Employment Agreement - CarsDirect.com Inc., Scott Painter and Bill Gross' idealab!
CARSDIRECT.COM, INC.
EMPLOYMENT AGREEMENT
Amended & Restated Effective as of September 30, 1999
This amended and restated Agreement is entered into as of September 30,
1999 (the "Effective Date"), between and among CarsDirect.com, Inc., a Delaware
corporation (the "Company"), Scott Painter ("Executive") and Bill Gross'
idealab! ("idealab!") (collectively, the "Parties").
WHEREAS, idealab! and Executive entered into a Consulting Agreement dated
December 29, 1998 (the "Consulting Agreement"); and
WHEREAS, the Company and Executive have entered into an Employment
Agreement dated as of January 1, 1999 (the "Original Employment Agreement"); and
WHEREAS, a dispute has arisen regarding the Parties' continuing obligations
and therefore the Parties desire to amend and restate the Original Employment
Agreement as set forth herein (the "Amended and Restated Employment Agreement");
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually agreed by the
parties as follows:
1. Duties and Scope of Employment.
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(a) Position. Prior to the CEO Date (as defined herein), Executive
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shall be employed as Chief Executive Officer and President of the Company;
following the CEO Date, Executive shall be employed as Vice Chairman and Co-
Founder of the Company. The "CEO Date" shall be the date upon which a
replacement Chief Executive Officer (Executive's successor) approved by a
majority of the Board of Directors officially begins his/her duties as Chief
Executive Officer of the Company.
(b) Duties. During the term of the Executive's employment with the
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Company as Co-Founder, the Executive shall devote his full time, skill and
attention to his duties and responsibilities, which the Executive shall perform
faithfully, diligently and competently, and the Executive shall use his best
efforts to further the business of the Company. While he is employed by the
Company as Co-Founder, Executive agrees not to actively engage in any other
employment, occupation or consulting activity (other than time spent and
responsibilities as a board member and principal of Vision, Inc.) for any direct
or indirect remuneration without the prior approval of the Board.
2. At-Will Employment. Executive and the Company understand and
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acknowledge that Executive's employment with the Company constitutes "at-will"
employment. Executive and the
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Company acknowledge that this employment relationship may be terminated at any
time with or without notice, with or without good cause or for any or no cause,
at the option either of the Company or Executive.
3. Compensation, Fringe Benefits and Stock Options.
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(a) Base Salary. While employed by the Company pursuant to this
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Amended and Restated Employment Agreement on and after the Effective Date, the
Company shall pay the Executive as compensation for his services a base salary
at the annualized rate of $165,000 (the "Base Salary") which amount shall be
reviewed annually at a minimum by the Board. Such salary shall be paid
periodically in accordance with normal Company payroll practices and subject to
the usual and applicable required withholding. Executive understands and agrees
that neither his job performance nor promotions, commendations, bonuses or the
like from the Company give rise to or in any way serve as the basis for
modification, amendment, or extension, by implication or otherwise, of this
Amended and Restated Employment Agreement.
(b) Signing Bonus. On the Effective Date, the Company shall pay
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Executive $75,000, less applicable withholding, as a signing bonus.
(c) June 30, 2000 IPO and Retention Bonus. If (i) the Company's
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initial public offering of its equity securities pursuant to a registration
statement on Form S-1 (or its successor form) has been declared effective by the
Securities and Exchange Commission (an "IPO") on or before June 30, 2000, (ii)
Executive has either (A) remained as a member of the Board of Directors through
June 30, 2000, or (B) has been removed from Board by the Company's stockholders
on or prior to June 30, 2000 without cause pursuant to and within the meaning of
Section 141(k) of the Delaware General Corporation Law (a "Board Removal Without
Cause"), and (iii) Executive executes a release of claims substantially similar
to that contained in Section 16 hereof (a "Release of Claims"), then Executive
shall receive a bonus, payable on June 30, 2000, equal to one times the Base
Salary (as defined in Section 3(a) hereof, i.e., a total of $165,000), less
applicable withholding (the "IPO and Retention Bonus"). Executive shall not be
entitled to any payment hereunder for partial performance, e.g., the IPO occurs
on July 1, 2000 and all the other conditions for payment have been satisfied.
(d) Executive Benefits. During his employment hereunder, Executive
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shall be eligible to participate in the employee benefit plans currently and
hereafter maintained by the Company of general applicability to other senior
executives of the Company. The Company reserves the right to cancel or change
the benefit plans and programs it offers to its employees at any time.
(e) Stock Options.
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(i) Existing Grants. Executive has been granted stock options
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as follows:
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(A) First Option. A stock option covering 300,000 shares of
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Company common stock with an exercise price equal to $0.001 per share (the
"First Option"). The First Option has a grant date of October 20, 1998 and is
100% vested as of the Effective Date. Executive has exercised the First Option
and the Company agrees to issue certificates representing the shares issued to
Executive upon such exercise promptly following the Effective Date.
(B) Second Option. A stock option covering 500,000 shares
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of Company common stock with an exercise price equal to $0.001 per share (the
"Second Option"). The Second Option has a grant date of February 8, 1999 and a
vesting commencement date of January 1, 1999. As amended by this Amended and
Restated Employment Agreement, the Second Option shall become vested as to fifty
percent (50%) of the then unvested shares subject to the Second Option on the
CEO Date, and the remainder of the unvested shares subject to the Second Option
shall vest on a pro rata daily basis for three years commencing on the CEO Date,
so as to be 100% vested on the third anniversary of the CEO Date, subject to
Executive continuing to render services to the Company as an employee or
director on such vesting dates; provided, however, that in the event of a Change
of Control of the Company (as defined below) occurring while Executive is an
employee or director of the Company, the vesting of the Second Option will
accelerate and the Second Option shall become vested as to 50% of the then
unvested shares subject to the Second Option immediately prior to such Change of
Control. "Change of Control" is defined as (i) the consummation of a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (ii) the
consummation of the sale or disposition by the Company of all or substantially
all of the Company's assets.
(C) Third Option. A stock option covering 750,000 shares of
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Company common stock with an exercise price equal to $0.35 per share (the "Third
Option" and, together with the First Option and the Second Option, the
"Options"). The Third Option has a grant date of June 23, 1999. As amended by
this Amended and Restated Employment Agreement, the Shares subject to the Third
Option vest daily on a ratable basis over a four year period; provided, however,
that upon the CEO date, the Third Option vesting shall accelerate so that twenty
percent (20%) of the shares originally subject to the Third Option are vested on
the CEO Date and the remaining eighty percent (80%) of the shares originally
subject to the Third Option shall thereafter vest on a pro rata daily basis
through June 23, 2003, so that one hundred percent (100%) of the shares subject
to the Third Option shall be fully vested on June 23, 2003, subject to Executive
continuing to render services to the Company as an employee or director on such
vesting dates.
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(ii) Other Terms and Conditions. In all other respects, the
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First, Second and Third Options are subject to the terms, definitions and
provisions of the Company's 1998 Stock Plan and the stock option agreements by
and between Executive and the Company, all of which documents are incorporated
herein by reference and are subject to accelerated vesting as set forth
elsewhere herein.
(iii) Right to Maintain. On an after the Effective Date,
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Executive shall be deemed a "Qualified Purchaser" under the Company's Third
Amended Investor Rights Agreement, as amended from time to time.
(iv) Termination as Co-Founder Without Cause. In the event
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Executive is terminated as Co-Founder without Cause (as defined below), then,
subject to Executive executing a new Release of Claims, the Company shall make
continued payments of Base Salary, less applicable withholding, to Executive for
nine months following the date of such termination. For purposes of this
paragraph (but not for purposes of a Board Removal Without Cause under Sections
3(c) and 3(e)(v) hereof, which shall be made with reference to Section 141(k) of
the Delaware General Corporation Law), "Cause" shall mean (i) a material act of
dishonesty made by Executive in connection with Executive's fiduciary
responsibilities as an employee and which materially affects the Company, (ii)
Executive's conviction of, or plea of nolo contendere to, a felony, or (iii)
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Executive's failure to perform his material employment duties if such failure is
not remedied within ninety (90) days following receipt by Executive of written
notice from the Board specifying the facts relating to the failure. A change of
Executive's title as Co-Founder (but not as Vice-Chairman) or material
modification of Executive's duties as Co-Founder (but not as Vice-Chairman)
shall be deemed for purposes of this section to be a termination without Cause.
(v) Board Removal Without Cause Prior to an IPO; Failure to
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Nominate to Board Following IPO. In the event Executive is (i) subject to a
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Board Removal Without Cause prior to an IPO, or (ii) if, following an IPO, the
Board fails to nominate Executive for re-election to the Board at any annual
meeting of the Company's stockholders upon which Executive's tenure as a Board
member would otherwise expire (except if Executive has voluntarily resigned from
the Board or elects not to stand for re-election), then, subject to Executive
executing a new Release of Claims, the Company agrees to accelerate the vesting
and exercisability of Executive's then outstanding unvested Options, so that
fifty percent (50%) of the unvested shares subject to each such Option shall be
fully vested and exercisable.
4. Loan. Executive has received a $75,000 loan from the Company at a 6%
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simple interest rate (the "Loan"). The Loan has a repayment term of two years
and is secured by 75,000 shares of Common Stock of the Company (the "Escrow
Shares"). In the event that the Executive voluntarily terminates his employment
with the Company or is terminated for "Cause" (as defined below), the Loan shall
become immediately payable.
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5. Expenses. The Company will pay or reimburse Executive for reasonable
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travel, entertainment or other expenses incurred by Executive in the furtherance
of or in connection with the performance of Executive's duties hereunder in
accordance with the Company's established policies.
6. Confidential Information. Executive agrees to continue to maintain the
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confidentiality of all confidential and proprietary information of the Company
and agrees, if he has not done so already, to enter into the CarsDirect.com,
Inc. Employment, Confidential Information and Inventions Assignment Agreement.
7. Assignment. This Amended and Restated Employment Agreement shall be
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binding upon and inure to the benefit of (a) the heirs, executors and legal
representatives of Executive upon Executive's death and (b) any successor of the
Company. Any such successor of the Company shall be deemed substituted for the
Company under the terms of this Amended and Restated Employment Agreement for
all purposes. As used herein, "successor" shall include any person, firm,
corporation or other business entity which at any time, whether by purchase,
merger or otherwise, directly or indirectly, acquires all or substantially all
of the assets or business of the Company. None of the rights of Executive to
receive any form of compensation payable pursuant to this Amended and Restated
Employment Agreement shall be assignable or transferable except through a
testamentary disposition or by the laws of descent. Any attempted assignment,
transfer, conveyance or other disposition (other than as aforesaid) of any
interest in the rights of Executive to receive any form of compensation
hereunder shall be null and void.
8. Notices. All notices, requests, demands and other communications
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called for hereunder shall be in writing and shall be deemed given if delivered
personally, one (1) day after mailing via Federal Express overnight or a similar
overnight delivery service, or three (3) days after being mailed by registered
or certified mail, return receipt requested, prepaid and addressed to the
parties or their successors in interest at the following addresses, or at such
other addresses as the parties may designate by written notice in the manner
aforesaid:
If to the Company: CarsDirect.com, Inc.
4312 Woodman Avenue
Sherman Oaks, California 91423
Attn: General Counsel
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If to idealab!: Bill Gross' idealab!
130 West Union Street
Pasadena, California 91103
Attn: General Counsel
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If to Executive: Scott Painter
10048 Cielo Drive
Beverly Hills, California 90210
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9. Severability. In the event that any provision hereof becomes or is
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declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Amended and Restated Employment Agreement shall continue in full
force and effect without said provision.
10. Entire Agreement. This Amended and Restated Employment Agreement, the
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Stock Option Plan, the First, Second and Third Option agreements, and the
Company's Employment, Confidential Information and Invention Assignment
Agreement represent the entire agreement and understanding between the Company
and Executive concerning Executive's employment relationship with the Company,
and supersede in their entirety any and all prior agreements and understandings
concerning Executive's employment relationship with the Company, including the
Original Employment Agreement. To the extent this Amended and Restated
Employment Agreement is inconsistent or conflicts with any other agreement
entered into between Executive and the Company, including the First, Second and
Third Option agreements, this Amended and Restated Employment Agreement shall
control.
11. Arbitration and Equitable Relief.
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(a) Except as provided in Section 11(e) below, Executive agrees that
any dispute or controversy arising out of, relating to, or in connection with
this Amended and Restated Employment Agreement, or the interpretation, validity,
construction, performance, breach, or termination thereof shall be settled by
arbitration, to the extent permitted by law, to be held in Los Angeles County,
California in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association (the
"Rules"). The arbitrator may grant injunctions or other relief in such dispute
or controversy. The decision of the arbitrator shall be final, conclusive and
binding on the parties to the arbitration. Judgment may be entered on the
arbitrator's decision in any court having jurisdiction.
(b) The arbitrator shall apply California law to the merits of any
dispute or claim, without reference to rules of conflict of law. Executive
hereby expressly consents to the personal jurisdiction of the state and federal
courts of Los Angeles County located in California for any action or proceeding
arising from or relating to this Amended and Restated Employment Agreement
and/or relating to any arbitration in which the parties are participants.
(c) Executive understands that nothing in this Section modifies
Executive's at-will status. Either the Company or Executive can terminate the
employment relationship at any time, with or without cause.
(d) EXECUTIVE HAS READ AND UNDERSTANDS SECTION 11, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AMENDED AND RESTATED
EMPLOYMENT AGREEMENT, EXECUTIVE AGREES TO SUBMIT ANY FUTURE CLAIMS ARISING OUT
OF, RELATING TO, OR IN CONNECTION WITH THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH,
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OR TERMINATION THEREOF TO BINDING ARBITRATION TO THE EXTENT PERMITTED BY LAW,
AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A
JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS
OF THE EMPLOYER/EXECUTIVE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE
FOLLOWING CLAIMS:
(i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF
EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT
OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL
MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR
PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION;
(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL, STATE
OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO THE CIVIL RIGHTS ACT OF
1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH
DISABILITIES ACT OF 1990, AND THE FAIR LABOR STANDARDS ACT;
(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND
REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
(e) THE PARTIES MAY APPLY TO ANY COURT OF COMPETENT JURISDICTION FOR
A TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNCTION, OR OTHER INTERIM OR
CONSERVATORY RELIEF, AS NECESSARY, WITHOUT BREACH OF THIS ARBITRATION AGREEMENT
AND WITHOUT ABRIDGMENT OF THE POWERS OF THE ARBITRATOR.
12. No Oral Modification, Cancellation or Discharge. This Amended and
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Restated Employment Agreement may only be amended, canceled or discharged in
writing signed by Executive and the Company.
13. Governing Law. This Amended and Restated Employment Agreement shall be
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governed by the internal substantive laws, but not the choice of law rules, of
the State of California.
14. Corporate Action. The Company represents and warrants to Executive
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that all necessary corporate action has been taken by the Company to execute,
deliver and perform this Amended and Restated Employment Agreement by the
Company.
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15. Consulting Agreement. Idealab! and Executive acknowledge and agree
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that idealab! has fully performed its obligations pursuant to the Consulting
Agreement and that the Consulting Agreement has terminated as of the Effective
Date. Executive acknowledges that amounts previously paid by idealab! constitute
its full and final payment obligations according to the Consulting Agreement,
and that Executive is not entitled to further compensation from idealab!
16. Release. Executive, in consideration for the mutual promises between
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the parties, hereby fully and unconditionally releases and forever discharges
Company and idealab! and any parent, subsidiary or affiliated entity, and all
persons acting by, through, under or in concert with them, and their respective
successors and assigns, from and against any and all claims, contentions, debts,
liabilities, demands, promises, agreements, costs, expenses (including but not
limited to attorneys' fees), damages, losses, suits, liens, actions or causes of
action, of whatever kind or nature, whether in law or equity and whether now
known or unknown, based on, arising out of, or in connection with Executive's
employment or consultation with Company or idealab!, except for claims resulting
from alleged breaches of the Amended and Restated Employment Agreement arising
after the date hereof.
(a) Waiver of Civil Code Section 1542. This release is intended
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to cover all claims or possible claims held by Executive, including but not
limited to those claims, demands, liabilities or causes of action arising out of
or related to Executive's employment or consultation with Company or idealab!,
whether the same are known, unknown, or hereinafter discovered or ascertained.
Executive acknowledges that he has been advised by legal counsel and is familiar
with the provisions of California Civil Code Section 1542, which provides as
follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
Executive, being aware of said Code Section, hereby expressly, knowingly and
intentionally waives any rights he may have thereunder, as well as under any
other statute or common law principles of similar effect.
(b) No Admission of Liability. This Amended and Restated Employment
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Agreement is a compromise of disputed claims and does not in any way constitute
an admission by Company or idealab! of any liability or responsibility, past,
present or future, for the matters released by and through this Amended and
Restated Employment Agreement.
17. Confidentiality. Executive agrees that the terms of this Amended and
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Restated Employment Agreement will remain confidential, and that he shall not
disclose the contents or terms of the Amended and Restated Employment Agreement
to any other person or entity, except to accountants, financial advisors,
attorneys and governmental agencies on a need-to-know basis and in order to
comply with applicable tax laws.
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18. Non-Solicitation; Non-Disparagement. In consideration for the benefits
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Executive is to receive herein Executive agrees that he (i) will not, at any
time during the one year following his termination date, directly or indirectly
solicit any individuals to leave the Company's or idealab!'s employ for any
reason or interfere in any other manner with the employment relationships at the
time existing between the Company or idealab! and their current or prospective
employees, and (ii) will not disparage, criticize, defame or slander the
Company, idealab! or their employees.
19. Further Assurances. Each of the Company and Executive agrees to take
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promptly all actions necessary, proper or advisable or as the other may
reasonably request to fully carry out the intent and purpose of this Amended and
Restated Employment Agreement.
20. Representation by Counsel. Each of the Parties hereto acknowledge that
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they have been represented by independent counsel of their choice throughout all
negotiations which preceded the execution of this Amended and Restated
Employment Agreement, and that this Amended and Restated Employment Agreement
has been executed with the consent and on the advice of such independent legal
counsel.
IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated
Employment Agreement, effective as of the Effective Date.
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CARSDIRECT.COM, INC.
By: _______________________
Name: _____________________
Title: ____________________
BILL GROSS' IDEALAB!
________________________
Marcia Goodstein
Chief Operating Officer
EXECUTIVE
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Scott Painter
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