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Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this " Agreement ") is made
and entered into as of January 30, 2007, by and between
AUTOBYTEL INC., a Delaware corporation (the " Company "),
and MONTY HOUDESHELL (the " Executive ").
Recitals
WHEREAS, the Company desires to employ the Executive as the
Company’s Executive Vice President, Finance, effective on the
date hereof (the " Commencement Date "), and employ
Executive as Executive Vice President and Chief Financial Officer
on the day following the filing of the Company’s Annual
Report on Form 10-K for fiscal year 2006, and the Executive desires
to be employed by the Company in such capacities beginning on the
applicable dates, on the terms and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and with reference to the above
recitals, the parties hereby agree as follows:
ARTICLE 1
TERM OF EMPLOYMENT
1.1 TERM OF EMPLOYMENT. The Company hereby employs the
Executive, and the Executive hereby accepts such employment by the
Company, for a period (as such period may be extended, the "
Term ") commencing on the date hereof and expiring on the
first to occur of (a) the termination of the Executive’s
employment pursuant to Article 6 , and
(b) January 30, 2010 (the " Termination Date ").
Provided that if the Executive’s employment has not
previously been terminated pursuant to Article 6 , the
Executive’s employment pursuant to this Agreement shall
automatically renew for additional one (1) year periods unless
either party notifies the other party in writing of its desire not
to renew the Executive’s employment under this Agreement no
later than one-hundred twenty (120) days prior to the
Termination Date or any applicable anniversary of the Termination
Date (a " Non-Renewal Notice "). If the Company delivers the
Non-Renewal Notice and the Executive does not terminate his
employment prior to the end of the Term, then such non-renewal
shall be deemed to be a termination by the Company of the
Executive’s employment without Cause (as defined below) as of
immediately prior to the expiration of the Term, and
Section 6.2 shall govern such termination. If the
Executive delivers the Non-Renewal Notice and the Company does not
terminate the Executive’s employment prior to the end of the
Term, then such non-renewal shall be deemed to be a termination by
the Executive of his employment without Good Reason (as defined
below) as of immediately prior to the expiration of the Term, and
Section 6.4 shall govern such termination.
ARTICLE 2
DUTIES AND OBLIGATIONS
2.1 DUTIES. Beginning on the Commencement Date and continuing
through the date the Company files its Annual Report on Form 10-K
for fiscal year 2006 with the Securities and Exchange Commission
("SEC"), the Executive shall be employed as the Executive Vice
President, Finance of the Company, and shall have such power and
authority as is customarily held by the executive vice president of
finance of similarly situated companies. Effective on the
day following the Company’s filing of its
Annual Report on Form 10-K for fiscal year 2006 with the SEC, the
Executive will be employed as the Executive Vice President and
Chief Financial Officer of the Company and shall have such power
and authority as is customarily held by the executive vice
president and chief financial officer of similarly situated
companies. During the Term, the Executive shall: (i) devote
his full business time, attention and energies to the business of
the Company; (ii) use his best efforts to promote the
interests of the Company; (iii) perform such functions and
services as shall lawfully be directed by the Chief Executive
Officer; (iv) act in accordance with the policies and
directives of the Company; and (v) report directly to the
Chief Executive Officer.
2.2 RESTRICTIONS. Except as provided in
Section 8.2(i) , the Executive covenants and agrees
that, while actually employed by the Company, he shall not engage
in any other business duties or pursuits whatsoever, or directly or
indirectly render any services of a business or commercial nature
to any other Person (as defined below), including, but not limited
to, providing services to any business that is in competition with
or similar in nature to the Company, whether for compensation or
otherwise, without the prior written consent of the Board of
Directors (the " Board "). However, the expenditure of
reasonable amounts of time for educational, charitable, or
professional activities shall not be deemed a breach of this
Agreement, if those activities do not materially interfere with the
services required under this Agreement, and such activities shall
not require the prior written consent of the Board. Notwithstanding
anything herein contained to the contrary, this Agreement shall not
be construed to prohibit the Executive from making passive personal
investments or conducting personal business, financial or legal
affairs or other personal matters if those activities do not
materially interfere with the services required hereunder. In
addition to the foregoing, notwithstanding anything contained
herein to the contrary, this Agreement shall not be construed to
prohibit the Executive from serving as a board member with respect
to up to two privately held companies so long as any such company
is not engaged in any Competitive Business (as defined in
Section 8.2 hereof). Any other service as a director or board
member of any other corporation, company, or other business entity,
shall be subject to the approval of the Board.
ARTICLE 3
COMPENSATION
3.1 BASE SALARY. As compensation for the services to be rendered
by the Executive pursuant to this Agreement, the Company hereby
agrees to pay the Executive a base salary (the " Base Salary
") equal to at least Three Hundred Thousand Dollars ($300,000.00)
per year during the Term of this Agreement, which rate shall be
reviewed by the Board at least annually and may be increased (but
not reduced) by the Board in such amounts as the Board deems
appropriate. The Base Salary shall be paid in substantially equal
bimonthly installments, in accordance with the normal payroll
practices of the Company.
3.2 BONUS. The Board may, in its sole discretion, provide the
Executive with the opportunity to earn an annual bonus ("
Bonus ") for each fiscal year of the Company occurring in
whole or in part during the Term of sixty percent (60%) (the "
Target ") of the Executive’s Base Salary for such
fiscal year. The Bonus, if any, payable to the Executive shall be
based on such criteria as may be established by the Board, in its
sole discretion, from time to time. The Executive shall participate
in all other short term and long term bonus or incentive plans
or
arrangements in which other senior executives of
the Company are eligible to participate from time to time. Any
bonus shall be paid as promptly as practicable following the end of
the preceding fiscal year. The provisions of this
Section 3.2 shall be subject to the provisions of
Section 3.4 .
3.3 WITHHOLDING. The Company shall have the right to deduct or
withhold from the compensation due to the Executive hereunder any
and all sums required for federal income and employee social
security taxes and all state or local income taxes now applicable
or that may be enacted and become applicable during the Term.
3.4 RIGHT TO SEEK APPROVAL. The Company may provide for
shareholder approval of any performance based compensation provided
herein and may provide for the compensation committee to establish
any applicable performance goals and determine whether such
performance goals have been met.
3.5 CHANGE OF CONTROL. Notwithstanding Article 1 above,
in the event of a Change of Control (as defined in
Section 3.6 ) of the Company (a) during the Term
while the Executive remains employed by the Company, or (b) at
any time during the six (6) month period following the
termination of the Executive’s employment with the Company
(other than for Cause or without Good Reason), the Company shall
pay to the Executive, concurrently with the consummation of such
Change of Control, a lump sum amount equal to two (2) times
the sum of the Executive’s annual Base Salary plus the Bonus
(at the Target level) (the " Severance Compensation ");
provided, that the Company’s obligation to pay the Severance
Compensation shall be conditioned on the following: if the
Executive is employed by the Company at the time of the Change of
Control and the Person or Group (each as defined in
Section 3.6 .) that acquires the Company requests that
the Executive continue as an employee of the Company, the successor
entity, or any of their respective affiliates on substantially the
same (or better, from the Executive’s perspective) terms
relating to salary, bonus, and benefits as contained in this
Agreement, the Executive shall agree to continue such employment
for a period of ninety (90) days from the date of the Change
of Control or such lesser period of time as the Person or Group
shall request. If the Executive’ employment with the Company
is terminated pursuant to Section 6.2 on or after the
date Executive becomes entitled to receive the Severance
Compensation, then notwithstanding anything set forth in
Section 6.2 , the Company shall not be required to make
any payments to the Executive pursuant to Section 6.2(a
), other than continuing to provide all benefits in accordance with
Section 4 to the extent set forth in
Section 6.2(a) . If the Executive’s employment
with the Company is terminated pursuant to Section 6.2
before the Executive becomes entitled to the Severance
Compensation, then notwithstanding the foregoing, the amount of the
Severance Compensation shall be reduced by the amount to which the
Executive is entitled pursuant to Section 6.2(a) .
3.6 DEFINITION OF CHANGE OF CONTROL. For purposes of this
Agreement "Change of Control " means the occurrence of any
of the following: (i)the sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation but not
including any underwritten public offering registered under the
Securities Act of 1933 ( "Public Offering" ) or any offering
of securities under Rule 144A promulgated under the Securities Act
of 1933 ( "Rule 144A Offering" )) in one or a series of
related transactions of all or substantially all of the assets of
the Company taken as a whole to any individual, corporation,
limited liability company,
partnership, or other entity (each, a ("
Person ") or group of Persons acting together (each a "
Group ") (other than any of the Company’s wholly-owned
subsidiaries or any Company employee pension or benefits plan),
(ii) except in respect of a voluntary or involuntary filing
under applicable bankruptcy or insolvency laws, the adoption of a
plan relating to the liquidation or dissolution of the Company,
(iii) the consummation of any transactions (including any
stock or other purchase, sale, acquisition, disposition, merger,
consolidation or reorganization, but not including any Public
Offering or Rule 144A Offering)) the result of which is that any
Person or Group (other than any of the Company’s wholly-owned
Subsidiaries, any underwriter temporarily holding securities
pursuant to a Public Offering or any Company employee pension or
benefits plan), becomes the beneficial owners of more than forty
percent (40%) of the aggregate voting power of all classes of
stock of the Company having the right to elect directors under
ordinary circumstances; or (iv) the first day on which a
majority of the members of the Board are not individuals who were
nominated for election or elected to the Board with the approval of
two-thirds of the members of the Board just prior to the time of
such nomination or election.
3.7 STOCK OPTIONS. On the Commencement Date, and subject to
compliance with federal and state securities laws, the Company
shall grant to the Executive under the Inducement Stock Option
Agreement, found in Schedule I hereto, stock options to
purchase Three Hundred Thousand (300,000) shares of the
Company’s common stock at an exercise price equal to the
closing price of the Company’s common stock on the date of
grant (the " Stock Options "). The Company and the Executive
agree that the terms and conditions set forth on Schedule I
hereto are hereby deemed incorporated by reference and shall govern
the Stock Options granted under this Agreement.
ARTICLE 4
EMPLOYEE BENEFITS
4.1 BENEFITS. The Company agrees that the Executive shall be
entitled to all ordinary and customary perquisites afforded
generally to executive employees of the Company (except to the
extent employee contribution may be required under the
Company’s benefit plans as they may now or hereafter exist),
which shall in no event be less than the benefits generally
afforded to the other executive employees of the Company as of the
date hereof or from time to time, but in any event shall include
any qualified or non-qualified pension, profit sharing and savings
plans, any death benefit and disability benefit plans, life
insurance coverages, any medical, dental, health and welfare plans
or insurance coverages and any stock purchase programs that are
approved in writing by the Board, in its sole discretion.
4.2 VACATION. The Executive shall be entitled to
four (4) weeks of paid vacation for each full calendar
year of his employment hereunder. To the extent accrued vacation
time is unused in any given year, it may be carried over in
accordance with the policies of the Company then in effect.
Notwithstanding anything to the contrary, however, the Executive
shall not be entitled to carry over any unused vacation for a
period exceeding two (2) years.
ARTICLE 5
BUSINESS EXPENSES
5.1 EXPENSES. The Company shall pay or reimburse the Executive
for all reasonable and authorized business expenses incurred by the
Executive during the Term; such payment or reimbursement shall not
be unreasonably withheld so long as said business expenses have
been incurred for and promote the business of the Company and are
normally and customarily incurred by employees in comparable
positions at other comparable businesses in the same or similar
market. Notwithstanding the above, the Company shall not pay or
reimburse the Executive for the costs of any membership fees or
dues for private clubs, civic organizations, and similar
organizations or entities, unless such organizations and the fees
and costs associated therewith have first been approved in writing
by the Board, in its sole discretion.
5.2 TRAVEL COSTS. Subject to the provisions of this Article
5 , the Company shall reimburse the Executive for expenses
incurred with business-related travel. For business-related flights
over four hours, Executive shall be reimbursed for Business Class
travel expenses.
5.3 RECORDS. As a condition to reimbursement under this
Article 5 , the Executive shall furnish to the Company
adequate records and other documentary evidence required by federal
and state statutes and regulations for the substantiation of each
expenditure. The Executive acknowledges and agrees that failure to
furnish the required documentation may result in the Company
denying all or part of the expense for which reimbursement is
sought.
ARTICLE 6
TERMINATION OF EMPLOYMENT
6.1 TERMINATION FOR CAUSE. The Company may, during the Term,
without notice to the Executive, terminate the Executive’s
employment under this Agreement and discharge the Executive for
Cause (as defined below), and in such event, except as set forth in
the proviso to this Section 6.1 , neither party shall
have any rights or obligations under Article 2 , Sections
3.1 and 3.2 , or Articles 4 and 5 ;
provided , however, that (a) the Company shall pay the
Executive any amount due and owing as of the termination date
pursuant to Section 3.1 and Section 3.2
(excluding a Bonus for the year in which the termination occurs)
and Articles 4 and 5 (subject, in each case, to
Section 3.3 ), and (b) the remaining provisions of
this Agreement shall remain in full force and effect in accordance
with their terms. As used herein, the term "Cause" shall refer to
the termination of the Executive’s employment as a result of
any one or more of the following: (i) any conviction of, or
pleading of nolo contendre by, the Executive for any crime of moral
turpitude or felony; (ii) any wilfull misconduct of the
Executive which has a materially injurious effect on the business
or reputation of the Company; (iii) the gross dishonesty of
the Executive which has a materially injurious effect on the
business or reputation of the Company; or (iv) a material
failure to consistently discharge his duties under this Agreement
which failure continues for thirty (30) days following written
notice from the Company detailing the area or areas of such
failure, other than such failure resulting from his Disability (as
defined below); provided, that clause (iv) above shall
be deemed to be deleted from this Agreement and shall have no force
or effect concurrently with the consummation of a Change of
Control. For purposes of this Section 6.1, no act or failure
to act, on the part of the Executive, shall be considered "willful"
if it is done, or omitted to be done, by the Executive in good
faith or with
reasonable belief that his action or omission was
in the best interest of the Company. The Executive shall have the
opportunity to cure any such acts or omissions (other than
clause (i) above) within thirty (30) days of
the Executive’s receipt of a notice from the Company finding
that, in the good faith opinion of the Company, the Executive is
guilty of acts or omissions constituting "Cause."
6.2 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. Subject to
Section 6.4 , the Company shall have the right, at any
time in its sole and subjective discretion, to terminate the
Executive’s employment under this Agreement without Cause
upon not less than thirty (30) days prior written notice to
the Executive. The term "termination without Cause" shall
mean the termination by the Company of the Executive’s
employment for any reason other than those expressly set fo
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