424
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED AND THUS, NOTWITHSTANDING ANY OTHER PROVISIONS CONTAINED HEREIN, MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE.
THE COBALT GROUP, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF WASHINGTON
ORIGINAL ISSUE DATE: AUGUST 18, 2000
THIS CERTIFIES THAT, for value received, General Electric Capital Auto
Financial Services, Inc., a Delaware corporation ("AFS"), or its assigns, is
entitled to subscribe for and purchase, during the periods specified in Section
1 hereof, Four Hundred Thousand (400,000) fully paid and non-assessable shares
of Common Stock, $.01 par value per share ("Common"), of THE COBALT GROUP, INC.,
a Washington corporation (the "Corporation"), at a per share price equal to the
Warrant Price, subject, however, to the provisions and upon the terms and
conditions hereinafter set forth. Certain capitalized terms used in this Warrant
shall have the meanings set forth in Section 10.
1. DURATION. The right to subscribe for and purchase shares of
Common represented hereby shall expire at 5:00 p.m., Seattle, Washington time,
on December 31, 2005.
2. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT.
(A) The holder hereof may exercise this Warrant, in whole or
in part, at the times and subject to the conditions set forth in
Section 1 hereof as follows:
(i) By presentation of the Subscription Form
attached hereto duly executed at the principal office of the
Corporation, accompanied by payment to the Corporation of the
then applicable Warrant Price for the shares being purchased
upon such exercise by check or wire transfer; or
(ii) By presentation of the Cashless Exercise Form
attached hereto duly executed at the principal office of the
Corporation (a "Cashless Exercise"). In the event of a
Cashless Exercise, the holder of this Warrant shall exchange
the portions of this Warrant then being exercised for that
number of shares of Common determined by multiplying the
number of shares of Common as to which this Warrant is then
being exercised by a fraction, the numerator of which shall be
the amount by which the then current market price per share of
Common exceeds the Warrant Price, and the denominator of which
shall be the then current market price per share of Common.
For purposes of any computation under this Section 2(A)(ii),
the then current market price per share of Common at any date
shall be deemed to be the average closing price of
publicly-traded Common during the twenty (20) trading days
immediately preceding the date of presentation of the Cashless
Exercise Form as reported by NASDAQ, or other
principal national securities exchange on which the Common is
then admitted to trading or listing. If the Common is not then
so listed or traded, the fair market price of the Common for
purposes of this Section 2 shall be as agreed upon by the
Board and the Majority Holders.
(1) If the Board and the Majority Holders
cannot so agree on the fair market value, then the
Majority Holders and the Board shall each select an
investment banking firm of national reputation to
determine the fair market price of the Common.
(2) The fair market price of the Common
shall be the average of the two determinations.
(3) The Corporation shall make available
any such books or records as any of the investment
banking firms involved in the valuation process
described in this Section 2(A)(ii) may reasonably
require in order to determine the fair market price
of the Common. The cost of any determinations
performed pursuant to this Section 2(A)(ii) shall be
paid one-half by the Majority Holders and one-half by
the Corporation.
(4) In determining the fair market price
of the Common, each investment banking firm shall
consider the cash price which a sophisticated
purchaser would pay on the effective date of the
determination for a share of Common, with no
discounts applied related to the fact that such share
of Common represents a minority interest in the
Corporation and is not registered pursuant to the
Securities Act.
(B) In the event of any exercise of the rights represented
by this Warrant, (i) stock certificates for the shares of Common so
purchased shall be delivered to the holder hereof, and (ii) stock
certificates for the shares of Common so purchased shall be dated the
date of exercise of this Warrant, and the holder exercising this
Warrant shall be deemed for all purposes to be the holder of the shares
of Common so purchased as of the date of such exercise. Such stock
certificates shall be delivered to the holder hereof within a
reasonable time, not exceeding five (5) Business Days, after the rights
represented by this Warrant shall have been so exercised. Each stock
certificate so delivered shall be in such denominations as may be
requested by the holder hereof and shall be registered in the name of
said holder or such other name (upon compliance with the transfer
requirements hereinafter set forth) as shall be designated by said
holder. The Corporation shall pay all taxes and other expenses and
charges payable in connection with the preparation, execution and
delivery of stock certificates (and new Warrants, if applicable)
pursuant to this Section 2(B).
3. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES.
(A) The Warrant Price and the number of shares of Common
purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the happening of certain events
occurring after the original issuance date, as follows:
(i) RECLASSIFICATION, CONSOLIDATION OR MERGER. In
case of any reclassification or change of outstanding Common
issuable upon exercise of this Warrant (other than a change in
par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or
combination), or in case of any consolidation or merger of the
Corporation with or into another corporation (other than a
merger with another corporation in which the Corporation is
the surviving corporation and which does not result in any
reclassification or change other than a change in par value,
or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination of
outstanding Common issuable upon such conversion) the rights
of the holders of this Warrant shall be adjusted in the manner
described below:
(1) In the event that the Corporation is
the surviving corporation, the Warrant shall, without
payment of additional consideration therefor, be
deemed modified so as to provide that upon exercise
hereof the holder of this Warrant shall procure, in
lieu of each share of Common theretofore issuable
upon such exercise, the kind and amount of shares of
stock, other securities, money and property
receivable upon such reclassification, change,
consolidation or merger by the holder of each share
of Common issuable upon such exercise had such
exercise occurred immediately prior to such
reclassification, change, consolidation or merger.
This Warrant (as adjusted) shall be deemed to provide
for further adjustments which shall be as nearly
equivalent as may be practicable to the adjustments
provided for in this Section 3. The provisions of
this clause (1) shall similarly apply to successive
reclassifications, changes, consolidations and
mergers.
(2) In the event that the Corporation is
not the surviving corporation, the surviving
corporation shall, without payment of any additional
consideration therefor, issue new Warrants, providing
that upon exercise hereof the holder thereof shall
procure in lieu of each share of Common theretofore
issuable upon exercise of this Warrant the kind and
amount of shares of stock, other securities, money
and property receivable upon such reclassification,
change, consolidation or merger by the holder of each
share of Common issuable upon exercise of this
Warrant had such exercise occurred immediately prior
to such reclassification, change, consolidation or
merger. Such new Warrants shall provide for
adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in
this Section 3. The provisions of this clause (2)
shall similarly apply to successive
reclassifications, changes, consolidations and
mergers.
(ii) SUBDIVISION OR COMBINATION OF SHARES. If the
Corporation, at any time while any of this Warrant is
outstanding, shall subdivide or combine its Common, the
Warrant Price shall be proportionately reduced, in case of
subdivision of shares, as of the effective date of such
subdivision, or if the Corporation shall take a record of
holders of its Common for the purpose of a
subdividing, as of such record date, whichever is earlier, or
shall be proportionately increased, in the case of combination
of shares, as of the effective date of such combination or, if
the Corporation shall take a record of holders of its Common
for the purpose of so combining, as of such record date,
whichever is earlier.
(iii) CERTAIN DIVIDENDS AND DISTRIBUTIONS. If the
Corporation, at any time while any of this Warrant is
outstanding, shall:
(1) STOCK DIVIDENDS. Pay a dividend
payable in, or make any other distribution of,
Common, the Warrant Price shall be adjusted, as of
the date the Corporation shall take a record of the
holders of its Common for the purpose of receiving
such dividend or other distribution (or if no such
record is taken, as of the date of such payment or
other distribution), to that price determined by
multiplying the Warrant Price by a fraction (1) the
numerator of which shall be the total number of
shares of Common outstanding immediately prior to
such dividend or distribution and (2) the denominator
of which shall be the total number of shares of
Common outstanding immediately after such dividend or
distribution (plus in the event that the Corporation
paid cash for fractional shares, the number of
additional shares which would have been outstanding
had the Corporation issued fractional shares in
connection with said dividend or distribution); or
(2) LIQUIDATING DIVIDENDS, ETC. Make a
distribution of its property to the holders of its
Common as a dividend in liquidation or partial
liquidation or by way of return of capital or other
than as a dividend payable out of funds legally
available for dividends under the laws of the State
of Washington (a "Liquidating Dividend"), the
Corporation shall provide AFS with written notice of
its intent to make such Liquidating Dividend
(including the amount and other material terms of the
Liquidating Dividend), no less than twenty (20)
Business Days prior to the record date for the
Liquidating Dividend. Notwithstanding any other
provision hereof, if a subscription for shares is to
be made in connection with a Liquidating Dividend,
such subscription shall be deemed to be conditioned
upon the distribution of the Liquidating Dividend in
accordance with the terms of the notice thereof
provided to AFS by the Corporation, in which case
such subscription will not be deemed to be effective
until the distribution of the Liquidating Dividend in
accordance with the terms of the notice thereof
provided to AFS by the Corporation.
(iv) NO DILUTION. The Corporation will not, by
amendment of its certificate of incorporation or through
reorganization, consolidation, merger, dissolution, sale of
assets or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this
Warrant, and will at all times in good faith (a) assist in the
carrying out of all such terms and (b) refrain from taking
actions that would dilute the rights of the holder hereof
other than as
a part of good faith financing, business transaction, stock
option or stock purchase plan activities of the Corporation
which is engaged in by the Corporation solely for legitimate
business purposes, none of which purposes may be to dilute the
rights of the holder hereof.
(v) OTHER ACTION AFFECTING COMMON. In the event
that after the date hereof the Corporation shall take any
action affecting its Common in a manner similar to the actions
described in any of the foregoing Subsections 3(A)(i) through
(iv), inclusive, other than an action described in any of the
foregoing Subsections 3(A)(i) through (iv), inclusive, which
would have a materially adverse effect upon the exercise
rights of the Warrants, the Warrant Price shall be adjusted in
such manner and at such time as the Board may in good faith
determine to be equitable in the circumstances. In addition,
in the event that after the date hereof the Corporation shall
take any action affecting its Common, other than an action
described in any of the foregoing Subsections 3(A)(i) through
(iv), inclusive, which would have a materially adverse effect
upon the exercise rights of the Warrants, the Warrant Price
shall be adjusted in such manner and at such time as the
Corporation adjusts any other warrants, options or similar
rights held by any other person or entity.
(vi) ADJUSTMENT OF NUMBER OF SHARES. Upon each
adjustment in the Warrant Price pursuant to any provision of
this Section 3(A), the number of shares of Common then
issuable upon exercise on full of this Warrant shall be
adjusted, effective as of such date, to the nearest one
hundredth of a whole share, to the product obtained by
multiplying the number of shares of Common issuable upon
exercise on full of this Warrant immediately prior to such
adjustment in the Warrant Price by a fraction, the numerator
of which shall be the Warrant Price immediately prior to such
adjustment and the denominator of which shall be the Warrant
Price immediately thereafter.
(B) Whenever any Warrant Price or the number of shares of
Common issuable upon exercise on full of this Warrant shall be adjusted
pursuant to Section 3 hereof, the Corporation shall make a certificate
signed by its President or a Vice President and by its Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary, setting forth,
in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated and
the Warrant Price and the number of shares of Common issuable upon
exercise on full of this Warrant after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed (by
certified mail, return receipt requested and postage prepaid) to the
holder of this Warrant at its address shown on the books of the
Corporation. The Corporation shall make such certificate and mail it to
each holder promptly after each adjustment.
4. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The
Corporation covenants and agrees that all Common issued upon exercise of this
Warrant will, upon issuance, be validly issued, fully paid and nonassessable and
free from preemptive rights and all taxes, liens and charges with respect to the
issuance thereof. The Corporation further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Corporation will at all times have authorized, and reserved for the purpose of
issue upon exercise of the subscription rights evidenced by this Warrant, a
sufficient number of shares of Common to provide for the exercise in full of the
rights represented by this Warrant. Furthermore, and without limiting the
generality of the foregoing, the Corporation covenants and agrees that it will
from time to time take all such action as may be required to assure that the par
value per share of Common is at all times equal to or less than the effective
Warrant Price.
5. TRANSFER AND EXCHANGE.
(A) TRANSFER. This Warrant may not be transferred, in whole
or in part, by AFS without the prior consent of the Corporation;
provided, however, that AFS may transfer this Warrant, in whole or in
part, to any Affiliate of AFS, any assignee of AFS's rights under the
Business Agreement or to any successor to, or purchaser or assignee of,
all or substantially all of the business of AFS. Any permitted transfer
of this Warrant and all rights hereunder, in whole or in part, is
registrable on the books of the Corporation by the holder hereof in
person or by his duly authorized attorney, upon presentation of the
Assignment Form attached hereto duly executed at the principal office
of the Corporation. Each holder of any portion of this Warrant, by
holding the same, consents and agrees that the transferee thereof, when
such portion of this Warrant shall have been transferred on the books
of the Corporation as provided in this Section 5(A), may be treated by
the Corporation and all other persons dealing with this Warrant as the
absolute owner and holder of such portion hereof for any purpose and as
the person entitled to exercise the rights represented by such portion
of this Warrant, or to the registration of transfer of such portion on
the books of the Corporation; and until due presentment for
registration of transfer on such books the Corporation may treat the
registered holder of such portion as the owner and holder for all
purposes, and the Corporation shall not be affected by notice to the
contrary. Upon any transfer of this Warrant (or any portion hereof) as
provided above, at the request of AFS (i) a new Warrant representing
the number of shares so transferred shall be delivered to the
transferee hereof within a reasonable time, not exceeding five (5)
Business Days, after presentation of the Assignment Form, and (ii) in
the event the Warrant has not been transferred in full, then
simultaneously with the holder's surrender of this Warrant, a new
Warrant representing the number of shares with respect to which this
Warrant shall not then have been transferred shall be delivered to the
holder hereof.
(B) SECURITIES LAW RESTRICTIONS. The holder of this Warrant,
by acceptance hereof, understands that the Warrant and Common issuable
upon exercise hereof (collectively, "Warrant Securities") are
characterized as "restricted securities" under the federal securities
laws inasmuch as they are being or will be acquired from the
Corporation in a transaction not involving a public offering and that
under such laws and applicable regulations neither this Warrant nor the
shares of Common issuable upon its exercise may be transferred,
assigned or sold (except pursuant to an effective registration
statement under the Securities Act) without first delivering to the
Corporation an opinion of counsel (reasonably acceptable in form and
substance to the Corporation) that neither registration nor
qualification under the Securities Act and applicable state securities
laws is required in connection with such transfer, assignment or sale.
(C) REGISTER. The Corporation shall maintain, at the
principal office of the Corporation, a register for this Warrant, in
which the Corporation shall record the name and address of the person
in whose name this Warrant has been issued, as well as the name and
address of each transferee and each prior owner of such Warrant. Within
ten (10) calendar days after any holder of Warrants shall by notice
request the same, the Corporation will deliver to such holder a
certificate, signed by one of its officers, listing the name and
address of every other holder of Warrants and/or Common issued upon
exercise of a Warrant, as such information appears in said register and
in the stock transfer books of the Corporation at the close of business
on the day before such certificate is signed.
(D) WARRANTS EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the holder hereof
at the principal office of the Corporation, for new Warrants of like
tenor representing in the aggregate the right to subscribe for and
purchase the number of shares which may be subscribed for and purchased
hereunder, each of such new Warrants to represent the right to
subscribe for and purchase such number of shares as shall be designated
by said holder hereof at the time of such surrender.
(E) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of
this Warrant in connection with any exchange, transfer or replacement,
this Warrant shall be promptly cancelled by the Corporation. The
Corporation shall pay all taxes (other than securities transfer taxes)
and all other expenses and charges payable in connection with the
preparation, execution and delivery of Warrants.
(F) LOSS OR MUTILATION. Upon receipt by the Corporation of
evidence satisfactory to it of the ownership of, and the loss, theft,
destruction or mutilation of, this Warrant and (in the case of loss,
theft or destruction) of indemnity satisfactory to it, and (in the case
of mutilation) upon surrender and cancellation hereof, the Corporation
will execute and deliver in lieu hereof a new Warrant.
6. NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally to
the recipient, one (1) Business Day after the date when sent to the recipient by
reputable overnight express courier service (charges prepaid and with evidence
of delivery) or five (5) Business Days after the date when mailed to the
recipient by certified or registered mail, return receipt requested and postage
prepaid. Such notices, demands and other communications will be sent, if to a
Warrant holder, at such Warrant holder's address as shown on the books of the
Corporation, and if to the Corporation at:
The Cobalt Group, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: President
or to such other address or to the attention of such other person or entity as
the recipient party has specified by prior written notice to the sending party.
7. GOVERNING LAW. This Warrant shall be construed in accordance
with and governed by the laws of the State of New York without regard to the
principles of conflicts of laws.
8. REMEDIES. The Corporation stipulates that the remedies at law
of the holder of this Warrant in the event of any default or threatened default
by the Corporation in the performance of or compliance with any of the terms of
this Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
9. MISCELLANEOUS.
(A) AMENDMENTS. The Warrants and any provision hereof may
be amended or waived only by an instrument in writing signed by the
Majority Holders, and, if it is to be bound thereby, by the
Corporation.
(B) DESCRIPTIVE HEADINGS. The descriptive headings of the
several paragraphs of this Warrant are inserted for purposes of
reference only, and shall not affect the meaning or construction of any
of the provisions hereof.
10. DEFINITIONS. For the purposes of this Warrant the following
terms have the following meanings:
"Affiliate" of an entity shall mean any entity which, directly or
indirectly, is controlled by, controls or is under common control with such
entity. As used in this definition, "control" (including, with its correlative
meanings "controlled by" and "under common control with") means the possession
directly or indirectly, of power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of voting
securities, by contract or otherwise.
"Board" shall mean the Board of Directors of the Corporation.
"Business Agreement" shall mean that certain Business Agreement, dated
August 18, 2000, by and between the Corporation and AFS.
"Business Day" shall mean any day other than a Saturday, Sunday,
federal holiday or holiday in the State of Illinois or the State of Washington.
"Common" shall mean the Corporation's Common Stock, $.01 par value per
share, and any stock into which such stock may hereafter be changed.
"Majority Holders" shall mean, at any specific time, the holders of
Warrants representing the right to purchase a majority of the number of shares
of Common which are still exercisable at such time upon full exercise of all
then outstanding Warrants.
"Securities Act" shall mean the Securities Act of 1933, as amended
prior to or after the date hereof, or any federal statute or statutes which
shall be enacted to take the place of such Act, together with all rules and
regulations promulgated thereunder.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in, corporate stock.
"Warrants" shall mean this Warrant, any Warrants issued in substitution
or replacement hereof and any Warrants issued to any transferee or assignee of
all or any portion of this Warrant.
"Warrant Price" shall mean $6.50, subject to adjustment pursuant to the
provisions of Section 3 hereof.
(SIGNATURE ON NEXT PAGE)
Dated: _________, 2000
THE COBALT GROUP, INC.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Executive Vice President & CFO
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SIGNATURE PAGE TO WARRANT
