Exhibit 10.51

October 1, 2002

Mr. Andrew F. Donchak
233 Avenida La Cuesta
San Clemente, CA 92672

Dear Mr. Donchak:

Autobytel Inc. (the “Company”) and Andrew F. Donchak, Executive Vice President
and Chief Marketing Officer (“Executive”) hereby agree as follows:

In the event of termination of the Executive by the Company without Cause (as
defined in Schedule I attached hereto) or by the Executive for Good Reason (as
defined in Schedule I attached hereto), the Executive shall be entitled to a
severance payment equal to one year’s base salary at the highest rate paid to
Executive while employed by the Company and Benefits (as defined in Schedule I
hereto) for twelve months following termination.

Upon a Change of Control (as defined in Schedule I hereto), the employment of
Executive, to the extent Executive is employed by the Company on the date of
such Change of Control, shall extend for two years from such date.

In the event the employment of Executive is terminated during the six (6) month
period immediately prior to, or the first twelve (12) months following a Change
of Control either:  (i) by Executive for Good Reason; or (ii) by the Company
other than for Cause, Disability (as defined in Schedule I hereto) or death (it
being understood that termination upon death or Disability shall not require any
payments to Executive under this letter agreement), then the payments in the
second paragraph hereof shall not apply and the Company shall, within thirty
(30) days of notice of termination to Executive, pay to Executive in a single
lump-sum payment the base salary that would have been received by Executive if
he had remained employed by the Company for two (2) years (calculated at the
highest base salary rate during his employment with the Company), and shall
continue to pay Benefits for twelve months.

The terms and conditions of the stock option agreements between the Company and
Executive entered into prior to the date hereof shall incorporate the terms and
conditions set forth on Schedule I hereto, which Schedule I terms and conditions
shall govern such stock options, including to the extent of any conflict with
the terms and conditions of the stock option agreements entered into prior to
the date hereof.

Additionally, Executive will be eligible to participate in the Company’s health
insurance plan and 401(k) plan, and other benefit plans each in accordance with
the terms of such plan. Executive shall be entitled to plan perquisites and
benefits afforded to the other senior officers of the Company, in each case, in
accordance with the plans governing such programs.

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The provisions of this letter are severable which means that if any part of this
letter is legally unenforceable, the other provisions shall remain fully valid
and enforceable.  This letter sets forth our complete understanding regarding
the matters addressed herein and supersedes all previous agreements or
understandings between Executive and the Company, whether written or oral,
including, without limitation, that certain letter agreement, dated July 28,
2000.

No modification, waiver, amendment, discharge or change of this letter, shall be
valid unless the same is in writing and signed by the party against whom
enforcement of such modification, waiver, amendment, discharge, or change is
sought.

Any controversy or claim arising out of, or related to, this letter, or the
breach thereof, shall be settled by binding arbitration in the City of Irvine,
California, in accordance with the rules then in effect of the American
Arbitration Association, and the arbitrator’s decision shall be binding and
final, and judgment upon the award rendered may be entered in any court having
jurisdiction thereof.  Each party hereto shall pay its or their own expenses
incident to the negotiation, preparation and resolution of any controversy or
claim arising out of, or related to, this letter, or the breach thereof,
provided, however, the Company shall pay and be solely responsible for any
attorneys’ fees and expenses and court or arbitration costs incurred by the
Executive as a result of a claim that the Company has breached or otherwise
failed to perform this letter or any provision hereof to be performed by the
Company if the Executive prevails in the contest in whole or in part.

This letter shall be construed and enforced in accordance with the laws of the
State of California.

Please execute a copy of this letter confirming your acceptance of and agreement
with the foregoing.

 

Sincerely,

 

 

 

 

 

/s/ JEFFREY A. SCHWARTZ

 

 

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Jeffrey A. Schwartz
President and CEO

 

AGREED AND ACCEPTED:
this 1st day of October, 2002.

/s/ ANDREW F. DONCHAK

 

 

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Andrew F. Donchak

 

 

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Schedule I

          (a)          Termination for Cause.  As of the date of the Executive’s
termination for Cause (as defined below), any unvested or unexercised portion of
any Option shall terminate immediately and shall be of no further force or
effect. As used herein, the term “for 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 or felony; (ii) any gross willful 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) 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. For purposes hereof, 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 item (i) above)
within fifteen (15) days of the Executive’s receipt of notice from the Company
finding that, in the good faith opinion of the Company, the Executive is guilty
of acts or omissions constituting “Cause”.

          (b)          Termination Without Cause or for Good Reason.  As of the
date of the Executive’s termination by the Company without Cause or by the
Executive for Good Reason (as defined below), any unvested portion of any Option
shall become immediately and fully vested and all Options, including any
previously vested but unexercised portions of any Options, shall be exercisable
from such termination of employment until the date that is two (2) years
following the termination date.  The term “termination without Cause” shall mean
the termination of the Executive’s employment for any reason other than those
expressly set forth in the definition “for Cause” above, or no reason at all,
and shall also mean the Executive’s decision to terminate his employment with
the Company by reason of any act, decision or omission by the Company or the
Board that: (A) materially modifies, reduces, changes, or restricts the
Executive’s salary, bonus opportunities, options or other compensation benefits
or perquisites, or the Executive’s authority, functions, services, duties,
rights, and privileges as, or commensurate with the Executive’s position as,
Executive Vice President and Chief Marketing Officer of the Company; (B)
relocates the Executive without his consent from the Company’s offices located
at 18872 MacArthur Boulevard, Irvine, California, 92612-1400 to any other
location in excess of fifty (50) miles beyond the geographic limits of Irvine,
California; (C) deprives the Executive of his titles and positions of Executive
Vice President and Chief Marketing Officer of the Company; or (D) involves or
results in any failure by the Company to comply with any provision of the
Employment Agreement or any Option, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive (each a
“Good Reason”).

          (c)          Termination due to Death or Disability.  As of the date
of the Executive’s termination due to death or Disability (as defined below),
any unvested portion of any Option

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shall become immediately and fully vested and all Options, including any
previously vested but unexercised portion of any Options, shall be exercisable
from the date of such termination of employment until two (2) years following
the termination date. If the Company determines in good faith that the
Disability of the Executive has occurred, it shall give written notice to the
Executive of its intention to terminate his employment.  In such event, the
Executive’s employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive, provided that, within the
thirty (30) days after such receipt, the Executive shall not have returned to
full-time performance of his duties.  For purposes hereof, “Disability” shall
mean the inability of the Executive to perform his duties to the Company on
account of physical or mental illness or incapacity for a period of ninety (90)
consecutive calendar days, or for a period of one hundred eighty (180) calendar
days, whether or not consecutive, during any three hundred sixty-five (365) day
period.

          (d)          Termination Without Good Reason.  As of the date of any
voluntary termination of employment with the Company by the Executive other than
due to death or Disability, and other than for Good Reason, any unvested portion
of any Option shall terminate immediately and shall be of no further force or
effect.  Any previously vested but unexercised portion of any Option shall
remain exercisable from the date of such termination of employment until the
second anniversary of the termination date.

          (e)          Termination Prior to or Following a Change of Control. 
In the event of a Change of Control (as defined below) while the Executive is
employed by the Company, or the Executive’s employment is terminated by the
Company without Cause or by the Executive for Good Reason within six (6) months
prior to a Change of Control, any unvested installment of any Option shall
immediately vest and become exercisable from the date of such Change of Control,
or if earlier the date of termination, until the date that is two (2) years
following:  (i) the Change of Control date, or (ii) if earlier the date of
termination.  For purposes hereof,  “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
initial or secondary public 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
person (a “Person”) or group of persons acting together (a “Group”) (other than
any of the Company’s wholly-owned subsidiaries or any Company employee pension
or benefits plan), (ii) 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
or consolidation, but not including any initial or secondary public offering)
the result of which is that any Person or Group (other than any of the Company’s
wholly-owned subsidiaries or any Company employee pension or benefits plan),
becomes the beneficial owners of more than 40 percent 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.

          “Benefits” shall mean participation, including eligible dependents, in
any Company medical, dental or other health plans.