Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into this 2nd day of
November, 2006, by and between AMBASSADORS INTERNATIONAL, INC. (“Company”), a
Delaware corporation, and JOSEPH J. UEBERROTH (“Executive”), with reference to
the following facts:

A. Executive has been serving Company as Chairman, President and Chief Executive
Officer in a satisfactory and capable manner.

B. Company has requested that Executive enter into an employment agreement with
Company with respect to matters relating to continued employment with Company,
and Executive has agreed to do so, upon the terms and conditions set forth
herein.

NOW, THEREFORE, in consideration of the terms and conditions and the mutual
agreements and covenants set forth herein, the parties hereto agree as follows:

1. SCOPE OF EMPLOYMENT.

1.1 Capacity. Company hereby continues to employ Executive, and Executive hereby
accepts continued employment, as Chairman, President and Chief Executive Officer
of Company. Executive shall report to the Board of Directors of Company
(“Board”) and perform the services and duties customarily incident to such
titles unless a change is agreed to by both parties.

1.2 Devotion of Services. Executive shall devote his business time, ability and
attention to the business of Company during the Term of Employment (as defined
below), except the Company acknowledges his outside business activities such as
member of private equity or venture capital funds, as a member of public and
private boards, passive investments, charitable and non-profit enterprises and
any other business investments which do not interfere with his duties hereunder
and which are not competitive with Company’s activities. Executive shall perform
and discharge well and faithfully those duties assigned him by the Board.
Executive shall perform his services under this Agreement primarily at Company’s
offices in Newport Beach, or such other location as is acceptable to Executive.

2. TERM OF EMPLOYMENT. The term of Executive’s employment under this Agreement
shall commence as of the date first set forth above and, unless sooner
terminated pursuant to Section 4 of this Agreement, shall terminate upon the
close of business twelve (12) months following the date that either party
notifies the other in writing that the notifying party elects to terminate such
employment (“Term of Employment”).

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3. COMPENSATION.

3.1 Salary and Bonus. In consideration of the services to be rendered by
Executive hereunder including, without limitation, any services rendered as an
officer or director of Company and/or any subsidiary thereof, Company shall pay
to Executive the following during the Term of Employment:

(a) A base salary in the amount of $375,000 per annum, which salary shall be
reviewed no less frequent than annually by Company’s Board or Compensation
Committee. The Board or Compensation Committee may increase Executive’s base
salary but, in no event, may Executive’s base salary be reduced during the Term
of Employment unless agreed to by both parties.

(b) Company intends to continue its annual cash incentive plan with respect to
Executive; provided, however, the amount of the annual cash incentive shall be
at the discretion of Company’s Board or Compensation Committee.

(c) All payments to Executive shall be subject to the applicable withholding
requirements of all appropriate governmental authorities.

(d) Company intends to continue its annual stock option and restricted stock
grants, its Long Term Incentive (LTI) plan, with respect to Executive; provided,
however, the number of options and/or restricted stock granted shall be at the
discretion of Company’s Board or such committee, but, in no event, may the
Executive’s LTI be less 50% of his total annual compensation during the Term of
Employment unless agreed to by both parties.

3.2 Other Benefits. During the Term of Employment, Executive shall be entitled
to participate in all employee pension and welfare benefit plans and programs
made available to Company’s senior members of management, as such plans or
programs may be in effect from time to time including, without limitation,
pension, profit sharing, savings and other retirement plans or programs,
accidental death and dismemberment protection, and health and medical plans.

3.3 Expenses. Company will advance to or reimburse Executive for all reasonable
travel and entertainment required by Company and other reasonable expenses
incurred by Executive in connection with the performance of his services under
this Agreement in accordance with Company policy as established from time to
time.

3.4 Vacation. Executive shall be entitled to not less than twenty-five (25) days
of vacation during each fiscal year of Company, during which time Executive’s
compensation shall be paid in full. Executive’s vacation allowance shall be
applied and extended under the same terms and conditions as are generally
applicable to other senior members of Company’s management.

 

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4. TERMINATION OF EMPLOYMENT.

4.1 Termination by Company for Cause. Notwithstanding the provisions of
Section 2 of this Agreement, Company may terminate Executive’s employment at any
time for Cause (as defined below) by delivering written notice to Executive, and
such termination shall be effective upon the date such notice is deemed received
by Executive or such later date if specified in the notice. In the event that
Company terminates Executive’s employment for Cause, then Executive shall only
be entitled to the compensation, unpaid expenses, unpaid vacation days and other
benefits provided for in Section 3 of this Agreement through the date of such
termination. As used herein, “Cause” shall mean any of the following events if
agreed to in writing by at least 75% of the independent directors of the board:
(a) Executive is convicted, or pleads guilty or nolo contendre to, a felony or a
crime involving moral turpitude; (b) Executive engages in gross negligence or
gross or willful misconduct in connection with the performance of his
responsibilities under this Agreement; (c) after written notice to Executive,
Executive repeatedly fails to comply materially with any material Company
policy; or (d) Executive materially breaches any material term or provision of
this Agreement and fails to cure such breach within thirty (30) days after he
receives written notice thereof from Company.

4.2 Termination by Executive Without Good Reason. Notwithstanding the provisions
of Section 2 of this Agreement, Executive may terminate his employment without
Good Reason (as defined below) by delivering written notice to Company. In the
event that Executive terminates his employment without Good Reason and provides
the Company at least 12 months notice, then Company shall pay to Executive all
of the following upon the following terms and conditions:

(i) An amount equal to the projected cost of Executive’s medical insurance under
COBRA for the eighteen (18) month period immediately following the termination;

(ii) An amount equal to one (1) times the average annual base salary plus the
average annual bonus paid to Executive for the two (2) full fiscal years
immediately preceding termination (in determining the annual bonuses, there
shall be included the cash amounts as well as that value ascribed for financial
accounting purposes on the dates of the grants to any and all option and share
grants give to Executive);

(iii) The payments provided for in clauses (i) and (ii) of this Section 4.2
shall be paid in full on the effective date of the termination and all such
payments shall be subject to the applicable withholding requirements of all
appropriate governmental authorities; and

(vi) Notwithstanding anything to the contrary contained herein, in the event
that any payments and/or other consideration to be received by Executive under
this Section 4.2 and or other sections within this agreement are subject to the
deduction limitations and tax imposed by Sections 280G and 4999 of the Internal
Revenue Code of 1986, as amended (“Code”), or to any similar tax imposed by
state or local law, or to any interest or penalties with respect to such taxes
(such taxes together with any such interest and penalties shall hereafter
collectively be referred to as “Excise Tax”), then the total amount of such
payments and value of the other consideration shall be reduced, or refunded, as
the case may be, by the minimum amount necessary so as to avoid the application
of any Excise Tax.

 

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4.3 Termination by Executive With Good Reason; Termination by Company Without
Cause. Notwithstanding the provisions of Paragraph 2 of this Agreement,
(i) Executive may terminate his employment with Good Reason (as defined below)
by delivering written notice to Company, and such termination shall be effective
thirty (30) days after the date such notice is deemed received by Company, and
(ii) Company may terminate Executive’s employment without Cause by delivering
written notice to Executive and such termination shall be effective upon the
date that such notice is deemed received by Executive. In the event that
Executive terminates his employment with Good Reason, or Company terminates
Executive’s employment without Cause, then Company shall pay to Executive all of
the following upon the following terms and conditions:

(i) All of the unpaid compensation, unpaid expenses, unpaid vacation days,
prorated bonuses and other benefits provided for in Section 3 through the date
of such termination;

(ii) An amount equal to the projected cost of Executive’s medical insurance
under COBRA for the eighteen (18) month period immediately following the
termination;

(iii) An amount equal to two (2) times the average annual base salary plus the
average annual bonus paid to Executive for the two (2) full fiscal years
immediately preceding termination (in determining the annual bonuses, there
shall be included the cash amounts as well as that value ascribed for financial
accounting purposes on the dates of the grants to any and all option and share
grants give to Executive);

(iv) All of Executive’s unvested stock options and stock grants shall fully vest
upon the date that the termination becomes effective;

(v) The payments provided for in clauses (i), (ii) and (iii) of this Section 4.3
shall be paid in full on the effective date of the termination and all such
payments shall be subject to the applicable withholding requirements of all
appropriate governmental authorities; and

(vi) Notwithstanding anything to the contrary contained herein, in the event
that any payments and/or other consideration to be received by Executive under
this Section 4.3 and or other sections within this agreement are subject to the
deduction limitations and tax imposed by Sections 280G and 4999 of the Internal
Revenue Code of 1986, as amended (“Code”), or to any similar tax imposed by
state or local law, or to any interest or penalties with respect to such taxes
(such taxes together with any such interest and penalties shall hereafter
collectively be referred to as “Excise Tax”), then the total amount of such
payments and value of the other consideration shall be reduced, or refunded, as
the case may be, by the minimum amount necessary so as to avoid the application
of any Excise Tax.

 

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As used herein, the term “Good Reason” shall mean any of the following events:

(a) Withdrawal by Company from Executive of any substantial part of his duties
then being performed, or responsibility or authority then being carried by him,
or a material change in Executive’s reporting lines;

(b) Assignment by Company to Executive of substantial additional duties or
responsibilities which are inconsistent with the duties or responsibilities then
being carried out by Executive;

(c) Material reduction in the level of Executive’s responsibility, authority,
autonomy, title, compensation, executive perquisites, or other employee
benefits;

(d) Failure to keep Executive in office as Chairman, President and Chief
Executive Officer of Company;

(e) Company materially breaches any material term or provision of this Agreement
and fails to cure such breach within thirty (30) days after it receives written
notice thereof from Executive;

(f) Fraud on the part of Company;

(g) Discontinuance of the active operation of business of Company; or

(h) Change in Control (as defined below)

(i) Relocation of office more than 25 miles from Newport Beach

4.4 Death or Permanent Disability. Executive’s employment shall terminate
immediately upon the date of Executive’s death. In the event that Executive
becomes physically or mentally disabled so as to become unable for more than one
hundred eighty (180) days in the aggregate in any twelve (12) month period to
perform his duties on a full-time basis with reasonable accommodations, Company
may, at its sole discretion, terminate Executive’s employment. Upon the date of
Executive’s death (if during the term of his employment) or upon Company’s
termination of Executive’s employment due to a disability as provided above,
then: (i) Executive shall be entitled to all of the unpaid compensation, unpaid
expenses, unpaid vacation days, prorated bonuses and other benefits provided for
in Paragraph 3 through the date of Executive’s death or termination for
disability; and (ii) all of Executive’s unvested stock options and stock grants
in Company shall fully vest on such date.

4.5 Application of Section 409A. To the extent applicable, it is intended that
this Agreement comply with the provisions of Section 409A of the Code, and shall
be interpreted in accordance therewith. This Agreement shall be administered in
a manner consistent with this intent, and any provision that would cause this
Agreement to fail to satisfy Section 409A of the Code shall have no force and
effect until amended by the parties to comply with Section 409A (which amendment
may be retroactive to the extent permitted by Section 409A). Notwithstanding the
foregoing, if Executive is a “specified employee” (as defined under
Section 409A) and, to the extent that any payment or portion of a payment under
Paragraph 4 of this Agreement is determined by Company to constitute a “deferral
of compensation” under Section 409A to which the “short-term deferral” exception
does not apply, then such payment or

 

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portion of a payment shall be paid to Executive by Company in cash and in full,
as soon as practicable following six (6) months after Executive’s “separation
from service” with Company (as such phrase is defined in Section 409A). If
Executive dies before such payment or portion of a payment has been paid, such
unpaid amounts shall be paid as soon as practicable following Executive’s death
to the personal representative of Executive’s estate.

5. CHANGE OF CONTROL In the event of a Change in Control, all of Executive’s
unvested stock options and stock grants shall fully vest. For purposes of this
Agreement, “Change in Control” means the occurrence of any of the following
events: (i) any sale, lease, license, exchange or other transfer to a party not
affiliated with Company (in one transaction or a series of related transactions)
of all, or substantially all, of the business and/or assets of Company; (ii) a
merger or consolidation of Company and Company is not the surviving entity;
(iii) a reorganization of the legal entities or liquidation of Company; or
(iv) a merger, consolidation, tender offer or any other transaction involving
Company if the equity holders of Company immediately before such merger,
consolidation, tender offer or other transaction do not own, directly or
indirectly, immediately following such merger, consolidation, tender offer or
other transaction, more than fifty percent (50%) of the combined voting power of
the outstanding voting securities of the entity resulting from such merger,
consolidation, tender offer or other transaction; or (v) a material change of
the board; 3 directors elected to the board in a 15 month period that are not
proposed by the Company.

6. CONFIDENTIALITY AND DISPARAGEMENT

6.1 Confidentiality of Information. Executive acknowledges and agrees that he
has been and shall be exposed to Company’s Confidential Information and Trade
Secrets. Executive agrees to keep all such information strictly confidential at
all times. Except as required by Executive’s duties for Company or by virtue of
a subpoena or other court order applicable to Executive, Executive agrees that,
both during and after the Term of Employment, not to make, use or disclose any
Confidential Information or Trade Secrets to any person, company, firm,
organization or other entity, or encourage any such person, company, firm,
organization or other entity to make use of such Confidential Information or
Trade Secrets.

6.2 Disparaging Statements. Both the Company and the Executive agree that
neither party will make any disparaging comments about the Company, Executive,
or any related Parties to any persons inside or outside the Company.

7. GENERAL

7.1 Entire Agreement. This Agreement contains the entire under-standing between
the parties hereto with respect to the subject matter herein and supersedes all
other oral and written agreements or understandings that may exist between them
concerning the subject matter herein.

7.2 Amendment. This Agreement may not be modified, amended, altered or
supplemented except by written agreement between Executive and Company.

7.3 Counterparts; Facsimile Signature. This Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. This Agreement may
be executed and delivered by facsimile signature.

 

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7.4 Jurisdiction. Each party hereby consents to the exclusive jurisdiction of
the state and federal courts sitting in Orange County, California, in any action
on a claim arising out of, under or in connection with this Agreement or the
transactions contemplated by this Agreement. Each party further agrees that
personal jurisdiction over him or it may be effected by service of process by
registered or certified mail addressed as provided in Section 9.9 herein, and
that when so made shall be as if served upon him or it personally within the
State of California.

7.5 Expenses. In the event an action at law or in equity is required to enforce
or interpret the terms and conditions of this Agreement, the prevailing party
shall be entitled to reasonable attorney’s fees and costs in addition to any
other relief to which that party may be entitled.

7.6 Interpretation. The headings herein are inserted only as a matter of
convenience and reference, and in no way define, limit or describe the scope of
this Agreement or the intent of any provisions thereof. No provision of this
document is to be interpreted for or against any party because that party or
party’s legal representative drafted it.

7.7 Successors and Assigns. This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto and their heirs, successors, assigns and
personal representatives. As used herein, the successors of Company shall
include, but not be limited to, any successor by way of merger, consolidation,
sale of all or substantially all of its assets or similar reorganization. In no
event may Executive assign any rights or duties under this Agreement.

7.8 Controlling Law; Severability. The validity and construction of this
Agreement or of any of its provisions shall be determined under the laws of the
State of California. Should any provision of this Agreement be invalid either
due to the duration thereof or the scope of the prohibited activity, such
provision shall be limited by the court to the extent necessary to make it
enforceable and, if invalid for any other reason, such invalidity or
unenforceability shall not affect or limit the validity and enforceability of
the other provisions hereof.

7.9 Notices. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if personally received by the party to
whom it is sent or delivered, or if sent by registered or certified mail,
postage prepaid, to Executive’s residence in the case of notice to Executive, or
to its principal office if to Company. A notice is deemed received or delivered
on the earlier of the day received or three (3) days after being sent by
registered or certified mail in the manner described in this Section.

7.10 Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.

 

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7.11 Survival. Notwithstanding anything to the contrary contained in this
Agreement, the rights and obligations of each party under Section 4 and 6 shall
survive the termination of Executive’s employment with Company.

7.12 Key Man Life Insurance. At any time during the Term of Employment, Company
may, but shall not be obligated to, take out and maintain, at Company’s sole
cost and expense, one or more insurance policies on the life of Executive, with
Company being the sole owner and sole beneficiary. Company shall have the right,
at any time and from time to time during the Term of Employment, to increase or
decrease the amount(s) of such insurance. Executive agrees to cooperate with
Company in connection with such policies, including but not limited to the
taking of medical examinations.

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

 

AMBASSADORS INTERNATIONAL, INC. By:   /s/ Brian Schaefgen   Brian Schaefgen  
Chief Financial Officer By:   /s/ Richard D. C. Whilden   Richard D. C. Whilden
  Chairman of Compensation Committee

 

/s/ Joseph J. Ueberroth JOSEPH J. UEBERROTH

 

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