Operating Agreement - UnitedAuto Group Inc., Penske Automotive Group Inc. and CarsDirect.com Inc.
OPERATING AGREEMENT
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THIS AGREEMENT, dated as of May 12, 2000 (the "Effective Date"), is made by
and between UnitedAuto Group, Inc., a Delaware corporation, with offices at
13400 West Outer Drive, Suite B-36, Detroit Michigan 48239 ("UAG"), Penske
Automotive Group, Inc., a Delaware corporation with offices at 3534 North Peck
Road, El Monte, CA 91731 ("PAG" and collectively with UAG, "P/UAG") and
CarsDirect.com, Inc., a Delaware corporation, with offices at 10567 Jefferson
Blvd., Culver City, CA 90232 ("CarsDirect"). CarsDirect and the P/UAG shall be
collectively referred to herein as the "Parties."
BACKGROUND
WHEREAS PAG and UAG are leading automotive retailers with more than one
hundred (100) automotive franchises;
WHEREAS CarsDirect is the national leader in online car-buying via its
website currently located at the URL http://www.carsdirect.com (the "CarsDirect
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Site");
WHEREAS the Company and each of UAG, PAG, HAC II, Inc. and Penske
Corporation are concurrently entering into consulting agreements (the
"Consulting Agreement").
WHEREAS the Company, Penske Internet Capital Group, L.L.C., UAG, HAC II,
Inc. and PAG are concurrently entering into a Series D Preferred Stock Purchase
and Warrant Agreement (the "Investment Agreement"); and
WHEREAS CarsDirect and PAG and UAG wish severally (except as set forth in
the Warrant Agreement) to establish a strategic relationship for purposes other
than the raising of capital pursuant to which PAG and UAG will each supply
Automobiles to CarsDirect and CarsDirect will Source Automobiles from PAG and
UAG, subject to the terms and conditions further defined herein.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. DEFINITIONS.
As used herein, the following terms have the following defined meanings:
"Affiliate" means, with respect to a party, any Person Controlling,
Controlled by or under common Control with such party.
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"Automobile" means any new motor vehicle under 10,000 pounds gross vehicle
weight designed for use on public roadways, including but not limited to,
standard passenger cars, sport utility vehicles, vans, minivans and light
trucks.
"Automobile Manufacturer" means the original equipment manufacturers of
Automobiles (e.g. Ford Motor Corporation, General Motors Corporation, etc.),
including their distributors and Affiliates.
"Automobile Purchase" means the purchase or lease of a Sourced Automobile
by a CarsDirect customer. For the purposes of this Agreement, an Automobile
Purchase shall be deemed consummated upon delivery of the purchased Automobile
to the applicable CarsDirect customer and the confirmation of such delivery (and
acceptance thereof) by CarsDirect in accordance with its standard practices.
"Available" means shown in the new Automobile inventory or incoming
inventory of the applicable P/UAG Dealer(s) in effect at the time of the
Sourcing Request and unsold or unleased and in existence at the time of the
Sourcing Request.
"CarsDirect Competitor" means any existing or future online or web site
service which enables individuals or entities to initiate, process, engage and
consummate the purchase of an Automobile, *** by a retail or commercial customer
utilizing a Direct Transaction Business Model unless such entity shall
completely cease to engage in such activity.
"CarsDirect Web Sites" means, collectively, all Web Sites maintained by or
on behalf of CarsDirect and its wholly owned subsidiaries.
"Change of Control" means the transfer of Control of a Party from the
Person or Persons who hold such Control on the Effective Date.
"Control, Controlling, Controlled" means possessing, directly or
indirectly, the power to direct or cause the direction of the management and
policies of any entity, whether through ownership of voting securities, by
contract or otherwise.
"Direct Transaction Business Model" means the method of doing business for
an Automobile purchase in the United States of America over the Internet in
which a consumer configures a new Automobile, receives an up-front price (as
distinct from "MSRP" or invoice price) for the configured Automobile and
substantially facilitates the transaction in some manner.
"DMA" means the area of responsibility set forth in the applicable dealer
agreement provided that the PAG, as to PAG dealers, and UAG, as to UAG dealers,
and CarsDirect may mutually agree upon any expansion of the DMA.
"Immediately Available" means shown in the new Automobile inventory of the
applicable P/UAG Dealer(s) and in existence at the time of the Sourcing Request.
"Penske Auto Centers" means Penske Auto Centers, Inc., a Delaware
corporation.
"Person" means any natural person, corporation, partnership, limited
liability company or other entity.
"Pricing" means the price at which CarsDirect Sources Automobiles from
P/UAG Dealers.
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"P/UAG Dealer" means a P/UAG owned or managed dealer, including Acquired
Dealerships (as defined in Section 2.3).
"P/UAG Inventory" means the new Automobiles Available from the applicable
P/UAG Dealer(s).
"P/UAG Inventory Data" means Automobile inventory data to a detailed option
and trim level from P/UAG's Dealers and factory locator system, including the
information described in Section 6.1.1.
"Source" means CarsDirect's acquisition of an Automobile from a P/UAG
Dealer subject to the criteria specified in this Agreement, including Pricing
and the criteria set forth on Exhibit A , Exhibit B-1 and Exhibit B-2 attached
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hereto.
"Sourcing Request" means the request by CarsDirect of a P/UAG Dealer to
effect a Sourcing Transaction.
"Sourcing Transaction" means a transaction by which CarsDirect acquires an
Automobile from a P/UAG Dealer subject to the criteria specified in this
Agreement, including Pricing and the criteria set forth on Exhibit A , Exhibit
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B-1 and Exhibit B-2 attached hereto.
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"Third Party Sourcing Transaction" means a transaction by which CarsDirect
acquires an Automobile from a franchised Automobile dealer other than a P/UAG
Dealer as a result of uncompetitive response to a Sourcing Request or
uncompetitive Pricing from a P/UAG Dealer.
"Web Site" means any point of presence maintained on the Internet or on any
other public commercial data network, excluding television or radio broadcast
commercials. With respect to any Web site maintained on the World Wide Web,
such Web site includes all HTML pages (or similar unit of information presented
in any relevant data protocol) that either (a) are identified by the same
second-level domain or by the same equivalent level identifier in any relevant
address scheme, or (b) contain branding, graphics, navigation or other
characteristics such that a user reasonably would conclude that the pages are
part of an integrated information or service offering.
2. SOURCING ARRANGEMENT.
2.1 P/UAG's Obligation to Source. Subject to Sections 2.2 and 2.3 below,
during the Term (i) CarsDirect shall provide Sourcing Requests to P/UAG Dealers
who are then P/UAG Dealers and (ii) PAG and UAG shall severally cause their
respective dealers to enter into a Sourcing Transaction with CarsDirect in
connection with such Sourcing Requests, provided that (i) the Automobiles
applicable to such Sourcing Requests are Available or are accessible by such
dealers by way of factory order or dealer trade and (ii) CarsDirect is not in
material breach of this Agreement (as provided in Section 10.2). P/UAG shall
notify CarsDirect of any acquisitions or dispositions of dealerships by P/UAG.
2.2 Pricing Terms. The Parties shall confer once per week during the Term
to negotiate regional Pricing and shall agree to such Pricing by 6 p.m.
(Pacific time) of each Monday during the Term (or by another process mutually
agreed upon by the Parties). CarsDirect shall be under no obligation (except as
provided in Section 2.3 below) to Source Automobiles at the negotiated Pricing.
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2.3 First Opportunity to Source. With respect to Automobiles for which
CarsDirect has agreed to Pricing as negotiated between the Parties pursuant to
Section 2.2 above, CarsDirect will offer any P/UAG Dealer of like make that is
located within the same DMA of a CarsDirect customer that has ordered an
Automobile through CarsDirect, the first opportunity to Source such Automobile
to CarsDirect, subject to written agreements between CarsDirect and third
parties in effect prior to the Effective Date and provided that PAG, UAG and
such P/UAG Dealer are in compliance with the terms and conditions of this
Agreement. In the event that P/UAG acquires one or more franchised Automobile
dealerships during the Term ("Acquired Dealerships"), CarsDirect shall provide
such dealerships the first priority to Source (as described in this Section 2.3)
subject to any written agreements between CarsDirect and any third party that
are effective prior to the consummation of any such acquisition.
2.4 Finance, Insurance and After Market Products. Neither P/UAG nor any
P/UAG Dealer shall, prior to the acceptance of delivery of the Automobile by the
CarsDirect Customer, solicit or cause such customer to unwind the Automobile
Purchase including any commitment by such customer to purchase any retail
finance, lease or other after-market Automobile product or service offered to
that customer through CarsDirect.
2.5 Service Level. P/UAG shall cause each P/UAG Dealer to comply with the
Service Level Criteria set forth on Exhibit A attached hereto, as well as the
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terms and conditions set forth in CarsDirect's standard Priority Supplier
Network Membership Agreement and CarsDirect's Vehicle Commitment Form, as in
effect from time to time, the current versions of which are attached hereto as
Exhibit B-1 and Exhibit B-2, respectively. Any changes to the Priority Supplier
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Network Membership Agreement or the CarsDirect's Vehicle Commitment Form after
the Effective Date which materially affect P/UAG's rights and obligations under
those agreements shall be subject to mutual agreement of the Parties. In the
event that a specific P/UAG Dealer fails to comply with the provisions contained
in Exhibit A or Exhibit B attached hereto, CarsDirect shall be under no
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obligation to provide such noncompliant P/UAG Dealer the limited first
opportunity to Source Automobiles as described in Section 2.3 above.
2.6 Delivery. CarsDirect and P/UAG shall develop mutually agreed upon
Automobile delivery procedures in connection with Automobile Purchases
consistent with applicable laws, Automobile Manufacturer policies and
the terms of the P/UAG Dealers' franchise agreements, including the
allocation of costs in connection with such delivery. P/UAG shall bear
all costs associated with such deliveries which are the responsibility
of P/UAG pursuant to the previous sentence.
2.7 Payment Terms. Payment terms for Sourcing Transactions shall be seven
(7) days gross pay. Provided, however, in the event that CarsDirect
consistently and repeatedly fails to pay the applicable P/UAG Dealers
the Pricing in connection with Sourcing Transactions within seven (7)
calendar days of the consummation of such Sourcing Transactions,
CarsDirect shall be required to pay to the applicable P/UAG Dealer the
Pricing, including documented and verified outstanding amounts owed by
CarsDirect (by wire transfer) upon the consummation of each Sourcing
Transaction.
3. SYSTEMS INTEGRATION.
3.1 Automated Transaction Systems. P/UAG and the P/UAG Dealers shall each
deliver to CarsDirect in a standard format reasonably acceptable to CarsDirect
(the "Standard Format"), the data
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and information specified in Section 6.1 below. In connection with the
development and operation of the Standard Format, the Parties shall collaborate
to develop systems necessary to extract data or information owned or controlled
by P/UAG and the P/UAG Dealers (the "Data") to a centralized data warehouse,
conforming to a standardized protocol (the "P/UAG Data Aggregation"). P/UAG
shall bear all costs in connection with and shall be otherwise responsible for
the P/UAG Data Aggregation effort. All costs in connection with transmitting the
Data to CarsDirect shall be borne by CarsDirect. In addition, CarsDirect shall
have the right, but not the obligation, to permit dealers other than the P/UAG
Dealers to deliver such data and information to CarsDirect in the Standard
Format.
CarsDirect shall create at its expense, with the cooperation of P/UAG,
systems (e.g. real-time inventory, order transmission and acceptance, delivery
confirmation) to create fully automated Sourcing Transactions and Automobile
Purchases (the "Transaction Systems"). CarsDirect shall be the exclusive owner
of any such Transaction Systems, provided, however, nothing herein shall be
construed to restrict, impair or deprive P/UAG of any rights or proprietary
interests in technology or products that existed prior to and independent of the
development of the Transaction Systems. Upon request from P/UAG, CarsDirect
will enter into a mutually acceptable, royalty-free licensing agreement for the
term hereof granting a limited, non-exclusive, non-transferable, non-
sublicensable license to P/UAG and their dealers of the Transaction System
solely to enable P/UAG and their dealers to perform this Agreement more
efficiently.
3.2 Web Site Development Assistance. CarsDirect, if requested by P/UAG,
will enter into a mutually acceptable, royalty-free license agreement for the
limited, non-exclusive, non-transferable, non-sublicensable license to P/UAG and
their dealers of the text, graphics, pictures, data (including descriptions of
Automobile specifications and standard Automobile equipment, and Automobile
options, MSRP, invoice and Manufacturer option prices) of a substance and form
similar to that which CarsDirect generally licenses to third parties
(collectively, the "Content"). CarsDirect shall make the Content available to
P/UAG in standard html format. The content shall also be associated with a set
of access pages. CarsDirect shall supply to P/UAG updated releases of the
Content on approximately a monthly basis during the Term. At such time as
CarsDirect develops, and generally makes available to third parties, modular
components of the Content CarsDirect will make the same available to P/UAG.
Upon the reasonable request of P/UAG, CarsDirect will provide up to eighty (80)
hours of qualified consulting services to assist in the utilization of the
Content. Thereafter, CarsDirect shall provide such services to P/UAG at a
level of up to two (2) people (FTE) at industry standard rates (currently
$20,000 per month).
3.3 Order Processing Procedures. The Parties agree to develop and
implement, within thirty (30) days of the Effective Date, Automobile delivery
procedures and a standard process that will be followed by CarsDirect and P/UAG
Dealers to expedite Sourcing Transactions and Automobile acceptances and
delivery confirmations. The Parties agree to exercise best efforts to enhance
and modify those procedures and standard processes during the term of this
Agreement to further expedite and automate the various functions.
4. ADDITIONAL PROGRAM DEVELOPMENT.
During the Term CarsDirect shall use reasonable efforts to develop an
Automobile trade in program. CarsDirect will explore the opportunities for
P/UAG to participate and/or invest in such program. Until such Automobile trade-
in program is developed and implemented, the P/UAG Dealer handling a Sourcing
Transaction shall have the first opportunity to negotiate the trade-in
applicable to the
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Sourcing Transaction, subject to the terms of written agreements between
CarsDirect and third parties and entered into prior to the Effective Date.
5. PENSKE AUTO CENTER SERVICES.
Upon the request of CarsDirect and to the extent permissible by applicable
laws and written agreements to which P/UAG or Penske Auto Centers are a party
to prior to the date of such request by CarsDirect, P/UAG will cause Penske Auto
Centers to negotiate with CarsDirect for the provision of temporary Automobile
storage facilities, Automobile inspection, reconditioning and delivery services
at the Penske Auto Centers' facilities. CarsDirect and the Penske Auto Centers
shall negotiate in good faith the pricing and other terms applicable to the
services described in this Section 5.
6. DATA.
6.1 P/UAG Data. During the Term P/UAG will provide the following data to
CarsDirect in an electronic format and in a delivery method mutually acceptable
to the Parties.
6.1.1 Inventory Data. P/UAG shall provide to CarsDirect, daily batch
information updates regarding the Automobile make, model, trim, options,
transmission, interior color, exterior color, engine specifications, vehicle
identification number, stock number (optional), MSRP, invoice price, year and
dealer name and address with respect to each Automobile contained in the P/UAG
Inventory. P/UAG shall use best efforts to provide to CarsDirect the
information contained in this Section 6.1.1 on a continuous, real-time basis.
P/UAG will provide to CarsDirect a glossary of defined abbreviations so that
CarsDirect identify the options offered by the Automobile Manufacturers.
6.1.2 Limitations. The information to be provided pursuant to this
Section 6.1 shall be subject to applicable law, and PAG's and UAG's Privacy
Policies, as may be modified from time to time. Provided further, CarsDirect
shall not have the right to sell, share, give away, or otherwise redistribute
the information provided pursuant to this Section 6.1 (either alone or in
combination with any other data, information or report) to any third party
without prior written permission from PAG or UAG, as the case may be.
6.2 CarsDirect Data. During the Term CarsDirect shall provide the
following data to P/UAG in an electronic format and in a delivery method
reasonably acceptable to P/UAG.
6.2.1 Automobile Transaction Data. CarsDirect shall provide to PAG's
Vice President and General Manager and UAG's Vice President and General Manager
factual information about Third Party Sourcing Transactions for the sole purpose
of enabling P/UAG Dealers to meet bonafide competition to maximize Automobile
Purchases. The factual information described in the immediately preceding
sentence shall not be identifiable to any third party franchised dealer.
6.2.2. Limitations. The information to be provided pursuant to this
Section 6.2 shall be subject to applicable law, and CarsDirect's Privacy Policy,
as may be modified from time to time. Provided further, neither P/UAG nor any
P/UAG Dealer shall have the right to sell, share, give away, or otherwise
redistribute the information provided pursuant to this Section 6.2 (either alone
or in combination with any other data, information or report) to any third party
without prior written permission from CarsDirect.
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7. WARRANT.
In consideration for UAG entering into this Agreement and performing its
obligations hereunder, CarsDirect shall execute and deliver to UAG warrant
agreement(s) for the exercise of an aggregate of 2,190,000 shares of
CarsDirect's Series D Preferred Stock (the " UAG Warrant Agreements"). In
consideration for PAG entering into this Agreement and performing its
obligations hereunder, CarsDirect shall execute and deliver to PAG warrant
agreement(s) for the exercise of an aggregate of 1,460,000 shares of
CarsDirect's Series D Preferred Stock (the "PAG Warrant Agreements" and
collectively with the PAG Warrant Agreements, the "Warrant Agreement").The
Warrant Agreement shall be in a form and substance as attached hereto as Exhibit
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C.
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8. EXCLUSIVITY.
For the *** period commencing on the Effective Date, neither P/UAG nor any
P/UAG Dealer shall sell, lease, transfer or otherwise directly supply
Automobiles or P/UAG Inventory Data to any of the following entities for so long
as they engage in the *** and its Affiliates (such exclusivity restrictions with
respect to *** shall only be applicable if *** (or any of its Affiliates)
engages in, promotes or facilitates the *** either alone or in conjunction with
any third party); provided, however, P/UAG and their dealers may sell or lease
Automobiles pursuant to a corporate purchase or employee compensation program or
purchase or otherwise obtain software from *** or its Affiliates.
Notwithstanding the foregoing, the exclusivity restrictions contained in
this Section 8 shall be inapplicable (a) with respect to P/UAG and the P/UAG
Dealers during periods that the CarsDirect Site is unavailable to the general
public for a period in excess of three (3) consecutive days as a result of
system failure within the reasonable control of CarsDirect (b) with respect to
Acquired Dealerships who become P/UAG Dealers after the Effective Date if such
dealerships are subject to pre-existing, written agreements which conflict with
the exclusivity restrictions contained in this Section 8 (but only to the extent
that such agreements expressly prohibit compliance with the provisions of this
Section 8) or (c) with respect to P/UAG and the P/UAG Dealers if CarsDirect
fails to expend a minimum of $5 million in customer acquisition costs during
each of two (2) consecutive calendar quarters (d) if CarsDirect is otherwise not
transacting business generally or (e) if a Change of Control has occurred with
respect to CarsDirect following the Effective Date other than in connection with
a Qualified Initial Public Offering as such term is defined under that certain
Amended and Restated Investor Rights Agreement dated October 27. 1999.
9. RELATIONSHIP MANAGEMENT.
9.1 P/UAG Corporate Endorsement. During such times as the "exclusivity"
provisions contained in Section 8 above are applicable to P/UAG, P/UAG agrees to
endorse CarsDirect to its P/UAG Dealers as P/UAG's preferred and exclusive
Direct Transaction Business Model customer. In addition, the Parties agree to
jointly publish an article in each issue of P/UAG's newsletter regarding the
Parties' relationship and successes.
10. TERM AND TERMINATION.
10.1 Term. This Agreement shall be effective as of the Effective Date and
shall continue through ***, unless terminated earlier as provided in this
Article 10.
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10.2 Termination for Breach. Either Party may terminate this Agreement
upon not less than thirty (30) days' prior written notice to the other Party of
any material breach hereof or of the Consulting Agreement, the Investment
Agreement and the Warrant Agreement by such other Party or its Affiliates
provided that such other Party or its Affiliates, as the case may be, has not
cured such material breach within such thirty (30) day period. PAG or UAG may
terminate this Agreement if CarsDirect consistently and repeatedly fails to pay
the applicable P/UAG Dealers the Pricing in connection with Sourcing
Transactions within seven (7) calendar days of the consummation of such Sourcing
Transactions for reasons other than inadvertence.
10.3 Termination for Bankruptcy and Related Events. In the event a Party
files a voluntary petition in bankruptcy court, or makes an assignment for
benefit of creditors, or is voluntarily or involuntarily adjudicated a bankrupt,
or has a receiver appointed for its business, or becomes insolvent, the other
party may elect to immediately terminate this Agreement.
10.4 Effect of Expiration or Termination. Upon termination or expiration
of this Agreement for any reason, all rights and obligations of the Parties
under this Agreement shall be extinguished, except that all payment obligations
accrued prior to the date of termination hereunder, and the rights and
obligations of the parties under Sections 6.1.2, 6.2.2, 11.3, 11.4 and 12 shall
survive such termination or expiration.
11. WARRANTIES, INDEMNIFICATION AND LIMITATION OF LIABILITY.
11.1 Warranties by Both Parties.
Each Party represents and warrants to the other that:
a) it has the full corporate right, power and authority to enter into
this Agreement and to perform the acts required of it hereunder;
b) its execution of this Agreement and performance of its obligations
hereunder, do not and will not violate any agreement to which it is a
party or by which it is bound; and
c) when executed and delivered, this Agreement will constitute the legal,
valid and binding obligation of such Party, enforceable against it in
accordance with its terms; and
11.2 Warranties by P/UAG.
PAG and UAG severally represent and warrant to CarsDirect that:
a) it has full and sufficient rights to grant to CarsDirect the rights
granted hereunder with respect to access to and use of the P/UAG
Inventory Data as contemplated herein without the necessity of payment
to any third party, and it has used and shall use commercially
reasonable efforts to ensure the accuracy and integrity of such data;
and
b) The P/UAG Inventory Data, nor CarsDirect's use of the same in any
manner contemplated hereunder, shall infringe upon or violate the
intellectual property rights of any third party.
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c) It has full power and authority to and shall cause each P/UAG Dealer
to abide by the terms of this Agreement.
11.3 Indemnification. Each Party (the "Indemnifying Party") will defend,
indemnify and hold harmless the other parties (the "Indemnified Party"), and the
respective directors, officers, employees and agents of the Indemnified Party,
from and against any and all claims, costs, losses, damages, judgments and
expenses (including reasonable attorneys' fees) arising out of or in connection
with any third-party claim alleging any breach of such party's representations
or warranties or covenants set forth in this Agreement. In addition, PAG and UAG
shall severally defend, indemnify and hold harmless CarsDirect, its directors,
officers, employees and agents from and against any and all claims, costs,
losses, damages, judgments and expenses including reasonable attorneys' fees
("Costs") asserted by a CarsDirect customer arising out of or in connection with
any Delivery if due to the fault or negligence of such Party; provided, however,
this sentence shall not be interpreted to vary the obligations of the Parties as
set forth in the Priority Supplier Network Membership Agreement or the Vehicle
Commitment Form, as such may be mutually agreed and in effect from time to time.
The Indemnified Party agrees that the Indemnifying Party shall have sole and
exclusive control over the defense and settlement of any such third party claim.
However, the Indemnifying Party shall not acquiesce to any judgment or enter
into any settlement that adversely affects the Indemnified Party's rights or
interests without prior written consent (such consent shall not be unreasonably
withheld or delayed) of the Indemnified Party. The Indemnified Party shall
provide reasonably prompt notice to the Indemnifying Party of any such claim of
which it becomes aware and shall (a) at the Indemnifying Party's expense,
provide reasonable cooperation to the Indemnifying Party in connection with the
defense or settlement of any such claim, and (b) at the Indemnified Party's
expense, be entitled to participate in the defense of any such claim.
11.4 Exclusion of Damages; Disclaimer.
11.4.1 Exclusion of Damages. UNDER NO CIRCUMSTANCES SHALL ANY PARTY
BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL,
SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES), ARISING FROM ANY PROVISION OF THIS AGREEMENT,
SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST
BUSINESS.
11.4.2 No Additional Warranties. EXCEPT AS SET FORTH IN THIS
AGREEMENT, NO PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS,
ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED (INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND
IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF
PERFORMANCE).
12. CONFIDENTIALITY.
12.1 Definition of Confidential Information. As used in this Agreement,
the term "Confidential Information" refers to: (a) the terms and conditions of
this Agreement; (b) each party's
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and with respect to PAG and UAG, the P/UAG Dealers' trade secrets, business
plans, strategies, methods and/or practices; (c) any and all information
relating to CarsDirect customers, in the case of CarsDirect; and (d) other
information relating to either party that is not generally known to the public,
including, but not limited to, information about either party's personnel,
products, customers, marketing strategies, services or future business plans.
12.2 Restrictions Applicable to Confidential Information. During the Term
and for a period of *** thereafter, or longer to the extent a party's
Confidential Information maintains its status as a "trade secret" under
applicable law each party (the "Receiving Party") will maintain in confidence
all Confidential Information of the other party (the "Disclosing Party"). Each
party agrees to use commercially reasonable efforts to protect the Confidential
Information of the other party, and in any event, to take precautions at least
as great as those taken to protect its own confidential information of a similar
nature. Each party agrees to use the Confidential Information of the Disclosing
Party solely for fulfilling the Receiving Party's obligations under this
Agreement and to disclose such Confidential Information only to those of its
employees, outside counsel, auditors, and financial advisors with a need to know
who are under a similar obligation of confidentiality and restricted use with
respect to such Confidential Information. Provided further it shall not be a
breach of this Agreement if this Agreement is filed or its terms are disclosed
as required in connection with a registration statement or report filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended or the Securities Exchange Act of 1934, as amended and the regulations
promulgated thereunder, as applicable, provided that the party making such
filing or disclosures consults with the other party prior to any such filing or
disclosure.
12.3 Exclusions. The foregoing restrictions shall not apply to any
information that: (a) was rightfully known by the Receiving Party prior to
disclosure thereof by the other party; (b) was in or entered the public domain
through no fault of the Receiving Party; (c) is disclosed to the Receiving Party
by a third party legally entitled to make such disclosure without violation of
any obligation of confidentiality; (d) is required to be disclosed by applicable
laws or regulations (but in such event, only to the extent required to be
disclosed as determined by the Receiving Party's counsel); or (e) is
independently developed by the Receiving Party without reference to any
Confidential Information of the other party.
12.4 Return of Confidential Information; Injunctive Relief. Upon request
of the other party, or in any event upon any termination or expiration of the
Term, each party shall return to the other all materials, in any medium, which
contain, embody, reflect or reference all or any part of any Confidential
Information of the other party. Each party acknowledges that breach of this
Article by it would result in irreparable harm to the other party, for which
money damages would be an insufficient remedy, and therefore that the other
party shall be entitled to seek injunctive relief to enforce the provisions of
this Article 12.
12.5 Ownership of Customer Data. All Confidential Information provided to
P/UAG by CarsDirect relating to a CarsDirect customer shall be owned and
retained solely by CarsDirect.
13. GENERAL PROVISIONS.
13.1 Independent Contractors. CarsDirect, PAG and UAG are independent
contractors under this Agreement, and nothing herein shall be construed to
create a partnership, joint venture, franchise or agency relationship between
them. No Party shall have any right, power or authority to
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enter into any agreement for, or on behalf of, or incur any obligation or
liability, or to otherwise bind the other Parties.
13.2 Assignment. No party may assign this Agreement or any of its rights
or delegate any of its duties under this Agreement without the prior written
consent of the other party; except that either party may, without the other
party's consent, assign this Agreement or any of its rights or delegate any of
its duties under this Agreement: (a) to any Affiliate of such party, or (b) to
any purchaser of all or substantially all of such party's assets or to any
successor by way of merger, consolidation or similar transaction, provided that,
in the event of an assignment by P/UAG hereunder, such assignee is not a
CarsDirect Competitor. However, the assigning Party shall not be relieved of
its obligations to the other Parties pursuant to this Agreement. Subject to the
foregoing, this Agreement will be binding upon, enforceable by, and inure to the
benefit of the parties and their respective successors and assigns.
13.3 Non-waiver. No waiver of any breach of any provision of this
Agreement shall constitute a waiver of any prior, concurrent or subsequent
breach of the same or any other provisions hereof, and no waiver shall be
effective unless made in writing and signed by an authorized representative of
the waiving party.
13.4 Publicity. CarsDirect and P/UAG may individually or jointly prepare
and issue mutually agreed upon press releases concerning the existence of this
Agreement and the terms hereof. The timing of any such press releases shall be
mutually agreed by CarsDirect and P/UAG. Otherwise, no public statements
concerning the existence or terms of this Agreement shall be made or released by
a party to any medium except with the prior approval of the other party or as
required by applicable law. Except as may be required by applicable securities
laws, for a period of sixty (60) days after the Effective Date, CarsDirect
agrees to refrain from publicly announcing an Automobile sourcing agreement with
a national Automobile dealer group similar to that contemplated by this
Agreement.
13.5 Force Majeure. Neither party shall be deemed to be in default of or
to have breached any provision of this Agreement as a result of any delay,
failure in performance or interruption of service, resulting directly or
indirectly from acts of God, acts of civil or military authorities, civil
disturbances, wars, strikes or other labor disputes, fires, transportation
contingencies, interruptions in telecommunications or Internet services or
network provider services, failure of equipment and/or software, other
catastrophes or any other occurrences which are beyond such party's reasonable
control.
13.6 Audit Rights. During the Term, each party shall maintain accurate
records with respect to such party's obligations under this Agreement. Each
party, at its expense, and upon ten (10) days' advance notice to the other
party, shall have the right, not more than once per year, to examine the other
party's directly relevant records in order to verify, in the case of P/UAG,
P/UAG's compliance with the terms and conditions of Sections 2.1, 2.4, 2.5,
6.1.1, and 6.2.2, and in the case of CarsDirect, CarsDirect's compliance with
the terms and conditions of Section 2.1, 2.3, 6.1.2, and 6.2.1. Any such
examination shall be conducted in a manner that does not interfere with the
ordinary business operations of the other party. In the event that such
examination reveals that a party has knowingly breached a material obligation of
this Agreement, then, in addition to such other remedies as the auditing party
may have, the breaching party will reimburse the auditing party for the actual
costs of such examination.
13.7 Notices. Any notice or other communication required or permitted to
be given hereunder shall be given in writing by hand, by certified mail, return
receipt requested, postage pre-paid, or by recognized overnight delivery
service, all delivery charges pre-paid, and addressed to the individual signing
this Agreement on behalf of the applicable party at its address specified in the
opening
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paragraph of the Agreement and shall be deemed effective upon receipt. A party
may from time to time change the individual to receive notices or its address by
giving the other party notice of the change in accordance with this Section. In
addition, copies of any notices sent to P/UAG or CarsDirect shall also be sent
to the following addresses, respectively:
UnitedAuto Group, Inc. CarsDirect.com, Inc.
13400 West Outer Drive 10567 Jefferson Boulevard
Suite B-26 Culver City, CA 90232
Detroit, MI 48329 Fax: (310) 280-4264
Fax: (313) 592-7340 Attention: General Counsel
Attention: General Counsel
Penske Automotive Group, Inc.
3534 North Peck Road
El Monte, CA 91731
Fax: (626) 580-6009
Attention: President
With copy to:
Executive Vice President and General Counsel, Penske Corporation
13400 West Outer Drive
Detroit, MI 48329
13.8 Entire Agreement; Amendment. This Agreement (including the Exhibits
hereto), the Warrant Agreement, the Investment Agreement, the Consulting
Agreement and any ancillary documents in connection with the Sourcing
Transactions contain the entire understanding of the parties hereto with respect
to the transactions and matters contemplated hereby, supersede all previous
agreements or negotiations between P/UAG and CarsDirect concerning the subject
matter hereof, and cannot be amended except by a writing signed by the
applicable parties.
13.9 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware without reference to its
choice of law rules.
13.10 Headings. All headings contained in this Agreement are inserted for
convenience only and are not intended to affect the meaning or interpretation of
this Agreement or any clause.
13.11 Third Party Beneficiaries. This Agreement is not intended and shall
not be construed to confer upon or to give any third party any rights or
remedies.
13.12 Severability. In the event any provision of this Agreement shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
the remaining provisions shall remain in full force and effect. If any
provision of this Agreement shall, for any reason, be determined by a court of
competent jurisdiction to be excessively broad or unreasonable as to scope or
subject, such provision shall be enforced to the extent necessary to be
reasonable under the circumstances and consistent with applicable law while
reflecting as closely as possible the intent of the parties as expressed herein.
13.13 Good Faith. The Parties agree to perform each of their respective
obligations, covenants and agreements provided herein in good faith.
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13.14 Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed an original, and all of which together constitute one
and the same instrument.
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IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the Effective Date.
CarsDirect.com, Inc. United AutoGroup, Inc.
By /s/ Robert N. Brisco By /s/ Roger S. Penske
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Name Roger S. Penske
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Title Title: Chairman of the Board
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Penske Automotive Group, Inc. Address of Notice:
13400 Outer Drive West
By /s/ Gregory W. Penske Detroit, MI 48239
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Gregory W. Penske
Title: President
Address of Notice:
3534 North Peck Road
El Monte, CA 91731
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