-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kcm+HgC8ca9j6TP18mip9SernAKJujE7vumDq2TQoE8fONKrhCdUWKwJOdftUCqe QyZBDbD4/HR7hf59joHzEA== /in/edgar/work/20000710/0000899140-00-000311/0000899140-00-000311.txt : 20000712 0000899140-00-000311.hdr.sgml : 20000712 ACCESSION NUMBER: 0000899140-00-000311 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000710 GROUP MEMBERS: E.M. WARBURG, PINCUS & CO., LLC GROUP MEMBERS: WARBURG PINCUS EQUITY PARTNERS LP GROUP MEMBERS: WARBURG, PINCUS & CO. GROUP MEMBERS: WARBURG, PINCUS EQUITY PARTNERS, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COBALT GROUP INC CENTRAL INDEX KEY: 0001036290 STANDARD INDUSTRIAL CLASSIFICATION: [7374 ] IRS NUMBER: 911674947 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-58197 FILM NUMBER: 669770 BUSINESS ADDRESS: STREET 1: 2200 FIRST AVENUE S STREET 2: STE 400 CITY: SEATTLE STATE: WA ZIP: 98134 BUSINESS PHONE: 2063867535 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS EQUITY PARTNERS LP CENTRAL INDEX KEY: 0001075598 STANDARD INDUSTRIAL CLASSIFICATION: [ ] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVE. CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2128780600 SC 13D 1 0001.txt INITIAL FILING ON SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 THE COBALT GROUP, INC. - -------------------------------------------------------------------------------- (Name of Issuer) Common Shares, $0.01 Par Value - -------------------------------------------------------------------------------- (Title of Class of Securities) 19074Q 10 3 - -------------------------------------------------------------------------------- (CUSIP Number of Class of Securities) Stephen Distler E.M. Warburg, Pincus & Co., LLC 466 Lexington Avenue New York, New York 10017 (212) 878-0600 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copies to: Steven J. Gartner, Esq. Willkie Farr & Gallagher 787 Seventh Avenue New York, NY 10019-6099 (212) 728-8000 June 26, 2000 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Schedule) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following: [X] SCHEDULE 13D - --------------------- ------------------ CUSIP No. 19074Q 10 3 Page 2 of 13 Pages - --------------------- ------------------ - ----------- -------------------------------------------------------------------- 1 NAME OF REPORT PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Warburg, Pincus Equity Partners, L.P. I.D. #13-3986317 - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - ----------- -------------------------------------------------------------------- 3 SEC USE ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - --------------------- --------- ------------------------------------------------ 7 SOLE VOTING POWER 8,180,585 NUMBER OF --------- ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING --------- ------------------------------------------------ PERSON WITH 9 SOLE DISPOSITIVE POWER 8,180,585 --------- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER - ----------- -------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 8,180,585 - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 45.5% - ----------- -------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - ----------- -------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - --------------------- ------------------ CUSIP No. 19074Q 10 3 Page 3 of 13 Pages - --------------------- ------------------ - ----------- -------------------------------------------------------------------- 1 NAME OF REPORT PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Warburg, Pincus & Co. I.D. #13-6358475 - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - ----------- -------------------------------------------------------------------- 3 SEC USE ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York - --------------------- --------- ------------------------------------------------ 7 SOLE VOTING POWER 8,180,585 NUMBER OF --------- ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING --------- ------------------------------------------------ PERSON WITH 9 SOLE DISPOSITIVE POWER 8,180,585 --------- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER - ----------- -------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 8,180,585 - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 45.5% - ----------- -------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - ----------- -------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - --------------------- ------------------ CUSIP No. 19074Q 10 3 Page 4 of 13 Pages - --------------------- ------------------ - ----------- -------------------------------------------------------------------- 1 NAME OF REPORT PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON E.M. Warburg, Pincus & Co., LLC I.D. #13-3536050 - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - ----------- -------------------------------------------------------------------- 3 SEC USE ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York - --------------------- --------- ------------------------------------------------ 7 SOLE VOTING POWER 8,180,585 NUMBER OF --------- ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING --------- ------------------------------------------------ PERSON WITH 9 SOLE DISPOSITIVE POWER 8,180,585 --------- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER - ---------- --------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 8,180,585 - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 45.5% - ---------- --------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - ----------- -------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. This Schedule 13D is being filed on behalf of Warburg, Pincus Equity Partners, L.P., a Delaware limited partnership (together with three affiliated entities, "WPEP"), Warburg, Pincus & Co., a New York general partnership ("WP"), and E.M. Warburg, Pincus & Co., LLC, a New York limited liability company ("EMW" and, together with WPEP and WP, the "Reporting Entities"). This Schedule 13D relates to the common shares, par value $0.01, of The Cobalt Group, Inc., a Washington corporation (the "Company"). Unless the context otherwise requires, references herein to the "Common Stock" are to the shares of common stock of the Company, par value $0.01 per share. Item 1. Security and Issuer. This statement on Schedule 13D relates to the Common Stock, and is being filed pursuant to Rule 13d-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The address of the principal executive offices of the Company is 2200 First Avenue, Suite 400, Seattle, Washington 98134. Item 2. Identity and Background. (a) This statement is filed by the Reporting Entities. The sole general partner of WPEP is WP. EMW manages WPEP. Lionel I. Pincus is the managing partner of WP and the managing member of EMW and may be deemed to control both WP and EMW. The general partners of WP and the members of EMW are described in Schedule I hereto. (b) The address of the principal business and principal office of each of the Reporting Entities is 466 Lexington Avenue, New York, New York 10017. (c) The principal business of WPEP is that of a partnership engaged in making venture capital and related investments. The principal business of WP is acting 6 as general partner of WPEP, Warburg, Pincus Ventures, L.P., Warburg, Pincus Investors, L.P., Warburg, Pincus Ventures International, L.P. and Warburg, Pincus Capital Company, L.P. The principal business of EMW is acting as manager of WPEP, Warburg, Pincus Ventures, L.P., Warburg, Pincus Investors, L.P., Warburg, Pincus Ventures International, L.P. and Warburg, Pincus Capital Company, L.P. (d) None of the Reporting Entities, nor, to the best of their knowledge, any of the directors, executive officers, general partners or members referred to in paragraph (a) has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) None of the Reporting Entities nor, to the best of their knowledge, any of the directors, executive officers, general partners or members referred to in paragraph (a) above has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Except as otherwise indicated on Schedule I hereto, each of the individuals referred to in paragraph (a) above is a United States citizen. Item 3. Source and Amount of Funds or Other Consideration. The total amount of funds required by WPEP to purchase the Common Stock it holds was approximately $29.3 million, and was furnished from the working capital of WPEP. 7 Item 4. Purpose of Transaction. In October 1998, WPEP acquired shares of preferred stock of the Company, for an aggregate purchase price of approximately $29.3 million. Those shares were subsequently converted into shares of Common Stock in connection with the Company's initial public offering. On June 26, 2000, WPEP and other strategic investors entered into a Securities Purchase Agreement with the Company (the "Securities Purchase Agreement"), attached hereto as Exhibit 2, pursuant to which WPEP and the other investors granted the Company an irrevocable option to cause WPEP and the other investors to purchase, subject to the terms and conditions of the Securities Purchase Agreement, an aggregate of up to 2,187,289 shares of Common Stock at a purchase price of $6.8578 per share. Under the terms of the Securities Purchase Agreement, WPEP is obligated to purchase up to 1,312,373 shares of Common Stock. The Company may exercise the option in whole or in part on only one occasion by giving written notice to WPEP and the other investors not earlier than 80 nor more than 140 days after June 26, 2000. In the event the Company exercises the option, the closing of such sales and purchases is subject to customary conditions, including the termination or expiration of any applicable waiting period under the Hart-Scott-Rodino Act. In consideration for granting the option to the Company, WPEP and the other investors received warrants from the Company to purchase shares of Common Stock at a purchase price of $6.8578 per share. The warrant granted to WPEP to acquire up to 416,390 shares of Common Stock is attached hereto as Exhibit 3. The warrant is exercisable at any time and from time to time, in whole or in part, by WPEP until June 26, 2005. The purchases by WPEP of Common Stock were effected because of the Reporting Entities' belief that the Company represented, and that the Company continues to represent, an attractive investment. WP has followed the Company and the industry for many years. WP views the investment as attractive based on the Company's business prospects and strategy, and is very supportive of the management team and its ability to execute this strategy. The Reporting Entities may from time to time acquire additional shares of the Company or engage in discussions with the Company concerning further acquisitions of shares of the Company or further investments by them in the Company. The Reporting 8 Entities intend to review their investment in the Company on a continuing basis and, depending upon the price and availability of shares of Common Stock, subsequent developments affecting the Company, the Company's business and prospects, other investment and business opportunities available to the Reporting Entities, general stock market and economic conditions, tax considerations and other factors considered relevant, may decide at any time to increase, or to decrease, the size of their investment in the Company. Except as set forth in this statement none of the Reporting Entities nor, to the best of their knowledge, any person listed in Schedule I hereto, has any plans or proposals which relate to or would result in: (a) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (d) any change in the present Board of Directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) any material change in the present capitalization or dividend policy of the Company; (f) any other material change in the Company's business or corporate structure; (g) changes in the Company's charter, By-laws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (h) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Company becoming eligible 9 for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (j) any action similar to any of those enumerated above. Item 5. Interest in Securities of the Issuer. (a) As of July 6, 2000 WPEP, WP and EMW each beneficially owned 8,180,585 shares of Common Stock. By reason of their respective relationships with WPEP, each of the Reporting Enitities may be deemed under Rule 13d-3 under the Exchange Act to own beneficially all of the shares of Common Stock which WPEP beneficially owns. The 8,180,585 shares of Common Stock represented approximately 45.5% of the outstanding shares of Common Stock, based on the 17,557,008 shares of Common Stock outstanding as of June 26, 2000, as represented by the Company in the Securities Purchase Agreement. In addition, under the Securities Purchase Agreement as described in Item 4, the Company has the right to require WPEP to purchase, subject to the terms and conditions of that agreement, up to 1,312,373 shares of Common Stock at $6.8578 per share. (b) Each of the Reporting Entities has sole power to dispose or to direct the disposition with respect to the 8,180,585 shares and all shares acquired by WPEP. (c) Except for the transaction described in Item 4, during the last sixty days there were no transactions effected by the Reporting Entities or by any of the persons set forth on Schedule I hereto. 10 (d) Except as set forth in this Item 5, no person other than each respective record owner referred to herein of securities is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, such securities. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. Pursuant to Rule 13d-1(k) promulgated under the Exchange Act, the Reporting Entities have entered into an agreement, attached hereto as Exhibit 1, with respect to the joint filing of this statement, and any amendment or amendments hereto. A Securities Purchase Agreement by and among the WPEP, Riverside Partnership, Third Point Partners L.P., Third Point Offshore Fund Ltd., Points West International Investments Ltd. and the Company was entered into on June 26, 2000 and is described herein in Item 4, supra. A warrant was issued by the Company to WPEP on June 26, 2000 in connection with the execution of the Securities Purchase Agreement and is described herein in Item 4, supra. In connection with this transaction, a Third Amendment to Registration Agreement was also entered into by the Company and WPEP on that date. This Agreement contains standard provisions found in agreements of such type, including "demand" and "piggyback" registration rights with respect to the shares of Common Stock beneficially owned by WPEP. The foregoing summary of the Registration Agreement is qualified in its entirety by reference to the Registration Agreement, as amended. A copy of each of the Registration Agreement, the First Amendment to the Registration 11 Agreement, the Second Amendment to the Registration Agreement and the Third Amendment to the Registration Agreement are attached hereto as Exhibit 4, 5, 6 and 7, respectively. Except as referred to above, there are no contracts, arrangements, understandings or relationships among the persons named in Item 2 or between such persons and any other person with respect to any securities of the Company. By virtue of the relationships among the Reporting Entities as described in Item 2, the Reporting Entities may be deemed to be a "group" under the Federal securities laws. Lionel I. Pincus disclaims any beneficial ownership of the shares of Common Stock reported herein as being beneficially owned by the Reporting Entities. Item 7. Material to be Filed as Exhibits. 1. Joint Filing Agreement, dated as of July 7, 2000, by and among the Reporting Entities. 2. Securities Purchase Agreement, dated as of June 26, 2000, by and among WPEP, Riverside Partnership, Third Point Partners L.P., Third Point Offshore Fund Ltd., Points West International investments Ltd. and the Company. 3. Warrant, dated June 26, 2000 to purchase shares of Common Stock. 4. Registration Agreement, dated as of February 28, 1997, by and among the Company and the parties named therein.* 5. First Amendment to Registration Agreement, dated as of October 7, 1998, by and among the Company and the parties named therein.* 12 6. Second Amendment to Registration Agreement, dated as of July 7, 1998, by and among the Company and the parties named therein.* 7. Third Amendment to Registration Agreement, dated as of June 26, 2000, by and among the Company and the parties named therein. - ---------- * Incorporated by reference to the Company's Registration Statement on Form S-1 (No. 333-79483) filed on May 27, 1999, as amended. 13 SIGNATURES After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. Dated: July 7, 2000 WARBURG, PINCUS EQUITY PARTNERS, L.P. By: Warburg, Pincus & Co., General Partner By: /s/ Stephen Distler ----------------------------------- Stephen Distler Partner Dated: July 7, 2000 WARBURG, PINCUS & CO. By: /s/ Stephen Distler ----------------------------------- Stephen Distler Partner Dated: July 7, 2000 E.M. WARBURG, PINCUS & CO., LLC By: /s/ Stephen Distler ----------------------------------- Stephen Distler Member SCHEDULE I ---------- Set forth below is the name, position and present principal occupation of each of the general partners of Warburg, Pincus & Co. ("WP") and members of E.M. Warburg, Pincus & Co., LLC ("EMW LLC"). The sole general partner of Warburg, Pincus Equity Partners, L.P. ("WPEP") is WP. WPEP, WP, and EMW LLC are hereinafter collectively referred to as the "Reporting Entities". Except as otherwise indicated, the business address of each of such persons is 466 Lexington Avenue, New York, New York 10017, and each of such persons is a citizen of the United States. GENERAL PARTNERS OF WP ---------------------- - --------------------------- ---------------------------------------------------- PRESENT PRINCIPAL OCCUPATION IN ADDITION TO POSITION WITH WP, AND POSITIONS NAME WITH THE REPORTING ENTITIES - --------------------------- ---------------------------------------------------- Joel Ackerman Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Harold Brown Partner of WP; Member and Senior Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- W. Bowman Cutter Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Cary J. Davis Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Stephen Distler Partner of WP; Member, Managing Director and Treasurer of EMW LLC - --------------------------- ---------------------------------------------------- Stewart K. P. Gross Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- S-1 - --------------------------- ---------------------------------------------------- Patrick T. Hackett Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Jeffrey A. Harris Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- William H. Janeway Partner of WP; Member and Senior Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Douglas M. Karp Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Charles R. Kaye Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Henry Kressel Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Joseph P. Landy Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Sidney Lapidus Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Kewsong Lee Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Jonathan S. Leff Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Reuben S. Leibowitz Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- David E. Libowitz Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Nancy Martin Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Edward J. McKinley Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Rodman W. Moorhead III Partner of WP; Member and Senior Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Howard H. Newman Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- S-2 - --------------------------- ---------------------------------------------------- Gary D. Nusbaum Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Dalip Pathak Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Lionel I. Pincus Managing Partner of WP; Managing Member, Chairman of the Board and Chief Executive Officer of EMW LLC - --------------------------- ---------------------------------------------------- John D. Santoleri Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Henry Schacht Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Steven G. Schneider Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- John L. Vogelstein Partner of WP; Member and Vice Chairman of EMW LLC - --------------------------- ---------------------------------------------------- Elizabeth H. Weatherman Partner of WP; Member and Managing Director of EMW LLC - --------------------------- ---------------------------------------------------- Pincus & Co.* - --------------------------- ---------------------------------------------------- NL & Co.** - --------------------------- ---------------------------------------------------- - --------------------- * New York limited partnership; primary activity is ownership interest in WP and EMW LLC. ** New York limited partnership; primary activity is ownership interest in WP. As of 6/00 S-3 MEMBERS OF EMW LLC ------------------ - ------------------------------ ------------------------------------------------- PRESENT PRINCIPAL OCCUPATION IN ADDITION TO POSITION WITH EMW LLC, AND POSITIONS NAME WITH THE REPORTING ENTITIES - ------------------------------ ------------------------------------------------- Joel Ackerman Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Frank M. Brochin (1) Member and Managing Director of EMW LLC - ------------------------------ ------------------------------------------------- Harold Brown Member and Senior Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- W. Bowman Cutter Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Cary J. Davis Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Stephen Distler Member, Managing Director, and Treasurer of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Tetsuya Fukagawa (2) Member and Managing Director of EMW LLC - ------------------------------ ------------------------------------------------- Stewart K. P. Gross Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Alf Grunwald (3) Member and Managing Director of EMW LLC - ------------------------------ ------------------------------------------------- Patrick T. Hackett Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Jeffrey A. Harris Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- S-4 - ------------------------------ ------------------------------------------------- Roberto Italia (4) Member and Managing Director of EMW LLC - ------------------------------ ------------------------------------------------- William H. Janeway Member and Senior Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Douglas M. Karp Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Charles R. Kaye Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Henry Kressel Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Rajiv B. Lall (5) Member and Managing Director of EMW LLC - ------------------------------ ------------------------------------------------- Joseph P. Landy Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Sidney Lapidus Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Kewsong Lee Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Jonathan S. Leff Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Reuben S. Leibowitz Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- David E. Libowitz Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Nicholas J. Lowcock (6) Member and Managing Director of EMW LLC - ------------------------------ ------------------------------------------------- John W. MacIntosh (7) Member and Managing Director of EMW LLC - ------------------------------ ------------------------------------------------- Nancy Martin Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Edward J. McKinley Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- James McNaught-Davis (6) Member and Managing Director of EMW LLC - ------------------------------ ------------------------------------------------- Rodman W. Moorhead III Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- S-5 - ------------------------------ ------------------------------------------------- Howard H. Newman Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Gary D. Nusbaum Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Dalip Pathak Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Lionel I. Pincus Managing Member, Chairman of the Board and Chief Executive of EMW LLC; Managing Partner of WP - ------------------------------ ------------------------------------------------- John D. Santoleri Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Henry Schacht Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Steven G. Schneider Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Dominic H. Shorthouse (6) Member and Managing Director of EMW LLC - ------------------------------ ------------------------------------------------- Melchior Stahl (3) Member and Managing Director of EMW LLC - ------------------------------ ------------------------------------------------- Chang Q. Sun (8) Member and Managing Director of EMW LLC - ------------------------------ ------------------------------------------------- John L. Vogelstein Member and Vice Chairman of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Elizabeth H. Weatherman Member and Managing Director of EMW LLC; Partner of WP - ------------------------------ ------------------------------------------------- Jeremy S. Young (6) Member and Managing Director of EMW LLC - ------------------------------ ------------------------------------------------- Pincus & Co.* - ------------------------------ ------------------------------------------------- (1) - Citizen of France (2) - Citizen of Japan (3) - Citizen of Germany (4) - Citizen of Italy (5) - Citizen of India S-6 (6) - Citizen of United Kingdom (7) - Citizen of Canada (8) - Citizen of China * New York limited partnership; primary activity is ownership interest in WP and EMW LLC As of 6/00 S-7 EX-1 2 0002.txt JOINT FILING AGREEMENT Exhibit 1 Joint Filing Agreement The undersigned hereby agree that the statement on Schedule 13D with respect to the Common Stock of Cobalt Group, Inc. is, and any amendment thereto signed by each of the undersigned shall be, filed on behalf of each undersigned pursuant to and in accordance with the provisions of 13d-1(k) under the Securities Exchange Act of 1934, as amended. Dated: July 7, 2000 WARBURG, PINCUS EQUITY PARTNERS, L.P. By: Warburg, Pincus & Co., General Partner By: /s/ Stephen Distler ------------------------------ Stephen Distler Partner WARBURG, PINCUS & CO. By: /s/ Stephen Distler ------------------------------ Stephen Distler Partner E.M. WARBURG, PINCUS & CO., LLC By: /s/ Stephen Distler ------------------------------ Stephen Distler Member EX-2 3 0003.txt SECURITIES PURCHASE AGREEMENT EXHIBIT 2 EXECUTION COPY ================================================================================ SECURITIES PURCHASE AGREEMENT among WARBURG, PINCUS EQUITY PARTNERS, L.P., RIVERSIDE PARTNERSHIP, THIRD POINT PARTNERS L.P., THIRD POINT OFFSHORE FUND LTD., POINTS WEST INTERNATIONAL INVESTMENTS LTD. and THE COBALT GROUP, INC. June 26, 2000 ================================================================================ THE COBALT GROUP, INC. SECURITIES PURCHASE AGREEMENT Dated as of June 26 , 2000 TO THE INVESTORS WHOSE NAMES APPEAR ON THE SIGNATURE PAGE HERETO Dear Sirs: The Cobalt Group, Inc., a Washington corporation (the "Company"), hereby agrees with each of the Investors whose names appear on the signature page hereto (collectively, the "Investors") as follows: SECTION 1. PURCHASE AND SALE OF SECURITIES 1.1. Grant of Options (a) Each of the Investors hereby grants to the Company an irrevocable option (each such option, an "Option" and collectively, the "Options") to cause such Investor, subject to the terms and conditions set forth in this Agreement and in reliance on the Company's representations and warranties set forth below, to purchase from the Company on the Closing Date (as defined below) the number of shares of the Company's Common Stock, $.01 par value ("Common Stock"), set forth opposite such Investor's name on Schedule 1.1 (such shares, collectively the "Shares") at a cash purchase price of $6.8578 per share (the "Purchase Price"). The Purchase Price and the number and character of such Shares are subject to adjustment as provided in this Agreement. (b) The Options may be exercised in whole or in part on only one occasion in the manner provided below. All Options must be exercised concurrently. If the Options are exercised in part, the number of shares to be purchased by each Investor shall have the same proportion to the aggregate number of shares to be purchased by the Investors as the number of shares set forth opposite such Investor's name on Schedule 1.1 has to 2,187,289. 1.2. Exercise of Options; Closing (a) In the event the Company wishes to exercise the Options, it shall send a written notice to the Investors not earlier than 80 nor more than 140 days after the date hereof, specifying the number of shares to be sold by the Company and purchased by each of the Investors. The closing of such sales and purchases (the "Closing") shall take place at 10:00 a.m., local time, at the offices of Stoel Rives LLP, 600 University Street, Suite 3600, Seattle, Washington 98101-3197, on the tenth day after such notice is given (unless such day is not a Business Day, in which case, on the first Business Day following such day), or if any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall not have then expired or been terminated, on the second Business Day following such expiration or termination, or at such other time as the parties hereto may agree (the "Closing Date"). Such sales and purchases shall be effected on the Closing Date by the Company executing and delivering to each of the Investors, duly registered in its name, duly executed stock certificates evidencing the Shares being purchased by it, against delivery by each of the Investors to the Company of the aggregate Purchase Price for such shares by wire transfer of immediately available funds to such account as the Company shall, not less than three Business Days prior to the Closing Date, designate to the Investors. 1.3. Reduction in Number of Shares for Alternate Equity Issuances (a) Each time, during the period from the date hereof to the Closing Date, the Company issues equity securities of any kind for cash (the term "equity securities" shall include for these purposes any warrants, options or other rights to acquire equity securities and debt securities convertible into equity securities, and any such issuance shall be referred to as an "Alternate Equity Issuance"), the number of Shares to be purchased by each Investor upon the Company's exercise of the Option granted by such Investor shall be reduced to the number equal to (A) the product of (i) such Investor's Investor Percentage and (ii) the excess, if any, of $15,000,000 over the gross proceeds to the Company of such Alternate Equity Issuance divided by (B) the Purchase Price. (b) For purposes of this Section 1.3, "Alternate Equity Issuances" shall not include the issuance of: (i) securities pursuant to the acquisition of another corporation by the Company by merger, stock purchase, purchase of substantially all of the assets, or other reorganization; (ii) shares of Common Stock (or related options) to employees, officers or other persons performing services for the Company pursuant to any stock offering, plan or arrangement approved by the Board of Directors of the Company; (iii) securities in connection with any stock split, stock dividend, shareholder rights plan or recapitalization by the Company; (iv) the Shares, the Warrant or the Warrant Shares; (v) securities upon exercise or conversion of any rights, options, warrants or convertible securities outstanding on the date of this Agreement; (vi) securities pursuant to the acquisition of an asset of another corporation or entity; or (vii) any right, option or warrant to acquire any security exercisable for or convertible into securities, the issuance of which is excluded from the definition of Alternate Equity Issuances pursuant to clauses (i) through (vii) above, or issuable upon exercise or conversion of any securities, the issuance of which is excluded from the definition of Alternate Equity Issuances pursuant to clauses (i) through (vii) above. (c) For purposes of this Section 1.3, the gross proceeds to the Company of an Alternate Equity Issuance shall be determined without deduction of any expenses incurred or any underwriting or other commissions, discounts or concessions allowed by the Company in connection therewith. 1.4. Other Adjustments An appropriate adjustment to the number of Shares to be purchased by each Investor upon the exercise of the Option granted by such Investor, the character of such Shares and the Purchase Price shall be made in the event that, prior to the Closing, the outstanding shares of Common Stock, are changed into or exchanged for a different number of shares or a 2 different class by reason of any reorganization, reclassification, subdivision, recapitalization, split-up, combination, exchange of shares, stock dividend or other similar transaction. 1.5. Issuance of Warrants In consideration for the Investors' granting the Options to the Company, the Company has on the date hereof granted to each Investor warrants, in substantially the form of Exhibit A (collectively, the "Warrants"), to purchase the number of shares of Common Stock set forth opposite such Investor's name on Schedule 1.5 (collectively, the "Warrant Shares"). SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to the Investors that: 2.1. Corporate Organization (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington. Attached hereto as Exhibits B and C, respectively, are true and complete copies of the Certificate of Incorporation and Bylaws of the Company, as amended through the date hereof (collectively, the "Organizational Documents"). (b) The Company has all requisite power and authority and has all necessary approvals, licenses, permits and authorization to own its properties and to carry on its business as now conducted. The Company has all requisite power and authority to execute and deliver the Transaction Documents and to perform its obligations hereunder and thereunder. (c) The Company has filed all necessary documents to qualify to do business as a foreign corporation in, and the Company is in good standing under the laws of each jurisdiction in which the conduct of the Company's business or the nature of the property owned requires such qualification, except where the failure to so qualify would not have or be reasonably likely to have a material adverse effect on the business, properties, assets, liabilities, prospects, profits, results of operations or condition (financial or otherwise) of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect"). 2.2. Subsidiaries Except as set forth on Schedule 2.2, on the date hereof, the Company has no subsidiaries and no interests or investments in any partnership, trust or other entity or organization. Each subsidiary of the Company listed on Schedule 2.2 has been duly incorporated, or duly established, and is validly existing and in good standing under the laws of its jurisdiction of establishment, has full power and authority (corporate or other) to own its properties and to conduct its business and is duly registered, qualified and authorized to transact business and is in good standing in each jurisdiction in which the conduct of its business or the nature of its properties requires such registration, qualification or authorization; all of the issued and outstanding capital stock of, or other form of ownership interest in, each subsidiary has been duly authorized and validly issued, is fully paid and non-assessable, and is owned by the 3 Company free and clear of any mortgage, pledge, lien, encumbrance, security interest, claim or equity. 2.3. Capitalization (a) On the date hereof, the authorized capital stock of the Company consists of 200,000,000 shares of Common Stock and 100,000,000 shares of preferred stock, $.01 par value ("Preferred Stock"). As of the date hereof, (A) 17,557,008 shares of Common Stock were issued and outstanding, (B) no shares of Preferred Stock were issued and outstanding, (C) 2,765,211 shares of Common Stock were reserved for issuance upon the exercise of outstanding options under the Company's stock option plan and (D) 1,364,765 shares of Common Stock were reserved for issuance upon the exercise of outstanding warrants other than the Warrants. (b) All the outstanding shares of capital stock of the Company have been duly and validly issued and are fully paid and non-assessable, and were issued in accordance with the registration or qualification requirements of the Securities Act and any relevant state securities laws or pursuant to valid exemptions therefrom. Upon issuance, sale and delivery as contemplated by this Agreement, the Shares will be duly authorized, validly issued, fully paid and non-assessable shares of the Company, free of all preemptive or similar rights. Upon their issuance in accordance with the terms of the Warrants, the Warrant Shares will be duly authorized, validly issued, fully paid and non-assessable shares of Common Stock, free of all preemptive or similar rights. (c) Except as set forth on Schedule 2.3(c) and except for the warrants and options referenced in Section 2.3(a), the Options and the Warrants, on the date hereof, there are no shares of Common Stock or any other equity security of the Company issuable upon conversion or exchange of any security of the Company nor will there be any rights, options or warrants outstanding or other agreements to acquire shares of Common Stock nor will the Company be contractually obligated to purchase, redeem or otherwise acquire any of its outstanding shares. No stockholder of the Company is entitled to any preemptive or similar rights to subscribe for shares of capital stock of the Company. 2.4. Corporate Proceedings, etc. The Company has authorized the execution, delivery, and performance of the Transaction Documents and each of the transactions and agreements contemplated hereby and thereby. No other corporate action (including stockholder approval) is necessary to authorize such execution, delivery and performance of the Transaction Documents, and upon such execution and delivery each of the Transaction Documents shall constitute the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights and general principles of equity. The Company has authorized the issuance and delivery of the Shares in accordance with this Agreement and the Company has reserved for issuance the Warrant Shares. 4 2.5. Consents and Approvals Except for the premerger notification requirements of the HSR Act and the listing of the Shares and the Warrant Shares on the Nasdaq National Market subject to notice of issuance and except as set forth on Schedule 2.5, the execution and delivery by the Company of the Transaction Documents, the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the transactions contemplated hereby and thereby do not require the Company or any of its subsidiaries to obtain any consent, approval or action of, or make any filing with or give any notice to, any corporation, person or firm or any public, governmental or judicial authority. 2.6. Absence of Defaults, Conflicts, etc. Except as set forth on Schedule 2.6, the execution and delivery of the Transaction Documents, and the fulfillment of the terms hereof and thereof by the Company, and the issuance of the Shares and the Warrant Shares will not, result in a breach of any of the terms, conditions or provisions of, or constitute a default under, or permit the acceleration of rights under or termination of, any indenture, mortgage, deed of trust, credit agreement, note or other evidence of indebtedness, or other material agreement of the Company or any of its subsidiaries (collectively the "Key Agreements and Instruments"), or the Organizational Documents, or any rule or regulation of any court or federal, state or foreign regulatory board or body or administrative agency having jurisdiction over the Company or any of its subsidiaries or over their respective properties or businesses. No event has occurred and no condition exists which, upon notice or the passage of time (or both), would constitute a default under any such Key Agreements and Instruments or in any license, permit or authorization to which the Company or any subsidiary is a party or by which any of them may be bound. 2.7. SEC Reports; Financial Statements (a) The Company has filed all forms, reports and documents required to be filed with the SEC since August 3, 1999, and has heretofore delivered to Investors, in the form filed with the SEC, its (i) Registration Statement on Form S-1 (Registration No. 333-79483), (ii) Annual Report on Form 10-K for the fiscal year ended December 31, 1999, (iii) Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000, (iv) all proxy statements relating to the Company's meetings of stockholders (whether annual or special) held since August 5, 1999 and (v) all other reports or registration statements filed by the Company with the SEC, since August 3, 1999 (collectively, the "SEC Reports"). The SEC Reports (i) were prepared in accordance with the requirements of the Securities Act or the Exchange Act, as the case may be, and (ii) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (b) The consolidated financial statements contained in the SEC Reports were prepared in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly presented the consolidated financial position of the Company and the subsidiaries as at the respective dates thereof and the consolidated results of operations and changes in financial 5 position of the Company and its subsidiaries for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments (which in the aggregate are not material in amount). (c) Except as disclosed in any SEC Report filed prior to the date of this Agreement, and except for liabilities and obligations incurred in the ordinary course of business consistent with past practice since the date of the most recent consolidated balance sheet included in the SEC Reports filed and publicly available prior to the date of this Agreement, the Company and its subsidiaries have no material liabilities of any nature (whether accrued, absolute, contingent or otherwise). 2.8. Absence of Certain Developments (a) Except as set forth on Schedule 2.8, since December 31, 1999 through the date hereof, there has been no (i) material adverse change in the condition, financial or otherwise, of the Company and its subsidiaries taken as a whole or in their assets, liabilities, properties, profits, results of operations or business or prospects, (ii) issuance of capital stock (other than pursuant to the exercise of options, warrants, or convertible securities outstanding at such date) or options, warrants or rights to acquire capital stock (other than the Options and Warrants granted to the Investors hereunder), (iii) acquisition or disposition of any material assets (or any contract or arrangement therefor), or any other material transaction by the Company or any subsidiary otherwise than for fair value in the ordinary course of business, (iv) material loss, destruction or damage to any property of the Company or any subsidiary, whether or not insured or (v) agreement, in writing or otherwise, by the Company or any of its subsidiaries to take any of the actions described in this Section 2.8(a), except as expressly contemplated by this Agreement. (b) Except as set forth on Schedule 2.8, since December 31, 1999 there has been no (i) declaration, setting aside or payment of any dividend or other distribution with respect to the capital stock of the Company, , (ii) acceleration or prepayment of any indebtedness for borrowed money or the refunding of any such indebtedness, (iii) labor trouble involving the Company or any subsidiary or any material change in their personnel or the terms and conditions of employment, (iv) waiver of any valuable right, (v) loan or extension of credit to any officer or employee of the Company or any subsidiary, (vi) revaluation by the Company of any asset (including, without limitation, any writing down of the value of inventory or writing off of notes or accounts receivable), other than in the ordinary course of business consistent with past practice, or (vii) agreement, in writing or otherwise, by the Company or any of its subsidiaries to take any of the actions described in this Section 2.8(b), except as expressly contemplated by this Agreement. 2.9. Compliance with Law (a) Except as set forth on Schedule 2.9, neither the Company nor any of its subsidiaries is in material violation of any laws, ordinances, governmental rules or regulations to which it is subject, including without limitation laws or regulations relating to the environment or to occupational health and safety, and no material expenditures are or will be required in order 6 to cause its current operations or properties to comply with any such law, ordinances, governmental rules or regulations. (b) Except as set forth on Schedule 2.9, the Company and its subsidiaries have all licenses, permits, franchises or other governmental authorizations necessary to the ownership of their property or to the conduct of their respective businesses, which if violated or not obtained might have a Material Adverse Effect. Neither the Company nor any subsidiary has finally been denied any application for any such licenses, permits, franchises or other governmental authorizations necessary to its business. 2.10. Litigation There are no legal actions, suits, arbitrations or other legal, administrative or other governmental investigations, inquiries or proceedings (whether federal, state, local or foreign) pending or, to the best of the Company's knowledge, threatened against or affecting the Company or any subsidiary or any of their respective properties, assets or businesses which, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect. The Company is not aware of any fact which might result in or form the basis for any such action, suit, arbitration, investigation, inquiry or other proceeding. Neither the Company nor any subsidiary is subject to any order, writ, judgment, injunction, decree, determination or award of any court or of any governmental agency or instrumentality (whether federal, state, local or foreign). 2.11. Tax Matters To the Company's knowledge, there are no federal, state, county or local taxes due and payable by the Company or any of its subsidiaries which have not been paid. The provisions for taxes on the balance sheets included in the SEC Reports are sufficient for the payment of all accrued and unpaid federal, state, county and local taxes of the Company whether or not disputed as of the respective dates of such balance sheets. The Company and its subsidiaries have duly filed all federal, state, county and local tax returns required to have been filed by it and there are in effect no waivers of applicable statutes of limitations with respect to taxes for any year. Neither the Company nor any of its subsidiaries has been subject to a federal or state tax audit of any kind. 2.12. Employee Benefit Plans The Company and its subsidiaries have no employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974) covering former and current employees of the Company or any of its subsidiaries, or under which the Company or any of its subsidiaries has any obligation or liability. All material plans, contracts, bonuses, commissions, profit-sharing, savings, stock options, insurance, deferred compensation, or other similar fringe or employee benefits covering former or current employees of the Company or any of its subsidiaries or under which the Company or any of its subsidiaries has any obligation or liability are and have been administered in substantial compliance with their terms and with the requirements of applicable law. 7 2.13. Intellectual Property Except as disclosed on Schedule 2.13, the Company and its subsidiaries own all right, title and interest in and to, or have a valid and enforceable license to use all the Intellectual Property used by them in connection with their respective businesses, which represents all intellectual property rights necessary to the conduct of the their business as now conducted (the "Company Intellectual Property"). The Company and its subsidiaries are in material compliance with all contractual obligations relating to the protection of such of the Company Intellectual Property as they use pursuant to license or other agreement. Except as disclosed on Schedule 2.13, to the Company's knowledge, there are no conflicts with or infringements of any Company Intellectual Property by any third party. To the Company's knowledge, the conduct of the business of the Company and its subsidiaries as currently conducted does not conflict with or infringe any proprietary right of any third party. Except as disclosed on Schedule 2.13, there is no claim, suit, action or proceeding pending or, to the knowledge of the Company, threatened against the Company or any subsidiary: (i) alleging any such conflict or infringement with any third party's proprietary rights; or (ii) challenging the Company's or any subsidiary's ownership or use of, or the validity or enforceability of any Company Intellectual Property that, individually, or in the aggregate, would be reasonably likely to have a Material Adverse Effect. 2.14. Title to Assets Except as disclosed in the SEC Reports filed prior to the date of the Agreement, the Company and its subsidiaries have good title to their properties and assets and good title to all their leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than or resulting from taxes which have not yet become delinquent and minor liens and encumbrances which do not in any case materially detract from the value of the property subject thereto or materially impair the operations of the Company and its subsidiaries and which have not arisen otherwise than in the ordinary course of business. 2.15. Registration Rights Except as disclosed in the SEC Reports filed prior to the date of the Agreement, and as provided in the Registration Rights Agreement, as amended by the Registration Rights Amendment, the Company is not on the date hereof under any obligation to register any of its securities under the Securities Act. 2.16. Private Offering Neither the Company nor anyone acting on its behalf has sold or has offered any of the Shares or Warrants for sale to, or solicited offers to buy from, or otherwise approached or negotiated with respect thereto with, any prospective purchaser, other than the Investors. Neither the Company nor anyone acting on its behalf shall offer the Shares or Warrants for issue or sale to, or solicit any offer to acquire any of the same from, anyone so as to bring the issuance and sale of such Shares or Warrants, or any part thereof, within the provisions of Section 5 of the Securities Act. Based in part upon the representations of the Investors set forth in Section 3, the offer, issuance and sale of the Shares, the Warrants and the Warrant Shares are and will be exempt from the registration and prospectus delivery requirements of the Securities Act, and 8 have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws. 2.17. Brokerage There are no claims for brokerage commissions or finder's fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement made by or on behalf of the Company and the Company agrees to indemnify and hold the Investors harmless against any costs or damages incurred as a result of any such claim. 2.18. Material Facts This Agreement, the schedules furnished contemporaneously herewith, and the other agreements, documents (other than the SEC Reports), certificates or written statements furnished or to be furnished to the Investors through the Closing Date by or on behalf of the Company in connection with the transactions contemplated hereby taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein or herein, in light of the circumstances in which they were made, not misleading. There is no fact which is known to the Company and which has not been disclosed herein or otherwise by the Company to the Investors which may materially adversely affect the business, properties, assets, liabilities, prospects, profits, results of operations or condition, financial or otherwise, of the Company and its subsidiaries taken as a whole. SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS Each of the Investors severally represents and warrants to the Company as follows: (a) It is acquiring the Shares and the Warrants (and will acquire the Warrant Shares) for its own account for investment and not with a view towards the resale, transfer or distribution thereof, nor with any present intention of distributing the Shares or the Warrants (or the Warrant Shares), but subject, nevertheless, to any requirement of law that the disposition of the Investors' property shall at all times be within the Investors' control, and without prejudice to the Investors' right at all times to sell or otherwise dispose of all or any part of such securities under a registration under the Securities Act or under an exemption from said registration available under the Securities Act. (b) It has full power and legal right to execute and deliver this Agreement and to perform its obligations hereunder. (c) It has taken all action necessary for the authorization, execution, delivery, and performance of this Agreement and its obligations hereunder, and, upon execution and delivery by the Company, this Agreement shall constitute the valid and binding obligation of such Investor, enforceable against such Investor in accordance with its terms, except that such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights and general principles of equity. 9 (d) There are no claims for brokerage commissions or finder's fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement made by or on behalf of such Investor and such Investor agrees to indemnify and hold the Company harmless against any costs or damages incurred as a result of any such claim. (e) It has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its investment in the Company as contemplated by this Agreement, and is able to bear the economic risk of such investment for an indefinite period of time. It has been furnished access to such information and documents as it has requested and has been afforded an opportunity to ask questions of and receive answers from representatives of the Company concerning the terms and conditions of this Agreement and the purchase of the Shares, the Warrants and the Warrant Shares contemplated hereby. SECTION 4. ADDITIONAL COVENANTS OF THE PARTIES 4.1. Resale of Securities (a) Each of the Investors severally covenants that it will not sell or otherwise transfer the Shares or the Warrants (or the Warrant Shares) except pursuant to an effective registration under the Securities Act or in a transaction which, in the opinion of counsel reasonably satisfactory to the Company, qualifies as an exempt transaction under the Securities Act and the rules and regulations promulgated thereunder. (b) The certificates evidencing the Shares and the Warrant Shares will bear the following legend reflecting the foregoing restrictions on the transfer of such securities: "These securities have not been registered under the Securities Act of 1933, as amended, the Washington State Securities Act or any other applicable securities act (the "Acts"), and neither the offering of the securities nor any offering materials have been reviewed by any administrator under the Acts. The securities were acquired by the registered holder pursuant to a representation that the holder was acquiring the securities for the holder's own account, for investment. These securities may not be pledged, hypothecated, sold, transferred or offered for sale in the absence of any effective registration statement under the Acts or an opinion of counsel satisfactory to the Corporation that such registration is not required". 4.2. Covenants Pending Closing Pending the Closing, (a) the Company shall, and shall cause each of its subsidiaries to, (i) carry on its respective businesses in the ordinary course, (ii) use all reasonable best efforts to preserve intact its current business organizations and keep available the services of its current officers and key employees, (iii) use all reasonable best efforts to preserve its relationships with customers, suppliers, and other Persons with whom it has business dealings, and (iv) comply in all material respects with all laws and regulations applicable to it or any of its properties, assets or business, and (b) the Company shall not, without the Investors' prior written consent, take any action which would result in the condition set forth in Section 5.1 not being satisfied at and as of the time immediately after such action, or in any of the covenants contained in this Agreement becoming incapable of performance. The Company shall promptly advise the 10 Investors of any action or event of which would cause or result in the condition set forth in Section 5.1 not being satisfied at and as of the time immediately after such action or event or which has the effect of rendering any of the covenants contained herein incapable of performance. 4.3. Further Assurance Each of the parties shall execute such documents and other papers and take such further actions as may be reasonably required or desirable to carry out the provisions hereof and the transactions contemplated hereby. Each such party shall use its reasonable efforts to fulfill or obtain the fulfillment of the conditions to the Closing as promptly as practicable. SECTION 5. INVESTORS' CLOSING CONDITIONS The obligation of the Investors to purchase and pay for the Shares on the Closing Date, as provided in Section 1 hereof, shall be subject to the satisfaction, prior thereto or concurrently therewith, of the following conditions: 5.1. Representations and Warranties The representations and warranties of the Company contained in this Agreement shall be true on and as of the date of this Agreement. In addition, such representations and warranties shall be true, without regard to any materiality or Material Adverse Effect qualifications contained in such representations and warranties, on and as of the Closing Date as though such representations and warranties were made on and as of the Closing Date, except to the extent they are expressly made as of another specific date, and except for inaccuracies in such representations and warranties that (i) individually or in the aggregate, have not had and would not be reasonably expected to have a Material Adverse Effect or (ii) are the result of any action taken by the Company, which action or failure to take action was specifically approved by the affirmative vote of at least two-thirds of the members of the Company's entire Board of Directors. 5.2. Compliance with Agreement The Company shall have performed and complied with all agreements, covenants and conditions contained in this Agreement which are required to be performed or complied with by the Company prior to or on the Closing Date. 5.3. Officer's Certificate Each of the Investors shall have received a certificate, dated the Closing Date, signed by each of the Chief Executive Officer and the Chief Financial Officer of the Company, certifying that the conditions specified in the foregoing Sections 5.1 and 5.2 hereof have been fulfilled. 11 5.4. Injunction There shall be no effective injunction, writ, preliminary restraining order or any order of any nature issued by a court of competent jurisdiction directing that the transactions provided for herein or any of them not be consummated as herein provided. 5.5. Counsel's Opinion The Investors shall have received from the Company's counsel, Stoel Rives LLP, an opinion, dated the Closing Date, substantially in the form of Exhibit D hereto. 5.6. Adverse Developments There shall not have occurred (i) any general suspension of, or limitation on prices for, trading in securities on any national securities exchange or the over-the-counter market, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any limitation (whether or not mandatory) by any government or governmental entity, on the extension of credit by banks or other lending institutions, (iv) a commencement of a war or armed hostilities or other national calamity directly involving the United States, (v) in the case of any of the foregoing existing at the date of this Agreement, a material acceleration or worsening thereof, or (vi) any suspension of trading of the Common Stock on the Nasdaq National Market by the Nasdaq Stock Market or the SEC. 5.7. Listing of the Shares The Shares and the Warrant Shares shall have been approved for designation, upon notice of issuance, on the Nasdaq National Market. 5.8. HSR Act Any waiting period under the HSR Act applicable to the Investors' acquisition of the Shares and the Warrant Shares shall have expired or terminated. 5.9. Consents and Approvals All consents and approvals from, action of, filings with, and notices to, any government, governmental entity or other Person required for the consummation of the purchase of the Shares and the Warrant Shares and the other transactions contemplated by the Transaction Documents shall have been obtained, made or given and shall be in effect. 5.10. Registration Rights Amendment The Company and each of the other parties thereto shall have executed the amendment to the Registration Rights Agreement, in substantially the form attached as Exhibit E hereto (the "Registration Rights Amendment"). 12 5.11. Approval of Proceedings All proceedings to be taken in connection with the transactions contemplated by this Agreement, and all documents incident thereto, shall be satisfactory in form and substance to the Investors and their special counsel, Willkie Farr & Gallagher; and the Investors shall have received copies of all documents or other evidence which they and Willkie Farr & Gallagher may request in connection with such transactions and of all records of corporate proceedings in connection therewith in form and substance satisfactory to the Investors and Willkie Farr & Gallagher. SECTION 6. COMPANY CLOSING CONDITIONS The obligation of the Company to issue and deliver the Shares on the Closing Date, as provided in Section 1 hereof, shall be subject to the satisfaction, prior thereto or concurrently therewith, of the following conditions: 6.1. Representations and Warranties The representations and warranties of the Investors contained in this Agreement shall be true on and as of the date of this Agreement, and on and as of the Closing Date as though such warranties and representations were made at and as of the Closing Date. 6.2. Compliance with Agreement The Investors shall have performed and complied with all agreements, covenants and conditions contained in this Agreement which are required to be performed or complied with by it prior to or on the Closing Date. 6.3. Investors' Certificates The Company shall have received a certificate from each of the Investors, dated the Closing Date, signed by a duly authorized representative of such Investor, certifying that the conditions specified in the foregoing Sections 6.1 and 6.2 hereof have been fulfilled. 6.4. Injunction There shall be no effective injunction, writ, preliminary restraining order or any order of any nature issued by a court of competent jurisdiction directing that the transactions provided for herein or any of them not be consummated as herein provided. SECTION 7. COVENANTS 7.1. Use of Net Proceeds The Company shall apply the net proceeds from the sale of the Shares for general working capital purposes. 13 7.2. HSR Act The Investors and the Company shall in good faith cooperate to file any notification required under the HSR Act and use reasonable efforts to cause expiration or termination of any waiting period under such act prior to the Closing. SECTION 8. INTERPRETATION OF THIS AGREEMENT 8.1. Terms Defined As used in this Agreement, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term: Affiliate: means any Person or entity, directly or indirectly, controlling, controlled by or under common control with such Person or entity. Alternative Equity Issuance: shall have the meaning set forth in Section 1.3(a). Business Day: shall mean a day other than a Saturday, Sunday or other day on which banks in the State of New York are required or authorized to close. Certificate of Designation: shall have the meaning set forth in Section 1. Closing: shall have the meaning set forth in Section 1.2(a). Closing Date: shall have the meaning set forth in Section 1.2(a). Code: shall mean the Internal Revenue Code of 1986, as amended. Common Stock: shall have the meaning set forth in Section 1.1(a). Company's knowledge (or words of similar import): shall mean the actual knowledge of the officers of the Company and any knowledge which would have likely been obtained by such officers through due and diligent inquiry of any appropriate employees of the Company or its subsidiaries. Exchange Act: shall mean the Securities Exchange Act of 1934. HSR Act: shall have the meaning set forth in Section 1.2. Intellectual Property: shall mean: (i) trademarks and service marks, trade dress, product configurations, trade names and other indications of origin, applications or registrations in any jurisdiction pertaining to the foregoing and all goodwill associated therewith; (ii) patentable inventions, discoveries, improvements, ideas, know-how, formula methodology, processes, technology, software (including password unprotected interpretive code or source code, object code, development documentation, programming tools, drawings, specifications and data) and applications and patents in any jurisdiction pertaining to the foregoing, including re-issues, continuations, divisions, continuations-in-part, renewals or extensions; (iii) trade secrets, 14 including confidential information and the right in any jurisdiction to limit the use or disclosure thereof; (iv) copyrights in writings, designs software, mask works or other works, applications or registrations in any jurisdiction for the foregoing and all moral rights related thereto; (v) database rights; (vi) Internet Web sites, domain names and applications and registrations pertaining thereto and all intellectual property used in connection with or contained in all versions of the Company's Web sites; (vii) rights under all agreements relating to the foregoing; (viii) books and records pertaining to the foregoing; and (ix) claims or causes of action arising out of or related to past, present or future infringement or misappropriation of the foregoing. Investor Percentage: shall mean, with respect to any Investor, a fraction, the numerator of which is the number of Shares to be purchased by such Investor upon the Company's exercise of the Option granted by such Investor and the denominator of which is the aggregate number of Shares purchasable by all Investors upon the Company's exercise of all Options. Key Agreements and Instruments: shall have the meaning set forth in Section 2.6 Material Adverse Effect: shall have the meaning set forth in Section 2.1. Option and Options: shall have the meanings set forth in Section 1.1(a). Organizational Documents: shall have the meaning set forth in Section 2.1(a). Person: shall mean an individual, partnership, joint-stock company, corporation, limited liability company, trust, unincorporated organization or other entity. Preferred Stock: shall have the meaning set forth in Section 2.3(a). Purchase Price: shall have the meaning set forth in Section 1.1(a). Registration Rights Agreement: means the Registration Rights Agreement, dated as of February 28, 1997, among the Company, and the Persons listed on the Schedule of Purchasers attached thereto, as amended by a First Amendment, dated as of October 7, 1998, and a Second Amendment, dated as of January 7, 1998. Registration Rights Amendment: shall have the meaning set forth in Section 5.10. SEC: shall mean the Securities and Exchange Commission. SEC Reports: shall have the meaning set forth in Section 2.7. Securities Act: shall mean the Securities Act of 1933, as amended. Shares: shall have the meaning set forth in Section 1.1(a). subsidiary: shall mean a corporation of which a Person owns, directly or indirectly, more than 50% of the Voting Stock. 15 Transaction Documents: shall mean this Agreement, the Warrants and the Registration Rights Agreement, as amended by the Registration Rights Amendment. Voting Stock: shall mean securities of any class or classes of a corporation the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions). Warrants: shall have the meaning set forth in Section 1.5. Warrant Shares: shall have the meaning set forth in Section 1.5. 8.2. Accounting Principles Where the character or amount of any asset or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, this shall be done in accordance with GAAP at the time in effect, to the extent applicable, except where such principles are inconsistent with the requirements of this Agreement. 8.3. Directly or Indirectly Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. 8.4. Governing Law This Agreement shall be governed by and construed in accordance with the law of the State of Washington applicable to contracts made and to be performed entirely within such State. 8.5. Paragraph and Section Headings The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof. SECTION 9. MISCELLANEOUS 9.1. Notices (a) All communications under this Agreement shall be in writing and shall be delivered by hand or facsimile or mailed by overnight courier or by registered mail or certified mail, postage prepaid: 16 (1) if to an Investor, at the address or facsimile number set forth on Schedule 1.1 hereto, or at such other address or facsimile number as the Investor may have furnished the Company in writing, (2) if to the Company, at: The Cobalt Group, Inc., 2200 First Avenue, Suite 400, Seattle, Washington 98134 (facsimile: (206) 269-6350), marked for the attention of the Chief Financial Officer, or at such other address or facsimile number as it may have furnished the Investors in writing. (b) Any notice so addressed shall be deemed to be given: if delivered by hand or facsimile, on the date of such delivery; if mailed by courier, on the first business day following the date of such mailing; and if mailed by registered or certified mail, on the third business day after the date of such mailing. 9.2. Expenses and Taxes (a) The Company agrees to pay the out-of-pocket fees and expenses incurred by the Investors in connection with the negotiation, preparation, execution and delivery of the Transaction Documents and the other instruments and agreements entered into pursuant to this Agreement, and any amendments to the same, and the consummation of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements of Willkie Farr & Gallagher, special counsel for the Investors and any filing fees applicable to filings under the HSR Act. Such payments shall be made by the Company no later than 30 days after a bill for such fees and expenses has been sent to the Company. (b) The Company will pay, and save and hold the Investors harmless from any and all liabilities (including interest and penalties) with respect to, or resulting from any delay or failure in paying, stamp and other taxes (other than income taxes), if any, which may be payable or determined to be payable on the execution and delivery or acquisition of the Shares or the Warrant Shares. 9.3. Reproduction of Documents This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by the Investors on the Closing Date (except for certificates evidencing the Shares themselves, and the Warrants) and (c) financial statements, certificates and other information previously or hereafter furnished to the Investors, may be reproduced by any Investor by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process and any Investor may destroy any original document so reproduced. All parties hereto agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by an Investor in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. 17 9.4. Termination and Survival Unless the Closing has occurred prior thereto, this Agreement and, except as herein provided, all the rights and obligations of the parties hereto (other than with respect to the Warrants and Warrant Shares), shall terminate on November 24, 2000 (unless (i) the Options shall have been exercised prior to such date and the Closing has not occurred on or prior to such date because any applicable waiting period under the HSR Act has not expired or terminated, in which case, on December 26, 2000 or (ii) such date is extended by mutual written consent). All warranties, representations, and covenants made by the Investors and the Company herein or in any certificate or other instrument delivered by one of the Investors or the Company under this Agreement shall be considered to have been relied upon by the Company or the Investors, as the case may be, and shall survive all deliveries to the Investors of the Shares, or payment to the Company for such Shares, regardless of any investigation made by the Company or an Investor, as the case may be, or on the Company's or an Investor's behalf. The Officer's Certificate delivered by the Company pursuant to Section 5.3 shall constitute warranties and representations by the Company hereunder as to the matters set forth in such certificate. 9.5. Successors and Assigns This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties. No party may assign any of its rights or obligations under this Agreement without the consent of the other parties, except that (i) any Investor may assign all or any portion of its rights and obligations hereunder to an Affiliate of such Investor so long as such Affiliate agrees in writing in advance to be bound by the terms of this Agreement and is able to make the representations and warranties contained in Section 3 hereof and (ii) each of Warburg, Pincus Equity Partners, L.P., and First Analysis Corp. may assign all or any portion of its rights and obligations hereunder to any other Person so long as (A) after giving effect to such assignment to such other Person, such Investor and its Affiliates remain obligated to purchase at least 45% of the aggregate Shares in the case of Warburg, Pincus Equity Partners, L.P., 8% of the aggregate Shares in the case of First Analysis Corp., and (B) such other Person agrees in writing in advance to be bound by the terms of this Agreement and is able to make the representations and warranties contained in Section 3 hereof (any assignment complying with this clause (ii), a "Third Party Assignment"). Upon making a Third Party Assignment, the assigning Investor will be released from its obligation to purchase Shares hereunder to the extent such obligation is so assigned. This Agreement is not intended to confer upon any other person, except the parties hereto, any rights or remedies hereunder, and no third person shall be a third party beneficiary of this Agreement. 9.6. Entire Agreement; Amendment and Waiver This Agreement and the agreements attached as Exhibits hereto constitute the entire understandings of the parties hereto and supersede all prior agreements or understandings with respect to the subject matter hereof among such parties. This Agreement may be amended, and the observance of any term of this Agreement may be waived, with (and only with) the written consent of the Company and the Investors. 18 9.7. Publicity. No party shall, without the prior consent of the other parties, file any documents or issue any statement or communication to the public or to the press regarding this Agreement, or any of the terms, conditions, or other matters with respect to this Agreement, except as required by law or the rules, regulations and guidelines of the SEC and then only following prior notice to, and consultation with, the other parties (which notice shall include a copy of the proposed statement or communication to be issued to the press or public). 9.8. Severability In the event that any part or parts of this Agreement shall be held illegal or unenforceable by any court or administrative body of competent jurisdiction, such determination shall not affect the remaining provisions of this Agreement which shall remain in full force and effect. 9.9. Limitation on Enforcement of Remedies The Company hereby agrees that it will not assert against the limited partners of any of the Investors any claim it may have under this Agreement by reason of any failure or alleged failure by such Investor to meet its obligations hereunder. 19 9.10. Counterparts This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement. Very truly yours, THE COBALT GROUP, INC By: /s/ Jackie Davidson ------------------------------ Name: Jackie Davidson Title: Vice President - Finance ACCEPTED AND AGREED: WARBURG, PINCUS EQUITY PARTNERS, L.P. By: WARBURG, PINCUS & CO., General Partner By: /s/ Joseph P. Landy ------------------------------ Joseph P. Landy General Partner 20 RIVERSIDE PARTNERSHIP, A Limited Partnership By: RIVERSIDE L.L.C., Managing General Partner By: FIRST ANALYSIS MANAGEMENT COMPANY III, L.L.C., Manager By: /s/ Bret R. Maxwell ------------------------------ Bret R. Maxwell Member 21 THIRD POINT PARTNERS L.P. By: THIRD POINT ADVISORS L.L.C., General Partner By: /s/ Daniel S. Loeb ------------------------------ Daniel S. Loeb Managing Member THIRD POINT OFFSHORE FUND LTD. By: THIRD POINT MANAGEMENT COMPANY L.L.C., Investment Advisor By: /s/ Daniel S. Loeb ------------------------------ Daniel S. Loeb Managing Member POINTS WEST INTERNATIONAL INVESTMENTS LTD. By: THIRD POINT MANAGEMENT COMPANY L.L.C., Investment Advisor By: /s/ Daniel S. Loeb ------------------------------ Daniel S. Loeb Managing Member 22 Schedule 1.1 ------------ Investors --------- Investor Name and Address Number of Shares - ------------------------- ---------------- Warburg, Pincus Equity Partners, L.P. 1,312,373 466 Lexington Avenue New York, NY 10017 Facsimile: (212) 716-5068 Attention: Joseph P. Landy Riverside Partnership 437,458 233 South Wacker Drive Suite 9500 Chicago 60606 Facsimile: (312) 258-0334 Attention: Bret R. Maxwell Third Point Partners L.P. 223,395 277 Park Avenue 27th Floor New York, NY 10172 Facsimile: (212) 350-5092 Attention: Daniel S. Loeb Third Point Offshore Fund Ltd. 173,669 277 Park Avenue 27th Floor New York, NY 10172 Facsimile: (212) 350-5092 Attention: Daniel S. Loeb Points West International Investments Ltd. 40,394 277 Park Avenue 27th Floor New York, NY 10172 Facsimile: (212) 350-5092 Attention: Daniel S. Loeb 23 Schedule 1.5 ------------ Warrant Shares -------------- Name of Investor Number of Warrant Shares ----------------- ------------------------ Warburg, Pincus Equity Partners, L.P. 416,390 Riverside Partnership 138,797 Third Point Partners L.P. 70,879 Third Point Offshore Fund Ltd. 55,102 Points West International Investments Ltd. 12,816 24 TABLE OF CONTENTS ----------------- SECTION 1. PURCHASE AND SALE OF SECURITIES.....................................1 1.1. Grant of Options....................................................1 1.2. Exercise of Options; Closing........................................1 1.3. Reduction in Number of Shares for Alternate Equity Issuances........2 1.4. Other Adjustments...................................................2 1.5. Issuance of Warrants................................................3 SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................3 2.1. Corporate Organization..............................................3 2.2. Subsidiaries........................................................3 2.3. Capitalization......................................................4 2.4. Corporate Proceedings, etc..........................................4 2.5. Consents and Approvals..............................................5 2.6. Absence of Defaults, Conflicts, etc.................................5 2.7. SEC Reports; Financial Statements...................................5 2.8. Absence of Certain Developments.....................................6 2.9. Compliance with Law.................................................6 2.10. Litigation..........................................................7 2.11. Tax Matters.........................................................7 2.12. Employee Benefit Plans..............................................7 2.13. Intellectual Property...............................................8 2.14. Title to Assets.....................................................8 2.15. Registration Rights.................................................8 2.16. Private Offering....................................................8 2.17. Brokerage...........................................................9 2.18. Material Facts......................................................9 SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.....................9 SECTION 4. ADDITIONAL COVENANTS OF THE PARTIES................................10 4.1. Resale of Securities...............................................10 4.2. Covenants Pending Closing..........................................10 4.3. Further Assurance..................................................11 SECTION 5. INVESTORS' CLOSING CONDITIONS......................................11 5.1. Representations and Warranties.....................................11 5.2. Compliance with Agreement..........................................11 5.3. Officer's Certificate..............................................11 5.4. Injunction.........................................................12 5.5. Counsel's Opinion..................................................12 5.6. Adverse Developments...............................................12 5.7. Listing of the Shares..............................................12 5.8. HSR Act............................................................12 5.9. Consents and Approvals.............................................12 5.10. Registration Rights Amendment......................................12 5.11. Approval of Proceedings............................................13 SECTION 6. COMPANY CLOSING CONDITIONS.........................................13 6.1. Representations and Warranties.....................................13 6.2. Compliance with Agreement..........................................13 6.3. Investors' Certificates............................................13 6.4. Injunction.........................................................13 SECTION 7. COVENANTS..........................................................13 7.1. Use of Net Proceeds................................................13 7.2. HSR Act............................................................14 SECTION 8. INTERPRETATION OF THIS AGREEMENT...................................14 8.1. Terms Defined......................................................14 8.2. Accounting Principles..............................................16 8.3. Directly or Indirectly.............................................16 8.4. Governing Law......................................................16 8.5. Paragraph and Section Headings.....................................16 SECTION 9. MISCELLANEOUS......................................................16 9.1. Notices............................................................16 9.2. Expenses and Taxes.................................................17 9.3. Reproduction of Documents..........................................17 9.4. Termination and Survival...........................................18 9.5. Successors and Assigns.............................................18 9.6. Entire Agreement; Amendment and Waiver.............................18 9.7. Publicity..........................................................19 9.8. Severability.......................................................19 9.9. Limitation on Enforcement of Remedies..............................19 9.10. Counterparts.......................................................20 SCHEDULES AND EXHIBITS NUMBER SCHEDULE NAME 1.1 Grant of Options 1.5 Issuance of Warrants 2.2 Subsidiaries 2.3(c) Capitalization 2.5 Consents and Approvals 2.6 Absence of Defaults, Conflicts, etc. 2.8 Absence of Certain Developments 2.9 Compliance with Law 2.13 Intellectual Property NUMBER EXHIBIT NAME Exhibit A Form of Warrant Exhibit B Certificate of Incorporation of the Company Exhibit C Bylaws of the Company Exhibit D Counsel's Opinion Exhibit E Registration Rights Amendment EX-3 4 0004.txt WARRANT EXHIBIT 3 WARRANT THIS WARRANT AND THE SECURITIES ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE WASHINGTON STATE SECURITIES ACT OR ANY OTHER APPLICABLE SECURITIES ACT (THE "ACTS"), AND NEITHER THE OFFERING OF THIS WARRANT, THE SECURITIES ISSUABLE UPON ITS EXERCISE NOR ANY OFFERING MATERIALS HAVE BEEN REVIEWED BY ANY ADMINISTRATOR UNDER THE ACTS. THIS WARRANT AND THE SECURITIES ISSUABLE UPON ITS EXERCISE MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OFFERED FOR SALE IN THE ABSENCE OF ANY EFFECTIVE REGISTRATION STATEMENT UNDER THE ACTS OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED. THE COBALT GROUP, INC. Common Stock Purchase Warrant The Cobalt Group, Inc., a Washington corporation (the "Company"), hereby certifies that, for value received, Warburg, Pincus Equity Partners, L.P. or registered assigns (the "Holder") is entitled, subject to the terms set forth below, to purchase from the Company, at any time and from time to time during the period beginning on June 26, 2000 and ending on June 26, 2005 (the "Expiration Date"), in whole or in part, an aggregate of 416,390 (four hundred sixteen thousand three hundred ninety) fully paid and non-assessable shares of the Common Stock of the Company at a purchase price, subject to the provisions of Paragraph 3 hereof, of $6.8578 per share (the "Purchase Price"). The Purchase Price and the number and character of such shares are subject to adjustment as provided below, and the term "Common Stock" shall mean, unless the context otherwise requires, the stock or other securities or property at the time deliverable upon the exercise of this Warrant. This Warrant is herein called the "Warrant." 1. EXERCISE OF WARRANT. The purchase rights evidenced by this Warrant shall be exercised by the Holder surrendering this Warrant, with the form of subscription at the end hereof duly executed by the Holder, to the Company at its office in Seattle, Washington, accompanied by payment, of an amount (the "Exercise Payment") equal to the Purchase Price multiplied by the number of shares being purchased pursuant to such exercise, payable as follows: (i) by payment to the Company in cash, by certified or official bank check, or by wire transfer of the Exercise Payment, (ii) by surrender to the Company for cancellation of securities of the Company having a Market Price (as hereinafter defined) on the date of exercise equal to the Exercise Payment; or (iii) by a combination of the methods described in clauses (i) and (ii) above. In lieu of payment of the Exercise Payment as described above, the Holder may elect to receive a number of shares of Common Stock with an aggregate value (valued at the Market Price on the date of exercise) equal to the difference between (i) the Market Price on the date of exercise multiplied by the number of shares as to which the Warrant is then being exercised and (ii) the Exercise Payment with respect to such shares. For purposes hereof, the term "Market Price" shall mean, with respect to any particular date, the average closing price of a share of Common Stock for the 20 consecutive trading days preceding such date on the principal national securities exchange on which the shares of Common Stock or securities are listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, the average of the reported bid and asked prices during such 20 trading day period in the over-the-counter market as furnished by the National Quotation Bureau, Inc., or, if such firm is not then engaged in the business of reporting such prices, as furnished by any member of the National Association of Securities Dealers, Inc. selected by the Company or, if the shares of Common Stock or securities are not publicly traded, the Market Price on such date shall be the fair market value of a share of Common Stock or the security on such date determined jointly by the Company and the holder of this Warrant; provided, however, that if such parties are unable to reach agreement within a reasonable period of time, the Market Price shall be determined in good faith by an independent investment banking firm selected jointly by the Company and the holder of this Warrant or, if that selection cannot be made within 15 days, by an independent investment banking firm selected by the American Arbitration Association in accordance with its rules. In no event may this Warrant be exercised at any time after the Expiration Date. Partial Exercise. This Warrant may be exercised for less than the full number of shares of Common Stock, in which case the number of shares receivable upon the exercise of this Warrant as a whole, and the sum payable upon the exercise of this Warrant as a whole, shall be proportionately reduced. Upon any such partial exercise, the Company at its expense will forthwith issue to the Holder a new Warrant or Warrants of like tenor calling for the number of shares of Common Stock as to which this Warrant has not been exercised, such Warrant or Warrants to be issued in the name of the Holder hereof or his or its nominee (upon payment by the Holder of any applicable transfer taxes). DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable after the exercise of this Warrant and payment of the Exercise Payment, and in any event within ten (10) days thereafter, the Company, at its expense, will cause to be issued in the name of and delivered to the Holder a certificate or certificates for the number of fully paid and non-assessable shares of Common Stock or other securities or property to which the Holder shall be entitled upon such exercise, plus, in lieu of any fractional share to which the Holder would otherwise be entitled, cash in an amount determined in accordance with Paragraph 3.7 hereof. The Company agrees that the shares of Common Stock so purchased shall be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares as aforesaid. ADJUSTMENTS. In order to prevent dilution of the right granted hereunder, the Purchase Price shall be subject to adjustment from time to time in accordance with this Paragraph 3. Upon each adjustment of the Purchase Price pursuant to this Paragraph 3, the registered Holder of this Warrant shall thereafter be entitled to acquire upon exercise, at the Purchase Price resulting from such adjustment, the number of shares of the Company's Common Stock obtainable by multiplying the Purchase Price in effect immediately prior to such adjustment by the number of shares of the Company's Common Stock acquirable immediately prior to such adjustment and dividing the product thereof by the Purchase Price resulting from such adjustment. Dividends Not Paid Out of Earnings or Earned Surplus. In the event the Company shall declare a dividend upon the Common Stock (other than a dividend payable in Common Stock) payable otherwise than out of earnings or earned surplus, determined in accordance with generally accepted accounting principles, including the making of appropriate deductions for minority interests, if any, in subsidiaries (herein referred to as "Liquidating Dividends"), then, as soon as possible after the exercise of this Warrant, the Company shall pay to the person exercising this Warrant an amount equal to the aggregate value of all Liquidating Dividends that would have been payable in respect of the Common Stock issuable upon exercise of this Warrant immediately prior to such Liquidating Dividend at the Purchase Price then in effect (including but not limited to all securities which would have been issued with respect to such Common Stock by reason of stock splits, stock dividends, mergers or reorganizations, or for any other reason). For the purposes of this Paragraph 3.1, a dividend other than in cash shall be considered payable out of earnings or earned surplus only to the extent that such earnings or earned surplus are charged an amount equal to the fair value of such dividend as determined in good faith by the Board of Directors of the Company. Subdivisions and Combinations. In case the Company shall at any time (i) subdivide the outstanding Common Stock or (ii) issue a stock dividend on its outstanding Common Stock, the Purchase Price in effect immediately prior to such subdivision or dividend shall be proportionately reduced by the same ratio as the subdivision or dividend. In case the Company shall at any time combine its outstanding Common Stock, the Purchase Price in effect immediately prior to such combination shall be proportionately increased by the same ratio as the combination. Reorganization, Reclassification, Consolidation, Merger or Sale of Assets. If any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with or into another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities, cash or other property with respect to or in exchange for Common Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provision shall be made whereby the Holder shall have the right to acquire and receive, upon exercise of this Warrant, such shares of stock, securities, cash or other property issuable or payable (as part of the reorganization, reclassification, consolidation, merger or sale) with respect to or in exchange for such number of outstanding shares of the Common Stock as would have been received upon exercise of this Warrant in full at the Purchase Price then in effect. The Company will not effect any such consolidation, merger or sale, unless prior to the consummation thereof the successor entity (if other than the Company) resulting from such consolidation or merger or the entity purchasing such assets shall assume by written instrument mailed or delivered to the Holder at the last address of the Holder appearing on the books of the Company, the obligation to deliver to the Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Holder may be entitled to purchase. If a purchase, tender or exchange offer is made to and accepted by the holders of more than 50% of the outstanding shares of Common Stock and at that time Warburg, Pincus Equity Partners, L.P. is the Holder, the Company shall not effect any consolidation, merger or sale with the person having made such offer or with any Affiliate of such person, unless prior to the consummation of such consolidation, merger or sale such Holder shall have been given a reasonable opportunity to then elect to receive upon the exercise of this Warrant either the stock, securities or assets then issuable with respect to the Common Stock or the stock, securities or assets, or the equivalent, issued to previous holders of the Common Stock in accordance with such offer. For purposes hereof the term "Affiliate" with respect to any given person shall mean any person controlling, controlled by or under common control with the given person. Notices of Record Date, Etc. In the event that: the Company shall declare any dividend upon its Common Stock that is not a Liquidating Dividend, or the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights, then the Company shall give to the Holder at least twenty (20) days' prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend or subscription rights. Such notice shall also specify the date on which the holder of the Common Stock shall be entitled to such dividend or subscription rights. In the event that: (1) there shall be any capital reorganization or reclassification of the capital stock of the Company, including any subdivision or combination of its outstanding shares of Common Stock, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation, or (2) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; the Company shall give to the Holder, at least twenty (20) days' prior written notice of the date when the same shall take place. Such notice shall specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. Each such written notice shall be given by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company. Grant, Issue or Sale of Options, Convertible Securities, or Rights. If at any time or from time to time on or after the date of issuance hereof, the Company shall grant, issue or sell any rights to subscribe for or to purchase, or any options for the purchase of, Common Stock or any stock or other securities convertible into or exchangeable for Common Stock, or rights to purchase property (the "Purchase Rights") pro rata to the record holders of any class of Common Stock, then the Holder shall be entitled to acquire (within thirty (30) days after the later to occur of the initial exercise date of such Purchase Rights or receipt by such holder of the notice concerning Purchase Rights to which such holder shall be entitled under Paragraph 3.4) and upon the terms applicable to such Purchase Rights either: the aggregate Purchase Rights which the Holder could have acquired if it had held the number of shares of Common Stock acquirable upon exercise of this Warrant immediately before the grant, issuance or sale of such Purchase Rights; provided that if any Purchase Rights were distributed to holders of Common Stock without the payment of additional consideration by such holders, corresponding Purchase Rights shall be distributed to the exercising Holder as soon as possible after such exercise and it shall not be necessary for the Holder specifically to request delivery of such rights; or in the event that any such Purchase Rights shall have expired or shall expire prior to the end of said thirty (30) day period, the number of shares of Common Stock or the amount of property which the Holder could have acquired upon such exercise at the time or times at which the Company granted, issued or sold such expired Purchase Rights. Adjustment by Board of Directors. If any event occurs as to which, in the opinion of the Board of Directors of the Company, the provisions of this Section 3 are not strictly applicable or if strictly applicable would not fairly protect the rights of the Holder in accordance with the essential intent and principles of such provisions, then the Board of Directors shall make an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to protect such rights as aforesaid, but in no event shall any adjustment have the effect of increasing the Purchase Price as otherwise determined pursuant to any of the provisions of this Section 3 except in the case of a combination of shares of a type contemplated in Paragraph 3.2 and then in no event to an amount larger than the Purchase Price as adjusted pursuant to Paragraph 3.2. Fractional Shares. The Company shall not issue fractions of shares of Common Stock upon exercise of this Warrant or scrip in lieu thereof. If any fraction of a share of Common Stock would, except for the provisions of this Paragraph 3.7, be issuable upon exercise of this Warrant, the Company shall in lieu thereof pay to the person entitled thereto an amount in cash equal to the current value of such fraction, calculated to the nearest one-hundredth (1/100) of a share, to be computed on the basis of the Market Price as of the date of exercise. Officers' Statement as to Adjustments. Whenever the Purchase Price shall be adjusted as provided in Section 3 hereof, the Company shall forthwith file at the Company's office in Seattle, Washington, a statement, signed by the Chairman of the Board, the President, any Vice President or Treasurer of the Company, showing in reasonable detail the facts requiring such adjustment and the Purchase Price that will be effective after such adjustment. The Company shall also cause a notice setting forth any such adjustments to be sent by mail, first class, postage prepaid, to the record Holder at his or its address appearing on the stock register. If such notice relates to an adjustment resulting from an event referred to in Paragraph 3.4, such notice shall be included as part of the notice required to be mailed and published under the provisions of Paragraph 3.4 hereof. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its certificate of incorporation or through reorganization, consolidation, merger, dissolution, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company will not increase the par value of any shares of stock receivable upon the exercise of this Warrant above the amount payable therefor upon such exercise, and at all times will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable stock upon the exercise of this Warrant. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The Company shall at all times reserve and keep available out of its authorized but unissued stock, solely for the issuance and delivery upon the exercise of this Warrant and other similar Warrants, such number of its duly authorized shares of Common Stock as from time to time shall be issuable upon the exercise of this Warrant and all other similar Warrants at the time outstanding. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to it, or (in the case of mutilation) upon surrender and cancellation thereof, the Company will issue, in lieu thereof, a new Warrant of like tenor. REMEDIES. The Company stipulates that the remedies at law of the Holder in the event of any default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that the same may be specifically enforced. NEGOTIABILITY, ETC. This Warrant is issued upon the following terms, to all of which each taker or owner hereof consents and agrees: Subject to the legend appearing on the first page hereof, title to this Warrant may be transferred by endorsement (by the Holder executing the form of assignment at the end hereof including guaranty of signature) and delivery in the same manner as in the case of a negotiable instrument transferable by endorsement and delivery. Until this Warrant is transferred on the books of the Company, the Company may treat the registered Holder as the absolute owner hereof for all purposes without being affected by any notice to the contrary. Prior to the exercise of this Warrant, the Holder shall not be entitled to any rights of a shareholder of the Company with respect to shares for which this Warrant shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein. The Company shall not be required to pay any Federal or state transfer tax or charge that may be payable in respect of any transfer involved in the transfer or delivery of this Warrant or the issuance or conversion or delivery of certificates for Common Stock in a name other than that of the registered Holder or to issue or deliver any certificates for Common Stock upon the exercise of this Warrant until any and all such taxes and charges shall have been paid by the Holder or until it has been established to the Company's satisfaction that no such tax or charge is due. SUBDIVISION OF RIGHTS. This Warrant (as well as any new warrants issued pursuant to the provisions of this paragraph) is exchangeable, upon the surrender hereof by the Holder, at the principal office of the Company for any number of new warrants of like tenor and date representing in the aggregate the right to subscribe for and purchase the number of shares of Common Stock which may be subscribed for and purchased hereunder. MAILING OF NOTICES, ETC. All notices and other communications from the Company to the Holder shall be mailed by first-class certified mail, postage prepaid, to the address furnished to the Company in writing by the last holder of this Warrant who shall have furnished an address to the Company in writing. HEADINGS, ETC. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect the meaning hereof. CHANGE, WAIVER, ETC. Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated orally but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF WASHINGTON. THE COBALT GROUP, INC. By /s/ Jackie Davidson ------------------------------ Dated: June 26, 2000 Attest: [To be signed only upon exercise of Warrant] To The Cobalt Group, Inc. The undersigned, the Holder of the within Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, _______________ shares of Common Stock, par value $0.01 per share, of The Cobalt Group, Inc., and herewith makes payment of $_______ therefor, and requests that the certificates for such shares be issued in the name of, and be delivered to ____________________ whose address is ________________________. Dated: ________________________ ____________________________ (Signature must conform in all respects to name of Holder as specified on the face of the Warrant) ____________________________ Address [To be signed only upon transfer of Warrant] FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ____________________________ the right represented by the within Warrant to purchase __________________ shares of Common Stock of The Cobalt Group, Inc. to which the within Warrant relates, and appoints ____________________ attorney to transfer said right on the books of The Cobalt Group, Inc., with full power of substitution in the premises. Dated: ________________________ ____________________________ (Signature must conform in all respects to name of Holder as specified on the face of the Warrant) ____________________________ Address In the presence of: ________________________ EX-7 5 0005.txt THIRD AMENDMENT TO REGISTRATION AGREEMENT EXHIBIT 7 EXECUTION COPY THIRD AMENDMENT TO REGISTRATION AGREEMENT This Third Amendment, dated as of June 26, 2000 (the "Amendment"), to the Registration Agreement dated as of February 28, 1997, among The Cobalt Group, Inc., a Washington corporation (the "Company"), and the persons listed on the Schedule of Purchasers attached thereto, as amended by a First Amendment, dated as of October 7, 1998, and a Second Amendment, dated as of January 7, 1998 (as amended by the First Amendment and the Second Amendment, the "Registration Agreement"). RECITALS The Company, Warburg, Pincus Equity Partners, L.P. ("WPEP"), Riverside Partnership ("Riverside Partnership"), Third Point Partners L.P. ("Third Point Partners"), Third Point Offshore Fund Ltd. (Third Point Offshore") and Points West International Investments Ltd. ("Points West") are parties to a Securities Purchase Agreement, dated as of June 26, 2000 (the "June 2000 Purchase Agreement"), pursuant to which (i) WPEP, Riverside Partnership, Third Point Partners, Third Point Offshore and Points West are purchasing shares of Common Stock and (ii) the Company has issued to WPEP, Riverside Partnership, Third Point Partners, Third Point Offshore and Points West warrants to purchase Common Stock. All capitalized terms used herein and not defined shall have the meaning set forth in the Registration Agreement. In order to induce WPEP, Riverside Partnership, Third Point Partners, Third Point Offshore and Points West to enter into the June 2000 Purchase Agreement and consummate the transactions contemplated thereby, the Company and WPEP, as the holder of a majority of the Registrable Securities, have agreed to amend the Registration Agreement to provide WPEP, Riverside Partnerhsip, Third Point Partners, Third Point Offshore and Points West with registration rights covering the securities issued under the June 2000 Purchase Agreement. NOW THEREFORE, in consideration of the foregoing, the parties to this Amendment agree as follows: 1. SCHEDULE OF PURCHASERS. The Schedule of Purchasers is hereby amended to insert: (i) immediately following the number of Series B-1 shares opposite WPEP's name "up to 1,312,373 shares of Common Stock, and 416,390 shares of Common Stock issuable upon exercise of warrants"; and (ii) "Riverside Partnership - 233 South Wacker Drive, Suite 9500, Chicago 60606 - up to 437,458 shares of Common Stock, and 138,797 shares of Common Stock issuable upon exercise of warrants". (iii) "Third Point Partners L.P. - 277 Park Avenue, 27th Floor, New York, NY 10172 - up to 223,395 shares of Common Stock, and 70,879 shares of Common Stock issuable upon exercise of warrants". (iv) "Third Point Offshore Fund Ltd. - 277 Park Avenue, 27th Floor, New York, NY 10172 - up to 173,669 shares of Common Stock, and 55,102 shares of Common Stock issuable upon exercise of warrants". (v) "Points West International Investments Ltd. - 277 Park Avenue, 27th Floor, New York, NY 10172 - up to 40,394 shares of Common Stock, and 12,816 shares of Common Stock issuable upon exercise of warrants". 2. AMENDMENT TO PARAGRAPH 1(g). The first sentence of Paragraph 1(g) is hereby amended and restated in its entirety to read as follows: "'Registrable Securities' means (i) any Series A Preferred Stock issued pursuant to the Purchase Agreement, (ii) any Series B Preferred Stock issued pursuant to the Series B Purchase Agreement and any Series B Preferred Stock issued to the Reynolds and Reynolds Company, (iii) any Common Stock issued upon the conversion of any Series A Preferred Stock issued pursuant to the Purchase Agreement, (iv) any Common Stock issued upon the conversion of any Series B Preferred Stock issued pursuant to the Series B Purchase Agreement and any Common Stock issued upon conversion of any Series B Preferred Stock issued to the Reynolds and the Reynolds Company, (v) any Common Stock issued pursuant to the Securities Purchase Agreement, dated as of June 26, 2000 (the "June 2000 Purchase Agreement"), among the Company, Warburg, Pincus Equity Partners, L.P., Riverside Partnership, Third Point Partners L.P., Third Point Offshore Fund Ltd. and Points West International Investments Ltd. (vi) any Common Stock issued upon exercise of the warrants issued in connection with the June 2000 Purchase Agreement and (vii) any Common Stock issued or issuable with respect to the securities referred to in clauses (i), (ii), (iii), (iv), (v) and (vi) by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization." 3. NO OTHER AMENDMENTS. Except as expressly amended as set forth above, the Registration Agreement shall remain in full force and effect in accordance with its terms. -2- IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment as of the date first written above. THE COBALT GROUP, INC. By: /s/ Jackie Davidson ------------------------------ Title: Vice President - Finance WARBURG, PINCUS EQUITY PARTNERS, L.P. By: Warburg, Pincus & Co., Its: General Partner /s/ Joseph P. Landy ------------------------------ Joseph P. Landy General Partner RIVERSIDE PARTNERSHIP, A Limited Partnership By: Riverside L.L.C., Its: Managing General Partner By: First Analysis Management Company III, L.L.C. Its: Manager /s/ Bret R. Maxwell ------------------------------ Bret R. Maxwell Member THIRD POINT PARTNERS L.P. By: Third Point Advisors L.L.C. Its: General Partner /s/ Daniel S. Loeb ------------------------------ Daniel S. Loeb Managing Member THIRD POINT OFFSHORE FUND LTD. By: Third Point Management Company L.L.C. Its: Investment Advisor /s/ Daniel S. Loeb ------------------------------ Daniel S. Loeb Managing Member POINTS WEST INTERNATIONAL INVESTMENTS LTD. By: Third Point Management Company L.L.C. Its: Investment Advisor /s/ Daniel S. Loeb ------------------------------ Daniel S. Loeb Managing Member -----END PRIVACY-ENHANCED MESSAGE-----