Document:

Exhibit 10.3

 

 

 

 

 

 

 

 

 

 

 

AUTOBYTEL INC.

SHAREHOLDER REGISTRATION RIGHTS AGREEMENT

 

 

 

SHAREHOLDER REGISTRATION RIGHTS AGREEMENT

This Shareholder Registration Rights Agreement (“Agreement”) is made as of January 13, 2014 (“Effective Date”) by and among Autobytel Inc., a Delaware corporation (“Company”), and AutoNationDirect.com, Inc., a Delaware corporation (“Shareholder”).  Shareholder and the Company are referred to herein together as the “Parties” and sometimes each individually as a “Party.”

Background

The Parties are parties to that certain Membership Interest Purchase Agreement dated as of January 13, 2014 (“Membership Interest Purchase Agreement”) pursuant to which Company has agreed to purchase from Shareholder all of the issued and outstanding membership interests of AutoUSA, LLC, a Delaware limited liability company (the “Transaction”). As partial consideration for the Transaction, the Company issued to Shareholder (i) a Convertible Subordinated Promissory Note dated as of the Effective Date (“Convertible Note”); and (ii) a Warrant dated as of the Effective Date (“Warrant”).  The Convertible Note is convertible into, and the Warrant is exercisable for, shares of Common Stock, $.001 par value, of the Company (“Common Stock”).

The Warrant and Convertible Note were issued, and the Covered Securities (as defined below) may be issued, without registration under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (“Securities Act”), and applicable state securities laws, in accordance with applicable exemptions from such registration requirements. This Agreement (i) sets forth the Company’s obligations to register Non-Restricted Securities (as defined below) for resale by Shareholder; (ii) imposes certain restrictions on the resale or other transfer of the Covered Securities by Shareholder; (iii) provides the Company with certain rights of first refusal with respect to the Covered Securities; and (iv) provides for a standstill by Shareholder.

In consideration of the mutual promises and covenants set forth herein, the Parties hereto further agree as follows:

1.            Definitions.  As used in this Agreement, the following defined terms shall have the meanings ascribed below:

 

“Affiliate” means, with respect to any specified Person, any other Person who or which, directly or indirectly, Controls, is Controlled by, or is under common Control with such specified Person.

“Business Day” means any day other than a Saturday, Sunday or any other day on which commercial banks in Delaware are authorized or required by law to close.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of management policies of a Person, whether through ownership of voting securities, by contract, or otherwise.

“Covered Securities” means Restricted Securities and Non-Restricted Securities.

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“Damages” means any loss, damage, or liability (joint or several) to which a Party hereto may become subject under the Securities Act, the Exchange Act, or other foreign, federal, state or local law, insofar as such loss, damage, or liability (or any action in respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state or foreign securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state or foreign securities law; provided, however, that Damages shall not include any loss, damage, or liability resulting from use of a preliminary prospectus if the loss, damage, or liability arises after the Company makes a correcting preliminary or final prospectus available by providing written notice to Shareholder, and any such loss, damage, or liability would have been avoided by delivery of such correcting preliminary or final prospectus.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Excluded Registration” means (i) a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; or (iii) a registration in which the only Company securities being registered are debt securities.

“Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.

“GAAP” means generally accepted accounting principles in the United States as in effect at the time of any determination under this Agreement.

“Minimum Number of Registration Shares” means a number of Covered Securities equal to one-half of the number of shares of Common Stock that could have been acquired as of the Effective Date upon conversion of the Note and exercise of the Warrant had the Convertible Note been converted in full and the Warrant exercised in full as of the Effective Date.

“Non-Restricted Securities” means Restricted Securities for which the restrictions on resale, pledge or other transfer under Section 3.2 have terminated under this Agreement.

 

“Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

“Restricted Securities” means (i) any shares of Common Stock issued upon conversion of the Convertible Note or exercise of the Warrant; and (ii) any Common Stock or other equity securities issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in

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replacement of, the shares of Common Stock referenced in clause (i) of this definition as provided in the Convertible Note and the Warrant, in any case, with respect to which the restrictions described in Section 3.2 have not yet lapsed.

“Restrictions Period” means the period commencing on the Effective Date and ending on the third anniversary of the later of (i) the Effective Date and (ii) the latest date any shares of Common Stock were issued upon conversion of the Convertible Note or exercise of the Warrant, as the case may be.

“SEC” means the Securities and Exchange Commission.

“SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

“SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.

“Selling Expenses” means all underwriting discounts and selling commissions relating to the sale of Non-Restricted Securities in a transaction described in Article 2 below.

2.            Registration Rights.  The Company covenants and agrees to provide the following registration rights with regard to Covered Securities held by the Shareholder.

 

2.1            Demand Registration.

 

(a)            If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from Shareholder that the Company file a Form S-3 registration statement with respect to at least the Minimum Number of Registration Shares, then the Company shall as soon as practicable, and in any event within thirty (30) days after the date such request is given by Shareholder, file a Form S-3 registration statement under the Securities Act covering all Covered Securities requested to be included in such registration, subject to the limitations of Sections 2.1(b), 2.1(c), and 2.3. The Company shall use reasonable best efforts to cause such Form S-3 registration statement to be declared effective by the SEC as soon as practicable after filing.  As of the date hereof, the Company is eligible to use a Form S-3 registration statement for the registration of shares of Common Stock, although no assurances can be given that it will be so eligible after the date hereof.  Notwithstanding anything herein to the contrary, Shareholder may exercise its demand rights hereunder not more than seventy-five (75) days before the Convertible Note first becomes convertible or the Warrant first becomes exercisable.

 

(b)            Notwithstanding the foregoing obligations, if the Company furnishes to Shareholder a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would: (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to

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defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than sixty (60) days after the request of Shareholder is given; provided, however, that the Company may not invoke this right more than once in any twelve (12) month period; and provided further that the Company shall not register any securities for its own account or that of any other stockholder during such sixty (60) day period.

(c)            The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(a) (i) during the period that is ninety (90) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after the effective date of, a Company-initiated registration, provided, that the Company is actively employing in good faith its commercially reasonable efforts to cause such registration statement to become effective; (ii) if the Company has effected a registration pursuant to Section 2.1(a) within the twelve (12) month period immediately preceding the date of such request; or (iii) more than twice (subject to the provisions of Section 2.3(c)). A registration shall not be counted as “effected” for purposes of this Section 2.1(c) until such time as the applicable registration statement has been declared effective by the SEC.

 

2.2            Company Registration.  If the Company proposes to register (including, for this purpose, a registration effected by the Company for stockholders other than Shareholder) any of its capital stock or other securities under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give Shareholder notice of such registration.  Upon the request of Shareholder given within twenty (20) days after such notice is given by the Company, the Company shall, subject to the provisions of Section 2.3, cause to be registered all of the Covered Securities that Shareholder has requested to be included in such registration.  The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 before the effective date of such registration, whether or not Shareholder has elected to include Covered Securities in such registration.  The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Section 2.6.

 

2.3            Underwriting Requirements.

 

(a)            If, pursuant to Section 2.1, Shareholder intends to distribute Covered Securities covered by its request by means of an underwriting, it shall so advise the Company as a part of its request made pursuant to Section 2.1.  The underwriter(s) will be selected by Shareholder subject only to the reasonable approval of the Company.  In such event, the right of Shareholder to include its Covered Securities in such registration shall be conditioned upon Shareholder’s participation in such underwriting and the inclusion of Shareholder’s Covered Securities in the underwriting to the extent provided herein.  The Shareholder proposing to distribute its Covered Securities through such underwriting shall (together with the Company as provided in Section 2.4(e)) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting.  Notwithstanding any other provision of this Section 2.3, if the managing underwriter(s) advise(s) Shareholder in writing that marketing factors require a limitation on the number of shares to be underwritten, then the number of Covered Securities that may be included in the underwriting shall be allocated among the Shareholder and any other shareholder of the Company who has the right to include Common

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Stock in the underwriting, in proportion (as nearly as practicable) to the total number of Covered Securities and shares of Common Stock owned by the other shareholders requested to be included in the underwriting or in such other proportion as shall mutually be agreed to by the Shareholder and all such selling other shareholders.

(b)            In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Section 2.2, the Company shall not be required to include any of Shareholder’s Covered Securities in such underwriting unless Shareholder accepts the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company.  If the total number of securities, including Covered Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Covered Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering.  If the underwriters determine that less than all of the Covered Securities requested to be registered can be included in such offering, then the Covered Securities that are included in such offering shall be allocated among the Shareholder and any other shareholders of the Company who have the right to include shares of Common Stock in the underwriting in proportion to (as nearly as practicable) the total number of Covered Securities and shares of Common Stock owned by the other shareholders requested to be included in the underwriting or in such other proportions as shall mutually be agreed to by the Shareholder and such other shareholders.

 

(c)            For purposes of Section 2.1, (i) a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Section 2.3(a), fewer than fifty percent (50%) of the total number of Covered Securities that Shareholder has requested to be included in such registration statement are actually included, and (ii) if the underwriter exercises its cutback provisions in Section 2.3(a), Shareholder shall be entitled to one additional demand registration right, provided that such registration is for at least 40,000 shares of Common Stock.

 

2.4            Obligations of the Company.  Whenever required under this Article 2 to effect the registration of any Covered Securities, the Company shall, as expeditiously as reasonably possible:

 

(a)            prepare and file with the SEC a registration statement (in form and substance required by the Securities Act) with respect to such Covered Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of Shareholder keeps such registration statement effective for a period of at least one hundred eighty (180) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such one hundred eighty (180) day period shall be extended for a period of time equal to the period Shareholder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration and/or for the period of time that the effectiveness of a registration statement is tolled under Section 2.1(b), and (ii) in the case of any

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registration of Covered Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred eighty (180) day period shall be extended, if necessary, to keep the registration statement effective until the earliest of (x) all such Covered Securities are sold under such registration statement, (y) all such Covered Securities may be sold under Rule 144, and (z) the second anniversary of the effective date of such registration statement;

(b)            prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;

 

(c)            furnish to the selling Shareholder such number of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as Shareholder may reasonably request in order to facilitate its disposition of its Covered Securities;

 

(d)            use its commercially reasonably efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Shareholder; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

(e)            in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

 

(f)            use its commercially reasonably efforts to cause all such Covered Securities covered by such registration statement to be listed on a national securities exchange and each securities exchange on which similar securities issued by the Company are then listed;

 

(g)            provide a transfer agent and registrar for all Covered Securities registered pursuant to this Agreement and provide a CUSIP number for all such Covered Securities, in each case not later than the effective date of such registration;

 

(h)            promptly make available for inspection by the selling Shareholder, any managing underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Shareholder, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;

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(i)            at the request of Shareholder, furnish to each underwriter, if any, and Shareholder, a legal opinion of its counsel and a letter from its independent certified public accountants, each in customary form and substance, at such time or times as such documents are customarily provided in the type of offering involved;

 

(j)            notify the selling Shareholder, promptly after the Company receives notice thereof and in any event within one Business Day, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed;

 

(k)            notify the selling Shareholder, promptly after the Company receives notice thereof and in any event within one Business Day, of (i) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of any such registration statement covering any or all of the Covered Securities or the initiation of any proceedings for that purpose, (ii) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Covered Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose or (iii) of the occurrence of any event or the passage of time that makes the financial statements included in any such registration statement ineligible for inclusion therein or any statement made in any such registration statement or prospectus or any document incorporated or deemed incorporated therein by reference untrue in any material respect or that requires any revisions to any such registration statement, prospectus or other documents so that, in the case of any registration statement or prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

 

(l)            use its commercially reasonable efforts to avoid the issuance of, or if issued, obtain the withdrawal of (i) any order suspending the effectiveness of a registration statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Covered Securities for sale in any jurisdiction, at the earliest practicable moment; and

 

(m)            after such registration statement becomes effective, notify the selling Shareholder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.

 

2.5            Furnish Information.  It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Article 2 with respect to the Covered Securities of the selling Shareholder that Shareholder shall furnish to the Company such information regarding itself, the Covered Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of Shareholder’s Covered Securities.

 

2.6            Expenses of Registration.  All expenses (other than Selling Expenses) incurred in connection with registrations, including without limitation, those expenses for filings, or qualifications pursuant to Article 2, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and expenses of compliance with securities laws or blue sky

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laws; and fees and disbursements of counsel for the Company shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently withdrawn at the request of Shareholder (in which case the selling Shareholder shall bear such expenses).  All Selling Expenses relating to Covered Securities registered pursuant to this Article 2 shall be borne and paid by Shareholder.

2.7            Delay of Registration.  Shareholder shall not have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Article 2.

 

2.8            Indemnification.  If any Covered Securities are included in a registration statement under this Article 2:

 

(a)            To the maximum extent permitted by law, the Company will indemnify and hold harmless Shareholder, and the partners, members, officers, directors, and stockholders of Shareholder; legal counsel and accountants for Shareholder; any underwriter (as defined in the Securities Act) for Shareholder; and each Person, if any, who controls Shareholder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to Shareholder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of Shareholder, underwriter, controlling Person, or other aforementioned Person and stated expressly for use in connection with such registration.

 

(b)            To the extent permitted by law, Shareholder will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Shareholder selling securities in such registration statement, and any controlling Person of any such underwriter or other Shareholder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of selling Shareholder and stated expressly for use in connection with such registration; and selling Shareholder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of Shareholder, which consent shall not be unreasonably withheld,

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conditioned or delayed; and provided further that in no event shall any indemnity under this Section 2.8(b) exceed the proceeds from the offering received by Shareholder (net of any Selling Expenses paid by Shareholder), except in the case of fraud or willful misconduct by Shareholder.

(c)            Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, give the indemnifying party notice of the commencement thereof.  The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one (1) separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action.  Failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the indemnified party under this Section 2.8, to the extent that such failure does not materially prejudice the indemnifying party’s ability to defend such action.

 

(d)            Notwithstanding anything else herein to the contrary, the foregoing indemnity agreements of the Company and Shareholder are subject to the condition that, insofar as they relate to any Damages arising from any untrue statement or alleged untrue statement of a material fact contained in, or omission or alleged omission of a material fact from, a preliminary prospectus (or necessary to make the statements therein not misleading) that has been corrected in the form of prospectus included in the registration statement at the time it becomes effective, or any amendment or supplement thereto filed with the SEC pursuant to Rule 424(b) under the Securities Act (“Final Prospectus”), such indemnity agreement shall not inure to the benefit of any Person if a copy of the Final Prospectus was timely furnished to the indemnified party and such indemnified party failed to deliver, at or before the confirmation of the sale of the shares registered in such offering, a copy of the Final Prospectus to the Person asserting the loss, liability, claim, or damage in any case in which such delivery was required by the Securities Act.

 

(e)            To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or

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other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations.  The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case, (x) Shareholder will not be required to contribute any amount in excess of the public offering price of all such Covered Securities offered and sold by Shareholder pursuant to such registration statement except in the case of willful misconduct or fraud, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall Shareholder’s liability pursuant to this Section 2.8(e), when combined with the amounts paid or payable by Shareholder pursuant to Section 2.8(b), exceed the proceeds from the offering received by Shareholder (net of any Selling Expenses paid by Shareholder), except in the case of willful misconduct or fraud by Shareholder.

(f)            Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

(g)            Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Shareholder under this Section 2.8 shall survive the completion of any offering of Covered Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.

 

2.9            Reports Under Exchange Act.  With a view to making available to Shareholder the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Shareholder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:

 

(a)            make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144;

 

(b)            use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at all times when the Company is subject to such reporting requirements); and

 

(c)            furnish to Shareholder, so long as Shareholder owns any Restricted Securities or Covered Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Securities Act, and the Exchange Act, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies); (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so

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filed by the Company; and (iii) such other information as may be reasonably requested in availing Shareholder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at all times when the Company is subject to such reporting requirements) or pursuant to Form S‐3 (at any time after the Company so qualifies to use such form).

2.10            “Market Stand‐off” Agreement.  Shareholder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to a registration of equity securities of the Company under the Securities Act and ending on the date specified by the Company and the managing underwriter (such period not to exceed the lesser of (x) one hundred eighty (180) days, which period may be extended upon the request of the managing underwriter for an additional period of up to fifteen (15) days if the Company issues or proposes to issue an earnings or other public release within fifteen (15) days of the expiration of the 180-day lockup period, and (y) the shortest period that any other shareholder of the Company who is subject to a market stand-off agreement is subject to, but in no event shall such period be less than 90 days), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Covered Securities or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Covered Securities held immediately before the effective date of the registration statement for such offering or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise.  The foregoing provisions of this Section 2.10 shall not apply to the sale of any securities to an underwriter pursuant to an underwriting agreement.  The underwriters in connection with such registration are intended third‐party beneficiaries of this Section 2.10 and shall have the right, power, and authority to enforce the provisions hereof as though they were a party hereto.  Shareholder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Section 2.10.

 

2.11            Addition of Other Registrable Securities. Notwithstanding any other provision of this Article 2, in the event the Company grants to any third parties any rights to register their securities under the Securities Act (“Other Registrable Securities”), such rights may be granted by the Company on a pari passu basis with the rights granted to Shareholder under this Agreement. Any such Other Registrable Securities may be included in any registration statement in which Covered Securities are included on the same terms and conditions as set forth in this Article 2 as if the Other Registrable Securities were Covered Securities and the holders of the Covered Securities were Shareholders. Upon request by the Company, the Parties shall amend this Article 2 to provide for such combined participation by holders of Other Registrable Securities or terminate the provisions of this Article 2 and enter into a separate agreement providing for such combined participation.

 

2.12            Termination of Registration Rights.  Shareholder shall not be entitled to exercise any right provided for in this Article 2 (i) upon expiration of the Restrictions Period; and (ii) with respect to any Covered Securities held by Shareholder, if at such time all Covered

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Securities held by Shareholder that may be sold at such time under this Agreement can be sold in a three (3) month period without registration under SEC Rule 144. The registration rights granted to Shareholder under this Article 2 are personal to Shareholder and may not be transferred or assigned to any subsequent holder of Covered Securities other than to an Affiliate of Shareholder who holds Restricted Securities pursuant to Section 3.2 hereof.

2.13            Certain Representations and Warranties.  The Company represents and warrants that (i) its execution and delivery of this Agreement has been authorized by all necessary and appropriate corporate action under its organizational documents and any applicable agreements and in conformity with applicable law and that this Agreement has been executed by an authorized representative of the Company and (ii) this Agreement represents a valid, legal and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that such enforceability is limited by bankruptcy, receivership, moratorium, conservatorship, or reorganization laws or other laws of general application affecting the rights of creditors generally or by general principles of equity.

 

3.            Restrictions on Transfer

 

3.1            Restricted Stock Under Securities Act.

 

(a)            Shareholder represents and warrants that the Covered Securities are being acquired for personal account, for investment purposes only, and not with a view to the distribution, resale or other disposition thereof.

 

(b)            The Covered Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act and the other resale, transfer and other restrictions and conditions set forth in this Agreement.  Shareholder will cause any proposed purchaser, pledgee, or transferee of Restricted Securities held by Shareholder to which a sale, pledge or other transfer is permitted under this Agreement to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement.

 

(c)            Each certificate, instrument or account representing (i) Covered Securities, and (ii) any other securities issued in respect of the securities referenced in clause (i) upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Section 3.1(c)) be stamped or otherwise imprinted or noted with a legend substantially in the following form:

 

“THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE STATE SECURITIES LAWS WITH RESPECT TO SUCH SECURITY IS THEN IN EFFECT, OR SUCH REGISTRATION UNDER THE SECURITIES ACT

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AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED DUE TO AVAILABLE EXEMPTIONS FROM SUCH REGISTRATION. SHOULD THERE BE REASONABLE UNCERTAINTY OR GOOD FAITH DISAGREEMENT BETWEEN THE ISSUER AND THE HOLDER AS TO THE AVAILABILITY OF SUCH EXEMPTIONS, THEN THE HOLDER SHALL BE REQUIRED TO DELIVER TO MAKER AN OPINION OF COUNSEL (SKILLED IN SECURITIES MATTERS, SELECTED BY THE HOLDER AND REASONABLY SATISFACTORY TO THE MAKER) IN FORM AND SUBSTANCE SATISFACTORY TO MAKER THAT SUCH OFFER, SALE, OR TRANSFER, PLEDGE, OR HYPOTHECATION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS .”

“THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A SHAREHOLDER REGISTRATION RIGHTS AGREEMENT DATED AS OF JANUARY 13, 2014, AS MAY BE AMENDED FROM TIME TO TIME, (A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST FROM THE COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF THE SHAREHOLDER REGISTRATION RIGHTS AGREEMENT.”

Shareholder consents to the Company making a notation in its records and giving instructions to any transfer agent of the Covered Securities in order to implement the restrictions on transfer set forth in this Section 3.1.

(d)            The holder of Covered Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Agreement.  Before any proposed sale, pledge, or transfer of any Covered Securities to a permitted purchaser, pledgee or transferee, unless there is in effect a registration statement under the Securities Act covering the proposed transaction, Shareholder thereof shall give notice to the Company of such Shareholder’s intention to effect such sale, pledge, or transfer.  Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail. If at the time of the proposed sale, pledge or transfer of Covered Securities no registration statement is in effect with respect to such shares under applicable provisions of the Securities Act and other applicable securities laws, the holder of the Covered Securities hereby agrees that the holder will not sell, transfer, offer, pledge or hypothecate all or any part of the Covered Securities unless there shall be available exemptions from such registration requirements. Should there be any uncertainty or disagreement between the Company and the holder as to the availability of such exemptions, then the holder shall be required to deliver to the Company (i) an opinion of counsel (skilled in securities matters and selected by the holder) in form and substance satisfactory to the Company to the effect that such offer, sale, transfer, pledge or hypothecation is in compliance with an available exemption under the Securities Act and other applicable securities laws, or (ii) an interpretative letter from the SEC to the effect that no enforcement action will be recommended if the proposed offer, sale, transfer, pledge or hypothecation is made without registration under the Securities Act. The Company will not require such a legal opinion or “no action” letter in any transaction in compliance with SEC Rule

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144.  Each certificate, instrument or account evidencing the Restricted Securities or Non-Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Section 3.1(c), except that such certificate, instrument or account shall not bear such restrictive legend if, in the opinion of counsel for Shareholder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.

3.2            Additional Transfer Restrictions on Restricted Securities.  Shareholder may not, without the prior written consent of the Company or in compliance with Section 3.3 and Section 4, (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any Restricted Securities or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Restricted Securities or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Covered Securities or other securities, in cash, or otherwise (each transaction described in clause (i) and (ii) above being referred to herein as a “Transfer”).  The restrictions set forth in this Section 3.2 shall terminate upon the expiration of the Restrictions Period.  Notwithstanding the foregoing, Shareholder may transfer all, but not less than all, outstanding Restricted Securities to an Affiliate provided such Affiliate agrees to be legally bound by the Shareholder Agreement and executes and delivers to the Company such documents and instruments reasonably requested by the Company, including a joinder agreement.  For the sake of clarity, nothing in this Section 3.2 shall restrict Shareholder from selling any Covered Security to the public or through any public securities trading market in accordance with Section 4.

 

3.3            Right of First Refusal.

 

(a)            Prior to any intended sale or other transfer of any Covered Security other than to an Affiliate in accordance with Section 3.2 or to the public or through any public securities trading market in accordance with Section 4, Shareholder shall first give written notice (“Offer Notice”) to the Company specifying (i) Shareholder’s bona fide intention to sell or otherwise transfer such Covered Securities, (ii) the name and address of the proposed purchaser(s) or transferee(s), (iii) the number of Covered Securities Shareholder proposes to sell (“Offered Securities”), (iv) the price for which Shareholder proposes to sell the Offered Securities, and (v) all other material terms and conditions of the proposed sale or other transfer.

 

(b)            Within three (3) Business Days after receipt of the Offer Notice, the Company or its nominee(s) may elect to purchase all or any portion of the Offered Securities at the price and on the terms and conditions set forth in the Offer Notice by delivery of written notice (“Acceptance Notice”) to Shareholder specifying the number of Offered Securities that the Company or its nominees elect to purchase.  Within fifteen (15) days after delivery of the Acceptance Notice to Shareholder, the Company and/or its nominee(s) shall deliver a check or wire transfer (or, at the discretion of the Company, such other form of consideration set forth in the Offer Notice) in the amount of the purchase price of the Offered Securities to be purchased pursuant to this Section 3.3, against delivery by Shareholder of a certificate or certificates representing the Offered Securities (or account transfer instructions) to be purchased, duly

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endorsed for transfer to the Company or such nominee(s), as the case may be.  If the Company and/or its nominee(s) do not elect to purchase all of the Offered Securities, Shareholder shall be entitled to sell the balance of the Offered Securities to the purchaser(s) named in the Offer Notice at the price specified in the Offer Notice or at a higher price and on the terms and conditions set forth in the Offer Notice, provided, however, that such sale or other transfer must be consummated within sixty (60) days from the date of the Offer Notice and any proposed sale after such sixty (60) day period may be made only by again complying with the procedures set forth in this Section 3.3.

(c)            Any successor of Shareholder, and any transferee of Covered Securities pursuant to this Section 3.3, shall hold the Covered Securities subject to the terms and conditions of this Agreement and no further transfer of the Covered Securities may be made without complying with the provisions of this Section 3.3.

 

(d)            The right of first refusal set forth in this Section 3.3 shall terminate (i) as to all Covered Securities upon the expiration of the Restrictions Period; and (ii) as to Offered Securities, on the date such Offered Securities are sold pursuant to an effective registration statement under the Securities Act (with the parties acknowledging that any request for registration under the Securities Act pursuant to this Agreement shall give rise to the right of first refusal set forth in this Section 3.3), to the extent that such right has not previously terminated.

 

4.            Limitation on Number of Resales or Transfers of Covered Securities. Notwithstanding any other provision of this Agreement, the number of Covered Securities that may be resold or transferred to the public or through any public securities trading market at any time (whether or not pursuant to a registered offering under Article 2 of this Agreement) may not exceed (i) for any one sale or transfer order, twenty-five percent (25%) of the Average Daily Volume; and (ii) for all sales or transfer volume in any calendar week, twenty-five percent (25%) of the Weekly Volume. For purposes of this Article 4, (i) “Average Daily Volume” will be determined once at the beginning of each calendar quarter for application during such quarter based on an averaging of the daily volume of sales of Company Common Stock as reported by The NASDAQ Global Market (provided that if the Company’s Common Stock is not then listed on The NASDAQ Global Market, as reported by such trading market on which the Common Stock is traded) for each trading day over the 90-trading day period preceding such determination; and (ii) “Average Weekly Volume” is calculated by multiplying the Average Daily Volume by the number of trading days in the calendar week preceding the proposed sale or transfer of Covered Securities.

 

5.            Standstill Provisions.

 

5.1            Agreement to Standstill.  Shareholder agrees that it will not, without the prior written consent of the Company: (a) take any action that would result in Shareholder becoming an “Acquiring Person” under the Company’s Tax Benefit Preservation Plan dated as of May 26, 2010 (as more fully defined in such plan, generally a Person who acquires ownership of 4.90% or more of the outstanding shares of Common Stock of the Company); (b) acquire, offer to acquire, propose (whether publicly or otherwise) to acquire, announce any intention to effect or cause or participate in or in any way assist or encourage any other person to effect or

15

 

seek, offer or propose (whether publicly or otherwise) to acquire or agree to acquire, directly or indirectly, by purchase or otherwise, any assets of the Company or any subsidiary or division thereof or of any successor to or person in control of the Company; (c) initiate or participate in (i) any tender or exchange offer, merger or other business combination involving the Company or any of its Affiliates; (ii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company or any of its Affiliates; or (iii) any "solicitation" of "proxies" (as such terms are used in the proxy rules of the SEC) or consents to vote any voting securities of the Company or any of its Affiliates; (d) form, join or in any way participate in a "group" as defined in Section 13(d)(3) of the Exchange Act in connection with any of the foregoing; (e) otherwise act, alone or in concert with others, with the intent to seek to control or influence the management, Board of Directors or policies of the Company or any of its Affiliates; (f) take any action which might force the Company to make a public announcement regarding any of the types of matters set forth in clause (b) above; or (g) enter into any discussions or arrangements with any third party with respect to any of the foregoing.

5.2            Expiration of Standstill.  The standstill agreed upon pursuant to this Article 5 shall terminate upon expiration of the Restrictions Period.

 

6.            Miscellaneous.

 

6.1            Successors and Assigns.  Except as otherwise set forth in this Agreement, the rights under this Agreement may not be assigned by Shareholder without the prior written consent of the Company; provided, however, that Shareholder may assign its rights and obligations under this Agreement to any permitted assignee of the Convertible Note or the Warrant, in each case in accordance with the terms thereof.  The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

 

6.2            Governing Law.  All issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

 

6.3            Counterparts; Facsimile. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  This Agreement may also be executed and delivered by facsimile signature and in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

6.4            Titles and Subtitles.  The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

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6.5            Notices.  All notices, requests, and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given, delivered and received (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) Business Day after the business day of deposit with a nationally recognized overnight courier, specifying next-day delivery, with written verification of receipt.  All communications shall be sent to the respective parties at their addresses as set forth on Schedule A hereto, or to the principal office of the Company and to the attention of the Chief Legal Officer, in the case of the Company, or to such email address, facsimile number, or address as subsequently modified by written notice given in accordance with this Section 6.5.

 

6.6            Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the other Parties; provided that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party.  No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

 

6.7            Severability.  In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

 

6.8            Entire Agreement.  This Agreement (including any Schedules and Exhibits hereto) constitutes the full and entire understanding and agreement among the Parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the Parties is expressly canceled.

 

6.9            Dispute Resolution; Forum.  The Parties hereby agree that any dispute which may arise between them arising out of or in connection with this Agreement shall be resolved in accordance with the dispute resolution provisions set forth in Section 7.6 of the Membership Interest Purchase Agreement.

 

6.10            Delays or Omissions.  No delay or omission to exercise any right, power, or remedy accruing to any Party under this Agreement, upon any breach or default of any other Party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting Party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  All remedies, whether under this Agreement or by law or otherwise afforded to any Party, shall be cumulative and not alternative.

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6.11            Specific Enforcement.  Each Party acknowledges and agrees that the Company will be irreparably damaged in the event any of the provisions of Articles 3, 4 or 5 are not performed by Shareholder in accordance with their specific terms or are otherwise breached.  Accordingly, it is agreed that the Company shall be entitled, in addition to any damages at law, to an injunction to prevent breaches of any such breaches, and to specific enforcement of such Articles and their respective terms and provisions in any action instituted in any court of the United States or any state having subject matter jurisdiction.

[Remainder of Page Intentionally Left Blank; Signature Page and Schedules Follow]

 

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IN WITNESS WHEREOF, the parties have executed this Shareholder Registration Rights Agreement as of the date first written above.

	
 

	
Autobytel Inc.

 

 

	
 

	
By:    /s/ Glenn E. Fuller                   

       Glenn E. Fuller

       Executive Vice President, Chief 

        Legal and Administrative 

        Officer and Secretary

	
 

	
 

	
 

	
 

	
 

	
AutoNationDirect.com, Inc.

 

 

	
 

	
By:    /s/ C. Coleman Edmunds         

             C. Coleman Edmunds

             Assistant Secretary

	
 

	
 

 

 

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SCHEDULE A

	
To the Company:

 

	
 

	
 

	
Autobytel Inc.

1887 MacArthur Blvd., Suite 200

Irvine, California 92612-1400

Attention:  Chief Legal Officer

Telephone: (949) 862-1392

 Fax:  (949) 862-1323

 

	
With a copy (which shall not constitute notice) to:

 

	
 

	
 

	
Drinker Biddle & Reath LLP

105 College Road East

P.O. Box 627

Princeton, NJ 08542-0627

Attention:  James Biehl, Esq.

 Fax:  (609) 799-7000

 

	
To Shareholder:

 

	
 

	
 

	
AutoNationDirect.com, Inc.

c/o AutoNation, Inc.

200 SW 1st Avenue

Suite 1400

Fort Lauderdale, Florida  33301

Attention:   Jonathan P. Ferrando

      Coleman Edmunds, Esq.

Fax:  (954) 769-6527

 

	
With a copy (which shall not constitute notice) to:

 

	
 

	
 

	
Akerman LLP

One Southeast Third Avenue

25th Floor

Miami, FL 33131

Attention:  Jonathan L. Awner, Esq.

Fax:  (305) 374-5095

[SCHEDULE A]Exhibit 10.4

 

 

LOAN AGREEMENT

THIS LOAN AGREEMENT ("Agreement") is made and entered into as of February 26, 2013 by and between AUTOBYTEL INC., a Delaware Corporation ("Borrower"), and UNION BANK, N.A., a national banking association ("Bank").

SECTION 1. THE CREDIT

1.1            CREDIT FACILITIES

1.1.1                          The Revolving Loan.  Bank will loan to Borrower an amount not to exceed Eight Million Dollars ($8,000,000) outstanding in the aggregate at any one time (the "Revolving Loan").  The proceeds of the Revolving Loan shall be used to finance working capital, capital expenditures, Permitted Acquisitions (as defined below), Permitted Investments (as defined below), shareholder buybacks, and other general corporate purposes.  Borrower may borrow, repay and reborrow all or part of the Revolving Loan in accordance with the terms of the Revolving Note (defined below). All borrowings of the Revolving Loan must be made before February 28, 2015 (the Maturity Date”), at which time all unpaid principal and interest of the Revolving Loan shall be due and payable. The Revolving Loan shall be evidenced by Bank’s standard form of commercial promissory note (the "Revolving Note").  Bank shall enter each amount borrowed and repaid in Bank's records and such entries shall be deemed correct.  Omission of Bank to make any such entries shall not discharge Borrower of its obligation to repay in full with interest all amounts borrowed.

1.1.1.1   The Standby L/C Sublimit.  As a sublimit under the Revolving Loan, Bank shall issue, for the account of Borrower, one or more irrevocable standby letters of credit (individually, a “Standby L/C").  The aggregate amount available to be drawn under all Standby L/Cs and the aggregate amount of unpaid reimbursement obligations under drawn Standby L/Cs shall not exceed Two Million Dollars ($2,000,000) and shall reduce, dollar for dollar, the maximum amount available under the Revolving Loan.  All Standby L/Cs shall be drawn on terms and conditions acceptable to Bank and shall be governed by the terms of (and Borrower agrees to execute) Bank's standard form of standby letter of credit application and reimbursement agreement.  No Standby L/C shall expire more than three hundred and sixty five (365) days from the date of its issuance, and in no event later than February 28, 2016; provided, however, that Borrower is required to post cash collateral for any Standby L/Cs outstanding on or after the Maturity Date.

1.2            Terminology.  The following words and phrases, whether used in their singular or plural form, shall have the meanings set forth below:

“Affiliate” means any entity which Borrower directly or indirectly controls. As used herein, “control” means the possession, directly or indirectly, of power to direct or cause the direction of the management policies of any entity, whether through the ownership of voting securities, by contract or otherwise.

“Change in Control” means:

(i)            A merger or consolidation of Borrower with or into another entity as a result of which transaction the shareholders of Borrower immediately prior to such transaction own less than fifty percent (50%) of the outstanding voting shares of Borrower immediately after such transaction; or

(ii)            A transaction or series of related transactions in which an entity not controlled by Borrower acquires all or substantially all of the assets of Borrower.

“GAAP” means generally accepted accounting principles and practices consistently applied.  Accounting terms used in this Agreement but not otherwise expressly defined have the meanings given them by GAAP.

“L/C” means the Commercial L/Cs or the Standby L/Cs, or both, as the context may require.

“Lien” means any voluntary or involuntary security interest, mortgage, pledge, claim, charge, encumbrance, title retention agreement, or third party interest covering all or any part of the property of Borrower.

“Loan” means all the credit facilities described above.

"Loan Documents" means this Agreement, the Note, and all other documents, instruments and agreements required by Bank and executed in connection with this Agreement, the Note, the Loans, and with all other credit facilities from time to time made available to Borrower by Bank.

"Note" means the Revolving Note described above.

“Permitted Acquisitions” means any acquisition of or investment in the assets or equity interests of a third party having an acquisition price or investment amount of (i) up to One Million Dollars ($1,000,000.00) for any single acquisition, and (ii) up to Two Million Dollars ($2,000,000) in the aggregate for all acquisitions consummated in any fiscal year.

“Permitted Investments” means any investment in the assets, equity interests or debt of a third party in an amount of (i) up to One Million Dollars ($1,000,000.00) for any single investment, and (ii) up to Two Million Dollars ($2,000,000) in the aggregate for all investements made between the closing date of this Agreement and the Maturity Date.

1.3            Prepayment.  The Loan may be prepaid in full or in part but only in accordance with the terms of the Note, and any such prepayment shall be subject to any prepayment fee provided for therein.  In the event of a principal prepayment on any term indebtedness, the amount prepaid shall be applied to the scheduled principal installments due in the reverse order of their maturity on the Loan being prepaid.

1.4            Interest.  The unpaid principal balance of the Loan shall bear interest at the rate or rates provided in the Note.

1.5            Unused Fee.  Starting on the closing date of this Agreement through March 29, 2013 and on the last calendar day of each three-month period thereafter, Borrower shall pay to Bank a fee of one tenth of 1 percent (0.10%) per year on the unused portion of the Revolving Loan for the preceding quarter, computed on the basis of a 365 day year for actual days elapsed.

1.6            Disbursement.  Bank shall disburse the proceeds of the Loan as provided in Bank's standard form Authorization(s) to Disburse executed by Borrower.

1.7            Security.  Prior to any Loan disbursement, Borrower shall execute one or more security agreements on Bank's standard form, and Bank shall file one or more financing statements in the official records of the appropriate state government and/or any other location required by Bank, granting to Bank a first priority security interest in all present and hereafter acquired accounts receivable generated from products or services (related to the sale of leads, referrals, and advertisements) sold or rendered in ordinary course of business, all books and records related to such accounts receivable, and all proceeds of the foregoing.  Any exceptions to Bank's first priority Lien are permitted only as provided in this Agreement. Upon expiration or termination of this Agreement and the Revolving Loan and full payment of all unpaid principal and interest under the Revolving Loan, Bank shall promptly take all actions and execute and file all documents necessary to release its security interest in Borrower’s accounts receivable, books and records, and proceeds thereof.

1.8            Termination at Election of Borrower. Borrower may elect in its sole discretion to terminate this Agreement and the Revolving Loan at any time prior to the Maturity Date upon written notice of termination to Bank. Upon any such termination, all unpaid principal, interest, expenses and fees owing under the Revolving Loan shall be immediately due and payable.

SECTION 2. CONDITIONS PRECEDENT

Bank shall not be obligated to disburse all or any portion of the Loans unless at or prior to the time of each such disbursement, the following conditions have been fulfilled to Bank's satisfaction:

2.1            Compliance.  Borrower shall have performed and complied with all terms and conditions required by this Agreement to be performed or complied with, and shall have executed and delivered to Bank the Note and all other Loan Documents.

2.2            Authorization to Obtain Credit.  Borrower shall have provided Bank with an executed copy of Bank’s form Authorization to Obtain Credit authorizing the execution, delivery and performance of this Agreement and the other Loan Documents.

2.3            Continuing Compliance.  At the time any disbursement is to be made and immediately thereafter, there shall not exist any Event of Default (as hereinafter defined) or any event, condition, or act which with notice or lapse of time, or both, would constitute an Event of Default.

SECTION 3. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants that:

3.1            Business Activity.  Borrower’s principal business is as an internet-based automotive service, sales referral, and marketing company.

3.2            Affiliates and Subsidiaries.  Borrower's Affiliates are as provided on a schedule delivered to Bank on or before the date of this Agreement.

3.3            Organization and Qualification.  Borrower is duly organized and existing under the laws of the state of its organization, is duly qualified and in good standing in any jurisdiction where such qualification is required, and has the power and authority to carry on the business in which it is engaged and/or proposes to engage.

3.4            Power and Authorization.  Borrower has the power and authority to enter into this Agreement and to execute and deliver the Note and all other Loan Documents. This Agreement and all things required by this Agreement and the other Loan Documents have been duly authorized by all requisite action of Borrower.

3.5            Authority to Borrow.  The execution, delivery and performance of this Agreement, the Note and all other Loan Documents are not in contravention of any of the terms of any indenture, agreement or undertaking to which Borrower is a party or by which it or any of its property is bound or affected.

3.6            Compliance with Laws.  Borrower is in material compliance with all applicable laws, rules, ordinances or regulations which materially affect the operations or financial condition of Borrower.

3.7            Title.  Except for assets which may have been disposed of in the ordinary course of business, Borrower has good and marketable title to all property owned by Borrower and reflected in its financial statements delivered to Bank and to all property acquired and owned by Borrower since the date of said financial statements, free and clear of all Liens, except Liens specifically referred to in said financial statements or as permitted by Section 5.1 of this Agreement.

3.8            Financial Statements.  Borrower’s financial statements, including both a balance sheet at September 30, 2012, together with supporting schedules, and an income statement for the nine (9) months ended September 30, 2012, have heretofore been furnished to Bank, are true and complete, and fairly represent Borrower’s financial condition for the period covered thereby.  Since September 30, 2012, there has been no material adverse change in Borrower’s financial condition or operations.

3.9            Litigation.  There is no litigation or proceeding pending or threatened against Borrower or any of its property which is reasonably likely to affect the financial condition, property or business of Borrower in a materially adverse manner or result in liability in excess of Borrower's insurance coverage.

3.10            ERISA.  Borrower’s defined benefit pension plans (as defined in the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), meet, as of the date hereof, the minimum funding standards of Section 302 of ERISA, and no Reportable Event or Prohibited Transaction as defined in ERISA has occurred with respect to any such plan.

3.11            Regulation U.  No action has been taken or is currently planned by Borrower, or any agent acting on its behalf, which would cause this Agreement or the Note to violate Regulation U or any other regulation of the Board of Governors of the Federal Reserve System, or to violate the Securities and Exchange Act of 1934, in each case as in effect now or as the same may hereafter be in effect.  Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock as one of its important activities and, except as may be expressly agreed to and documented between Borrower and Bank, none of the proceeds of the Loan will be used directly or indirectly for such purpose.

3.12            No Event of Default.  Borrower is not now in default in the payment of any of its material obligations, and there exists no Event of Default, and no condition, event or act which with notice or lapse of time, or both, would constitute an Event of Default.

3.13            Continuing Representations and Warranties.  The foregoing representations and warranties shall be considered to have been made again at and as of the date of each and every Loan disbursement and shall be true and correct as of each such date.

SECTION 4. AFFIRMATIVE COVENANTS

Until all sums payable pursuant to this Agreement, the Note and the other Loan Documents have been paid in full, unless Bank otherwise consents in writing, Borrower agrees that:

4.1            Use of Proceeds.  Borrower will use the proceeds of the Loan only as provided in Section 1 above.

4.2            Payment of Obligations.  Borrower will pay and discharge promptly when due all taxes, assessments and other governmental charges and claims levied or imposed upon it or its property, or any part thereof; provided, however, that Borrower shall have the right in good faith to contest any such taxes, assessments, charges or claims and, pending the outcome of such contest, to delay or refuse payment thereof provided that adequately funded reserves are established by it to pay and discharge any such taxes, assessments, charges and claims.

4.3            Maintenance of Existence.  Borrower will maintain and preserve its existence, its material assets, and all material rights, franchises, licenses and other authority necessary for the conduct of its business, and will maintain and preserve its property, equipment and facilities in good order, condition and repair.  Bank may, at reasonable times, visit and inspect any of Borrower’s properties.

4.4            Records.  Borrower will keep and maintain full and accurate accounts and records of its operations in accordance with GAAP and will permit Bank, at Borrower’s expense, to have access thereto, to make examination and photocopies thereof, and to make audits of Borrower’s accounts and records and Bank’s collateral during regular business hours; provided, however, that unless an Event of Default has occurred or is continuing, Bank shall be limited to not more than one such audit in any twelve-month period.

4.5            Information Furnished.  Borrower will furnish to Bank:

(a)            Within forty five (45) days after the close of each fiscal quarter, except for the final quarter of each fiscal year, its unaudited balance sheet as of the close of such fiscal quarter, its unaudited income and expense statement with year-to-date totals and supportive schedules, and its statement of retained earnings for that fiscal quarter all prepared in accordance with GAAP.

(b)            Within one hundred and twenty (120) days after the close of each fiscal year, a copy of its statement of financial condition including at least its balance sheet as of the close of such fiscal year and its income and expense statement, and its retained earnings statement for such fiscal year, examined and prepared on an audited basis by independent certified public accountants selected by Borrower and reasonably satisfactory to Bank, in accordance with GAAP.

(c)            Concurrently with delivery to Bank of the financial statements provided in Section 4.5 (a) and Section 4.5 (b) hereof a certificate of compliance with all covenants under this Agreement executed by Borrower’s chief financial officer or other duly authorized officer in form acceptable to bank. The certificate of compliance will include changes, if any, in Borrower’s Affiliates (including any subsidiaries) and a list of all persons known to 

 

Borrower, based on public filings with the Securities and Exchange Commission, to be the beneficial owner of more than ten percent of the Borrower’s outstanding common stock.

(d)            Within ninety (90) days after the close of each fiscal year, a copy of the internally prepared projections of Borrower for the forthcoming fiscal year;

(e)            Prompt written notice to Bank of any Event of Default or breach under any of the terms or provisions of this Agreement or any other Loan Document, any litigation which would have a material adverse effect on Borrower's financial condition, and any other matter which has resulted in, or is likely to result in, a material adverse change in Borrower’s financial condition or operations.

(f)            Prompt written notice to Bank of any change in Borrower's officers, board members, and other senior management, Borrower's name or state of organization, and the location of Borrower's assets.

(g)            Within fifteen (15) days after Borrower knows or has reason to know that any Reportable Event or Prohibited Transaction (as defined in ERISA) has occurred with respect to any defined benefit pension plan of Borrower, a statement of an authorized officer of Borrower describing such event or condition and the action, if any, which Borrower proposes to take with respect thereto.

(h)            Such other financial statements and information as Bank may reasonably request from time to time.

4.6            Net Liquidity.  Borrower will, at all times, maintain a minimum Net Liquidity of at least Eight Million Dollars ($8,000,000).   "Net Liquidity" to be defined as cash and cash equivalents with a rating of at least A1 or P1 maturing in less than 90 days minus any dollar borrowings under the Revolving Loan for the same applicable period. For purposes of calculating this covenant, all restricted cash is considered excluded from the definition of Liquidity.

4.7            Profitability.  Borrower will, at the end of each fiscal quarter, maintain a net profit after tax of at least one dollar ($1.00).

4.8            EBITDA.  Borrower will, at the end of each fiscal quarter, maintain quarterly EBITDA of at least the following :

                                          Minimum Amount                                               Quarter

    Five Hundred Thousand Dollars ($500,000)                        ending March 31st

    Six Hundred Thousand Dollars ($600,000)                                                ending June 30th

One Million Two Hundred Thousand Dollars ($1,200,000)                                   ending September 30th

   One Million Dollars ($1,000,000)                                                                                                            ending December 31st

		“EBITDA” to be defined as earnings before interest, taxes, depreciation, amortization, non cash share-based compensation, and other non-cash charges expensed for the applicable period.

4.9            Tangible Net Worth.  Borrower will, at all times, maintain Tangible Net Worth of not less than Nine Million Dollars ($9,000,0000) from the day of closing this Agreement to December 30, 2013; increasing to Ten Million Dollars ($10,000,000) on December 31, 2013 and staying at that level for each measurable period thereafter.

“Tangible Net Worth” shall be defined as the net worth of the Borrower (as defined by GAAP) increased by any indebtedness subordinated to Bank and decreased by any patents, licenses, trademarks, trade names, amortizing loan fees, goodwill and other similar intangible assets, organizational expenses, covenants not to compete, and any monies due from affiliates (including officers, shareholders, employees, and directors).

4.10            Balance.  Borrower shall maintain its major depository accounts with Bank until all obligations of Borrower to Bank under the Loan Documents have been paid in full.

4.11            Insurance.  Borrower will keep all of its insurable property, whether real, personal or mixed, adequately insured by good and responsible companies against fire and such other risks for damages to persons and property as are customarily insured against by companies conducting similar business with respect to like properties. Borrower will maintain adequate worker's compensation insurance for Borrower’s employees.

4.12            Additional Requirements.  Upon Bank’s demand, Borrower will promptly take such further action and execute all such additional documents and instruments in connection with this Agreement and the other Loan Documents as Bank reasonably deems necessary, and promptly supply Bank with such other information concerning its affairs as Bank may reasonably request from time to time.

4.13            Litigation and Attorneys' Fees.  Upon Bank’s demand, Borrower will promptly pay to Bank reasonable attorneys' fees, including the reasonable estimate of the allocated costs and expenses of in-house legal counsel and staff, and all costs and other expenses paid or incurred by Bank in collecting, modifying or compromising the Loan or in enforcing or exercising its rights or remedies created by, connected with or provided for in this Agreement and the other Loan Documents.  If any judicial action, arbitration or other proceeding is commenced, only the prevailing party shall be entitled to attorneys' fees and court costs.

4.14            Bank Expenses.  Upon Bank’s request, Borrower will pay or reimburse Bank for all costs, expenses and fees incurred by Bank in preparing and documenting any amendments and modifications to any Loan Documents, including but not limited to all filing and recording fees, costs of appraisals, insurance and attorneys' fees, including the reasonable estimate of the allocated costs and expenses of in-house legal counsel and staff.

 

SECTION 5. NEGATIVE COVENANTS

Until all sums payable pursuant to this Agreement, the Note and the other Loan Documents have been paid in full, unless Bank otherwise consents in writing, Borrower agrees that:

5.1                  Liens.  Borrower will not create, assume or suffer to exist any Lien on any of its property, whether real, personal or mixed, now owned or hereafter acquired, or upon the income or profits thereof, except (a) Liens in favor of Bank, (b) Liens for taxes not delinquent and taxes and other items being contested in good faith, (c) minor encumbrances and easements on real property which do not affect its market value, (d) existing Liens on Borrower's personal property, (e) future purchase money security interests encumbering only the personal property purchased; (f) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other similar Liens arising in the ordinary course of business which are not delinquent or remain payable without penalty; (g) Liens incidental to the conduct of business or the ownership of properties and assets (including Liens in connection with worker’s compensation, unemployment insurance and other like laws and attorneys’ liens); (h) Liens to secure the performance of bids, tenders or trade contracts or to secure statutory obligations, surety or appeal bonds; (i) Liens of like general nature incurred in the ordinary course of business and not in connection with the borrowing of money; (j) Liens for borrowed money from any entity other than Bank in an aggregate amount not to exceed One Million Dollars ($1,000,000), and (k) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; and (l) Liens of or resulting from any judgment or award the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which Borrower shall at any time in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution pending such appeal or proceeding for review shall have been secured and in an amount, at any time, not to exceed more than Five Million Dollars ($5,000,000).

5.2            Borrowings.  Borrower will not sell, discount or otherwise transfer any account receivable (other than accounts receivable in connection with collection, dispute or settlement of such accounts receivable) or any note, draft or other evidence of indebtedness payable to Borrower, except to Bank or except to a financial institution at face value for deposit or collection purposes only, and without any fees other than the financial institution’s normal fees for such services.  Borrower will not borrow any money, become contingently liable to borrow money, or enter any agreement to directly or indirectly obtain borrowed money, except :  (i) pursuant to agreements with Bank; (ii) transactions resulting in Liens permitted in Sections 5.1 (d), (e) and (h); (iii) borrowings under Section 5.1 (j) in an amount not to exceed One Million Dollars ($1,000,000); (iv) the existing Five Million Dollars ($5,000,000) in convertible subordinated promissory notes to the former owners of Autotropolis, Inc. and Cyber Ventures, Inc. maturing on September 30, 2015; and (v) trade credit or other borrowings incurred in the normal course of business.

5.3            Sale of Assets, Liquidation or Merger.  Borrower will not liquidate or dissolve or enter into any transaction resulting in a Change in Control.

5.4            Loans, Advances and Guaranties.  Borrower will not, except in the ordinary course of business as currently conducted or between Borrower and its wholly owned subsidiaries, make any loans or advances, become a guarantor or surety, or pledge its credit or properties in excess of One Million Dollars ($1,000,000) in the aggregate.

5.5            Investments.  Borrower will not purchase the debt or equity of another entity except for (i) savings accounts and certificates of deposit of Bank, direct U.S. Government obligations, commercial paper issued by corporations with the top ratings of Moody's or Standard & Poor's, provided that all such permitted investments shall mature within one year of purchase; and (ii) Permitted Investments.

5.6            Payment of Dividends.  Except for dividends, distributions or exchanges of Rights, Series A Junior Participating Preferred Stock or common stock in accordance with the Company’s Tax Benefit Preservation Plan, Borrower will not declare or pay any dividends, other than dividends payable solely in its own common stock, or authorize or make any other distribution with respect to any of its stock now or hereafter outstanding which exceeds in the aggregate for any fiscal year more than twenty five percent (25%) of Borrower's net profit after taxes.

5.7            Redemption of Stock.  Except for redemption of rights or Series A Junior Participating Preferred Stock in accordance with the Company’s Tax Benefit Preservation Plan, Borrower will not redeem or retire any share of its capital stock for value in excess of Three Million Dollars ($3,000,000) in any one fiscal year.

5.8            Affiliate Transactions.  Borrower will not transfer any property to any Affiliate, except for value received in the normal course of business and for an amount, including any management or service fee(s), as would be conducted and charged with an unrelated or unaffiliated entity.  Borrower will not pay any management fee or fee for services to any Affiliate, other than as would be conducted and charged with an unrelated or unaffiliated entity, without Bank’s prior written consent.

5.9            Capital Expenditures.  Borrower will not purchase fixed assets in the form of property, plant, equipment or fixtures in excess of Two Million Five Hundred Thousand Dollars ($2,500,000) in any single fiscal year of Borrower.  For purposes of calculating such expenditures to determine compliance with the above limitation, the amount shall be that represented as purchase of such items on the Consolidated Statement of Cash Flows of the Borrower's fiscal year-end audited financial statement.

5.10            Lease Obligations.  Borrower will not incur total lease obligations as lessee which would result in aggregate lease payments for any fiscal year exceeding Three Million Dollars ($3,000,000).  Each such lease shall be of equipment or real property needed by Borrower in the ordinary course of its business.

 

SECTION 6. EVENTS OF DEFAULT

The occurrence of any of the following events ("Events of Default") shall terminate any obligation of Bank to make or continue the Loan and shall automatically, unless otherwise provided under the Note, make all sums of interest and principal and any other amounts owing under the Loan immediately due and payable, without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor, or any other notices or demands:

6.1            Borrower shall default in the due and punctual payment of the principal of or the interest on the Note or any of the Loan Documents and such default shall continue for a period of three (3) business days; provided, however, that no grace period shall apply to any payment default at maturity, following acceleration or in connection with a prepayment hereunder.

6.2            Other than a payment default under Section 6.1, Borrower shall default in any material respect in the due performance or observance of any covenant or condition of the Loan Documents and such default shall not have been cured by Borrower before the expiration of fifteen (15) days after the date of the default.

6.3            There shall have occurred a Change in Control.

6.4            The insolvency of Borrower or the failure of Borrower to generally to pay Borrower’s debts as such debts become due, subject to applicable grace or cure periods.

6.5            The commencement by Borrower of any voluntary proceeding under any laws relating to bankruptcy, insolvency, reorganization, dissolution, general assignment for the benefit of creditors, debt adjustment, debtor relief, or appointment of a receiver, trustee, custodian or similar official for all or substantially all of Borrower’s property.

6.6            The commencement against Borrower of any involuntary proceeding under any laws relating to bankruptcy, insolvency, reorganization, general assignment for the benefit of creditors, debt adjustment, debtor relief, or appointment of a receiver, trustee, custodian or similar official for all or substantially all of Borrower’s property and any such proceeding is not dismissed within ninety (90) days after commencement.

6.7            The failure by Borrower to comply in any respect with any order, judgment, injunction, decree, writ or demand of any court or other public authority where such failure would result in a material adverse change in, or a material adverse effect upon, the operations, assets, performance, business, properties, or condition (financial or otherwise) of Borrower such that Borrower’s ability to perform under any Loan Document) is materially impaired.

6.8            The default by Borrower or any Guarantor for any obligation exceeding One Million Dollars ($1,000,000) concerning the borrowing of money, which default enables the obligee to accelerate the entire amount due.

SECTION 7. GENERAL PROVISIONS

7.1            Additional Remedies.  The rights, powers and remedies given to Bank hereunder shall be cumulative and not alternative and shall be in addition to all rights, powers and remedies given to Bank by law against Borrower or any other person or entity including but not limited to Bank's rights of setoff and banker's lien.

7.2            Nonwaiver.  Any forbearance or failure or delay by Bank in exercising any right, power or remedy hereunder shall not be deemed a waiver thereof and any single or partial exercise of any right, power or remedy shall not preclude the further exercise thereof.  No waiver shall be effective unless it is in writing and signed by an officer of Bank.

7.3            Inurement.  The benefits of this Agreement and the other Loan Documents shall inure to the successors and assigns of Bank and the permitted successors and assigns of Borrower, but any attempted assignment by Borrower without Bank's prior written consent shall be null and void.

7.4            Applicable Law.  This Agreement and the other Loan Documents shall be governed by and construed according to the laws of the State of California.

7.5            Severability.  Should any one or more provisions of this Agreement or any other Loan Document be determined to be illegal or unenforceable, all other provisions of such document shall nevertheless be effective.

7.6            Controlling Document.  In the event of any inconsistency between the terms of this Agreement and any other Loan Document, the terms of the other Loan Document shall prevail.

7.7            USA Patriot Act Notice.  Bank is subject to the USA Patriot Act and hereby notifies Borrower that pursuant to the requirements of that Act, Bank is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow Bank to identify Borrower in accordance with that Act.

7.8            Construction.  The section and subsection headings herein are for convenient reference only and shall not limit or otherwise affect the interpretation of this Agreement.

7.9            Amendments.  This Agreement may be amended only in writing signed by all parties hereto.

7.10            Counterparts.  Borrower and Bank may execute one or more counterparts to this Agreement, each of which shall be deemed an original, but all such counterparts when taken together, shall constitute one and the same agreement.

7.11            Notices.  Any notices or other communications provided for or allowed hereunder shall be effective only when given by one of the following methods and addressed to the parties at their respective addresses and shall be considered to have been validly given (a) upon delivery, if delivered personally, (b) upon receipt, if mailed, first class postage prepaid, with the United States Postal Service, (c) on the next business day, if sent by overnight courier service of recognized standing, or (d) upon telephoned confirmation of receipt, if telecopied or e-mailed.  The addresses to which notices or demands are to be given may be changed from time to time by notice delivered as provided above.

7.12            Integration Clause.  Except for the other Loan Documents, this Agreement constitutes the entire agreement between Bank and Borrower regarding the Loan, and all prior oral or written communications between Borrower and Bank shall be of no further effect or evidentiary value.

THIS AGREEMENT is executed on behalf of the parties by their duly authorized representative(s) as of the date first above written.

	
AUTOBYTEL INC.

 

By:      /s/ Curtis DeWalt                    

      Curtis DeWalt

      Chief Financial Officer

 

 

By:   /s/ Glenn E. Fuller               

      Glenn E. Fuller

      Executive Vice President, Chief

      Legal and Administrative Officer

      and Secretary

 

Address:

 

18872 MacArthur Blvd., Suite 200

Irvine California  92612

 

Telephone: 949-225-4500

Fax :          949-797-0450

	
 

 

 

 

UNION BANK, N.A.

 

By:   /s/ Gregory Dubnansky                                           

      Gregory Dubnansky

      Vice President

 

Address:

 

18300 Von Karman Avenue, Suite 310

Irvine, California  92612

 

Telephone:  949-553-6879

Fax :           949-553-7112

 

 

FIRST AMENDMENT

TO LOAN AGREEMENT

THIS FIRST AMENDMENT TO THE LOAN AGREEMENT ("First Amendment"), dated as of September 10, 2013, is made and entered into by and between AUTOBYTEL, INC., a Delaware corporation ("Borrower"), and UNION BANK, N.A., a national banking association ("Bank").

RECITALS:

A.        Borrower and Bank are parties to that certain Loan Agreement dated as of February 26, 2013 (the "Agreement"), pursuant to which Bank agreed to extend credit to Borrower in the form of an Eight Million Dollar ($8,000,000) revolving line of credit (the "Facility").

B.        Borrower has requested that Bank agree to amend the Agreement in certain respects and Bank is willing to so agree to amend the Agreement, subject, however, to the terms and conditions of this First Amendment.

AGREEMENT:

In consideration of the above recitals and of the mutual covenants and conditions contained herein, Borrower and Bank hereby agree as follows:

1.        Defined Terms.  Initially capitalized terms used herein which are not otherwise defined shall have the meanings assigned thereto in the Agreement.

2.        Amendment to the Agreement.

The definition of "Permitted Investments" is deleted in its entirety and replaced with the following:

"Permitted Investments" means any investment in the assets, equity interests, or debt of a third party in an amount not to exceed (i) Five Million Dollars ($5,000,000) for an equity investment in AutoWeb.com, ii) up to One Million Dollars ($1,000,000)for any single investment, and (iii) up to Two Million Dollars ($2,000,000) in the aggregate for all investments made between February 26, 201 3 and the Maturity Date (excluding AutoWeb.com)".

3.        Effectiveness of this First Amendment.  This First Amendment shall become effective as of the date hereof when, and only when, Bank shall have received all of the following, in form and substance satisfactory to Bank:

(a)        A counterpart of this First Amendment, duly executed by Borrower;

(b)        Such other documents, instruments or agreements as Bank may reasonably deem necessary in order to effect fully the purposes of this First Amendment.

4.        Ratification.

(a)        Except as specifically amended hereinabove, the Agreement shall remain in full force and effect and is hereby ratified and confirmed; and

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(b)        Upon the effectiveness of this First Amendment, each reference in the Agreement to "this Agreement", "hereunder", "herein", "hereof' or words of like import referring to the Agreement shall mean and be a reference to the Agreement as amended by this First Amendment,

5.      Representations and Warranties.  Borrower represents and warrants as follows:

(a)        Each of the representations and warranties contained in Section 3 of the Agreement, as amended hereby, is hereby reaffirmed as of the date hereof, each as if set forth herein;

(b)        The execution, delivery and performance of this First Amendment are within Borrower's corporate powers, have been duly authorized by all necessary corporate action, have received all necessary approvals, if any, and do not contravene any law or any contractual restriction binding on Borrower; and

(c)        Except as previously disclosed to Bank, no event has occurred and is continuing or would result from this First Amendment which constitutes an Event of Default under the Agreement, or would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

6.        Governing Law.  This First Amendment shall be deemed a contract under and subject to, and shall be construed for all purposes and in accordance with, the laws of the State of California.

7.        Counterparts.  This First Amendment may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

WITNESS the due execution hereof as of the date first above written.

"Borrower"

AUTOBYTEL, INC.

By:  /s/ Curtis DeWalt                                                                                                           

 Curtis DeWalt

      Senior Vice President and 

       Chief Financial Officer

By:  /s/ Glenn E. Fuller                                                                                                         

Glenn E. Fuller

     Executive Vice President, 

      Chief Legal and Administrative 

      Officer and Secretary

"Bank"

UNION BANK, N.A.

By:   /s/ Gregory Dubnansky                                                                      

       Gregory Dubnansky

        Vice President

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SECOND AMENDMENT

 TO LOAN AGREEMENT

THIS SECOND AMENDMENT TO THE LOAN AGREEMENT (“Second Amendment”), dated as of January 13, 2014, is made and entered into by and between AUTOBYTEL INC., a Delaware corporation (“Borrower”), and UNION BANK, N.A., a national banking association (“Bank”).

RECITALS:

A.        Borrower and Bank are parties to that certain Loan Agreement dated as of February 26, 2013, that certain Consent dated July 29, 2013, and that certain First Amendment dated September 10, 2013 (collectively the “Agreement”), pursuant to which Bank agreed to extend credit to Borrower in the form of an Eight Million Dollar ($8,000,000) revolving line of credit.

B.        Borrower has requested that Bank agree to amend the Agreement in certain respects including, but not limited to, (a) the approval of Borrower's acquisition of AutoNation's leads generation business, (b) the addition of a new Nine Million Dollar ($9,000,000) Term Loan, and (c) the amendment of certain financial covenants. Bank is willing to amend the Agreement, subject, however, to the terms and conditions of this Second Amendment.

C.        Borrower has informed Bank that it intends to purchase AutoNation’s leads generation business (the “Acquisition”) for Fourteen Million Dollars ($14,000,000) in accordance with the terms of the letter of intent dated November 25, 2013 (“LOI”).  Borrower has requested that Bank consent to this Acquisition not withstanding any provisions to the contrary contained in the Agreement.

AGREEMENT:

In consideration of the above recitals and of the mutual covenants and conditions contained herein, Borrower and Bank hereby agree as follows:

1.        Defined Terms.  Initially capitalized terms used herein which are not otherwise defined shall have the meanings assigned thereto in the Agreement.

 

2.        Amendments to the Agreement.

 

(a)        Notwithstanding any provisions to the contrary in the Agreement, Bank hereby consents to the Acquisition, provided that (a) the purchase price for such acquisition does not exceed Fourteen Million Dollars ($14,000,000), (b) such Acquisition is consummated in accordance with the LOI, the form and substance of which shall be acceptable to Bank, (c) the Acquisition closes within the next ninety (90) days, and (d) both before and after giving effect to such Acquisition, no default or Event of Default shall exist under the Agreement after giving effect to the forgoing consent.

(b)        Section 1.1.1 of the Agreement, which relates to the Revolving Loan, is hereby amended by substituting the new maturity date of “March 31, 2017” for the existing maturity date of “February 28, 2015 appearing in line eight thereof.

(c)        Section 1.1 .1.1 of the Agreement, which relates to the Standby L/C Sublimit, is hereby amended by substituting the new maturity date of “March 31, 2018” for the existing maturity date of “February 28, 2016” appearing in line twelve thereof.

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(d)                Section 1.1 of the Agreement, which related to the Credit Facilities, is hereby amended by adding a new Section, 1.1.2, for the new term loan, which shall read as follows:

“1.1.2                    Term Loan.  Pursuant to the terms and conditions of the Second Amendment, Bank shall make a new term loan (“Term Loan”) to Borrower in one disbursement on the closing date of this Second Amendment in the aggregate principal amount of Nine Million Dollars ($9,000,000).  Proceeds of this Term Loan are to be used to finance a portion of the acquisition of AutoNation's leads generation business.  Borrower's obligation to repay the principal amount of this Term Loan, together with accrued interest thereon, shall be evidenced by a promissory note (“Term Note”), issued by Borrower in favor of Bank on the standard form used by Bank to evidence its commercial loans.  This Term Note shall provide for quarterly payments of principal and interest as set forth therein and shall be fully repaid by no later than December 31, 2017.”

                    (e)        Section 1.7 of the Agreement, which relates to the Security Agreement, is hereby deleted in its entirety and replaced with the following:

 

        “1.7            Security.  Prior to the making of any advance under the Revolving Loan or Term Loan, Borrower shall execute one or more security agreements, each on Bank's standard form, granting to Bank a first priority security interest in such of Borrower's personal property (the “Collateral”) as is described in such security agreement or security agreements.  Bank is hereby authorized to file one or more financing statements covering all or any portion of the Collateral in the official records of the appropriate state government and/or any other location required by Bank. Any exceptions to Bank's first priority security interest in the Collateral are permitted only as provided in this Agreement.  At Bank's request, Borrower will use commercially reasonable efforts to obtain executed landlord's and mortgagee's waivers, each on Bank's form, covering all of Borrower's fixed assets located on leased or encumbered real property.  Upon the expiration or termination of this Agreement, along with full payment of all unpaid principal, interest and fees under the Loans thereunder, Bank shall promptly take all actions to execute and file documents necessary to release its security in the assets of the Borrower.”

 

       (f)        Section 4.6 of the Agreement, which relates to Net Liquidity, is hereby deleted in its entirety and replaced with the following:

 

“4.6            Minimum Liquidity.  Borrower will, at all times, maintain a minimum Liquidity of at least the following:

		(i)	Eight Million Dollars ($8,000,000) from the day of the closing of this Amendment through June 30, 2014, increasing to

		(ii)	
Nine Million Dollars ($9,000,000) from July 1, 2014 through December 31, 2014, increasing to

 

		(iii)	Ten Million Dollars ($10,000,000) on January 1, 2015 and for every period thereafter.

“Liquidity” to be defined as cash and equivalents with a S&P or Moody's rating of at least A1 or PI and maturing in less than 90 days from the date of determination.  All restricted cash shall be excluded from this Liquidity calculation.”

(g)        Section 4.7 of the Agreement, which relates to Profitability, is hereby deleted in its entirety and replaced with the following:

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“4.7            Minimum Annual EBITDA.  Borrower will, at the end of each fiscal year, maintain a minimum EBITDA of at least Five Million Three Hundred Thousand Dollars ($5,300,000).

“EBITDA” to be defined as earnings before interest, taxes, depreciation, amortization, non cash share-based compensation, and other non-cash charges expensed for the applicable period.”

(h)        Section 4.8 of the Agreement, which relates to EBITDA, is hereby deleted in its entirety and replaced with the following:

“4.8                Quarterly EBITDA.  Borrower will, at the end of each fiscal quarter, maintain a minimum quarterly EBITDA of at least the following:

	
 

	
Minimum Amount

	
Quarter

	
Seven Hundred Fifty Thousand Dollars ($750,000)

	
ending March 31st

	
One Million Dollars ($1,000,000)

	
ending June 30th

	
One Million Five Hundred Thousand Dollars ($1,500,000)

	
ending Sept 30th

	
One Million Two Hundred Fifty Thousand Dollars (1,250,000)

	
ending December 31st

(i)        Section 4.9 of the Agreement, which relates to Tangible Net Worth, is hereby deleted in its entirety and replaced with the following:

		“4.9	Tangible Net Worth.  Borrower will, at all times, maintain a Tangible Net Worth of not less than 75% of the combined balance sheet Tangible Net Worth at the time of the Acquisition's closing and staying at that level for each measurable period thereafter

“Tangible Net Worth” shall be defined as the net worth of the Borrower (as defined by GAAP) increased by any indebtedness subordinated to Bank and decreased by any patents, licenses, trademarks, trade names, amortizing loan fees, goodwill and other similar intangible assets, organizational expenses, covenants not to compete, and any monies due from affiliates (including officers, shareholders, employees, and directors).”

(j)        Section 5.2 of the Agreement, which relates to Borrowings, is hereby amended by adding subset iv) to the end of the paragraph as follows:

“, and vi) the One Million Dollars ($1,000,000) seller note issued in conjunction with the acquisition of AutoNation's lead generation business.”

3.          Effectiveness of this Second Amendment.  This Second Amendment shall become effective as of the date hereof when, and only when, Bank shall have received all of the following, in form and substance satisfactory to Bank:

(a)        A counterpart of this Second Amendment, duly executed by Borrower;

(b)        A replacement Revolving Note and new Term Note; and

(c)        Such other documents, instruments or agreements as Bank may reasonably deem necessary in order to effect fully the purposes of this Second Amendment.

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4.        Ratification.

(a)        Except as specifically amended herein above, the Agreement shall remain in full force and effect and is hereby ratified and confirmed; and

 

(b)        Upon the effectiveness of this Second Amendment, each reference in the Agreement to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to the Agreement shall mean and be a reference to the Agreement as amended by this Second Amendment.

5.          Representations and Warranties.  Borrower represents and warrants as follows:

(a)        Each of the representations and warranties contained in Section 3 of the Agreement, as amended hereby, is hereby reaffirmed as of the date hereof, each as if set forth herein;

(b)        The execution, delivery and performance of this Second Amendment are within Borrower's corporate powers, have been duly authorized by all necessary corporate action, have received all necessary approvals, if any, and do not contravene any law or any contractual restriction binding on Borrower; and

(c)        Except as previously disclosed to Bank, no event has occurred and is continuing or would result from this Second Amendment which constitutes an Event of Default under the Agreement, or would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

6.           Governing Law.  This Second Amendment shall be deemed a contract under and subject to, and shall be construed for all purposes and in accordance with, the laws of the State of California.

7.           Counterparts.  This Second Amendment may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

WITNESS the due execution hereof as of the date first above written

“Borrower”

AUTOBYTEL INC.

By:             /s/ Curtis DeWalt                       

Curtis DeWalt

Chief Financial Officer

By:             /s/ Glenn E. Fuller                     

        Glenn E. Fuller

          Executive Vice President, Chief Legal

          and Administrative Officer and Secretary

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“Bank”

UNION BANK, N.A.

By:       /s/ Gregory Dubnansky                        

Gregory Dubnansky

    Vice President

 

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                                          SECURITY AGREEMENT

This Security Agreement ("Agreement") is executed at Irvine, California on January 13, 2014 by Autobytel Inc. a Delaware corporation (herein called "Debtor").

As security for the payment and performance of all of Debtor's obligations to UNION BANK, N.A., (herein called "Bank"), regardless of the manner in which or the time at which such obligations arose or shall arise, whether direct or indirect, alone or with others, or absolute or contingent, Debtor hereby grants a continuing security interest in, and assigns and transfers to Bank, the following personal property, whether or not delivered to or in the possession or control of Bank or its agents, and whether now or hereafter owned or in existence, and all proceeds thereof (hereinafter called the "Collateral"):

All present and hereafter acquired personal property including but not limited to all accounts, chattel paper, Swap Contract (as defined in the security agreement), instruments, contract rights, general intangibles, goods, equipment, inventory, documents, certificates of title, deposit accounts, returned or repossessed goods, fixtures, commercial tort claims, insurance claims, rights and policies, letter of credit rights, investment property, supporting obligations, and the proceeds, products, parts, accessories, attachments, accessions, replacements, substitutions, additions, and improvements of or to each of the foregoing.

Entities executing this Security Agreement as Debtor agree not to change their state of organization, principal place of business (if a general partnership or other nonregistered entity) or name, as identified below, without Bank's prior written consent::

LEGAL NAME OF DEBTOR                             STATE OF ORGANIZATION/PRINCIPAL PLACE OF BUSINESS

Autobytel Inc.                                                                                        State of Delaware

 

AGREEMENT

1.            The term "credit" or "indebtedness" as used throughout this Agreement means any indebtedness to Bank under that certain Promissory Note dated as of January 13, 2014 (“Note”), executed by Debtor in favor of Bank. Credit may be granted at the request of any one Debtor without further authorization by or notice to any other Debtor. Collateral shall be security for all nonconsumer indebtedness of Debtor to Bank in accordance with the terms and conditions herein.

2.            Debtor will: (a) pay when due all indebtedness to Bank; (b) execute such other documents and do such other acts and things as Bank may from time to time require to establish and maintain a valid perfected security interest in Collateral, including payment of all costs and fees in connection with any of the foregoing when deemed necessary by Bank; (c) furnish Bank such information concerning Debtor and Collateral as Bank may from time to time request, including but not limited to current financial statements in accordance with that certain Loan Agreement dated February 26, 2013 (all Amendments and the Loan Agreement together called the “Loan Agreement”); (d) keep Collateral separate and identifiable where such Collateral is currently located and permit Bank and its representatives to inspect Collateral and/or records pertaining thereto from time to time during normal business hours; (e) not sell, assign or create or permit to exist any lien on or security interest in Collateral in favor of anyone other than Bank unless Bank consents thereto in writing and at Debtor's expense upon Bank's request remove any unauthorized lien or security interest and defend any claim affecting the Collateral; (f) pay all charges against Collateral prior to delinquency including but not limited to taxes, assessments, encumbrances, insurance and diverse claims, and upon Debtor's failure to do so Bank may pay any such charge as it deems necessary and add the amount paid to the indebtedness of Debtor hereunder; (g) protect, defend and maintain the Collateral and the perfected security interest of Bank and initiate, commence and maintain any action or proceeding to protect the Collateral; (h) reimburse Bank for any expenses, including but not limited to reasonable attorneys' fees and expenses (including the allocated costs of Bank's in-house counsel and legal staff)

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incurred by Bank in seeking to protect, collect or enforce any rights in Collateral; (i) provide insurance in accordance with the Loan Agreement; (j) intentionally omitted; (k) perform all of the obligations of the Debtor under the Collateral and save Bank harmless from the consequence of any failure to do so; and (l) at its own expense, upon request of Bank, notify any parties obligated to Debtor on any Collateral to make payment to Bank and Debtor hereby irrevocably grants Bank power of attorney to make said notifications and collections. Debtor hereby appoints Bank the true and lawful attorney of Debtor and authorizes Bank to perform any and all acts which Bank in good faith deems necessary for the protection and preservation of Collateral or its value or Bank's perfected security interest therein, including transferring any Collateral into its own name and receiving the income thereon as additional security hereunder. Bank does not assume any of the obligations arising under the Collateral.

3.            Debtor warrants that: (a) it is and will be the lawful owner of all Collateral free of all claims, liens, encumbrances and setoffs whatsoever, other than the security interest granted pursuant hereto; (b) it has the capacity to grant a security interest in Collateral to Bank; (c) all information furnished by Debtor to Bank heretofore or hereafter, whether oral or written, is and will be correct and true as of the date given; and (d) if Debtor is an entity, the execution, delivery and performance hereof are within its powers and have been duly authorized.

4.            The term default shall have the same meaning as such term is defined in the Note.

5.            Whenever a default exists, Bank, at its option, may: (a) without notice accelerate the maturity of any part or all of the indebtedness and terminate any agreement for the granting of further credit to Debtor; (b) sell, lease or otherwise dispose of Collateral at public or private sale; (c) transfer any Collateral into its own name or that of its nominee; (d) retain Collateral in satisfaction of obligations secured hereby, with notice of such retention sent to Debtor as required by law; (e) notify any parties obligated on any Collateral consisting of accounts, instruments, chattel paper, choses in action or the like to make payment to Bank and enforce collection of any Collateral; (f) file any action or proceeding which Bank may deem necessary or appropriate to protect and preserve the right, title and interest of the Bank in the Collateral; (g) require Debtor to assemble and deliver any Collateral to Bank at a reasonably convenient place designated by Bank; (h) apply all sums received or collected from or on account of Collateral, including the proceeds of any sale thereof, to the payment of the costs and expenses incurred in preserving and enforcing rights of Bank, including reasonable attorneys' fees (including the allocated costs of Bank's in-house counsel and legal staff), and indebtedness secured hereby in such order and manner as Bank in its sole discretion determines; Bank shall account to Debtor for any surplus remaining thereafter, and shall pay such surplus to the party entitled thereto, including any second secured party who has made a proper demand upon Bank and has furnished proof to Bank as requested in the manner provided by law; in like manner, Debtor agrees to pay to Bank without demand any deficiency after any Collateral has been disposed of and proceeds applied as aforesaid; and (i) exercise its banker's lien or right of setoff in the same manner as though the credit were unsecured. Bank shall have all the rights and remedies of a secured party under the Uniform Commercial Code of California and in any jurisdiction where enforcement is sought, whether in said state or elsewhere. All rights, powers and remedies of Bank hereunder shall be cumulative and not alternative. No delay on the part of Bank in the exercise of any right or remedy shall constitute a waiver thereof and no exercise by Bank of any right or remedy shall preclude the exercise of any other right or remedy or further exercise of the same remedy.

6.            Debtor waives: (a) all right to require Bank to proceed against any other person including any other Debtor hereunder or to apply any Collateral Bank may hold at any time or to pursue any other remedy; Collateral, endorsers or guarantors may be released, substituted or added without affecting the liability of Debtor hereunder; (b) the defense of the Statute of Limitations in any action upon any obligations of Debtor secured hereby; (c) any right of subrogation and any right to participate in Collateral until all obligations secured hereby have been paid in full; and (d) to the fullest extent permitted by law, any right to oppose the appointment of a receiver or similar official to operate Debtor's business.

7.            The right of Bank to have recourse against Collateral shall not be affected in any way by the fact that the credit is secured by a mortgage, deed of trust or other lien upon real property.

8.            The security interest granted herein is irrevocable and shall remain in full force and effect until there is payment in full of the indebtedness or the security interest is released in writing by Bank.

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9.            Debtor shall be obligated to request the release, reassignment or return of Collateral after the payment in full of all existing obligations. Bank shall be under no duty or obligation to release, reassign or return any Collateral except upon the express written request of Debtor and then only where all of Debtor's obligations hereunder have been paid in full.

10.            If more than one Debtor executes this Agreement, the obligations hereunder are joint and several. All words used herein in the singular shall be deemed to have been used in the plural when the context and construction so require. Any married person who signs this Agreement expressly agrees that recourse may be had against his/her separate property for all of his/her obligations to Bank.

11.            This Agreement shall inure to the benefit of and bind Bank, its successors and assigns and each of the undersigned, their respective heirs, executors, administrators and successors in interest. Upon transfer by Bank of any part of the obligations secured hereby, Bank shall be fully discharged from any liability with respect to Collateral transferred therewith.

12.            Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but, if any provision of this Agreement shall be prohibited or invalid under applicable law, such provisions shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such or the remaining provisions of this Agreement.

The grant of a security interest in proceeds does not imply the right of Debtor to sell or dispose of any Collateral without the express consent in writing by Bank.

Debtor:

Autobytel Inc., a Delaware corporation

By:   /s/ Glenn E. Fuller                         

Glenn E. Fuller

Title:               E.V.P. and Secretary

By:   /s/ Curtis E. DeWalt                        

Curtis E. DeWalt

Title:              S.V.P., Chief Financial Officer

 

 

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COMMERCIAL PROMISSORY NOTE

(Base Rate)

    Debtor Name:                           Autobytel Inc., a Delaware corporation

Office:  45061

    Debtor Address:               18872 MacArthur Blvd., Suite #200

Irvine, CA  92612-1448                                                                                                  Loan Number: 055-716-185-7

Maturity Date:  December 31, 2017                                                  Amount:  $9,000,000.00

$  9,000,000.00                                                                                                                          Date:  January 13, 2014

FOR VALUE RECEIVED, on December 31, 2017 , the undersigned ("Debtor") promises to pay to the order of UNION BANK, N.A. ("Bank"), as indicated below, the principal sum of Nine Million and 00/100ths Dollars ($ 9,000,000.00 ), or so much thereof as is disbursed, together with interest on the balance of such principal from time to time outstanding, at the per annum rate or rates and at the times set forth below.

 

1.            PRINCIPAL AND INTEREST PAYMENTS.  Debtor shall pay principal in installments of $562,500.00  each on the 31st day of each quarter commencing March 31.2014,  Debtor shall pay interest on the 31st day of each quarter commencing March 31.2014.  Should interest not be paid when due, it shall become part of the principal and bear interest as herein provided. All computations of interest under this note shall be made on the basis of a year of 365 days, for actual days elapsed.  If any interest rate defined in this note ceases to be available from Bank for any reason, then said interest rate shall be replaced by the rate then offered by Bank, which, in the sole discretion of Bank, most closely approximates the unavailable rate. The availability under this note shall be reduced on the same day and in the same amount as each scheduled principal payment.

(a)            BASE INTEREST RATE.  At Debtor's option, amounts outstanding hereunder in minimum amounts of $100,000 shall bear interest at a rate, based on an index selected by Debtor, which is two and one-half percent (2.5 %) per annum in excess of the LIBOR Rate for the lnterest Period selected by Debtor, acceptable to Bank.

No Base lnterest Rate may be changed, altered or otherwise modified until the expiration of the lnterest Period selected by Debtor. The exercise of interest rate options by Debtor shall be as recorded in Bank's records, which records shall be prima facie evidence of the amount borrowed under either interest option and the interest rate; provided, however, that failure of Bank to make any such notation in its records shall not discharge Debtor from its obligations to repay in full with interest all amounts borrowed. In no event shall any lnterest Period extend beyond the maturity date of this note.

To exercise this option, Debtor may, from time to time with respect to principal outstanding on which a Base lnterest Rate is not accruing, and on the expiration of any lnterest Period with respect to principal outstanding on which a Base lnterest Rate has been accruing, select an index offered by Bank for a Base lnterest Rate Loan and an lnterest Period by telephoning an authorized lending officer of Bank located at the banking office identified below prior to 10:00 a.m., Pacific

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time, on any Business Day and advising that officer of the selected index, the lnterest Period and the Origination Date selected (which Origination Date, for a Base lnterest Rate Loan based on the LIBOR Rate, shall follow the date of such selection by no more than two (2) Business Days).

Bank will mail a written confirmation of the terms of the selection to Debtor promptly after the selection is made. Failure to send such confirmation shall not affect Bank's rights to collect interest at the rate selected. If, on the date of the selection, the index selected is unavailable for any reason, the selection shall be void. Bank reserves the right to fund the principal from any source of funds notwithstanding any Base lnterest Rate selected by Debtor.

(b)            VARIABLE INTEREST RATE.  All principal outstanding hereunder which is not bearing interest at a Base Interest Rate shall bear interest at a rate per annum of one-half percent (00.5%) less than the Reference Rate, which rate shall vary as and when the Reference Rate changes.

Debtor shall pay all amounts due under this note in lawful money of the United States at Bank's P.O. Box 30115, Los Angeles, CA 90030-0115 Office, or such other office as may be designated by Bank, from time to time.

2.            LATE PAYMENTS.  If any payment required by the terms of this note shall remain unpaid ten days after same is due, at the option of Bank, Debtor shall pay a fee of $100 to Bank.

3.            INTEREST RATE FOLLOWING DEFAULT.  In the event of default, at the option of Bank, and, to the extent permitted by law, interest shall be payable on the outstanding principal under this note at a per annum rate equal to five percent (5%) in excess of the interest rate specified in paragraph 1.b, above, calculated from the date of default until all amounts payable under this note are paid in full.

4.            PREPAYMENT.

(a)            Amounts outstanding under this note bearing interest at a rate based on the Reference Rate may be prepaid in whole or in part at any time, without penalty or premium. Debtor may prepay amounts outstanding under this note bearing interest at a Base lnterest Rate in whole or in part provided Debtor has given Bank not less than five (5) Business Days prior written notice of Debtor's intention to make such prepayment and pays to Bank the prepayment fee due as a result. The prepayment fee shall also be paid, if Bank, for any other reason, including acceleration or foreclosure, receives all or any portion of principal bearing interest at a Base lnterest Rate prior to its scheduled payment date. The prepayment fee shall be an amount equal to the present value of the product of: (i) the difference (but not less than zero) between (a) the Base lnterest Rate applicable to the principal amount which is being prepaid, and (b) the return which Bank could obtain if it used the amount of such prepayment of principal to purchase at bid price regularly quoted securities issued by the United States having a maturity date most closely coinciding with the relevant Base Rate Maturity Date and such securities were held by Bank until the relevant Base Rate Maturity Date ("Yield Rate"); (ii) a fraction, the numerator of which is the number of days in the period between the date of prepayment and the relevant Base Rate Maturity Date and the denominator of which is 365; and (iii) the amount of the principal so prepaid (except in the event that principal payments are required and have been made as scheduled under the terms of the Base lnterest Rate Loan being prepaid, then an amount equal to the lesser of (A) the amount prepaid or (B) 50% of the sum of (1) the amount prepaid and (2) the amount of principal scheduled under the terms of the Base lnterest Rate Loan being prepaid to be outstanding at the relevant Base Rate Maturity Date). Present value under this note is determined by discounting the above product to present value using the Yield Rate as the annual discount factor.

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(b)              In no event shall Bank be obligated to make any payment or refund to Debtor, nor shall Debtor be entitled to any setoff or other claim against Bank, should the return which Bank could obtain under this prepayment formula exceed the interest that Bank would have received if no prepayment had occurred. All prepayments shall include payment of accrued interest on the principal amount so prepaid and shall be applied to payment of interest before application to principal. A determination by Bank as to the prepayment fee amount, if any, shall be conclusive. In the event of partial prepayment, such prepayments shall be applied to principal payments in the inverse order of their maturity.

(c)              Bank shall provide Debtor a statement of the amount payable on account of prepayment. Debtor acknowledges that (i) Bank establishes a Base lnterest Rate upon the understanding that it apply to the Base lnterest Rate Loan for the entire lnterest Period, and (ii) Bank would not lend to Debtor without Debtor's express agreement to pay Bank the prepayment fee described above.

DEBTOR INITIAL HERE:                    GEF                  CED                        

5.            DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. The occurrence of any of the following shall constitute a default (a) Debtor shall default in the due and punctual payment of the principal of or the interest on the note or any of the Loan Documents (as such term is defined in that certain Loan Agreement of even date herewith ("Loan Agreement")) and such default shall continue for a period of three (3) business days; provided, however, that no grace period shall apply to any payment default at maturity, following acceleration or in connection with a prepayment hereunder; (b) other than a payment default under paragraph 5(a), above, Debtor shall default in any material respect in the due performance or observance of any covenant or condition of the Loan Documents and such default shall not have been cured by Debtor before the expiration of fifteen (15) days after the date of the default; (c) there shall have occurred a Change in Control (as defined in the Loan Agreement); (d) the insolvency of Debtor or the failure of Debtor to generally to pay Debtor's debts as such debts become due, subject to applicable grace or cure periods; (e) the commencement by Debtor of any voluntary proceeding under any laws relating to bankruptcy, insolvency, reorganization, dissolution, general assignment for the benefit of creditors, debt adjustment, debtor relief, or appointment of a receiver, trustee, custodian or similar official for all or substantially all of Debtor's property; (f) the commencement against Debtor of any involuntary proceeding under any laws relating to bankruptcy, insolvency, reorganization, general assignment for the benefit of creditors, debt adjustment, debtor relief, or appointment of a receiver, trustee, custodian or similar official for all or substantially all of Debtor's property and any such proceeding is not dismissed within ninety (90) days after commencement; (g) the failure by Debtor to comply in any respect with any order, judgment, injunction, decree, writ or demand of any court or other public authority where such failure would result in a material adverse change in, or a material adverse effect upon, the operations, assets, performance, business, properties, or condition (financial or otherwise) of Debtor such that Debtor's ability to perform under any Loan Document) is materially impaired; or (h) the default by Debtor or any Guarantor for any obligation exceeding One Million Dollars ($1,000,000) concerning the borrowing of money, which default enables the obligee to accelerate the entire amount due. Upon the occurrence of any such default, Bank, in its discretion, may cease to advance funds hereunder and may declare all obligations under this note immediately due and payable; however, upon the occurrence of an event of default under e, all principal and interest shall automatically become immediately due and payable.

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6.            ADDITIONAL AGREEMENTS OF DEBTOR.  If any amounts owing under this note are not paid when due, Debtor promises to pay all costs and expenses, including reasonable attorneys' fees, (including the allocated costs of Bank's in-house counsel and legal staff) incurred by Bank in the negotiation, documentation and modification of this note and all related documents and in the collection or enforcement of any amount outstanding hereunder. Debtor and any Obligor, for the maximum period of time and the full extent permitted by law, (a) waive diligence, presentment, demand, notice of nonpayment, protest, notice of protest, and notice of every kind; (b) waive the right to assert the defense of any statute of limitations to any debt or obligation hereunder; and (c) consent to renewals and extensions of time for the payment of any amounts due under this note. If this note is signed by more than one party, the term "Debtor" includes each of the undersigned and any successors in interest thereof; all of whose liability shall be joint and several. Any married person who signs this note agrees that recourse may be had against the separate property of that person for any obligations hereunder. The receipt of any check or other item of payment by Bank, at its option, shall not be considered a payment on account until such check or other item of payment is honored when presented for payment at the drawee bank. Bank may delay the credit of such payment based upon Bank's schedule of funds availability, and interest under this note shall accrue until the funds are deemed collected. In any action brought under or arising out of this note, Debtor and any Obligor, including their successors and assigns, hereby consent to the jurisdiction of any competent court within the State of California, as provided in any alternative dispute resolution agreement executed between Debtor and Bank, and consent to service of process by any means authorized by said state's law. The term "Bank" includes, without limitation, any holder of this note. This note shall be construed in accordance with and governed by the laws of the State of California. This note hereby incorporates any alternative dispute resolution agreement previously, concurrently or hereafter executed between Debtor and Bank.

7.            DEFINITIONS.  As used herein, the following terms shall have the meanings respectively set forth below:  "Base lnterest Rate" means a rate of interest based on the LlBOR Rate.  "Base lnterest Rate Loan" means amounts outstanding under this note that bear interest at a Base lnterest Rate. "Base Rate Maturity Date" means the last day of the lnterest Period with respect to principal outstanding under a Base lnterest Rate Loan.  "Business Day" means a day on which Bank is open for business for the funding of corporate loans, and, with respect to the rate of interest based on the LlBOR Rate, on which dealings in U.S. dollar deposits are carried out in the London interbank market.  "lnterest Period" means with respect to funds bearing interest at a rate based on the LIBOR Rate, any calendar period of 1,2, 3, 6 or 12 months. In determining an Interest Period, a month means a period that starts on one Business Day in a month and ends on and includes the day preceding the numerically corresponding day in the next month. For any month in which there is no such numerically corresponding day, then as to that month, such day shall be deemed to be the last calendar day of such month.  Any lnterest Period which would otherwise end on a non-Business Day shall end on the next succeeding Business Day unless that is the first day of a month, in which event such lnterest Period shall end on the next preceding Business Day. "LIBOR Rate" means, for any specified lnterest Period, a per annum rate of interest determined by Bank as equal to the rate for deposits in US Dollars for a period comparable to the lnterest Period which appears on the Reuters Screen LlBOR 01 Page (or any replacement or successor page or service) as of 11:00 a.m., London time, on the day that is two (2) Business Days preceding the first day of such lnterest Period.  "Origination Date" means the first day of the lnterest Period.  "Reference Rate" means the rate announced by Bank from time to time at its corporate headquarters as its Reference Rate.  The Reference Rate is an index rate determined by Bank from time to time as a means of pricing certain extensions of credit and is neither directly tied to any external rate of interest or index nor necessarily the lowest rate of interest charged by Bank at any given time.

SEE FOLLOWING PAGE FOR ALL (OR ADDITIONAL) SIGNATURES

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DEBTOR:

Autobytel Inc., a Delaware corporation

By:  /s/ Curtis DeWalt                            

Curtis DeWalt, Chief Financial Officer

By:     /s/ Glenn E. Fuller                       

Glenn E. Fuller, E.V.P., Chief Legal/

Admin Off., Sec.

 

 

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 COMMERCIAL PROMISSORY NOTE

(Base Rate)

    Debtor Name:                         Autobytel Inc., a Delaware corporation

Office:  45061

    Debtor Address:                18872 MacArthur Blvd., Suite #200

Irvine, CA  92612-1448                                                                                                  Loan Number: 055-716-185-7

Maturity Date:  March 31, 2017                                                                                                                Amount:  $8,000,000.00

$  8,000,000.00                                                                                                                                      Date:  January 13, 2014

FOR VALUE RECEIVED, on March 31, 2017, the undersigned ("Debtor") promises to pay to the order of UNION BANK, N.A. ("Bank"), as indicated below, the principal sum of Eight Million and 00/100ths Dollars ($ 8,000,000.00), or so much thereof as is disbursed, together with interest on the balance of such principal from time to time outstanding, at the per annum rate or rates and at the times set forth below. Any letter of credit issued and outstanding in connection with this note shall result in reduction of the amount available to Debtor.

1.            INTEREST PAYMENTS.  Debtor shall pay interest on the last day of each month commencing January 31, 2014.  Should interest not be paid when due, it shall become part of the principal and bear interest as herein provided. All computations of interest under this note shall be made on the basis of a year of 365 days, for actual days elapsed. If any interest rate defined in this note ceases to be available from Bank for any reason, then said interest rate shall be replaced by the rate then offered by Bank, which, in the sole discretion of Bank, most closely approximates the unavailable rate.

	
 

	
(a)     BASE INTEREST RATE.  At Debtor's option, amounts outstanding hereunder in minimum amounts of $ 100,000 shall bear interest at a rate, based on an index selected by Debtor, which is two and one-half percent (2.5 %) per annum in excess of the LIBOR Rate for the Interest Period selected by Debtor, acceptable to Bank.

No Base Interest Rate may be changed, altered or otherwise modified until the expiration of the Interest Period selected by Debtor. The exercise of interest rate options by Debtor shall be as recorded in Bank's records, which records shall be prima facie evidence of the amount borrowed under either interest option and the interest rate; provided, however, that failure of Bank to make any such notation in its records shall not discharge Debtor from its obligations to repay in full with interest all amounts borrowed. In no event shall any Interest Period extend beyond the maturity date of this note.

To exercise this option, Debtor may, from time to time with respect to principal outstanding on which a Base Interest Rate is not accruing, and on the expiration of any Interest Period with respect to principal outstanding on which a Base Interest Rate has been accruing, select an index offered by Bank for a Base Interest Rate Loan and an Interest Period by telephoning an authorized lending officer of Bank located at the banking office identified below prior to 10:00 a.m., Pacific time, on any Business Day and advising that officer of the selected index, the Interest Period and the Origination Date selected (which Origination Date, for a Base Interest Rate Loan based on the LIBOR Rate, shall follow the date of such selection by no more than two (2) Business Days).

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Bank will mail a written confirmation of the terms of the selection to Debtor promptly after the selection is made. Failure to send such confirmation shall not affect Bank's rights to collect interest at the rate selected. If, on the date of the selection, the index selected is unavailable for any reason, the selection shall be void. Bank reserves the right to fund the principal from any source of funds notwithstanding any Base Interest Rate selected by Debtor.

	
 

	
(b)   VARIABLE INTEREST RATE.  All principal outstanding hereunder which is not bearing interest at a Base Interest Rate shall bear interest at a rate per annum of one-half percent (00.5 %) less than the Reference Rate, which rate shall vary as and when the Reference Rate changes.

At any time prior to the maturity date of this note, subject to the provisions of paragraph 4 below, Debtor may borrow, repay and reborrow hereunder so long as the total outstanding at any one time does not exceed the principal amount of this note.

Debtor shall pay all amounts due under this note in lawful money of the United States at Bank's P.O. Box 30115, Los Angeles, CA 90030-0115 Office, or such other office as may be designated by Bank, from time to time.

2.            LATE PAYMENTS. If any payment required by the terms of this note shall remain unpaid ten days after same is due, at the option of Bank, Debtor shall pay a fee of $100 to Bank.

3.            INTEREST RATE FOLLOWING DEFAULT.  In the event of default, at the option of Bank, and, to the extent permitted by law, interest shall be payable on the outstanding principal under this note at a per annum rate equal to five percent (5 %) in excess of the interest rate specified in paragraph 1.b, above, calculated from the date of default until all amounts payable under this note are paid in full.

	
4.

	
PREPAYMENT.

	
 

	
(a)   Amounts outstanding under this note bearing interest at a rate based on the Reference Rate may be prepaid in whole or in part at any time, without penalty or premium. Debtor may prepay amounts outstanding under this note bearing interest at a Base Interest Rate in whole or in part provided Debtor has given Bank not less than five (5) Business Days prior written notice of Debtor's intention to make such prepayment and pays to Bank the prepayment fee due as a result. The prepayment fee shall also be paid, if Bank, for any other reason, including acceleration or foreclosure, receives all or any portion of principal bearing interest at a Base Interest Rate prior to its scheduled payment date. The prepayment fee shall be an amount equal to the present value of the product of: (i) the difference (but not less than zero) between (a) the Base Interest Rate applicable to the principal amount which is being prepaid, and (b) the return which Bank could obtain if it used the amount of such prepayment of principal to purchase at bid price regularly quoted securities issued by the United States having a maturity date most closely coinciding with the relevant Base Rate Maturity Date and such securities were held by Bank until the relevant Base Rate Maturity Date ("Yield Rate"); (ii) a fraction, the numerator of which is the number of days in the period between the date of prepayment and the relevant Base Rate Maturity Date and the denominator of which is 365; and (iii) the amount of the principal so prepaid (except in the event that principal payments are required and have been made as scheduled under the terms of the Base Interest Rate Loan being prepaid, then an amount equal to the lesser of (A) the amount prepaid or (B) 50% of the sum of (1) the amount prepaid and (2) the amount of principal scheduled under the terms of the Base Interest Rate Loan being prepaid to be outstanding at the relevant Base Rate Maturity Date).  Present value under this note is determined by discounting the above product to present value using the Yield Rate as the annual discount factor.

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(b)   In no event shall Bank be obligated to make any payment or refund to Debtor, nor shall Debtor be entitled to any setoff or other claim against Bank, should the return which Bank could obtain under this prepayment formula exceed the interest that Bank would have received if no prepayment had occurred.  All prepayments shall include payment of accrued interest on the principal amount so prepaid and shall be applied to payment of interest before application to principal.  A determination by Bank as to the prepayment fee amount, if any, shall be conclusive.

	
 

	
(c)   Bank shall provide Debtor a statement of the amount payable on account of prepayment. Debtor acknowledges that (i) Bank establishes a Base Interest Rate upon the understanding that it apply to the Base Interest Rate Loan for the entire Interest Period, and (ii) Bank would not lend to Debtor without Debtor's express agreement to pay Bank the prepayment fee described above.

DEBTOR INITIAL HERE:                   GEF               CED                

5.            DEFAULT AND ACCELERATION OF TIME FOR PAYMENT.  The occurrence of any of the following shall constitute a default (a) Debtor shall default in the due and punctual payment of the principal of or the interest on the note or any of the Loan Documents (as such term is defined in that certain Loan Agreement of even date herewith ("Loan Agreement")) and such default shall continue for a period of three (3) business days; provided, however, that no grace period shall apply to any payment default at maturity, following acceleration or in connection with a prepayment hereunder; (b) other than a payment default under paragraph 5(a), above, Debtor shall default in any material respect in the due performance or observance of any covenant or condition of the Loan Documents and such default shall not have been cured by Debtor before the expiration of fifteen (15) days after the date of the default; (c) there shall have occurred a Change in Control (as defined in the Loan Agreement); (d) the insolvency of Debtor or the failure of Debtor to generally to pay Debtor's debts as such debts become due, subject to applicable grace or cure periods; (e) the commencement by Debtor of any voluntary proceeding under any laws relating to bankruptcy, insolvency, reorganization, dissolution, general assignment for the benefit of creditors, debt adjustment, debtor relief, or appointment of a receiver, trustee, custodian or similar official for all or substantially all of Debtor's property; (f) the commencement against Debtor of any involuntary proceeding under any laws relating to bankruptcy, insolvency, reorganization, general assignment for the benefit of creditors, debt adjustment, debtor relief, or appointment of a receiver, trustee, custodian or similar official for all or substantially all of Debtor's property and any such proceeding is not dismissed within ninety (90) days after commencement; (g) the failure by Debtor to comply in any respect with any order, judgment, injunction, decree, writ or demand of any court or other public authority where such failure would result in a material adverse change in, or a material adverse effect upon, the operations, assets, performance, business, properties, or condition (financial or otherwise) of Debtor such that Debtor's ability to perform under any Loan Document) is materially impaired; or (h) the default by Debtor or any Guarantor for any obligation exceeding One Million Dollars ($1,000,000) concerning the borrowing of money, which default enables the obligee to accelerate the entire amount due. Upon the occurrence of any such default, Bank, in its discretion, may cease to advance funds hereunder and may declare all obligations under this note immediately due and payable; however, upon the occurrence of an event of default under e, all principal and interest shall automatically become immediately due and payable.

6.            ADDITIONAL AGREEMENTS OF DEBTOR.  If any amounts owing under this note are not paid when due, Debtor promises to pay all costs and expenses, including reasonable attorneys' fees, (including the allocated costs of Bank's in-house counsel and legal staff) incurred by Bank in the negotiation, documentation and modification of this note and all related documents and in the collection or enforcement of any amount outstanding hereunder.  Debtor and any Obligor, for the maximum period of time and the full extent permitted by law, (a) waive diligence, presentment,

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demand, notice of nonpayment, protest, notice of protest, and notice of every kind; (b) waive the right to assert the defense of any statute of limitations to any debt or obligation hereunder; and (c) consent to renewals and extensions of time for the payment of any amounts due under this note. If this note is signed by more than one party, the term "Debtor" includes each of the undersigned and any successors in interest thereof; all of whose liability shall be joint and several. Any married person who signs this note agrees that recourse may be had against the separate property of that person for any obligations hereunder. The receipt of any check or other item of payment by Bank, at its option, shall not be considered a payment on account until such check or other item of payment is honored when presented for payment at the drawee bank. Bank may delay the credit of such payment based upon Bank's schedule of funds availability, and interest under this note shall accrue until the funds are deemed collected. In any action brought under or arising out of this note, Debtor and any Obligor, including their successors and assigns, hereby consent to the jurisdiction of any competent court within the State of California, as provided in any alternative dispute resolution agreement executed between Debtor and Bank, and consent to service of process by any means authorized by said state's law. The term "Bank" includes, without limitation, any holder of this note. This note shall be construed in accordance with and governed by the laws of the State of California. This note hereby incorporates any alternative dispute resolution agreement previously, concurrently or hereafter executed between Debtor and Bank.

7.            DEFINITIONS.  As used herein, the following terms shall have the meanings respectively set forth below:  "Base Interest Rate" means a rate of interest based on the LIBOR Rate.  "Base Interest Rate Loan" means amounts outstanding under this note that bear interest at a Base Interest Rate.  "Base Rate Maturity Date" means the last day of the Interest Period with respect to principal outstanding under a Base Interest Rate Loan.  "Business Day" means a day on which Bank is open for business for the funding of corporate loans, and, with respect to the rate of interest based on the LIBOR Rate, on which dealings in U.S. dollar deposits are carried out in the London interbank market.  "Interest Period" means with respect to funds bearing interest at a rate based on the LIBOR Rate, any calendar period of 1, 2, 3, 6 or 12 months.  In determining an Interest Period, a month means a period that starts on one Business Day in a month and ends on and includes the day preceding the numerically corresponding day in the next month. For any month in which there is no such numerically corresponding day, then as to that month, such day shall be deemed to be the last calendar day of such month.  Any Interest Period which would otherwise end on a non-Business Day shall end on the next succeeding Business Day unless that is the first day of a month, in which event such Interest Period shall end on the next preceding Business Day.  "LIBOR Rate" means, for any specified Interest Period, a per annum rate of interest determined by Bank as equal to the rate for deposits in US Dollars for a period comparable to the Interest Period which appears on the Reuters Screen LIBOR 01 Page (or any replacement or successor page or service) as of 11:00 a.m., London time, on the day that is two (2) Business Days preceding the first day of such Interest Period.  "Origination Date" means the first day of the Interest Period.  "Reference Rate" means the rate announced by Bank from time to time at its corporate headquarters as its Reference Rate.  The Reference Rate is an index rate determined by Bank from time to time as a means of pricing certain extensions of credit and is neither directly tied to any external rate of interest or index nor necessarily the lowest rate of interest charged by Bank at any given time.

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DEBTOR:

Autobytel Inc., a Delaware corporation

By:  /s/Curtis DeWaltt                             

      Curtis DeWalt, Chief Financial Officer

By:   /s/ Glenn E. Fuller                           

Glenn E. Fuller, E.V.P., Chief Legal/

Admin Off., Sec.

  

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