THIRD AMENDMENT TO LOAN AGREEMENT

THIS THIRD AMENDMENT TO LOAN AGREEMENT ("Third Amendment"), dated as of May 20, 2015, is made and entered into by and between AUTOBYTEL INC., a Delaware corporation ("Borrower"), and MUFG UNION BANK, N.A., formerly Union Bank, N.A. ("Bank").

A.         Borrower and Bank are parties to that certain Loan Agreement dated as of February 26, 2013, that certain Consent dated July 29, 2013, that certain First Amendment dated September 10, 2013 and that certain Second Amendment dated January 13, 2014 (collectively the “Agreement”), pursuant to which Bank agreed to extend credit to Borrower in the form of a revolving line of credit and term loan.

B.         Borrower has requested that Bank agree to amend the Agreement in certain respects including, but not limited to, (a) the approval of Borrower’s acquisition of CDK Global, LLC’s automotive leads generation and sales business, (b) the addition of a new Fifteen Million Dollar ($15,000,000) term loan, and (c) the amendment of certain financial covenants. Bank is willing to amend the Agreement, subject, however, to the terms and conditions of this Third Amendment.

C.         Borrower has informed Bank that it intends to purchase CDK Global, LLC’s automotive leads generation and sales business (the “Acquisition”) in accordance with the terms of the stock purchase agreement entered into in May of 2015 (“Purchase Agreement”). Borrower has requested that Bank consent to the Acquisition notwithstanding any provisions to the contrary contained in the Agreement.

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

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

2.         Amendments to the Agreement.

(a) Notwithstanding any provisions to the contrary in the Agreement, Bank hereby consents to the Acquisition, provided that (a) the purchase price for such Acquisition does not exceed Nineteen Million Dollars ($19,000,000) in total consideration (excluding any purchased working capital), (b) such Acquisition is consummated substantially in accordance with the Purchase Agreement, (c) the Acquisition closes on or before July 1, 2015, and (d)  both before and after giving effect to such Acquisition, no default or Event of Default shall exist under the Agreement after giving effect to the forgoing consent.

(b) Section 1.1.1 of the Agreement, which relates to the Revolving Loan, is hereby amended by substituting the new maturity date of “April 30, 2018” for the existing maturity date of “March 31, 2017” appearing in line eight thereof.

(c) Section 1.1.1.1 of the Agreement, which relates to the Standby L/C Sublimit, is hereby amended by substituting the new maturity date of “April 30, 2019” for the existing maturity date of “March 31, 2018” appearing in line twelve thereof.

(d) Section 1.1 of the Agreement, which related to the Credit Facilities, is hereby amended by adding a new Section, 1.1.3, for the new term loan, which shall read as follows:

“1.1.3                 Term Loan 2.  Pursuant to the terms and conditions of the Third Amendment, Bank shall make a new term loan (“Term Loan 2”) to Borrower in one disbursement on the closing date of the Third Amendment in the aggregate principal amount of Fifteen Million Dollars ($15,000,000). Proceeds of Term Loan 2 are to be used to finance a portion of the acquisition of CDK Global, LLC’s automotive leads generation and sales business (“Acquisition”). Borrower’s obligation to repay the principal amount of Term Loan 2, together with accrued interest thereon, shall be evidenced by a promissory note (“Term Note 2”), issued by Borrower in favor of Bank on the standard form used by Bank to evidence its commercial loans. Term Note 2 shall provide for quarterly payments of principal and interest as set forth therein and shall be fully repaid by no later than June 30, 2020.”

(e) Section 3.8 of the Agreement, which relates to Financial Statements, is hereby deleted in its entirety and replaced with the following :

“3.8           Financial Statements.  Borrower’s financial statements, including both a balance sheet at March 31, 2015, together with supporting schedules, and an income statement for the three (3) months ended March 31, 2015, have heretofore been furnished to Bank, are true and complete, and fairly represent Borrower’s financial condition for the period covered thereby. Since March 31, 2015 through the date of the Third Amendment, there has been no material adverse change in Borrower’s financial condition or operations.”

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

“4.7           Minimum Annual EBITDA.  Borrower will, at the end of each fiscal year, maintain a minimum EBITDA of at least the following :

(i)	Seven Million Five Hundred Thousand Dollars ($7,500,000) for the 2015 fiscal year, increasing to

(ii)	Nine Million Dollars ($9,000,000) for the 2016 fiscal year, and each fiscal year end thereafter.

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

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

“4.8           Quarterly EBITDA.  Borrower will, at the end of each fiscal quarter, maintain a minimum EBITDA of at least One Million Dollars ($1,000,000) for the fiscal quarter ended June 30, 2015 and the following amounts for each fiscal quarter thereafter:

(j) Section 5.2 of the Agreement, which relates to Borrowings, is hereby amended by deleting subsection iv) allowing for Five Million Dollars ($5,000,000) in convertible subordinated promissory notes to the former owners of Autotropolis, Inc. and Cyber Ventures, Inc.

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

 

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

 

(b)   A replacement Revolving Note superseding in its entirety the existing Revolving Note dated January 13, 2014;

 

(c)   A new Term Note 2;  and 

 

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