MOTORPLACE VEHICLE NETWORK BUSINESS AGREEMENT
This Motorplace Vehicle Network Business Agreement (this "AGREEMENT") is
effective as of August 18, 2000 (the "EFFECTIVE DATE"), by and between The
Cobalt Group, Inc., a Washington corporation ("COBALT") with offices located at
2200 First Avenue South, Seattle, WA 98134-1408, and General Electric Capital
Auto Financial Services, Inc., a Delaware corporation ("GE CAPITAL") with
offices located at 540 W. Northwest Highway, Barrington, IL 60010 (each of
Cobalt and GE Capital shall be referred to individually as a "PARTY" and
together as the "PARTIES").
RECITALS
WHEREAS, Cobalt provides Internet marketing services to, and collects
data from, automotive dealers and operates the MotorPlace.com
business-to-business automotive Internet portal currently located on the World
Wide Web portion of the Internet at www.motorplace.com ("MOTORPLACE"); and
WHEREAS, GE Capital is a large independent automobile lessor, has
relationships with automobile manufacturers ("OEMS") and providers of automotive
finance services, and owns certain software that enables the wholesale purchase
and sale of Automobiles (as defined in Section 1.8 below); and
WHEREAS, GE Capital seeks access to MotorPlace and Cobalt's Internet
infrastructure, OEM relationships and network of automotive dealers; and
WHEREAS, Cobalt seeks access to GE Capital's inventory of Automobiles,
a non-exclusive license to enhance certain GE Capital software and GE Capital's
wholesale Automobile remarketing and fulfillment expertise; and
WHEREAS, GE Capital and Cobalt desire to enter into an arrangement
under which Cobalt and GE Capital will develop, operate and market an
Internet-based wholesale Automobile listing and purchasing system for automobile
dealers and lessors in the United States and Canada that will be available in
MotorPlace and on a stand-alone, private label basis for OEMs and automobile
dealers and lessors.
NOW, THEREFORE, in consideration of the promises, terms and conditions
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, Cobalt and GE
Capital agree as follows:
1. DEFINITIONS
1.1 "AAA" shall have the meaning set forth in Section 12.22.1.
1.2 "ACTION" shall have the meaning set forth in Section 12.5.2.
1.3 An "AFFILIATE" of an entity shall mean any entity which, directly
or indirectly, is controlled by, controls or is under common control with such
entity. As
used in this definition, "control" (including, with its correlative
meanings "controlled by" and "under common control with") means the possession,
directly or indirectly, of power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of voting
securities, by contract or otherwise.
1.4 "AGREEMENT" shall have the meaning set forth in the Preamble.
1.4.5 "ALTERNATIVE PAYMENT AMOUNT" shall mean an amount calculated in
the same manner as the Change of Control Payment except that, for these
purposes, all references to the Change of Control Payment Date contained in
Section 1.13 shall be references to the effective date of termination of this
Agreement.
1.5 "APPRAISAL DATE" shall mean, as appropriate, (a) the date that
either Party gives notice of its intent not to renew this Agreement for any
Renewal Period pursuant to Section 10.1, or (b) the date either Party gives
notice of its intent to terminate this Agreement.
1.6 "AUDIT" shall have the meaning set forth in Section 12.4.
1.7 Intentionally Omitted
1.8 "AUTOMOBILE" shall mean any (i) passenger motor vehicle, (ii)
truck not exceeding one ton in capacity, (iii) sport utility vehicle, or (iv)
van intended for non-commercial use.
1.9 "BANKRUPTCY LAW" See Section 1.51.
1.10 "BREACHING PARTY" shall have the meaning set forth in Section
10.2.
1.11 "BUSINESS DAY" shall mean any day other than a Saturday, Sunday,
federal holiday or holiday in the State of Illinois or the State of Washington.
1.12 "CHANGE OF CONTROL" shall mean, with respect to a Party, (a)
any sale, issuance, exchange and/or other transfer or series of sales,
issuances, exchanges and/or other transfers of shares of capital stock
thereof that results in any person or entity or group of affiliated persons
or entities (other than Warburg, Pincus Equity Partners, LP, First Analysis
Corp. or any of their respective Affiliates) owning capital stock possessing
the voting power (under ordinary circumstances) to elect a majority of such
Party's board of directors if such person, group or entity did not have such
power before such issuance, exchange or transfer, or (b) any sale of all or a
majority of the assets of such Party.
1.13 "CHANGE OF CONTROL PAYMENT" shall mean the amount determined
as follows. For each Measuring Period ending on or before the Change of
Control Payment Date, the Future Value Revenues for such Measuring Period and
the Future Value Expenses for such Measuring Period shall be calculated. The
positive remainder, if any, obtained by subtracting the sum of the Future
Value Revenues so calculated from the sum of the Future Value Expenses so
calculated shall be the Change of Control Payment.
Eamples of such calculations are set forth in EXHIBIT I. For purposes of this
Section 1.13, the following definitions shall apply:
1.13.1 The "FUTURE VALUE EXPENSES" for any Measuring Period
shall equal the result of the following formula:
MPE*(1.25)(n)
where MPE is the Measuring Period Expenses for such Measuring Period
and n is the Measuring Period Exponent for such Measuring Period.
1.13.2 The "FUTURE VALUE REVENUES" for any Measuring Period
shall equal the result of the following formula:
MPR*(1.25)(n)
where MPR is the Measuring Period Revenues for such Measuring Period
and n is the Measuring Period Exponent for such Measuring Period.
1.13.3 The "MEASURING PERIOD EXPENSES" for any Measuring
Period shall mean the aggregate of all Expenses actually paid (and the
Expenses payable if such Measuring Period is the Measuring Period which
ends on the Change of Control Payment Date) by GE Capital during such
Measuring Period.
1.13.4 The "MEASURING PERIOD EXPONENT" for (1) a specific
Measuring Period that is not the Measuring Period which ends on the
Change of Control Payment Date shall equal the sum of (a) a number, but
no less than zero, equal to the number of Measuring Periods which
consist of twelve months which commence with such Measuring Period
minus five tenths (0.5), plus (b) a fraction (expressed as a decimal),
the numerator of which is the number of days which constitute the
Measuring Period which ends on the Change of Control Payment Date, and
the denominator of which is three hundred sixty-five (365); provided,
however, that if the Measuring Period which ends on the Change of
Control Payment Date consists of twelve (12) months, the fraction
provided for in clause (1)(b) of this Section 1.13.4 shall be zero, and
(2) a specific Measuring Period that is the Measuring Period which ends
on the Change of Control Payment Date shall equal a fraction (expressed
as a decimal), the numerator of which is one-half (1/2) the number of
days which constitute the Measuring Period which ends on the Change of
Control Payment Date, and the denominator of which is three hundred
sixty-five (365).
1.13.5 The "MEASURING PERIOD REVENUES" for any Measuring
Period shall mean the aggregate of all Revenues actually received (and
the Revenue receivable if such Measuring Period is the Measuring Period
which ends on the Change of Control Payment Date) by GE Capital during
such Measuring Period.
1.13.6 The period beginning with the Effective Date and ending
on the earlier of (i) twelve months thereafter, or (ii) the Change of
Control Payment Date
shall be referred to as the "INITIAL MEASURING PERIOD," and each of
the periods during the Term beginning on each annual anniversary of
the Effective Date and ending on the earlier of (i) twelve months
thereafter, or (ii) the Change of Control Payment Date shall be
referred to as a "SUBSEQUENT MEASURING PERIOD." The "MEASURING
PERIODS" shall mean, collectively, the Initial Measuring Period and
each of the Subsequent Measuring Periods, and a "MEASURING PERIOD"
shall mean any one of the Measuring Periods.
1.14 "CHANGE OF CONTROL PAYMENT DATE" shall mean the effective date of
termination of this Agreement pursuant to Section 10.3.3.
1.15 "COBALT" shall have the meaning set forth in the Preamble.
1.16 "COBALT COMMON" shall mean the common stock, $0.01 par value
per share, of Cobalt.
1.17 "COBALT MEMBER" shall have the meaning set forth in Section 4.1.
1.18 "COBALT SHARE" shall mean, at any specific time, an amount equal
to the Mowven FMV multiplied by the remainder obtained by subtracting the
Cumulative Expense Share at such time from 100%.
1.19 "COBALT SITES" shall have the meaning set forth in Section 7.2.1.
1.20 "COBALT VALUATION AMOUNT" shall mean the average closing price of
publicly-traded Cobalt Common during the twenty (20) trading days immediately
preceding the Appraisal Date as reported by the NASDAQ National Market or other
national securities exchange or market on which the Cobalt Common is then listed
or traded. If the Cobalt Common is not then so listed or traded, the Cobalt
Valuation Amount shall be either (a) any valuation of the Cobalt Common prepared
by a Person independent from Cobalt no earlier than ninety (90) calendar days
prior to the Appraisal Date which valuation is of a type routinely obtained and
used by the Board of Directors of Cobalt for valuing the Cobalt Common for other
than internal uses of Cobalt, or (b) if no valuation meeting the requirements of
clause (a) exists, as agreed upon by Cobalt and GE Capital; provided, however,
that if Cobalt and GE Capital cannot so agree on the Cobalt Valuation Amount,
then Cobalt and GE Capital shall each select an investment banking firm of
national reputation to determine the Cobalt Valuation Amount and the Cobalt
Valuation Amount shall be the average of the determinations made by such
investment banking firms. Cobalt shall make available any such books and records
as any of the investment banking firms involved in the valuation process
described above may reasonably require in order to determine the Cobalt
Valuation Amount. The cost of any determinations performed pursuant to this
Section 1.20 shall be paid one-half by Cobalt and one-half by GE Capital. In
determining the Cobalt Valuation Amount , each investment banking firm shall
consider the cash price that a sophisticated and willing purchaser would pay on
the effective date of the determination for a share of Cobalt Common, with
appropriate discounts applied related to the fact that such share of Cobalt
Common represents a minority interest in Cobalt, may not be registered pursuant
to the
Securities Act of 1933 and is not then listed or traded on the NASDAQ
National Market or any other national securities exchange or market.
1.21 "COBALT VALUATION NOTICE" shall have the meaning set forth
in Section 10.6.2.
1.22 ***confidential treatment requested***
1.23 "CONFIDENTIAL INFORMATION" shall mean (a) any proprietary
information contained in any documents disclosed by one Party to the other
Party or that is marked or otherwise identified as confidential, (b) the
terms of this Agreement, and (c) any information disclosed by one Party to
the other Party that constitutes a trade secret as defined in the Illinois
Trade Secret Act; provided, however, that any disclosure by one Party to the
other Party of information that constitutes a trade secret as defined in the
Illinois Trade Secret Act shall not be (i) deemed to make such information
"generally known to other persons who can obtain economic value from its
disclosure or use," nor (ii) construed as a waiver or impairment of the
disclosing Party's efforts to maintain the secrecy or confidentiality of such
information.
1.24 "CUMULATIVE EXPENSE SHARE" shall mean, as of any date, that
portion of the total Expenses incurred through such date by GE Capital and
Cobalt (expressed as a percentage) that have been incurred through such date
by GE Capital.
1.25 "CUSTODIAN" see Section 1.51.
1.26 "DELIVERABLES" shall mean the specified portions of the Mowven
infrastructure, Enhancements and/or other deliverables to be developed by either
or both of the Parties, or by an independent contractor pursuant to a written
agreement with either or both of the Parties, at a specified time as set forth
in detail in the Operating Plan.
1.27 "DISPUTE NOTICE" shall have the meaning set forth in Section
12.22.1.
1.28 "EBITDA" shall mean earnings before interest, taxes,
depreciation and amortization, determined in accordance with GAAP.
1.29 "EFFECTIVE DATE" shall have the meaning set forth in the
Preamble.
1.30 "ELECTION NOTICE" shall have the meaning set forth in Section
10.7.1.
1.31 "ENHANCEMENTS" shall mean MTS Version 1.0 as enhanced and
funded pursuant to this Agreement and in accordance with the License,
including (i) all changes or additions to, and all modifications or
variations of, MTS Version 1.0, including any updates, upgrades, interfaces
and revisions thereof, and (ii) all derivative works based on GEAutoDirect.
Notwithstanding the foregoing, except as provided in Section 11.8, MTS
Version 1.0 as it exists prior to its being modified shall not be deemed to
be part of the Enhancements.
1.32 "EXPENSE BUDGET" shall mean, with respect to any Period, the
expense budget developed by the Parties as part of the Operating Plan for
such Period, as the same may be amended pursuant to Section 3.2.
1.33 "EXPENSE SHARE" shall mean, as of any date, that portion of
the Expenses for any Period (expressed as a percentage) for which GE Capital
is liable. ***confidential treatment requested***
1.34 "EXPENSES" shall mean all expenses, whether direct or indirect
and whether or not capitalized, that are (a) authorized to be incurred by the
Steering Committee in connection with an Expense Budget and not in violation
of any term or provision of this Agreement, and (b) incurred by the Parties
to develop, operate and market Mowven, including without limitation the
expenses incurred in developing MTS Version 1.0 and the Enhancements and in
developing and operating the option in Mowven that will permit Cobalt to
subcontract with GE Capital as the provider of Fulfillment Services;
provided, however, that any expenses incurred by GE Capital in providing
Fulfillment Services shall not be deemed Expenses hereunder. Without limiting
the foregoing, Expenses shall include (i) in connection with the employees of
Cobalt and GE Capital, as the case may be, who will provide services to
Mowven during any Period as contemplated by the Expense Budget for such
Period, the pro-rata share (based upon the percentage of time during the
applicable Period that they devote to Mowven, on the one hand, and to other
matters for their respective employers, on the other hand) of the wages and
payroll taxes of such employees, and (ii) any other allocated costs agreed to
by the Parties in the Expense Budget for such Period. Notwithstanding the
foregoing, unless the Parties agree otherwise as part of an Operating Plan,
Expenses shall not include any expenses associated with the granting to, or
exercise by, any employee of Cobalt of any options, warrants or similar
rights to acquire Cobalt Common, or any other security issued or issuable by
Cobalt, Newco or any other person or entity, other than options to acquire up
to an aggregate of sixty thousand (60,000) shares of Cobalt Common to be
issued to the initial Mowven Manager at the time that the initial Mowven
Manager is first hired for such position so long as such options vest no
sooner than twenty-five percent (25%) after the first (1st) year of service
as the Mowven Manager and the remaining seventy-five percent (75%) in equal
monthly installments during the second (2nd), third (3rd) and fourth (4th)
years of such service, it being acknowledged that the expenses associated
with such options granted to the initial Mowven Manager shall be recognized
as Expenses only at the time that such options are actually exercised;
provided, however, that to the extent that any such options are vested (in
accordance with the vesting schedule contained in such option) but not
exercised as of the effective date of termination or expiration of this
Agreement, then (i) the positive remainder, if any, obtained by subtracting
(a) the weighted average exercise price per share of such options from (b)
the Cobalt Valuation Amount (except that, for such purposes, all references
to the Appraisal Date contained in Section 1.20 shall be references to the
effective date of termination or expiration of this Agreement), multiplied by
(ii) the number of shares of Cobalt Common subject to such options, shall be
deemed to be Expenses as of the effective date of termination or expiration
of this Agreement.
1.35 "FORCE MAJEURE EVENT" shall have the meaning set forth in
Section 12.9.
1.36 "FULFILLMENT SERVICES" shall mean the Management Services (as
that term is defined in the Fulfillment Services Agreement attached hereto as
EXHIBIT C).
1.37 "FULLY DILUTED BASIS" shall mean taking into account the
number of shares and other ownership interests issuable upon exercise of
outstanding warrants, options or other rights to acquire shares or other
ownership interests (and regardless of whether such rights are vested) and
conversion or issuance of all securities that may be converted into or
exchanged for shares or other ownership interests.
1.38 "GAAP" shall mean generally accepted accounting principles,
consistently applied.
1.39 "GEAUTODIRECT" means the software being licensed to Cobalt
pursuant to the License.
1.40 "GE CAPITAL" shall have the meaning set forth in the Preamble.
1.41 "GE CAPITAL MEMBER" shall have the meaning set forth in
Section 4.1.
1.42 "GE CAPITAL SHARE" shall mean, at any specific time, an amount
equal to the Mowven FMV multiplied by the Cumulative Expense Share at such
time.
1.43 "GE CAPITAL VALUATION NOTICE" shall have the meaning set forth
in Section 10.6.1.
1.44 "HIGH BIDDER" shall have the meaning set forth in Section
3.3.2.2.
1.45 "INDEMNIFIED PARTY" shall have the meaning set forth in
Section 12.5.2.
1.46 "INDEMNIFYING PARTY" shall have the meaning set forth in
Section 12.5.2.
1.47 "INDEPENDENT ACCOUNTANT" shall mean Arthur Andersen unless
such firm is then the auditor of either Party or declines such engagement, in
which case it shall mean the next firm, selected alphabetically in descending
order commencing with A, which is a "Big Five" accounting firm that is not
then the auditor of either Party and does not decline such engagement, in
each case utilizing partners that have not represented and have no
relationship with either Party.
1.48 "INDEPENDENT AUDIT" shall have the meaning set forth in
Section 12.4.2.
1.49 "INITIAL PERIOD" shall have the meaning set forth in Section
3.1.
1.50 "INITIAL TERM" shall have the meaning set forth in Section
10.1.
1.51 "INSOLVENCY EVENT" means any Party, pursuant to or within the
meaning of Title 11, U.S. Code or any similar federal, state or foreign law
for the relief of debtors (a "BANKRUPTCY LAW"): (i) admitting in writing its
inability to pay its debts generally as
they become due, (ii) commencing a voluntary case or proceeding, (iii)
consenting to the entry of an order for relief against it in an involuntary
case or proceeding, (iv) consenting or acquiescing in the institution of a
bankruptcy or insolvency proceeding against it, (v) consenting to the
appointment of a receiver, trustee, assignee, liquidator, sequestrator or
similar official under any Bankruptcy Law (a "CUSTODIAN") of it or for all or
substantially all of its property, (vi) making a general assignment for the
benefit of its creditors, (vii) taking any action to authorize or effect any
of the actions described in clauses (i) through (vi) above, or (viii) a court
of competent jurisdiction entering an order or decree under any Bankruptcy
Law that: (1) is for relief in an involuntary case or proceeding, (2)
appoints a Custodian of all or substantially all of its property, or (3)
orders its liquidation, in each case which is not discharged within sixty
(60) calendar days after the commencement of such case or proceeding.
1.52 "INTELLECTUAL PROPERTY RIGHTS" means all tangible or
intangible, now known or hereafter existing, (a) rights associated with works
of authorship, including but not limited to all exclusive exploitation
rights, copyrights, neighboring rights, and moral rights, (b) trademark,
service mark and trade name rights and similar rights, (c) trade secret
rights, (d) patents, designs, algorithms and other industrial property
rights, (e) all other proprietary rights of every kind and nature, however
designated (including without limitation logos, character rights, "RENTAL"
rights and rights to remuneration), whether arising by operation of law,
contract, license or otherwise, and (f) all registrations, applications,
renewals, extensions, continuations, divisions or reissues of any of the
foregoing now or hereafter in force.
1.53 "INTERNAL AUDIT" shall have the meaning set forth in Section
12.4.1.
1.54 "LIABILITIES" shall have the meaning set forth in Section
12.5.1.
1.55 "LIBOR RATE" shall mean a rate per annum equal to the offered
rate for deposits in Dollars for a thirty (30) calendar day period which
appears on Telerate Page 3750 as of 11:00 A.M. (London time).
1.56 "LICENSE" shall have the meaning set forth in Section 5.
1.57 "LIQUIDITY OFFERING" shall have the meaning set forth in
Section 10.7.1.2
1.58 "LOW BIDDER" shall have the meaning set forth in Section
3.3.2.1.
1.59 "MARKS" shall have the meaning set forth in Section 12.1.
1.60 "MONTHLY RECONCILIATION REPORT" shall have the meaning set
forth in Section 3.6.
1.61 "MOTORPLACE" shall have the meaning set forth in the Recitals.
1.62 "MOTORPLACE FRAMEWORK" shall mean the accessibility to Mowven
through MotorPlace.
1.63 "MOWVEN" shall mean the Internet-based wholesale Automobile
listing and purchasing system for OEMs, automobile dealers and lessors that
Cobalt and GE Capital will develop, operate and market pursuant to this
Agreement, whether located in MotorPlace or offered as a Private Label
Service, including without limitation all activities related to wholesale
Automobile listings which generate revenue, whether or not those revenues and
activities are listed in the Revenue Model attached hereto as EXHIBIT A. From
time to time, Mowven is also referred to in this Agreement as "MOTORPLACE
AUTO EXCHANGE."
1.64 "MOWVEN CUSTOMERS" shall mean purchasers and sellers of
Automobiles who use Mowven to enable such sale or purchase.
1.65 "MOWVEN FMV" shall mean the fair market value (defined as the
cash price a sophisticated and willing buyer would pay to a sophisticated
willing seller in a non-distress negotiated private sale in the ordinary
course of business) of Mowven (taking into account (x) the non-exclusive
right of Mowven to use the Enhancements, and (y) the exclusive relationship
of Mowven within Motorplace.com) as of the Appraisal Date. In the event GE
Capital and Cobalt cannot agree on the Mowven FMV within thirty (30) calendar
days after the Appraisal Date, the Parties shall submit the determination of
the Mowven FMV to one or more appraisers pursuant to the methodology
described in Section 10.6.
1.66 "MOWVEN MANAGER" shall have the meaning set forth in Section
4.5.
1.67 "MOWVEN TRANSACTION SYSTEM" shall mean GEAutoDirect, MTS
Version 1.0 and the Enhancements including, without limitation, the
functionalities for interfacing with multiple sellers, buyer authentication
and registration, provision of fulfillment services and transaction
accounting; provided, however, that the Mowven Transaction System shall not
include any portions of MTS Version 1.0 or of the Enhancements that are part
of Cobalt's dealer website or retail vehicle database infrastructure.
1.68 "MOWVEN TRANSACTION SYSTEM PROBLEMS" shall have the meaning
set forth in Section 7.3.1.
1.69 "MPP" shall have the meaning set forth in Section 6.1.
1.70 "MTS VERSION 1.0" shall mean GEAutoDirect as it has been
modified at such time as the Phase described as Version 1.0 in Section I of
the MPP is reached.
1.71 "MTS VERSION 2.0" shall mean the Enhancements as they exist
when the Phase described as Version 2.0 QA & Test in Section I of the MPP has
been substantially completed.
1.72 "NEWCO" shall have the meaning set forth in Section 10.7.
1.73 "NEWCO STOCK" shall have the meaning set forth in Section 10.7.
1.73.5 "NON-MOWVEN REVENUE" shall mean any revenues received by
Cobalt for the provision of services or products of Cobalt which are not
services or products of Mowven.
1.74 "OEM" shall have the meaning set forth in the Recitals.
1.75 "OFFER NOTICE" shall have the meaning set forth in Section
11.6.3.1.
1.76 "OPERATING PLAN" shall have the meaning set forth in Section
3.1.
1.77 "PARTY" and "PARTIES" shall have the meanings set forth in
the Preamble.
1.78 "PAYMENT ALTERNATIVE A" shall mean a mix of cash, original
principal balance of Promissory Note and percentage of Newco Stock determined
by GE Capital, in its sole discretion pursuant to either Option A-1 or Option
A-2 set forth below.
1.78.1 Pursuant to Option A-1, GE Capital may select in the
Election Notice (a) an amount of cash no greater than $7,500,000, and
(b) a Promissory Note with an original principal balance no greater
than the greater of $10,000,000 or six and one-half (6.5) times the
EBITDA of Mowven during the twelve month period ending on the
Appraisal Date. If GE Capital selects Option A-1, then the actual
payment of the GE Capital Share shall be made by Cobalt, assuming that
the GE Capital Share will be paid in accordance with Payment
Alternative A pursuant to Section 10.7.1, and will include (i) an
amount of cash no less than the amount selected by GE Capital in the
Election Notice, (ii) a Promissory Note with an original principal
balance no less than the amount selected by GE Capital in the Election
Notice, and (iii) a percentage of all of the Newco Stock, on a Fully
Diluted Basis as of the consummation of the Qualified Public Offering,
equal to the result obtained by dividing (1) the remainder obtained by
subtracting from the GE Capital Share the sum of (x) the amount of
cash pursuant to clause (i) above, plus (y) the original principal
amount of the Promissory Note pursuant to clause (ii) above, by (2)
the Mowven FMV.
1.78.2 Pursuant to Option A-2, GE Capital may select in the
Election Notice (a) an amount of cash no greater than $7,500,000, and
(b) a percentage (up to and including 100%) of the remainder of the
GE Capital Share after subtracting the cash selected pursuant to
clause (a) in Newco Stock. If GE Capital selects Option A-2, then the
actual payment of the GE Capital Share shall be made by Cobalt,
assuming that the GE Capital Share will be paid in accordance with
Payment Alternative A pursuant to Section 10.7.1, and will include
(i) an amount of cash equal to the amount selected by GE Capital in
the Election Notice, (ii) a percentage of all of the Newco Stock, on
a Fully Diluted Basis as of the consummation of the Qualified Public
Offering, no less than (A) the percentage of Newco Stock selected by
GE Capital in the Election Notice, multiplied by (B) the result
obtained by dividing (1) the remainder obtained by subtracting from
the GE Capital Share the amount of cash pursuant to clause (i) above,
by (2) the Mowven FMV, and (iii) cash in an amount, a Promissory
Note with an original principal
balance or a combination of cash in an amount and a Promissory Note
with an original principal balance, equal to (I) the GE Capital
Share, minus (II) the sum of (X) the amount of cash pursuant to
clause (i) above, and (Y) the percentage of Newco Stock pursuant to
clause (ii) above multiplied by the Mowven FMV.
1.79 "PAYMENT ALTERNATIVE B" shall mean a mix of cash, original
principal balance of Promissory Note and shares of Cobalt Common determined
by GE Capital, in its sole discretion pursuant to either Option B-1 or Option
B-2 set forth below.
1.79.1 Pursuant to Option B-1, GE Capital may select in the
Election Notice or Payment Alternative B Notice(a) an amount of cash
no greater than $7,500,000, and (b) a Promissory Note with an
original principal balance no greater than the greater of
$10,000,000 or six and one-half (6.5) times the EBITDA of Mowven
during the twelve month period ending on the Appraisal Date. If GE
Capital selects Option B-1, then the actual payment of the GE
Capital Share shall be made by Cobalt, assuming that the GE Capital
Share will not be paid in accordance with Payment Alternative A
pursuant to Section 10.7.1, and will include (i) an amount of cash
no less than the amount selected by GE Capital in the Election
Notice or Payment Alternative B Notice, (ii) a Promissory Note with
an original principal balance no less than the amount selected by GE
Capital in the Election Notice or Payment Alternative B Notice, and
(iii) an amount of Cobalt Common, valued at the Cobalt Valuation
Amount, equal to the remainder obtained by subtracting from the GE
Capital Share the sum of (x) the amount of cash pursuant to clause
(i) above, plus (y) the original principal amount of the Promissory
Note pursuant to clause (ii) above.
1.79.2 Pursuant to Option B-2, GE Capital may select in the
Election Notice or Payment Alternative B Notice (a) an amount of
cash no greater than $7,500,000, and (b) an amount of Cobalt Common,
valued at the Cobalt Valuation Amount, equal in value to no more
than 25% of the GE Capital Share. If GE Capital selects Option B-2,
then the actual payment of the GE Capital Share shall be made by
Cobalt, assuming that the GE Capital Share will not be paid in
accordance with Payment Alternative A pursuant to Section 10.7.1,
and will include (i) an amount of cash no less than the amount
selected by GE Capital in the Election Notice or Payment B
Alternative Notice, (ii) an amount of Cobalt Common, valued at the
Cobalt Valuation Amount, no less than the amount selected by GE
Capital in the Election Notice or Payment B Alternative Notice, and
(iii) a Promissory Note with an original principal balance equal to
(I) the GE Capital Share, minus (II) the sum of (X) the amount of
cash pursuant to clause (i) above, and (Y) the value of the Cobalt
Common, valued at the Cobalt Valuation Amount, pursuant to clause
(ii) above.
1.80 "PAYMENT ALTERNATIVE B NOTICE" shall have the meaning set forth
in Section 10.7.2.
1.81 "PERIOD" shall have the meaning set forth in Section 3.1.
1.82 "PRIVATE LABEL SERVICE" shall mean all Internet-based,
wholesale Automobile listing and purchasing systems that Cobalt makes
available to GE Capital or markets to third parties such as OEMs and
automobile dealers and lessors for use by GE Capital or such third parties,
as the case may be, as a private label, Internet-based, wholesale Automobile
listing and purchasing system, which system may include all or less than all
of the features included and/or Automobiles listed in Mowven as made
available on MotorPlace.
1.83 "PROMISSORY NOTE" shall mean a promissory note in the form of
EXHIBIT N attached hereto which provides for a term of five years from the
date of its issuance, an interest rate equal to 425 basis points in excess of
the LIBOR Rate in effect from time to time (but reset only on a monthly
basis), quarterly interest payments only during the first year after issuance
and quarterly payments of interest and principal (based on a 4 year
amortization commencing on the first anniversary of the issuance date)
thereafter.
1.84 "QUALIFIED PUBLIC OFFERING" shall mean the effectiveness of a
registration statement under the Securities Act of 1933 covering some or all
of the Newco Stock.
1.85 "RENEWAL TERMS" shall have the meaning set forth in Section
10.1.
1.86 "REUSABLE COMPONENT" shall have the meaning set forth in
Section 11.6.4.
1.87 "REVENUE" shall mean the revenue (consisting of cash received,
net of rebates, discounts, refunds and similar payments) derived from Mowven
including revenues of the type listed in the Revenue Model attached hereto as
EXHIBIT A.
1.88 "REVIEW DATE" shall have the meaning set forth in Section 3.2.
1.89 "REVIEW TRIGGER" shall have the meaning set forth in Section
3.1.9.
1.90 "REVIEW TRIGGER EVENT" shall have the meaning set forth in
Section 3.2.
1.91 "SCHEDULED MAINTENANCE PERIODS" shall mean scheduled
maintenance periods (a) that last no longer than two hours per day between
the hours of 2:00 a.m. and 6:00 a.m. Eastern Standard Time, (b) that are
preceded by no less than two weeks prior written notice to the other Party,
or (c) at such times as to which the Parties may agree in writing.
1.92 "SELLER FEES" shall mean the fees payable by Mowven Customers
when such Mowven Customers list and/or sell Automobiles on Mowven.
1.93 "SEMI-ANNUAL PERIOD" shall have the meaning set forth in
Section 3.1.
1.94 "SPIN-OFF NOTICE" shall have the meaning set forth in Section
10.7.
1.95 "STEERING COMMITTEE" shall have the meaning set forth in
Section 4.1.
1.96 "SUBMISSION DATE" shall have the meaning set forth in Section
10.6.3.
1.97 "TELERATE PAGE 3750" means the page designated as "3750" on
the Dow Jones Market service (formerly known as the "Telerate Service"), or
such other page as may replace page 3750 on that service or such other
service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers' Association
Interest Settlement Rates for Dollar deposits.
1.98 "TERM" shall have the meaning set forth in Section 10.1.
1.99 "TERMINATING PARTY" shall have the meaning set forth in
Section 10.2.
1.100 "TERRITORY" shall mean the United States and Canada.
1.101 "THIRD FIRM" shall have the meaning set forth in Section
10.6.3 .
1.102 ***confidential treatment requested***
1.103 "WEB SITE PROBLEMS" shall have the meaning set forth in
Section 7.2.1.
1.104 "WRITTEN SPECIFICATION" shall have the meaning set forth in
Section 6.1.1.
In this Agreement, (a) unless the context otherwise requires, words denoting
the singular include the plural and vice versa and words denoting any gender
include all genders, (b) the words "including", "includes" and "included"
shall mean "including (or includes or included) without limitation," (c) any
reference to a statute shall mean the statute, as amended, in force at the
date hereof, and (d) all dollar amounts are expressed in the currency of the
United States of America.
2. MOWVEN
2.1 EXCLUSIVITY. Upon completion (defined as meeting the milestone
referred to as such in the MPP) of MTS Version 1.0, Cobalt shall make Mowven
available on MotorPlace and, as soon as practicable thereafter, as a Private
Label Service. Mowven will be the exclusive wholesale Automobile
business-to-business sale module on MotorPlace, and will be the only
Internet-based wholesale Automobile listing and purchasing system that Cobalt
operates, develops, hosts, manages or controls for use by OEMs, automobile
dealers and lessors in the Territory.
2.2 GE CAPITAL USE OF MOWVEN. GE Capital will list on Mowven some
or all of the Automobiles that it offers for sale in the Territory which it
has leased (as lessor), financed (as lender) or for which it services the
associated leases or loans for third parties (unless such third parties
prohibit the listing on Mowven of their Automobiles) including, to the extent
multiple listing is practicable because of the existence of appropriate sale
notification features and subject to any legal or contractual restrictions on
multiple listings of Automobiles to which GE Capital may be subject, at least
the same Automobiles as it lists on any other Internet-based wholesale
Automobile listing and purchasing system intended primarily for use by
wholesale buyers of Automobiles in the
Territory that has substantially the same type of functionality as Mowven.
***confidential treatment requested*** GE Capital shall use its commercially
reasonable efforts to promote the use of Mowven to all of its remarketing and
servicing customers for whom it arranges the sale of Automobiles. After the
time that clause (b)(4) of Section 1.22 ceases to apply, (a) if First
National Bank of Nevada elects not to list Automobiles on Mowven in
MotorPlace, then GE Capital shall have the right to list Automobiles leased
or financed by First National Bank of Nevada on a Private Label Service made
available to GE Capital by Cobalt (or on GEAutoDirect in its current or any
enhanced form) without being assessed any Seller Fees related to such
Automobiles, and (b) if any of the Persons listed on EXHIBIT B elect not to
list Automobiles on Mowven in MotorPlace, then GE Capital shall have the
right to list Automobiles leased or financed by such Persons on a Private
Label Service made available to GE Capital by Cobalt and such Persons shall
be assessed Seller Fees in an amount determined in good faith by the
***confidential treatment requested***
2.3 FULFILLMENT SERVICES AGREEMENT. On or before the Effective
Date, Cobalt and GE Capital will execute and deliver to each other the
Fulfillment Services Agreement attached hereto as EXHIBIT C.
2.4 REVENUE MODEL. The Steering Committee will develop the pricing
for Mowven services in accordance with the Revenue Model attached hereto as
EXHIBIT A. The Steering Committee shall price all services offered to Mowven
Customers as part of Mowven in a commercially reasonable manner, competitive
with the prices offered by others in the relevant industry or industries.
3. FINANCIAL OPERATION OF MOWVEN
3.1 DEVELOPMENT OF SEMI-ANNUAL OPERATING PLAN. For (a) the period
beginning with the Effective Date and ending December 31, 2000 (the "INITIAL
PERIOD"), and (b) each of the six month periods during the Term thereafter
(each, a "SEMI-ANNUAL PERIOD"), the Parties shall agree upon a written
operating plan for the respective period (each an "OPERATING PLAN"). Each
Operating Plan shall set forth the information and tasks relating to the
development, operation and marketing of Mowven during the applicable Initial
Period or Semi-Annual Period (each, a "PERIOD"), or such shorter period if
the Operating Plan is revised in accordance with Section 3.2, and shall
address the following matters:
3.1.1 Strategy;
3.1.2 Staffing;
3.1.3 Development plans, including development of MTS
Version 1.0 and the Enhancements;
3.1.4 Marketing plans;
3.1.5 Operating goals (both financial and operational);
3.1.6 Revenue projections;
3.1.7 Expense Share;
3.1.8 an expense budget reflecting all Expenses expected to be
incurred during the applicable Period; and
3.1.9 Review triggers that may include minimum revenue targets
and other developmental and operational milestones appropriate for the
particular Period (the "REVIEW TRIGGERS").
The Operating Plan for the Initial Period is attached hereto as EXHIBIT D. By
April 30 and October 31 of each year during the Term, the Steering Committee
will agree upon, and submit to the Parties, a draft Operating Plan for the
immediately succeeding Period. If the Steering Committee is unable to agree
upon a draft Operating Plan for any Period by such date, then the Steering
Committee shall submit to the Parties, by such date, a draft Operating Plan
containing all of the items upon which the Steering Committee has reached
agreement and, for each other item of the draft Operating Plan, each of the
alternatives proposed for such item by the members of the Steering Committee.
By May 31 and November 30 of each year during the Term, the Parties will
agree upon and adopt the Operating Plan for the immediately succeeding
Period. If the Parties are unable to agree upon the Operating Plan for any
Period by such date, any outstanding issues shall be resolved as provided in
Section 3.3.
Each Party agrees that, notwithstanding any rights it may have
pursuant to this Agreement not to agree on the Operating Plan for the first
Semi-Annual Period, it shall be liable for ***confidential treatment
requested*** (or such greater amount as the Parties agree) of Expenses for
the development of MTS Version 1.0 and the Enhancements during the first
Semi-Annual Period; provided, however, that GE Capital shall not be so
obligated if (1) the items marked with an "*" on Section 2.2 of the Operating
Plan for the Initial Period have not been accomplished by the end of the
Initial Period and GE Capital used commercially reasonable efforts to
cooperate with Cobalt to enable such milestone to be met by such date, or (2)
any Expenses for development of MTS Version 1.0 and the Enhancements during
the Initial Period or the first Semi-Annual Period are not incurred or
committed to be incurred in a manner consistent with normal software
development project management standards.
In connection with the preparation of each Operating Plan, each
Party shall (x) disclose to the Steering Committee any efforts which it is
then undertaking independently of this Agreement to develop a feature or
functionality which is intended to be part of Mowven to the extent that such
undertaking is known to the members of the Steering Committee appointed by
such Party, and (y) use commercially reasonable efforts to make available to
Mowven, on terms and conditions acceptable to the Parties, such feature or
functionality when it has been developed.
3.2 FAILURE TO MEET REVIEW TRIGGERS. Within five (5) Business Days
after the date fixed in the Operating Plan for a Review Trigger, or at any
time during the last two
weeks of the third month of each Period if no such date has been fixed with
respect to review of a Review Trigger, the Steering Committee shall review
the actual performance of Mowven to determine whether the applicable Review
Trigger has been achieved, completed, or otherwise satisfied (each date by
which the Steering Committee is required to review the actual performance of
Mowven pursuant to this sentence being called a "REVIEW DATE"). The Steering
Committee shall determine whether (i) a Review Trigger has not been achieved,
completed or satisfied by the applicable date, (ii) any Review Trigger likely
will not be achieved, completed or satisfied during the applicable Period,
and (iii) actual Expenses incurred during the Period related to any line item
of the then-applicable Expense Budget have deviated or are likely to deviate
from the appropriate Expense Budget line item by more than fifteen percent
(15%) (each of the items in clauses (i), (ii) and (iii) being referred to as
a "REVIEW TRIGGER EVENT"); provided, however, that if two or more members of
the Steering Committee disagree with any determination made by the Steering
Committee as to whether a Review Trigger Event has occurred, such dispute
shall be submitted to the Parties for resolution and, if the Parties are
unable to resolve such dispute within five (5) Business Days after its
submission, such dispute shall be resolved pursuant to Section 3.3. If the
Steering Committee determines (or if it is so determined as a result of the
dispute resolution process set forth in the immediately preceding sentence)
that a Review Trigger Event has occurred, then, no later than fifteen (15)
Business Days after the date of such determination, the Steering Committee
shall reevaluate the Operating Plan and either (x) submit to the Parties a
draft revision to the Operating Plan, including as necessary the Expense
Budget, for such Period containing all of the items upon which the Steering
Committee has reached unanimous agreement and, for each other item of the
draft revision to the Operating Plan, each of the alternatives proposed for
such item by the members of the Steering Committee, or (y) unanimously agree
that no such revision is necessary and so notify the Parties. No later than
ten (10) Business Days after the Steering Committee submits to the Parties
the draft revision to the Operating Plan or notifies the Parties that no such
revision is necessary, the Parties will either agree upon and adopt a
revision to the Operating Plan for such Period or agree that no such revision
is necessary. If the Parties are unable to agree upon a revision to the
Operating Plan for such Period or that no such revision is necessary within
such ten (10) Business Day period, then any outstanding issues shall be
resolved as provided in Section 3.3.
3.3 DISPUTE RESOLUTION. If the Parties are unable to agree on (a)
an Operating Plan by the applicable dates set forth in Section 3.1, (b) any
revision to an Operating Plan or that such a revision is not necessary by the
applicable dates set forth in Section 3.2, (c) whether a Review Trigger Event
has occurred by the applicable dates set forth in Section 3.2, or (d) any
other matter requiring the joint or mutual agreement or determination of the
Parties pursuant to Section 3, then in each such case the Parties shall
submit any outstanding issues to the President or Chief Executive Officer of
each of Cobalt and GE Capital, who shall undertake promptly, in good faith,
to discuss and resolve such issues.
3.3.1 If any disagreement which does not relate to an Expense
Budget, pursuant to clause (c) or (d) of Section 3.3, is not resolved
by the Parties' respective Presidents or Chief Executive Officers
within ten (10) Business Days
after their first substantive discussion related thereto, then such
disagreement shall be resolved by the Steering Committee.
3.3.2 If any disagreement, which does relate to an Expense
Budget, pursuant to clause (a), (b), (c) or (d) of Section 3.3 is
not resolved by the Parties' respective Presidents or Chief
Executive Officers within ten (10) Business Days after their first
substantive discussion related thereto, then:
3.3.2.1 subject to Section 3.4, the Party that proposed
the lower Expense Budget (the "LOW BIDDER") shall be liable
for a share of the Expenses for the Period (or remaining
portion thereof) as to which the dispute relates equal to
fifty percent (50%) of the lower Expense Budget it proposed;
3.3.2.2 the Party that proposed the higher Expense
Budget (the "HIGH BIDDER") shall have the right to establish
the Expense Budget for the Period (or remaining portion
thereof) as to which the dispute relates at any amount it
determines in its discretion (but no lower than the Expense
Budget proposed by the Low Bidder and no higher than the
Expense Budget proposed by the High Bidder);
3.3.2.3 the High Bidder shall be liable for all of the
Expenses for the Period (or remaining portion thereof) as to
which the dispute relates other than those which are the
liability of the Low Bidder pursuant to Section 3.3.2.1;
3.3.2.4 the Cumulative Expense Share shall be
recalculated at the end of each calendar month following the
date that the High Bidder establishes the Expense Budget
pursuant to Section 3.3.2.2; and
3.3.2.5 the Low Bidder shall have the right to
terminate this Agreement by providing at least six months'
prior written notice of the effective date of termination to
the High Bidder; provided, however, that the Low Bidder may
not give such a termination notice prior to the first
anniversary of the Effective Date.
3.3.3 Upon termination of this Agreement by GE Capital pursuant
to Section 3.3.2, Cobalt shall pay GE Capital the GE Capital Share
pursuant to the terms of Section 10.7.
3.3.4 Upon termination of this Agreement by Cobalt pursuant
to Section 3.3.2, at GE Capital's option, either (a) Cobalt shall
pay to GE Capital the GE Capital Share pursuant to the terms of
Section 10.7, or (b) (i) GE Capital shall pay to Cobalt the Cobalt
Share within five (5) Business Days after the Mowven FMV is agreed
upon by the Parties or determined pursuant to Section 10.6, (ii)
Cobalt shall assign to GE Capital all of its right, title and
interest in Mowven, including, without limitation, the right to
operate Mowven in MotorPlace and/or elsewhere,
all data and information regarding the Mowven Customers (but only to
the extent it relates to Mowven) and the operations of Mowven and
the right to employ the Mowven Manager, and (iii) the provisions of
Section 11.4 shall apply to Cobalt.
3.4 EXPENSE SHARING. During each Period during the Term, in
accordance with the procedures set forth in Section 3.6, GE Capital shall be
liable for a portion of each Expense equal to the Expense Share as it existed
on the date that such Expense was incurred (as determined in accordance with
GAAP). If either Party has paid Expenses during any Period in excess of the
amount for which it is responsible pursuant to this Section 3.4, then the
other Party shall reimburse such Party for the amount of such excess, all as
provided in Section 3.6. The Parties acknowledge that if the Steering
Committee incurs any expenses which do not constitute Expenses because they
were incurred without having been authorized or ratified pursuant to the
terms of this Agreement, then Cobalt shall be solely liable for paying such
expenses and the fact that Cobalt paid such expenses shall not be taken into
account in determining the Cumulative Expense Share. The Parties further
acknowledge that the liability of GE Capital for Expenses is solely a
reimbursement obligation to Cobalt to reimburse Cobalt for the Expense Share
of Expenses and does not constitute an obligation of GE Capital to pay any
amounts to any third parties unless GE Capital agrees to pay such a third
party directly.
3.5 REVENUE SHARING. During each Period during the Term, in
accordance with the procedures set forth in Section 3.6, Cobalt shall pay to
GE Capital a percentage of the Revenue received during such Period, which
percentage shall be equal to the Cumulative Expense Share as it existed on
the date that such Revenue was earned (as determined in accordance with
GAAP); provided that all Revenue derived from fees for Fulfillment Services
provided by GE Capital or its contractors pursuant to the Fulfillment
Services Agreement shall be paid to GE Capital. The Parties intend that (a)
if Cobalt provides services or products of Mowven to any Person as a package
with services or products of Cobalt which are not services or products of
Mowven, or in any other manner which results in revenues (including payment
in the form of equity) being provided to Cobalt in addition to its share of
the Revenue, then the revenue (including payment in the form of equity)
received by Cobalt in such a transaction shall be allocated between Revenue
and Non-Mowven Revenue, in good faith, on a commercially reasonable basis
consistent with the amount of Revenue which would have been realized from a
provision of similar services or products to a similarly situated customer in
a transaction which did not include the generation of any Non-Mowven Revenues
or result in any revenues (including payment in the form of equity) being
provided to Cobalt in addition to its share of the Revenue, and (b) all
revenues derived by Cobalt from any Internet-based wholesale Automobile
listing and purchasing system shall constitute Revenue.
3.6 PAYMENT AND DISTRIBUTION OF EXPENSES AND REVENUE. Cobalt shall
prepare a monthly reconciliation of the Revenue and Expenses of Mowven for
the immediately preceding calendar month (the "MONTHLY RECONCILIATION
REPORT") and deliver such report to GE Capital on the later of (i) the
fifteenth (15th) Business Day of each month or (ii) fifteen (15) Business
Days after GE Capital has delivered to Cobalt all information within GE
Capital's control that Cobalt requires to prepare the Monthly Reconciliation
Report. The Monthly Reconciliation Report shall include (a) the Cumulative
Expense Share as of the end of the month then ended, (b) the total amount of
Revenue received and Expenses incurred by each Party, set forth on both a
cash and an accrual basis, itemized as provided in EXHIBIT L, and (c) the net
amount owed by one Party to the other after calculation of the amounts due
and payable pursuant to Sections 3.4 and 3.5 on a cash basis; provided,
however, that following the termination or expiration of this Agreement, (x)
GE Capital shall continue to be liable to pay to Cobalt its share of any
Expenses (determined in accordance with Section 3.4) which were incurred
prior to the date of such termination or expiration, and (y) Cobalt shall
continue to be liable to pay to GE Capital its share of any Revenues earned
(determined in accordance with Section 3.5) prior to the date of such
termination or expiration. GE Capital or Cobalt, as the case may be, shall
pay to the other Party the net amount owed as set forth on the Monthly
Reconciliation Report (by wire transfer to such account as may be designated
in writing by the Party from time to time) within five (5) Business Days of
the date on which such report is delivered to GE Capital. Each party shall be
liable for its own bank fees and related expenses in connection with the
payment of any amounts due hereunder.
4. MANAGEMENT AND PERSONNEL
4.1 STEERING COMMITTEE. A "STEERING COMMITTEE" comprised of
***confidential treatment requested*** employees of Cobalt (each, a "COBALT
MEMBER") and ***confidential treatment requested*** employees of GE Capital
(each, a "GE CAPITAL MEMBER") shall direct and manage the development,
operation and marketing of Mowven. The initial members of the Steering
Committee are identified on EXHIBIT E. Each member of the Steering Committee
shall be designated by his or her employer annually and shall hold office
until such member's resignation, inability to serve or removal by the
respective designating Party. The Party responsible for designating any
member of the Steering Committee shall have the sole authority to designate a
replacement for such member in the event such member resigns from, becomes
unable to serve on, or is removed from, the Steering Committee. The Steering
Committee shall meet no less frequently than monthly to review the
performance of Mowven as compared to the then-applicable Operating Budget.
4.2 GENERAL POWERS OF STEERING COMMITTEE. Except as may be
provided otherwise in this Agreement, the Steering Committee shall have
complete and exclusive discretion in the management and control of the
development, promotion, and operation of Mowven; provided, however, that the
Steering Committee shall make all decisions in accordance with the Operating
Plan for the applicable Period. Except as may be provided otherwise in this
Agreement, the Steering Committee shall possess the power and authority to do
all things necessary or convenient to carry out the development, promotion,
and operation of Mowven.
4.3 LIMITATIONS OF POWERS OF THE STEERING COMMITTEE. None of the
following actions shall be taken without the unanimous vote or unanimous
written consent of the members of the Steering Committee:
4.3.1 any material expansion of Mowven's scope of activities
beyond providing Internet-based wholesale Automobile listing and
purchasing services for OEMs, automobile dealers and lessors in the
Territory;
4.3.2 marketing activities other than in accordance with the
marketing plans set forth in the then-applicable Operating Plan;
4.3.3 incurring any Expenses that would cause an increase in
excess of 15% for the applicable line item in the Expense Budget that
is part of the then-applicable Operating Plan;
4.3.4 any act that would make it impossible to carry on the
ordinary business of Mowven;
4.3.5 the development of Mowven other than pursuant to an
Operating Plan;
4.3.6 the authorization of any previously unidentified capital
expenditures exceeding Twenty Thousand Dollars ($20,000) in the
aggregate in any Period that is not otherwise authorized in the
then-applicable Operating Plan; and
4.3.7 incurring any Expenses that would cause the aggregate
Expenses incurred during any Period to exceed the total amount of
Expenses provided for in the Expense Budget for such Period by more
than $200,000; provided, however, that the $200,000 amount contained
in this Section 4.3.7 may be increased or decreased by the Parties
for any Period in the then-current Operating Plan, so long as such
increase or decrease has been approved by both Parties.
4.4 MEETINGS OF THE STEERING COMMITTEE; ACTION BY THE STEERING
COMMITTEE.
4.4.1 REGULAR MEETINGS. The members of the Steering Committee
may provide by resolution the time for the holding of regular
meetings of the Steering Committee without other notice than such
resolution. All regular meetings shall be held at the location or
locations agreed upon by the members of the Steering Committee. An
agenda describing the business to be transacted at, and the purpose
of, any regular meeting of the members of the Steering Committee,
together with any relevant documentation related thereto, must be
given by the Mowven Manager to each member of the Steering Committee
at least five (5) calendar days prior to the date of such meeting.
The members of the Steering Committee may not transact any business
at a regular meeting of the Steering Committee which is not
described on the agenda for such meeting unless at least four (4)
members of the Steering Committee agree otherwise.
4.4.2 SPECIAL MEETINGS. Special meetings of the Steering
Committee may be called by or at the request of any member of the
Steering Committee. All special meetings shall be held at the
location specified in the notice therefor.
4.4.3 NOTICE OF MEETINGS. Notice of any special meeting of
the Steering Committee shall be given at least five (5) calendar
days previously thereto by written notice delivered personally or
sent by mail, overnight courier service, telecopy or telegram to
each member of the Steering Committee at his or her address as shown
by the records of the Steering Committee. If mailed, such notice
shall be deemed to be delivered three (3) Business Days after being
deposited in the United States mail in a sealed envelope so
addressed, with postage thereon prepaid. If notice be given by
telegram, overnight courier service or telecopy, such notice shall
be deemed to be delivered the following Business Day. Any member of
the Steering Committee may waive notice of any meeting. The
attendance of a member of the Steering Committee at any meeting
shall constitute a waiver of notice of such meeting, except where a
member of the Steering Committee attends a meeting for the express
purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. The business to be
transacted at, and the purpose of, any special meeting of the member
of the Steering Committee must be specified in the notice of such
meeting and any relevant documentation related thereto must
accompany such notice. The members of the Steering Committee may
not transact any business at a special meeting of the Steering
Committee which is not described in the notice for such meeting
unless at least four (4) members of the Steering Committee agree
otherwise.
4.4.4 QUORUM AND VOTING OF THE STEERING COMMITTEE. Each
member of the Steering Committee shall have one vote. At least four
members of the Steering Committee shall constitute a quorum for the
transaction of business by the Steering Committee. Except as
specifically provided otherwise in this Agreement, the act of at
least three members of the Steering Committee present at a meeting
at which a quorum is present shall be the act of the Steering
Committee.
4.4.5 INFORMAL ACTION BY STEERING COMMITTEE. Any action
required to be taken at a meeting of the Steering Committee may be
taken without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by at least four (4) of the members
of the Steering Committee.
4.4.6 COMMUNICATIONS EQUIPMENT. Members of the Steering
Committee may participate in and act at any meeting of the Steering
Committee through the use of a conference telephone or other
communications equipment by means of which all persons participating
in the meeting can hear each other, and participation in the meeting
pursuant to this Section 4.4.6 shall constitute presence in person
at such meeting.
4.5 MOWVEN MANAGER. The full-time manager of Mowven (the "MOWVEN
MANAGER") shall be a Cobalt Member designated by Cobalt with the approval of
GE Capital, such approval not to be unreasonably withheld or delayed. The
Mowven Manager shall have such authorities and duties as may be delegated to
him or her from time to time by the Steering Committee, and shall be
responsible for the day-to-day business and operations of Mowven; provided,
however, that the Mowven Manager shall
exercise his or her authority only in accordance with the then-applicable
Operating Plan. The Mowven Manager shall be subject to performance
benchmarks, including financial goals, as set forth in the then-applicable
Operating Plan. In the event that the Mowven Manager fails to meet the
performance benchmarks for any Period (or if GE Capital determines, at any
Review Trigger Date, that any performance benchmark will not be achieved,
completed or satisfied during the applicable Period), then GE Capital may
notify Cobalt that it must establish and implement a performance plan
acceptable to GE Capital, such acceptance not to be unreasonably withheld or
delayed, which must be met by the Mowven Manager during the ninety (90)
calendar day period commencing on the date that Cobalt is so notified. If the
Mowven Manager does not satisfy such performance plan during such ninety (90)
calendar day period, then GE Capital may establish and implement a
performance plan acceptable to Cobalt, such acceptance not to be unreasonably
withheld or delayed, which must be met by the Mowven Manager during the
ninety (90) calendar day period commencing on the date that the performance
plan established and implemented by Cobalt expires. If the Mowven Manager
does not satisfy such performance plan during such ninety (90) calendar day
period, then, at the request of GE Capital, Cobalt shall replace the Mowven
Manager with another Cobalt Member designated by Cobalt with the approval of
GE Capital, such approval not to be unreasonably withheld or delayed; it
being acknowledged that Cobalt has no obligation to terminate the employment
of the Mowven Manager but may reassign him or her to other duties within
Cobalt unrelated to Mowven. The Mowven Manager shall at all times conduct him
or herself, and carry out his or her management responsibilities, in a
professional and ethical manner consistent with the General Electric Capital
Corporation Integrity Standards attached hereto as EXHIBIT F, as such
standards may be revised for general application to GE Capital and its
employees from time to time.
4.6 PRODUCT MANAGEMENT AND OPERATIONS FUNCTIONS. GE Capital shall
designate such GE Capital personnel as it determines, in its sole discretion,
to manage, subject to the general authority of the Steering Committee and the
supervision of the Mowven Manager, Mowven's product management and operations
functions.
4.7 EMPLOYEES. Each Party shall assign such personnel as may be
necessary, from time to time, to participate in the development, promotion,
operation, management and support of Mowven as contemplated by the
then-applicable Operating Plan. Each Party shall have exclusive control over
the means and manner by which its employees perform the services called for
in this Agreement. Each Party shall be solely responsible for supervising and
managing their own employees in all respects including, without limitation,
(a) hiring, firing, training and disciplining (for all matters, including
without limitation for performance and/or conduct), and (b) supervising all
other labor conditions (such as working hours, vacations, holidays and
personal leave). Each Party shall promptly notify the other Party of any
complaints received from employees of the other Party related to (i) the
performance of the other Party of its obligations under this Agreement, or
(ii) the other Party's conduct as an employer. In the event that any Party
has any complaints or other comments related to the performance of any
employees of the other Party providing services as contemplated in this
Section 4.7, it shall notify one of the members of the Steering Committee
appointed by the Party as to whose employees it has such complaints or other
comments. Each Party shall be solely responsible for all
salary, benefits, and other compensation and work-related expenses arising
from or relating to, its employees who provide services in connection with
Mowven, regardless of whether such expenses are Expenses provided for in the
then-applicable Operating Plan. Each Party shall satisfy its respective
withholding and other liabilities associated with any payroll or other taxes
applicable to its employees' compensation and all other requirements that may
be applicable to its respective employees' employment status, and shall
comply with applicable employment agreements. Each such employee, including
the Cobalt Members and the GE Capital Members, shall remain an employee of
the Party that assigned such employee to participate in Mowven, shall not be
deemed to be an employee of the other Party and shall sign an acknowledgement
to that effect prior to providing any services as contemplated by this
Section 4.7. Each Party shall be responsible to its employees and third
parties for all employer liabilities. No employee of one Party shall have
authority to bind the other Party.
4.8 CONTINUITY AND REPLACEMENT OF EMPLOYEES. Each Party
acknowledges that continuity of participation by its designated employees as
members of the Steering Committee and otherwise as participants in the
development, promotion, operation, management and support of Mowven is
important to its success. Each Party shall use commercially reasonable
efforts to maintain the continuity of participation by each of its designated
employees in Mowven during each Period. Each Party will use commercially
reasonable efforts to replace each designated employee whose participation in
Mowven terminates with personnel who, in the reasonable judgment of such
Party, are capable of satisfactorily carrying out the responsibilities
formerly performed by the departing employee, provided that such Party
determines it is necessary for such employee to be replaced to meet the
requirements of the then-applicable Operating Plan. A Party will use
commercially reasonable efforts to effect such replacement within ten (10)
Business Days of the date on which an employee's participation in Mowven
terminates.
5. SOFTWARE LICENSE
On or before the Effective Date, Cobalt and GE Capital will execute and
deliver to each other the Software License attached hereto as EXHIBIT G (the
"LICENSE").
6. DEVELOPMENT OF ENHANCEMENTS
6.1 DEVELOPMENT. The Parties shall use commercially reasonable
efforts to develop MTS Version 1.0 and the Enhancements in accordance with a
Master Product Plan ("MPP"), which will set forth the principal features of
MTS Version 1.0 and the Enhancements and the sequencing of the development
plan with respect thereto. An initial draft of the MPP is attached hereto as
EXHIBIT M. The final version of the MPP, MTS Version 1.0 and each Enhancement
shall be approved and revised, from time to time, by the Parties and
incorporated into the Operating Plan. The Parties shall cooperate in good
faith in providing information, personnel, and such other resources as may be
necessary and appropriate, as determined by the Steering Committee in
accordance with the then-applicable Operating Plan, to facilitate the
specification and development of MTS Version 1.0 and the Enhancements, to
develop mutually agreeable procedures for
acceptance testing, and to otherwise facilitate the performance of the
Parties' respective obligations hereunder.
6.1.1 WRITTEN SPECIFICATIONS. MTS Version 1.0 and each
Enhancement will be developed according to the functional and
technical specifications therefor set forth in the applicable MPP
(the "WRITTEN SPECIFICATIONS"). Each Written Specification shall
include a statement of work describing the steps, technology,
personnel and other resources required to develop MTS Version 1.0
and each Enhancement. The Steering Committee shall allocate the work
described in the statement of work to either or both Parties, or
subcontract all or a portion of such work to one or more third
parties, in each case in accordance with the then-applicable
Operating Plan.
6.1.2 MODIFICATIONS TO WRITTEN SPECIFICATIONS. Either Party
may propose modifications or changes to the Written Specifications.
Any such proposal shall be submitted in writing to the Steering
Committee and shall include (i) a description of the proposed
modification or change and an explanation of the rationale for the
proposal; (ii) the effects on the performance of MTS Version 1.0 or
the Enhancement and on the development program therefor resulting
from implementation of the proposal (e.g., change in development
cost or implementation date); and (iii) alternative solutions and
the potential adverse consequences, if any, of not implementing the
proposal. The Parties shall review the proposal, together with the
recommendations of the Steering Committee related to such proposal,
and, if mutually agreeable, shall revise the MPP and Operating Plan
accordingly; provided, however, that if such proposal is not
mutually agreeable, then the MPP and Operating Plan shall be revised
to reflect the delays, if any, in the time-frames and deadlines
contained therein resulting solely from the Parties' review of such
proposal. In no event shall a Party be obligated to commence work
on any modification or change to a Written Specification until the
MPP and Operating Plan have been revised to reflect such
modification or change.
6.1.3 STORAGE AND VERSION CONTROL. The Parties shall follow
such procedures as are appropriate for (a) the storage, backing-up
and archiving of any source or object code developed as part of the
development process, (b) adequate disaster recovery, and (c)
adequate version control for the Enhancements as they are developed
and modified.
6.2 TESTING. The Parties shall jointly approve the acceptance test
procedures applicable to MTS Version 1.0 and each Enhancement to determine
conformity thereof with its Written Specification. At such time as
development of MTS Version 1.0 or an Enhancement is completed, Cobalt shall
conduct the acceptance test applicable thereto at its facilities. GE Capital
shall be provided at least ten (10) Business Days advance written notice of
such acceptance testing and shall be entitled to participate in and monitor
the acceptance test. If MTS Version 1.0 or an Enhancement shall fail the
acceptance test, as determined mutually by the Parties, then the Parties
shall jointly examine the acceptance test results and develop, or require a
third party to develop,
appropriate modifications to correct the non-conformity to its Written
Specifications. Upon correction of the non-conformity, Cobalt shall re-run
the acceptance test on MTS Version 1.0 or the Enhancement, as modified. The
Parties shall repeat this process until the earlier of successful completion
of the acceptance test (as determined mutually by the Parties) or the Parties
decide to terminate work on MTS Version 1.0 or the Enhancement, as
appropriate. An acceptance test shall be successfully completed at such time
as the Parties mutually determine that MTS Version 1.0 or the Enhancement, as
appropriate, functions without the occurrence of any demonstrated,
reproducible non-conformity to the Written Specification therefor.
6.3 ACCEPTANCE. At such time as the acceptance test is
successfully completed, the Steering Committee may accept MTS Version 1.0 or
the Enhancement, as appropriate, as an approved Deliverable.
6.4 SUBCONTRACTORS. The Steering Committee may engage, on behalf
of the Parties, third party subcontractors to develop MTS Version 1.0 and the
Enhancements. The Steering Committee shall cause each third party engaged in
connection with the development of MTS Version 1.0 and the Enhancements to
execute confidentiality and assignment of rights agreements with the Parties
prior to such third party's engagement. Such agreements (a) shall be in a
form acceptable to Cobalt and to GE Capital and shall provide that the
services are a "work-for-hire" pursuant to the United States Copyright Act of
1976, as amended, (b) shall include a full assignment of rights to Cobalt and
GE Capital, (c) shall, to the extent permissible pursuant to applicable laws,
provide that they are governed by the internal laws (but not the conflict
principles) of either the State of Washington or the State of Illinois, (d)
shall include a waiver of any "droit moral" or "moral rights of authors" or
any similar rights, (e) shall include an assignment of any so-called "rental
rights," (f) shall be freely assignable, and (g) shall have confidentiality
and non-disclosure provisions acceptable to Cobalt and GE Capital.
6.5 OWNERSHIP OF ENHANCEMENTS. Except as set forth in Section
6.5.2, the Parties shall be deemed co-authors of the Enhancements. Each Party
shall own an undivided 50% interest in the Enhancements and all Intellectual
Property Rights embodied therein (including any source code, object code or
other Intellectual Property created by any Party, any employee of any Party
or, consistent with the requirements of Section 6.4, any subcontractor of a
Party or the Parties) as tenants in common, without rights of survivorship,
but with full and unrestricted rights to exploit the Enhancements and the
Intellectual Property Rights embodied therein subject to the restrictions set
forth in this Agreement. Each Party shall (i) execute and deliver such
written assignments and other documents and (ii) take any other actions as
may be necessary to perfect the other Party's ownership interest and rights
in and to the Enhancements and the Intellectual Property Rights embodied
therein. Except as provided in Section 11.6, neither Party shall have any
obligation to account to the other for any revenues received from use or
licensing of the Enhancements. Neither Party shall take or cause to be taken
any action that would in any way impair or threaten to impair the rights of
the other Party in and to MTS Version 1.0 and the Enhancements.
Notwithstanding the foregoing, subject to Section 12.1 and except in the
situation described in the proviso to Section 11.8, GE Capital shall be
deemed to be the author and the sole owner of MTS Version 1.0.
6.5.1 ACCESS TO ENHANCEMENTS. At any time during the Term,
each Party shall, if requested by the other Party, provide to such
Party access to the then-current version of any Enhancements
(including all documentation, object code and source code related
thereto) in such Party's possession or control (other than
Enhancements as to which a Party has no ownership rights pursuant to
Section 6.5.2).
6.5.2 LIMITATIONS ON OWNERSHIP OF ENHANCEMENTS.
Notwithstanding anything contained in this Section 6.5 to the
contrary, (a) GE Capital shall have no ownership or other rights,
and Cobalt shall have all right, title and interest, with respect to
any Enhancements which are developed after the end of two (2)
consecutive Periods during each of which the Expense Share is less
than 25%, and (b) Cobalt shall have no ownership or other rights,
and GE Capital shall have all right, title and interest, with
respect to any Enhancements which are developed after the end of two
(2) consecutive Periods during each of which the Expense Share is
greater than 75%.
6.6 NO REPRESENTATIONS OR WARRANTIES. NEITHER PARTY WARRANTS THAT
MTS VERSION 1.0 OR ANY ENHANCEMENTS WHICH IT IS RESPONSIBLE FOR DEVELOPING
WILL MEET ANY SPECIFIC REQUIREMENTS, NOR DO THEY WARRANT THAT THE OPERATION
OF MTS VERSION 1.0 OR THE ENHANCEMENTS WILL BE ERROR-FREE. EACH PARTY ASSUMES
THE RESPONSIBILITY TO TAKE ADEQUATE PRECAUTIONS AGAINST DAMAGES TO ITS
OPERATIONS WHICH COULD BE CAUSED BY DEFECTS OR DEFICIENCIES IN MTS VERSION
1.0 OR THE ENHANCEMENTS. NEITHER PARTY MAKES ANY, AND EACH PARTY HEREBY
SPECIFICALLY DISCLAIMS ANY, REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, IN MTS VERSION 1.0 OR THE ENHANCEMENTS WHICH IT IS RESPONSIBLE FOR
DEVELOPING. NO OTHER WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY (INCLUDING,
BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR PURPOSE OR
ANY IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF
PERFORMANCE) APPLY TO THE ENHANCEMENTS WHICH EITHER PARTY IS RESPONSIBLE FOR
DEVELOPING.
7. OBLIGATIONS OF THE PARTIES
7.1 JOINT OBLIGATIONS OF COBALT AND GE CAPITAL
7.1.1 The Parties shall work together in good faith to develop
procedures for the wholesale listing and sale of Automobiles through
Mowven, consistent with the standards specified in the MPP.
7.1.2 Each Party agrees that, in providing products or services
in connection with Mowven, it shall (i) take commercially reasonable
actions to provide such products and services in a manner consistent
with the way in which
such products or services were advertised or represented by such Party,
and (ii) comply with all applicable laws.
7.1.3 Neither Party shall grant or consent to the imposition of
any lien or other encumbrance on the other Party's interest, if any,
in MTS Version 1.0, the Enhancements, GEAutoDirect or the Revenue.
7.1.4 Each Party shall provide the relevant personnel of such
Party with the ongoing documentation, training and instruction
reasonably necessary to understand, use and evaluate the operation of
Mowven. Each Party shall provide the relevant personnel of the other
Party with the ongoing documentation, training and instruction
reasonably necessary to understand such Party's service offerings,
and the competitive strengths of such offerings, that are relevant to
the performance of this Agreement. As may be specified in the
Operating Plan, the Parties agree to provide training programs to
their respective sales personnel to promote Mowven.
7.1.5 Each Party shall use its commercially reasonable efforts
to perform its responsibilities pursuant to the then-applicable
Operating Plan.
7.2 COBALT OBLIGATIONS
7.2.1 Cobalt shall host MotorPlace and the MotorPlace
Framework (together the "COBALT SITES") and the Mowven Transaction
System, to the extent that Cobalt operates such system, on secure
file servers so that the Cobalt Sites and the Mowven Transaction
System are accessible by users via the Internet twenty-four (24)
hours per day, seven (7) days per week, except (a) for interruptions
beyond Cobalt's control, (b) upon the occurrence of a Force Majeure
Event, or (c) for Scheduled Maintenance Periods. Except in the case
of Scheduled Maintenance Periods, Cobalt shall, upon its discovery
or receipt of notification that the Cobalt Sites or the Mowven
Transaction System are inaccessible or that there are any defects,
errors or omissions in the Cobalt Sites or the Mowven Transaction
System that materially and adversely affect the performance,
delivery, accessibility or availability of Mowven (the "WEB SITE
PROBLEMS"), use its best efforts to remedy or cause to be remedied
the Web Site Problems within a commercially reasonable time. Cobalt
shall, in accordance with high industry standards, check for and
take measures to prevent viruses from affecting the Cobalt Sites or
the Mowven Transaction System. In the event a virus is discovered,
Cobalt will use its best efforts to remove such virus. Failure by
Cobalt to maintain the aforementioned standards or comply with the
above corrective measures will be considered a material breach of
this Agreement. In addition, during the Term, Cobalt shall have in
place disaster recovery plans related to the Cobalt Sites and the
Mowven Transaction System, to the extent that Cobalt operates such
system, consistent with the disaster recovery plans which Cobalt
maintains for the sites which it hosts itself.
7.2.2 Cobalt shall provide technical support to Mowven
Customers consistent with the levels of technical support which
Cobalt provides to customers of its other products. Such support
shall be provided by email and telephone by Cobalt personnel and
may, as determined by Cobalt, be provided by Cobalt field-based
personnel. Cobalt shall respond to Mowven Customers requiring
technical support within one (1) Business Day. GE Capital agrees
that, during the time that it hosts the Mowven Transaction System,
it will make available to Cobalt, as part of its obligations
pursuant to Section 4.7, at least one employee of GE Capital to
serve as a consultant to Cobalt regarding technical support issues
and one employee of GE Capital to serve as a consultant to Cobalt
regarding customer support issues, in each case to provide Cobalt
with assistance in connection with its provision of technical
support to Mowven Customers on matters related to the Mowven
Transaction System.
7.2.3 Cobalt shall collect all Revenue and shall distribute
the Revenue in accordance with Section 3.6 of this Agreement. Cobalt
agrees that all such Revenues collected or received by it which are,
or could be, the property of GE Capital pursuant to Section 3.5 or
3.6 shall be handled in a manner such that they are (a) not
commingled with any other funds of Cobalt, (b) held in trust for the
benefit of GE Capital, and (c) not subjected to the claims of any
creditors of Cobalt other than GE Capital.
7.2.4 Cobalt shall market Mowven primarily to franchised
automotive dealers and to wholesale sellers of used Automobiles, in
each case as provided in the then-applicable Operating Plan, and
will have primary responsibility for managing dealer and seller
relationships. Cobalt shall provide such other sales and marketing
services as specified in the then-applicable Operating Plan.
7.3 GE CAPITAL OBLIGATIONS
7.3.1 This Section 7.3.1 applies only so long as GE Capital
operates the Mowven Transaction System. GE Capital shall host the
Mowven Transaction System on secure file servers so that the Mowven
Transaction System is accessible by users via the Internet
twenty-four (24) hours per day, seven (7) days per week, except (a)
for interruptions beyond GE Capital's control, (b) upon the
occurrence of a Force Majeure Event, or (c) for Scheduled
Maintenance Periods. Except in the case of Scheduled Maintenance
Periods, GE Capital shall, upon its discovery or receipt of
notification that the Mowven Transaction System, and any successors
thereto, are disabled or inaccessible or there are any defects,
errors or omissions in the Mowven Transaction System that materially
and adversely affect the performance, delivery, accessibility or
availability of the Mowven Transaction System (the "MOWVEN
TRANSACTION SYSTEM PROBLEMS"), use its commercially reasonable
efforts to remedy or cause to be remedied the Mowven Transaction
System Problems within a commercially reasonable time. GE Capital
shall, following procedures generally consistent with industry
standards, check for and take measures to prevent viruses from
affecting the Mowven Transaction System. In the event a virus is
discovered, GE Capital will use its commercially reasonable
efforts to remove such virus. In addition, GE Capital shall have
in place disaster recovery plans related to the Mowven Transaction
System consistent with the disaster recovery plans which GE Capital
maintains for the sites which it hosts itself.
7.3.2 GE Capital shall have the exclusive right to establish
and manage a financial clearinghouse to facilitate the liquidity
necessary for Mowven Customers to consummate transactions on Mowven;
provided, however, that if GE Capital has not established such a
financial clearinghouse within ninety (90) calendar days after
Cobalt provides GE Capital with written notice that the Steering
Committee desires to have Mowven offer such a capability, which
notice may not be given by Cobalt prior to January 1, 2001, then
Cobalt shall have the right to retain a third party to establish and
manage such a financial clearinghouse. The Parties acknowledge that
Cobalt shall have the right to charge Mowven Customers for the use
of financial clearinghouse services an amount in excess of the
amount charged by GE Capital to Cobalt for providing such services;
provided, however, that all such excess amounts shall be deemed
Revenue.
7.3.3 Within a reasonable time after Cobalt's request
therefor, GE Capital will provide to Cobalt an introduction to
senior management of GE Capital's Global Consumer Finance Affiliate
in Europe so that Cobalt and GE Capital can jointly present to them
the operations and functionalities of Mowven and discuss how the
Parties might work together in Europe.
7.3.4 GE Capital shall assist Cobalt to develop listing
relationships with wholesale sellers of used Automobiles. GE Capital
shall provide such other sales and marketing services as specified
in the then-applicable Operating Plan.
8. OWNERSHIP OF MOWVEN
8.1 OWNERSHIP OF MOWVEN. The Parties acknowledge that, subject to
Sections 3.4, 3.5, 3.6 and 6.5, Cobalt shall retain the ownership of Mowven
and all of its assets. Cobalt shall use its commercially reasonable best
efforts to preserve and protect the business and prospects of Mowven and its
assets and, subject to Section 8.3, shall not transfer, sell or dispose of
any of the assets comprising a part of, or used in connection with, Mowven
unless, following such transfer, sale or disposition, Cobalt has sufficient
remaining or substitute assets to continue the business of Mowven in the
ordinary course, consistent with past practice and the then-current Operating
Plan.
8.2 WARRANTS. On the Effective Date, Cobalt shall deliver to GE
Capital a duly executed Warrant, exercisable for a number of shares of Cobalt
Common, all as provided for and in the form attached hereto as EXHIBIT H.
8.3 CONTINUITY OF INVESTMENT. Cobalt shall have the right, at any
time, to restructure or alter the ownership of MotorPlace or Mowven in any
way, including, by way of example and not by way of limitation, a partial or
complete spin off of Mowven or MotorPlace by Cobalt, transfer of all or a
portion of Mowven to an Affiliate of Cobalt
or a third party, sale of a tracking stock based upon the results of Mowven
or MotorPlace, or any similar type of transaction which results in some or
all of MotorPlace or Mowven ceasing to be solely owned directly by Cobalt in
the manner in which either of them are owned on the Effective Date, so long
as (a) GE Capital is issued equity or other ownership interests in the
restructured entity so that GE Capital owns, immediately following the
restructuring or alteration, a portion of such equity or other ownership
interests then outstanding equal to a fraction, (i) the numerator of which is
the GE Capital Share (provided that, for this purpose, all references to the
Appraisal Date referred to in Section 1.65 or 10.6 shall be deemed to be
references to the date of such restructuring or alteration), and (ii) the
denominator of which is the fair market value of the restructured entity as
of the date of such restructuring or alteration (such fair market value to be
determined on the same basis, and using the same methodology, as the Mowven
FMV is determined), (b) the equity ownership or other ownership interest in
the restructured entity issued to GE Capital must be the equivalent of common
stock in a corporation including being entitled to dividends and
distributions, (c) no equity ownership or other ownership interest in the
restructured entity senior or preferred to the equity ownership or ownership
interest issued to GE Capital shall be issued, (d) this Agreement is amended
and, if necessary, new agreements are executed, to assure that GE Capital
retains rights (including, without limitation, economic, governance and other
rights) with respect to the restructured entity no less beneficial to it than
the rights it has pursuant to this Agreement, and (e) no Person other than GE
Capital, Cobalt or an Affiliate of GE Capital or Cobalt owns any of the
equity ownership or other ownership interests in the restructured entity;
provided, however, that clauses (a) through (e) of this Section 8.3 shall not
apply to a transaction consisting solely of Cobalt assigning all of its
right, title and interest in Mowven and this Agreement to a wholly-owned
subsidiary of Cobalt. Nothing contained in this Section 8.3 shall affect the
rights of GE Capital pursuant to Section 10.3.3.
8.4 PROTECTION OF GE CAPITAL SHARE. Cobalt hereby grants to GE
Capital a security interest in all of Cobalt's right, title and interest in the
Enhancements to secure Cobalt's performance and payment of all of its
obligations pursuant to this Agreement. Cobalt shall execute, at the request of
GE Capital, such financing statements or other documents or instruments
necessary to perfect such security interest.
9. INTENTIONALLY OMITTED
10. TERM AND TERMINATION
10.1 TERM. This Agreement shall be for a term commencing on the
Effective Date and ending on December 31, 2005 (the "INITIAL TERM"), subject
to earlier termination as provided in this Agreement. Following the Initial
Term, this Agreement shall automatically renew for additional one (1) year
periods ("RENEWAL TERMS") unless either Party provides written notice to the
other Party, at least ninety (90) calendar days prior to the conclusion of
the then-current Term, of its intention not to renew. For the purposes of
this Agreement, "TERM" shall be deemed to include the Initial Term and any
Renewal Term(s).
10.2 TERMINATION FOR CAUSE. This Agreement may be terminated
immediately by either Party (a "TERMINATING PARTY") "for cause" at any time
by providing to the other Party written notice containing an effective date
of termination and stating that termination is for cause. For purposes of
this Agreement, "for cause" means any of the following events with respect to
the other Party (the "BREACHING PARTY"):
10.2.1 The Breaching Party ceases to carry on business as a
going concern;
10.2.2 An Insolvency Event occurs with respect to the Breaching
Party;
10.2.3 Except in connection with a Change of Control, the
Breaching Party assigns or transfers any of its rights or
responsibilities granted under this Agreement without the prior written
consent of the Terminating Party, except as expressly permitted under
this Agreement (including pursuant to Sections 6.4 and 8.3);
10.2.4 The Breaching Party materially breaches Sections 2.1, 6.5,
11 (other than Section 11.9) or the second sentence of Section 12.6 and
fails to cure such material breach to the Terminating Party's
reasonable satisfaction within sixty (60) calendar days after receipt
of written notification from the Terminating Party of such breach; or
10.2.5 The Breaching Party fails to pay any amount due to the
Terminating Party under this Agreement within forty-five (45) calendar
days after the Terminating Party has given the Breaching Party written
notice of such late payment.
10.3 ADDITIONAL TERMINATION RIGHTS. Notwithstanding the foregoing,
this Agreement may be terminated as follows:
10.3.1 By GE Capital, after the first year of the Initial Term,
upon no less than one hundred eighty (180) calendar days prior written
notice to Cobalt;
10.3.2 By either Party, pursuant to Section 3.3.2; or
10.3.3 By GE Capital, upon no less than ninety (90) calendar days
prior written notice to Cobalt given no later than one hundred
eighty (180) calendar days after Cobalt undergoes a Change of Control;
provided, however, that Cobalt shall have the right to cause GE Capital
to terminate this Agreement on any date between the date Cobalt is
given such written notice and the anticipated date of termination set
forth in such written notice.
10.4 POST-TERMINATION RIGHTS. Upon termination or expiration of this
Agreement, GE Capital shall have the right to (a) market goods and services to
Mowven Customers, (b) place advertisements on MotorPlace to the extent that such
advertisements are for products or services that do not compete with Cobalt
products and services and are consistent with MotorPlace's practices at the time
with respect to advertising on
MotorPlace at fees consistent with Cobalt's then existing advertising fee
structure, and (c) if this Agreement is terminated by GE Capital pursuant to
Section 10.2, obtain from Cobalt a list of all Mowven Customers through the
date of termination.
10.5 GE CAPITAL INVESTMENT RECOUPMENT. Except as provided in the
last sentence of this Section 10.5, if (a) this Agreement is terminated (i)
by GE Capital pursuant to Section 10.2, or (ii) by Cobalt other than pursuant
to Section 10.2 or 10.3.2, or (b) if Cobalt or GE Capital elects not to
extend the Agreement for any Renewal Term, then Cobalt shall pay to GE
Capital, pursuant to the terms of Section 10.7, the GE Capital Share. If this
Agreement is terminated by GE Capital pursuant to Section 10.3.3, then Cobalt
shall pay to GE Capital, in cash, no later than five (5) Business Days after
the Change of Control Payment Date, the Change of Control Payment.
Notwithstanding the foregoing, if this Agreement is terminated by GE Capital
pursuant to Section 10.2 and the Alternative Payment Amount exceeds the GE
Capital Share, then, in such event, Cobalt shall pay to GE Capital, in lieu
of the GE Capital Share, an amount equal to the Alternative Payment Amount,
in cash, no later than five (5) calendar days after the Mowven FMV is
determined.
10.6 PROCEDURES FOR FAIR MARKET VALUATION.
10.6.1 In the event GE Capital and Cobalt do not agree on the
amount of the Mowven FMV, GE Capital shall, within thirty-five (35)
calendar days after the Appraisal Date, give Cobalt a notice (a "GE
CAPITAL VALUATION NOTICE") containing the name of an investment
banking firm of national reputation to determine the Mowven FMV on
behalf of GE Capital; provided, however, that such investment
banking firm (a) does not own more than 5% of the capital stock of
General Electric Company, (b) represents and warrants, in writing,
to the Parties that it is not aware of any conflict of interest
which would prevent it from providing such determination in an
impartial manner, and (c) discloses, in writing, to the Parties the
nature of all transactions or other assignments for which it
provided services to GE Capital or any of its Affiliates during the
twenty-four (24) months prior to the GE Capital Valuation Date which
may be publicly disclosed without violating any confidentiality or
other legal requirements.
10.6.2 Within five (5) calendar days following receipt of a
GE Capital Valuation Notice, Cobalt shall designate, in writing
submitted to GE Capital (a "COBALT VALUATION NOTICE"), another
investment banking firm of national reputation that (a) does not
have an investment in Cobalt, (b) is not in the process of
underwriting any offerings of any of Cobalt's securities, (c) does
not make a market in any of Cobalt's securities to determine the
Mowven FMV on behalf of Cobalt, (d) represents and warrants, in
writing, to the Parties that it is not aware of any conflict of
interest which would prevent it from providing such determination in
an impartial manner, and (e) discloses, in writing, to the Parties
the nature of all transactions or other assignments for which it
provided services to Cobalt or any of its Affiliates during the
twenty-four (24) months prior to the date of the Cobalt Valuation
Notice which may be publicly disclosed without violating any
confidentiality or other legal requirements. The two investment
banking firms shall then each determine the Mowven FMV.
10.6.3 Each of the investment banking firms appointed by
GE Capital and Cobalt shall be directed to provide, within thirty (30)
calendar days following GE Capital's receipt of the Cobalt Valuation
Notice, GE Capital and Cobalt with a written report of the
investment banking firm's respective Mowven FMV (the date of the
later submission being referred to herein as the "SUBMISSION DATE").
If the lower of the two Mowven FMVs is greater than or equal to 90%
of the higher Mowven FMV, the final Mowven FMV shall be the average
of the two Mowven FMVs submitted by such investment banking firms.
If the lower of the two Mowven FMVs does not equal 90% or more of
the higher Mowven FMV, within ten (10) calendar days following the
Submission Date, GE Capital and Cobalt shall jointly select a third
investment banking firm of national reputation (the "THIRD FIRM") to
perform a third Mowven FMV; PROVIDED, HOWEVER, that if GE Capital
and Cobalt are unable to agree on a Third Firm within such period,
then GE Capital and Cobalt shall jointly instruct the two investment
banking firms which submitted Mowven FMVs to select, within ten (10)
calendar days following their notification of such request, a Third
Firm. The Third Firm shall be instructed to prepare a Mowven FMV
and deliver it to GE Capital and Cobalt within ten (10) calendar
days after its retention. The Mowven FMV shall be the average of
the three Mowven FMVs provided by the investment banking firms, and
such average shall constitute the Final Market Valuation and shall
be final and conclusive.
10.6.4 GE Capital and Cobalt agree to make reasonably available
any such books or records and cash flow projections as any of the
parties involved in the valuation process described in this Section
may reasonably require in order to reach a Mowven FMV. The cost of
any appraisals performed pursuant to this Section 10.6 shall be paid
one-half by Cobalt and one-half by GE Capital.
10.7 PAYMENT OF MOWVEN FMV. If Cobalt is required to pay GE Capital
the GE Capital Share, then no later than five (5) calendar days after
the Mowven FMV is determined, Cobalt shall have the right to provide to
GE Capital a written notice (the "SPIN-OFF NOTICE") informing GE Capital that
Cobalt will elect to engage in a transaction whereby Cobalt will transfer all
of its right, title and interest in Mowven to a new entity which will have a
capital structure consisting of only one class of common stock or other
ownership interests and no classes or preferred or senior stock or other
ownership interests (assuming that Cobalt has not previously taken advantage
of its rights pursuant to Section 8.3) and either cause such new entity to
engage in a Qualified Public Offering or, if Cobalt has previously taken
advantage of its rights pursuant to Section 8.3, cause the restructured
entity created pursuant to Section 8.3 to engage in a Qualified Public
Offering; provided, however, that Cobalt shall not have the right to provide
to GE Capital a Spin-Off Notice if the Mowven FMV is less than $50,000,000.
The new entity or restructured entity which Cobalt will cause to engage in a
Qualified Public Offering pursuant to this Section 10.7 shall be referred to
as "NEWCO" and the common stock or other ownership interests in Newco shall
be referred to as the "NEWCO STOCK."
10.7.1 If Cobalt timely provides to GE Capital a Spin-Off
Notice, then GE Capital shall have ten (10) calendar days to provide
to Cobalt a written notice (the "ELECTION NOTICE") setting forth the
amounts of cash, original principal balance of Promissory Note and
either the percentage of Newco Stock or value of Cobalt Common,
which GE Capital desires pursuant to, and in compliance with the
standards of, both Payment Alternative A and Payment Alternative B.
Cobalt must then file with the United States Securities and Exchange
Commission a registration statement to effectuate the registration
of some or all of the Newco Stock which will be issued and
outstanding on the date of consummation of the Qualified Public
Offering (such registration statement to include, at a minimum, all
of the Newco Stock to be delivered to GE Capital pursuant to Payment
Alternative A plus at least 20% of the Newco Stock to be issued and
outstanding immediately after the consummation of the Qualified
Public Offering) within thirty (30) calendar days after its receipt
of the Election Notice and shall use its commercially reasonable
efforts to consummate the Qualified Public Offering within five
months of the date of the filing of such registration statement
(without taking into consideration any amendments to such
registration statement which may be filed).
10.7.1.1 Upon consummation of the Qualified Public Offering,
Cobalt shall pay to GE Capital the GE Capital Share in accordance
with Payment Alternative A; provided, however, that all of the Newco
Stock delivered to GE Capital as part of Payment Alternative A shall
be registered pursuant to the Securities Act of 1933.
10.7.1.2 If the Qualified Public Offering does not result in at
least 40% of the then-outstanding Newco Stock being both (i) listed
or traded on a national securities exchange or market, and (ii) held
by Persons other than GE Capital, Cobalt or any direct or indirect
owner of 5% or more of the capital stock of GE Capital or Cobalt,
then at such time after the consummation of the Qualified Public
Offering as the Parties shall agree, but no later than six months
after the consummation of the Qualified Public Offering (unless the
underwriter therefor advises the Parties in writing that market
conditions at such time are not favorable for such an offering, in
which case no later than the first anniversary of the consummation
of the Qualified Public Offering), unless GE Capital notifies Cobalt
in writing within thirty (30) calendar days after the consummation
of the Qualified Public Offering that it does not wish to
participate in a Liquidity Offering, each Party shall use its best
efforts and cooperate with the other Party to cause an underwritten
offering (the "LIQUIDITY OFFERING") to the public of an amount of
the Newco Stock then owned by such Party equal to no less than the
lesser of (x) 20% of the Newco Stock then owned by such Party or (y)
20% of all of the Newco Stock then issued and outstanding. As part
of the Liquidity Offering, the Parties shall cause Newco to, at the
sole cost and expense of Newco, (a) list on a national securities
exchange or market all of the Newco Stock to be offered as part of
the Liquidity Offering plus any other Newco Stock
then owned by GE Capital, (b) provide a transfer agent and registrar
for all such Newco Stock not later than the consummation date of the
Liquidity Offering, (c) enter into such customary agreements on
terms reasonably satisfactory to the Parties (including underwriting
agreements in customary form) and take all such other actions as
either Party or the underwriters reasonably request in order to
expedite or facilitate the disposition of the Newco Stock being
offered in the Liquidity Offering, (d) pay all expenses incident to
the Liquidity Offering, including all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws,
printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for Newco, and all fees and expenses of
independent certified public accountants and other Persons retained
by Newco, including fees and disbursements of counsel for Newco in
its capacity as counsel to the Parties; provided, however, that if
Newco counsel does not make itself available for this purpose for
any reason other than a Party's refusal to waive a conflict with
respect to representation by Newco counsel, Newco will pay the
reasonable fees and disbursements of one counsel for each Party, and
(e) engage (with the Parties) in such "road shows" and other
marketing endeavors determined to be reasonably necessary to sell
the Newco Stock being offered as part of the Liquidity Offering. The
Parties agree that all underwriting discounts, commissions and other
selling expenses, if any, and any and all legal fees and expenses
(but only to the extent that a Party elects not to be represented by
Newco counsel) incurred by a Party in relation to the Liquidity
Offering shall be borne by such Party.
10.7.1.3 If the Qualified Public Offering does result in at
least 40% of the then-outstanding Newco Stock being held by Persons
other than GE Capital, Cobalt or any direct or indirect owner of 5%
or more of the capital stock of GE Capital or Cobalt, then Cobalt
shall cause all of the Newco Stock provided to GE Capital as part of
the payment of the GE Capital Share pursuant to Payment Alternative
A to be listed on a national securities exchange or market at the
time it is delivered to GE Capital.
10.7.2 If Cobalt does not timely provide to GE Capital a Spin-Off
Notice in those circumstances where it has the right to so provide a Spin-Off
Notice, then GE Capital shall have ten (10) calendar days after the date that
the Spin-Off Notice was required to be provided to GE Capital to provide to
Cobalt a written notice (the "PAYMENT ALTERNATIVE B NOTICE") setting forth the
amounts of cash, original principal balance of Promissory Note and the value of
Cobalt Common which GE Capital desires pursuant to, and in compliance with the
standards of, Payment Alternative B. If Cobalt does not have the right to
provide to GE Capital a Spin-Off Notice, then GE Capital shall have ten (10)
calendar days after the Mowven FMV is determined to provide to Cobalt a Payment
Alternative B Notice.
10.7.3 If (a) GE Capital has provided Cobalt with a Payment
Alternative B Notice pursuant to Section 10.7.2, (b) Cobalt does not
timely file the registration statement or consummate the Qualified
Public Offering within the time frames set forth in Section 10.7.1,
or (c) Cobalt elects not to have Newco engage in a Qualified Public
Offering, then within five (5) calendar days after the occurrence of
any such event Cobalt shall pay to GE Capital the GE Capital Share
in accordance with Payment Alternative B. Cobalt shall cause the
shares of Cobalt Common delivered to GE Capital as part of Payment
Alternative B to be registered under the Securities Act of 1933, and
listed on each securities exchange or market on which any shares of
Cobalt Common are then listed no later than thirty (30) (or, if
Cobalt is not then eligible to use Form S-3 in connection with
Cobalt Common, ninety (90)) calendar days after the date that Cobalt
is required to pay to GE Capital the GE Capital Share in accordance
with Payment Alternative B.
Notwithstanding anything contained in this Section 10.7 to the contrary, without
the prior written consent of GE Capital, Cobalt may not pay the GE Capital Share
to GE Capital prior to the effective date of termination or expiration of this
Agreement.
10.8 EFFECT OF TERMINATION. Upon the effective date of termination
or expiration of this Agreement, except as provided in Section 3.6, Cobalt
shall cease to have any obligations to pay to GE Capital any of portion of
the Revenues and GE Capital shall cease to have any obligation to pay to
Cobalt any portion of the Expenses. In addition, on the date which is the
earlier of (a) the one hundred eightieth (180th) calendar day after the
effective date of termination or expiration of this Agreement, or (b) the
date on which Cobalt pays the GE Capital Share to GE Capital (or, as
appropriate, GE Capital pays the Cobalt Share to Cobalt), Cobalt shall
deliver to GE Capital one copy of all of the source and object code for, and
documentation related to, MTS Version 1.0 and the Enhancements as they exist
on such date.
11. RESTRICTIVE COVENANTS
11.1 RESTRICTIONS. Each Party acknowledges that the other Party
has delivered valuable consideration for the benefits represented by this
Agreement, particularly customer and supplier lists, access to business
relationships, distribution records, and other Confidential Information. The
use by any Party of these relationships and Confidential Information in a
business or activity that competes with Mowven could provide the competing
business with an unfair advantage over Mowven and the other Party. Each Party
agrees, in consideration of the mutual promises and covenants contained in
this Agreement, to comply with the terms of this Section 11, all of which are
reasonable and necessary to protect the confidential business information,
business prospects and trade secrets of Mowven and to prevent any unfair
advantage from being conferred upon either Party.
11.2 ***confidential treatment requested***
11.3 CONFIDENTIALITY. Each Party acknowledges that Confidential
Information may be disclosed to the other Party during the Term. Except as
provided in Sections 11.3.1, 11.3.2 and 11.3.3, each Party agrees that it
will take reasonable steps, at least substantially equivalent to the steps it
takes to protect its own proprietary information of a similar nature, during
and for one (1) year after the Term, to prevent the duplication or disclosure
of Confidential Information of the other Party, other than by or to its
employees or agents who must have access to such Confidential Information to
perform such Party's obligations hereunder, who will each agree to comply
with this Section. Both Parties agree to notify each of their employees and
agents who provide services in connection with Mowven of their obligations
pursuant to this Section 11.3.
11.3.1 Either Party may issue a press release or other
disclosure containing Confidential Information without the consent of
the other Party, to the extent such disclosure is required by law,
rule, regulation or government or court order. In such event, to the
extent practical and if it does not potentially create a liability of
the disclosing Party, the disclosing Party will provide at least five
(5) Business Days prior written notice of such intended disclosure to
the other Party. Further, in the event disclosure is required of either
Party under the laws, rules or regulations of the Securities and
Exchange Commission or any other applicable regulatory authority and if
the text of this Agreement is required to be disclosed, then such Party
will (i) redact mutually agreed-upon portions of this Agreement to the
fullest extent permitted under applicable laws, rules and regulations
and (ii) submit a request to such regulatory authority that such
portions and other provisions of this Agreement receive confidential
treatment under applicable laws, rules and regulations or otherwise be
maintained as confidential to the fullest extent permitted thereunder.
11.3.2 The restrictions contained in this Section 11.3 shall
not apply with respect to any Confidential Information that: (a) is or
becomes generally available to the public without breach by a Party of
this Agreement; (b) already was known by the receiving Party, free of
any obligation of confidentiality, at the time of the disclosing
Party's communication thereof to the receiving Party; (c) was, to the
knowledge of the receiving party, communicated to the receiving Party
free of any obligation of confidentiality subsequent to the time of the
disclosing Party's communication thereof to the receiving Party; or (d)
was developed by the receiving Party, independently of and without
reference to the Confidential Information.
11.3.3 The restrictions contained in this Section 11.3 shall
not apply to National Broadcasting Company (NBC), CNBC, MSNBC or any of
their Affiliates in the ordinary course of its or their business of
disseminating information, provided that such disclosure does not
result from a breach of the obligations contained in this Section 11.3
by Cobalt or GE Capital.
11.4 ***confidential treatment requested***
11.5 SOLICITATION OF EMPLOYEES. During the Term, neither Party
shall solicit or hire for employment, any person who is an employee of the
other Party and the substantial portion of whose work includes Mowven
responsibilities unless (a) such person approached the hiring Party seeking
employment or retention without being solicited by such hiring Party, (b)
such hiring Party informs the person seeking employment or retention that he
or she must obtain the consent of the other Party to his or her employment by
the hiring Party, and (c) such consent is provided by the other Party.
11.6 RESTRICTIONS ON EXPLOITATION OF THE ENHANCEMENTS.
11.6.1 TRANSFER, LICENSE, DISTRIBUTION AND SALE OF ENHANCEMENTS.
During the Term, neither Party shall transfer, license, distribute or
sell any Enhancements to a third party without the prior written
consent of the other Party; provided, however, that (a) GE Capital may
transfer, license, distribute or sell the Enhancements to third
parties for purposes other than in connection with Mowven, so long
as GE Capital does not transfer, sublicense, distribute or sell, or
authorize any other Person to transfer, sublicense, distribute or
sell, any Enhancements for use in or with a Competing System, and
(b) Cobalt may license the Enhancements to any Person pursuant to a
non-transferable object code license as part of the provision of a
Private Label Service to such Person. ***confidential treatment
requested***
11.6.2 USE OF ENHANCEMENTS BY GE CAPITAL. Subject to Section
11.6.4, during the Term, GE Capital may use the Enhancements for
purposes other than in connection with Mowven, so long as GE Capital
does not use any Enhancements in or with a Competing System.
11.6.3 USE OF ENHANCEMENTS BY COBALT. Subject to Section 11.6.4,
during the Term, Cobalt may not use any Enhancement (or any derivative
work based on any Enhancement) other than in connection with Mowven in
the Territory in compliance with the then-applicable Operating Plan
without the prior written consent of GE Capital. Notwithstanding the
foregoing, during the Term, Cobalt may create derivative works based
on the Enhancements for use in the Territory in connection with the
listing or sale of products or assets other than Automobiles; provided,
however, that if Cobalt desires to undertake such activities as a
stockholder, partner, associate, consultant, owner, agent, creditor,
contractor or coventurer of, or a participant in any other type of
strategic alliance with, any Person (other than (a) Cobalt, (b) a
wholly-owned subsidiary of Cobalt, (c) Warburg, Pincus Equity
Partners, LP, or (d) First Analysis Corp.), then Cobalt shall, in
writing, offer to GE Capital the right to participate in such
activities on the same terms and conditions offered to such Person
(the "OFFER NOTICE"). If Cobalt provides GE Capital with an Offer
Notice, then GE Capital shall have thirty (30) Business Days after
its receipt of the Offer Notice to notify Cobalt that it desires to
participate in the proposed activity described in the Offer Notice
on the terms provided for in the Offer Notice. GE Capital's failure
to notify Cobalt of GE Capital's desire to so participate within
such period will result in the restrictions contained in this
Section 11.6.3.1 to expire with respect to the
proposed activity described in the Offer Notice so long as Cobalt
enters into an agreement with the Person specified in the Offer
Notice, on the same terms and conditions specified in the Offer
Notice within sixty (60) Business Days after the end of such thirty
(30) Business Day period and does not materially expand the scope of
such proposed activities beyond those set forth in the Offer Notice
during the Term.
11.6.4 USE OF NON-UNIQUE COMPONENTS. During the Term, both
Parties and their Affiliates shall have the right to use and reuse,
for themselves and to provide services (other than the sale or resale
of software) to persons or entities with whom they have contractual
relationships, portions of the Enhancements which can be used with
computer programs other than a Competing System, Mowven or GEAutoDirect
and are not unique to GEAutoDirect or Mowven (each such portion, a
"REUSABLE COMPONENT"). During the Term, the Parties shall consult with
each other whenever one of the Parties determines that a Reusable
Component has commercial applications for which commercial licensing is
a viable alternative; provided, however, that neither Party may engage
in any commercial licensing of a Reusable Component without the prior
written consent of the other Party.
11.7 PROTECTION OF INTELLECTUAL PROPERTY RIGHTS. Subject to
Section 12.1, neither Party shall (a) during the Term, and for a period of five
years thereafter, seek to obtain any patents, trademarks, copyrights or other
types of legal protections related to the Enhancements or any derivative
works based on the Enhancements that would result in the other Party being
unable to use, transfer, license, distribute or sell the Enhancements (other
than those Enhancements as to which such other Party has no ownership rights
pursuant to Section 6.5.2) or any derivative works based on the Enhancements
(other than those Enhancements as to which such other Party has no ownership
rights pursuant to Section 6.5.2) as permitted by this Agreement, unless such
Party provides the other Party with written notice of the obtaining of such
protection and, upon the request of the other Party provided within ninety
(90) calendar days after its receipt of such notice, grants to such other
Party a world-wide, non-exclusive, assignable, transferable, sublicenseable,
perpetual, irrevocable, non-cancelable, unlimited, royalty-free and fully
paid-up license to use such legally protected intellectual property, (b)
challenge the right of the other Party to use, transfer, sublicense,
distribute or sell the Enhancements (other than those Enhancements as to
which such other Party has no ownership rights pursuant to Section 6.5.2) or
any derivative works based on the Enhancements (other than those Enhancements
as to which such other Party has no ownership rights pursuant to Section
6.5.2) as permitted by this Agreement, or (c) permit any licensee,
sublicensee, transferee or user to take any of the actions described in
clauses (a) and (b) hereof, in any such case without obtaining the prior
written consent of the other Party. The Parties shall consult and cooperate
with each other in good faith (i) to secure such legal protections for the
Enhancements as the Parties mutually agree upon, and (ii) in the event that
either Party becomes aware of any infringement or potential infringement of
the Enhancements, or any other action by a third party that could be
detrimental to the Parties' rights in the Enhancements.
11.8 USE OF MTS VERSION 1.0 BY COBALT. Without the prior written
consent of GE Capital, Cobalt may not use MTS Version 1.0 (or any derivative
work based on any portion of MTS Version 1.0 which does not constitute an
Enhancement) other than in connection with Mowven in compliance with the
then-applicable Operating Plan; provided, however, that, upon the termination
or expiration of this Agreement, if no Enhancements have been developed by
the Parties, then Cobalt shall have the right to use, transfer, license,
distribute and sell MTS Version 1.0 as though it were an Enhancement.
11.9 PUBLICITY. Except as provided in Sections 11.9.1, 11.9.2 or
11.9.3, without the prior written consent of the other Party, neither Party
shall, with respect to Mowven or any of the transactions contemplated by this
Agreement, (a) make any public disclosure using, disclosing or referring to
the name or identity of the other Party, (b) make or issue any press release,
or (c) make any statement for use in any publication, in any such case which
is inconsistent with (i) the three (3) forms of Q&A agreed upon by the
Parties prior to the execution of this Agreement in connection with the
initial public announcement of the transactions contemplated by this
Agreement, or (ii) the Mowven publicity standards adopted by the unanimous
vote or unanimous written consent of the members of the Steering Committee,
as the same may be amended from time to time by the unanimous vote or
unanimous written consent of the members of the Steering Committee.
11.9.1 Either Party may make any public disclosure, make or
issue any press release, or make any statement for use in any
publication without the consent of the other Party, to the extent such
disclosure is required by law, rule, regulation or government or court
order. In such event, to the extent practical and if it does not
potentially create a liability of the disclosing Party, the disclosing
Party will provide at least five (5) Business Days prior written notice
of such intended disclosure to the other Party. Further, in the event
disclosure is required of either Party under the laws, rules or
regulations of the Securities and Exchange Commission or any other
applicable regulatory authority and if the text of this Agreement is
required to be disclosed, then such Party will (i) redact mutually
agreed-upon portions of this Agreement to the fullest extent permitted
under applicable laws, rules and regulations and (ii) submit a request
to such regulatory authority that such portions and other provisions of
this Agreement receive confidential treatment under applicable laws,
rules and regulations or otherwise be maintained as confidential to the
fullest extent permitted thereunder.
11.9.2 The restrictions contained in this Section 11.9 shall
not apply with respect to any information contained in any public
disclosure, press release, or statement for use in any publication to
the extent, but only to the extent, that such information is or becomes
generally available to the public without breach by a Party of this
Agreement.
11.9.3 The restrictions contained in this Section 11.9 shall
not apply to National Broadcasting Company (NBC), CNBC, MSNBC or any of
their Affiliates in the ordinary course of its or their business of
disseminating
information, provided that such disclosure does not result from a
breach of the obligations contained in this Section 11.9 by Cobalt
or GE Capital.
11.10 SCOPE. If, at the time of enforcement of this Section 11, a
court shall hold that the duration, scope or area restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that
the maximum duration, scope or area reasonable under such circumstances shall
be substituted for the stated duration, scope or area.
11.11 REMEDIES. Each Party agrees that if it shall commit or
threaten to commit a breach of any of the covenants and agreements contained
in this Section 11, then the other Party shall have the right to seek and
obtain all appropriate injunctive and other equitable remedies therefor,
without the need to post any bond or security therefor, in addition to any
other rights and remedies that may be available at law, it being acknowledged
and agreed that any such breach would cause irreparable injury to the other
Party and that money damages would not provide an adequate remedy therefor.
11.12 RESTRICTIONS ON THE PARTIES. All of the restrictions imposed
upon the Parties pursuant to this Section 11 (other than those contained in
Sections 11.3, 11.6, 11.7, 11.8 and 11.9) shall only restrict the activities
of the Parties in the Territory.
12. MISCELLANEOUS
12.1 OWNERSHIP OF TRADEMARKS. Each Party acknowledges the
ownership of the other Party in the names, logos, trademarks, tradenames and
service marks (the "MARKS") of the other Party and neither Party will use the
Marks of the other Party without the prior written consent of the other
Party. Each party agrees that all use of the other Party's Marks will inure
to the benefit, and be on behalf, of the other Party. Each Party acknowledges
that its utilization of the other Party's Marks will not create in it, nor
will it represent it has, any right, title, or interest in or to such Marks.
Each Party agrees not to do anything to contest or impair the other Party's
rights to its Marks.
12.2 INFRINGEMENT PROCEEDINGS. Each Party will have the sole right
and discretion to bring proceedings alleging infringement of its Marks or
unfair competition related thereto; provided, however, that each Party agrees
to provide the other Party with its reasonable cooperation and assistance
with respect to any such infringement proceedings.
12.3 REPRESENTATIONS AND WARRANTIES. Each Party represents and
warrants to the other Party that: (i) such Party has the full corporate power
and authority to enter into this Agreement and to perform the acts required
of it hereunder; (ii) the execution of this Agreement by such Party, and the
performance by such Party of its obligations and duties hereunder, do not and
will not violate any agreement to which such Party is a party or by which it
is otherwise bound, or cause the acceleration of an obligation or imposition
of a lien; (iii) when executed and delivered by such Party, this Agreement
will constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms, except as
enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting the enforcement of creditors' rights
generally, general equitable principles (including those limiting the
availability of specific performance, injunctive relief, and other equitable
remedies and those providing for defenses based on fairness and
reasonableness), regardless of whether such enforceability is considered in a
proceeding in equity or at law; and (iv) such Party acknowledges that the
other Party makes no representations, warranties or agreements related to the
subject matter hereof that are not expressly provided for in this Agreement.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY, AND
EACH PARTY HEREBY SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, IN GEAUTODIRECT, THE ENHANCEMENTS OR ANY SERVICES
PROVIDED UNDER THIS AGREEMENT, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES
ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE.
12.4 AUDIT RIGHTS. Both Parties agree to keep adequate, accurate records
pertaining to Expenses and Revenue, together with any other records necessary
to determine the EBITDA of Mowven, and to retain such records for at least
two years after the termination or expiration of this Agreement. During the
Term and for the two year period thereafter, either Party shall have the
right to cause either an Internal Audit or an Independent Audit
(collectively, an "AUDIT") of all such records and of each Monthly
Reconciliation Report to ensure that proper records are being kept and to
verify all reports and payments due hereunder. An Audit may only be conducted
by a Party, or on a Party's behalf by an independent auditor, with a minimum
of ten (10) Business Days advance notice and during normal business hours.
This Section 12.4 shall survive for two years after expiration or termination
of this Agreement.
12.4.1 Either Party may, at its own cost and expense, conduct an
audit (an "INTERNAL AUDIT") which will not be binding on the Parties
using either its own employees and/or an independent auditor. Neither
Party may conduct an Internal Audit more than three times each calendar
year; provided, however, that the foregoing restriction shall not apply
to any Internal Audit reasonably necessary to ensure compliance with
applicable laws. If an Internal Audit is conducted on a Party's behalf
by an independent auditor, such independent auditor shall execute a
confidentiality agreement with the Parties prior to beginning an
Internal Audit.
12.4.2 Either Party may request that an audit (an "INDEPENDENT
AUDIT") be performed by the Independent Accountant. Independent Audits
may not be conducted more than twice each calendar year; provided,
however, that the foregoing restriction shall not apply to any Internal
Audit reasonably necessary to ensure compliance with applicable laws.
The Independent Accountant shall execute a confidentiality agreement
with the Parties prior to beginning an Independent Audit. Within ten
(10) Business Days following the conclusion of an Independent Audit, the
Independent Accountant will provide the Parties with a copy of the
results of the Independent Audit. The results of such Independent Audit
shall be binding upon the Parties unless either Party elects to submit
the
results of such Independent Audit to arbitration pursuant to Section 12.22
by submitting a Dispute Notice to the other Party within ten (10)
Business Days after the date that the Independent Accountant provides
the Parties with a copy of the results of the Independent Audit (in
which case the provisions of Section 12.22 other than Section 12.22.1
shall apply). GE Capital or Cobalt, as the case may be, shall pay the
other Party any amounts due as determined by such Independent Audit
within thirty (30) Business Days of receiving the results thereof;
provided, however, that if such results are submitted to arbitration
pursuant to Section 12.22, then GE Capital or Cobalt, as the case may
be, shall pay the other Party any amounts due as determined by a final
decision, no longer subject to appeal, made pursuant to the provisions
of Section 12.22 within thirty (30) Business Days of the issuance of
such final decision. The cost of any Independent Audit hereunder will
be borne by the Party requesting the Independent Audit; provided that if
the Independent Audit discloses that payments due and owing by one Party
to the other differs by at least 10% from the amounts actually paid by
the owing Party, such Party shall pay all costs relating to the
Independent Audit.
12.5 CLAIMS AND INDEMNITY.
12.5.1 INDEMNITY. Each Party will defend, indemnify, save and
hold the other Party and its officers, directors, agents, Affiliates,
and employees harmless from any and all claims, demands, liabilities,
costs or expenses, including reasonable attorneys' fees ("LIABILITIES"),
resulting from an Action arising out of (i) the indemnifying Party's
material breach of any covenant, representation or warranty contained in
this Agreement, (ii) the supply by the Indemnifying Party of any
information or materials (other than GEAutoDirect) for use with Mowven
including, without limitation, any Confidential Information, that
breaches, infringes or allegedly infringes any third party Intellectual
Property Rights, (iii) the grossly negligent conduct or willful
misconduct of the Indemnifying Party's employees, and (iv) any employer
liabilities of the Indemnifying Party to its employees or to third
parties. In addition, Cobalt shall defend, indemnify, save and hold GE
Capital and its officers, directors, agents, Affiliates, and employees
harmless from any and all Liabilities, other than the portions of the
Expenses for which GE Capital is liable pursuant to Section 3.4,
asserted against or incurred by GE Capital to the extent premised upon
the relationship between GE Capital and Cobalt pursuant to this
Agreement.
12.5.2 CLAIMS. If a Party entitled to indemnification hereunder
(the "INDEMNIFIED PARTY") becomes aware of any matter it believes is
indemnifiable hereunder involving any claim, action, suit,
investigation, arbitration or other proceeding against the Indemnified
Party by any third party (each an "ACTION"), the Indemnified Party will
give the other Party (the "INDEMNIFYING PARTY") prompt written notice of
such Action; provided that the failure to provide prompt notice shall
not relieve the Indemnifying Party of its obligations except and only to
the extent (i) that the delay results in the inability to assert a
defense and (ii) of the increase in the Indemnifying Party's liability
resulting solely from the inability to assert a defense. Such notice
will (a) provide the basis on which
indemnification is being asserted and (b) be accompanied by copies of
all relevant pleadings, demands, and other papers related to the Action
and in the possession of the Indemnified Party. The Indemnifying Party
will have a period of ten (10) calendar days after receipt of such
notice to respond. If the Indemnifying Party elects to defend the Action
or does not respond within the requisite ten (10) calendar day period,
the Indemnifying Party will be obligated to defend the Action, at its
own expense, and by counsel reasonably satisfactory to the Indemnified
Party. The Indemnified Party will cooperate, at the expense of the
Indemnifying Party, with the Indemnifying Party and its counsel in the
defense and the Indemnified Party will have the right to participate
fully, at its own expense, in the defense of such Action. If the
Indemnifying Party responds within the required ten (10) calendar day
period and elects not to defend such Action, the Indemnified Party will
be free, without prejudice to any of the Indemnified Party's rights
hereunder, to compromise or defend (and control the defense of) such
Action. In such case, the Indemnifying Party will cooperate, at its own
expense, with the Indemnified Party and its counsel in the defense
against such Action and the Indemnifying Party will have the right to
participate fully, at its own expense, in the defense of such Action.
Any compromise or settlement of an Action will require the prior written
consent of both Parties hereunder, such consent not to be unreasonably
withheld or delayed.
12.5.3 LIMITATION OF LIABILITY. Except for the obligations
contained in Section 12.5.1 and any payment obligations (whether in cash
or other property) of such Party, each Party's liability to the other
Party under this Agreement shall be limited to the greater of (a)
$5,000,000, or (b) fifteen percent (15%) of the Mowven FMV (provided
that, for this purpose, all references to the Appraisal Date referred to
in Section 1.65 or 10.6 shall be deemed to be references to the date of
the event giving rise to the liability in question). EXCEPT WITH
RESPECT TO ANY ACTION ALLEGING INFRINGEMENT BY ANY CONFIDENTIAL
INFORMATION, NEITHER PARTY SHALL HAVE LIABILITY FOR ANY CONSEQUENTIAL,
INDIRECT, INCIDENTAL, PUNITIVE, OR SPECIAL DAMAGES WHATSOEVER, INCLUDING
WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS
INTERRUPTION, LOSS OF BUSINESS INFORMATION AND THE LIKE (INCLUDING UNDER
ANY CLAIM OF NEGLIGENCE, STRICT LIABILITY, DESIGN DEFECT OR OTHER
THEORY) ARISING OUT OF THIS AGREEMENT, EVEN IF THE PARTY HAS ADVISED THE
OTHER PARTY OF THE POSSIBILITY OF SUCH DAMAGES.
12.6 INDEPENDENT CONTRACTORS. The Parties to this Agreement are
independent contractors, it being acknowledged by the Parties that the
relationship between the Parties pursuant to this Agreement consists solely
of GE Capital providing to Cobalt certain services in connection with the
development, operation and marketing of Mowven and receiving compensation
from Cobalt for the provision of such services. Neither Party is an agent,
representative or partner of the other Party and neither Party shall hold
itself out to any person or entity as being the agent, representative or
partner (in a manner that implies the existence of a legally binding
partnership) of the other Party. Neither Party
will have any right, power or authority to enter into any agreement for or on
behalf of, or incur any obligation or liability of, or to otherwise bind, the
other Party. This Agreement will not be interpreted or construed to create an
association, agency, joint venture or partnership between the Parties or to
impose any liability attributable to such a relationship upon either Party.
Notwithstanding anything herein to the contrary, neither Party shall have any
responsibility for the other Party's products or services, including, but not
limited to order-taking, fulfillment, billing, collections, refunds and
customer service, for dealers or consumers, and, except as may otherwise be
specifically provided herein, neither Party shall have any authority or
responsibility to act as an agent of the other Party with regard to any
matters, including, but not limited to, the foregoing.
12.7 NOTICES. In addition to any obligations pursuant to Section 12.17,
all notices, demands or other communications to be given or delivered under
or by reason of the provisions of this Agreement will be in writing and will
be deemed to have been given when delivered personally to the recipient, one
(1) Business Day after the date when sent to the recipient by reputable
overnight express courier service (charges prepaid and with evidence of
delivery) or five (5) Business Days after the date when mailed to the
recipient by certified or registered mail, return receipt requested and
postage prepaid. Such notices, demands and other communications will be sent
to GE Capital and Cobalt at the addresses indicated below:
If to GE Capital:
General Electric Capital Auto Financial Services, Inc.
540 W. Northwest Highway
Barrington, IL 60010
Attn: Vice President - E-Business
With a copy to:
General Electric Capital Auto Financial Services, Inc.
540 W. Northwest Highway
Barrington, IL 60010
Attn: General Counsel
If to Cobalt:
The Cobalt Group, Inc.
2200 First Avenue South
Seattle, Washington 98134
Attn: President
or to such other address or to the attention of such other person or entity as
the recipient party has specified by prior written notice to the sending party.
12.8 NO WAIVER. The failure of either Party to insist upon or enforce
strict performance by the other Party of any provision of this Agreement or
to exercise any
right under this Agreement will not be construed as a waiver or
relinquishment to any extent of such Party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same will
be and remain in full force and effect.
12.9 FORCE MAJEURE. Neither Party shall be liable for loss or damage
resulting from any delay or non-performance (other than failure to pay any
amounts due hereunder when due), or be held to be in breach hereof, nor shall
the other Party be entitled to terminate this Agreement, due to any of the
following cause or causes beyond its reasonable control: an act of the other
Party, a delay in transportation, acts of God, fire, flood, earthquake,
storm, war, sabotage, riot, civil commotion, the failure or delay of delivery
of necessary supplies, or because of any law, rule, regulation, order or
other action by any public authority (any such cause or causes, a "FORCE
MAJEURE EVENT"), provided the delayed Party: (i) gives the other party
written notice of such cause promptly and (ii) uses its reasonable best
efforts to correct such failure or delay.
12.10 ENTIRE AGREEMENT. This Agreement, including the Exhibits attached
hereto, sets forth the entire agreement and supersedes any and all prior
agreements of the Parties with respect to the transactions set forth herein.
Neither Party will be bound by, and each Party specifically objects to, any
term, condition or other provision which is different from or in addition to
the provisions of this Agreement (whether or not it would materially alter
this Agreement) and which is proffered by the other Party in any
correspondence or other document, unless the Party to be bound thereby
specifically agrees to such provision in writing.
12.11 AMENDMENT. No change, amendment or modification of any provision
of this Agreement will be valid unless set forth in a written instrument
signed by the Party subject to enforcement of such amendment.
12.12 FURTHER ASSURANCES. Each Party will take such action (including,
but not limited to, the execution, acknowledgment and delivery of documents)
as may reasonably be requested by the other Party for the implementation or
continuing performance of this Agreement.
12.13 ASSIGNMENT. Except as provided in Section 8.3, neither Party may
assign this Agreement or any right, interest or benefit under this Agreement
without the prior written consent of the other Party, which consent shall not
be unreasonably withheld or delayed; provided that GE Capital may assign its
rights and obligations under this Agreement to an Affiliate. Subject to the
foregoing, this Agreement will be fully binding upon, inure to the benefit of
and be enforceable by the Parties hereto and their respective successors and
permitted assigns. Except as expressly set forth in this Agreement, nothing
in this Agreement shall confer upon any Person not a party to this Agreement,
or the legal representatives of such Person, any rights (including rights as
a third party beneficiary) or remedies of any nature or kind whatsoever under
or by reason of this Agreement.
12.14 CONSTRUCTION; SEVERABILITY. In the event that any provision of
this Agreement conflicts with the law under which this Agreement is to be
construed or if any
such provision is held invalid by a court with jurisdiction over the Parties
to this Agreement, (i) such provision will be deemed to be restated to
reflect as nearly as possible the original intentions of the Parties in
accordance with applicable law, and (ii) the remaining terms, provisions,
covenants and restrictions of this Agreement will remain in full force and
effect.
12.15 REMEDIES. Except where otherwise specified, the rights and
remedies granted to a Party under this Agreement are cumulative and in
addition to, and not in lieu of, any other rights or remedies which the Party
may possess at law or in equity.
12.16 APPLICABLE LAW. This Agreement will be interpreted, construed and
enforced in all respects in accordance with the laws of the State of New York
except for its conflicts of laws principles.
12.17 SERVICE OF PROCESS. In the event Cobalt is served with any suit,
regulatory complaint or similar process relating to or naming GE Capital,
Cobalt agrees to immediately forward a copy of the same to the GE Capital
Legal Department by facsimile to (847) 277-5983 and to forward a copy of the
same by overnight courier within one (1) Business Day to the address set
forth in Section 12.7. In the event GE Capital is served with any suit,
regulatory complaint or similar process relating to or naming Cobalt, GE
Capital agrees to immediately forward a copy of the same to the Cobalt Legal
Department by facsimile to (206) 269-6350 and to forward a copy of the same
by overnight courier within one (1) Business Day to the address set forth in
Section 12.7.
12.18 EXPORT CONTROLS. Both Parties will adhere to all applicable laws,
regulations and rules relating to the export of technical data and will not
export or re-export any technical data, any products received from the other
Party or the direct product of such technical data to any proscribed country
listed in such applicable laws, regulations and rules unless properly
authorized.
12.19 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which will be deemed an original and all of which together will constitute
one and the same document.
12.20 SUBMISSION TO JURISDICTION. Subject to Section 12.22, each of the
parties to this Agreement submits to the jurisdiction of any state or federal
court sitting in Chicago, Illinois, in any action or proceeding arising out
of or relating to this Agreement and agrees that all claims in respect of the
action or proceeding may be heard and determined in any such court. Each of
the parties to this Agreement waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other party with
respect thereto.
12.21 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, AND
AS SEPARATELY BARGAINED FOR CONSIDERATION, EACH PARTY HEREBY WAIVES ANY RIGHT
TO TRIAL BY
JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT
OF OR RELATING TO THIS AGREEMENT.
12.22 ARBITRATION. Except for the need for either Party to seek a
provisional remedy in a court of law to secure or preserve the rights and
benefits conferred by this Agreement or to enforce the restrictions contained
herein, including injunctive relief, relief in bankruptcy proceedings or
relief that will cease to be available to the Party due to any applicable
statute of limitations or the doctrine of laches if the provision of this
Section 12.22 are complied with, any dispute between the Parties relating to
this Agreement shall be resolved by mediation or arbitration as provided in
this Section 12.22, to wit:
12.22.1 No Party hereto shall commence an arbitration proceeding
pursuant to the provisions of Section 12.22.2 below unless such Party
shall first give a written notice (a "DISPUTE NOTICE") to the other
Party setting forth the nature of the dispute. The Parties shall
attempt in good faith to resolve the dispute by mediation in Cook
County, Illinois under the Commercial Mediation Rules of the American
Arbitration Association ("AAA") in effect on the date of this Agreement.
If the Parties cannot agree on the selection of a mediator within
twenty (20) calendar days after delivery of the Dispute Notice, the
mediator will be selected by the AAA in Cook County, Illinois. If the
dispute has not been resolved by mediation as provided above within
sixty (60) calendar days after the delivery of the Dispute Notice, then
the dispute shall be determined by arbitration in accordance with the
provisions of Section 12.22.2 hereof. Mediation proceedings and
documents prepared exclusively for the mediation proceedings shall be
deemed to be matters pertaining to confidential settlement negotiations
and not admissible at any other legal proceeding except for such
summaries of agreements prepared by the mediator and signed by the
Parties.
12.22.2 Any dispute relating to this Agreement to be resolved by
arbitration, shall be determined by arbitration in Cook County, Illinois
by one arbitrator in accordance with the Commercial Arbitration Rules of
the AAA and its Supplementary Procedures for Large, Complex Disputes,
except that every person named on all lists of potential arbitrators
shall be a neutral and impartial lawyer with excellent academic and
professional credentials (i) who is or has been practicing law as a
partner in a highly respected law firm for at least five (5) years,
specializing in either general commercial litigation or general
corporate and commercial matters, with experience in the field of
contract law and business alliances, (ii) who has had experience as an
arbitrator of commercial transactions, and (iii) who is generally
available to serve as an arbitrator. The AAA shall submit a list of
three (3) arbitrators meeting the criteria set forth above. GE Capital
and Cobalt shall each be entitled to strike one (1) of such three (3)
designees on a peremptory basis within ten (10) calendar days after its
receipt of such list of designees, indicating its order of preference
with respect to the remaining designees. If two (2) of such designees
have been stricken by the Parties, the remaining designee shall be the
arbitrator. Otherwise, the selection of the arbitrator shall be made by
the AAA from the remaining designees in
accordance with their mutual order of preference, or by random selection
in the absence of a mutual order of preference. The arbitrator shall
base his or her award on applicable law and judicial precedent and,
unless all Parties agree otherwise, shall include in such award the
findings of fact and conclusions of law upon which the award is based.
Judgment on the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof.
12.22.3 Notwithstanding the foregoing, upon the application by any
Party to a court for an order confirming, modifying or vacating the
award, the court shall have the power to review whether, as a matter of
law based on the findings of fact determined by the arbitrator, the
award should be confirmed, modified or vacated in order to correct any
errors of law made by the arbitrator. In order to effectuate such
judicial review limited to issues of law, the Parties agree (and shall
so stipulate to the court) that the findings of fact made by the
arbitrator shall be binding on the Parties and shall serve as the facts
to be submitted to and relied on by the court in determining the extent
to which the award should be confirmed, modified or vacated.
12.22.4 If any Party fails to proceed with mediation or
arbitration as provided herein or unsuccessfully seeks to stay such
mediation or arbitration, or fails to comply with any arbitration award,
or is unsuccessful in vacating or modifying the award pursuant to a
petition or application for judicial review, the other Party shall be
entitled to be awarded costs, including reasonable attorneys' fees, paid
or incurred by such other Party in successfully compelling such
mediation or arbitration or defending against the attempt to stay,
vacate or modify such mediation or arbitration award and/or successfully
defending or enforcing the award.
12.22.5 During arbitration proceedings, the Parties shall continue
to perform their respective responsibilities under this Agreement.
12.22.6 The Dispute Notice shall be given within a reasonable time
after the dispute has arisen, and in no event shall it be made after the
date when the institution of legal or equitable proceedings based on
such dispute would be barred by the applicable statute of limitations.
12.22.7 All deadlines and procedures specified in this Section
12.22 may be modified in writing by mutual agreement of the Parties.
12.22.8 In all matters, the cost of mediation, the cost of the
arbitrator, legal fees and other costs of the prevailing Party relating
to the resolution of the dispute shall be paid by the other Party.
12.23 DOCUMENTATION. This Agreement was initially prepared by GE
Capital's legal counsel as a matter of convenience only, and such documents
have been thoroughly reviewed by Cobalt and its legal counsel and the input
of Cobalt and its legal counsel was properly considered, and, therefore, no
interpretation will be made in favor of any of the
Parties or any of their Affiliates with respect to this Agreement for the
reason that such document was prepared by GE Capital's legal counsel.
12.24 SURVIVAL. In addition to any express language contained in this
Agreement related to the survival of any terms or provisions of this
Agreement, the provisions of Sections 1, 3.6, 6.5, 6.6, 10.4, 10.5, 10.6,
10.7, 10.8, 11.1, 11.4, 11.7, 11.8, 11.9, 11.10, 11.11 and 12 shall survive
the termination or expiration of this Agreement for any reason.
(SIGNATURES ON NEXT PAGE)
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
THE COBALT GROUP, INC.
By: /s/ David S. Snyder
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Name: David S. Snyder
--------------------------------
Its: Executive Vice President & CFO
---------------------------------
GENERAL ELECTRIC CAPITAL AUTO
FINANCIAL SERVICES, INC.
By: /s/ Daniel S. Henson
----------------------------------
Name: Daniel S. Henson
--------------------------------
Its: President
---------------------------------