EXHIBIT 10.1
EMPLOYMENT AGREEMENT
          This Employment Agreement (the “Agreement”) is entered into as of this
26th day of April, 2007 (the “Effective Date”) by and among Richard Holland
(“Employee”), Arkona, Inc. (“Employer”) and DA Acquisition Corp., a Delaware
corporation (“MergerSub”), a subsidiary of DealerTrack Holdings, Inc., a
Delaware corporation (“Parent”). This Agreement shall become effective on the
date (the “Effective Date”) that the merger of MergerSub with and into Employer
becomes effective pursuant to the terms of the Agreement and Plan of Merger by
and among the Parent, MergerSub and Employer dated as of April 26, 2007
(including exhibits attached thereto, the “Merger Agreement”) and shall be of no
force or effect if the Merger Agreement is terminated in accordance with its
terms.
     WHEREAS, in accordance with the Merger Agreement, MergerSub has agreed to
make, and Parent has agreed to cause the MergerSub to make, an offer to purchase
the outstanding capital stock of Employer on the terms and subject to the
conditions contained in the Merger Agreement;
     WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, the Parent has required that the Employee enter into this Agreement;
          WHEREAS, pursuant to the Merger Agreement, MergerSub will merge with
and into the Employer in accordance with the Delaware General Corporation Law
with the Employer surviving as a wholly owned subsidiary of Parent; and
     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
          Section 1. Term
          Employer shall continue to employ Employee and Employee agrees to
continue such employment, upon the terms and conditions hereinafter set forth,
from the Effective Date through and including the second anniversary of the
Effective Date (the “Term”).
          Section 2. Employee’s Duties
          (a) Employee shall serve as Vice President of DMS and shall report
directly to the Senior Vice President of Strategy and Development of Parent or
his or her designee. Employee’s duties shall be at least commensurate with the
title of his position. Employee shall faithfully and diligently perform his
duties to the best of Employee’s ability. Employee shall (i) devote his best
efforts, skill, and ability and full business time and attention to the
performance of his duties, subject to vacations and sick leave as provided
herein and in accordance with Employer policy, (ii) carry out his duties in a
competent and professional manner; and (iii) generally promote the interests of
Employer and its affiliates. Subject to applicable law, Employee shall not
knowingly participate in any activity that is detrimental to the interests of
Employer or any of its affiliates, including, without limitation, any public
criticism or

 

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disparagement of any type by Employee, through the media or otherwise, of
Employer or any of its affiliates or employees, except in connection with the
exercise of Employee’s rights against Employer or any of its affiliates.
          (b) Employee agrees to abide by all policies applicable to employees
of Employer promulgated from time to time by Employer and to execute Parent’s
Proprietary Information and Inventions Agreement in the form attached hereto as
Exhibit 1.
          (c) Except for such business travel as may be incident to his duties
hereunder, Employee shall perform his duties at Employer’s Salt Lake City, Utah
offices or at such other location as may be approved by Employee.
          Section 3. Compensation for Employee’s Services
          In consideration of the duties and services to be performed by
Employee pursuant to Sections 1 and 2 hereof, Employee shall receive:
          (a) Salary. Employee shall earn base salary (the “Salary”) at the
annual rate of two hundred thousand dollars ($200,000) (the “Minimum Salary”),
less all applicable federal, state, and local tax withholdings. Such Salary
shall be earned and shall be payable in periodic installments in accordance with
Employer’s payroll practices. Employer may in its discretion increase the
Salary, but may not reduce it during the Term. Employer shall conduct a review
of Employee’s Salary on an annual or more frequent basis.
          (b) Bonus. In addition to the Salary, Employee shall be eligible to
receive a cash performance bonus (“Bonus”), less all applicable federal, state,
and local tax withholdings, in each calendar year of the Term. For each calendar
year, Employee can earn a target Bonus equal to 35% of Salary based on
Employee’s attainment of budget goals and other criteria established by the
Board of Directors of Parent (the “Parent Board”) in its sole and absolute
discretion. In addition, the Parent Board may determine in any calendar year to
award a Bonus amount of up to but not more than 150% of the target bonus for
such year in its sole and absolute discretion. Employee understands and agrees
that the Bonus is established in part as an inducement for Employee to remain
employed by Employer and, therefore, that no Bonus will be deemed earned for a
given year unless Employee remains employed through December 31st of that year,
except with respect to a departure for Good Reason, as described below. In the
event that Employee’s employment terminates for any reason prior to December 31
of any year during the Term, then Employee shall not be entitled to receive
payment of any Bonus. For 2007, the Employee will receive at least a $70,000.00
bonus (the “Guaranteed Bonus”), notwithstanding the preceding sentence.
          (c) Vacation; Sick Leave. During the Term, Employee shall be entitled
to four weeks (4) weeks vacation per year, paid holidays, sick leave, and
similar benefits, to be earned and used in accordance with Employer’s policy and
procedure for other similarly situated vice presidents of Employer and its
affiliates.
          (d) Benefits. Employer shall provide Employee with the right to
participate in and receive benefits from all life, accident, disability, medical
and pension plans, and all similar

 

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benefits as are from time to time in effect and are generally made available to
similar situated vice presidents of Employer and its affiliates. The amount and
extent of benefits to which Employee is entitled shall be governed by the
specific benefit plan, as it may be amended from time to time.
          (e) Expenses. Employer shall promptly reimburse Employee for
reasonable expenses for travel, meals, lodging and similar items incurred in the
conduct of Employer’s business. Such expenses shall be reimbursed in accordance
with Employer’s expense reimbursement policies and guidelines.
          (f) Equity. Employer will recommend to the Parent Board that Employee
receive a grant of (a) stock options to purchase 10,000 shares of the common
stock and of Parent and (b) 10,000 shares of the restricted stock of Parent
pursuant to Parent’s 2005 Incentive Award Plan. The awards and the exercise
price of the stock options are subject to the approval of the Parent Board, the
terms of the 2005 Incentive Award Plan and the terms of any individual option
agreement or restricted stock agreement Employee is required to sign as a
condition to the grants. The proposed vesting schedules for the options and
restricted stock are as follows: 25% of the options will vest after one year of
employment, and 1/36 of the remaining 75% of the option shares shall vest on
each monthly anniversary of the vesting date thereafter. The restricted stock
will vest 25% on each of the first four anniversaries of the date of grant. Upon
termination of Employee’s employment for any reason , Employee will immediately
forfeit all unvested options and unvested restricted stock and have 90 days in
which to exercise any vested but unexercised options, but if Employee is
terminated for Cause (as defined below) Employee will also forfeit any and all
rights related to any vested but unexercised options and will not be permitted
to exercise such options.
          (g) Modification. Employer reserves the right to modify, suspend or
discontinue any and all of the above plans, practices, policies and programs
referenced in Sections 3(d) and (e) at any time in its discretion without
recourse by Employee so long as such action is taken generally with respect to
other vice presidents of Employer and its affiliates. Any such modification,
suspension or discontinuance of the plans, practices and policies referenced in
Section 3(e) will not apply to otherwise reimbursable expenses incurred by
Employee prior to any such modification, suspension or discontinuance.
     Section 4. Termination of Employment
          (a) Termination. Employer may terminate Employee’s employment at any
time, with or without Cause, upon written notice to Employee.
          (b) Death or Disability. Employee’s employment shall terminate
immediately upon Employee’s death. In the event Employer, in good faith,
determines that Employee is unable to perform the functions of his position due
to a Disability (as defined below), it may notify Employee in writing of its
intention to terminate Employee’s employment and Employee’s employment with
Employer shall terminate effective on the thirtieth (30th) day after receipt of
such notice by Employee. For the purposes of this Agreement, “Disability” shall
mean a physical or mental impairment that substantially limits a major life
activity of Employee and renders Employee unable to perform the essential
functions of his position even with reasonable

 

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accommodation (that does not impose an undue hardship on Employer), and which
has lasted at least (i) sixty (60) consecutive days, (ii) the balance of
Employee’s entitlement to leave, if any, under the Family and Medical Leave Act,
or other similar statute or (iii) the balance of any election period under the
Employer’s long term disability program (without regard to whether Employee is
awarded benefits under such program), whichever is longer.
          (c) Cause. Employer may immediately terminate Employee’s employment
for “Cause” by giving written notice to Employee. For purposes of this
Agreement, “Cause” shall mean:

  (1)   Employee’s commission of an act of fraud or embezzlement upon Employer
or any of its affiliates; or     (2)   Employee’s commission of any willful act
intended to injure the reputation, business, or any business relationship of
Employer or any of its affiliates; or     (3)   Employee is found by a court of
competent jurisdiction to have committed a felony; or     (4)   the refusal or
failure of Employee to perform Employee’s duties with Employer in a competent
and professional manner that is not cured by Employee within ten (10) business
days after a written demand therefor is delivered to Employee by Employer which
identifies the manner in which Employer believes that Employee has not
substantially performed Employee’s duties; provided, further, however, that if
Employer, in good faith, determines that the refusal or failure by Employee is
egregious in nature or is not susceptible of cure, then no cure period shall be
required hereunder; or     (5)   the refusal or failure of Employee to comply
with any of his material obligations under this Agreement (including any exhibit
hereto) that is not cured by Employee within ten (10) business days after a
written demand therefor is delivered to Employee by Employer which identifies
the manner in which Employer believes Employee has materially breached this
Agreement; provided, further, however, that if Employer, in good faith,
determines that the refusal or failure by Employee is egregious in nature or is
not susceptible of cure, then no cure period shall be required hereunder.

          (d) Resignation for Good Reason. Resignation for Good Reason. Employee
may “Resign for Good Reason” by giving written notice to Employer. “Resignation
for Good Reason” occurs if Employee terminates his employment with Employer
because, without Employee’s express written consent, any of the events described
below occurs during the Term.

 

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  (1)   Employer significantly diminishes Employee’s assigned duties and
responsibilities from the level or extent at which they existed before the
Effective Date. Employee must deliver written notice to Employer specifying the
diminution in assigned duties and responsibilities that he believes constitutes
Good Reason within seven days of such occurrence, and Employer must fail to
reverse the same or to take all reasonable steps to that end within thirty days
after receiving the notice.     (2)   Employer reduces Employee’s Salary below
that in effect as of the Effective Date or such greater amount as may then be in
effect.     (3)   Employer requires Employee to, or assigns duties to Employee
which would reasonably require him to relocate his home from the greater Salt
Lake City, Utah metropolitan area. (For greater clarity, if Employer moves the
Employee’s business to another location but permits Employee to remain in the
greater Salt Lake City metropolitan area, this shall not constitute “Good
Reason”.

          (e) Continuing Obligations. Employee acknowledges and agrees that any
termination under this Section 4 is not intended, and shall not be deemed or
construed, to affect in any way any of Employee’s covenants and obligations
contained in Section 6 or the Proprietary Information and Inventions Agreement,
which shall continue in full force and effect beyond such termination for any
reason.
          Section 5. Termination Obligations
          (a) Cause. If Employee’s employment is terminated by Employer for
Cause, this Agreement shall terminate without further obligations to Employee
other than for the timely payment of the sum of any unpaid salary and
reimbursable expenses and vacation accrued and owing to Employee prior to the
termination. The sum of such amounts shall hereinafter be referred to as the
“Accrued Obligations.” If it is subsequently determined by an arbitrator,
pursuant to Section 17 hereof, that Employer did not have Cause for termination,
then Employer’s decision to terminate shall be deemed to have been made without
Cause and the terms of Section 5(b) shall apply.
          (b) By Employer Other than for Cause or Death or Disability.
               (1) If Employer terminates Employee’s employment during the Term
for a reason other than Cause, or due to Employee’s death or Disability,
Employer shall have no further obligations to Employee other than for (i) the
payment of Accrued Obligations and (ii) severance pay in an amount equal to
twelve (12) months of Salary to be paid in equal installments in accordance with
Employer’s payroll practices during the period beginning on the date of the
Employee’s termination of employment.
               (2) The amounts payable pursuant to Section 5(b)(1) shall be the
only amounts Employee shall receive for termination in accordance with this
Section 5(b); provided,

 

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however, that no amounts shall be payable pursuant to section 5(b)(1)(ii) on or
following the date Employee breaches any provisions of the Proprietary
Information and Inventions Agreement.
          (c) By Employee for Good Reason.
               (1) If Employee Resigns for Good Reason during the Term, Employee
shall receive (i) the payment of Accrued Obligations, (ii) severance pay in an
amount equal to twelve (12) months of Salary to be paid in equal installments in
accordance with Employer’s payroll practices during the period beginning on the
date of Employee’s termination of employment, and (iii) notwithstanding the
provisions of Section 3(b), that portion of the Bonus payable for such year of
employment prorated from the beginning of such year through the date of
Employee’s Resignation for Good Reason, based on Employee’s target bonus for
that year.
               (2) The amounts payable pursuant to Section 5(c)(1) shall be the
only amounts Employee shall receive for termination in accordance with this
Section 5(c); provided, however, that no amount shall be payable pursuant to
Section 5(c)(1)(ii) on or following the date Employee breaches any provisions of
the Proprietary Information and Inventions Agreement.
          (d) Release/Timing of Payments. Notwithstanding anything to the
contrary contained herein, no severance payments required hereunder shall be
made by Employer until such time as Employee shall execute a general release for
the benefit of Employer and its affiliates in a form satisfactory to Employer.
Anything in this Agreement to the contrary notwithstanding, if at the time of
the Employee’s termination of employment, the Employee is considered a
“specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the
Internal Revenue Code of 1986, as amended (the “Code”), and if any payment that
the Employee becomes entitled to under this Agreement is considered deferred
compensation subject to interest and additional tax imposed pursuant to
Section 409A(a) of the Code as a result of the application of
Section 409A(a)(2)(B)(i) of the Code, then no such payment shall be payable
prior to the date that is the earliest of (i) six months after the date of the
Employee’s termination of employment, (ii) the Employee’s death, or (iii) such
other date as will cause such payment not to be subject to such interest and
additional tax, and the initial payment shall include a catch-up amount covering
amounts that would otherwise have been paid during the first six-month period
but for the application of this Section.
          (e) Exclusive Remedy. Employee agrees that the payments set forth in
this Agreement shall constitute the exclusive and sole remedy for any
termination of Employee’s employment and Employee covenants not to assert or
pursue any other remedies, at law or in equity, with respect to this Agreement.
          (f) Termination of Employee’s Office. Following the termination of
Employee’s employment for any reason, Employee shall hold no further office or
position with Employer or any of its affiliates.
          Section 6. Nonsolicitation/Non-Compete
          (a) Employee agrees that until the later of (1) the seventh
anniversary of the Effective Date and (2) the second anniversary of the
termination of his employment for any reason, he will not, directly or
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partner, member, stockholder (except as set forth below), corporate officer or
director, or in any other individual or representative capacity, engage in or
participate in any individual or entity, present or future, then providing (or
hiring Employee in order to begin to provide) dealership management systems for
vehicle dealerships that are similar to any products or services offered by
Employer or any of its affiliates. Individual ownership, for personal investment
purposes only, not to exceed one percent (1%), of the voting stock of any
publicly held corporation shall not constitute a violation hereof. Employee’s
non-compete obligations with respect to Employer’s business other than dealer
management systems shall be as set forth in the Proprietary Information and
Inventions Agreement in the form attached hereto as Exhibit A.
          (b) The restrictions contained in this Section 6 are necessary for the
protection of the business and goodwill of Employer and are considered by
Employee to be reasonable for such purpose. Further, Employee represents that
these restrictions will not prevent him from earning a livelihood during the
restricted period.
          (c) This Section 6 shall survive the termination or expiration of this
Agreement.
          Section 7. Equitable Relief
          Employee acknowledges and agrees that Employer and its affiliates will
suffer irreparable damage which cannot be adequately compensated by money
damages in the event of a breach, or threatened breach, of any of the terms and
provisions of Section 6 of this Agreement, and that, in the event of any such
breach, or threatened breach, Employer and its affiliates will not have an
adequate remedy at law. It is therefore agreed that Employer and its affiliates,
in addition to all other such rights, powers, privileges and remedies that they
may have, shall be entitled to injunctive relief, specific performance or such
other equitable relief as Employer and its affiliates may request to enforce any
of those terms and provisions and to enjoin or otherwise restrain any act
prohibited thereby, and Employee will not raise and hereby waives any objection
or defense that there is an adequate remedy available at law. Notwithstanding
the provisions of Section 17 of this Agreement, Employee agrees that Employer
and its affiliates shall be entitled to seek such injunctive relief, without
bond, in a court of competent jurisdiction and Employee hereby consents to the
jurisdiction of the state and federal courts of New York for purposes of such an
action. Employee agrees that any claim he may have against Employer or any of
its affiliates shall not constitute a defense against the issuance of any such
equitable relief. The foregoing shall not constitute a waiver of any of
Employer’s rights, powers, privileges and remedies against or in respect of a
breaching party or any other person or thing under this Agreement, or applicable
law.
          Section 8. Notice
          Any notice, request, demand or other communication hereunder shall be
in writing, shall be delivered by hand or sent by registered or certified mail
or by reputable overnight delivery service, postage prepaid, to the addressee at
the address set forth below (or at such other address as shall be designated
hereunder by written notice to the other party hereto) and shall be deemed
conclusively to have been given when actually received by the addressee.

 

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          All notices and other communications hereunder shall be addressed as
follows:
If to Employee at the address set forth in the Employer’s payroll records.
With a copy to:
Ronald G. Moffitt
Stoel Rives LLP
201 S. Main Street, Suite 1100
Salt Lake City, UT 84111
If to Employer:
10757 South River Front Parkway
Suite 400
South Jordan, Utah 84095
Telecopier No.: 801-486-3575
Attention: President
With a copy to:
General Counsel
DealerTrack Holdings, Inc.
1111 Marcus Avenue, Suite M04
Lake Success, NY 11042
and to:
Goodwin Procter LLP
Exchange Place
Boston, MA 02109
Attention: Kenneth J. Gordon, Esq.
or to such other address as either party shall have furnished to the other in
writing in accordance herewith.
          Section 9. Legal Counsel
          In entering into this Agreement, the parties represent that they have
relied upon the advice of their attorneys, who are attorneys of their own
choice, and that the terms of this Agreement have been completely read and
explained to them by their attorneys, and that those terms are fully understood
and voluntarily accepted by them.
          Section 10. Section and Other Headings
          The section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.

 

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          Section 11. Governing Law
          This Agreement has been executed and delivered, and shall be governed
by and construed in accordance with the applicable laws pertaining, in the State
of New York, without regard to conflicts of laws principles.
          Section 12. Severability
          In the event that any term or provision of this Agreement shall be
finally determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by a governmental authority having jurisdiction and
venue, that determination shall not impair or otherwise affect the validity,
legality or enforceability, to the maximum extent permissible by law, (a) by or
before that authority of the remaining terms and provisions of this Agreement,
which shall be enforced as if the unenforceable term or provision were deleted,
or (b) by or before any other authority of any of the terms and provisions of
this Agreement.
          Section 13. Counterparts
          This Agreement may be executed in two counterpart copies of the entire
document or of signature pages to the document, each of which may be executed by
one of the parties hereto, but all of which, when taken together, shall
constitute a single agreement binding upon both of the parties hereto.
          Section 14. Benefit
          This Agreement shall be binding upon and inure to the benefit of the
respective parties hereto and their legal representatives, successors and
assigns. Insofar as Employee is concerned, this Agreement, being personal,
cannot be assigned; provided, however, that should Employee become entitled to
payment pursuant to Section 5 hereof, he may assign his rights to such payment
to his legal representatives, successors, and assigns. Without limiting the
generality of the foregoing, all representations, warranties, covenants and
other agreements made by or on behalf of Employee in this Agreement shall inure
to the benefit of the successors and assigns of Employer.
          Section 15. Modification
          This Agreement may not be amended or modified other than by a written
agreement executed by all parties hereto.
          Section 16. Entire Agreement
          This Agreement and the Proprietary Information and Inventions
Agreement contain the entire agreement of the parties and supersedes all other
representations, warranties, agreements and understandings, oral or otherwise,
among the parties with respect to the matters contained herein, including any
prior employment agreements between Employee and Employer or any affiliate of
Employer. If any portion or provision of this Agreement shall to any extent be
declared illegal or unenforceable by a court of competent jurisdiction, then the
remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as

 

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to which it is so declared illegal or unenforceable, shall not be affected
thereby, and each portion and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law. In the event that any
portion or provision of this Agreement (including, without limitation, any
portion or provision of the covenants set forth in Section 6) is determined by a
court of competent jurisdiction to be unenforceable or unreasonable by reason of
excessive or unreasonable geographic scope, duration or functional scope of the
activities precluded, such provision will be deemed to extend only over the
maximum geographic scope, duration and functional scope, as to which it may be
reasonable and enforceable and shall be so enforced.
          Section 17. Arbitration
          (a) Subject to the Employer’s right to seek injunctive relief pursuant
to Section 7 above and Section 6 of the Proprietary Information and Inventions
Agreement, Employee agrees that any dispute or controversy arising out of,
relating to, or in connection with this Agreement or the termination thereof, or
the interpretation, validity, construction, performance, breach, or termination
thereof, shall be settled by expedited, binding arbitration to be held in New
York, New York in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association (the
“Rules”). The arbitrator may grant injunctions or other relief in such dispute
or controversy. The decision of the arbitrator shall be final, conclusive and
binding on the parties to the arbitration. Judgment may be entered on the
arbitrator’s decision in any court having jurisdiction. The arbitrator may award
the prevailing party its reasonable attorney’s fees. This Section 17 is
specifically enforceable.
          (b) The arbitrator shall apply New York law to the merits of any
dispute or claim, without reference to rules of conflicts of law. The
arbitration proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law.
          (c) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EMPLOYEE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EMPLOYEE IS
AGREEING TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH
THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,
BREACH OF TERMINATION THEREOF, TO BINDING ARBITRATION, AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL AND RELATES TO
THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE
RELATIONSHIP INCLUDING, BUT NOT LIMITED TO, STATUTORY DISCRIMINATION CLAIMS.
          Section 18. Representations and Warranties of Employee
          In order to induce Employer to enter into this Agreement, Employee
represents and warrants to Employer, to the best of his knowledge after the
review of his personnel files, that: (a) the execution and delivery of this
Agreement by Employee and the performance of his obligations hereunder will not
violate or be in conflict with any fiduciary or other duty, instrument,
agreement, document, arrangement or other understanding to which Employee is a
party or by which he is or may be bound or subject; and (b) Employee is not a
party to any

 

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instrument, agreement, document, arrangement or other understanding with any
person (other than Employer) requiring or restricting the use or disclosure of
any confidential information or the provision of any employment, consulting or
other services.
          Section 19. Waiver of Breach
          Except as may specifically provided herein, the failure of a party to
insist on strict adherence to any term of this Agreement on any occasion shall
not be considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any term of this Agreement. Any
waiver hereto must be in writing.
          Section 20. Section 409A.
          The parties acknowledge and agree that, to the extent applicable, this
Agreement shall be interpreted in accordance with Section 409A of the Code and
Department of Treasury regulations and other interpretive guidance issued
thereunder, including without limitation any such regulations or other guidance
that may be issued after the Effective Date. Notwithstanding any provision of
this Agreement to the contrary, in the event that Employer determines that any
amounts payable hereunder will be immediately taxable to the Employee under
Section 409A of the Code and related Department of Treasury guidance, Employer
may (a) adopt such amendments to this Agreement and appropriate policies and
procedures, including amendments and policies with retroactive effect, that
Employer determines necessary or appropriate to preserve the intended tax
treatment of the benefits provided by this Agreement and/or (b) take such other
actions as Employer determines necessary or appropriate to comply with the
requirements of Section 409A of the Code and related Department of Treasury
guidance, including such Department of Treasury guidance and other interpretive
materials as may be issued after the Effective Date.
[signature page follows]

 

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          IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.

            EMPLOYEE:
      /s/ Richard Holland                     EMPLOYER:
      By:   /s/ Alan Rudd         Name:   Alan Rudd        Title:   Chief
Executive Officer        DA ACQUISITION CORP.:
      By:   /s/ Mark O'Neil         Name:   Mark O'Neil        Title:  
President     

 

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Exhibit 1
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
          As a condition of my employment or continued employment, as
applicable, with Arkona, Inc., a wholly-owned subsidiary of DealerTrack
Holdings, Inc., a Delaware corporation (together with Employer, the “Company”),
and in consideration thereof, my receipt of the compensation now and hereafter
paid to me by the Company and for other good and valuable consideration, the
receipt of which is hereby acknowledged, I agree to the following to the extent
allowed by law:
     1. Proprietary Information.
          1.1 Restrictions on Proprietary Information. I acknowledge that
(i) because of my responsibilities at the Company, I will help develop and
create, and/or will be exposed to, the Company’s business strategies,
information on customers, clients and web site design and other valuable
confidential, proprietary and trade secret information of the Company (as more
fully defined below, “Proprietary Information”), (ii) in such capacity I will
become familiar with procedures and methods by which the Company develops and
conducts its business, (iii) I will have access to the Company’s clients,
channels for developing clients, and other Proprietary Information, (iv) it
would be unfair to the Company if I were to appropriate to myself or others the
benefits of the Company’s resources expended to develop such business
relationships, (v) it would be unfair to the Company if I were to appropriate to
myself or others the benefits of the business, personnel and other Proprietary
Information which the Company has developed in the conduct of its business, and
(vi) it is therefore fair that reasonable restrictions should be placed on
certain of my activities during my employment and after my employment with the
Company terminates. I agree to hold in strict confidence and in trust for the
sole benefit of the Company all Proprietary Information that I may have access
to, learn, observe or obtain during the course of my employment with the Company
and, except as required in my authorized duties on behalf of the Company, will
not disclose any Proprietary Information, directly or indirectly, to anyone
outside of the Company, or use, copy, publish, summarize, or remove from Company
premises such information (or remove from the premises any other property of the
Company) unless I am expressly authorized in writing by the President of the
Company. I further agree that I will promptly advise the Company of any
unauthorized use, removal, copy or disclosure of the Proprietary Information by
anyone, including myself. I understand that if I disclose, copy, remove or
misuse any Proprietary Information in violation of this Proprietary Information
and Inventions Agreement (this “Agreement”) or threaten or cause damage to the
Company, I will be responsible to and will indemnify the Company. I will not use
the Company’s name outside the scope of my employment, without the Company’s
prior written consent. I also agree not to use any material obtained or prepared
in connection with my employment at the Company for any purpose not related to
the Company’s business(es).
          1.2 Definition of Proprietary Information. “Proprietary Information”
means all information and any idea in whatever form, tangible or intangible,
recorded or otherwise, and

 

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without regard to the form of recordation or the state of completion, whether
disclosed to or learned or developed by me, pertaining in any manner to the
business of the Company, any parent(s) or stockholders, and any present or
future direct or indirect affiliations or subsidiaries of such entities
(hereinafter, included in the reference to “Company”, if the context permits)
including without limitation: (i) client lists, client prospects, business
development information, client data proprietary, financial standing, investment
holdings and other personal financial data; (ii) company lists, profiles and
reports; (iii) training and research materials and methodologies; (iv)
structure, operations, pricing, financial and personnel information;
(v) information systems design and procedures; (vi) computer technology designs,
hardware configuration systems, and software designs and implementations;
(vii) information databases, devices, data processing programs, interactive
procedures, navigation, functionality, web site design, tests, analysis and
studies developed by or for the benefit of the Company; (viii) plans, designs,
inventions, formulas, research and technology developed by or for the benefit of
the Company; (ix) business information and business secrets of the Company and
its clients; (x) trade secrets of the Company; (xi) plans, prospects, policies,
practices, and procedures of the Company which are not generally known in the
industry; (xii) licenses and agreements of any nature; and (xiii) all other
proprietary and confidential information of every nature and source. Proprietary
Information does not include information which: (A) is or becomes generally
available to the public through no breach of this Agreement or any other
agreement to which the Company is a party; (B) was received from a third party
free to disclose such information without restriction; (C) is approved for
release in writing by the President of the Company, subject to whatever
conditions are imposed by such person; or (D) is required by law or regulation
to be disclosed, but only to the extent necessary and only for the purpose
required.
               1.2.1 Unfair Competitive Practices. I acknowledge and agree that
the pursuit of the activities forbidden by this Agreement would necessarily
involve the use or disclosure of Proprietary Information in breach of the
preceding subsections, but that proof of such a breach would be extremely
difficult to establish. To forestall any such disclosure, use, and breach, and
in consideration of my employment or continued employment, as applicable, with
the Company, I agree that during the period of my employment and for a period of
two (2) years after my employment ends for any reason, I shall not, directly or
indirectly, solicit, induce or influence (i) any person employed by the Company
to terminate his or her employment (without the express written approval of the
President of the Company) or (ii) any Company customers who were serviced by me
or whose names became known to me while I was employed by the Company.
               1.2.2 Non-Competition. While I am an employee of the Company and
for a period of two (2) years after my employment ends for any reason, I will
not, directly or indirectly, either as an employee, employer, agent, principal,
partner, member, stockholder (except as set forth below), corporate officer or
director, or in any other individual or representative capacity, engage in or
participate in any Competitive Company. Individual ownership, for personal
investment purposes only, not to exceed one percent (1%), of the voting stock of
any publicly held corporation shall not constitute a violation hereof.
“Competitive Company” shall mean any individual or entity, present or future,
then providing any of the following product or services: (1) a multi-finance
source auto finance portal, (2) electronic

 

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contracting for auto finance or lease transactions, other than at a financing
source entity that purchases electronic contracts or leases from auto dealers,
(3) auto lease, retail and/or balloon payment comparison or desking tools or
(4) any other sales, inventory or finance and insurance-related products or
services for auto dealerships similar to any products or services offered by the
Company or any of its affiliates. I understand that in the event of a conflict
or inconsistency between this provision and a similar provision in any
employment agreement I may have with the Company or any affiliate of the
Company, the employment agreement shall govern.
               1.2.3 Third-Party Information. I acknowledge that the Company has
received and in the future will receive from third parties their confidential
information subject to a duty on the Company’s part to maintain the
confidentiality of this information and to use it only for certain limited
purposes. I agree that I owe the Company and these third parties, during and
after my employment with the Company, a duty to hold all such confidential
information in the strictest confidence and not to disclose or use it, except as
necessary to perform my obligations hereunder and as is consistent with the
Company’s agreement with third parties.
               1.2.4 Prior Actions and Knowledge. Except as disclosed on
Schedule A hereto or on Schedule A of any prior proprietary information and
inventions agreement I may have signed and delivered to the Company, I did not
know anything about the Company’s business or Proprietary Information prior to
the commencement of my employment with the Company, other than information I
learned from the Company in the course of being hired and employed.
     2. Invention Ideas.
          2.1 Defined; Statutory Notice. I agree that during the term of my
employment, there will be certain restrictions on my development of technology,
ideas, and inventions, collectively referred to in this Agreement as “Invention
Ideas.” The term “Invention Ideas” means any and all ideas, processes,
trademarks, service marks, inventions, technology, computer programs, original
works of authorship, writings, designs, formulas, discoveries, patents,
copyrights, navigation, functionality, web site design, and all improvements,
rights, business concepts, and claims related to the foregoing that are
conceived, developed, or reduced to practice, relating to any activities of the
Company that have been or will be conceived or developed by me alone or with
others (a) during the term of my employment, including, without limitation, my
employment by Employer prior to the date hereof, whether or not conceived or
developed during regular business hours, and whether or not conceived before, on
or after the date hereof or (b) if based on Proprietary Information, after
termination of my employment.
          2.2 Records of Invention Ideas. I agree to maintain adequate and
current written records on the development of all Invention Ideas and to
disclose promptly to the Company all Invention Ideas and relevant records, which
records will remain the sole property of the Company. I further agree that all
information and records pertaining to any idea, process, trademark, service
mark, invention, technology, computer program, original work of authorship,
design, formula, discovery, patent, or copyright that I do not believe to be an
Invention Idea, but is conceived, developed, or reduced to practice by me (alone
or with others) during my period of employment, shall be promptly disclosed to
the Company (such disclosure to be received in

 

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confidence). Notwithstanding the preceding sentence, the Company shall have the
right to examine such information to determine if it believes the idea, process,
or invention, etc., is an Invention Idea subject to this Agreement.
          2.3 Assignment. Subject to Section 2.4, I agree to assign to the
Company, without further consideration, my entire right, title, and interest
(throughout the United States and in all foreign countries), free and clear of
all liens and encumbrances, in and to each Invention Idea, which shall be the
sole property of the Company, and, to the maximum extent permitted by applicable
law, shall be deemed works made for hire. In the event any Invention Idea shall
be deemed by the Company to be patentable or otherwise registrable, I will
assist the Company (at its expense) in obtaining letters patent or other
applicable registrations thereon and I will execute all documents and do all
other things (including testifying at the Company’s expense) necessary or proper
to obtain letters patent or other applicable registrations thereon and to vest
the Company with full title thereto. Should the Company be unable for any reason
to secure my signature on any document necessary to apply for, prosecute,
obtain, or enforce any patent, copyright, trademark, tradename, servicemark or
other right or protection relating to any Invention Idea, whether due to my
mental or physical incapacity or any other cause, I hereby irrevocably designate
and appoint the Company and each of its duly authorized officers and agents as
my agent and attorney-in-fact, to act for and in my behalf and stead, to execute
and file any such document, and to do any other lawfully permitted acts to
further the prosecution, issuance, and enforcement of patents, copyrights,
trademarks, tradenames, servicemarks or other rights or protections with the
same force and effect as if executed and delivered by me. The power-of-attorney
granted pursuant to this Section 2.3 is coupled with an interest and is
irrevocable.
          2.4 Exclusions. To avoid future confusion, I have listed on Schedule A
hereto or on a Schedule A of a prior proprietary information and inventions
agreement signed by me and delivered to the Company a description of all
Invention Ideas, if any, developed or conceived by me prior to the commencement
of my employment with the Company in which I claim any ownership or other right.
I understand that, by not listing an Invention Idea, I am acknowledging that the
Invention Idea was not developed or conceived before commencement of my
employment with the Company.
          2.4.1 For California Employees Only. I recognize that this Agreement
does not require assignment of any Invention Ideas, which qualifies fully for
protection under Section 2870 of the California Labor Code, which provides as
follows:
(a) Any provision in an employment agreement which provides that an employee
shall assign, or offer to assign, any of his or her rights in an invention to
his or her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer’s equipment,
supplies, facilities, or trade secret information except for those inventions
that either:
(i) Relate at the time of conception or reduction to practice of the invention
to the employer’s business, or actual or demonstrably anticipated research or
development of the employer; or

 

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(ii) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.
          2.5 License for Other Inventions. If, in the course of my employment
with the Company, I incorporate into Company property an Invention Idea owned by
me or in which I have an interest, the Company is granted a nonexclusive,
royalty-free, irrevocable, perpetual, worldwide license to make, modify, use and
sell my Invention Idea as part of and in connection with the Company property.
          2.6 Patent and Copyright Registration. I agree to assist the Company,
or its designee, at the Company’s expense, in every proper way to secure the
Company’s rights in the Invention Ideas and any copyrights, patents, mask work
rights or other intellectual property rights relating thereto in any and all
countries, including the disclosure to the Company of all pertinent information
and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments which the Company
shall deem necessary in order to apply for and obtain such rights and in order
to assign and convey to the Company, its successors, assignees, and nominees the
sole and exclusive rights, title and interest in and to such Invention Ideas,
and any copyrights, patents, mask work rights or other intellectual property
rights relating thereto. I further agree that my obligation to execute or cause
to be executed, when it is in my power to do so, any such instrument or papers
shall continue after the termination of this Agreement.
     3. Former or Conflicting Agreements. I recognize that the Company desires
not to improperly obtain or use any unpublished document, proprietary
information or trade secrets of any former employer or other person or entity.
During my employment with the Company, I will not bring onto the premises of the
Company, disclose to the Company, or use or induce the Company to use, any
proprietary information, unpublished document or trade secret in any form of
such former employer or other person or entity. I represent that I have returned
all property of my former employer (including proprietary information) to my
former employer and my performance of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I certify that I
have no outstanding agreement or obligation that is in conflict with any of the
provisions of this Agreement, or that would preclude me from complying with the
provisions hereof, and I agree not to enter into any written or oral agreement
in conflict herewith.
     4. Termination.
          4.1 Returning Company Property. I agree that, at the time of leaving
the employ of the Company, or at any other time the Company so requests, I will
immediately deliver to the Company (and will not keep in my possession, make
copies, recreate or deliver to anyone else) all property belonging to the
Company and all material containing or constituting Proprietary Information and
Invention Ideas, including any copies in my possession or control, whether

 

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prepared by me or others. If I become legally compelled by an order of a court
or governmental agency to disclose any Proprietary Information, I will provide
the President of the Company with prompt written notice, so that Company may
timely assert whatever interest either or both have in the information prior to
disclosure by me.
          4.2 Termination Certificate. In the event of the termination of my
employment, I agree to sign and deliver the Termination Certificate attached
hereto as Schedule B.
          4.3 Subsequent Employers. After the termination of my employment with
the Company, I will not enter into any agreement that conflicts with my
obligations under this Agreement and will inform any subsequent employers of my
obligations under this Agreement.
     5. Nature of Agreement. This is not an employment contract. Subject to the
terms of any written employment agreement between the Company and myself, the
relationship between myself and the Company is one of “employment-at-will,”
meaning that I may quit at any time with or without cause, and the Company may
terminate my employment at any time with or without cause. Failure to enforce
any provision of this Agreement shall not constitute a waiver of any other
provision hereof.
     6. Equitable Relief. I recognize that any violation of this Agreement could
cause the Company irreparable harm and significant injury, the amount of which
may be extremely difficult to estimate, thus, making any remedy at law or in
damages inadequate. Therefore, I agree that the Company shall have the right to
obtain from any court of competent jurisdiction a temporary or permanent order
or injunction, without the posting of a bond, restraining any breach or
threatened breach of this Agreement and for any other relief the Company deems
appropriate. This right shall be in addition to any other remedy available to
the Company in law or equity.
     7. Governing Law and Jurisdiction; Waiver of Jury Trial. This Agreement is
to be construed in accordance with and governed by the internal laws of the
State of New York without giving effect to any choice of law rule that would
cause the application of the laws of any jurisdiction other than the internal
laws of the State of New York to the rights and duties of the parties. I
expressly consent to the jurisdiction of New York courts and waive my right to
trial by jury with respect to this Agreement.
     8. Severability. If any provision of this Agreement, or As application to
any person, place, or circumstance, is held by an arbitrator or a court of
competent jurisdiction to be invalid, unenforceable, or void, such provision
shall be enforced to the greatest extent permitted by law, and the remainder of
this Agreement and such provision as applied to other persons, places, and
circumstances shall remain in full force and effect.
     9. Entire Agreement. The terms of this Agreement and the Employment
Agreement by and among the Company and me and the other parties named therein
dated as of April ___, 2007 (the “Employment Agreement”) are the final
expression of my agreement with respect to the subject matter hereof. This
Agreement and the Employment Agreement supersedes, as of the date hereof on a
going-forward basis, all other prior and contemporaneous agreements and

 

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statements, whether written or oral, express or implied, pertaining to the
subject matter of this Agreement, and they may not be contradicted by evidence
of any prior or contemporaneous statements or agreements. Notwithstanding the
foregoing, it is understood and agreed that the Schedule A of any prior
proprietary and inventions agreement I may have signed and delivered to the
Company is incorporated by reference into this Agreement. Any proprietary
information and inventions agreements or similar agreements signed by me and
delivered to the Company prior to the date hereof shall continue to govern with
respect to periods of time prior to the date hereof. Unless specifically set
forth in this Agreement, no representations, warranties or covenants have been
made or agreed to by the Company and no agent of the Company has been authorized
to make or agree to any such representations, warranties or covenants. To the
extent that the practices, policies, or procedures of the Company, now or in the
future, apply to me and are inconsistent with the terms of this Agreement, the
provisions of this Agreement shall control. If any portion or provision of this
Agreement shall to any extent be declared illegal or unenforceable by a court of
competent jurisdiction, then the remainder of this Agreement, or the application
of such portion or provision in circumstances other than those as to which it is
so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law. In the event that any portion or provision of
this Agreement (including, without limitation, any portion or provision of the
covenants set forth in Sections 1.2.1 and 1.2.2 are determined by a court of
competent jurisdiction to be unenforceable or unreasonable by reason of
excessive or unreasonable geographic scope, duration or functional scope of the
activities precluded, such provision will be deemed to extend only over the
maximum geographic scope, duration and functional scope, as to which it may be
reasonable and enforceable and shall be so enforced.
     10. Amendment/Waivers. This Agreement can be amended, modified,
supplemented or terminated only by a written agreement signed by both parties.
No failure to exercise or delay by the Company in exercising any right under
this Agreement shall operate as a waiver thereof.
     11. Assignment. I agree that the Company may assign to another person or
entity any of its rights under this Agreement, including, without limitation,
any successor in interest to the Company or its business operations. I agree
that neither this Agreement nor my obligations under this Agreement may be
assigned by me to any other party. This Agreement shall be binding upon me and
my heirs, executors, administrators, and successors, and shall inure to the
benefit of the Company’s successors and assigns.
     12. This Agreement shall survive my employment relationship with the
Company indefinitely.
[Remainder of Page Intentionally Left Blank]

 

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          I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY NOTED ON SCHEDULE A TO THIS AGREEMENT ANY PROPRIETARY INFORMATION,
IDEAS, PROCESSES, INVENTIONS, TECHNOLOGY, WRITINGS, PROGRAMS, DESIGNS, FORMULAS,
DISCOVERIES, PATENTS, COPYRIGHTS, OR TRADEMARKS, OR IMPROVEMENTS, RIGHTS, OR
CLAIMS RELATING TO THE FOREGOING, THAT I DESIRE TO EXCLUDE FROM THIS AGREEMENT.
          This Proprietary Information and Inventions Agreement is made and
entered into as of ___ ___, 2007.

     
 
   
 
  (Employee’s Signature)
 
   
 
  (Employee’s Name)

 

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Schedule A
1. Proprietary Information. Except as set forth below, I acknowledge that, prior
to the commencement of my employment with the Company, I knew nothing about the
business or Proprietary Information of the Company, other than information I
learned from the Company in the course of being hired: N/A
2. Reserved Inventions. Except as set forth below, there are no ideas,
processes, inventions, technology, writings, programs, designs, formulas,
discoveries, patents, copyrights, or trademarks, or any claims, rights, or
improvements to the foregoing, developed or conceived by me prior to the
commencement of my employment with the Company that I wish to exclude from the
operation of this Agreement (whether conceived solely by me or jointly with
others): N/A

 

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Confidential Draft – April 6, 2007
Schedule B
Termination Certificate
          This is to certify that I do not have in my possession, nor have I
failed to return, any property of ___. (the “Company”), including without
limitation, devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items.
          I further certify that I have complied with all the terms of the
Proprietary Information and Inventions Agreement(s) (the “Agreement(s)”) signed
by me, including, without limitation, the disclosures on Schedule A to the
Agreement(s), the prompt disclosure to Company of all Invention Ideas (as
defined in the Agreement) and relevant records, and that I did not engage in any
unauthorized use, removal, copy or disclosure of Proprietary Information (as
defined in the Agreement(s)).
          I further agree that, in compliance with the Agreement(s), I will
preserve as confidential all of the Company’s Proprietary Information, including
without limitation, trade secrets, confidential knowledge, data or other
proprietary information relating to products, processes, know-how, designs,
formulas, developmental or experimental work, computer programs, data bases,
other original works of authorship, customer lists, business plans, financial
information or other subject matter pertaining to any business of the Company or
any of its employees, clients, consultants or licensees.

         
Date:
       
 
       
 
      (Employee’s Signature)