Cars.com Inc. (Form: 10-Q, Received: 06/20/2017 17:01:47)

Large accelerated filer

Accelerated filer

Non-accelerated filer

☒ (Do not check if a smaller reporting company)

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-37869

Cars.com Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	81-3693660
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

300 S. Riverside Plaza, Suite 1000 Chicago, Illinois	60606
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (312) 601-5000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒ ^*

* The registrant became subject to the requirements on May 15, 2017

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 31, 2017, the registrant had 71,589,655 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2
	Condensed Combined Balance Sheets	2
	Condensed Combined Statements of Income	3
	Condensed Combined Statements of Cash Flows	4
	Condensed Combined Statements of Equity	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	20
PART II.	OTHER INFORMATION	21
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 5.	Other Information	21
Item 6.	Exhibits	22
Signatures		23
Exhibit Index		24

PART I—FINANCI AL INFORMATION

Item 1. Financial Statements.

Cars.com Inc.

CONDENSED COMBINED BALANCE SHEETS

In thousands of dollars

	Mar. 31, 2017			Dec. 31, 2016
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	1,951		$	8,896
Accounts receivables, less allowance of $3,272 and $3,527, respectively		91,445			98,303
Prepaid expenses and other current assets		12,104			12,342
Total current assets		105,500			119,541
Property and equipment
Cost		42,059			37,190
Less accumulated depreciation		(19,335	)		(16,729	)
Net property and equipment		22,724			20,461
Intangible and other assets
Goodwill		788,107			788,107
Intangible assets, less accumulated amortization of $185,118 and $165,651, respectively		1,587,902			1,607,369
Investments and other assets		11,264			11,788
Total assets	$	2,515,497		$	2,547,266
Liabilities and equity
Current liabilities
Accounts payable	$	4,424		$	7,844
Accrued liabilities		61,463			64,140
Total current liabilities		65,887			71,984
Noncurrent liabilities
Deferred incentive plans		2,039			3,913
Unfavorable contracts liability		37,785			44,085
Deferred tax liability		8,155			8,325
Other noncurrent liabilities		2,510			1,674
Total noncurrent liabilities		50,489			57,997
Total liabilities		116,376			129,981
Commitments and contingent liabilities
Equity
Parent’s investment, net		2,399,121			2,417,285
Total liabilities and equity	$	2,515,497		$	2,547,266

The accompanying notes are an integral part of these unaudited condensed combined financial statements.

Cars.com Inc.

CONDENSED COMBINED STATEMENTS OF INCOME

Unaudited, in thousands of dollars

	Three Months Ended
	Mar. 31, 2017		Mar. 31, 2016
Revenues:
Retail	$	112,245	$	109,605
Wholesale ^(a)		40,929		42,884
Total		153,174		152,489
Operating expenses:
Product support, technology and operations		34,819		32,709
Marketing and sales		59,001		58,342
General and administrative		10,345		7,502
Affiliate revenue share		2,361		1,994
Amortization of intangible assets		19,467		18,164
Total		125,993		118,711
Operating income		27,181		33,778
Other income (loss), net		125		(79	)
Income before income taxes		27,306		33,699
Provision for income taxes		418		—
Net income	$	26,888	$	33,699

The accompanying notes are an integral part of these unaudited condensed combined financial statements.

^(a)	Wholesale revenue includes revenue generated from our Parent of $2.1 million during both the three months ended March 31, 2017 and 2016 (See Note 9).

Cars.com Inc.

CONDENSED COMBINED STATEMENTS OF CASH FLOWS

Unaudited, in thousands of dollars

	Three Months Ended
	Mar. 31, 2017			Mar. 31, 2016
Cash flows from operating activities:
Net income	$	26,888		$	33,699
Adjustments to reconcile net income to operating cash flows:
Depreciation and amortization		22,073			20,245
Amortization of unfavorable contract liability		(6,300	)		(6,300	)
(Gain) loss on trading securities related to deferred compensation		(84	)		79
Provision for doubtful accounts receivable		763			723
Increase (decrease) in operating assets and liabilities	376				(22,588	)
Net cash flow provided by operating activities		43,716			25,858
Cash flows from investing activities:
Purchase of property and equipment		(5,609	)		(2,129	)
Net cash used in investing activities		(5,609	)		(2,129	)
Cash flows from financing activities:
Transactions with Parent, net		(45,052	)		(23,693	)
Net cash used in financing activities		(45,052	)		(23,693	)
(Decrease) increase in cash and cash equivalents		(6,945	)		36
Cash and cash equivalents at beginning of period		8,896			100
Cash and cash equivalents at end of period	$	1,951		$	136
Supplemental non-cash information:
Purchases of property and equipment in accrued liabilities and accounts payables	$	140		$	135

The accompanying notes are an integral part of these unaudited condensed combined financial statements.

Cars.com Inc.

CONDENSED COMBINED STATEMENTS OF EQUITY

Unaudited, in thousands of dollars

	Parent’s investment, net
Balance at Dec. 31, 2016	$	2,417,285
Net income		26,888
Transactions with Parent, net		(45,052	)
Balance at Mar. 31, 2017	$	2,399,121

Balance at Dec. 31, 2015	$	2,304,519
Net income		33,699
Transactions with Parent, net		(23,693	)
Balance at Mar. 31, 2016	$	2,314,525

The accompanying notes are an integral part of these unaudited condensed combined financial statements.

NOTES TO UNAUDITED CONDENSED C OMBINED FINANCIAL STATEMENTS

NOTE 1

Separation from Parent, description of business and basis of presentation

Separation from Parent . On September 7, 2016, TEGNA Inc. (“TEGNA” or the “Parent”), our former parent company, announced its plan to separate its digital automotive marketplace business, including Cars.com, LLC, the principal entity through which TEGNA’s digital automotive marketplace business has historically been operated, and DMR Holdings, Inc. (“DealerRater”), a leading automotive dealer review website, from its other digital businesses (the “Separation”). The Separation occurred on May 31, 2017 by means of a spin-off of a newly formed company named Cars.com Inc. (“Cars.com,” the “Company,” “our,” “us,” or “we”), which now owns the digital automotive marketplace business. A Registration Statement on Form 10 relating to the Separation was filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) on May 5, 2017 and declared effective by the SEC on May 15, 2017 (the “Registration Statement on Form 10”). On May 31, 2017, the Parent completed the Separation through a pro rata distribution to the Parent’s stockholders of all of the outstanding shares of our common stock, and our common stock began trading “regular way” on the New York Stock Exchange on June 1, 2017. Each holder of Parent common stock received one share of our common stock for every three shares of Parent common stock held on May 18, 2017, the record date for the distribution. The Parent structured the distribution to be tax-free to its U.S. stockholders for U.S. federal income tax purposes.

Description of business . Cars.com is a leading online destination that helps car shoppers and owners navigate every turn of car ownership. A pioneer in automotive classifieds, the company has evolved into one of the largest digital automotive platforms, connecting consumers with local dealers across the country anytime, anywhere. Through trusted expert content, on-the-lot mobile app features, millions of new and used vehicle listings, a comprehensive set of research tools and the largest database of consumer reviews in the industry, Cars.com helps shoppers buy, sell and service their vehicles. We have approximately 35 million monthly visits to our web properties. Cars.com generates revenue through online subscription advertising products targeting car dealerships through our direct sales force as well as our affiliate sales channels. We also generate revenue through the sale of display advertising to national advertisers. Our website hosts approximately five million vehicle listings and serves approximately 21,000 franchise and independent car dealers in all 50 states. Cars.com properties include DealerRater, Auto.com, PickupTrucks.com™ and NewCars.com©. The Company is headquartered in Chicago, IL.

Basis of Presentation . Historically, TEGNA has not disclosed separate combined interim financial statements for Cars.com, LLC. On August 1, 2016, TEGNA purchased 100% of DealerRater, a leading automotive dealer review website. DealerRater was included in the distribution to Cars.com as part of the Separation. The accompanying financial statements combine the activity for the acquired business from the date of acquisition and reflect the application of push down accounting. The accompanying interim financial statements are derived from the historical accounting records of TEGNA and present our financial position, results of operations and cash flows as of the periods presented as if we were a separate entity. These interim financial statements are presented in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements. Accordingly, the interim financial statements do not include all information and footnotes normally included in annual financial statements prepared in accordance with U.S. GAAP.

Since the Parent’s acquisition of Cars.com, LLC in 2014, Cars.com, LLC has primarily operated as a standalone entity within TEGNA’s broader corporate organization. The historical financial statements include allocations of certain TEGNA corporate expenses. Such costs primarily include insurance and other general corporate overhead expenses and were allocated based on either the actual costs incurred, or Cars.com, LLC’s headcount relative to our Parent’s consolidated headcount. The historical allocated corporate costs were $0.7 million and $0.1 million during the three months ended March 31, 2017 and 2016, respectively. Our management believes that such allocations are reasonable. These allocated expenses relate to the various services that have historically been provided to Cars.com, LLC by our Parent. However, such expenses may not be indicative of the actual level of expense that would have been incurred by Cars.com, LLC if it had operated as an independent, publicly-traded company or the costs expected to be incurred in the future.

All of our internal intercompany accounts have been eliminated. All significant intercompany transactions between either (i) us and Parent or (ii) us and Parent affiliates have been included within the financial statements and are considered to be effectively settled through equity contributions or distributions at the time the transactions were recorded. The accumulated net effect of intercompany transactions between either (i) us and Parent or (ii) us and Parent affiliates are included in “Parent’s investment, net.” The total net effect of these intercompany transactions is reflected in the Condensed Combined Statements of Cash Flows as financing activities.

These interim financial statements should be read in conjunction with the audited annual financial statements, and notes thereto, as of and for the year ended December 31, 2016 included in our Registration Statement on Form 10. These interim financial statements follow the same accounting policies and methods in their application as the most recent audited financial statements. In the opinion of management, the interim financial statements reflect all adjustments (all of which are of a normal and recurring nature), which are necessary to present fairly the financial position, results of operations and cash flows for the interim periods.

NOTE 2

Summary of significant accounting policies

See Note 2 “Summary of significant accounting policies” in Part I, Item 13 of our Registration Statement on Form 10 for a discussion of Cars.com’s significant accounting policies.

New Accounting Pronouncements Not Yet Adopted .

The Financial Accounting Standards Board (“FASB”) amended the FASB Accounting Standards Codification and created a new Topic 606, Revenue from Contracts with Customers. Under the amendment, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The required adoption date of the standard is January 1, 2018. The two permitted transition methods are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown; and the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. We currently anticipate adopting the standard using the modified retrospective method. Our primary source of revenue is through the sale of online subscription advertising products to car dealerships. We currently do not expect the standard to have a material impact on this revenue stream, which will continue to be recognized primarily on a straight-line basis over the contract term as the service is provided to our customers.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments—Overall (Subtopic 825-10). This guidance amended several elements surrounding the recognition and measurement of financial instruments. The new guidance requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation) to be measured at fair value with changes in fair value recognized in Net income. The new guidance is effective for us beginning in the first quarter of 2018. We are currently evaluating the effect this new guidance will have on our financial statements and related disclosures.

In February 2016, the FASB amended the FASB Accounting Standards Codification and created a new Topic 842, Leases . This guidance related to leases which will require lessees to recognize assets and liabilities on the combined balance sheets for leases with lease terms of more than 12 months. Consistent with current U.S. GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current U.S. GAAP—which requires only capital leases to be recognized on the combined balance sheets—the new guidance will require both types of leases to be recognized on the combined balance sheets. The new guidance is effective for us beginning in the first quarter of 2019 and will be adopted using a modified retrospective approach. We are currently evaluating the effect it is expected to have on our financial statements and related disclosures.

In June 2016, the FASB Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326). This guidance related to the measurement of credit losses on financial instruments. The new guidance changes the way credit losses on accounts receivable are estimated. Under current U.S. GAAP, credit losses on trade accounts receivable are recognized once it is probable that such losses will occur. Under the new guidance, we will be required to estimate credit losses based on the expected amount of future collections which may result in earlier recognition of allowance for doubtful accounts. The new guidance is effective for public companies beginning in the first quarter of 2020 and will be adopted using a modified retrospective approach. We are currently evaluating the effect this new guidance will have on our financial statements and related disclosures.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Simplifying the Test for Goodwill Impairment. This guidance eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. Instead, companies will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on Step 1 of the impairment test). The standard has tiered effective dates, starting in 2020. Early adoption is permitted for interim and annual goodwill impairment testing dates after January 1, 2017. We are currently evaluating the effect this new guidance will have on our financial statements and related disclosures.

NOTE 3

Goodwill and other intangible assets and liabilities

The following table displays goodwill, indefinite-lived intangibles and amortizable intangible assets at March 31, 2017 and December 31, 2016 (in thousands):

	Gross		Accumulated Amortization			Net
Mar. 31, 2017
Goodwill	$	788,107	$	—		$	788,107
Indefinite-lived intangibles:
Trade name		872,320		—			872,320
Amortizable intangible assets:
Customer relationships		814,240		(156,889	)		657,351
Acquired software		71,700		(25,555	)		46,145
Trade name		9,800		(544	)		9,256
Non-compete agreements		2,860		(1,430	)		1,430
Content library		2,100		(700	)		1,400
Total amortizable intangible assets		900,700		(185,118	)		715,582
Total	$	2,561,127	$	(185,118	)	$	2,376,009
Dec. 31, 2016
Goodwill	$	788,107	$	—		$	788,107
Indefinite-lived intangibles:
Trade name		872,320		—			872,320
Amortizable intangible assets:
Customer relationships		814,240		(140,788	)		673,452
Acquired software		71,700		(22,798	)		48,902
Trade name		9,800		(340	)		9,460
Non-compete agreements		2,860		(1,287	)		1,573
Content library		2,100		(438	)		1,662
Total amortizable intangible assets		900,700		(165,651	)		735,049
Total	$	2,561,127	$	(165,651	)	$	2,395,476

We also have an intangible liability related to unfavorable wholesale contracts that Cars.Com, LLC entered into as part of the acquisition by TEGNA in October 2014. The unfavorable contract liability as of March 31, 2017 and December 31, 2016 was $63.0 million and $69.3 million, respectively. Liabilities that will be amortized in the next twelve months are recorded in Accrued liabilities, with the remainder recorded in Unfavorable contract liability on the Condensed Combined Balance Sheets. Amortization of the liability is recognized as wholesale revenue on the Condensed Combined Statements of Income. Unfavorable wholesale contract revenue recognized in both the three months ended March 31, 2017 and 2016 was $6.3 million.

NOTE 4

Investments

We have a 21% ownership interest in RepairPal, Inc. (“RepairPal”), an online marketplace offering consumers a price estimator for car repairs and an ability to research repair shop reviews. We account for our investment under the cost method. While we believe that we have the ability to exercise significant influence, it has been determined that our investment is not substantially similar to common stock on the acquisition date because it has a substantive liquidation preference over RepairPal’s common stock. This factor precludes us from accounting for the investment under the equity method.

In May 2016, we purchased $2.2 million of convertible debt issued by RepairPal. The debt accrues interest at an annual rate of 7% and matures in May 2018, at which time the debt converts into shares of preferred stock.

The aggregate carrying amount of the investment as of March 31, 2017 and December 31, 2016 was $9.4 million and $9.3 million, respectively. We record these amounts in Investments and other assets on the Condensed Combined Balance Sheets. No events or circumstances occurred that required us to estimate the fair value of the investment.

NOTE 5

Income taxes

DealerRater, a corporate entity, is subject to federal and state income taxes. Accordingly, income taxes incurred by DealerRater since its acquisition on August 1, 2016 have been recognized in the historical financial statements. We did not have any income taxes for the three months ended March 31, 2016.

NOTE 6

Long-term incentive plan

In June 2001, we established a long-term incentive plan (“LTIP”). Under the plan, at our discretion, we may designate employees to participate and may make annual contributions to the participants’ account. In the three months ended March 31, 2017 and for full-year 2016, we contributed $0.3 million and $0.6 million, respectively. The total amount contributed by us is marked to market quarterly and any unrealized gains (losses) are recognized in Other income, net on the Condensed Combined Statements of Income.

Under this plan, deferred compensation expense was $0.2 million and $0.3 million in the three months ended March 31, 2017 and 2016, respectively. The deferred compensation liability was $2.3 million and $3.1 million as of March 31, 2017 and December 31, 2016, respectively. Management does not expect to make any new contributions to LTIP subsequent to the Separation.

NOTE 7

Fair value measurement

We measure and record certain assets at fair value in the accompanying financial statements. U.S. GAAP establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels:

Level 1—	Quoted market prices in active markets for identical assets or liabilities;

Level 2—	Inputs other than Level 1 inputs that are either directly or indirectly observable; and

Level 3—	Unobservable inputs developed using our own estimates and assumptions, which reflect those that a market participant would use.

Financial assets that are carried at fair value on a recurring basis in the balance sheet consist of marketable securities held as LTIP investments.

The following table presents the LTIP investments carried at fair value as of March 31, 2017 and December 31, 2016, by category on the balance sheet in accordance with the valuation hierarchy defined above (in thousands):

Fair value measurement as of Mar. 31, 2017	Level 1		Level 2		Level 3		Total
Assets:
Mutual funds	$	1,862	$	—	$	—	$	1,862
Total	$	1,862	$	—	$	—	$	1,862
Investments valued using the net asset value as a practical expedient:
Fixed income fund							$	861
Total investments at fair value							$	2,723

Fair value measurement as of Dec. 31, 2016	Level 1		Level 2		Level 3		Total
Assets:
Mutual funds	$	2,228	$	—	$	—	$	2,228
Total	$	2,228	$	—	$	—	$	2,228
Investments valued using the net asset value as a practical expedient:
Fixed income fund							$	1,031
Total investments at fair value							$	3,259

Fair value for mutual funds is measured using Level 1 inputs and quoted market prices at the reporting date multiplied by the quantity held. Our fixed income fund investment consists of a commingled fund for which quoted market prices are not available. The fair value of the investment represents the net asset value as provided by the trustee.

In addition to the financial instruments listed in the table above, we hold other financial instruments, including cash and cash equivalents, receivables and accounts payable. The carrying amounts for these balances approximated their fair values.

Certain assets and liabilities are measured at fair value on a nonrecurring basis, and therefore, not included in the tables above. These assets include goodwill and intangible assets and result as acquisitions occur. The amounts assigned to intangible assets and goodwill as they relate to the Company’s acquisitions are based on the Company’s best estimate of the fair value. The Company uses an independent valuation specialist to assist in determining the fair value of the identified intangible assets at acquisition. The fair value of the significant identified intangible assets is generally estimated using a combination of an income approach using the discounted cash flow analysis and market approach using the guideline public company analysis, which represents a Level 3 fair value measurement. The income approach includes a forecast of direct revenues and costs associated with the respective intangible assets and charges for economic returns on tangible and intangible assets utilized in cash flow generation. The market approach also uses forecasted revenue and earnings, as well as comparable public company trading values. Net cash flows attributable to the identified intangible assets are discounted to their present value at a rate commensurate with the perceived risk.

NOTE 8

Share appreciation rights plan

Effective as of January 1, 2012, we established a Share Appreciation Rights Plan (the "SAR Plan"). Eligible participants receive a number of stock appreciation rights annually that entitle the employee to receive the appreciation in the fair market value of a share from the date of grant up to a specified date or dates plus an amount equal to the distributions per share. Deferred compensation is based upon award of stock appreciation rights, the value of which is related to the appreciation in the value of Cars.com. Awards granted in a given year vest to the participant over a three-year period. Benefits paid under the SAR Plan are made in cash, not common stock, at the end of the three-year vesting period from the original grant date. Expense related to the SAR Plan has been recorded in accordance with the accounting standards for share based payments. Due to the cash settlement at the end of the performance period, the awards are classified as a liability and are remeasured each reporting period at fair value. As of March 31, 2017, Cars.com recorded a liability of $2.0 million related to its SAR Plan on its Condensed Combined Balance Sheets.

In the three months ended March 31, 2017, no stock appreciation rights were granted to employees. Management does not expect to issue any new grants subsequent to the Separation.

NOTE 9

Related party transactions

We were party to a commercial agreement with our Parent. Revenue earned from this agreement for both the three months ended March 31, 2017 and 2016 was $2.1 million.

Prior to the Separation and distribution, Parent utilized a centralized approach to cash management and the financing of its operations, providing funds to its entities as needed. These transactions were recorded in “Parent’s investment, net” when advanced. Accordingly, none of Parent’s Cash and cash equivalents were assigned to us in the Financial Statements. Cash and cash equivalents in our Condensed Combined Balance Sheets represent cash held locally by us.

Equity in the Condensed Combined Balance Sheets represents the accumulated balance of transactions between us and Parent, our paid-in-capital, and Parent’s interest in our cumulative retained earnings, and are presented within “Parent’s investment, net”. The amounts comprising the accumulated balance of transactions between us and Parent and Parent affiliates include (i) the cumulative net assets attributed to us by Parent and Parent affiliates and (ii) the cumulative net advances to Parent representing our cumulative funds swept (net of funding provided by Parent and Parent affiliates to us) as part of the centralized cash management program.

NOTE 10

Commitments, contingent liabilities and other matters

Commitments

In May 2016, we entered into a new lease of a building in Chicago, IL. The lease extends through June 2031 and monthly rental payments under the lease escalate by 2.5% each year throughout the lease. Minimum payments throughout the life of the lease are $57.7 million.

Litigation

We are defendants from time to time in judicial and administrative proceedings involving matters incidental to our business. We do not believe that any material liability will be imposed as a result of these matters.

NOTE 11

Subsequent events

Separation from Parent . On May 31, 2017, the Parent completed the Separation through a pro rata distribution to the Parent’s stockholders of all the outstanding shares of our common stock and we made a $650 million cash transfer to Parent. Each holder of Parent common stock received one share of our common stock for every three shares of Parent common stock held on May 18, 2017, the record date for the distribution. The Parent structured the distribution to be tax-free to its U.S. stockholders for U.S. federal income tax purposes.

In connection with the Separation and prior to the distribution, we entered into various agreements to effect the Separation and provide a framework for its relationship with Parent after the Separation and distribution, including a separation and distribution agreement, a transition services agreement, a tax matters agreement and an employee matters agreement. These agreements provide for the allocation between Cars.com and Parent of the assets, employees, liabilities and obligations (including investments, property and employee benefits and tax-related assets and liabilities) of Parent and its subsidiaries attributable to periods prior to, at and after Cars.com’s Separation from Parent and govern the relationship between Cars.com and Parent subsequent to the completion of the Separation.

A summary of the separation and distribution agreement and these other agreements can be found in the Company’s Registration Statement on Form 10.

In connection with the Separation and distribution, on May 30, 2017, we adopted several compensation and benefit plans, including the Cars.com Inc. Omnibus Incentive Compensation Plan (the “Omnibus Plan”). A summary of each of these plans can be found in the Registration Statement on Form 10. At the time of the distribution, we issued equity awards under the Omnibus Plan as a result of the conversion of certain outstanding share-based awards previously granted by Parent into awards denominated in our shares in accordance with the terms of the Separation and distribution agreement and employee matters agreement we entered into with Parent.

Term loan and revolving credit facility . On May 31, 2017, we and certain of our domestic wholly-owned subsidiaries (the “Guarantors”) entered into a Credit Agreement (the “Credit Agreement”) with the lenders named therein. The Credit Agreement matures on May 31, 2022 and includes (a) revolving loan commitments in an aggregate principal amount of up to $450,000,000 (of which up to $25,000,000 may be in the form of letters of credit at the request of the Company) and (b) term loans in an aggregate principal amount of $450,000,000. Interest on the borrowings under the Credit Agreement is payable at a base rate or eurocurrency rate, in either case plus an applicable margin and fees which, after the second full fiscal quarter following the closing date, is based upon the Company’s total net leverage ratio. Borrowings under the Credit Agreement were used to fund the payment of a cash payment to TEGNA immediately prior to the distribution, to pay fees and expenses related to the Separation and distribution and related transactions and may also be used for general corporate purposes, including, without limitation, to fund acquisitions, investments and capital expenditures not prohibited under the Credit Agreement. The term loan requires quarterly amortization payments commencing on September 30, 2017.

The obligations under the Credit Agreement are guaranteed by the Guarantors and, the Company and the Guarantors secured their respective obligations under the Credit Agreement by granting liens in favor of the agent on substantially all of their assets. The terms of the Credit Agreement include representations and warranties, affirmative and negative covenants (including certain financial covenants) and events of default that are customary for credit facilities of this nature. See a summary of our Credit Agreement in the Registration Statement on Form 10.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This report contains certain forward-looking statements regarding business strategies, market potential, future financial performance and other matters. The words “believe,” “expect,” “estimate,” “could,” “should,” “intend,” “may,” “plan,” “seek,” “anticipate,” “project” and similar expressions, among others, generally identify “forward-looking statements,” which speak only as of the date the statements were made. The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. In particular, information included under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other sections of this report contain forward-looking statements. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of Cars.com management and is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Comparisons of results between current and prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data. Whether or not any such forward-looking statement is in fact achieved will depend on future events, some of which are beyond Cars.com’s control. Except as may be required by law, Cars.com undertakes no obligation to modify or revise any forward-looking statement to reflect new information, events or circumstances occurring after the date of this information statement. Factors, risks, trends and uncertainties that could cause actual results or events to differ materially from those anticipated include the matters described under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Important factors that could cause our actual results to differ materially from the forward-looking statements contained in this report include, among others:

•

competitive pressures in the markets in which Cars.com operates and innovation by Cars.com’s competitors;

•

increased closures or consolidation among automobile dealers or other events which may adversely affect business operations of major customers and/or depress their level of advertising;

•

macroeconomic trends and conditions;

•

economic downturns leading to a weak automotive market or a decrease in online and mobile advertising or consumer demand for new and used cars;

•

the ability of Cars.com to anticipate market needs and develop new and enhanced products and services to meet those needs, and its ability to successfully monetize them;

•

potential disruption or interruption of Cars.com’s operations due to accidents, extraordinary weather events, civil unrest, political events, terrorism or cyber security attacks;

•

an inability to realize benefits or synergies from acquisitions of new businesses or dispositions of existing businesses or to operate businesses effectively following acquisitions or divestitures;

•

the ability to attract and retain employees;

•

the ability to adequately protect intellectual property;

•

reliance on third-party service providers;

•

rapid technological changes and frequent new product introductions prevalent in the markets in which Cars.com competes;

•

volatility in financial and credit markets which could affect Cars.com’s ability to raise funds through debt or equity issuances and otherwise affect Cars.com’s ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms;

•

reliance on the performance of counterparties to affiliation agreements to generate wholesale advertising revenues, and the potential underperformance of these counterparties;

•

the ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to Cars.com’s business;

•

adverse outcomes in proceedings with governmental authorities or administrative agencies;

•

an other than temporary decline in operating results and enterprise value that could lead to non-cash goodwill, other intangible asset, investment or property, plant and equipment impairment charges;

•

Cars.com’s expectations regarding the time during which it will be an “emerging growth company” under the JOBS Act;

•

Cars.com’s inability to engage in certain corporate transactions following the separation;

•

any failure to realize expected benefits from the separation; and

•

other uncertainties relating to general economic, political, business, industry, regulatory and market conditions.

The following discussion and analysis of our financial condition and results of operations and quantitative and qualitative disclosures should be read in conjunction with our unaudited condensed combined financial statements and related notes. The financial information discussed below and included elsewhere in this report may not necessarily reflect what our financial condition, results of operations and cash flow would have been had we been a stand-alone company during the periods presented or what our financial condition, results of operations and cash flows may be in the future .

Business Overview

Cars.com, Inc (“Cars.com,” the “Company,” “our,” “us,” or “we”) is a leading online destination for automotive consumers offering credible, objective information about car shopping, selling and servicing. We leverage our consumer audience to help automotive dealers and marketers more effectively reach car buyers and sellers, as well as those looking for trusted service providers. We have approximately 35 million monthly visits to our web properties. Cars.com generates revenue through online subscription advertising products targeting car dealerships through our direct sales force as well as our affiliate sales channels. We also generate revenue through the sale of display advertising to national advertisers. Our website hosts approximately five million vehicle listings at any given time and serves more than 21,000 franchise and independent car dealers in all 50 states.

Separation from Parent

On September 7, 2016, TEGNA, Inc. (“TEGNA” or the “Parent”) our former parent company, announced its plan to separate its digital automotive marketplace business, including Cars.com, LLC, the principal entity through which TEGNA’s digital automotive marketplace business has historically been operated, and DMR Holdings, Inc. (“DealerRater”), a leading automotive dealer review website, from its other digital businesses (the “Separation”). The Separation occurred on May 31, 2017 by means of a spin-off of a newly formed company named Cars.com, which now owns the digital automotive marketplace business. A Registration Statement on Form 10 relating to the Separation was filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) on May 5, 2017 and declared effective by the SEC on May 15, 2017 (the “Registration Statement on Form 10”). On May 31, 2017, Parent completed the Separation through a pro rata distribution to Parent’s stockholders of all of the outstanding shares of our common stock, and our common stock began trading “regular way” on the New York Stock Exchange on June 1, 2017. Each holder of Parent common stock received one share of our common stock for every three shares of Parent common stock held on May 18, 2017, the record date for the distribution. Parent structured the distribution to be tax-free to its U.S. stockholders for U.S. federal income tax purposes.

During the three months ended March 31, 2017, the Company generated revenues of $153.2 million and recorded Net income of $26.9 million. Of the $153.2 million in revenues, 73% consisted of retail revenue with the remaining 27% derived from wholesale revenues.

In evaluating our financial condition and operating performance, our management team reviews a wide variety of factors and forms. We are particularly focused on the following themes and performance metrics, which our management team views as instructive:

•

Traffic . Our traffic and our ability to continue generating traffic are key to our business, and the tracking of our traffic performance is a critical measure. In 2015 and 2016, we undertook a re-platforming initiative to develop a responsive design platform, which provides a seamless experience for consumers across desktop, mobile and tablets. This new platform also allows us to move faster in introducing new content and features to the Cars.com sites. In addition, DealerRater, which TEGNA acquired in August 2016, was contributed to us in connection with the Separation, and we also have invested in developing or acquiring several adjacent offerings, including in the repair and trade-in space. The tracking of our traffic performance is critical to measuring the return on the investments described above, and traffic performance is highly correlated with our ability to provide value to our advertisers.

•

Connections . We are compensated by our advertisers for providing the direct and indirect connections we facilitate between consumers and dealers or Original Equipment Manufacturers (“OEMs”). Whether through a direct connection such as an email or phone call from a consumer to a dealer, an indirect connection such as a transfer from one of the Cars.com sites to a dealer’s website or by pushing walk-in traffic into a dealership, the ability to connect consumers and advertisers is the heart of our business. Our platfo rm, with its captive audience of in-market car shoppers, also serves as an excellent branding platform for local dealerships and OEMs alike. Major auto manufacturers regularly include advertising on the Cars.com sites when rolling out new makes and models each year. Shifting trends in consumer behavior are changing the ways consumers interact with automotive dealers and manufacturers. The shift to mobile, a preference for texting, and the increasing use of social media are three trends that are disrupting t he way consumers have historically interfaced with dealers through online shopping sites. Management measures the various ways in which consumers are interfacing with dealers and OEMs and reports these various metrics with regularity to its customers. Cars .com also is expanding its capabilities of reporting on its consumer influence through innovations like Lot Insights, which uses geo-fencing technology to capture consumer searches on our platform that are performed on a dealer’s physical premises. Though we have had success with many of our customers in proving that our value goes well beyond direct connections and includes a strong influence on walk-in traffic and ultimately vehicle sales, dealers who are focused on more traditional methods of tracking co nsumer intent such as phone leads may not understand the value that Cars.com is delivering to them. An ongoing area of focus will be educating more dealers on these shifting consumer trends and demonstrating the value of our products.

•

Customers . Our value to consumers tracks to our ability to showcase the inventory of our dealer and OEM customers. The larger the advertiser base, the more inventory and options that are available for consumers to review. Management is focused not only on expanding our network of franchise and independent dealers, but also on developing new approaches to consumer engagement to increase the value of our platform to existing customers. In 2016 and the first three months of 2017, we experienced a higher-than-usual migration of customers away from product enhancement packages or from our solutions more generally. We continue to highlight the value of our connections to dealers while at the same time introducing new advertising opportunities such as our Sell and Trade product and the ability to generate and syndicate reviews through DealerRater.

Our continued success will depend in part on our ability to address and successfully manage challenges, both specific to our business and in the digital advertising marketplace generally. In the near term, we may experience compressed margins as a result of the transition from a wholly-owned subsidiary of TEGNA to an independent publicly traded company. In particular, the transition will require us to build out our internal infrastructure and support functions, through recruiting and hiring managers and employees to strengthen our legal, treasury, accounting, tax, investor relations and other similar functions. Similarly, we will face ongoing public company costs, including those related to an independent board of directors, compliance with regulatory and stock exchange requirements, and increased auditing and insurance fees. Further, the indebtedness we incur in connection with the Separation will reduce our free cash flow and may limit our ability to make strategic acquisitions. We expect to manage these incremental costs and the associated increased risk by focusing on operating efficiency and continued growth in our business to drive profit margins and generate cash flow.

More generally, we anticipate challenges in the broader digital advertising marketplace, including the following specific challenges:

•

Increasing competition in the online automotive space . We compete in a crowded marketplace for a share of overall dealer and OEM marketing spend. In the face of increasing competition and the development of new technologies, we will need to continue to enhance our existing products and develop innovative new ones, while leveraging our excellent brand and strong consumer following.

•

Flattening growth in new car sales and other macro risks . Growth in new car sales has flattened in 2016, and we do not expect growth in new car sales in 2017. A more dramatic slowdown in car sales or other negative macroeconomic changes could reduce our customers’ aggregate digital advertising spend.

•

Shifting consumer trends . Consumers continue to shift to mobile devices and to social media, which can have a downstream impact on many aspects of our business, including desktop display advertising revenues and the ability to continue to generate traditional phone and email leads. As of March 31, 2017, mobile traffic to Cars.com sites accounted for 56% of our total traffic compared to 51% a year earlier. As consumers continue to shift to mobile devices, we will need to continue to adjust our existing platforms and develop new platforms so that we are engaging consumers through their preferred medium.

Presentation of Financial Statements

Historically, TEGNA has not disclosed separate combined interim financial statements for Cars.com, LLC. On August 1, 2016, TEGNA purchased 100% of DealerRater, a leading automotive dealer review website. DealerRater was included in the distribution to Cars.com, Inc. as part of the Separation. The accompanying financial statements combine the activity for the acquired business from the date of acquisition and reflect the application of push down accounting. The accompanying interim financial statements are derived from the historical accounting records of TEGNA and present our financial position, results of operations and cash flows as of the periods presented as if we were a separate entity. These interim financial statements are presented in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements. Accordingly, the interim financial statements do not include all information and footnotes normally included in annual financial statements prepared in accordance with U.S. GAAP.

Since the Parent’s acquisition of Cars.com, LLC in 2014, Cars.com, LLC has primarily operated as a standalone entity within TEGNA’s broader corporate organization. The historical financial statements include allocations of certain TEGNA corporate expenses. Such costs primarily include insurance and other general corporate overhead expenses and were allocated based on either the actual costs incurred, or Cars.com, LLC’s headcount relative to our Parent’s consolidated headcount. Since Cars.com, LLC operated primarily as a standalone entity, the historical allocated corporate costs were $0.7 million and $0.1 million during the three months ended March 31, 2017 and 2016, respectively. Our management believes that such allocations are reasonable. These allocated expenses relate to the various services that have historically been provided to Cars.com, LLC by our Parent. However, such expenses may not be indicative of the actual level of expense that would have been incurred by Cars.com, LLC if it had operated as an independent, publicly-traded company or the costs expected to be incurred in the future.

We manage and operate our business as one segment. All of our internal intercompany accounts have been eliminated. All significant intercompany transactions between either (i) us and Parent or (ii) us and Parent affiliates have been included within the financial statements and are considered to be effectively settled through equity contributions or distributions at the time the transactions were recorded. The accumulated net effect of intercompany transactions between either (i) us and Parent or (ii) us and Parent affiliates are included in “Parent’s investment, net.” The total net effect of these intercompany transactions is reflected in the Combined Statements of Cash Flows as financing activities.

With regards to income taxes, the determination of whether taxes should be presented in the financial statements of a limited liability company (“LLC”) is dependent on whether tax law considers the entity to be a flow-through entity. Cars.com, LLC is a multi-member LLC that is considered to be a partnership for U.S. income tax purposes. Multi-member LLCs generally are not subject to federal, state or local income taxes and are therefore considered flow-through entities. Accordingly, no income taxes have been recognized in Cars.com, LLC historical financial statements. DealerRater is subject to federal and state income taxes. Accordingly, income taxes incurred by DealerRater since its acquisition on August 1, 2016 have been recognized in the historical financial statements.

Key Operating Metrics

We regularly review a number of key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make operating and strategic decisions. The following table presents certain of these key metrics.

	Three months ended Mar. 31,
	2017		2016
Traffic-visits		105,805,000		113,479,000
Dealer customers		21,552		20,833
Average vehicle listings		4,958,000		4,713,000

Traffic-Visits. We utilize traffic-visit numbers to evaluate the performance of the Cars.com websites. This internally generated metric includes data for multi-platform reporting pulls from desktop (home and work) and mobile (web browser and application access). Visits refers to the number of times a site is visited, no matter how many visitors make up those visits. Traffic-visit numbers provide an indication of our consumer reach. Although our consumer reach does not correlate directly to revenue, we believe our ability to reach diverse demographic audiences is attractive to our dealers and national advertisers.

Dealer Customers . Dealer customers represent the number of car dealers using our products at the end of the applicable periods. The number includes dealers from both retail and affiliate sales channels.

Average Vehicle Listings. Average Vehicle Listings represent the average daily vehicle listings on Cars.com website properties.

Factors Affecting Our Performance

Spending on Online Marketing . Our revenue is dependent on the amount dealers spend on our online subscription products. We also generate a significant amount of revenue from the sale of advertising on our websites. In order to increase our revenues, dealers and other advertisers such as OEMs will likely have to increase the amount they spend on online marketing in absolute dollars or as a percentage of their total marketing expenditures.

Dealer Customers . Our future growth will depend, in part, on our ability to successfully increase the amount that each of our dealer customers spends on our digital solutions. We have made a substantial investment in our sales organization, and we are dependent on the success of that organization, combined with the effectiveness of our products, to help our subscribing dealers see the value and the return on investment of our premium listings and our enhancement services.

Automotive Industry and Consumer Trends . Our current customer base, revenue sources and operations are substantially limited to the U.S. Accordingly, our results can be impacted by prevailing economic and market conditions in the U.S. that impact the retail automotive industry in general and car dealers, in particular. General economic conditions can also impact the number of in-market car shoppers on our websites and the availability of used car inventory.

Launch of New Products and Services . Our revenue growth in the future will be dependent, in part, on our ability to successfully innovate, develop, launch, and gain market acceptance of new services that dealers will purchase for an additional fee. Also, our future results of operations will be affected by the timing of the launch of new products and services.

Results of Operations

The following table sets forth our selected statement of operations for each of the periods indicated:

	Three months ended Mar. 31,
In thousands of dollars	2017		2016			Change
Revenues
Direct revenue	$	83,635	$	81,805			2	%
National advertising revenue		24,936		24,251			3	%
Other revenue		3,674		3,549			4	%
Retail revenue		112,245		109,605			2	%
Wholesale revenue		40,929		42,884			(5	)%
Total		153,174		152,489			—	%
Operating expenses
Product support, technology and operations		34,819		32,709			6	%
Marketing and sales		59,001		58,342			1	%
General and administrative		10,345		7,502			38	%
Affiliate revenue share		2,361		1,994			18	%
Amortization of intangible assets		19,467		18,164			7	%
Total		125,993		118,711			6	%
Operating income		27,181		33,778			(20	)%
Non-operating (expense) income
Other non-operating income		125		(79	)		***	%
Income before income taxes		27,306		33,699			(19	)%
Provision for income taxes		418		—			***	%
Net income	$	26,888	$	33,699			(20	)%

***	Not meaningful

Three Month Period Ended March 31, 2017 Compared to Three Month Period Ended March 31, 2016

Revenues

Retail Revenues—Direct . Direct revenues represent online subscription products sold by Cars.com sales teams at retail rates set by Cars.com. Automotive dealer customers purchase advertising packages to market their vehicle inventory and other aspects of the dealership, such as the service department. In addition to subscription packages, dealers may also purchase leads on a pay-per-lead basis. Direct revenue is our largest revenue stream, representing approximately 55% of total revenue for the first three months of 2017. Direct revenue for the first three months of 2017 increased 2% from the prior year reflecting an increase primarily due to the sale of DealerRater product, partially offset by decreases in both subscription rates and subscription products sold by Cars.com.

Retail Revenues—National Advertising . National advertising revenues consists of display advertising sold to advertising agencies and OEMs as well as leads sold to OEMs. Banner display ads are placed throughout the Cars.com network of properties. National advertising revenue represented approximately 16% of total revenue for the first three months of 2017. National revenue for the three months of 2017 rose 3% from the prior year mainly due to increased lead volume sold to OEMs. During the quarter, national advertising revenues were negatively impacted by two OEM customers who reduced their spending with Cars.com due to changes being implemented within their own businesses.

Retail Revenues—Other . Other includes revenues from (1) leads sold to reseller companies, (2) data sold to third-parties and (3) products such as Sell It Yourself/For Sale By Owner. Other revenue represented approximately 2% of total revenue for the three months ended March 31, 2017. Other revenue for the three months ended March 31, 2017 increased 4% mainly due to increased lead volume sold to third-party lead resellers.

Wholesale Revenues . Wholesale revenues represents the wholesale fees paid to Cars.com for online subscription products sold by Affiliates. Wholesale revenue represented approximately 27% of total revenue for the three months ended March 31, 2017. Wholesale revenues for the three months ended March 31, 2017 decreased 5%, reflecting declines in subscriptions sold partially offset by increases in subscription rates. The decline in subscriptions sold was driven by subscription cancellations due to increased competition and an increase in subscription rates. Affiliate businesses sell directly to these customers as opposed to the Cars.com direct sales force.

Expenses

Product support, technology and operations . Product support, technology and operations expenses primarily consist of the costs to support revenue including the compensation costs for our product development, technology and operations teams. Expenses to support revenue include traffic acquisition costs, third party inventory processing costs, photo/video maintenance, service provider expenses, and content licenses. The product development team creates and develops Cars.com products along with providing editorial content on the site. The technology team develops and supports the Cars.com website. Expenses include outside consulting, hardware/software maintenance, software licenses, data center and other infrastructure costs. The operations team is responsible for product fulfillment, customer service, and account management. Product support, technology and operations expenses increased 6% in the first three months of 2017 due to the DealerRater acquisition in August 2016 and higher lead acquisition costs.

Marketing and sales . Marketing and sales expenses primarily consist of compensation costs for our marketing and sales teams, travel expenses, sales training expenses, sales contests and events expenses, advertising expenses for TV and online (includes production, agency, and distribution costs), search engine marketing and partner lead costs, market research, and marketing events. Marketing and sales expenses were up 1% in the first three months of 2017 due to the DealerRater acquisition in August 2016, increased spend on TV advertising and search engine marketing, and timing of industry events offset by efficiencies in other cost areas.

General and administrative . General and administrative expenses primarily consist of salaries, benefits and long-term incentive compensation for our executive, finance, legal, human resources, facilities and other administrative employees. In addition, general and administrative expenses include depreciation, outside consulting, legal and accounting services and other supporting overhead costs not allocated to other expense categories. We expect that we will incur additional costs as a result of becoming a public company, given the expected increase in audit fees, legal fees, regulatory compliance listing fees, director compensation and director and officer insurance premiums, among other costs. General and administrative expenses increased 38% in the first three months of 2017 mainly due to $1.1 million additional costs related to becoming a public company and an additional $1.1 million of new office space related expense.

Affiliate revenue share . Affiliate revenue share primarily represents payments made to affiliates for major account customers we service directly that are located in the affiliates’ market territory. Revenue recognized for these sales is recorded as retail revenues. Affiliate revenue share costs increased 18% in the first three months of 2017 due to increased sales for major account customers in affiliates markets.

Amortization of intangibles . As a res ult of Parent’s acquisition of Cars.com, LLC in October 2014 and the acquisition of DealerRater in August 2016, we recorded amortizable intangible assets for customer relationships, acquired software, trade-names, non-compete agreements, and a content libr ary. This expense category reflects the amortization of these assets.

Liquidity and Capital Resources

Prior to the Separation, we had access to Parent’s program of maintaining bank revolving credit availability as a component of our liquidity. Following the Separation, we will no longer participate in capital management with Parent and our ability to fund our future cash needs will depend on our ongoing ability to generate and raise cash in the future.

Our operations have historically generated strong positive cash flow which, along with our new term loan and credit facility described below, are expected to provide adequate liquidity to meet our requirements, including those for investments, strategic acquisitions, and the one-time dividend payment to Parent.

On May 31, 2017, we and certain of our domestic wholly-owned subsidiaries (the “Guarantors”) entered into a Credit Agreement (the “Credit Agreement”) with the lenders named therein. The Credit Agreement matures on May 31, 2022 and includes (a) revolving loan commitments in an aggregate principal amount of up to $450,000,000 (of which up to $25,000,000 may be in the form of letters of credit at the request of the Company) and (b) term loans in an aggregate principal amount of $450,000,000. Interest on the borrowings under the Credit Agreement is payable at a base rate or eurocurrency rate, in either case plus an applicable margin and fees which, after the second full fiscal quarter following the closing date, is based upon the Company’s total net leverage ratio. Borrowings under the Credit Agreement were used to fund the payment of a cash payment to TEGNA immediately prior to the distribution, to pay fees and expenses related to the Separation and distribution and related transactions and may also be used for general corporate purposes, including, without limitation, to fund acquisitions, investments and capital expenditures not prohibited under the Credit Agreement. The term loan requires quarterly amortization payments commencing on September 30, 2017.

The tax matters agreement that TEGNA and Cars.com entered into prior to the distribution included restrictions that may limit Cars.com’s ability to pursue certain strategic transactions or other transactions that it may believe to be in the best interests of its stockholders or that might increase the value of its business. Under the tax matters agreement, for the two-year period following the distribution, Cars.com is prohibited, except in certain circumstances, from: entering into any transaction resulting in the acquisition of all or a portion of its stock or assets, whether by merger or otherwise; merging, consolidating or liquidating; issuing equity securities beyond certain thresholds; repurchasing its capital stock beyond certain thresholds; and ceasing to actively conduct its business. See Part II, Item 1A, “Risk Factors” of this report for additional information.

Details of our cash flows are included in the table below:

In thousands of dollars	Three months ended Mar. 31, 2017			Three months ended Mar. 31, 2016
Net cash provided by operating activities	$	43,716		$	25,858
Net cash used in investing activities		(5,609	)		(2,129	)
Net cash used in financing activities		(45,052	)		(23,693	)
Net change in cash and cash equivalents	$	(6,945	)	$	36

Cash flow generated by operating activities is our primary source of liquidity. Net cash flow from operating activities was $43.7 million in the three months ended March 31, 2017, versus $25.9 million in the three months ended March 31, 2016. This increase is due to changes in working capital, primarily due to the timing of the settlement of costs in accrued liabilities and the collection of accounts receivable as well as lower deferred compensation payments. These increases were offset by lower net income in the first three months of 2017 compared to the first three months of 2016.

Net cash used in investing activities totaled $5.6 million in the first three months of 2017, compared with $2.1 million in the first three months of 2017. This change is mainly due to $3.2 million of costs for the new office space build-out that began in 2017.

Net cash used for financing activities totaled $45.1 million in the first three months of 2017, compared with $23.7 million in the first three months of 2016. Cash used for financing activities is related to transactions with Parent. Parent utilizes a centralized approach to cash management and the financing of its operations. Under this centralized cash management program, we provide funds to Parent and vice versa. Accordingly, the net cash flow between us and Parent is presented as a financing activity.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements.

Effects of Inflation and Changing Prices and Other Matters

Our results of operations and financial condition have not been significantly affected by inflation.

Critical Accounting Policies

See “Critical Accounting Policies and Estimates” in Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 1 of our Registration Statement on Form 10.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk represents the risk of loss that may affect our financial position due to adverse changes in financial market prices and rates. We are exposed to market risks related to changes in interest rates.

Interest Rate Risk

Market risk is the potential gain/loss arising from changes in market rates and prices, such as interest rates, foreign currency exchange rates and changes in the market value of financial instruments. Our main exposure to market risk will relate to interest rates. A substantial portion of our debt facilities bear interest at floating rates, based on the London Interbank Offered Rate or the alternate base rate, as defined in the Credit Agreement. Accordingly, we will be exposed to fluctuations in interest rates. Based on the value of the debt as of the Separation date, a 100 basis point increase in interest rates would result in a corresponding increase in the Company’s interest expense of approximately $6.8 million during 2017.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. However, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, operating results and financial condition.

Foreign Currency Exchange Risk

Historically, as our operations and sales have been primarily in the United States, we have not faced any significant foreign currency risk. With the acquisition of DealerRater in August 2016, Cars.com acquired a limited number of Canadian customers, some of which are billed in Canadian dollars. Any foreign currency exchange rate fluctuations have been and are anticipated to be immaterial. If we plan for additional international expansion, our risks associated with fluctuation in currency rates will become greater, and we will continue to reassess our approach to managing this risk.

Item 4. Control s and Procedures

Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed in the reports that we file or submit under the Exchange Act, and that this information was accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the period covered by this quarterly report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

For a description of our material pending legal proceedings, please refer to Note 10, “Commitments, contingent liabilities and other matters” of the Notes to the Unaudited Condensed Combined Financial Statements included in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors

Our business and common stock are subject to a number of risks and uncertainties. The information presented below updates, and should be read in conjunction with, the risks summarized under the caption “Risk Factors” in Part I, Item 1A of the Registration Statement on Form 10. There have been no material changes from the risk factors described in the Registration Statement on Form 10.

Item 5. Other Information

On June 17, 2017, we adopted the Cars.com Inc. Change in Control Severance Plan (the “CIC Severance Plan”) and the Cars.com Inc. Executive Severance Plan (the “Executive Severance Plan”) (collectively, “Severance Plans”). There is no duplication of benefits between the Severance Plans and participants who have a qualifying termination of employment under both Severance Plans receive benefits from the CIC Severance Plan. Participants in the Severance Plans are generally selected by the Compensation Committee of our Board of Directors (the “Compensation Committee”) and currently include Alex Vetter (Chief Executive Officer and President), Becky Sheehan (Chief Financial Officer), Jim Rogers (Chief Legal Officer), John Clavadetscher (Chief Revenue Officer) and certain other key employees.

Under the CIC Severance Plan, a participant who, in connection with a change in control of the Company or within two years following a change in control, experiences an involuntary termination without cause or voluntarily terminates his or her employment for good reason, would receive a lump sum amount equal to the sum of (1) any unpaid base salary and bonus through the date of termination; and (2) a prorated annual bonus for the portion of the fiscal year elapsed prior to the termination date in an amount equal to the average annual bonus the participant earned with respect to the three fiscal years immediately prior to the fiscal year in which the termination date occurs prorated for the portion of the fiscal year elapsed prior to the termination date, as well as outplacement benefits. Additionally, participants would receive a lump sum cash severance payment equal to the product of (a) a severance multiple and (b) the sum of (1) the participant’s annual base salary at the highest rate of salary during the 12-month period immediately prior to the termination date or, if higher, during the 12-month period immediately prior to the change in control, and (2) the participant’s average annual bonus earned for the three fiscal years preceding the termination (or, if higher, the three fiscal years preceding the change in control). The severance multiple is 2.0 for a participant who is the Company’s Chief Executive Officer and from 0.5 to 1.5, as designated by the Compensation Committee, for other participants. A participant will also receive an amount equal to the monthly COBRA cost of the participant’s medical and dental coverage in effect as of the date of termination multiplied by 24 for the Company’s Chief Executive Officer and from 6 to 18 in accordance with the designation of the severance multiple. Becky, Jim and John have been designated as participants under the CIC Severance Plan with a 1.5 severance multiple.

The CIC Severance Plan does not provide excise tax gross-ups on payments to participants. A severance payment is contingent upon the participant’s execution of a release of claims in favor of the Company and its affiliates and reaffirming restrictive covenants in other agreements or providing covenants restricting the participant’s solicitation of employees, disparagement of the Company and its affiliates, and disclosure of confidential information.

Under the Severance Plan, a participant who experiences an involuntary termination of employment without cause would receive a lump-sum cash severance payment equal to the product of (a) a severance multiple and (b) the sum of the participant’s annual base salary and average annual bonus earned for the three fiscal years immediately preceding the termination. The severance multiple is 1.5 for a participant who is the Company’s Chief Executive Officer and from 0.5 to 1.0, as designated by the Compensation Committee, for other participants. The participant would also receive a lump sum amount equal to the sum of (1) any unpaid base salary and bonus through the date of termination; and (2) a prorated annual bonus for the portion of the fiscal year elapsed prior to the termination based on actual performance. Additionally, the participant would generally receive 12-months continued vesting under equity awards (18 months for the Chief Executive Officer for awards granted on or after November 2, 2016) and outplacement benefits. A participant will also receive an amount equal to the monthly COBRA cost of the participant’s medical and dental coverage in effect as of the date of termination multiplied by 18 for the Company’s Chief Executive Officer and from 6 to 12 in accordance with the designation of the severance multiple. Becky, Jim and John have been designated as participants under the Executive Severance Plan with a 1.0 severance multiple. The severance payment is contingent upon the participant’s execution of a release of claims in favor of the Company and its affiliates and reaffirming restrictive covenants in other agreements or providing covenants restricting the participant’s competition, solicitation of employees, disparagement of the Company and its affiliates, and disclosure of confidential information.

The for egoing description of the Severance Plans is qualified in its entirety by reference to the text of the Severance Plans, a copy of which is attached hereto as Exhibit 10.1 and 10.2 and incorporated herein by reference.

Item 6. Exhibits.

Incorporated by reference to the Exhibit Index attached hereto and made a part hereof.

Exhibit Number		Description
10.1*		Cars.com Inc. Change in Control Severance Plan
10.2*		Cars.com Inc. Executive Severance Plan
10.3*		Form of Director Restricted Stock Unit Award Agreement
10.4*		Form of Employee Restricted Stock Unit Award Agreement
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.

SIGNA TURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Company Name

Date: June 20, 2017	By:	/s/ T. Alex Vetter
		T. Alex Vetter
		President and Chief Executive Officer

Date: June 20, 2017	By:	/s/ Becky A. Sheehan
		Becky A. Sheehan
		Chief Financial Officer

Exhibit Index

Exhibit Number		Description
10.1*		Cars.com Inc. Change in Control Severance Plan
10.2*		Cars.com Inc. Executive Severance Plan
10.3*		Form of Director Restricted Stock Unit Award Agreement
10.4*		Form of Employee Restricted Stock Unit Award Agreement
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.

Exhibit 10.1

CARS.COM INC.

CHANGE IN CONTROL SEVERANCE PLAN

Table of Contents

Page

1.	Purpose of the Plan		1

2.	Effective Date		1

3.	Administration of the Plan.		1

	(a)	The Committee	1

	(b)	Determinations by the Committee	2

	(c)	Delegation of Authority	2

4.	Participation in the Plan.		2

	(a)	Designation of Participants	2

	(b)	Terminating or Changing Severance Multiple as a Participant	3

5.	Change in Control		3

6.	Eligibility for Benefits under the Plan.		4

	(a)	General	4

	(b)	Cause	5

	(c)	Good Reason	5

	(d)	Certain Terminations Prior to a Change in Control	6

	(e)	No Waiver	6

	(f)	Notice of Termination After a Change in Control	6

	(g)	Date of Termination	6

7.	Obligations of the Company upon Termination.		7

	(a)	Cause; Other than for Good Reason	7

	(b)	Termination Without Cause; Good Reason Terminations	7

	(c)	Timing of Payments and Release Condition	9

8.	Mitigation		9

9.	Resolution of Disputes		9

10.	Legal Expenses and Interest.		10

11.	Funding		10

12.	No Contract of Employment		10

13.	Non-exclusivity of Rights.		11

	(a)	Future Benefits under Company Plans	11

	(b)	Benefits of Other Plans and Agreements	11

- i -

Table of Contents

(continued)

Page

14.	Successors; Binding Agreement		11

15.	Transferability and Enforcement.		11

16.	Notices		12

17.	Amendment or Termination of the Plan		12

18.	Waivers		12

19.	Validity		12

20.	Governing Law		13

21.	Section 409A.		13

	(a)	General	13

	(b)	Delay of Payment	13

	(c)	Reimbursement and In-Kind Benefits	13

22.	Headings		14


	- ii -

CARS.COM INC.

CHANGE IN CONTROL SEVERANCE PLAN

1. Purpose of the Plan . The Board of Directors (the “Board”) of Cars.com Inc. (the “Company”) considers the establishment and maintenance of a strong and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders.

As is the case with most publicly held corporations, the possibility of a Change in Control (as defined below) of the Company exists, and that possibility, and the uncertainty and questions which it may raise among key executives concerning future employment, may result in the departure or distraction of key executives, to the detriment of the Company and its stockholders.

The purpose of the Plan (as defined below) is to assure the Company that it will have the continued dedication of, and the availability of objective advice and counsel from, key executives of the Company and its affiliates (as defined below) notwithstanding the possibility, threat or occurrence of a Change in Control.

In the event that the Company or its stockholders receive any proposal from a third party concerning a possible business combination with the Company or an acquisition of the Company’s equity securities, the Board believes it imperative that the Company and the Board be able to rely upon key executives to continue in their positions and be available for advice, if requested, without concern that those individuals might be distracted by the personal uncertainties and risks created by such a proposal.

Should the Company receive any such proposal, in addition to their regular duties, such key executives may be called upon to assist in the assessment of such proposal, advise management and the Board as to whether such proposal would be in the best interest of the Company and its stockholders, and to take such other actions as the Board might determine to be appropriate.

Therefore, in order to accomplish these objectives, the Board has adopted the Change in Control Severance Plan (the “Plan”).

2. Effective Date . The Plan shall become effective as of June 1, 2017, the first business day following the date that the Company was spun off from TEGNA Inc.

3. Administration of the Plan .

(a) The Committee . The Plan shall be administered (i) by the Compensation Committee of the Board or (ii) if so determined by the Board, by such other committee of non- employee directors as the Board shall appoint or by the Board (the “Committee”). The members of the Committee shall be entitled to all of the rights to indemnification and payment of expenses and costs set forth in the Bylaws of the Company. In no event may the protection afforded the Committee members in this Section 3(a) be reduced in anticipation of or following a Change in Control.

- 1 -

(b) Determinations by the Committee . Subject to the express provisions of the Plan and to the rights of the Participants (as defined below) pursuant to such provisions, the Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable; to designate persons to be covered by the Plan; to revoke such designations; to interpret the terms and provisions of the Plan (and any notices or agreements relating thereto); and otherwise to supervise the administration of the Plan in accordance with the terms hereof . Prior to a Change in Control, all decisions made by the Committee pursuant to the Plan shall be made in its sole discretion and shall be final and binding on all persons, including the Company and Participants . The Committee’s determinations need not be uniform, and may be made selectively among eligible employees and among Participants, whether or not they are similarly situated . Notwithstanding any provision in the Plan to the contrary, however, following a Change in Control, any act, determination or decision of the Company or the Committee, as applicable, with regard to the administration, interpretation and application of the Plan must be reasonable, as viewed from the perspective of an unrelated party and with no deference paid to the actual act, determination or decision of the Company or the Committee, as applicable . Furthermore, following a Change in Control, any decision by the Company or the Committee, as applicable, shall not be final and binding on a Participant . Instead, following a Change in Control, if a Participant disputes a decision of the Company or the Committee relating to the Plan and pursues legal action, the court shall review the decision under a “de novo” standard of review . In addition, following a Change in Control, in the event that (i) the Company’s common stock is no longer publicly traded and (ii) any securities of the Company’s Ultimate Parent (as defined below) are publicly traded, then any decisions by the Board with respect to whether a Participant was terminated for “Cause” shall be made by the board of directors of the Ultimate Parent . For purposes of the Plan, “Ultimate Parent” means a publicly traded corporation or entity which, directly or indirectly through one or more affiliates, beneficially owns at least a plurality of the then-outstanding voting securities of the Company (including any successor to the Company by reason of merger, consolidation, the purchase of all or substantially all of the Company’s assets or otherwise).

(c) Delegation of Authority . The Committee may delegate to one or more officers or employees of the Company such duties in connection with the administration of the Plan as it deems necessary, advisable or appropriate.

4. Participation in the Plan .

(a) Designation of Participants . The Committee shall from time to time select the employees who are to participate in the Plan (the “Participants”) from among those management or highly compensated employees of the Company and its affiliates it determines to be appropriate to include as Participants, given the purposes of the Plan and the potential effects on the employee of a Change in Control. The Committee shall also designate the Severance Multiple of each Participant who is not the Chief Executive Officer of the Company. The Company shall notify each Participant in writing of his or her participation in the Plan and such Participant’s Severance Multiple. For purposes of the Plan, the term “affiliate” has the meaning set forth in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and includes any partnership or joint venture of which the Company or any of its affiliates are general partners or co-venturers.

- 2 -

(b) Terminating or Changing S everance Multiple as a Participant . A person shall cease to be a Participant upon (i) the termination of his or her employment by the Company and any affiliate for any reason prior to a Change in Control, or (ii) notification in writing by the Company t hat such individual’s status as a Participant has been revoked . Any such revocation shall not become effective until 12 months from the date that the revocation notice is provided . A Participant’s Severance Multiple may be changed if the Company notifies the Participant in writing that such Part icipant’s Severance Multiple has changed. A reduction in a Participant’s Severance Multiple shall not become effective until 12 months from the date that the change notice is provided. Except as specifically provided herein, the Committee shall have absolute discretion in the selection of Participants and Severance Multiples and in revoking their status as Participants or changing Severance Multiples . Notwithstanding the foregoing, no revocation by the Committee of any person’s designation as a Participant shall be effective if made (i) on the day of, or within 24 months after, a Change in Control, (ii) prior to a Change in Control, but at the request of any third party participating in or causing the Change in Control or (iii) otherwise in connection with, in relation to, or in anticipation of a Change in Control.

5. Change in Control . For purposes of the Plan, “Change in Control” means the first to occur of the following:

(a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (i) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section, the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or one of its affiliates or (D) any acquisition pursuant to a transaction that complies with Sections 5(c)(i), 5(c)(ii) and 5(c)(iii);

(b) individuals who, as of the Effective Date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(c) consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding

- 3 -

Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation or entity resulting from such Business Combination (including, without limitation, a corporation or entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or any corporation or entity resulting from such Business Combination) beneficially owns, directly or indirectly, 3 0% or more of, respectively, the then- outstanding shares of common stock of the corporation or entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation or entity, except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation or entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

(d) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

No Participant in this Plan who participates in any group conducting a management buyout of the Company under the terms of which the Company ceases to be a public company may claim that such buyout is a Change in Control under this Plan and no such Participant shall be entitled to any payments or other benefits under this Plan as a result of such buyout. For purposes of the Plan, no Participant in this Plan shall be deemed to have participated in a group conducting a management buyout of the Company unless, following the consummation of the transaction, such Participant was the beneficial owner of more than 10% of the then-outstanding voting securities of the Company or any successor corporation or entity resulting from such transaction. Notwithstanding the foregoing, in no event will the spinoff of the Company from TEGNA Inc. be treated as a Change in Control.

6. Eligibility for Benefits under the Plan .

(a) General . If a Change in Control shall have occurred, each person who is a Participant on the date of the Change in Control shall be entitled to the compensation and benefits provided in Section 7(b) upon the subsequent termination of the Participant’s employment, provided that such termination occurs prior to the second anniversary of the Change in Control, unless such termination is (i) because of the Participant’s death or disability (as determined under the Company’s Long Term Disability Plan in effect immediately prior to the Change in Control), (ii) by the Company or its affiliate for Cause, or (iii) by the Participant other than for Good Reason.

- 4 -

(b) Cause . For purposes of the Plan, “Cause” means:

(i) any material misappropriation of funds or property of the Company or its affiliate by the Participant;

(ii) unreasonable and persistent neglect or refusal by the Participant to perform his or her duties which is not remedied within thirty (30) days after receipt of written notice from the Company; or

(iii) conviction, including a plea of guilty or of nolo contendere, of the Participant of a securities law violation or a felony.

Notwithstanding the foregoing provisions of this Section 6(b), the Participant shall not be deemed to have been terminated for Cause after a Change in Control unless and until there shall have been delivered to the Participant a copy of a resolution duly adopted by the affirmative vote of not less than three quarters of the entire membership of the Board at a meeting of the Board (after reasonable notice to the Participant and an opportunity for Participant, together with his or her counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Participant was guilty of conduct set forth above in this Section 6(b) and specifying the particulars thereof in detail.

(c) Good Reason . For purposes of the Plan, “Good Reason” means the occurrence after a Change in Control of any of the following circumstances without the Participant’s express written consent, unless such circumstances are fully corrected prior to the Date of Termination (as defined below) specified in the Notice of Termination (as defined below) given in respect thereof:

(i) the material diminution of the Participant’s duties, authorities or responsibilities from those in effect immediately prior to the Change in Control (failure to report to the Chief Executive Officer or a change in reporting level does not, by itself, constitute Good Reason);

(ii) a reduction in the Participant’s base salary or target bonus opportunity as in effect on the date immediately prior to the Change in Control;

(iii) the relocation of the Participant’s office from the location at which the Participant is principally employed immediately prior to the date of the Change in Control to a location 35 or more miles farther from the Participant’s residence immediately prior to the Change in Control, or the Company’s requiring the Participant to be based anywhere other than the Company’s offices at such location, except for required travel on the Company’s business to an extent substantially consistent with the Participant’s business travel obligations prior to the Change in Control;

(iv) the failure by the Company or its affiliate to pay any compensation or benefits due to the Participant;

(v) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform the Plan, as contemplated in Section 14; or

- 5 -

(vi) any purported termination of the Participant’s employment that is not effected pursuant to a Notice of Termination satisfying the requirements of the Plan.

(d) Certain Terminations Prior to a Change in Control . Anything in the Plan to the contrary notwithstanding, if a Change in Control occurs and if the Participant’s employment with the Company terminated prior to the date on which the Change in Control occurs, and if it is reasonably demonstrated by the Participant that such termination of employment (i) was at the request of any third party participating in or causing the Change in Control or (ii) otherwise arose in connection with, in relation to, or in anticipation of the Change in Control, then the Participant shall be entitled to all payments and benefits under the Plan as though the Participant had terminated his or her employment for Good Reason on the day after the Change in Control. For purposes of this Section 6(d), a Change in Control means a Change in Control that is also a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Internal Revenue Code of 1986, as amended, (the “Code”) and the Treasury regulations and guidance issued thereunder (“Section 409A”).

(e) No Waiver . Subject to the last sentence of Section 6(f), the Participant’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.

(f) Notice of Termination After a Change in Control . Any termination by the Company, or by the Participant for Good Reason, shall be communicated by Notice of Termination given in accordance with the Plan. For purposes of the Plan, a “Notice of Termination” means a written notice that (i) indicates the specific termination provision in the Plan relied upon, and (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under the provision so indicated. With respect to a Notice of Termination given by a Participant in connection with a termination for “Good Reason” such notice must be provided within ninety (90) days after the event that created the “Good Reason”.

(g) Date of Termination . For purposes of the Plan, “Date of Termination” means

(i) if the Participant’s employment is terminated by the Company for Cause, the date on which the Notice of Termination is given or any later date specified therein (which, however, shall not be more than 15 days later), (ii) if the Participant’s employment is terminated by the Participant for Good Reason, the date specified in the Notice of Termination (which, however, shall not be less than 30 days or more than 45 days later than the date on which the Notice of Termination is given), or (iii) if the Participant’s employment is terminated by the Company other than for Cause, the date on which the Company notifies the Participant of such termination. In all instances, the Date of Termination shall mean the date of the Participant’s separation from service within the meaning of Section 409A.

- 6 -

7. Obligations of the Company upon Termination .

(a) Cause; Other than for Good Reason . If the Participant’s employment shall be terminated for Cause, or if the Participant terminates his or her employment other than for Good Reason, the Company shall pay the Participant his or her annual salary through the Date of Termination, to the extent not already paid, at the rate in effect at the time Notice of Termination is given, plus all other amounts to which the Participant is entitled under any compensation, benefit or other plan or policy of the Company at the time such amounts are due, and the Company shall have no further obligations to the Participant under the Plan.

(b) Termination Without Cause; Good Reason Terminations . Any Participant who becomes eligible for compensation and benefits pursuant to Section 6(a) shall be paid or provided the following:

(i) his or her annual base salary through the Date of Termination, to the extent not already paid, at the rate in effect at the time Notice of Termination is given, plus all other amounts to which the Participant is entitled under any compensation, benefit or other plan or policy of the Company at the time such amounts are due, including without limitation the annual bonus for the fiscal year prior to the Date of Termination, to the extent not already paid;

(ii) as severance pay and in lieu of any further salary or bonus for the period following the Date of Termination, the Participant shall receive a lump sum payment equal to his or her “Annual Compensation” (as defined below) multiplied by the “Severance Multiple” (as defined below).

For purposes of the Plan, (i) for a Participant who is the Chief Executive Officer of the Company on the date of the Change in Control, the “Severance Multiple” means two (2.0) and (ii) for any other Participant, the “Severance Multiple” means such number from one half (.5) to one and one half (1.5), as designated by the Committee.

For purposes of the Plan, “Annual Compensation” means the sum of (A) the Participant’s annual base salary at the highest rate of salary during the 12-month period immediately prior to the Date of Termination or, if higher, during the 12 month period immediately prior to the Change in Control (in each case, as determined without regard for any reduction for deferred compensation, 401(k) Plan contributions and similar items), and (B) the higher of (1) the average annual bonus the Participant earned with respect to the three fiscal years immediately prior to the fiscal year in which the Change in Control occurs; and (2) the average annual bonus the Participant earned with respect to three fiscal years immediately prior to the fiscal year in which the Date of Termination occurs;

(iii) a prorated annual bonus for the portion of the fiscal year elapsed prior to the Date of Termination in an amount equal to the average annual bonus the Participant earned with respect to the three fiscal years immediately prior to the fiscal year in which the Date of Termination occurs prorated for the portion of the fiscal year elapsed prior to the Date of Termination;

- 7 -

(iv) an amount equal to the monthly COBRA cost of the Participant’s medical and dental coverage in effect as of the Termination Date multiplied by (i) 24 for a Participant who is the Chief Executive Officer, (ii) 18 for those Participants with a Severance Multiple of 1.5, (iii) 6 for those Participants with a Severance Multiple of .5, and (iv) a prorated number between 6 and 18 for those Participants with a Severance Multiple between .5 and 1.5 ;

(v) senior executive-level outplacement services for the Participant with such outplacement services being provided by such executive outplacement firm selected by the Executive with a cost to the Company of no more than $25,000. The Executive shall commence utilization of any such senior executive-level outplacement services within six months following the Participant’s Date of Termination.

(vi) For purposes of this subsection, “average annual bonus the Participant earned with respect to the three fiscal years immediately prior” is calculated using for any fiscal year prior to the Participant’s commencement of employment Participant’s target bonus percentage with respect to Participant’s first full fiscal year of employment and annualizing the annual bonus earned with respect the fiscal year in which the Participant commenced employment.

(vii) It is the object of this subsection to provide for the maximum after-tax income to each Participant with respect to any payment or distribution to or for the benefit of the Participant, whether paid or payable or distributed or distributable pursuant to the Plan or any other plan, arrangement or agreement, that would be subject to the excise tax imposed by Section 4999 of the Code or any similar federal, state or local tax that may hereafter be imposed (a “Payment”) (Section 4999 of the Code or any similar federal, state or local tax are collectively referred to as the “Excise Tax”). Accordingly, before any Payments are made under this Plan, a determination will be made as to which of two alternatives will maximize such Participant’s after-tax proceeds, and the Company must notify the Participant in writing of such determination. The first alternative is the payment in full of all Payments potentially subject to the Excise Tax. The second alternative is the payment of only a part of the Participant’s Payments so that the Participant receives the largest payment and benefits possible without causing the Excise Tax to be payable by the Participant. This second alternative is referred to in this subsection as “Limited Payment”. The Participant’s Payments shall be paid only to the extent permitted under the alternative determined to maximize the Participant’s after-tax proceeds, and the Participant shall have no rights to any greater payments on his or her Payments. If Limited Payment applies, Payments shall be reduced in a manner that would not result in the Participant incurring an additional tax under Section 409A and only to the extent required to avoid the Excise Tax. The Payments shall be reduced in a manner that maximizes the Participant’s economic position; provided that the reduction shall be made in a manner consistent with the requirements of Section 409A, and to the extent required by Section 409A where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero.

- 8 -

In the event of conflict between the order of reduction under this Plan and the order provided by any other Company document governing a Payment, then the order under this Plan shall control.

All determinations required to be made under this Section 7(b)(v) shall be made by a nationally recognized independent accounting firm or consulting firm chosen by the Committee prior to the Change in Control (the “Firm”) which shall provide detailed supporting calculations both to the Company and the Participant within ten (10) business days of the termination of employment giving rise to benefits under the Plan, or such earlier time as is requested by the Company. All fees, costs and expenses (including, but not limited to, the costs of retaining experts) of the Firm shall be borne by the Company. In the event the Firm determines that the Payments shall be reduced, it shall furnish the Participant with a written opinion to such effect. The determination by the Firm shall be binding upon the Company and the Participant.

(c) Timing of Payments and Release Condition . All payments under Sections 7(b)(ii), 7(b)(iii), and 7(b)(iv) shall be due and payable in a lump sum on the 5th business day after the Release Effective Date (as defined in Exhibit A) except to the extent required by Section 409A, if the period to execute the release and not revoke the release spans two calendar years, the payment shall be made on the later of the 5th business day after the Release Effective Date or the first business day of such second calendar year; provided that the Participant executes the attached agreement set forth at Exhibit A (or a substantially similar agreement) (i) on or before the 30th day after the Date of Termination if such termination is not treated as part of a group termination under the Age Discrimination in Employment Act of 1967, as amended by the Older Worker Benefit Protection Act (“ADEA”) or (ii) on or before the 55th day after the Date of Termination if such termination is treated as part of a group termination under ADEA. The Participant shall forfeit all rights under this Plan if such agreement is not executed by that date. The timing of all payments and benefits under this Plan shall be made consistent with the requirements of Section 409A, and notwithstanding any provision of the Plan to the contrary, any amount or benefit that is payable to a Participant who is a “specified employee” (as defined in Section 409A) shall be delayed until the date which is first day of the seventh month after the date of such Participant’s termination of employment (or, if earlier, the date of such Participant’s death), if paying such amount or benefit prior to that date would violate Section 409A.

8. Mitigation . Except as provided in Section 13(b), the Participant shall not be required to mitigate the amount of any payment provided for in the Plan by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in the Plan be reduced by any compensation earned by the Participant as a result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Participant to the Company, or otherwise.

9. Resolution of Disputes . If there shall be any dispute between the Company and the Participant (a) in the event of any termination of the Participant’s employment by the Company, as to whether such termination was for Cause, or (b) in the event of any termination of employment by the Participant, as to whether Good Reason existed, then, unless and until there is a final, nonappealable judgment by a court of competent jurisdiction declaring that such termination by the Company was for Cause or that the termination by the Participant was not for

- 9 -

Good Reason, the Company shall pay all amounts, and provide all benefits, to the Participant and/or the Participant’s family or other beneficiaries, as the case may be, that the Company would be required to pay or provide pursuant to the Plan as though such termination were by the Company without Cause or by the Participant with Good Reason; provided, however, that the Company shall not be required to pay any disputed amount pursuant to this Section except upon receipt of a written undertaking by or on behalf of the Participant to repay all such amounts to which the Participant is ultimately adjudged by such court not to be entitled . Notwithstanding the foregoing, the payment of any amount in settlement of a dispute described in this Section shall be made in accordance with the requirements of Section 409A.

10. Legal Expenses and Interest .

(a) If, with respect to any alleged failure by the Company to comply with any of the terms of the Plan or any dispute between the Company and the Participant with respect to the Participant’s rights under the Plan, a Participant in good faith hires legal counsel with respect thereto or institutes any negotiations or institutes or responds to legal action to assert or defend the validity of, to interpret, enforce his or her rights under, or recover damages for violation of the terms of the Plan, then (regardless of the outcome) the Company shall pay, as they are incurred, the Participant’s actual expenses for attorneys’ fees and disbursements. The Company agrees to pay such amounts within 10 days following the Company’s receipt of an invoice from the Participant, provided that the Participant shall have submitted an invoice for such amounts at least 30 days before the end of the calendar year next following the calendar year in which such fees and disbursements were incurred.

(b) To the extent permitted by law, the Company shall pay to the Participant on demand a late charge on any amount not paid in full when due after a Change in Control under the terms of the Plan. Except as otherwise specifically provided in the Plan, the late charge shall be computed by applying to the sum of all delinquent amounts a late charge rate. The late charge rate shall be a fixed rate per year that shall equal the sum of 3% plus the “prime rate” of Morgan Guaranty Trust Company of New York or successor institution (“Morgan”) publicly announced by Morgan to be in effect on the Date of Termination, or if Morgan no longer publicly announces a prime rate on such date, any substantially equivalent rate announced by Morgan to be in effect on such date (or, if Morgan does not exist on such date, the prime rate published by the Wall Street Journal on such date) (provided, however, that such rate shall not exceed any applicable legally permissible rate).

11. Funding . The Company may, in its discretion, establish a trust to fund any of the payments which are or may become payable to Participant under the Plan, but nothing included in the Plan shall require that the Company establish such a trust or other funding arrangement. Whether or not the Company sets any assets aside for the purposes of the Plan, such assets shall at all times prior to payment to Participants remain the assets of the Company subject to the claims of its creditors. Neither the Company nor the Board nor the Committee shall be deemed to be a trustee or fiduciary with respect to any amount to be paid under the Plan.

12. No Contract of Employment . The Participant and the Company acknowledge that, except as may otherwise be provided under any written agreement between the Participant and the Company, the employment of the Participant by the Company is “at will” and, subject to

- 10 -

such payments as may become due under the Plan, such employment may be terminated by either the Participant or the Company at any time and for any reason.

13. Non-exclusivity of Rights .

(a) Future Benefits under Company Plans . Nothing in the Plan shall prevent or limit the Participant’s continuing or future participation in any plan, program, policy or practice of the Company or any of its affiliates, nor shall anything herein limit any rights or reduce any benefits the Participant may have under any agreement or arrangement with the Company or any of its affiliates. Amounts that are vested benefits or that the Participant is otherwise entitled to receive under any plan, policy, practice or program of or any agreement or arrangement with the Company or any of its affiliates at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or agreement or arrangement except as explicitly modified by the Plan.

(b) Benefits of Other Plans and Agreements . If the Participant becomes entitled to receive compensation or benefits under the terms of the Plan, such compensation or benefits will be reduced by other severance benefits payable under any plan, program, policy or practice of or agreement or other arrangement between the Participant and the Company (not including payments or distributions under the Company’s equity based compensation plan) unless the other plan specifically provides for payment under this Plan and not the other plan. It is intended that the Plan provide compensation or benefits that are supplemental to severance benefits and that are actually received by the Participant pursuant to any plan, program, policy or practice of or agreement or arrangement between the Participant and the Company, such that the net effect to the Participant of entitlement to any similar benefits that are contained both in the Plan and in any other existing plan, program, policy or practice of or agreement or arrangement between the Participant and the Company will be to provide the Participant with the greater of the benefits under the Plan or under such other plan, program, policy, practice, or agreement or arrangement. This Plan is not intended to modify, amend, terminate or otherwise affect the Company’s equity compensation plan, which shall remain a fully independent and separate plan.

14. Successors; Binding Agreement . The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume and agree to perform the Plan in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in the Plan, “Company” means the Company as herein defined and any successor to its business and/or assets which assumes and agrees to perform the Plan, by operation of law or otherwise.

15. Transferability and Enforcement .

(a) The rights and benefits of the Company under the Plan shall be transferable, but only to a successor of the Company, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by or against its successors and assigns. The rights and benefits of Participants under the Plan shall not be transferable other than by the laws of descent and distribution.

- 11 -

(b) The Company intends the Plan to be enforceable by Participants . The rights and benefits under the Plan shall inure to the benefit of and be enforceable by any Participant and the Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees . If the Participant should die while any amount would still be payable to the Participant hereunder had the Participant continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of the Plan to the Participant’s estate or as determined appropriate by the Committee .

16. Notices . Any notices referred to herein shall be in writing and shall be deemed given if delivered in person or by facsimile transmission, or sent by U.S. registered or certified mail to the Participant at his or her address on file with the Company (or to such other address as the Participant shall specify by notice), or to the Company at its principal executive office, Attn: Secretary.

17. Amendment or Termination of the Plan . The Board reserves the right to amend, modify, suspend or terminate the Plan at any time, provided that:

(a) without the written consent of the Participant, no such amendment, modification, suspension or termination shall adversely affect the benefits or compensation due under the Plan to any Participant whose employment has terminated prior to such amendment, modification, suspension or termination and is entitled to benefits and compensation under Section 7(b);

(b) no such amendment, modification, suspension or termination that has the effect of reducing or diminishing the right of any Participant to receive any payment or benefit under the Plan will become effective prior to the first anniversary of the date on which written notice of such amendment, modification, suspension or termination was provided to the Participant, and if such amendment, modification, suspension or termination was effected (i) on the day of or subsequent to the Change in Control, (ii) prior to the Change in Control, but at the request of any third party participating in or causing a Change in Control or (iii) otherwise in connection with, in relation to, or in anticipation of a Change in Control, such amendment, modification, suspension or termination will not become effective until the second anniversary of the Change in Control; and

(c) the Board’s right to amend, modify, suspend or terminate the Plan is subject to the requirements of Section 409A to the extent such requirements apply to the Plan.

18. Waivers . The Participant’s or the Company’s failure to insist upon strict compliance with any provision of the Plan or the failure to assert any right the Participant or the Company may have hereunder, including, without limitation, the right of the Participant to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision or right under the Plan. However, the preceding sentence does not override the time limitations set forth in the last sentence of Section 6(f).

19. Validity . The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision of the Plan, and such other provisions shall remain in full force and effect to the extent permitted by law.

- 12 -

20. Governing Law . To the extent not preempted by federal law, all questions pertaining to the construction, regulation, validity and effect of the provisions of the Plan shall be determined in accordance with the laws of the State of Delaware without regard to the conflict of laws principles thereof.

21. Section 409A .

(a) General . It is intended that payments and benefits made or provided under this Plan shall not result in penalty taxes or accelerated taxation pursuant to Section 409A, and the Plan shall be interpreted and administered in accordance with that intent; however, the Company shall not be responsible for any such taxes. If any provision of the Plan would otherwise conflict with or frustrate this intent, that provision will be interpreted and deemed amended so as to avoid the conflict. Any payments that qualify for the “short-term deferral” exception, the separation pay exception or another exception under Section 409A shall be paid under the applicable exception. For purposes of the limitations on nonqualified deferred compensation under Section 409A, each payment of compensation under this Plan shall be treated as a separate payment of compensation for purposes of applying the exclusion under Section 409A for short-term deferral amounts, the separation pay exception or any other exception or exclusion under Section 409A. In no event may a Participant, directly or indirectly, designate the calendar year of any payment under this Plan. Despite any contrary provision of this Plan, any references to “termination of employment” or “Date of Termination” or similar term shall mean and refer to the date of a Participant’s “separation from service,” as that term is defined in Section 409A and Treasury regulation Section 1.409A-1(h).

(b) Delay of Payment . Notwithstanding any other provision of this Plan to the contrary, if a Participant is considered a “specified employee” for purposes of Section 409A (as determined in accordance with the methodology established by the Company as in effect on the termination date), any payment that constitutes nonqualified deferred compensation within the meaning of Section 409A that is otherwise due to a Participant under this Plan during the six (6)- month period immediately following a Participant’s separation from service (as determined in accordance with Section 409A) on account of a Participant’s separation from service shall be accumulated and paid to such Participant on the first (1st) business day of the seventh (7th) month following such Participant’s separation from service (the “Delayed Payment Date”). If such Participant dies during the postponement period, the amounts and entitlements delayed on account of Section 409A shall be paid to the personal representative of such Participant’s estate on the first to occur of the Delayed Payment Date or thirty (30) calendar days after the date of his or her death.

(c) Reimbursement and In-Kind Benefits . Notwithstanding anything to the contrary in this Plan, all reimbursements and in-kind benefits provided under this Plan that are subject to Section 409A shall be made in accordance with the requirements of Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Participant’s lifetime (or during such other period of time specified in this Plan); (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (iii) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred; and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

- 13 -

22. Headings . The headings and paragraph designations of the Plan are included solely for convenience of reference and shall in no event be construed to affect or modify any provisions of the Plan.

- 14 -

Exhibit A
Release of Claims and Restrictive Covenant Agreement

This Release of Claims and Restrictive Covenant Agreement (this “ Agreement ”) is entered into by you [_______________] and Cars.com Inc. (the “ Company ”) in connection with your separation from employment with the Company and in accordance with the Cars.com Inc. Change in Control Severance Plan (the “ Plan ”). Capitalized terms used and not defined herein shall have the meanings provided in the Plan. You and the Company agree to the following:

(1) Date of Termination . Your final day as an employee of the Company is _______________, 20_____ (the “ Date of Termination ”).

(2) Severance Amount . Provided that you execute this Agreement, do not later revoke your acceptance, and that this Agreement becomes effective on or before _______________, 20_____, you will receive (a) a lump sum cash payment in the amount of $_______________, less legally-required withholdings, payable on _______________ and (b) outplacement services as described in Section 7(b)(v) of the Plan.

(3) Release Deadline . You will receive the benefits described in paragraph 2 above only if you sign this Agreement on or before _______________, 20_____. In exchange for and in consideration of the benefits offered to you by the Company in paragraph 2 above, you agree to the terms of this Agreement.

(4) Release of Claims . You agree that this is a full and complete Release of Claims. Accordingly, you and the Company agree as follows:

(a)

The Release of Claims means that you agree to give up forever any and all legal claims, or causes of actions, you may have, or think you have, against the Company, any of its subsidiaries, related or affiliated companies, including any predecessor or successor entities, and their respective directors, officers, and employees (collectively, the “ Company Parties ”). This Release of Claims includes all legal claims that arose at any time before or at the time you sign this Agreement; it also includes those legal claims of which you know and are aware, as well as any legal claims of which you may not know or be aware, including claims for breach of contract, claims arising out of any employment agreement you may have or under the Plan, claims of intentional or negligent infliction of emotional distress, defamation, breach of implied covenant of good faith and fair dealing, and any other claim arising from, or related to, your employment by the Company.

Notwithstanding the foregoing, by executing this Release of Claims, you will not forfeit or release your right to receive your vested benefits under a qualified retirement plan, the Cars.com Share Appreciation Rights Plan, or the Cars.com, LLC Long Term Incentive (but you will forfeit your right to receive any further severance or annual bonus award); your vested outstanding awards under the Omnibus Incentive Compensation Plan

A-1

comprised of [specify any outstanding vested awards]; any rights to indemnification and advancement of expenses under the Company’s By-laws and/or directors’ and officers’ liability insurance policies; any other rights under the Plan that are intended to survive a termination of employment; or any legal claims or causes of action arising out of actions allegedly taken by the Company after the date of your execution of this Agreement; any rights you have under applicable workers compensation laws; any benefits or monies paid in the normal course to employees separating from employment such as payment of accrued but unused vacation and reimbursement of valid and appropriate business expenses; or any other claims that cannot lawfully be released . The matters referenced in this paragraph are referred to as the “ Excluded Matters .”

(b)

Several laws of the United States and of the State of Illinois create claims for employees in various circumstances. These laws include the Age Discrimination in Employment Act of 1967, as amended by the Older Worker Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Family and Medical Leave Act, the Employee Retirement Income Security Act, the Americans With Disabilities Act, the Genetic Information Non-discrimination Act, and the Virginia Human Rights Act. Several of these laws also provide for the award of attorneys’ fees to a successful plaintiff. You agree that this Release of Claims specifically includes any possible claims under any of these laws or similar state and federal laws, including any claims for attorneys’ fees.

(c)

By referring to specific laws we do not intend to limit the Release of Claims to just those laws. All legal claims for money damages, or any other relief that relate to or are in any way connected with your employment with the Company or any of its subsidiaries, related or affiliated companies, are included within this Release of Claims, even if they are not specifically referred to in this Agreement. The only legal claims that are not covered by this Release of Claims are the Excluded Matters.

(d)

Except for the Excluded Matters, we agree that neither party will say later that some particular legal claim or claims are not covered by this Release of Claims because we or you were unaware of the claim or claims, because such claims were overlooked, or because you or we made an error.

(e)

A-2

barred from recovering any money damages or remedy of any kind, except in the case of any legal claims or causes of action arising out of any of the Excluded Matters . This provision is meant to include claims that are solely or in part on your behalf, or claims which you have or have not authorized.

(f)

This Agreement, and the Release of Claims, will not prevent you from filing any future administrative charges with the United States Equal Employment Opportunity Commission (“ EEOC ”) or a state fair employment practices (“ FEP ”) agency, nor from participating in or cooperating with the EEOC or a state FEP agency in any investigation or legal action undertaken by the EEOC or a state FEP agency. However, this Agreement, and the Release of Claims, does mean that you may not collect any monetary damages or receive any other remedies from charges filed with or actions by the EEOC or a state FEP agency. This Agreement and the Release of Claims do not prohibit you from participating in an investigation, filing a charge or otherwise communicating with any federal, state or local government office, official or agency, including, but not limited to, Department of Labor, National Labor Relations Board, or the Securities and Exchange Commission. Nothing in this Agreement shall prohibit you from seeking and obtaining a whistleblower award from a government agency, as provided for, protected under or warranted by applicable law, including Section 21F of the Securities Exchange Act of 1934, as amended.

(5) Restrictive Covenants .

(a)

[You hereby reaffirm the Restrictive Covenant Agreement you previously entered into (a copy of which is attached to this Agreement). The Company and you agree that if you qualify for benefits under the Plan and this Agreement becomes effective, the non-competition provision within such Restrictive Covenant Agreement shall apply to no more than six entities specified by the Company no later than 10 days after the Date of Termination.] [You understand and agree that the relationship between the Company and each of its employees constitutes a valuable asset of the Company and may not be converted to your own use. Accordingly, you hereby agree that for a period of twelve (12) months after the Date of Termination (the “ Restricted Period ”), you shall not, directly or indirectly, on your own behalf or on behalf of another person, solicit or induce any employee of the Company or its affiliates to terminate his or her employment relationship with the Company or any affiliate of the Company or to enter into employment with another person or entity. The foregoing shall not apply to employees who respond to solicitations of employment directed to the general public or who seek employment at their own initiative.

A-3

(b)

You agree that you will not make any statements, oral or written, or cause or allow to be published in your name, or under any other name, any statements, interviews, articles, books, web logs, editorials or commentary (oral or written) that are critical or disparaging of the Company, its affiliates, or any of their operations, or any of their officers, employees or directors .

(c)

During the course of your employment and as part of the performance of your various duties you came into the possession of information which the Company or its affiliates consider to be Confidential and Proprietary Information and which is not generally disclosed or made known to the trade or public. This includes, but is not limited to, information bearing on strategic planning, finances, shareholder matters, budgets, audience, research, marketing, personnel, management of the company and its affiliated companies, and relationships with advertisers, vendors and suppliers. You agree that unless duly authorized in writing by the Company, you will not at any time divulge or use in connection with any business activity any trade secrets or confidential and proprietary information first acquired by you during and by virtue of your employment with the Company or its affiliates. You agree that you will not retain any copies of such materials, whether in hard copy or electronic copy, and will not use or disclose to anyone any such Confidential or Proprietary Information, in any form.]

(d)

You acknowledge that a breach of this paragraph 5 would cause irreparable injury and damage to the Company which could not be reasonably or adequately compensated by money damages. Accordingly, you acknowledge that the remedies of injunction and specific performance shall be available in the event of such a breach, and the non-breaching party shall be entitled to money damages, costs and attorneys’ fees, and other legal or equitable remedies, including an injunction pending trial, without the posting of bond or other security. Any period of restriction set forth in this paragraph 5 shall be extended for a period of time equal to the duration of any breach or violation thereof.

(e)

In the event of your breach of this paragraph 5, in addition to the injunctive relief described above, the Company’s remedy shall include the forfeiture and return to the Company of any payment made to you or on your behalf under paragraph 2 above.

(f)

In the event that any provision of this paragraph 5 is held to be in any respect an unreasonable restriction, then the court so holding may modify the terms thereof, including the period of time during which it operates or the geographic area to which it applies, or effect any other change to the extent necessary to render this paragraph 5 enforceable, it being acknowledged by the parties that the representations and covenants set forth herein are of the essence of this Agreement.

A-4

(6) Entire Agreement . You agree that this Agreement contains all of the details of the agreement between you and the Company with respect to the subject matter hereof . Nothing has been promised to you, either in some other written document or orally, by the Company or any of its officers, employees or directors, that is not included in this Agreement.

(7) No Admission . Nothing contained in this Agreement will be deemed or construed as an admission of wrongdoing or liability on the part of Company Parties.

(8) Governing Law and Venue . All matters affecting this Agreement, including the validity thereof, are to be governed by, and interpreted and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State. The parties agree to submit to the jurisdiction of the federal and state courts sitting in Delaware, for all purposes relating to the validity, interpretation, or enforcement of this Agreement.

(9) Time to Consider; Effectiveness . Please review this Agreement carefully. We advise you to talk with an attorney before signing this Agreement. So that you may have enough opportunity to think about this offer, you may keep this Agreement for [21(if not a group termination under ADEA)] [45 (if a group termination under ADEA) ] days from the date of termination of your employment. You acknowledge that this Agreement was made in connection with your participation in the Plan and was available to you both prior to and immediately at the time of your termination of employment. For that reason you acknowledge and agree that the [21-day][45-day] consideration period identified in this paragraph commenced to run, without any further action by the Company immediately upon your being advised of the termination of your employment. Consequently, if you desire to execute this Agreement, you must do so no later than _______________, 20_____. Should you accept all the terms by signing this Agreement on or before _______________, 20_____, you may nevertheless revoke this Agreement within seven (7) days after signing it by notifying ____________________ in writing of your revocation. We will provide a courtesy copy to your attorney, if you retain one to represent you and request us to do so. If you choose to retain counsel to review and advise you concerning this Agreement that shall be considered a personal expense on your part and not be reimbursed or indemnified. If you wish to accept this Agreement, please confirm your acceptance of the terms of the Agreement by signing the original of this Agreement in the space provided below. The Agreement will become effective, and its terms will be carried out beginning on the day following the seven (7)-day revocation period (“ Release Effective Date ”).

A-5

(10) Knowing and Voluntary . By signing this Agreement you agree that you have carefully read this Agreement and understand its terms . You also agree that you have had a reasonable opportunity to think about your decision, to talk with an attorney or advisor of your choice, that you have voluntarily signed this Agreement, and that you fully understand the legal effect of signing this Agreement.

Date:
			EMPLOYEE


Date:
			CARS.COM INC.
			By:
			Title:

A-6

Exhibit 10.2

CARS.COM INC.

EXECUTIVE SEVERANCE PLAN

Table of Contents

Page

1.	Purpose of Plan	1

2.	Certain Defined Terms	1

3.	Eligible Employees	2

4.	Term of the Plan	2

5.	Administration of the Plan	2

6.	Amendment or Termination of Plan	2

7.	Benefits under this Plan	3

8.	Release Requirement	4

9.	Timing and Form of Payment of Severance Amount	4

10.	No Mitigation/Offset	4

11.	Legal Expenses	4

12.	Severability; Waiver	4

13.	Employment Status	5

14.	Tax Withholdings	5

15.	Section 409A.	5

16.	Successors	6

17.	Governing Law	6

-i-

Cars.com Inc.
Executive Severance Plan

1. Purpose of Plan . The purpose of this Cars.com Inc. Executive Severance Plan (the “ Plan ”) is to provide individuals who are designated as Participants in the Plan severance benefits in the event of certain involuntary terminations of employment.

2. Certain Defined Terms . Certain terms used herein have the definitions given to them in the first place in which they are used, and all other defined terms have the meanings set forth below in this Section 2.

(a)

“ Annual Base Salary ” means a Participant’s regular rate of annual base salary as in effect immediately preceding such Participant’s Qualifying Termination.

(b)

“ Board ” means the Company’s Board of Directors.

(c)

“ Cause ” means a termination of a Participant’s employment following the occurrence of any of the following events, each of which shall constitute a “Cause” for such termination:

(i)

any material misappropriation of funds or property of the Company or its affiliate by the Participant;

(ii)

unreasonable and persistent neglect or refusal by the Participant to perform his or her duties which is not remedied within thirty (30) days after receipt of written notice from the Company;

(iii)

conviction, including a plea of guilty or of nolo contendere, of the Participant of a securities law violation or a felony; or

(iv)

material violation of the Company’s employment policies by a Participant.

(d)

“ Committee ” means the Compensation Committee of the Board of Directors of the Company.

(e)

“ Company ” means Cars.com Inc.

(f)

“ Qualifying Termination ” means an involuntary termination of a Participant’s employment by the Company (other than for Cause). Any determination as to whether a termination is a Qualifying Termination shall be made in the reasonable, good faith discretion of the Committee. In no event shall a Participant’s voluntary termination or a termination due to a Participant’s death or disability constitute a Qualifying Termination under this Plan. Additionally, a Qualifying Termination shall not occur if the Participant’s employment is terminated in connection with a

- 1 -

restructuring, reorganization, redundancy, merger, acquisition, sale, spinoff, outsourcing, transfer, or other similar condition or transaction, in such circumstances where the Participant is offered employment by the Company, a successor organization or other entity related to the transaction with an Annual Base Salary that is not materially less than that paid to the Participant prior to such change. The Company shall provide written notice of the Qualifying Termination, and the date of a Qualifying Termination shall be the Participant’s separation from service with the Company in accordance with the notice.

(g)

“ Severance Multiple ” means (i) with respect to a Participant who is the Chief Executive Officer of the Company, one and one half (1.5) and (ii) with respect to any other Participant, such number from one half (.5) to one (1.0), as designated by the Committee.

3. Eligible Employees . This Plan shall apply solely with respect to the Company’s key employees who are designated by the Board or the Committee as participants (the “ Participants ”). The Board or the Committee shall also designate the Severance Multiple of each Participant who is not the Chief Executive Officer of the Company. Designation as a Participant shall be effective as of the date of such Board or Committee action. The Committee and the Board reserve the right to add new Participants or terminate the participation of a Participant at any time and in its sole discretion, but a Participant may not be removed from participation in the Plan or have the Participant’s Severance Multiple reduced without at least six (6) months’ advance notice.

4. Term of the Plan . This Plan shall be effective commencing as of June 1, 2017, the day following the spin-off of the Company from TEGNA Inc., and shall continue until the Committee terminates the Plan. The termination of the Plan shall not affect any unsatisfied obligations under this Plan that have arisen prior to the termination with respect to Participants who have received notice of a Qualifying Termination prior to the termination.

5. Administration of the Plan . This Plan shall be administered by the Committee or its delegee. All actions taken and all determinations by the Committee shall be final and binding on all persons claiming any interest in or under this Plan.

6. Amendment or Termination of Plan . Following the Effective Date, the Committee and the Board reserve the right to amend or terminate the Plan at any time, but the amendment or termination of this Plan shall not affect any obligations under this Plan that have arisen prior to the date of such amendment or termination and no reduction in the benefits under this Plan through a plan amendment or plan termination shall become effective unless the Company provides at least six (6) months’ advance written notice to the affected Participants.

- 2 -

7. Benefits under this Plan . Upon a Qualifying Termination, a Participant shall, subject to the terms and conditions of this Plan including Section 8, be entitled to receive the following (the “ Severance Benefits ”) :

(a)

a severance payment (the “ Severance Amount ”) equal to the Participant’s Severance Multiple multiplied by the sum of: (i) the Participant’s Annual Base Salary, plus (ii) the average annual bonus the Participant earned with respect to the three fiscal years immediately prior to the fiscal year in which the Qualifying Termination occurs. For purposes of this subsection, “average annual bonus the Participant earned with respect to the three fiscal years immediately prior” is calculated for any fiscal year prior to the Participant’s commencement of employment by using Participant’s target bonus percentage with respect to Participant’s first full fiscal year of employment and annualizing the annual bonus earned with respect the fiscal year in which the Participant commenced employment.

(b)

an amount equal to the monthly COBRA cost of the Participant’s medical and dental coverage in effect as of the Termination Date multiplied by (i) 18 for a Participant who is the Chief Executive Officer, (ii) 12 for those Participants with a Severance Multiple of 1.0, (iii) 6 for those Participants with a Severance Multiple of 0.5, and (iv) a prorated number between 6 and 12 for those Participants with a Severance Multiple between 0.5 and 1.0.

(c)

for stock-based awards, unless specifically provided otherwise in the award document at the time of grant, service credit and continued vesting in such awards for the 12-month period following a Qualifying Termination except that for the Company’s Chief Executive Officer the service credit and continued vesting shall be for the 18-month period following a Qualifying Termination and shall apply only to stock-based awards granted on or after November 2, 2016 with prior stock-based awards for the Company’s Chief Executive Officer subject to the terms of any prior employment agreement. The stock-based awards that become payable because of such service credit and continued vesting shall be paid at the same time such awards would have been paid if the Participant had remained employed for such period but no earlier than the payment date set forth in Section 9 for the Severance Amount.

(d)

a prorated portion of the Participant’s annual bonus for the fiscal year in which the Participant is terminated based on actual performance and paid at the time that annual bonuses are paid to similarly situated executives but no earlier than the payment date set forth in Section 9 for the Severance Amount.

In addition, a Participant shall be paid in accordance with normal payroll practices all earned but unpaid compensation, accrued vacation and accrued but unreimbursed expenses required to be reimbursed through the date of termination (the “ Accrued Obligations ”).

- 3 -

Notwithstanding the foregoing, in the event that a Participant experiences a Qualifying Termination under circumstances that entitle the Participant to compensation and benefits under the Company’s Change in Control Severance Plan, the Participant shall receive compensation and benefits under the Company’s Change in Control Severance Plan and not under this Plan.

8. Release Requirement . A Participant shall not be entitled to the Severance Benefits unless the Participant has signed and not revoked, within (i) 30 days after the date of such Participant’s Qualifying Termination if such termination is not treated as part of a group termination under the Age Discrimination in Employment Act of 1967, as amended by the Older Worker Benefit Protection Act (“ADEA”) or (ii) 55 days after the date of such Participant’s Qualifying Termination if such termination is treated as part of a group termination under ADEA, a release and covenant agreement in the form attached hereto as Exhibit A (the “ Release and Restrictive Covenant Agreement ”) or such other form that the Committee deems appropriate. The Participant shall forfeit all rights under this Plan if such Release and Restrictive Covenant Agreement is not executed and irrevocable by that date.

9. Timing and Form of Payment of Severance Amount . Subject to the Release and Restrictive Covenant Agreement becoming effective and irrevocable on the Release Effective Date (as defined in Exhibit A) after the Participant’s Qualifying Termination, the Severance Amount shall be payable in a lump sum on the 5th business day after the Release Effective Date except to the extent required by Section 409A, if the period to execute the Release and Restrictive Covenant Agreement spans two calendar years, the payment shall be made on the later of the 5th business day after the Release Effective Date or the first business day of such second calendar year.

10. No Mitigation/Offset . A Participant shall not be required to mitigate damages or the amount of any payment provided for under this Plan by seeking other employment or otherwise, nor shall any payments hereunder be subject to offset in respect of any claims that the Company may have against a Participant, nor shall the amount of any payment provided for under this Plan be reduced by any compensation earned as a result of such Participant’s employment with another employer.

11. Legal Expenses . If, with respect to any alleged failure by the Company to comply with the terms of this Plan, a Participant institutes or responds to legal action to assert or defend the validity of, enforce his or her rights under, or recover damages for breach of the terms of this Plan or, following termination of employment, the Release and Restrictive Covenant Agreement, and thereafter the Company is found in a judgment no longer subject to review or appeal to have breached this Plan or, following termination of employment, the Release and Restrictive Covenant Agreement in any material respect, then the Company shall indemnify the Participant for his or her reasonable attorneys’ fees and costs in connection with such legal action and such indemnification payment shall be made within 60 days after such judgment.

12. Severability; Waiver . If any provision of this Plan or the application thereof is held invalid or unenforceable, the invalidity or unenforceability thereof shall not affect any other provisions of this Plan which can be given effect without the invalid or unenforceable provision, and to this end the provisions of this Plan are to be severable. No waiver by either party of any

- 4 -

breach by the other party of any provision or conditions of this Plan shall be deemed to be a waiver of any other provision or condition at the same or any prior or subsequent time.

13. Employment Status . This Plan does not constitute a contract of employment or impose on a Participant or the Company or its subsidiaries any obligation to retain the Participant as an employee or change the status of such Participant’s employment to anything other than “at will.” The Company reserves the right to terminate a Participant for any or no reason at its convenience.

14. Tax Withholdings . The Company may withhold from any payments due to a Participant hereunder, such amounts as the Company may determine are required to be withheld under applicable federal, state and local tax laws.

15. Section 409A .

(a)

General . It is intended that payments and benefits made or provided under this Plan shall not result in penalty taxes or accelerated taxation pursuant to Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”), and the Plan shall be interpreted and administered in accordance with that intent; however, the Company shall not be responsible for any such taxes. If any provision of the Plan would otherwise conflict with or frustrate this intent, that provision will be interpreted and deemed amended so as to avoid the conflict. Any payments that qualify for the “short-term deferral” exception, the separation pay exception or another exception under Section 409A of the Code shall be paid under the applicable exception. For purposes of the limitations on nonqualified deferred compensation under Section 409A of the Code, each payment of compensation under this Plan shall be treated as a separate payment of compensation for purposes of applying the exclusion under Section 409A of the Code for short-term deferral amounts, the separation pay exception or any other exception or exclusion under Section 409A of the Code. In no event may a Participant, directly or indirectly, designate the calendar year of any payment under this Plan. Despite any contrary provision of this Plan, any references to termination of employment or date of termination shall mean and refer to the date of a Participant’s “separation from service,” as that term is defined in Section 409A of the Code and Treasury regulation Section 1.409A-1(h).

(b)

Delay of Payment . Notwithstanding any other provision of this Plan to the contrary, if a Participant is considered a “specified employee” for purposes of Section 409A of the Code (as determined in accordance with the methodology established by the Company as in effect on the termination date), any payment that constitutes nonqualified deferred compensation within the meaning of Section 409A of the Code that is otherwise due to a Participant under this Plan during the six (6)-month period immediately following a Participant’s separation from service (as determined in accordance with Section 409A of the Code) on account of a

- 5 -

Participant’s separation from service shall be accumulated and paid to such Participant on the first (1st) business day of the seventh (7th) month following such Participant’s separation from service (the “ Delayed Payment Date ”). If such Participant dies during the postponement period, the amounts and entitlements delayed on account of Section 409A of the Code shall be paid to the personal representative of such Participant’s estate on the first to occur of the Delayed Payment Date or thirty (30) calendar days after the date of his or her death.

16. Successors . This Plan shall be binding upon the successors and assigns of the Company.

17. Governing Law . This Plan shall be governed by and construed under and in accordance with the laws of the State of Delaware without regard to principles of conflicts of laws.

- 6 -

Exhibit A
Release of Claims and Restrictive Covenant Agreement

This Release of Claims and Restrictive Covenant Agreement (this “ Agreement ”) is entered into by you [____________________] and Cars.com Inc. (the “ Company ”) in connection with your separation from employment with the Company and in accordance with the Cars.com Inc. Executive Severance Plan (the “ Plan ”). Capitalized terms used and not defined herein shall have the meanings provided in the Plan. You and the Company agree to the following:

(1) Date of Termination . Your final day as an employee of the Company is _______________, 20_____ (the “ Date of Termination ”).

(2) Severance Benefits . Provided that you execute this Agreement, do not later revoke your acceptance, and that this Agreement becomes effective and non-revocable on or before _______________, 20_____, you will receive (a) a lump sum cash payment in the amount of $__________, less legally-required withholdings, payable on __________, (b) continued service credit and vesting for [12][18] months in the following stock-based awards ____________ and (c) a prorated portion of the annual bonus, if any, for the year in which your employment is terminated based on actual performance and paid at the time that annual bonuses are paid to similarly situated key employees.

(3) Release Deadline . You will receive the benefit described in paragraph 2 above only if you sign this Agreement on or before _______________, 20_____. In exchange for and in consideration of the benefits offered to you by the Company in paragraph 2 above, you agree to the terms of this Agreement.

(4) Release of Claims . You agree that this is a full and complete Release of Claims. Accordingly, you and the Company agree as follows:

(a)

Notwithstanding the foregoing, by executing this Release of Claims, (i) you will not forfeit or release your right to receive your vested benefits

~~91004-0040/135756924.1~~

A-1

under a qualified retirement plan, the Cars.com Share Appreciation Rights Plan, or the Cars.com, LLC Long Term Incentive (but you will forfeit your right to receive any further severance or annual bonus award); your vested outstanding awards under the Cars.com, Inc. Omnibus Incentive Compensation Plan comprised of [specify any outstanding vested awards] any rights to indemnification and advancement of expenses under the Company’s By-laws and/or directors’ and officers’ liability insurance policies; any other rights under the Plan that are intended to survive a termination of employment; any legal claims or causes of action arising out of actions allegedly taken by the Company after the date of your execution of this Agreement; any rights you have under applicable workers compensation laws; any benefits or monies paid in the normal course to employees separating from employment such as payment of accrued but unused vacation and reimbursement of valid and appropriate business expenses; or any other claims that cannot lawfully be released. The matters referenced in this paragraph are referred to as the “ Excluded Matters .”

(b)

(c)

(d)

Except for the Excluded Matters, we and you agree that neither party will say later that some particular legal claim or claims are not covered by this Release of Claims because we or you were unaware of the claim or claims, because such claims were overlooked, or because you or we made an error.

~~91004-0040/135756924.1~~

A-2

(e)

You specifically confirm that, as far as you know, no one has made any legal claim in any federal, state or local court or government agency relating to your employment, or the ending of your employment, with the Company. If, at any time in the future, such a claim is made by you, or someone acting on behalf of you, or by some other person or a governmental agency, you agree that you will be totally and completely barred from recovering any money damages or remedy of any kind, except in the case of any legal claims or causes of action arising out of any of the Excluded Matters. This provision is meant to include claims that are solely or in part on your behalf, or claims which you have or have not authorized.

(f)

(5) Restrictive Covenants .

(a)

[You hereby reaffirm the Restrictive Covenant Agreement you previously entered into (a copy of which is attached to this Agreement).] [You agree that in consideration for the payment under paragraph 2 above, for a period of twelve (12) months after the Date of Termination (the “ Restricted Period ”), you will not, without the written consent of the Company, obtain or seek a position with a Competitor (as defined below) in which you will use or are likely to use any confidential information or trade secrets of the Company or its affiliates including, but not limited to, a position in which you would have duties for such Competitor within the United States that involve Competitive Services (as defined below) and that are the same or similar to those duties actually performed by you for the Company.

~~91004-0040/135756924.1~~

A-3

(b)

You understand and agree that the relationship between the Company and each of its employees constitutes a valuable asset of the Company and may not be converted to your own use. Accordingly, you hereby agree that during the Restricted Period, you shall not, directly or indirectly, on your own behalf or on behalf of another person, solicit or induce any employee of the Company or any affiliate of the Company to terminate his or her employment relationship with the Company or any affiliate of the Company or to enter into employment with another person or entity. The foregoing shall not apply to employees who respond to solicitations of employment directed to the general public or who seek employment at their own initiative.

(c)

For purposes of this paragraph 5, “ Competitive Services ” means the business of selling or otherwise providing a national searchable online resource to individuals and businesses seeking to purchase, sell or lease (other than short-term rentals) passenger cars or light trucks through internet websites or digital platforms (including in conjunction with any competitive platform or business listed in the last sentence of this paragraph 5(c)) or selling or otherwise providing to third parties through such websites or platforms products and services substantially equivalent to those included in the Customer Packages offered by the Company and “ Competitor ” means any individual or any entity or enterprise engaged, wholly or in part, in Competitive Services. The parties acknowledge that the Company or its affiliates may from time to time during the term of this Agreement change or increase the line of goods or services they provide, and you agree to amend this Agreement from time to time to include such different or additional goods and services to the definition of “Competitive Services” for purposes of this paragraph 5. The following is intended to constitute a nonexclusive list of National Restricted Businesses: ADP/Cobalt, AOL Autos, Autobytel/AutoUSA, Autolist, Autotrader.com, CarFax/HIS, CarGurus, CarsDirect/Internet Brands, CarsforSale.com, CarSoup.com, DealerTrack/Dealer.com, eBay Motors, Edmunds.com, KBB.com, LotLinx, MSN Autos, TrueCar, Yahoo! Autos.]

(d)

[During the course of your employment and as part of the performance of your various duties you came into the possession of information which the Company or its affiliates consider to be Confidential and Proprietary Information and which is not generally disclosed or made known to the trade or public. This includes, but is not limited to, information bearing on strategic planning, finances, shareholder matters, budgets, audience, research, marketing, personnel, management of the company and its affiliated companies, and relationships with advertisers, vendors and suppliers. You agree that unless duly authorized in writing by the Company, you will not at any time divulge or use in connection with any business activity any trade secrets or confidential and proprietary information first acquired by you during and by virtue of your employment with the Company or its affiliates. You agree that you will

~~91004-0040/135756924.1~~

A-4

not retain any copies of such materials, whether in hard copy or electronic copy, and will not use or disclose to anyone any such Confidential or Proprietary Information, in any form. ]

(e)

You agree that you will not make any statements, oral or written, or cause or allow to be published in your name, or under any other name, any statements, interviews, articles, books, web logs, editorials or commentary (oral or written) that are critical or disparaging of the Company, the Company’s affiliates, or any of their operations, or any of their officers, employees or directors.

(f)

You agree that due to your position of trust and confidence the restrictions contained in this paragraph 5 are reasonable, and the benefits conferred on you in this Agreement are adequate consideration, and since the nature of the Company’s business is national in scope, the geographic restriction herein is reasonable.

(g)

You acknowledge that a breach of this paragraph 5 would cause irreparable injury and damage to the Company which could not be reasonably or adequately compensated by money damages. Accordingly, you acknowledge that the remedies of injunction and specific performance shall be available in the event of such a breach, and the non- breaching party shall be entitled to money damages, costs and attorneys’ fees, and other legal or equitable remedies, including an injunction pending trial, without the posting of bond or other security. Any period of restriction set forth in this paragraph 5 shall be extended for a period of time equal to the duration of any breach or violation thereof.

(h)

In the event of your breach of this paragraph 5, in addition to the injunctive relief described above, the Company’s remedy shall include the forfeiture or return to the Company of any payment made or due to you or on your behalf under paragraph 2 above.

(i)

(6) Cooperation . You agree to fully cooperate and assist the Company in the defense of any investigations, claims, charges, arbitrations, grievances, or lawsuits brought against the Company or any of its operations, or any officers, employees or directors the Company or any of its operations, as to matters of which you have personal knowledge necessary, in the Company’s judgment, for the defense of the action. You agree to provide such assistance reasonably consistent with the requirements of your other obligations and the Company agrees to pay your

~~91004-0040/135756924.1~~

A-5

reasonable out-of-pocket expenses incurred in connection with this assistance and such expenses will be paid in accordance with Treasury Regulation 1.409A-3(i)(1)(iv)(A).

(7) Entire Agreement . You agree that this Agreement contains all of the details of the agreement between you and the Company with respect to the subject matter hereof. Nothing has been promised to you, either in some other written document or orally, by the Company or any of its officers, employees or directors, that is not included in this Agreement.

(8) No Admission . Nothing contained in this Agreement will be deemed or construed as an admission of wrongdoing or liability on the part of Company Parties.

(9) Governing Law and Venue . All matters affecting this Agreement, including the validity thereof, are to be governed by, and interpreted and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State. The parties agree to submit to the jurisdiction of the federal and state courts sitting in Delaware, for all purposes relating to the validity, interpretation, or enforcement of this Agreement.

(10) Time to Consider; Effectiveness . Please review this Agreement carefully. We advise you to talk with an attorney before signing this Agreement. So that you may have enough opportunity to think about this offer, you may keep this Agreement for [21(if not a group termination under ADEA)][45 (if a group termination under ADEA)] days from the date of termination of your employment. You acknowledge that this Agreement was made in connection with your participation in the Plan and was available to you both prior to and immediately at the time of your termination of employment. For that reason you acknowledge and agree that the [21-day]][45-day] consideration period identified in this paragraph commenced to run, without any further action by the Company immediately upon your being advised of the termination of your employment. Consequently, if you desire to execute this Agreement, you must do so no later than _______________, 20_____. Should you accept all the terms by signing this Agreement on or before _______________, 20_____, you may nevertheless revoke this Agreement within seven (7) days after signing it by notifying ____________________ in writing of your revocation. We will provide a courtesy copy to your attorney, if you retain one to represent you and you request us to do so. If you choose to retain counsel to review and advise you concerning this Agreement that shall be considered a personal expense on your part and not be reimbursed or indemnified. If you wish to accept this Agreement, please confirm your acceptance of the terms of the Agreement by signing the original of this Agreement in the space provided below. The Agreement will become effective, and its terms will be carried out beginning on the day following the seven (7)-day revocation period (“ Release Effective Date ”).

~~91004-0040/135756924.1~~

A-6

(11) Knowing and Voluntary . By signing this Agreement you agree that you have carefully read this Agreement and understand its terms. You also agree that you have had a reasonable opportunity to think about your decision, to talk with an attorney or advisor of your choice, that you have voluntarily signed this Agreement, and that you fully understand the legal effect of signing this Agreement.

Date:
			EMPLOYEE


Date:
			CARS.COM INC.
			By:
			Title:

~~91004-0040/135756924.1~~

A-7

Exhibit 10.3

Director Award

RESTRICTED STOCK UNIT
AWARD AGREEMENT
Under the
Cars.com Inc.
Omnibus Incentive Compensation Plan

This Award Agreement, governs the grant of Restricted Stock Units (referred to herein as “Stock Units”) to the director (the “Director”) designated in the Notification of Grant Award dated coincident with this Award Agreement. The Stock Units are granted under, and are subject to, the Cars.com Inc. (the “Company”) Omnibus Incentive Compensation Plan, as amended (the “Plan”). Terms used herein that are defined in the Plan shall have the meaning ascribed to them in the Plan or, to the extent applicable, the Notification of Grant Award. If there is any inconsistency between this Award Agreement and the terms of the Plan, the Plan’s terms shall supersede and replace the conflicting terms herein.

2. Vesting Schedule . Except as otherwise provided in Sections 6 and 13, the Stock Units shall vest in accordance with the Vesting Schedule specified in the Notification of Grant Award [or the date immediately preceding the day of the 20__ Annual Meeting of Stockholders, if earlier] to the extent that the Director continues as a director of the Company until such vesting date (“Vesting Date”).

3. Dividend Units . Dividend units shall be credited to the Director with regard to the Stock Units. Dividend units shall be calculated based on the dividends paid on shares of Common Stock. Dividend units shall be deemed to be reinvested in shares of Common Stock as of the date dividends are paid on Common Stock, shall be paid to the Director at the same time and in the same form as Stock Units are paid to the Director, and are subject to the same terms and conditions as the Stock Units, including, without limitation, the same vesting requirements.

4. Delivery of Shares . The Company shall deliver to the Director a certificate or certificates, or at the election of the Company make an appropriate book-entry, for the number of shares of Common Stock equal to the number of vested Stock Units as soon as administratively practicable after the Director separates from service, but no later than 30 days from that date. A Director shall have no further rights with regard to the Stock Units once the underlying shares of Common Stock have been delivered.

5. Cancellation of Stock Units . Except as provided in Sections 6 and 13 below, all unvested Stock Units granted to the Director shall automatically be cancelled upon the Director’s separation from service, and in such event, the Director shall not be entitled to receive any shares of Common Stock in respect thereof.

-1-

Director Award

6. Death, Disability or Retirement . In the event that the Director separates from service on or prior to the Lapse Date due to death, Disability or the age o r service limitations set forth in the Company ’ s Bylaws, if any, the Director (or in the case of the Director ’ s death, the Director ’ s estate or designated beneficiary) shall be entitled to receive at the time of the Director ’ s death or separation from service the total number of shares of Common Stock in respect of such Stock Units which the Director would have been entitled to receive had the Director continued service until the Lapse Date . For purposes of this Award Agreement, Disability shall mean the Director is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

7. Non-Assignability . Stock Units may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the Stock Units be made subject to execution, attachment or similar process.

8. Rights as a Shareholder . The Director shall have no rights as a shareholder by reason of the Stock Units.

10. Effect of Plan and these Terms and Conditions . The Plan is hereby incorporated by reference into this Award Agreement, and this Award Agreement is subject in all respects to the provisions of the Plan, including without limitation the authority of the Committee in its sole discretion to adjust awards and to make interpretations and other determinations with respect to all matters relating to the applicable Notification of Grant Award, Award Agreements, the Plan and awards made pursuant thereto. This Award Agreement shall apply to the grant of Stock Units made to the Director on the date hereof and shall not apply to any future grants of Stock Units made to the Director.

11. Notices . Notices hereunder shall be in writing and if to the Company shall be addressed to the Secretary of the Company at 300 S Riverside Plaza, Suite 1000, Chicago, Illinois 60606, and if to the Director shall be addressed to the Director at his or her address as it appears on the Company’s records.

12. Successors and Assigns . The applicable Notification of Grant Award and Award Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company and, to the extent provided in Section 6 hereof, to the estate or designated beneficiary of the Director.

-2-

Director Award

13. Change in Control Provisions .

Notwithstanding anything to the contrary in this Award Agreement, the following provisions shall apply to all Stock Units granted under the Notification of Grant Award.

(a) Definitions .

As a modification to the definition set forth in Article 15 of the Plan and as used in this Award Agreement, a “Change in Control” shall mean the first to occur of the following:

(i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section, the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or one of its affiliates, or (iv) any acquisition pursuant to a transaction that complies with Sections 13(a)(iii)(A), 13(a)(iii)(B) and 13(a)(iii)(C);

(ii) individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

-3-

Director Award

Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B ) no Person (excluding any employee benefit plan (or related trust) of the Company or any corporation or entity resulting from such Business Combination) beneficially owns, directly or indirectly, 3 0% or more of, respectively, the then-outstanding shares of common stock of the corporation or entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation or entity, except to the extent that such ownership existed prior to the Business Combination, and (C ) at least a majority of the members of the board of directors of the corporation or entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

(iv) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

(b) Acceleration Provisions . In the event of the occurrence of a Change in Control, the vesting of the Stock Units shall be accelerated and, if such Change in Control constitutes a “change in control event” within the meaning of Section 409A of the Code, there shall be paid out to the Director within thirty (30) days following the effective date of the Change in Control, the full number of shares of Common Stock subject to the Stock Units. In the event of the occurrence of a Change in Control that is not a “change in control event” within the meaning of Section 409A of the Code, the vesting of the Stock Units shall be accelerated and the Stock Units shall be paid out at the Director’s separation from service.

(c) Legal Fees . The Company shall pay all legal fees, court costs, fees of experts, and other costs and expenses when incurred by the Director in connection with any actual, threatened or contemplated litigation or legal, administrative or other proceedings involving the provisions of this Section 13, whether or not initiated by the Director. The Company agrees to pay such amounts within 10 days following the Company’s receipt of an invoice from the Director, provided that the Director shall have submitted an invoice for such amounts at least 30 days before the end of the calendar year next following the calendar year in which such fees and disbursements were incurred.

14. Applicable Laws and Consent to Jurisdiction . The validity, construction, interpretation and enforceability of this Agreement shall be determined and governed by the laws of the State of Delaware without giving effect to the principles of conflicts of law. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction in Illinois and agree that such litigation shall be conducted in the courts of Cook County, Illinois or the federal courts of the United States for the Northern District of Illinois.

15. Compliance with Section 409A . This Award is intended to comply with the requirements of Section 409A, and shall be interpreted and administered in accordance with that intent (e.g., the definition of “separates from service” or “separation from service” (or similar term used herein) shall have the meaning ascribed to “separation from service” under Section 409A). If any provision of this Award Agreement would otherwise conflict with or frustrate this intent, the provision shall not apply. Solely to the extent required by Section 409A,

-4-

Director Award

if the Director is a “ specified employee ” (within the meaning of Code Section 409A) and if delivery of shares is being made in connection with the Director ’ s separation from service other than by reason of the Director ’ s death, delivery of the shares shall be delayed until six months and one day after the Director ’ s separation from service with the Company (or, if earlier than the end of the six-month period, the date of the Director ’ s death). The Company shall not be responsible or liable for the consequences of any failure of the Award to avoid taxation under Section 409A.

-5-

Exhibit 10.4

Employee Award

RESTRICTED STOCK UNIT
AWARD AGREEMENT
Under the
Cars.com Inc.
Omnibus Incentive Compensation Plan

This Award Agreement governs the grant of Restricted Stock Units (referred to herein as “Stock Units”) to the employee (the “Employee”) designated in the Notification of Grant Award dated coincident with this Award Agreement. The Stock Units are granted under, and are subject to, the Cars.com Inc. (the “Company”) Omnibus Incentive Compensation Plan, as amended (the “Plan”). Terms used herein that are defined in the Plan shall have the meaning ascribed to them in the Plan or, to the extent applicable, the Notification of Grant Award. If there is any inconsistency between this Award Agreement and the terms of the Plan, the Plan’s terms shall supersede and replace the conflicting terms herein.

1. Grant of Stock Units . Pursuant to the provisions of (i) the Plan, (ii) the individual Notification of Grant Award governing the grant, and (iii) this Award Agreement, the Company has granted to the Employee the number of Stock Units set forth on the applicable Notification of Grant Award. Each vested Stock Unit shall entitle the Employee to receive from the Company one share of the Company’s common stock (“Common Stock”) upon the earliest of the Employee’s termination of employment (but only to the extent provided in Section 14), a Change in Control (but only to the extent provided in Section 13) or the Vesting Date, as defined below. The Employee shall not be entitled to receive any shares of Common Stock with respect to unvested Stock Units, and the Employee shall have no further rights with regard to a Stock Unit once the underlying share of Common Stock has been delivered with respect to that Stock Unit.

2. Vesting Schedule . Subject to the special vesting rules set forth in Sections 6, 13 and 14, the Stock Units shall vest in accordance with the Vesting Schedule specified in the Notification of Grant Award to the extent that the Employee is continuously employed by the Company or its Subsidiaries until the vesting date (“Vesting Date”) and has not terminated employment on or before such date. An Employee will not be treated as remaining in continuous employment if the Employee’s employer ceases to be a Subsidiary of the Company.

3. No Dividend Equivalents . No dividend equivalents shall be paid to the Employee with regard to the Stock Units.

4. Delivery of Shares . The Company shall deliver to the Employee a certificate or certificates, or at the election of the Company make an appropriate book-entry, for the number of shares of Common Stock equal to the number of vested Stock Units as soon as administratively practicable (but always by the 30th day) after the earliest of the Employee’s termination of employment (but only to the extent provided in Section 14), a Change in Control (but only to the extent provided in Section 13) or the Vesting Date. The Employee shall not be entitled to receive any shares of Common Stock with respect to unvested Stock Units, and the Employee shall have no further rights with regard to a Stock Unit once the underlying share of Common Stock has been delivered with respect to that Stock Unit.

Employee Award

5. Cancellation of Stock Units .

(a) Termination of Employment . Subject to Sections 6, 13 and 14, all Stock Units granted to the Employee that have not vested as of the date of the Employee’s termination of employment shall automatically be cancelled upon the Employee’s termination of employment. Unvested Stock Units shall also be cancelled in connection with an event that results in the Employee’s employer ceasing to be a Subsidiary of the Company.

(b) Forfeiture of Stock Units/Recovery of Common Stock . Pursuant to any recoupment policy the Company establishes, the Company may forfeit an Employee’s Stock Units or recover shares of Common Stock issued in connection with a Stock Unit. In addition, the Company may assert any other remedies that may be available to the Company, including, without limitation, those available under Section 304 of the Sarbanes-Oxley Act of 2002.

6. Death and Disability . In lieu of the Vesting Schedule set forth in the Notification of Grant Award, in the event that the Employee’s employment terminates on or prior to the Stock Unit Lapse Date by reason of death or permanent disability (as determined under the Company’s Long Term Disability Plan), the Employee (or in the case of the Employee’s death, the Employee’s estate or designated beneficiary) shall become vested in a number of Stock Units equal to the product of (i) the total number of Stock Units in which the Employee would have become vested upon the Stock Unit Lapse Date had the Employee’s employment not terminated, and (ii) a fraction, the numerator of which shall be the number of full calendar months between the Grant Date and the date that employment terminated, and the denominator of which shall be the number of full calendar months from the Grant Date to the Stock Unit Lapse Date; provided such number of Stock Units so vested shall be reduced by the number of Stock Units that had previously become vested.

8. Rights as a Shareholder . The Employee shall have no rights as a shareholder by reason of the Stock Units.

9. Discretionary Plan; Employment . The Plan is discretionary in nature and may be suspended or terminated by the Company at any time. With respect to the Plan, (a) each grant of Stock Units is a one-time benefit which does not create any contractual or other right to receive future grants of Stock Units, or benefits in lieu of Stock Units; (b) all determinations with respect to any such future grants, including, but not limited to, the times when the Stock Units shall be granted, the number of Stock Units and the Vesting Dates, will be at the sole discretion of the Company; (c) the Employee’s participation in the Plan shall not create a right to further employment with the Employee’s employer and shall not interfere with the ability of the Employee’s employer to terminate the Employee’s employment relationship at any time with or without cause; (d) the Employee’s participation in the Plan is voluntary; (e) the Stock Units are not part of normal and expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payment, bonuses, long-service awards, pension or

Employee Award

retirement benefits, or similar payments; and (f) the future value of the Stock Units is unknown and cannot be predicted with certainty.

10. Effect of Plan and these Terms and Conditions . The Plan is hereby incorporated by reference into this Award Agreement, and this Award Agreement is subject in all respects to the provisions of the Plan, including without limitation the authority of the Committee in its sole discretion to adjust awards and to make interpretations and other determinations with respect to all matters relating to the applicable Notification of Grant Award, Award Agreements, the Plan and awards made pursuant thereto. This Award Agreement shall apply to the grant of Stock Units made to the Employee on the date hereof and shall not apply to any future grants of Stock Units made to the Employee.

11. Notices . Notices hereunder shall be in writing and if to the Company shall be addressed to the Secretary of the Company at 300 S Riverside Plaza, Suite 1000, Chicago, Illinois 60606, and, if to the Employee, shall be addressed to the Employee at his or her address as it appears on the Company’s records.

13. Change in Control Provisions .

Notwithstanding anything to the contrary in this Award Agreement, the following provisions shall apply to all Stock Units granted under the Notification of Grant Award.

(a) Definitions .

As a modification to the definition set forth in Article 15 of the Plan and as used in this Award Agreement, a “Change in Control” shall mean the first to occur of the following:

(i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section, the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or one of its affiliates or (iv) any acquisition pursuant to a transaction that complies with Sections 13(a)(iii)(A), 13(a)(iii)(B) and 13(a)(iii)(C);

Employee Award

nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(iii) consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation or entity resulting from such Business Combination (including, without limitation, a corporation or entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or any corporation or entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then-outstanding shares of common stock of the corporation or entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation or entity, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation or entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

(iv) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

(b) Acceleration Provisions . (i) In the event of the occurrence of a Change in Control in which the Stock Units are not continued or assumed (i.e., the Stock Units are not equitably converted into, or substituted for, a right to receive cash and/or equity of a successor entity or its affiliate), the Stock Units that have not been cancelled or paid out shall become fully vested. The vested Stock Units shall be paid out to the Employee as soon as administratively practicable on or following the effective date of the Change in Control (but in no event later than 30 days after such event); provided that the Change in Control also constitutes a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A, and such payout will not result in additional taxes under Section 409A. Otherwise, the vested Stock Units shall be paid out as soon as administratively practicable after the earlier of the Employee’s termination of employment or

Employee Award

the applicable Vesting Date for such Stock Units (but in no event later than 30 days after such events).

(ii) In the event of the occurrence of a Change in Control in which the Stock Units are continued or assumed (i.e., the Stock Units are equitably converted into, or substituted for, a right to receive cash and/or equity of a successor entity or its affiliate), the Stock Units shall not vest upon the Change in Control, provided that the Stock Units that are not subsequently vested and paid under the other provisions of this Award shall become fully vested in the event that the Employee has a “qualifying termination of employment” within two years following the date of the Change in Control. In the event of the occurrence of a Change in Control in which the Stock Units are continued or assumed, vested Stock Units shall be paid out as soon as administratively practicable after the earlier of the Employee’s termination of employment or the applicable Vesting Date for such Stock Units (but in no event later than 30 days after such events).

A “qualifying termination of employment” shall occur if the Company involuntarily terminates the Employee without “Cause” or the Employee is otherwise entitled to severance benefits under a severance plan or arrangement. For this purpose, “Cause” shall mean:

•

any material misappropriation of funds or property of the Company or its affiliate by the Employee;

•

unreasonable and persistent neglect or refusal by the Employee to perform his or her duties which is not remedied within thirty (30) days after receipt of written notice from the Company;

•

or conviction, including a plea of guilty or of nolo contendere, of the Employee of a securities law violation or a felony.

(iii) If in connection with a Change in Control, the Stock Units are assumed (i.e., the Stock Units are equitably converted into, or substituted for, a right to receive cash and/or equity of a successor entity or its affiliate), the Stock Units shall refer to the right to receive such cash and/or equity. An assumption of this Stock Unit award must satisfy the following requirements:

•

The converted or substituted award must be a right to receive an amount of cash and/or equity that has a value, measured at the time of such conversion or substitution, that is equal to the value of this Award as of the date of the Change in Control;

•

Any equity payable in connection with a converted or substituted award must be publicly traded equity securities of the Company, a successor company or their direct or indirect parent company, and such equity issuable with respect to a converted or substituted award must be covered by a registration statement filed with the Securities Exchange Commission that permits the immediate sale of such shares on a national exchange;

Employee Award

•

The vesting terms of any converted or substituted award must be substantially identical to the terms of this Award; and

•

The other terms and conditions of any converted or substituted award must be no less favorable to the Employee than the terms of this Award are as of the date of the Change in Control (including the provisions that would apply in the event of a subsequent Change in Control).

•

The determination of whether the conditions of this Section 13(b)(iii) are satisfied shall be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.

(c) Legal Fees . The Company shall pay all legal fees, court costs, fees of experts and other costs and expenses when incurred by Employee in connection with any actual, threatened or contemplated litigation or legal, administrative or other proceedings involving the provisions of this Section 13, whether or not initiated by the Employee. The Company agrees to pay such amounts within 10 days following the Company’s receipt of an invoice from the Employee, provided that the Employee shall have submitted an invoice for such amounts at least 30 days before the end of the calendar year next following the calendar year in which such fees and disbursements were incurred.

14. Employment or Similar Agreements . The provisions of Sections 1, 2, 4, 5, 6 and 13 of this Award Agreement shall not be applied to or interpreted in a manner which would decrease the rights held by, or the payments owing to, an Employee under an employment agreement, termination benefits plan or agreement or similar plan or agreement with the Company and contains specific provisions applying to Plan awards in the case of any change in control or similar event or termination of employment, and if there is any conflict between the terms of such employment agreement, termination benefits plan or agreement or similar plan or agreement and the terms of Sections 1, 2, 4, 5, 6 and 13, the employment agreement, termination benefits plan or agreement or similar plan or agreement shall control.

15. Grant Subject to Applicable Regulatory Approvals . Any grant of Stock Units under the Plan is specifically conditioned on, and subject to, any regulatory approvals required in the Employee’s country. These approvals cannot be assured. If necessary approvals for grant or payment are not obtained, the Stock Units may be cancelled or rescinded, or they may expire, as determined by the Company in its sole and absolute discretion.

16. Applicable Laws and Consent to Jurisdiction . The validity, construction, interpretation and enforceability of this Agreement shall be determined and governed by the laws of the State of Delaware without giving effect to the principles of conflicts of law. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction in Illinois and agree that such litigation shall be conducted in the courts of Cook County, Illinois or the federal courts of the United States for the Northern District of Illinois.

17. Compliance with Section 409A . This Award is intended to comply with the requirements of Section 409A so that no taxes under Section 409A are triggered, and shall be

Employee Award

interpreted and administered in accordance with that intent (e.g., the definition of “termination of employment” (or similar term used herein) shall have the meaning ascribed to “separation from service” under Section 409A). If any provision of th is Award Agreement would otherwise conflict with or frustrate this intent, the provision shall not apply. Notwithstanding any provision in this Award Agreement to the contrary and solely to the extent required by Section 409A, if the Employee is a “specified employee” within the meaning of Code Section 409A and if delivery of shares is being made in connection with the Employee’s separation from service other than by reason of the Employee’s death, delivery of the shares shall be delayed until six months and one day after the Employee’s separation from service with the Company (or, if earlier than the end of the six-month period, the date of the Employee’s death). The Company shall not be responsible or liable for the consequences of any failure of the Award to avoid taxation under Section 409A.

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, T. Alex Vetter, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Cars.com Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information related to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

[Paragraph omitted in accordance with SEC transition instructions.];

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 20, 2017	By:	/s/ T. Alex Vetter
		T. Alex Vetter
		President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Becky A. Sheehan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Cars.com Inc.;

(a)

(b)

[Paragraph omitted in accordance with SEC transition instructions.];

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 20, 2017	By:	/s/ Becky A. Sheehan
		Becky A. Sheehan
		Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cars. Com Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: June 20, 2017	By:	/s/ T. Alex Vetter
		T. Alex Vetter
		President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cars.com Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: June 20, 2017	By:	/s/ Becky A. Sheehan
		Becky A. Sheehan
		Chief Financial Officer