Exhibit 10.3
Execution Version
EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is entered into as of the 25th day
of May, 2005 (the “Effective Date”) by and between JOHN A. BLAIR, an individual
residing in California (“Executive”) and SANTA ACQUISITION CORPORATION
(“Employer”) with principal offices at 111 S. La Cumbre Lane, Santa Barbara,
California 93105.
     Section 1. Term. Employer hereby employs Executive and Executive hereby
accepts such employment, upon the terms and conditions hereinafter set forth.
The term of employment hereunder shall continue for five (5) years from the
Effective Date, subject to earlier termination in accordance with Section 4
below (the “Term”, which Term shall include any renewal period described below).
This Agreement shall not renew except upon mutual agreement of the parties.
     Section 2. Executive’s Duties.
          (a) Executive shall be Chief Executive Officer of Employer (“CEO”) and
shall report directly to the Board of Directors of the Employer (the “Board”)
and the Chief Executive Officer and/or President or a designee of the Chief
Executive Officer of DealerTrack Holdings, Inc. (“Parent”). Executive shall
faithfully and diligently perform his duties at the direction of the Board,
Parent’s Chief Executive Officer, President or the Chief Executive Officer’s
designee, to the best of Executive’s ability. Executive shall (i) devote his
best efforts, skill, and ability and full business time and attention to the
performance of the services customarily incident to such office, subject to
vacations and sick leave as provided herein and in accordance with Employer
policy, (ii) carry out his duties in a competent and professional manner; and
(iii) generally promote the interests of Employer. It is acknowledged and agreed
that Executive may continue to be an officer and employee of Automotive Lease
Guide (alg), LLC (“ALG”) incidental to the winding up of ALG’s business and on
the condition that Executive’s activities for ALG do not interfere with the
performance of his duties hereunder. Subject to applicable law, Executive shall
not knowingly participate in any activity that is detrimental to the interests
of the Employer or any of its affiliates, including, without limitation, any
criticism or disparagement of any type by Executive, through the media or
otherwise, of Employer or any affiliate of Employer, except in connection with
the exercise of Executive’s rights against the Employer or any affiliate of
Employer.
          (b) Executive agrees to abide by all policies applicable to senior
officers of Employer promulgated from time to time by Parent or Employer which
policies are enforced uniformly and applicable to all similarly-situated
executives of Parent or Employer, as applicable and, as applied to Executive,
are consistent with such policies as applied to similarly-situated executives of
other operating companies that are affiliates of Parent (“Operating Companies”).
          (c) Except for such business travel as may be incident to his duties
hereunder, Executive shall perform his duties at Employer’s offices at the
address set forth in the preamble to this Agreement or at such other location as
may be approved by Employer.

 

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     Section 3. Compensation for Executive’s Services. In consideration of the
duties and services to be performed by Executive pursuant to Sections 1 and 2
hereof, Executive shall receive:
          (a) Salary. Executive shall earn salary (the “Salary”) at the annual
rate of Two Hundred Fifty Thousand Dollars ($250,000), less all applicable
federal, state, and local tax withholdings. Such Salary shall be earned and
shall be payable in periodic installments in accordance with Employer’s payroll
practices. During the term of Executive’s employment with Employer, the Board of
Directors of Parent (the “Parent Board”) or Compensation Committee of the Parent
Board (the “Compensation Committee”) will review the Salary annually and may in
its discretion increase the Salary, but may not reduce it during the Term unless
Parent institutes salary reductions across the board; provided that in any
event, the Salary shall not be reduced below Two Hundred Fifty Thousand Dollars
($250,000) per year without the Executive’s written consent.
          (b) Annual Bonus. In addition to the Salary, Executive is eligible to
receive a cash performance bonus (“Bonus”), less all applicable federal, state,
and local tax withholdings, in each calendar year of the Term, including a Bonus
pro rated for the portion of calendar year 2005 during which Executive is
employed under this Agreement. This bonus shall be payable, if at all, on a
schedule consistent with Employer’s bonus payments to its other Executives. For
each calendar year, Executive can earn a target Bonus equal to 50% of Salary
based on Employee’s attainment of budget goals and other criteria established by
the Board in its sole and absolute discretion. Executive may earn a Bonus of up
to 100% of Salary based on exceeding such budget goals and other criteria in
increments established by the Board in its sole and absolute discretion.
Executive understands and agrees that the Bonus is established in part as an
inducement for Executive to remain employed by Employer and, therefore, that no
Bonus will be deemed earned for a given year unless Executive remains employed
through December 31 of that year. Except as provided in Section 5(c), in the
event that Executive’s employment terminates prior to December 31 of any year
during the Term, then Executive shall not receive payment of any Bonus, for that
year.
          (c) Additional Compensation. Without limiting the amounts otherwise
set forth in this Agreement, Executive shall receive a payment each month (the
“Additional Compensation”) in arrears from the Effective Date of this Agreement
until the Note described in Section 3(d) below is issued, based on the following
formula:
[ $1,200,000 (the “Face Amount”) ] x [the prime interest rate, as published in
the Wall Street Journal as of the Effective Date, plus 1%, up to an aggregate
maximum rate of 7% (the “Interest Rate”)] / 12.
          (d) Additional Bonus. As an additional inducement for Executive to
remain employed by Employer, Executive shall be eligible to receive an
additional bonus (the “Additional Bonus”), less all applicable federal, state
and local tax withholdings, as follows:

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  (1)   If in any calendar year ending on or before December 31, 2009 (y) the
revenue from sales of ALG products and Chrome Systems Corporation (“Chrome”)
products (“ALG/Chrome Revenues”) for such year equals or exceeds $50.0 million
(the “ALG/Chrome Revenue Milestone”) and (z) the EBITDA Ratio for the ALG/Chrome
business for such year equals or exceeds the EBITDA Ratio of the Parent business
as a whole (exclusive of the ALG/Chrome business), then Parent shall promptly
issue to Executive a note in the principal amount of $1,200,000 on the terms
described in (d)(3) below (the “Note”). “EBITDA Ratio” shall mean the ratio of
the earnings before interest, taxes, depreciation, and amortization for the
respective business in question divided by the revenue from such business.    
(2)   If ALG/Chrome Revenues for the year ending December 31, 2009 equal 70% of
the ALG/Chrome Revenue Milestone, and (d)(1)(z) above occurs for that year,
Parent shall issue to Executive a Note in the principal amount of $600,000. If
ALG/Chrome Revenues for the year ending December 31, 2009 are greater than 70%
of the ALG/Chrome Revenue Milestone, but less than 100% of such milestone and
(d)(1)(z) above occurs, then Parent shall issue to Executive a Note in the
principal amount of (x) $600,000 plus (y) $20,000 for each additional $500,000
of ALG/Chrome Revenues for the year ending December 31, 2009 in excess of 70% of
the ALG/Chrome Revenue Milestone and less than 100% of the ALG/Chrome Revenue
Milestone. For the avoidance of doubt, there will be no additional $20,000 (or
portion thereof) added to the principal of the Note for each incremental
additional ALG/Chrome Revenues for the year ending December 31, 2009 of less
than $500,000. For example, if ALG/Chrome Revenues for the year ending
December 31, 2009 are $36,200,000, then an additional amount of $40,000 (i.e.,
$20,000 x2) shall be added to the principal amount of the Note for a total
principal amount of $640,000.     (3)   The Note will provide that (w) it shall
bear interest at the Interest Rate, (x) interest accrued on the Note will be
paid to the Executive monthly, (y) it will be payable in full on June 30, 2010,
and (z) it may be prepaid without penalty at any time in Parent’s sole
discretion.

  (i)   Within 90 days following each of the years ending December 31, 2005,
2006, 2007, 2008 and 2009, Parent shall deliver to Executive Parent’s
calculation, with reasonable supporting detail (the “Parent’s Calculation”) of
ALG/Chrome Revenues or ALG Revenues, as the case may

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      be, and the applicable EBITDA Ratios (collectively, the “Financial
Milestones”) for the preceding calendar year.

  (ii)   If Executive disagrees with the Parent’s Calculation, the Executive
may, within 30 days after delivery of the Parent’s Calculation, deliver a notice
to Parent disagreeing with any portion of the Parent’s Calculation for such year
(the “Objection Notice”). The Objection Notice shall specify in reasonable
detail those items or amounts as to which Executive disagrees. If Executive does
not deliver an Objection Notice during such time period or Executive indicates
agreement with the Parent’s Calculation, then the Parent’s Calculation shall be
the agreed upon amounts for the Financial Milestones for such applicable period.
    (iii)   If Executive shall have delivered the Objection Notice within the
30 day period referred to in clause (ii) above, then Parent and Executive shall,
during the 30 days following such delivery, use their good faith efforts to
reach agreement on the disputed items or amounts in order to determine the
Financial Milestones. If Parent and Executive are unable to reach agreement
during such period, they shall promptly thereafter cause a mutually acceptable
independent public accounting firm (the “Accounting Referee”) to review the
disputed items or amounts for the purpose of calculating the Financial
Milestone(s) in dispute. The Accounting Referee may request additional
supporting detail from the Parent pertaining to the portion of the Parent’s
Calculation identified by Executive in the Objection Notice. Within ten
(10) days after delivery of such additional detail, the Executive may supplement
the Objection Notice to add any disputes newly discovered by the Executive from
the additional detail, but only if such item in dispute could not reasonably
have been ascertained from the supporting detail provided by Parent with the
Parent Calculation. The Objection Notice may be supplemented only once. In
making such calculation, the Accounting Referee shall consider only those items
or amounts in the Parent’s Calculation as to which the Executive has disagreed
and which are specifically identified in reasonable notice in the Objection
Notice, as supplemented, if applicable. The Accounting Referee shall deliver to
Parent and Executive, as promptly as practicable, a written report setting forth
its calculation of the items or amounts in dispute. Such report shall be final
and binding upon Parent and Executive, absent manifest error or willful
misconduct. The cost of

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      such review and report shall be borne (x) by Executive, if Parent’s
calculation of the Financial Milestone(s) in dispute is closer to the Accounting
Referee’s determination than Executive’s calculation thereof, (y) by Parent, if
the reverse is true and (z) except as provided in (x) or (y) above, equally by
Executive and Parent.

  (4)   If Parent sells or disposes of some or all of the assets of Employer or
Chrome or does not collect fair market value for the products/services of the
Company or Chrome because said products/services are sold as part of a bundle of
products/services, the terms of this Section 3(d) will be adjusted equitably in
the manner described under similar circumstances in that certain Asset Purchase
Agreement, dated May 25, 2005, by and among Employer, ALG, Executive and other
parties (the “Purchase Agreement”).

          (e) Equity. In connection with Executive’s employment, within
forty-five (45) days of the Effective Date, Executive will be granted stock
options (“Stock Options”) to purchase 40,000 shares of Parent common stock
pursuant to the terms of either (i) the DealerTrack Holdings, Inc. Stock Option
Plan, dated as of February 1, 2001, as amended, or (ii) any new incentive stock
option plan adopted by Parent on or before the date of grant ( in either case,
hereinafter, “Stock Option Plan”) and the stock option agreement (the “Option
Agreement”) Executive will be required to enter into pursuant to the Stock
Option Plan. Except as otherwise provided herein, the terms of the Stock Options
shall be governed by this Section 3(e) and, to the extent not inconsistent
herewith, the Stock Option Plan and the Option Agreement. The Stock Options will
vest so long as the Executive remains employed in accordance with the following
schedule: Stock Options to acquire twenty-five percent (25%) of said shares will
vest on the first anniversary of the Effective Date and the remaining Stock
Options will vest ratably on a monthly basis thereafter for the following
thirty-six (36) months. Executive shall be credited with twelve (12) months
accelerated vesting of his Stock Options upon termination of Executive’s
employment by: (1) Employer without Cause (as defined below); or (2) Executive
for Good Reason (as defined below). Executive shall be credited with twenty four
(24) months accelerated vesting of his Stock Options upon a Change of Control
(as defined in the Stock Option Plan). Executive shall be credited with full
acceleration and vesting of his Stock Options upon the earlier of: (1) the
termination of Executive’s employment without Cause within twelve (12) months
after a Change of Control; or (2) termination of the Executive’s employment for
Good Reason within twelve (12) months after a Change of Control. Anything in the
Stock Option Plan to the contrary notwithstanding, if Executive’s employment is
terminated by Executive with Good Reason or by the Employer without Cause, or
under circumstances described above which would result in certain accelerated
vesting of any unvested Stock Options held by Executive, the unexercised portion
of any Stock Options held by Executive will not terminate until the twelve
(12) month anniversary of the date of termination of Executive’s employment. Any
Stock Options that remain unvested in accordance with the terms of this
Agreement, the Stock Option Plan and Option Agreement upon termination of the
Executive’s employment shall expire. In the event Employer determines to provide
equity in satisfaction of

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this provision, in whole or in part, by issuing restricted stock, the
derestriction terms of such grant shall be equivalent to the foregoing vesting
terms.
          (f) Benefits. Employer shall provide Executive with the right to
participate in and receive benefits from all life, accident, disability, medical
and pension or profit-sharing plans, and all similar benefits as are from time
to time in effect and that are generally comparable to benefits made available
to similarly-situated senior officers of the Operating Companies. The amount and
extent of benefits to which Executive is entitled shall be governed by the
specific benefit plan, as it may be amended from time to time.
          (g) Expenses. Employer shall promptly reimburse Executive for
reasonable expenses for cellular telephone usage, entertainment, travel, meals,
lodging and similar items incurred in the conduct of Employer’s business. Such
expenses shall be reimbursed in accordance with Employer’s expense reimbursement
policies and guidelines.
          (h) Vacation; Sick Leave. During the Term, Executive shall be entitled
to four weeks (4) weeks vacation per year, paid holidays, sick leave, and
similar benefits, to be earned and used in accordance with Employer’s policy and
procedure for other similarly situated senior executive officers.
          (i) Modification. Employer reserves the right to modify, suspend or
discontinue any and all of the above plans, practices, policies and programs
referenced in Sections 3(f) and (g) at any time in its discretion without
recourse by Executive so long as such action is taken generally with respect to
other similarly situated senior executive officers.
          (j) Guarantee of First Year Compensation. If Employer terminates
Executive’s employment without Cause or if Employee terminates his employment
for Good Reason during the first year of the Term, all remaining unpaid
compensation for such first year shall, in the case of payments pursuant to
Sections 3(a) and 3(d) be paid on regular payment dates and, in the case of
Section 3(b) be paid when ascertainable, without reducing any severance
obligations of Employer as provided in Section 5. Executive’s rights and
obligations will be subject to the terms and conditions of applicable benefit
plans.
     Section 4. Termination of Employment.
          (a) Resignation. Executive may voluntarily terminate his employment
with Employer at any time with or without Good Reason, upon written notice to
Employer.
          (b) Termination. Employer may terminate Executive’s employment at any
time, with or without Cause, upon written notice to Executive.
          (c) Death or Disability. Executive’s employment shall terminate
immediately upon Executive’s death. In the event Employer, in good faith,
determines that Executive is unable to perform the functions of his position due
to a Disability (as defined below), it may notify Executive in writing of its
intention to terminate Executive’s employment and Executive’s employment with
Employer shall terminate effective on the thirtieth (30th) day after receipt of
such notice by Executive. For the purposes of this Agreement, “Disability” shall
mean a physical or mental impairment that substantially limits a major life
activity of Executive

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and renders Executive unable to perform the essential functions of his position
even with reasonable accommodation (that does not impose an undue hardship on
Employer), and which has lasted at least (i) sixty (60) consecutive days or
(ii) the balance of Executive’s entitlement to leave, if any, under the Family
and Medical Leave Act or similar state law, or (iii) the balance of any
elimination period under the Employer’s long term disability insurance program
(without regard to whether Executive is awarded benefits under such program),
whichever is longer.
          (d) Cause. Employer may immediately terminate Executive’s employment
for “Cause” by giving written notice to Executive. For purposes of this
Agreement, “Cause” shall mean:
(1) Executive’s commission of an act of fraud or embezzlement upon Employer or
any of its affiliates; or
(2) Executive’s commission of any willful act intended to injure the reputation,
business, or any business relationship of Employer or any of its affiliates; or
(3) Executive is found by a court of competent jurisdiction to have committed a
felony; or
(4) the refusal or failure of Executive to perform Executive’s duties with
Employer in a competent and professional manner that is not cured by Executive
within ten (10) business days after a written demand therefor is delivered to
Executive by the Board which specifically identifies the manner in which the
Board believes that Executive has not substantially performed Executive’s
duties; provided, further, however, that if the Board, in good faith, determines
that the refusal or failure by Executive is egregious in nature or is not
susceptible of cure, then no cure period shall be required hereunder; or
(5) the refusal or failure of Executive to comply with any of his material
obligations under this Agreement (including any Exhibit hereto) that is not
cured by Executive within ten (10) business days after a written demand
therefore is delivered to Executive by the Board which specifically identifies
the manner in which the Board believes Executive has materially breached this
Agreement; provided, further, however, that if the Board, in good faith,
determines that the refusal or failure by Executive is egregious in nature or is
not susceptible of cure, then no cure period shall be required hereunder.
          (e) Good Reason. Executive may terminate his employment for “Good
Reason,” by delivering written notice of such termination (“Employer Default
Notice”) to the Chief Executive Officer of Parent within sixty (60) days after
the occurrence of any of the following events, each of which shall constitute
Good Reason: (i) Employer’s material breach of any provision of this Agreement,
the Stock Options or the Stock Option Plan which has not been cured within the
allotted time; (ii) a material reduction of Executive’s title, status,
authority,

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responsibility or duties as CEO or the assignment to Executive of any duties
materially inconsistent with the position of CEO; (iii) any material reduction
in Executive’s Salary or benefits; (iv) the failure of any successor entity to
assume the terms of this Agreement upon any Change of Control; (v) moving
Employer’s principal executive office more than 50 miles from Employer’s address
set forth in the preamble to this Agreement; or (vi) a determination, that is
final and unappealable (“Final Order”), that Employer has defaulted under
Section 2.06 of the Purchase Agreement but only if and when Employer fails to
make the payment with respect to which it is found to be in default within the
later of (i) the time specified in the Final Order or (ii) 30 days following the
entry of the Final Order. The Employer Default Notice shall specify the reason
for Executive’s belief that an event constituting Good Reason has occurred.
Notwithstanding the foregoing, any material breach of this Agreement by
Employer, or other event constituting Good Reason, shall not constitute Good
Reason if any such breach or other event is cured or corrected by Employer
within ten (10) business days following delivery to Employer of the Employer
Default Notice.
          (f) Continuing Obligations. Executive acknowledges and agrees that any
termination under this Section 4 is not intended, and shall not be deemed or
construed, to affect in any way any of Executive’s covenants and obligations
contained in Sections 6 and 7 hereof, which shall continue in full force and
effect beyond such termination for any reason.
     Section 5. Termination Obligations.
          (a) Resignation. If Executive’s employment is terminated voluntarily
by Executive without Good Reason, Executive’s employment shall terminate without
further obligations to Executive other than for payment of the sum of any unpaid
Salary determined by the Board and reimbursable expenses and vacation accrued
and owing to Executive prior to the termination. The sum of such amounts shall
hereinafter be referred to as the “Accrued Obligations,” which shall be paid to
Executive or Executive’s estate or beneficiary within thirty (30) days of the
date of termination. If Executive voluntarily terminates his employment without
Good Reason and within thirty (30) days of such termination, DealerTrack
determines that it would have had Cause to terminate Executive pursuant to
Section 4(d), Executive shall be deemed to have been terminated for Cause and
the terms of Section 5(b) shall apply.
          (b) Cause. If Executive’s employment is terminated by Employer for
Cause, the Employer and Parent shall not have any further obligations to
Executive other than for the timely payment of Accrued Obligations. If it is
subsequently determined by an arbitrator, pursuant to Section 18 hereof, that
Employer did not have Cause for termination, then Employer’s decision to
terminate shall be deemed to have been made without Cause and the terms of
Section 5(c) shall apply.
          (c) By Employer Other than for Cause or Death or Disability; By
Executive for Good Reason.
               (1) If (A) Employer terminates Executive’s employment for a
reason other than Cause, or due to Executive’s death or Disability, or
(B) Executive terminates his employment for Good Reason, Employer shall have no
further obligations to Executive other than for (i) the payment of Accrued
Obligations; (ii) severance pay in an amount equal to twenty-

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four (24) months of Salary to be paid in equal monthly installments; (iii) a pro
rata Bonus calculated based on multiplying the percentage of the year Executive
worked for Employer during the year of his termination by the Bonus received by
Executive during the preceding year or which would have been received for the
current year, whichever is greater; (iv) the Additional Bonus, payable as set
forth in Section 3(d) above; (v) the Additional Compensation, payable as set
forth in Section 3( c) above; and (vi) if Executive elects continuation of his
medical and/or dental insurance coverage in accordance with the law known as
“COBRA,” payment of the Employer’s share of premiums for such coverage(s) for up
to twelve (12) months or until the executive no longer is eligible for COBRA
continuation coverage, whichever is earlier.
               (2) If Executive terminates his employment for Good Reason and it
is subsequently determined by an arbitrator, pursuant to Section 18 hereof, that
Executive did not have Good Reason for termination, then Executive’s decision to
terminate for Good Reason shall be deemed to have been a voluntary resignation,
the terms of Section 5(a) shall apply, and all monies paid to Executive pursuant
to this Section 5(c)(1), except for those monies paid pursuant to
Section 5(c)(1)(i), shall be immediately returned to Employer.
               (3) The amounts payable pursuant to Section 5(c)(1) shall be the
only amounts Executive shall receive for termination in accordance with this
Section 5(c).
          (d) Mitigation. In the event Executive’s employment with Employer is
terminated during the Term pursuant to this Section 5 on or after the first
anniversary of the effective Date, Executive shall be required to notify
Employer, in writing, within seven (7) days of obtaining subsequent employment,
which shall include, without limitation, self-employment, consulting or other
arrangement but shall not include managing Eexecutive’s or his extended family’s
passive investments. In the event Executive obtains other employment during any
severance payout period described in Section 5(c)(1)(B)(ii), the severance
payments due to Executive thereunder shall be reduced by fifty (50%) percent of
the amount paid to Executive in his new capacity (including the amount of any
up-front or deferred payments), commencing on the date Executive commences
providing services in his new capacity; provided, however, that such reduction
will not be more than fifty (50%) percent of the remaining severance payments
due to Executive. Nothing herein shall be construed to require Executive to seek
employment. In the event that Executive inadvertently fails to notify Employer
of any subsequent employment within seven (7) days as described above and such
noncompliance is not intentional, then Employer’s sole remedy with respect to
recovering damages for such failure shall be to recoup the amounts so owed
Employer under this Section 5(d) with interest thereon at the US prime rate plus
2% and any reasonable fees and expense, including reasonable attorney fees, that
Employer may incur in collecting such amounts.
          (e) Release. Notwithstanding anything to the contrary contained
herein, no severance payments required hereunder shall be made by Employer until
such time as Executive shall execute a general release for the benefit of
Employer in a form satisfactory to Employer. Such general release shall not
apply to (i) Executive’s rights under the Purchase Agreement, (ii) Executive’s
rights under his Stock Option Agreement, (iii) Executive’s rights, as
applicable, to indemnification under Employer’s or Parent’s charter documents,
any indemnification agreement or applicable law, (iv) Executive’s rights under
laws governing worker’s compensation, or (v) Executive’s post-termination rights
under this Agreement.

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          (f) Stock Options. Except as expressly provided herein, the terms of
the Stock Option Plan and any related Stock Option Agreement and/or Notice of
Grant shall govern the termination, vesting, and/or exercise of Executive’s
Stock Options upon the termination of Executive’s employment for any reason.
          (g) Exclusive Remedy. Executive agrees that the payments set forth in
this Agreement shall constitute the exclusive and sole remedy for any
termination of Executive’s employment and Executive covenants not to assert or
pursue any other remedies, at law or in equity, with respect to this Agreement.
          (h) Termination of Executive’s Office. Following the termination of
Executive’s employment for any reason, Executive shall hold no further office or
position with Employer.
     Section 6. Restrictions Respecting Confidential Information. Executive
hereby covenants and agrees that, during his employment and thereafter,
Executive will not, under any circumstance, disclose in any way any Confidential
Information (as defined below) to any other person other than (i) at the
direction of and for the benefit of Employer or (ii) to his attorneys or other
advisors in connection with the enforcement of Executive’s or ALG’s rights under
the Purchase Agreement or any Ancillary Agreement (as defined in the Purchase
Agreement), provided such individuals agree to be bound by the confidentiality
obligations herein and, if such Confidential Information is relevant to such
enforcement action, to the court or arbitrator, as applicable, subject to a
protective order. For the purposes of the foregoing, “Confidential Information”
means any information pertaining to the assets, business, creditors, vendors,
manufacturers, customers, data, employees, financial condition or affairs,
formulae, licenses, methods, operations, procedures, reports, suppliers, systems
and technologies of Employer and its affiliates, including (without limitation)
the contracts, patents, trade secrets and customer lists developed or otherwise
acquired by Employer and its affiliates; provided, however, that Confidential
Information shall exclude any information that was, is, or becomes publicly
available other than through disclosure by Executive or any other person known
to Executive to be subject to confidentiality obligations to Employer. All
Confidential Information is and will remain the sole and exclusive property of
Employer and its affiliates. Following the termination of his employment,
Executive shall return all documents and other tangible items containing
Confidential Information to Employer, without retaining any copies, notes or
excerpts thereof.
     Section 7. Proprietary Matters. Executive expressly understands and agrees
that any and all improvements, inventions, discoveries, processes, or know-how
that are generated or conceived by Executive, whether alone or with others,
during the Term (collectively, the “Inventions”) will be the sole and exclusive
property of Employer, and Executive will, whenever requested to do so by
Employer (either during the Term or thereafter), execute and assign any and all
applications, assignments and/or other instruments and do all things which
Employer may deem necessary or appropriate in order to apply for, obtain,
maintain, enforce and defend patents, copyrights, trade names or trademarks of
the United States or of foreign countries for said Inventions, or in order to
assign and convey or otherwise make available to Employer the sole and exclusive
right, title, and interest in and to said Inventions, applications, patents,
copyrights, trade names or trademarks; provided, however, that pursuant to
California Labor Code Section 2872 and any successor thereto, the provisions of
this Section 7 shall not apply to an

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invention that qualifies fully under the provisions of California Labor Code
Section 2870 (and any successor thereto) which provides:
“Any provision in an employment agreement which provides that an employee shall
assign, or offer to assign, any of his or her rights in an invention to his or
her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer’s equipment,
supplies, facilities, or trade secret information except for those inventions
that either: (1) Relate at the time of conception or reduction to practice of
the invention to the employer’s business, or actual or demonstrably anticipated
research or development of the employer; or (2) Result from any work performed
by the employee for the employer.”
Executive shall promptly communicate and disclose to Employer all Inventions
conceived, developed or made by him during his employment by Employer, whether
solely or jointly with others, and whether or not patentable or copyrightable,
(a) which relate to any matters or business of the type carried on or being
developed by Employer, or (b) which result from or are suggested by any work
done by him in the course of his employment by Employer. Executive shall also
promptly communicate and disclose to Employer all material other data obtained
by him concerning the business or affairs of Employer in the course of his
employment by Employer.
          Section 8. Equitable Relief. Executive acknowledges and agrees that
Employer will suffer irreparable damage which cannot be adequately compensated
by money damages in the event of a breach, or threatened breach, of any of the
terms and provisions of Section 6 or 7 of this Agreement, and that, in the event
of any such breach, or threatened breach, Employer will not have an adequate
remedy at law. It is therefore agreed that Employer, in addition to all other
such rights, powers, privileges and remedies that it may have, shall be entitled
to injunctive relief, specific performance or such other equitable relief as
Employer may request to enforce any of those terms and provisions and to enjoin
or otherwise restrain any act prohibited thereby, and Executive will not raise
and hereby waives any objection or defense that there is an adequate remedy
available at law. Notwithstanding the provisions of Section 18 of this
Agreement, Executive agrees that Employer shall be entitled to seek such
injunctive relief, without bond, in a court of competent jurisdiction. The
Executive agrees that any claim he may have against the Employer or Parent shall
not constitute a defense against the issuance of such equitable relief. The
foregoing shall not constitute a waiver of any of Employer’s rights, powers,
privileges and remedies against or in respect of a breaching party or any other
person or thing under this Agreement, or applicable law.
          Section 9. Notice. Any notice, request, demand or other communication
hereunder shall be in writing, shall be delivered by hand or sent by registered
or certified mail or by reputable overnight delivery service, postage prepaid,
to the addressee at the address set forth below (or at such other address as
shall be designated hereunder by written notice to the other party hereto) and
shall be deemed conclusively to have been given when actually received by the
addressee.

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All notices and other communications hereunder shall be addressed as follows:

     
 
  If to Executive:
 
   
 
  John A. Blair
701 Via Hierba
Santa Barbara, California 93110
 
   
 
  With a copy to:
 
   
 
  Joseph D. Abkin, Esq.
Fell, Marking, Abkin, Montgomery,
  Granet & Raney, LLP
222 E. Carrillo St., Suite 400
Santa Barbara, CA 93101
 
   
 
  If to the Employer:
 
   
 
  Mark F. O’Neil
[DealerTrack Sub]
1111 Marcus Avenue
Lake Success, NY 11042
 
   
 
  With copies to:
 
   
 
  General Counsel
DealerTrack Holdings, Inc.
1111 Marcus Avenue
Lake Success, NY 11042
 
   
 
  and to:
 
   
 
  Ruskin Moscou Faltischek, P.C.
East Tower, 15th Floor
190 EAB Plaza
Uniondale, NY 11556
Attention: Irvin Brum, Esq.

or to such other address as either party shall have furnished to the other in
writing in accordance herewith.
     Section 10. Legal Counsel. In entering into this Agreement, the parties
represent that they have relied upon the advice of their attorneys, who are
attorneys of their own choice, and that the terms of this Agreement have been
completely read and explained to them by their attorneys, and that those terms
are fully understood and voluntarily accepted by them.

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     Section 11. Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
     Section 12. Governing Law. This Agreement has been executed and delivered,
and shall be governed by and construed in accordance with the applicable laws
pertaining, in the State of California, without regard to conflicts of laws
principles. Without prejudice to the obligations of either party under
Section 18, each party irrevocably and unconditionally submits to the
jurisdiction of the California state court in Los Angeles County or any federal
court of the United States sitting in Los Angeles, California and any appellate
court presiding thereover.
     Section 13. Severability. In the event that any term or provision of this
Agreement shall be finally determined to be superseded, invalid, illegal or
otherwise unenforceable pursuant to applicable law by a governmental authority
having jurisdiction and venue, that determination shall not impair or otherwise
affect the validity, legality or enforceability, to the maximum extent
permissible by law, (a) by or before that authority of the remaining terms and
provisions of this Agreement, which shall be enforced as if the unenforceable
term or provision were deleted, or (b) by or before any other authority of any
of the terms and provisions of this Agreement.
     Section 14. Counterparts. This Agreement may be executed in two counterpart
copies of the entire document or of signature pages to the document, each of
which may be executed by one of the parties hereto, but all of which, when taken
together, shall constitute a single agreement binding upon both of the parties
hereto.
     Section 15. Benefit. This Agreement shall be binding upon and inure to the
benefit of the respective parties hereto and their legal representatives,
successors and assigns. Insofar as Executive is concerned, this Agreement, being
personal, cannot be assigned; provided, however, that should Executive become
entitled to payment pursuant to Section 5 hereof, he may assign his rights to
such payment to his legal representatives, successors, and assigns. Without
limiting the generality of the foregoing, all representations, warranties,
covenants and other agreements made by or on behalf of Executive in this
Agreement shall inure to the benefit of the successors and assigns of Employer.
     Section 16. Modification. This Agreement may not be amended or modified
other than by a written agreement executed by all parties hereto.
     Section 17. Entire Agreement. Except as provided in Section 5(e) hereof,
this Agreement contains the entire agreement of the parties and supersedes all
other representations, warranties, agreements and understandings, oral or
otherwise, among the parties with respect to the matters contained herein.
     Section 18. Arbitration.
          (a) Executive agrees that any dispute or controversy arising out of,
relating to, or in connection with this Agreement or the termination thereof, or
the interpretation, validity, construction, performance, breach, or termination
thereof, shall be settled by expedited, binding arbitration to be held in Los
Angeles, California, in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration

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Association (the “Rules”). The arbitrator may grant injunctions or other relief
in such dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator’s decision in any court having jurisdiction. The
arbitrator may award the prevailing party its reasonable attorneys’ fees and
costs.
          (b) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE IS
AGREEING TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH
THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,
BREACH OF TERMINATION THEREOF, TO BINDING ARBITRATION, AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE’S RIGHT TO A JURY TRIAL AND RELATES TO
THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE
RELATIONSHIP INCLUDING, BUT NOT LIMITED TO, STATUTORY DISCRIMINATION CLAIMS.
     Section 19. Representations and Warranties of Executive. In order to induce
Employer to enter into this Agreement, Executive represents and warrants to
Employer, to the best of his knowledge after the review of his personnel files,
that: (a) the execution and delivery of this Agreement by Executive and the
performance of his obligations hereunder will not violate or be in conflict with
any fiduciary or other duty, instrument, agreement, document, arrangement or
other understanding to which Executive is a party or by which he is or may be
bound or subject; and (b) Executive is not a party to any instrument, agreement,
document, arrangement or other understanding with any person (other than
Employer) requiring or restricting the use or disclosure of any confidential
information or the provision of any employment, consulting or other services.
     Section 20. Waiver of Breach. Except as may specifically provided herein,
the failure of a party to insist on strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any term
of this Agreement. Any waiver hereto must be in writing.
[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.

             
 
                EXECUTIVE:    
 
                /s/ John A. Blair                   John A. Blair    
 
           
 
  Date:        
 
           
 
                SANTA ACQUISITION CORPORATION:    
 
           
 
  By:   /s/ Mark O’Neil    
 
           
 
           
 
  Name:        
 
           
 
           
 
  Title:        
 
           
 
           
 
  Date:        
 
           

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