to or
from such properties or facilities any Hazardous Materials in a manner that
would be reasonably likely to result in liability to Autobytel or Merger Sub in
excess of $150,000. Neither Merger Sub nor Autobytel has knowledge of any
presence, disposals, releases or threatened releases of Hazardous Materials on,
from or under any such properties or facilities, which may have occurred prior
to Autobytel or Merger Sub having taken possession of any such properties or
facilities and which would be reasonably likely to result in liability to
Autobytel in excess of $150,000.
3.17 Employee Matters. Except as is not reasonably likely to result,
----------------
individually or in the aggregate, in a Material Adverse Effect on Autobytel,
each of Merger Sub and Autobytel is in compliance with all applicable laws and
regulations respecting employment, discrimination in employment, terms and
conditions of employment, wages, hours and occupational safety and health and
employment practices, and is not engaged in any unfair labor practice. Neither
Merger Sub nor Autobytel is a party to any collective bargaining agreement or
other labor union contract and neither Merger Sub nor Autobytel is aware of any
activities or proceedings of any labor union to organize any such employees. To
Autobytel's or Merger Sub's knowledge, no employees of Autobytel or Merger Sub
are in violation of any term of any employment contract, patent disclosure
agreement, noncompetition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by Autobytel
or Merger Sub because of the nature of the business conducted or presently
proposed to
-31-
be conducted by Autobytel or Merger Sub or to the use of trade secrets or
proprietary information of others.
3.18 Interested Party Transactions. Except as disclosed in the
-----------------------------
Autobytel SEC Documents, neither Merger Sub nor Autobytel is indebted to any
director or officer of Autobytel or Merger Sub (except for amounts due as normal
salaries and bonuses and in reimbursement of ordinary expenses), and no such
Person is indebted to Autobytel or Merger Sub and there are no other
transactions of the type required to be disclosed pursuant to Items 402 and 404
of Regulation S-K under the Securities Act and the Exchange Act.
3.19 Complete Copies of Materials. Autobytel has delivered or made
----------------------------
available true and complete copies of each document listed on the Autobytel
Disclosure Schedule and each other document that has been reasonably requested
by Autoweb or its counsel in connection with their legal and accounting review
of Autobytel and Merger Sub.
3.20 Board Approval. The Board of Directors of Autobytel and Merger
--------------
Sub have approved this Agreement and the Merger, and agree to promptly submit
this Agreement to the stockholders of Autobytel for approval, and will recommend
to the stockholders of Autobytel that they approve this Agreement and the
Merger.
3.21 State Anti-Takeover Statutes. No state takeover statute is
----------------------------
applicable to the Merger, this Agreement or the transactions contemplated
hereby.
3.22 Brokers' and Finders' Fees. Except for payment obligations to
--------------------------
Xxxxxx Brothers set forth in an engagement letter, a copy of which has been
provided to Autoweb, neither Merger Sub nor Autobytel has incurred, nor will
such Person incur, directly or indirectly, any liability for brokerage or
finders fees or agents commissions or investment bankers fees or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
3.23 Minute Book. The minute books of Autobytel have been made
-----------
available to Autoweb and contain a complete and accurate summary of all meetings
of directors, including committees of the board of directors, and stockholders
or actions by written consent since the time of incorporation of Autobytel
through the date of this Agreement, and reflect all transactions referred to in
such minutes accurately in all material respects.
3.24 Opinion of Financial Advisor. Autobytel has been advised by its
----------------------------
financial advisor, Xxxxxx Brothers, that in such advisor's opinion, as of March
29, 2001, the Merger Consideration to be delivered to the stockholders of
Autoweb is fair, from a financial point of view, to the stockholders of
Autobytel.
3.25 Insurance. Except as set forth in Section 3.25 of the Autobytel
--------- ------------
Disclosure Schedule, there is no claim in excess of $150,000 pending under any
insurance policies and bonds to which Autobytel is a party or which pertain to
-32-
Autobytel's assets as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds. All premiums due and payable
under all insurance policies and bonds to which Autobytel is a party or which
pertain to Autobytel's assets have been paid and Autobytel is otherwise in
compliance in all material respects with the terms of such policies and bonds.
Autobytel has no knowledge of any threatened termination (other than by
expiration) of, or premium increase in excess of $150,000 with respect to, any
of such policies.
3.26 Tax Representations.
-------------------
(a) References to Autobytel or Merger Sub shall be deemed to
include any predecessor to such Person or any other Person from which Autobytel
or Merger Sub incurs a liability for Taxes as a result of transferee liability.
(b) Each of Autobytel and Merger Sub has duly filed (and prior
to the Closing Date will duly file), on a timely basis taking into account
extensions, all material Tax Returns that were due, or will be due, prior to the
Closing Date. Such returns, reports, statements or estimates have been, or will
be, prepared in accordance with applicable laws, for all years and periods (and
portions thereof), for all jurisdictions (whether federal, state, local or
foreign) in which any such returns, reports or estimates were due, or will be
due, prior to the Closing Date. No material adjustments relating to such returns
have been proposed formally or informally by any taxing authority and, to the
knowledge of Autobytel and Merger Sub, no basis exists for any material
adjustment. All Taxes shown as due and payable on such returns, reports and
estimates have been paid (or will be paid prior to the Closing), and there is no
current liability for any material Taxes due and payable.
(c) The Autobytel Balance Sheet reflects adequate reserves in
accordance with generally accepted accounting principles (without regard to any
amounts reserved for deferred Taxes) for all liabilities for Taxes accrued by
Autobytel or Merger Sub but not yet paid for all Tax periods and portions
thereof through the date of the Autobytel Balance Sheet. Since the date of the
Autobytel Balance Sheet, neither Autobytel nor Merger Sub has incurred any
liability for Taxes other than in the ordinary course of business.
(d) Neither Autobytel nor Merger Sub is, or within the five
year period preceding the Closing Date has been, an S corporation within the
meaning of Section 1361(a) of the Code.
(e) Each of Autobytel and Merger Sub has withheld all required
amounts from its employees, agents, contractors, nonresidents, creditors,
stockholders and third parties and remitted such amounts to the proper
authorities; paid all employer contributions and premiums; and filed all
federal, state, local and foreign returns and reports with respect to employee
income Tax withholding, and social security and unemployment Taxes and premiums,
all in compliance with the withholding provisions of the Code, or any prior
provision of the Code and other applicable Laws,
-33-
except to the extent that any failure to do so is not reasonably likely to have
a Material Adverse Effect on Autobytel.
(f) Neither Autobytel nor Merger Sub has a permanent
establishment in any foreign country.
(g) There are no claims or investigations by the IRS or any
other tax authority pending or, to the knowledge of Autobytel or Merger Sub,
threatened against Autobytel or Merger Sub for any past due Taxes in excess of
$150,000 individually or in the aggregate, and neither Autobytel nor Merger Sub
has any reason to expect any taxing authority to assess any material additional
taxes for any period for which tax returns were filed; there has been no waiver
granted or requested of any applicable statute of limitations or extension of
the time for the assessment of any Tax of Autobytel or Merger Sub for which such
Person could be liable under any provision of federal, state, local, or foreign
law. No closing agreement (as defined in section 7121 of the Code) or any
similar provision of any state, local, or foreign law has been entered into by
or with respect to Autobytel or Merger Sub.
(h) There are no liens or encumbrances for any Tax that is due
and payable prior to the Closing Date upon any asset of Autobytel or Merger Sub.
(i) No power of attorney that is currently in force has been
granted to any person with respect to any matter relating to Taxes that could
materially adversely affect Autobytel or Merger Sub.
(j) Neither Autobytel nor Merger Sub has any item of income,
gain, loss or deduction reportable in a taxable period ending after the date
hereof but attributable to a transaction that occurred in a taxable period or
portion thereof ending on or before the date hereof.
(k) Except as set forth on Section 3.26(k) of the Autobytel
---------------
Disclosure Schedule, neither Autobytel nor Merger Sub has been included in nor
is includible in any consolidated, combined or unitary Tax Return with any
entity.
(l) Neither Autobytel nor Merger Sub is a party to or is bound
by, and neither Autobytel nor Merger Sub has any obligation under, any Tax
sharing, Tax indemnity or similar agreement.
(m) Neither Autobytel nor Merger Sub is a party to any
agreement or arrangement which payment thereunder would result, separately or in
the aggregate, due to the consummation of the transactions contemplated by this
Agreement, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code or an excise Tax to the recipient of such payment
pursuant to Section 4999 of the Code. No acceleration of the vesting schedule
for any property of Autobytel or Merger Sub that is substantially unvested
within the meaning of the regulations under Section 83 of the Code will occur in
connection with the transactions contemplated by this Agreement. Neither
Autobytel nor Merger Sub is a party to any agreement or
-34-
arrangement which, individually or collectively with respect to any person,
could give rise to the payment of any amount, due to the consummation of the
transactions contemplated by this Agreement, that would not be deductible by
Autobytel or Merger Sub by reason of Section 162(a)(1) or 162(m) of the Code.
(n) Neither Autobytel nor Merger Sub is, or has been, a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
(o) There are no proposed reassessments of any property owned
by Autobytel or Merger Sub or other proposals that could increase the amount of
any Tax to which Autobytel or Merger Sub would be subject.
(p) Neither Autobytel nor Merger Sub has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of any asset owned by Autobytel or Merger Sub.
(q) Neither Autobytel nor Merger Sub has constituted either a
"distributing corporation" or a "controlled corporation" in a distribution of
stock qualifying for tax free treatment under Section 355 of the Code (i) in the
two years prior to the date of this Agreement or (ii) in a distribution which
could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in connection with the
Merger.
3.27 Representations Complete. None of the representations or
------------------------
warranties made by Autobytel or Merger Sub herein or in any Schedule hereto,
including the Autobytel Disclosure Schedule, or certificate furnished by
Autobytel or Merger Sub pursuant to this Agreement, or the Autobytel SEC
Documents, when all such documents are read together in their entirety, contains
or will contain at the Effective Time any untrue statement of a material fact,
or omits or will omit at the Effective Time to state any material fact necessary
in order to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.
ARTICLE IV.
CONDUCT PRIOR TO THE EFFECTIVE TIME
-----------------------------------
4.1 Conduct of Business of Autoweb and Autobytel. During the
--------------------------------------------
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, each of Autoweb and
Autobytel agrees (except to the extent expressly contemplated by this Agreement
or as consented to in writing by the other), to carry on its business in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted, to pay debts and Taxes when due subject to good faith
disputes over such debts or Taxes and to file tax returns (including delinquent
tax returns), to pay or perform other obligations when due, and to use all
reasonable efforts consistent with past practice and policies to preserve intact
its present business organization, use commercially reasonable efforts
consistent with past practice to keep available the services of its present
officers and key employees and use commercially reasonable efforts consistent
with past practice
-35-
to preserve its relationships with customers, suppliers, distributors,
licensors, licensees, and others having business dealings with it or its
subsidiaries, to the end that its goodwill and ongoing business shall be
unimpaired at the Effective Time. Each of Autoweb and Autobytel agrees to
promptly notify the other of any event or occurrence which is reasonably likely
to have a Material Adverse Effect on either party or the transactions
contemplated by this Agreement.
4.2 Conduct of Business of Autoweb. During the period from the date
------------------------------
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, except as expressly contemplated by this
Agreement, Autoweb shall not do, cause or permit any of the following, without
the prior written consent of Autobytel:
(i) Charter Documents. Cause or permit any amendments to
-----------------
its Certificate of Incorporation or Bylaws;
(ii) Dividends; Changes in Capital Stock. Declare or pay
-----------------------------------
any dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares
in connection with any termination of service to Autoweb;
(iii) Stock Option Plans. Take any action to accelerate,
------------------
amend or change the period of exercisability or vesting of options or other
rights granted under the Autoweb Option Plans, the exercise price of such
options or authorize cash payments in exchange for any options or other rights
granted under any of such plans;
(iv) Modification to Contracts. Except as specifically
permitted in this Section 4.2, (a) Enter into any contract or commitment, or
------------
violate, amend or otherwise modify or waive any of the terms of any contract,
other than in the ordinary course of business consistent with past practice, and
in no event shall such contract, commitment, amendment, modification or waiver
(other than those relating to sales of products or purchases of inventory and
supplies in the ordinary course) obligate Autoweb to pay amounts in cash
property in excess of $75,000, individually, or $300,000 in the aggregate or (b)
enter into any contract or commitment relating to, or violate, amend or
otherwise modify or waive any of its employment agreements, option agreements or
any other compensatory arrangements even if such action would otherwise be in
the ordinary course of business;
(v) Issuance of Securities. Issue, deliver, sell,
----------------------
authorize or propose the issuance, delivery or sale of, or purchase or propose
the purchase of, any shares of its capital stock or securities convertible into,
or subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it
-36-
to issue any such shares or other convertible securities, other than (a) the
issuance of shares of Autoweb Common Stock pursuant to the exercise of stock
options, warrants or other rights therefor outstanding as of the date of this
Agreement and (b) the granting of stock options to new hires in the ordinary
course of business and consistent with past practices and clause (xv) of this
Section 4.2;
-----------
(vi) Intellectual Property. Transfer to any Person or entity any
---------------------
rights to its Intellectual Property other than non-exclusive licenses of data in
the ordinary course of business consistent with past practice (other than any
transfer between Autoweb and Autobytel);
(vii) Exclusive Rights. Enter into or amend any agreements pursuant
----------------
to which any other party is granted exclusive marketing or other exclusive
rights of any type or scope with respect to any of Autoweb's products or
technology;
(viii) Dispositions. Sell, lease, license or otherwise dispose of or
------------
encumber any of its properties or assets with a fair market value individually
in excess of $25,000 or in the aggregate in excess of $200,000, except in the
ordinary course of business consistent with past practice;
(ix) Indebtedness. Incur any indebtedness for borrowed money or
------------
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(x) Leases. Enter into any operating lease in excess of $50,000;
------
(xi) Payment of Obligations. Pay, discharge or satisfy in an
----------------------
amount in excess of $75,000 in any one case, any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
(a) the payment, discharge or satisfaction of liabilities reflected or reserved
against in the Autoweb Financial Statements, and (b) the payment of fees and
expenses of third parties in connection with the transactions contemplated by
this Agreement;
(xii) Capital Expenditures. Make any capital expenditures, capital
--------------------
additions or capital improvements, or enter in to any capital leases, except in
the ordinary course of business and in no event shall such expenditures,
additions, improvements or leases in the aggregate be in excess of $100,000;
(xiii) Insurance. Reduce the amount of any insurance coverage
---------
provided by existing insurance policies;
(xiv) Termination or Waiver. Terminate or waive any right the value
---------------------
of which exceeds $25,000 individually or in the aggregate;
(xv) Employee Benefit Plans; New Hires; Pay Increases. Adopt or
------------------------------------------------
amend any employee benefit or stock purchase or option plan, hire any new
-37-
director level employee, officer level employee, non-director employee or non-
officer employee, except solely to replace non-director or non-officer employees
that either leave or are terminated after the date of this Agreement, pay any
special bonus or special remuneration to any employee or director except for
payments previously committed to in writing, which payments are disclosed on
Section 4.2(xv) of the Autoweb Disclosure Schedule or increase the salaries
---------------
or wage rates of its employees;
(xvi) Severance Arrangements. Grant any severance or termination
----------------------
pay (i) to any director or officer or (ii) to any other employee except payments
made pursuant to written agreements or written policies already in effect which
are specifically disclosed and described on Section 4.2(xvi) of the Autoweb
-----------------
Disclosure Schedule.
(xvii) Lawsuits. Commence a lawsuit other than (i) for the routine
--------
collection of bills, (ii) in such cases where Autoweb in good faith determines
that failure to commence suit would result in the material impairment of a
valuable aspect of its business, provided that it consults with Autobytel prior
to the filing of such a suit, or (iii) for a breach of this Agreement;
(xviii) Acquisitions. Acquire or agree to acquire by merging or
------------
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to its business, or acquire or agree to acquire any equity securities
of any corporation, partnership, association or business organization;
(xix) Notices. Autoweb shall give all notices and other information
-------
required by applicable law to be given to the employees of Autoweb, any
collective bargaining unit representing any group of employees of Autoweb, and
any applicable government authority under the Worker Adjustment and Retraining
Notification Act (which shall be given not later than three (3) days after
receipt of a written request from Autobytel to deliver such notice along with
written verification of the mailing of the Autobytel Proxy Statement that
includes the affirmative recommendation of the Autobytel Board of Directors that
the Autobytel stockholders approve the issuance of the Merger Consideration),
the National Labor Relations Act, the Code, the COBRA, and other applicable law
in connection with the transactions provided for in this Agreement and with
respect to events occurring prior to the Effective Time;
(xx) Revaluation. Revalue any of its assets, including without
-----------
limitation writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; or
(xxi) Other. Take or agree in writing or otherwise to take, any of
-----
the actions described in Sections 4.2(i) through (xx) above, or any action which
--------------- ----
would make any of its representations or warranties contained in this Agreement
-38-
untrue or incorrect or prevent it from performing or cause it not to perform its
covenants hereunder.
4.3 Conduct of Business of Autobytel. During the period from the
--------------------------------
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, except as expressly contemplated by this
Agreement, Autobytel shall not do, cause or permit any of the following, or
allow, cause or permit any of its subsidiaries (other than Autoweb) to do, cause
or permit any of the following, without the prior written consent of Autoweb,
which will not be unreasonably withheld, unless such conduct is required or
contemplated by this Agreement: declare, set aside, or pay any dividends on or
make any other distributions in respect of its capital stock, or split, combine
or reclassify any of its capital stock; amend its certificate of incorporation,
for a reason other than authorizing additional shares of capital stock of
Autobytel; repurchase or otherwise acquire, directly or indirectly, any shares
of its capital stock except from former employees, directors and consultants in
accordance with agreements providing for the repurchase of shares in connection
with any termination of service to it or its subsidiaries (other than Autoweb);
issue any capital stock for less than current market value, except pursuant to
outstanding options, warrants or other similar securities; or take or agree in
writing or otherwise to take, any of the actions described above, or any action
which would make any of its representations or warranties contained in this
Agreement untrue or incorrect or prevent it from performing or cause it not to
perform its covenants hereunder.
4.4 No Solicitation. Autoweb shall not, and shall direct its
---------------
officers, directors, employees, representatives or other agents not to, do any
of the following: (i) take any action to solicit, initiate or encourage an offer
or proposal (a "Takeover Proposal") for (a) a merger or other business
combination involving Autoweb or the acquisition, in one or more transactions,
of 20% or more of the assets of Autoweb, other than the Merger, or (b) the
acquisition by any Person or Persons, directly or indirectly, of shares of
capital stock of Autoweb, or (ii) subject to the terms of the immediately
following sentence, engage in negotiations with, or disclose any nonpublic
information relating to Autoweb to, or afford access to the properties, books or
records of Autoweb to, any Person that has advised Autoweb that it may be
considering making, has made or could reasonably be expected to make a Takeover
Proposal; provided, nothing herein shall prohibit Autoweb's Board of Directors
from taking and disclosing to Autoweb's stockholders a position with respect to
a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange
Act. Notwithstanding the immediately preceding sentence, if an unsolicited
Takeover Proposal shall be received by the Board of Directors of Autoweb, then,
to the extent the Board of Directors of Autoweb believes in good faith (after
written advice from its financial advisor) that such Takeover Proposal would, if
consummated, result in a transaction more favorable to Autoweb's stockholders
from a financial point of view than the transaction contemplated by this
Agreement (any such more favorable Takeover Proposal being referred to in this
Agreement as a "Superior Proposal") and the Board of Directors of Autoweb
determines in good faith after consultation with outside legal counsel that
failure to provide information or engage in negotiations would be reasonably
likely to violate the Autoweb Board of Directors' fiduciary duties to Autoweb's
stockholders under applicable laws, then Autoweb and its
-39-
officers, directors, employees, investment bankers, financial advisors,
attorneys, accountants and other representatives retained by it may furnish in
connection therewith information to the party making such Superior Proposal and
engage in negotiations with such party, and such actions shall not be considered
a breach of this Section 4.4 or any other provisions of this Agreement; provided
-----------
that in each such event Autoweb notifies Autobytel of such determination by the
Autoweb Board of Directors and provides Autobytel with a true and complete copy
of the Superior Proposal received from such third party, and provides (or has
provided) Autobytel with all documents containing or referring to non-public
information of Autoweb that are supplied to such third party; provided, further,
that Autoweb provides such non-public information pursuant to a non-disclosure
agreement at least as restrictive on such third party as the Confidentiality
Agreement (as defined in Section 5.5) is on Autobytel; provided, further,
-----------
however, that Autoweb shall not, and shall not permit any of its officers,
directors, employees or other representatives to agree to or endorse any
Takeover Proposal or withdraw its recommendation of the Merger unless Autoweb
has provided Autobytel at least five (5) days prior notice thereof, has
terminated this Agreement pursuant to Section 7.1(f), and paid Autobytel all
--------------
amounts payable pursuant to Section 7.3(b). Autoweb will promptly notify
--------------
Autobytel after receipt of any Takeover Proposal or any notice that any
Person is considering making a Takeover Proposal or any request for non-public
information relating to Autoweb or for access to the properties, books or
records of Autoweb by any Person that has advised Autoweb that it may be
considering making, or that has made, a Takeover Proposal and will keep
Autobytel fully informed of the status and details of any such Takeover Proposal
notice, and shall provide Autobytel with a true and complete copy of such
Takeover Proposal notice or any amendment thereto, if it is in writing, or a
complete written summary thereof, if it is not in writing.
ARTICLE V.
ADDITIONAL AGREEMENTS; REPRESENTATIONS
--------------------------------------
5.1 Proxy Statement/Prospectus; Registration Statement. As
--------------------------------------------------
promptly as practicable after the execution of this Agreement, (a) Autoweb and
Autobytel shall prepare the Proxy Statement relating to the approval of the
Merger and the transactions contemplated hereby by the stockholders of Autoweb
and Autobytel and (b) Autoweb and Autobytel shall file such Proxy Statement and
Autobytel shall file with the SEC a Registration Statement on Form S-4 (or such
other or successor form as shall be appropriate) incorporating the Proxy
Statement as a prospectus, in each case which complies in form with applicable
SEC requirements and shall use all reasonable efforts to cause the Registration
Statement to become effective as soon thereafter as practicable. Autoweb and
Autobytel will notify each other promptly of the receipt of any comments from
the SEC or its staff and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the Proxy Statement or any
other filing or for additional information and will supply each other with
copies of all correspondence between such party or any of its representatives,
on the one hand, and the SEC, or its staff or any other government officials, on
the other hand, with respect to the
-40-
Proxy Statement or other filing. Whenever any event occurs that is required to
be set forth in an amendment or supplement to the Proxy Statement, the
Registration Statement or any other filing, Autoweb and Autobytel shall promptly
inform the other of such occurrence and cooperate in filing with the SEC or its
staff or any other government officials, and/or mailing to stockholders of
Autoweb and Autobytel, such amendment or supplement. It is understood and agreed
that both Paul, Hastings, Xxxxxxxx & Xxxxxx LLP and Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, Professional Corporation, shall issue to their respective clients
substantially identical opinions to the effect that the Merger will qualify as a
reorganization under Section 368(a) of the Code and related matters for
description, and inclusion as Exhibits, in the S-4 Registration Statement and
for description in the Proxy Statements. The parties to this Agreement agree to
make reasonable and customary representations as requested by such counsel for
the purpose of rendering such opinions.
5.2 Meeting of Autoweb Stockholders. Autoweb shall promptly after
-------------------------------
the date hereof take all action necessary in accordance with Delaware Law and
its Certificate of Incorporation and Bylaws to convene the Autoweb Stockholders
Meeting within 45 days of the Registration Statement being declared effective by
the SEC. Autoweb shall consult with Autobytel regarding the date of the Autoweb
Stockholders Meeting and use all reasonable efforts and shall not postpone or
adjourn (other than for the absence of a quorum) the Autoweb Stockholders
Meeting without the consent of Autobytel. Subject to Sections 2.28, 4.4 and 5.1,
------------- --- ---
Autoweb shall use commercially reasonable efforts to solicit from stockholders
of Autoweb proxies in favor of the Merger and shall take all other action
necessary or advisable to secure the vote or consent of stockholders required to
effect the Merger and shall, through its Board of Directors, recommend to its
stockholders the approval and adoption of this Agreement and the Merger, and the
transactions contemplated hereby and thereby. Such recommendation shall not be
modified or withdrawn unless the Board of Directors concludes reasonably and in
good faith that its fiduciary duties require such action.
5.3 Meeting of Autobytel Stockholders. Autobytel shall promptly
---------------------------------
after the date hereof take all action necessary in accordance with Delaware Law
and its certificate of incorporation and bylaws to convene a meeting of
Autobytel's stockholders (the "Autobytel Stockholder Meeting") within 45 days of
the Registration Statement being declared effective by the SEC. Autobytel shall
consult with Autoweb regarding the date of the Autobytel Stockholders Meeting
and use all reasonable efforts and shall not postpone or adjourn (other than for
the absence of a quorum) the Autobytel Stockholders Meeting without the consent
of Autoweb. Subject to Sections 4.4 and 5.1, Autobytel shall use commercially
------------ ---
reasonable efforts to solicit from stockholders of Autobytel proxies in favor of
the Merger and shall take all other action necessary or advisable to secure the
vote or consent of stockholders required to effect the Merger and shall, through
its Board of Directors, recommend to its stockholders the approval of the
issuance of the Merger Consideration. Such recommendation shall not be modified
or withdrawn unless the Board of Directors concludes reasonably and in good
faith that its fiduciary duties require such action.
-41-
5.4 Access to Information.
---------------------
(a) Access. Each party shall afford the other party and its
------
accountants, counsel and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to (i) all of such
party's and its subsidiaries' properties, books, contracts, commitments and
records, and (ii) all other information concerning the business, properties and
personnel of such party and its subsidiaries as the other party may reasonably
request. Each party agrees to provide to the other party and its accountants,
counsel and other representatives copies of internal financial statements
promptly upon request.
(b) Ongoing Operations. Subject to compliance with applicable
------------------
law, from the date hereof until the Effective Time, each of Autobytel and
Autoweb shall confer on a regular and frequent basis with one or more
representatives of the other party to report operational matters of materiality
and the general status of ongoing operations.
(c) No Modification. No information or knowledge obtained in
------------------
any investigation pursuant to this Section 5.4 shall affect or be deemed to
-----------
modify any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
5.5 Confidentiality. The parties acknowledge that each of Autobytel
---------------
and Autoweb have previously executed a confidentiality and non-disclosure
agreement dated November 2, 2000 (the "Confidentiality Agreement"), which
Confidentiality Agreement shall continue in full force and effect in accordance
with its terms; provided, however, that the Confidentiality Agreement shall not
be binding on Autobytel or its subsidiaries or affiliates after the Effective
Time.
5.6 Public Disclosure. Unless otherwise permitted by this Agreement,
-----------------
Autobytel and Autoweb shall consult with each other before issuing any press
release or otherwise making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior approval of the other (which approval shall not be
unreasonably withheld), except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange or with
the NASD.
5.7 Consents; Cooperation.
---------------------
(a) Consents. Each of Autobytel and Autoweb shall promptly
--------
apply for or otherwise seek, and use commercially reasonable efforts to obtain,
all consents, waivers and approvals required to be obtained by it, including
those under any contracts, for the consummation of the Merger, including those
required under the HSR Act and those listed on Schedule 5.7(a). The parties
---------------
hereto will consult and cooperate with one another, and consider in good faith
the views of one another, in connection with
-42-
any analyses, appearances, presentations, memoranda, briefs, arguments, opinions
and proposals made or submitted by or on behalf of any party hereto in
connection with proceedings under or relating to the HSR Act or any other
federal or state antitrust or fair trade law.
(b) Cooperation. Each of Autobytel and Autoweb shall use
-----------
commercially reasonable efforts to resolve such objections, if any, as may be
asserted by any Governmental Entity with respect to the transactions
contemplated by this Agreement under the HSR Act, the Xxxxxxx Act, as amended,
the Xxxxxxx Act, as amended, the Federal Trade Commission Act, as amended, and
any other federal, state or foreign statutes, rules, regulations, orders or
decrees that are designed to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade (collectively,
"Antitrust Laws"). In connection therewith, if any administrative or judicial
action or proceeding is instituted (or threatened to be instituted) challenging
any transaction contemplated by this Agreement as violative of any Antitrust
Law, each of Autobytel and Autoweb shall cooperate and use its reasonable best
efforts vigorously to contest and resist any such action or proceeding and to
have vacated, lifted, reversed, or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent (each an "Order"),
that is in effect and that prohibits, prevents, or restricts consummation of the
Merger or any such other transactions, unless by mutual agreement Autobytel and
Autoweb decide that litigation is not in their respective best interests.
Notwithstanding the provisions of the immediately preceding sentence, it is
expressly understood and agreed that Autobytel shall have no obligation to
litigate or contest any administrative or judicial action or proceeding or any
Order beyond September 30, 2001. Each of Autobytel and Autoweb shall use its
reasonable best efforts to take such action as may be required to cause the
expiration of the notice periods under the HSR Act or other Antitrust Laws with
respect to such transactions as promptly as possible after the execution of this
Agreement. Autobytel and Autoweb also agree to take any and all of the following
actions to the extent necessary to obtain the approval of any Governmental
Entity with jurisdiction over the enforcement of any applicable laws regarding
the transactions contemplated hereby: entering into negotiations; providing
information required by law or governmental regulation; and substantially
complying with any second request for information pursuant to the Antitrust
Laws. Notwithstanding anything to the contrary in this Section 5.7, neither the
-----------
Autobytel nor Autoweb shall be required to take any action that would reasonably
be expected to substantially impair the overall benefits expected, as of the
date hereof, to be realized from the consummation of the transactions
contemplated hereby.
(c) No Action Required. Notwithstanding anything to the contrary
------------------
in Section 5.7(a) or (b), (i) neither Autobytel nor any of it subsidiaries shall
-------------- ---
be required to divest any of their respective businesses, product lines or
assets, or to take or agree to take any other action or agree to any limitation
that is reasonably likely to have a Material Adverse Effect on Autobytel or of
Autobytel combined with the Surviving Corporation after the Effective Time and
(ii) neither Autoweb nor its subsidiaries shall be required to divest any of
their respective businesses, product lines or assets, or to take or agree to
take any other action or agree to any limitation that is reasonably likely to
have a Material Adverse Effect on Autoweb.
-43-
5.8 Merger Filings. On the Closing Date, Merger Sub and Autoweb
--------------
shall cause their duly authorized officers to prepare, execute and acknowledge
the Certificate of Merger and cause such documents to be duly filed with the
Secretary of State of Delaware on the Closing Date or a soon as practicable
thereafter.
5.9 Voting Agreement. Autoweb shall cause each Person named in
----------------
Schedule 5.9 which has not already executed the Voting Agreement to execute and
------------
deliver to Autobytel the Voting Agreement concurrent with the execution of this
Agreement and keep the Voting Agreement in full force and effect.
5.10 Legal Requirements. Subject to Section 5.7 hereof, each of
------------------ -----------
Autobytel, Merger Sub and Autoweb will, and will cause their respective
subsidiaries to, take all reasonable actions necessary to comply promptly with
all legal requirements which may be imposed on them with respect to the
consummation of the transactions contemplated by this Agreement and will
promptly cooperate with and furnish information to any party hereto necessary in
connection with any such requirements imposed upon such other party in
connection with the consummation of the transactions contemplated by this
Agreement and will take all reasonable actions necessary to obtain (and will
cooperate with the other parties hereto in obtaining) any consent, approval,
order or authorization of, or any registration, declaration or filing with, any
Governmental Entity or other Person, required to be obtained or made in
connection with the taking of any action contemplated by this Agreement.
5.11 Blue Sky Laws. Autobytel shall take such steps as may be
-------------
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of the Autobytel Common Stock in connection
with the Merger. Autoweb shall use commercially reasonable efforts to assist
Autobytel as may be necessary to comply with the securities and blue sky laws of
all jurisdictions which are applicable in connection with the issuance of
Autobytel Common Stock in connection with the Merger.
5.12 Assumed Options. At the Effective Time, all Autoweb Options
---------------
listed in Section 5.12 of the Autoweb Disclosure Schedule shall be assumed by
------------
Autobytel. Within thirty days after the Effective Time, Autobytel will issue to
each Person who, immediately prior to the Effective Time was a holder of an
Assumed Option a document evidencing the foregoing assumption of such option by
Autobytel. Autoweb represents and warrants to Autobytel that Section 5.12 of the
------------
Autoweb Disclosure Schedule sets forth a true and complete list as of the date
hereof of all holders of outstanding options pursuant to the Autoweb Option
Plans, including the number of shares of Autoweb Common Stock subject to each
such option, the exercise and vesting schedule (including that related to any
change of control), the exercise price per share, the date such option was
issued, the term of each such option and the option plan pursuant to which such
option was issued. At the Effective Time, Autoweb shall deliver to Autobytel an
updated Section 5.12 of the Autoweb Disclosure Schedule current as of such date,
------------
which shall indicate additional time based vesting in accordance with the terms
and conditions of such options.
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5.13 Letter of Autobytel's and Autoweb's Accountants.
-----------------------------------------------
(a) Autobytel. Autobytel shall use commercially reasonable
---------
efforts to cause to be delivered to Autoweb a Procedures Letter of Autobytel's
independent auditors, dated a date within two business days before the date on
which the Registration Statement shall become effective and addressed to
Autobytel and Autoweb, in form reasonably satisfactory to Autoweb and customary
in scope and substance for letters delivered by independent public accountants
in connection with registration statements similar to the Registration
Statement.
(b) Autoweb. Autoweb shall use commercially reasonable efforts
-------
to cause to be delivered to Autobytel a Procedures Letter of Autoweb's
independent auditors, dated a date within two business days before the date on
which the Registration Statement shall become effective and addressed to
Autobytel and Autoweb, in form reasonably satisfactory to Autobytel and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
5.14 Form S-8. If the shares of Autobytel Common Stock underlying
--------
the Assumed Options have not already been registered in connection with the
filing of Form S-4 by Autobytel, Autobytel shall use its best efforts to file on
or before three business days after the Closing Date, a registration statement
on Form S-8 covering the shares of Autobytel Common Stock issuable pursuant to
Assumed Options. Autoweb shall cooperate with and assist Autobytel in the
preparation of such registration statement.
5.15 Listing of Additional Shares. Prior to the Effective Time,
----------------------------
Autobytel shall file with the Nasdaq National Market a Notification Form for
Listing of Additional Shares with respect to the shares referred to in Section
-------
6.1(e).
------
5.16 Determination Letter. Immediately prior to the Closing Date,
--------------------
Autoweb shall terminate its 401(k) Profit Sharing Plan and Trust (the "401(k)
Plan"). Autoweb shall furnish to Autobytel a copy of a completed IRS Form 5310
(Application for Determination for Terminating Plan).
5.17 Increase Autobytel's Board. On or prior to the Closing Date,
--------------------------
Autobytel shall take, or shall have caused to be taken, all action necessary to
elect as Directors of Autobytel two individuals to be designated by Autoweb
prior to the effective date of the Registration Statement.
5.18 Indemnification.
---------------
(a) Indemnification. After the Effective Time, Autobytel will,
---------------
and will cause the Surviving Corporation to, indemnify and hold harmless the
present and former officers, directors, employees and agents of Autoweb (the
"Indemnified Parties") in respect of acts or omissions occurring on or prior to
the Effective Time to the extent provided under Autoweb's Certificate of
Incorporation and Bylaws or any
-45-
indemnification agreement with Autoweb officers and directors to which Autoweb
is a party listed in Section 5.18 of the Autoweb Disclosure Schedule and which
------------
have been provided to Autobytel, in each case in effect on the date hereof;
provided that such indemnification shall be (i) subject to any limitation
imposed from time to time under applicable law and (ii) limited to any such
items covered by Autobytel's officers' and directors' liability insurance.
Without limitation of the foregoing and in accordance therewith, in the event
any such Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter relating to this
Agreement or the transactions contemplated hereby occurring on or prior to the
Effective Time, Autobytel shall, or shall cause the Surviving Corporation to,
pay as incurred such Indemnified Party's reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith upon receipt of an undertaking by or on behalf of such Indemnified
Party to repay such amount if it shall ultimately be determined that such
Indemnified Party is not entitled to be indemnified pursuant to this Section
-------
5.18(a).
-------
(b) Directors and Officers Insurance. For six years after the
--------------------------------
Effective Time, Autobytel will continue to use its commercially reasonable
efforts to provide officers' and directors' liability insurance ("D&O
Insurance") in respect of acts or omissions occurring on or prior to the
Effective Time covering each officer and director of Autoweb currently covered
by Autoweb's officers' and directors' liability insurance policy. Autobytel will
provide D&O Insurance in respect of acts or omissions occurring after the
Effective Time covering (i) Autoweb's designees to Autobytel's Board of
Directors as contemplated by Section 5.17 hereof in the same manner provided to
------------
all other directors of Autobytel and (ii) any officer of Autoweb that becomes an
officer of Autobytel in the same manner provided to all other officers of
Autobytel.
(c) Claims. To the extent there is any claim, action, suit,
------
proceeding or investigation (whether arising before or after the Effective Time)
against an Indemnified Party that arises out of or pertains to any action or
omission in his or her capacity as director, officer, employee, fiduciary or
agent of Autoweb occurring prior to the Effective Time, or arises out of or
pertains to the transactions contemplated by this Agreement for a period of six
years after the Effective Time (whether arising before or after the Effective
Time), in each case for which such Indemnified Party is indemnified under this
Section 5.18, such Indemnified Party shall be entitled to be represented by
------------
counsel, which counsel shall be counsel of the Autobytel (provided that if use
of counsel of the Autobytel would be expected under applicable standards of
professional conduct to give rise to a conflict between the position of the
Indemnified Person and of the Autobytel, the Indemnified Party shall be entitled
instead to be represented by counsel selected by the Indemnified Party and
reasonably acceptable to Autobytel) and following the Effective Time the
Surviving Corporation and Autobytel shall, subject to the last sentence of
Section 5.18(a), pay the reasonable fees and expenses of such counsel, promptly
---------------
after statements therefor are received and the Surviving Corporation and
Autobytel will cooperate in the defense of any such matter; provided, however,
that neither the Surviving Corporation nor Autobytel shall be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld); and provided, further, that, in the event that any claim
or claims for indemnification are
-46-
asserted or made within such six year period, all rights to indemnification in
respect to any such claim or claims shall continue until the disposition of any
and all such claims. The Indemnified Parties as a group may retain only one law
firm (in addition to local counsel) to represent them with respect to any single
action unless there is, under applicable standards of professional conduct, a
conflict on any significant issue between the position of any two or more
Indemnified Parties.
(d) Successors. In the event that Autobytel or any of its
----------
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person in a single transaction or a series of
transactions, then, and in each such case, Autobytel shall make or cause to be
made proper provisions so that the successors and assigns of Autobytel assume
the indemnification obligations of Autobytel under this Section 5.18 for the
------------
benefit of the Indemnified Parties.
(e) Beneficiaries. The provisions of this Section 5.18 are
------------- ------------
intended to be for the benefit of, and shall be enforceable by, each Indemnified
Party or his or her heirs and representatives and shall be binding on all
successors and assigns of the Surviving Corporation or Autobytel.
(f) Best Efforts and Further Assurances. Each of the parties to
-----------------------------------
this Agreement shall use its best efforts to effectuate the transactions
contemplated hereby and to fulfill and cause to be fulfilled the conditions to
closing under this Agreement. Each party hereto, at the reasonable request of
another party hereto, shall execute and deliver such other instruments and do
and perform such other acts and things as may be necessary or desirable for
effecting completely the consummation of this Agreement and the transactions
contemplated hereby.
ARTICLE VI.
CONDITIONS TO THE MERGER
------------------------
6.1 Conditions to Obligations of Each Party to Effect the Merger.
------------------------------------------------------------
The respective obligations of each party to this Agreement to consummate and
effect this Agreement and the transactions contemplated hereby shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by agreement of all the
parties hereto:
(a) Stockholder Approval. This Agreement and the Merger shall
--------------------
have been approved and adopted by the requisite vote of the stockholders of
Autoweb, Autobytel and Merger Sub under Delaware Law and as may be required by
such Person's Certificate of Incorporation and Bylaws.
(b) Registration Statement Effective. The SEC shall have
--------------------------------
declared the Registration Statement effective. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no
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proceeding for that purpose, and no similar proceeding in respect of the Proxy
Statement, shall have been initiated or threatened by the SEC; and all requests
for additional information on the part of the SEC shall have been complied with
to the reasonable satisfaction of the parties hereto.
(c) No Injunctions or Restraints; Illegality. No temporary
----------------------------------------
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger shall be in effect, nor
shall any proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal. In the event an
injunction or other order shall have been issued, each party agrees to use
commercially reasonable efforts to have such injunction or other order lifted.
(d) Governmental Approval. Autobytel, Autoweb and Merger Sub and
---------------------
their respective subsidiaries shall have timely obtained from each Governmental
Entity all approvals, waivers and consents, if any, necessary for consummation
of or in connection with the Merger and the transactions contemplated hereby,
including such approvals, waivers, expirations of waiting periods and consents
as may be required under the Securities Act, state Blue Sky laws, and the HSR
Act.
(e) Listing of Additional Shares. The filing with the Nasdaq
----------------------------
National Market of a Notification Form for Listing of Additional Shares with
respect to the shares of Autobytel Common Stock issuable upon conversion of the
Autoweb Common Stock in the Merger and upon exercise of the Assumed Options
shall have been made.
6.2 Additional Conditions to Obligations of Autoweb. The obligations
-----------------------------------------------
of Autoweb to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, by Autoweb:
(a) Representations, Warranties and Covenants. (i) The
-----------------------------------------
representations and warranties of Autobytel and Merger Sub in this Agreement
shall be true and correct on and as of the Effective Time as though such
representations and warranties were made on and as of such time, except to the
extent (A) for such failures to be true and correct that do not in the aggregate
constitute a Material Adverse Effect on Autobytel and (B) for those
representations or warranties which address matters only as of a specified date,
in which case such representations and warranties shall have been true and
correct as of such specified date, subject to the qualifications set forth in
the preceding clause (A) as of such specified date (it being understood that,
for purposes of determining the accuracy of such representations and warranties
in connection with this clause (i), all "Material Adverse Effect" qualifications
and other qualifications based on the word "material" or similar phrases
contained in such representations and warranties
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shall be disregarded), (ii) Autobytel and Merger Sub shall have performed and
complied in all material respects with all covenants, obligations and conditions
of this Agreement required to be performed and complied with by them as of the
Effective Time and (iii) Autoweb shall have been provided with a certificate
executed on behalf of Autobytel by its President and its Interim Chief Financial
Officer or Chief Financial Officer, as the case may be, certifying that the
conditions set forth in this Section 6.2(a) shall have been fulfilled.
--------------
(b) No Material Adverse Effect. There shall not have occurred
--------------------------
since the date of this Agreement any change that constitutes a Material Adverse
Effect on Autobytel, determined without regard to whether such change
constitutes a breach of a representation or warranty.
(c) Tax Opinion. Autoweb shall have received the written
-----------
opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, to the
effect that the Merger will be treated as a reorganization described in Section
368(a) of the Code and such opinion shall not have been withdrawn.
(d) Change of Control of Autobytel. There shall not have
------------------------------
occurred a merger or other business combination involving Autobytel or the
acquisition in one or more transactions of all or substantially all of the
assets of Autobytel after which Autobytel or its successor ceases to be in the
automotive, internet, technology or media business (a "Change of Control").
(e) Employment Agreements. Autobytel shall have executed and
---------------------
delivered the Employment Agreement attached hereto as Exhibit E dated the
Effective Time.
6.3 Additional Conditions to the Obligations of Autobytel and Merger
----------------------------------------------------------------
Sub. The obligations of Autobytel and Merger Sub to consummate and effect this
---
Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by Autobytel:
(a) Representations, Warranties and Covenants. (i) The
-----------------------------------------
representations and warranties of Autoweb in this Agreement shall be true and
correct on and as of the Effective Time as though such representations and
warranties were made on and as of such time, except (A) for such failures to be
true and correct that do not in the aggregate constitute a Material Adverse
Effect on Autoweb and (B) for those representations and warranties which address
matters only as of a specified date, in which case such representations and
warranties shall have been true and correct as of such specified date, subject
to the qualifications set forth in the preceding clause (A) as of such specified
date (it being understood that, for purposes of determining the accuracy of such
representations and warranties in connection with this clause (i), all "Material
Adverse Effect" qualifications and other qualifications based on the word
"material" or similar phrases contained in such representations and warranties
shall be disregarded), (ii) Autoweb shall have performed and complied in all
material respects with all covenants,
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obligations and conditions of this Agreement required to be performed and
complied with by it as of the Effective Time and (iii) Autobytel shall have been
provided with a certificate executed on behalf of Autoweb by its President and
Chief Financial Officer certifying that the conditions set forth in this Section
-------
6.3(a) shall have been fulfilled.
------
(b) Third Party Consents. Autobytel shall have been furnished
--------------------
with evidence satisfactory to it of the consent or approval of those Persons set
forth on Schedule 6.3(b).
---------------
(c) Injunctions or Restraints on Conduct of Business. No
------------------------------------------------
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint provision limiting or restricting Autobytel's conduct or operation of
the business of Autoweb, following the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
Governmental Entity, domestic or foreign, seeking the foregoing be pending.
(d) Dissenting Shares. Not more than 15% of Autoweb Common
-----------------
Stock outstanding will constitute Dissenting Shares.
(e) No Material Adverse Effect. There shall not have occurred
--------------------------
any change since the date of this Agreement that constitutes a Material Adverse
Effect on Autoweb, determined without regard to whether such change constitutes
a breach of a representation or warranty.
(f) Tax Opinion. Autobytel shall have received the written
-----------
opinion of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, to the effect that the Merger
will be treated as a reorganization described in Section 368(a) of the Code and
such opinion shall not have been withdrawn.
(g) Amendments to Certain Documents. Autobytel shall have been
-------------------------------
furnished with evidence satisfactory to it of the amendment or termination of
those contracts, plans and other items set forth on Schedule 6.3(g).
---------------
ARTICLE VII.
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
7.1 Termination. At any time prior to the Effective Time, whether
-----------
before or after approval of the matters presented in connection with the Merger
by the stockholders of Autoweb or Autobytel, this Agreement may be terminated:
(a) by mutual consent of Autobytel and Autoweb;
(b) by either Autobytel or Autoweb, if, without fault of the
terminating party, the Closing shall not have occurred on or before September
30, 2001 (provided a later date may be agreed upon in writing by the parties
hereto; and provided further that the right to terminate this Agreement under
this Section 7.1(b) shall not be
--------------
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available to any party whose action or failure to act has been the cause of or
resulted in the failure of the Merger to occur on or before such date and such
action or failure to act constitutes a breach of this Agreement or would
constitute a breach after notice and a failure to cure);
(c) by Autobytel, if (i) Autoweb shall breach any of its
representations, warranties, covenants or obligations hereunder and such breach
shall not have been cured within ten (10) business days of receipt by Autoweb of
written notice of such breach or in any event on or before September 30, 2001
(and Autobytel shall not have willfully breached any of its covenants hereunder,
which breach is not cured), or (ii) for any reason Autoweb fails to call and
hold the Autoweb Stockholders Meeting by September 30, 2001 unless the reason
therefor is that the Registration Statement has not been declared effective by
the SEC at least thirty-five (35) days prior to September 30, 2001 or unless
Autoweb is terminating this Agreement as a result of Autobytel's breach hereof
or (iii) if the Board of Directors of Autoweb withdraws, modifies or changes its
recommendation that the stockholders of Autoweb approve the Merger in a manner
adverse to Autobytel and its stockholders, unless such withdrawal, modification
or change is as a result of a breach by Autobytel that would entitle Autoweb to
terminate this Agreement or as a result of a Material Adverse Effect on
Autobytel;
(d) by Autoweb, if (i) Autobytel shall breach any of its
representations, warranties, covenants or other obligations hereunder and such
breach shall not have been cured within ten (10) business days following receipt
by Autobytel of written notice of such breach or in any event on or before
September 30, 2001 (and Autoweb shall not have willfully breached any of its
covenants hereunder, which breach is not cured) or (ii) for any reason Autobytel
fails to call and hold the Autobytel Stockholders Meeting by September 30, 2001
unless the reason therefor is that the Registration Statement has not been
declared effective by the SEC at least thirty-five (35) days prior to September
30, 2001 or unless Autobytel is terminating this Agreement as a result of
Autoweb's breach hereof, or (iii) the Board of Directors of Autobytel withdraws,
modifies or changes its recommendation of the issuance of the Merger
Consideration in a manner adverse to Autoweb or its stockholders unless such
withdrawal, modification or change is as a result of a breach by Autoweb that
would entitle Autobytel to terminate this Agreement or as a result of a Material
Adverse Effect on Autoweb;
(e) by Autobytel if a Takeover Proposal shall have occurred and
the Board of Directors of Autoweb in connection therewith does not within ten
(10) business days of such occurrence (or, in any event, on or before September
30, 2001) reject such Takeover Proposal;
(f) by Autoweb if a Superior Proposal shall have occurred and
Autoweb shall have provided Autobytel at least five (5) business days prior
notice of the terms of the Superior Proposal, provided Autoweb simultaneously
pays the amounts due under Section 7.3(b);
--------------
(g) by either Autobytel or Autoweb if (i) any permanent
injunction or other order of a court or other competent authority preventing the
-51-
consummation of the Merger shall have become final and nonappealable, (ii) any
required approval of the stockholders of Autoweb shall not have been obtained by
reason of the failure to obtain the required vote upon a vote held at a duly
held meeting of stockholders or at any adjournment thereof, or (iii) any
required approval of the stockholders of Autobytel shall not have been obtained
by reason of the failure to obtain the required vote upon a vote held at a duly
held meeting of stockholders or at any adjournment thereof; or
(h) by Autoweb if a Change of Control shall have occurred.
7.2 Effect of Termination. In the event of termination of this
---------------------
Agreement as provided in Section 7.1, this Agreement shall forthwith become void
-----------
and there shall be no liability or obligation on the part of Autobytel, Merger
Sub or Autoweb or their respective officers, directors, stockholders or
affiliates, except to the extent that such termination results from the breach
by a party hereto of any of its representations, warranties or covenants set
forth in this Agreement; provided that, notwithstanding the foregoing, the
provisions of Section 5.5 (Confidentiality), Section 7.3 (Expenses and
----------- -----------
Termination Fees) and this Section 7.2 shall remain in full force and effect and
-----------
survive any termination of this Agreement.
7.3 Expenses and Termination Fees.
-----------------------------
(a) Parties to Bear Own Expenses. Subject to subsection (b) of
---------------------------- --------------
this Section 7.3, whether or not the Merger is consummated, all costs and
-----------
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, the fees and expenses of its
advisers, accountants and legal counsel, the expenses incurred in connection
with printing the Proxy Statement and the Registration Statement, registration
and filing fees incurred in connection with the Registration Statement, the
Proxy Statement and the listing of additional shares pursuant to Section 6.1(e)
--------------
and fees, costs and expenses associated with compliance with applicable state
securities laws in connection with the Merger) shall be paid by the party
incurring such expense.
(b) Expenses and Termination Fees Payable by Autoweb.
------------------------------------------------
(i) If (A) this Agreement is (x) terminated by Autoweb
pursuant to Section 7.1(b) on or after September 30, 2001 following the non-
--------------
satisfaction of the conditions set forth in Sections 6.3(a) or 6.3(b) or (y)
--------------- ------
terminated by Autobytel pursuant to Section 7.1(c)(ii) or (z) terminated by
------------------
either party pursuant to Section 7.1(g)(ii), and (B) as of such termination,
------------------
there shall exist or have been proposed a Takeover Proposal which Autoweb has
not rejected, then Autoweb shall promptly pay Autobytel in immediately available
funds an amount equal to the sum of (I) $1,000,000 (the "Termination Fee") plus
(II) the Autobytel Expenses (defined below);
(ii) in the event that Autobytel shall terminate this
Agreement pursuant to Section 7.1(c)(i), then Autoweb shall promptly reimburse
-----------------
Autobytel for Autobytel's costs and expenses directly incurred to negotiate,
execute and
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perform its obligations under this Agreement, including costs and expenses
related to the Proxy Statement and Registration Statement, and the transactions
contemplated hereby (but specifically excluding any costs or expenses related to
the amendment of any agreement or settlement of any dispute prior to the
execution of this Agreement) up to a maximum amount of $1,000,000 ("Autobytel
Expenses"), and if, as of date of such termination, there shall exist or have
been proposed a Takeover Proposal which has not been rejected, Autoweb shall
also promptly pay Autobytel in immediately available funds the Termination Fee;
and
(iii) if this Agreement is terminated by Autobytel pursuant
to Section 7.1(e) or by Autoweb pursuant to Section 7.1(f), then Autoweb shall
-------------- --------------
promptly pay Autobytel in immediately available funds an amount equal to the sum
of (A) the Termination Fee plus (B) the Autobytel Expenses.
(c) Expenses and Termination Fees Payable by Autobytel. If this
--------------------------------------------------
Agreement is terminated by Autoweb pursuant to Section 7.1(d)(i), (ii) or (iii)
----------------- ---- -----
or 7.1(h), then Autobytel shall promptly pay Autoweb in immediately available
------
funds an amount equal to Autoweb's costs and expenses directly incurred to
negotiate, execute and perform its obligations under this Agreement, including
costs and expenses related to the Proxy Statement and Registration Statement,
and the transactions contemplated hereby (but specifically excluding any costs
or expenses related to the amendment of any agreement or settlement of any
dispute prior to the execution of this Agreement), up to a maximum amount of
$1,000,000.
7.4 Amendment. The boards of directors of the parties hereto may
---------
cause this Agreement to be amended at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto; provided that an
amendment made subsequent to adoption of this Agreement by the stockholders of
Autoweb, Autobytel or Merger Sub shall not (i) alter or change the amount or
kind of consideration to be received on conversion of the Autoweb Common Stock,
(ii) alter or change any term of the certificate of incorporation of the
Surviving Corporation to be effected by the Merger, or (iii) alter or change any
of the terms and conditions of this Agreement if such alteration or change would
materially adversely affect the holders of Autoweb Common Stock or Merger Sub
Common Stock.
7.5 Extension; Waiver. At any time prior to the Effective Time any
-----------------
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
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ARTICLE VIII.
GENERAL PROVISIONS
------------------
8.1 Non-Survival at Effective Time. The representations, warranties
------------------------------
and agreements set forth in this Agreement shall terminate at the Effective
Time, except that the agreements set forth in Article I, Section 5.5
-----------
(Confidentiality), 5.12 (Assumed Options), 5.14 (Form S-8), 5.15 (Listing of
---- ---- ----
Additional Shares), 5.18 (Indemnification), 5.19 (Best Efforts and Further
---- ----
Assurances), 7.2 (Effect of Termination), 7.3 (Expenses and Termination Fees),
--- ---
7.4 (Amendment), and this Article VIII shall survive the Effective Time.
---
8.2 Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the following address (or at such other address for a party as shall be
specified by like notice):
(a) if to Autobytel or Merger Sub, to:
xxxxxxxxx.xxx inc.
00000 XxxXxxxxx Xxxx.
Xxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx Xxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) if to Autoweb, to:
Xxxxxxx.xxx, Inc.
0000 Xxx Xxxxxx, Xxxx.0
Xxxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
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with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
8.3 Interpretation. When a reference is made in this Agreement to
--------------
Exhibits or Schedules, such reference shall be to an Exhibit or Schedule to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement", "the date hereof", and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to April 11, 2001. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.4 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Nonassignability; Parties in Interest. This
-------------------------------------------------------
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits, the
Schedules, including the Autoweb Disclosure Schedule and the Autobytel
Disclosure Schedule (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, except for the Confidentiality Agreement, which shall
continue in full force and effect, and shall survive any termination of this
Agreement or the Closing, in accordance with its terms; (b) are not intended to
confer upon any other Person any rights or remedies hereunder, except as set
forth in Sections 1.6(a)-(d) and (f), 1.7, 5.12, 5.14, 5.15 and 5.18; and (c)
------------------- --- --- ---- ---- ---- ----
shall not be assigned by operation of law or otherwise except as otherwise
specifically provided.
8.6 Severability. In the event that any provision of this Agreement,
------------
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other Persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
-55-
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.7 Remedies Cumulative. Except as otherwise provided herein, any
-------------------
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy.
8.8 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of California without regard to
principles of conflicts of law, except to the extent that the laws of the State
of Delaware govern the terms and effects of the Merger. Each of the parties
hereto irrevocably consents to the exclusive jurisdiction of any court located
in Orange County, California in connection with any matter based upon or arising
out of this Agreement or the matters contemplated herein, agrees that process
may be served upon them in any manner authorized by the laws of the State of
California for such Persons and waives and covenants not to assert or plead any
objection which they might otherwise have to such jurisdiction and such process.
8.9 Rules of Construction. The parties hereto agree that they have
---------------------
been represented by counsel during the negotiation, preparation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
[Signature Page Follows]
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[SIGNATURE PAGE TO ACQUISITION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective duly authorized officers as of the
date first written above.
XXXXXXXXX.XXX INC.
By: /s/ Xxxx X. Xxxxxxx
__________________________________
Name Xxxx X. Xxxxxxx
____________________________
Title: President & CEO
____________________________
AUTOBYTEL ACQUISITION I CORP.
By: /s/ Xxxxx Xxxx
__________________________________
Name Xxxxx Xxxx
____________________________
Title: Vice President
____________________________
XXXXXXX.XXX, INC.
By: /s/ Xxxxxxx Xxxxxxxx
__________________________________
Name Xxxxxxx Xxxxxxxx
____________________________
Title: President & CEO
____________________________
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