Document:

Exhibit 4.1

 Exhibit 4.1 
  

EXECUTION COPY 
  

 
 MBNA CREDIT CARD MASTER NOTE TRUST 
  
 as Issuer 
  
 CLASS C(2005-1) TERMS DOCUMENT 
  
 dated as of June 1, 2005 
  
 to 
  
 MBNASERIES INDENTURE SUPPLEMENT 
  
 dated as of May 24, 2001 
  
 to

  
 INDENTURE 
  
 dated as of May 24, 2001 
  
 THE BANK OF NEW YORK 
  
 as Indenture Trustee 
  

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page

	 	  	ARTICLE I	  	 
			
	 	  	Definitions and Other Provisions of General Application	  	 
			
	Section 1.01.	  	Definitions	  	1
			
	Section 1.02.	  	Governing Law; Submission to Jurisdiction; Agent for Service of Process	  	5
			
	Section 1.03.	  	Counterparts	  	6
			
	Section 1.04.	  	Ratification of Indenture and Indenture Supplement	  	6
			
	 	  	ARTICLE II	  	 
	 	  	The Class C(2005-1) Notes	  	 
			
	Section 2.01.	  	Creation and Designation	  	7
			
	Section 2.02.	  	Interest Payment	  	7
			
	Section 2.03.	  	Calculation Agent; Determination of LIBOR	  	7
			
	Section 2.04.	  	Payments of Interest and Principal	  	8
			
	Section 2.05.	  	Targeted Deposit to the Class C Reserve Account	  	8
			
	Section 2.06.	  	Form of Delivery of Class C(2005-1) Notes; Depository; Denominations	  	9
			
	Section 2.07.	  	Delivery and Payment for the Class C(2005-1) Notes	  	9
			
	Section 2.08.	  	Targeted Deposits to the Accumulation Reserve Account	  	9
			
	 	  	ARTICLE III	  	 
	 	  	Representations and Warranties	  	 
			
	Section 3.01.	  	Issuer’s Representations and Warranties	  	10

  

 -i- 

 THIS CLASS C(2005-1) TERMS DOCUMENT (this “Terms Document”), by and between MBNA CREDIT
CARD MASTER NOTE TRUST, a statutory trust created under the laws of the State of Delaware (the “Issuer”), having its principal office at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890, and THE BANK OF NEW
YORK, a New York banking corporation ( the “Indenture Trustee”), is made and entered into as of June 1, 2005. 
  
 Pursuant to this Terms Document, the Issuer and the Indenture Trustee shall create a new tranche of Class C Notes and shall specify the principal terms
thereof. 
  
 ARTICLE I 
  
 Definitions and Other Provisions of General Application 
  
 Section 1.01. Definitions. For all purposes of this Terms Document,
except as otherwise expressly provided or unless the context otherwise requires: 
  
 (1) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular;

  
 (2) all other terms used herein which are
defined in the Indenture Supplement or the Indenture, either directly or by reference therein, have the meanings assigned to them therein; 
  
 (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term “generally accepted accounting principles” with respect to any computation required or permitted hereunder means such accounting principles as are generally accepted
in the United States of America at the date of such computation; 
  
 (4) all references in this Terms Document to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Terms Document as
originally executed; 
  
 (5) the words
“herein,” “hereof” and “hereunder” and other words of similar import refer to this Terms Document as a whole and not to any particular Article, Section or other subdivision; 
  
 (6) in the event that any term or provision contained herein
shall conflict with or be inconsistent with any term or provision contained in the Indenture Supplement or the Indenture, the terms and provisions of this Terms Document shall be controlling; 
  
 (7) each capitalized term defined herein shall relate only
to the Class C(2005-1) Notes and no other tranche of Notes issued by the Issuer; and 

 (8) “including” and words of similar import will be deemed to be followed by
“without limitation.” 
  
 “Accumulation Reserve
Funding Period” shall mean, (a) if the Accumulation Period Length is determined to be one (1) month, there shall be no Accumulation Reserve Funding Period and (b) otherwise, the period (x) commencing on the earliest to occur of (i) the
Monthly Period beginning three (3) calendar months prior to the first Transfer Date for which a budgeted deposit is targeted to be made into the Principal Funding sub-Account of the Class C(2005-1) Notes pursuant to Section 3.10(b) of the
Indenture Supplement, (ii) the Monthly Period following the first Transfer Date following and including the April 2008 Transfer Date for which the Quarterly Excess Available Funds Percentage is less than 2%, but in such event the Accumulation
Reserve Funding Period shall not be required to commence earlier than 24 months prior to the Expected Principal Payment Date, (iii) the Monthly Period following the first Transfer Date following and including the October 2008 Transfer Date for which
the Quarterly Excess Available Funds Percentage is less than 3%, but in such event the Accumulation Reserve Funding Period shall not be required to commence earlier than 18 months prior to the Expected Principal Payment Date, and (iv) the Monthly
Period following the first Transfer Date following and including the December 2008 Transfer Date for which the Quarterly Excess Available Funds Percentage is less than 4%, but in such event the Accumulation Reserve Funding Period shall not be
required to commence earlier than 16 months prior to the Expected Principal Payment Date and (y) ending on the close of business on the last day of the Monthly Period preceding the earlier to occur of (i) the Expected Principal Payment Date for the
Class C(2005-1) Notes and (ii) the date on which the Class C(2005-1) Notes are paid in full. 
  
 “Base Rate” means, with respect to any Monthly Period, the sum of (i) the Weighted Average Interest Rates for the Outstanding MBNAseries Notes, (ii) the Net Servicing Fee Rate (as such term is defined
in the Series 2001-D Supplement) and (iii) so long as MBNA or The Bank of New York is the Servicer, the Servicer Interchange Rate, in each case, for such Monthly Period. 
  
 “Calculation Agent” is defined in Section 2.03(a). 
  
 “Class C Reserve Account Percentage” means, (i) zero, if the
Quarterly Excess Available Funds Percentage on such Transfer Date is greater than or equal to 4.50%, (ii) 1.25%, if the Quarterly Excess Available Funds Percentage on such Transfer Date is less than 4.50% and greater than or equal to 4.00%, (iii)
2.00%, if the Quarterly Excess Available Funds Percentage on such Transfer Date is less than 4.00% and greater than or equal to 3.50%, (iv) 2.75%, if the Quarterly Excess Available Funds Percentage is less than 3.50% and greater than or equal to
3.00%, (v) 3.50%, if the Quarterly Excess Available Funds Percentage on such Transfer Date is less than 3.00% and greater than or equal to 2.50%, (vi) 4.50%, if the Quarterly Excess Available Funds Percentage is less than 2.50% and greater than or
equal to 2.00%, and (vii) 6.00%, if the Quarterly Excess Available Funds Percentage on such Transfer Date is less than 2.00%. 
  
 “Class C(2005-1) Note” means any Note, substantially in the form set forth in Exhibit A-3 to the Indenture Supplement, designated
therein as a Class C(2005-1) Note and duly executed and authenticated in accordance with the Indenture. 
  

 2 

 “Class C(2005-1) Noteholder” means a Person in whose name a Class C(2005-1) Note is
registered in the Note Register. 
  
 “Class C(2005-1)
Termination Date” means the earliest to occur of (a) the Principal Payment Date on which the Outstanding Dollar Principal Amount of the Class C(2005-1) Notes is paid in full, (b) the Legal Maturity Date and (c) the date on which the
Indenture is discharged and satisfied pursuant to Article VI thereof. 
  
 “Controlled Accumulation Amount” means $10,416,666.67; provided, however, if the Accumulation Period Length is determined to be less than twelve (12) months pursuant to Section
3.10(b)(ii) of the Indenture Supplement, the Controlled Accumulation Amount shall be the amount specified in the definition of “Controlled Accumulation Amount” in the Indenture Supplement. 
  
 “Excess Available Funds Percentage” means, with respect to
any Transfer Date, the amount, if any, by which the Portfolio Yield for the preceding Monthly Period exceeds the Base Rate for such Monthly Period. 
  
 “Expected Principal Payment Date” means May 17, 2010. 
  
 “Initial Dollar Principal Amount” means $125,000,000. 
  
 “Interest Payment Date” means the fifteenth day of each
month commencing July 15, 2005, or if such fifteenth day is not a Business Day, the next succeeding Business Day. 
  
 “Interest Period” means, with respect to any Interest Payment Date, the period from and including the previous Interest Payment Date (or
in the case of the initial Interest Payment Date, from and including the Issuance Date) through the day preceding such Interest Payment Date. 
  
 “Issuance Date” means June 1, 2005. 
  
 “Legal Maturity Date” means October 15, 2012. 
  
 “LIBOR” means, for any Interest Period, the London interbank offered rate for one-month United States dollar deposits determined by the
Calculation Agent on the LIBOR Determination Date for each Interest Period in accordance with the provisions of Section 2.03. 
  
 “LIBOR Determination Date” means (i) May 27, 2005 for the period from and including the Issuance Date to but excluding June 15, 2005,
(ii) June 13, 2005 for the period from and including June 15, 2005 to but excluding July 15, 2005 and (iii) for each Interest Period thereafter, the second London Business Day prior to the Interest Payment Date on which such Interest Period
commences. 
  
 “London Business Day” means any
Business Day on which dealings in deposits in United States Dollars are transacted in the London interbank market. 
  

 3 

 “MBNAseries Servicer Interchange” means, with respect to any Monthly Period, an amount
equal to the product of (a) the Servicer Interchange (as such term is defined in the Series 2001-D Supplement) with respect to such Monthly Period and (b) a fraction the numerator of which is the Weighted Average Available Funds Allocation Amount
for the MBNAseries for such Monthly Period and the denominator of which is the Weighted Average Available Funds Allocation Amount for all series of Notes for such Monthly Period. 
  
 “Note Interest Rate” means a per annum rate equal to 0.41% in excess of LIBOR as determined by the
Calculation Agent on the related LIBOR Determination Date with respect to each Interest Period. 
  
 “Paying Agent” means The Bank of New York. 
  
 “Portfolio Yield” means, with respect to any Monthly Period, the annualized percentage equivalent of a fraction, the numerator of which
is (a) the amount of Available Funds allocated to the MBNAseries pursuant to Section 501 of the Indenture, plus (b) any Interest Funding sub-Account Earnings on the related Transfer Date, plus (c) any amounts to be treated as
MBNAseries Available Funds pursuant to Sections 3.20(d) and 3.27(a) of the Indenture Supplement, plus (d) the MBNAseries Servicer Interchange for such Monthly Period, minus (e) the excess, if any, of the sum of the PFA
Prefunding Earnings Shortfall plus the PFA Accumulation Earnings Shortfall over the sum of the aggregate amount to be treated as MBNAseries Available Funds for such Monthly Period pursuant to Sections 3.04(a)(ii) and 3.25(a) of
the Indenture Supplement plus any other amounts applied to cover earnings shortfalls on amounts in the Principal Funding sub-Account for any tranche of MBNAseries Notes for such Monthly Period, minus (f) the MBNAseries Investor Default
Amount for such Monthly Period, and the denominator of which is the Weighted Average Available Funds Allocation Amount for the MBNAseries for such Monthly Period. 
  
 “Predecessor Note” means, with respect to any particular Note, every previous Note evidencing all or a
portion of the same debt as that evidenced by such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section 306 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Note shall
be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note. 
  
 “Quarterly Excess Available Funds Percentage” means, with respect to the July 2005 Transfer Date and each Transfer Date thereafter, the percentage equivalent of a fraction the numerator of which is
the sum of the Excess Available Funds Percentages with respect to the immediately preceding three Monthly Periods and the denominator of which is three. 
  
 “Record Date” means, for any Transfer Date, the last Business Day of the preceding Monthly Period. 
  
 “Reference Banks” means four major banks in the London
interbank market selected by the Beneficiary. 
  

 4 

 “Required Accumulation Reserve sub-Account Amount” means, with respect to any Monthly
Period during the Accumulation Reserve Funding Period, an amount equal to (i) 0.5% of the Outstanding Dollar Principal Amount of the Class C(2005-1) Notes as of the close of business on the last day of the preceding Monthly Period or (ii) any other
amount designated by the Issuer; provided, however, that if such designation is of a lesser amount, the Note Rating Agencies shall have provided prior written confirmation that a Ratings Effect will not occur with respect to such
change. 
  
 “Servicer Interchange Rate” means,
for any Monthly Period, the percentage equivalent of a fraction, the numerator of which is the MBNAseries Servicer Interchange for such Monthly Period, and the denominator of which is the Weighted Average Available Funds Allocation Amount for the
MBNAseries for such Monthly Period. 
  
 “Stated Principal
Amount” means $125,000,000. 
  
 “Telerate Page
3750” means the display page currently so designated on the Moneyline Telerate Service (or such other page as may replace that page on that service for the purpose of displaying comparable rates or prices). 
  
 “Weighted Average Interest Rates” means, with respect to any
Outstanding Notes of a class or tranche of the MBNAseries, or of all of the Outstanding Notes of the MBNAseries, on any date, the weighted average (weighted based on the Outstanding Dollar Principal Amount of the related Notes on such date) of the
following rates of interest: 
  
 (a) in the case of a tranche of
Dollar Interest-bearing Notes with no Derivative Agreement for interest, the rate of interest applicable to that tranche on that date; 
  
 (b) in the case of a tranche of Discount Notes, the rate of accretion (converted to an accrual rate) of that tranche on that date; 
  
 (c) in the case of a tranche of Notes with a payment due under a Performing
Derivative Agreement for interest, the rate at which payments by the Issuer to the applicable Derivative Counterparty accrue on that date (prior to the netting of such payments, if applicable); and 
  
 (d) in the case of a tranche of Notes with a non-Performing Derivative
Agreement for interest, the rate specified for that date in the related terms document. 
  
 Section 1.02. Governing Law; Submission to Jurisdiction; Agent for Service of Process. This Terms Document shall be governed by and construed in accordance with the laws of the State of Delaware, without regard
to principles of conflict of laws. The parties hereto declare that it is their intention that this Terms Document shall be regarded as made under the laws of the State of Delaware and that the laws of said State shall be applied in interpreting its
provisions in all cases where legal interpretation shall be required. Each of the parties hereto agrees (a) that this Terms Document involves at least $100,000.00, and (b) that this Terms Document has been entered into by the parties hereto in
express reliance upon 6 DEL. C. § 2708. Each of the parties hereto hereby irrevocably and unconditionally agrees (a) to be subject to the 
  

 5 

 jurisdiction of the courts of the State of Delaware and of the federal courts sitting in the State of Delaware, and
(b)(1) to the extent such party is not otherwise subject to service of process in the State of Delaware, to appoint and maintain an agent in the State of Delaware as such party’s agent for acceptance of legal process, and (2) that, to the
fullest extent permitted by applicable law, service of process may also be made on such party by prepaid certified mail with a proof of mailing receipt validated by the United States Postal Service constituting evidence of valid service, and that
service made pursuant to (b)(1) or (2) above shall, to the fullest extent permitted by applicable law, have the same legal force and effect as if served upon such party personally within the State of Delaware. 
  
 Section 1.03. Counterparts. This Terms Document may be executed in any
number of counterparts, each of which so executed will be deemed to be an original, but all such counterparts will together constitute but one and the same instrument. 
  
 Section 1.04. Ratification of Indenture and Indenture Supplement. As supplemented by this Terms Document, each of the
Indenture and the Indenture Supplement is in all respects ratified and confirmed and the Indenture as so supplemented by the Indenture Supplement as so supplemented and this Terms Document shall be read, taken and construed as one and the same
instrument. 
  
 [END OF ARTICLE I] 
  
  

 6 

 ARTICLE II 
  
 The Class C(2005-1) Notes 
  
 Section 2.01. Creation and Designation. There is hereby created a tranche of MBNAseries Class C Notes to be issued pursuant to the Indenture and
the MBNAseries Indenture Supplement to be known as the “MBNAseries Class C(2005-1) Notes.” 
  
 Section 2.02. Interest Payment. 
  
 (a) For each Interest Payment Date, the amount of interest due with respect to the Class C(2005-1) Notes shall be an amount equal to the product of (i)(A)
a fraction, the numerator of which is the actual number of days in the related Interest Period and the denominator of which is 360, times (B) the Note Interest Rate in effect with respect to the related Interest Period, times (ii) the
Outstanding Dollar Principal Amount of the Class C(2005-1) Notes determined as of the Record Date preceding the related Transfer Date. Interest on the Class C(2005-1) Notes will be calculated on the basis of the actual number of days in the related
Interest Period and a 360-day year. 
  
 (b) Pursuant to Section
3.03 of the Indenture Supplement, on each Transfer Date, the Indenture Trustee shall deposit into the Class C(2005-1) Interest Funding sub-Account the portion of MBNAseries Available Funds allocable to the Class C(2005-1) Notes. 
  
 Section 2.03. Calculation Agent; Determination of LIBOR. 

 
 (a) The Issuer hereby agrees that for so long as any Class C(2005-1)
Notes are Outstanding, there shall at all times be an agent appointed to calculate LIBOR for each Interest Period (the “Calculation Agent”). The Issuer hereby initially appoints the Indenture Trustee as the Calculation Agent for
purposes of determining LIBOR for each Interest Period. The Calculation Agent may be removed by the Issuer at any time. If the Calculation Agent is unable or unwilling to act as such or is removed by the Issuer, or if the Calculation Agent fails to
determine LIBOR for an Interest Period, the Issuer shall promptly appoint a replacement Calculation Agent that does not control or is not controlled by or under common control with the Issuer or its Affiliates. The Calculation Agent may not resign
its duties, and the Issuer may not remove the Calculation Agent, without a successor having been duly appointed. 
  
 (b) On each LIBOR Determination Date, the Calculation Agent shall determine LIBOR on the basis of the rate for deposits in United States dollars for a
one-month period which appears on Telerate Page 3750 as of 11:00 a.m., London time, on such date. If such rate does not appear on Telerate Page 3750, the rate for that LIBOR Determination Date shall be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at approximately 11:00 a.m., London time, on that day to prime banks in the London interbank market for a one-month period. The Calculation Agent shall request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the rate for that LIBOR Determination Date shall be the arithmetic mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that LIBOR Determination Date will be the arithmetic mean of the rates quoted by four 
  

 7 

 major banks in New York City, selected by the Beneficiary, at approximately 11:00 a.m., New York City time, on that day
for loans in United States dollars to leading European banks for a one-month period. 
  
 (c) The Note Interest Rate applicable to the then current and the immediately preceding Interest Periods may be obtained by telephoning the Indenture Trustee at its corporate trust office at (212) 815-3247 or such
other telephone number as shall be designated by the Indenture Trustee for such purpose by prior written notice by the Indenture Trustee to each Noteholder from time to time. 
  
 (d) On each LIBOR Determination Date, the Calculation Agent shall send to the Indenture Trustee and the Beneficiary, by
facsimile transmission, notification of LIBOR for the following Interest Period. 
  
 Section 2.04. Payments of Interest and Principal. 
  
 (a) Any installment of interest or principal, if any, payable on any Class C(2005-1) Note which is punctually paid or duly provided for by the Issuer and the Indenture Trustee on the applicable Interest Payment Date
or Principal Payment Date shall be paid by the Paying Agent to the Person in whose name such Class C(2005-1) Note (or one or more Predecessor Notes) is registered on the Record Date, by wire transfer of immediately available funds to such
Person’s account as has been designated by written instructions received by the Paying Agent from such Person not later than the close of business on the third Business Day preceding the date of payment or, if no such account has been so
designated, by check mailed first-class, postage prepaid to such Person’s address as it appears on the Note Register on such Record Date, except that with respect to Notes registered on the Record Date in the name of the nominee of Cede &
Co., payment shall be made by wire transfer in immediately available funds to the account designated by such nominee. 
  
 (b) The right of the Class C(2005-1) Noteholders to receive payments from the Issuer will terminate on the first Business Day following the Class
C(2005-1) Termination Date. 
  
 Section 2.05. Targeted Deposit
to the Class C Reserve Account. The deposit targeted to be made to the Class C Reserve sub-Account for the Class C(2005-1) Notes for any Transfer Date will be an amount equal to (i) to the product of (A) Class C Reserve Account Percentage for
the related Monthly Period times (B) the sum of the Initial Outstanding Dollar Principal Amounts of each tranche of Outstanding MBNAseries Notes as of the last day of the preceding Monthly Period times (C) a fraction, the numerator of
which is the Nominal Liquidation Amount of the Class C(2005-1) Notes as of the close of business on the last day of the preceding Monthly Period and the denominator of which is the Nominal Liquidation Amount of all Class C Notes in the MBNAseries as
of the close of business on the last day of the preceding Monthly Period, minus (ii) any amount previously on deposit in the Class C(2005-1) Reserve sub-Account prior to such targeted deposit; provided however, that if an Early
Redemption Event or Event of Default occurs with respect to the Class C(2005-1) Notes, the deposit targeted will be the Adjusted Outstanding Dollar Principal Amount of the Class C(2005-1) notes minus the amount then on deposit in such
sub-Account. 
  

 8 

 Section 2.06. Form of Delivery of Class C(2005-1) Notes; Depository; Denominations. 
  
 (a) The Class C(2005-1) Notes shall be delivered in the form of a global
Registered Note as provided in Sections 202 and 301(i) of the Indenture, respectively. 
  
 (b) The Depository for the Class C(2005-1) Notes shall be The Depository Trust Company, and the Class C(2005-1) Notes shall initially be registered in the
name of Cede & Co., its nominee. 
  
 (c) The Class C(2005-1)
Notes will be issued in minimum denominations of $5,000 and multiples of $1,000 in excess of that amount. 
  
 Section 2.07. Delivery and Payment for the Class C(2005-1) Notes. The Issuer shall execute and deliver the Class C(2005-1) Notes to the Indenture
Trustee for authentication, and the Indenture Trustee shall deliver the Class C(2005-1) Notes when authenticated, each in accordance with Section 303 of the Indenture. 
  
 Section 2.08. Targeted Deposits to the Accumulation Reserve Account. The deposit targeted to be made to the
Accumulation Reserve Account for any Monthly Period during the Accumulation Reserve Funding Period will be an amount equal to the Required Accumulation Reserve sub-Account Amount. 
  
 [END OF ARTICLE II] 
  

 9 

 ARTICLE III 
  
 Representations and Warranties 
  
 Section 3.01. Issuer’s Representations and Warranties. The Issuer makes the following representations and warranties as to the Collateral
Certificate on which the Indenture Trustee is deemed to have relied in acquiring the Collateral Certificate. Such representations and warranties speak as of the execution and delivery of this Terms Document, but shall survive until the termination
of this Terms Document. Such representations and warranties shall not be waived by any of the parties to this Terms Document unless the Issuer has obtained written confirmation from each Note Rating Agency that there will be no Ratings Effect with
respect to such waiver. 
  
 (a) The Indenture creates a valid and
continuing security interest (as defined in the Delaware UCC) in the Collateral Certificate in favor of the Indenture Trustee, which security interest is prior to all other liens, and is enforceable as such as against creditors of and purchasers
from the Issuer. 
  
 (b) The Collateral Certificate constitutes
either an “account,” a “general intangible,” an “instrument,” or a “certificated security,” each within the meaning of the Delaware UCC. 
  
 (c) At the time of the transfer and assignment of the Collateral Certificate to the Indenture Trustee pursuant to the
Indenture, the Issuer owned and had good and marketable title to the Collateral Certificate free and clear of any lien, claim or encumbrance of any Person. 
  
 (d) The Issuer has caused, within ten days of the execution of the Indenture, the filing of all appropriate financing statements in the proper filing
office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Collateral Certificate granted to the Indenture Trustee pursuant to the Indenture. 
  
 (e) Other than the security interest granted to the Indenture Trustee
pursuant to the Indenture, the Issuer has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed the Collateral Certificate. The Issuer has not authorized the filing of and is not aware of any financing statements against
the Issuer that include a description of collateral covering the Collateral Certificate other than any financing statement relating to the security interest granted to the Indenture Trustee pursuant to the Indenture or any financing statement that
has been terminated. The Issuer is not aware of any judgment or tax lien filings against the Issuer. 
  
 (f) All original executed copies of the Collateral Certificate have been delivered to the Indenture Trustee. 
  

 10 

 (g) At the time of the transfer and assignment of the Collateral Certificate to the Indenture Trustee
pursuant to the Indenture, the Collateral Certificate had no marks or notations indicating that it has been pledged, assigned or otherwise conveyed to any Person other than the Indenture Trustee. 
  
 [END OF ARTICLE III] 
  

 11 

 IN WITNESS WHEREOF, the parties hereto have caused this Terms Document to be duly executed, all as of the
day and year first above written. 
  

			
	 MBNA CREDIT CARD MASTER NOTE TRUST, by MBNA AMERICA BANK,
 NATIONAL ASSOCIATION,

	as Beneficiary and not in its individual capacity
		
	By:	 	 /s/ Kevin F. Sweeney

	 	 	Kevin F. Sweeney
	 	 	First Vice President
	
	THE BANK OF NEW YORK, as Indenture Trustee and not in its individual capacity
		
	By:	 	 /s/ Jonathan Farber

	Name:	 	Jonathan Farber
	Title:	 	Assistant Vice President

  
 [Signature Page
to the Class C(2005-1) Terms Document]Employment Agreement dated May 30, 2005

 EXHIBIT 10.1 
  
 EMPLOYMENT AGREEMENT 
  
 This Employment Agreement (this “Agreement”) is made and entered into as of May 30, 2005, by and between AUTOBYTEL INC., a Delaware
corporation (the “Company”), and MICHAEL SCHMIDT (the “Executive”). 
  
 Recitals 
  
 WHEREAS, the Company and the Executive are parties to a certain letter agreement, dated March 9, 2004 (the “Prior Agreement”), pursuant to which the Company employs the Executive. 
  
 WHEREAS, effective May 30, 2005, the Executive was appointed as the
Company’s Executive Vice President and Chief Financial Officer (the “Promotion”). 
  
 WHEREAS, as a result of the Promotion, the Company and the Executive desire to amend and restate the Prior Agreement, as set forth herein, in order to set
forth the terms and conditions under which the Executive will continue his employment with the Company, and the Company will continue to employ the Executive, from and after the date hereof. 
  
 NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and with reference to the above recitals, the parties hereby agree as follows: 
  
 ARTICLE 1 
 AMENDMENT AND RESTATEMENT OF PRIOR AGREEMENT; 
 TERM OF EMPLOYMENT 
  
 1.1 AMENDMENT AND RESTATEMENT. The Company and the Executive hereby agree to amend and restate the Prior Agreement, as set forth herein, and agree that
the Prior Agreement no longer has any force or effect and is superceded in its entirety by this Agreement. 
  
 1.2 TERM OF EMPLOYMENT. The Company hereby employs the Executive as the Executive Vice President and Chief Financial Officer of the Company, and the
Executive hereby accepts such employment by the Company, for a period (the “Term”) commencing on the date hereof and expiring on the first to occur of (a) the termination of the Executive’s employment pursuant to Article
6, and (b) May 30, 2006 (the “Termination Date”). Provided that if the Executive’s employment has not previously been terminated pursuant to Article 6, the Executive’s employment pursuant to this Agreement shall
automatically renew for an additional one (1) year period unless either party notifies the other party in writing of its desire not to renew the Executive’s employment under this Agreement no later than sixty (60) days prior to the Termination
Date (a “Non-Renewal Notice”). If the Company delivers the Non-Renewal Notice and the Executive does not terminate his employment prior to the end of the Term, then such non-renewal shall be deemed to be a termination by the Company
of the Executive’s employment without Cause (as defined below) as of immediately prior to the expiration of the Term, and Section 6.2 shall govern such termination. If the Executive delivers the Non-Renewal Notice and the Company does
not terminate the Executive’s employment prior to the end of the Term, then such non-renewal shall be deemed to be a termination by the Executive of his 

  

 
employment without Good Reason (as defined below) as of immediately prior to the expiration of the Term, and Section 6.1 shall govern such
termination. 
  
 ARTICLE 2 
 DUTIES AND OBLIGATIONS 
  
 2.1 DUTIES. During the Term, the Executive shall: (i) be employed as the Executive Vice President and Chief Financial Officer of the Company, and shall
have such power and authority as is customarily held by the executive vice president and chief financial officer of similarly situated companies, (ii) devote his full business time, attention and energies to the business of the Company; (iii) use
his best efforts to promote the interests of the Company; (iv) perform such functions and services as shall lawfully be directed by the Chief Executive Officer; (v) act in accordance with the policies and directives of the Company; and (vi) report
directly to the Chief Executive Officer. 
  
 2.2 RESTRICTIONS.
Except as provided in Section 8.2(i), the Executive covenants and agrees that, while actually employed by the Company, he shall not engage in any other business duties or pursuits whatsoever, or directly or indirectly render any services of a
business or commercial nature to any other Person, including, but not limited to, providing services to any business that is in competition with or similar in nature to the Company, whether for compensation or otherwise, without the prior written
consent of the Board of Directors (the “Board”). However, the expenditure of reasonable amounts of time for educational, charitable, or professional activities shall not be deemed a breach of this Agreement, if those activities do
not materially interfere with the services required under this Agreement, and such activities shall not require the prior written consent of the Board. Notwithstanding anything herein contained to the contrary, this Agreement shall not be construed
to prohibit the Executive from making passive personal investments or conducting personal business, financial or legal affairs or other personal matters if those activities do not materially interfere with the services required hereunder. In
addition to the foregoing, notwithstanding anything contained herein to the contrary, this Agreement shall not be construed to prohibit the Executive from serving as a director or board member of any other corporation, company, or other business
entity, subject to the approval of the Board. 
  
 ARTICLE 3

 COMPENSATION 
  
 3.1 BASE SALARY. As compensation for the services to be rendered by the Executive pursuant to this Agreement, the Company hereby agrees to pay the
Executive a base salary (the “Base Salary”) equal to at least Two Hundred Fifty Thousand Dollars ($250,000.00) per year during the Term of this Agreement, which rate shall be reviewed by the Board at least annually and may be
increased (but not reduced) by the Board in such amounts as the Board deems appropriate. The Base Salary shall be paid in substantially equal bimonthly installments, in accordance with the normal payroll practices of the Company. 
  
 3.2 BONUS. The Board may, in its sole discretion, provide the Executive with
the opportunity to earn an annual bonus (“Bonus”) for each fiscal year of the Company occurring in whole or in part during the Term of fifty percent (50%) (the “Target”) of the Executive’s Base 

  

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Salary for such fiscal year. The Bonus, if any, payable to the Executive shall be based on such criteria as may be established by the Board, in its sole
discretion, from time to time The Executive shall participate in all other short term and long term bonus or incentive plans or arrangements in which other senior executives of the Company are eligible to participate from time to time. Any bonus
shall be paid as promptly as practicable following the end of the preceding fiscal year. The provisions of this Section 3.2 shall be subject to the provisions of Section 3.4. 
  
 3.3 WITHHOLDING. The Company shall have the right to deduct or withhold from
the compensation due to the Executive hereunder any and all sums required for federal income and employee social security taxes and all state or local income taxes now applicable or that may be enacted and become applicable during the Term.

  
 3.4 RIGHT TO SEEK APPROVAL. The Company may provide for
shareholder approval of any performance based compensation provided herein and may provide for the compensation committee to establish any applicable performance goals and determine whether such performance goals have been met. 
  
 3.5 CHANGE OF CONTROL. Notwithstanding Article 1 above, in the event
of a Change of Control (as defined in Section 3.6) of the Company (a) during the Term while the Executive remains employed by the Company, or (b) at any time during the six (6) month period following the termination of the Executive’s
employment with the Company (other than for Cause or without Good Reason), the Company shall pay to the Executive, concurrently with the consummation of such Change of Control, a lump sum amount equal to two (2) times the sum of the Executive’s
annual Base Salary plus the Bonus (at the Target level) (the “Severance Compensation”); provided, that the Company’s obligation to pay the Severance Compensation shall be conditioned on the following: if the Executive is
employed by the Company at the time of the Change of Control and the Person or Group (each as defined in Section 3.6.) that acquires the Company requests that the Executive continue as an employee of the Company, the successor entity, or any
of their respective affiliates on substantially the same (or better, from the Executive’s perspective) terms relating to salary, bonus, and benefits as contained in this Agreement, the Executive shall agree to continue such employment for a
period of six (6) months from the date of the Change of Control or such lesser period of time as the Person or Group shall request. If the Executive’ employment with the Company is terminated pursuant to Section 6.2 after the Executive
becomes entitled to receive the Severance Compensation, then notwithstanding anything set forth in Section 6.2, the Company shall not be required to make any payments to the Executive pursuant to Section 6.2(a). If the Executive’s
employment with the Company is terminated pursuant to Section 6.2 before the Executive becomes entitled to the Severance Compensation, then notwithstanding the foregoing, the amount of the Severance Compensation shall be reduced by the amount
to which the Executive is entitled pursuant to Section 6.2(a). 
  
 3.6 DEFINITION OF CHANGE OF CONTROL. For purposes of this Agreement “Change of Control” means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation but not including any underwritten public offering registered under the Securities Act of 1933 (“Public Offering”) or any offering of securities under Rule 144A promulgated under the Securities Act of 1933

  

 - 3 - 

 
(“Rule 144A Offering”)) in one or a series of related transactions of all or substantially all of the assets of the Company taken as a whole
to any individual, corporation, limited liability company, partnership, or other entity (each, a (“Person”) or group of Persons acting together (each a “Group”) (other than any of the Company’s wholly-owned
subsidiaries or any Company employee pension or benefits plan), (ii) except in respect of a voluntary or involuntary filing under applicable bankruptcy or insolvency laws, the adoption of a plan relating to the liquidation or dissolution of the
Company, (iii) the consummation of any transactions (including any stock or other purchase, sale, acquisition, disposition, merger, consolidation or reorganization, but not including any Public Offering or Rule 144A Offering)) the result of which is
that any Person or Group (other than any of the Company’s wholly-owned Subsidiaries, any underwriter temporarily holding securities pursuant to a Public Offering or any Company employee pension or benefits plan), becomes the beneficial owners
of more than 40 percent (40%) of the aggregate voting power of all classes of stock of the Company having the right to elect directors under ordinary circumstances; or (iv) the first day on which a majority of the members of the Board are not
individuals who were nominated for election or elected to the Board with the approval of two-thirds of the members of the Board just prior to the time of such nomination or election. 
  
 3.7 STOCK OPTIONS. Immediately following the close of trading on the first trading day on which sales of the Company’s
common stock may be effected under the Company’s registration statements on Form S-8 governing the Company’s stock option plans (the “S-8 Effective Date”), and subject to compliance with federal and state securities laws
and any policies of the Company, the Company shall grant to the Executive under one or more of its stock option plans, stock options to purchase One Hundred Fifty Thousand (150,000) shares of the Company’s common stock at an exercise price
equal to the closing price of the Company’s common stock on the S-8 Effective Date (the “Stock Options”). The Company and the Executive agree that the terms and conditions set forth on Schedule I hereto are hereby deemed
incorporated by reference and shall govern the Stock Options. 
  
 ARTICLE 4 
 EMPLOYEE BENEFITS 
  
 4.1 BENEFITS. The Company agrees that the Executive shall be entitled to all ordinary and customary perquisites afforded generally to executive employees
of the Company (except to the extent employee contribution may be required under the Company’s benefit plans as they may now or hereafter exist), which shall in no event be less than the benefits generally afforded to the other executive
employees of the Company as of the date hereof or from time to time, but in any event shall include any qualified or non-qualified pension, profit sharing and savings plans, any death benefit and disability benefit plans, life insurance coverages,
any medical, dental, health and welfare plans or insurance coverages and any stock purchase programs that are approved in writing by the Board, in its sole discretion. 
  
 4.2 VACATION. The Executive shall be entitled to four (4) weeks of paid vacation for each full calendar year of his
employment hereunder. To the extent accrued vacation time is unused in any given year, it may be carried over in accordance with the policies of the Company 

  

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then in effect. Notwithstanding anything to the contrary, however, the Executive shall not be entitled to carry over any unused vacation for a period
exceeding two (2) years. 
  
 ARTICLE 5 
 BUSINESS EXPENSES 
  
 5.1 EXPENSES. The Company shall pay or reimburse the Executive for all reasonable and authorized business expenses incurred by the Executive during the
Term; such payment or reimbursement shall not be unreasonably withheld so long as said business expenses have been incurred for and promote the business of the Company and are normally and customarily incurred by employees in comparable positions at
other comparable businesses in the same or similar market. Notwithstanding the above, the Company shall not pay or reimburse the Executive for the costs of any membership fees or dues for private clubs, civic organizations, and similar organizations
or entities, unless such organizations and the fees and costs associated therewith have first been approved in writing by the Board, in its sole discretion. 
  
 5.2 TRAVEL COSTS. Subject to the provisions of this Article 5, the Company shall reimburse the Executive for expenses incurred with
business-related travel (which expenses shall appropriately be grossed up for any income or employment taxes levied thereon on or prior to June 30, 2006). For business-related flights over four hours, Executive shall be reimbursed for Business Class
travel expenses. 
  
 5.3 RECORDS. As a condition to reimbursement
under this Article 5, the Executive shall furnish to the Company adequate records and other documentary evidence required by federal and state statutes and regulations for the substantiation of each expenditure. The Executive acknowledges and
agrees that failure to furnish the required documentation may result in the Company denying all or part of the expense for which reimbursement is sought. 
  
 ARTICLE 6 
 TERMINATION OF EMPLOYMENT

  
 6.1 TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. The Company
may, during the Term, without notice to the Executive, terminate the Executive’s employment under this Agreement and discharge the Executive for Cause (as defined below), and in such event, except as set forth in the proviso to this Section
6.1, neither party shall have any rights or obligations under Article 2, Sections 3.1 and 3.2, or Articles 4 and 5; provided, however, that (a) the Company shall pay the Executive any amount due and
owing as of the termination date pursuant to Section 3.1 and Section 3.2 (excluding a Bonus for the year in which the termination occurs) and Articles 4 and 5 (subject, in each case, to Section 3.3), and (b) the
remaining provisions of this Agreement shall remain in full force and effect in accordance with their terms. As used herein, the term “Cause” shall refer to the termination of the Executive’s employment as a result of any one
or more of the following: (i) any conviction of, or pleading of nolo contendre by, the Executive for any crime or felony; (ii) any wilfull misconduct of the Executive which has a materially injurious effect on the business or reputation of the
Company; (iii) the gross dishonesty of the Executive which has a materially injurious effect on the business or reputation of the Company; or (iv) a material failure to consistently discharge his duties under this Agreement which failure continues
for thirty (30) days following 

  

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written notice from the Company detailing the area or areas of such failure, other than such failure resulting from his Disability (as defined below);
provided, that clause (iv) above shall be deemed to be deleted from this Agreement and shall have no force or effect concurrently with the consummation of a Change of Control. For purposes of this Section 6.1, no act or failure to act,
on the part of the Executive, shall be considered “willful” if it is done, or omitted to be done, by the Executive in good faith or with reasonable belief that his action or omission was in the best interest of the Company. The Executive
shall have the opportunity to cure any such acts or omissions (other than clause (i) above) within thirty (30) days of the Executive’s receipt of a notice from the Company finding that, in the good faith opinion of the Company, the
Executive is guilty of acts or omissions constituting “Cause.” 
  
 6.2 TERMINATION WITHOUT CAUSE OR GOOD REASON. Subject to Section 6.4, the Company shall have the right, at any time in its sole and subjective discretion, to terminate the Executive’s employment under this
Agreement without Cause upon not less than thirty (30) days prior written notice to the Executive. The term “termination without Cause” shall mean the termination by the Company of the Executive’s employment for any reason
other than those expressly set forth in Section 6.1, or no reason at all, and shall also mean the Executive’s decision to terminate his employment under this Agreement 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 the Executive Vice President and Chief Financial Officer of the Company as described in Section 2.1 hereof; (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 Financial Officer of the Company; or (D) involves or results in any failure by the Company to comply with any provision of this Agreement, 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”). In the event the Company or the Executive shall exercise the termination right
granted pursuant to this Section 6.2, then except as set forth in the proviso to this Section 6.2, neither party shall have any rights or obligations under Article 2, Sections 3.1 and 3.2, or Articles 4 and
5; provided, however, that, subject to Section 3.5, the Company shall pay to the Executive (a) an amount equal to twelve (12) months of the Executive’s Base Salary in effect at the time of termination plus the Bonus (at the
Target level) and shall continue to provide all benefits in accordance with Section 4 for a period of twelve (12) months after the effective date of the termination (subject in each case to Section 3.3), except that the Company shall
not be required to provide such benefits to the extent that, during such twelve (12) month period, the Executive receives substantially similar (or better, from the Executive’s perspective) benefits from a new employer, and (b) any amount due
and owing as of the termination date pursuant to Section 3.2 (including a Bonus for the year in which the termination occurs prorated to the date of termination based on the performance of the Company in such year as of the date on which the
termination occurs versus the performance targets for the Company established by the Board for the entire year, and using such factors as the Board shall determine in its sole discretion (e.g., revenue, EBITDA, net income, etc.)) and
Article 5 (subject, in each case, to Section 3.3), and the remaining provisions of this Agreement shall remain in full force and effect 

  

 - 6 - 

 
in accordance with their terms. The amounts and benefits required by clause (a) above shall be provided only if the Executive has executed (and not
revoked) a release in favor of the Company (which release shall be substantially in the form attached as Exhibit A). The amounts payable pursuant to this Section 6.2 shall be in payment for the services rendered by the Executive
pursuant to this Agreement during the Term, and the Executive shall not be entitled to any additional amounts in consideration for such services. 
  
 6.3 TERMINATION FOR DEATH OR DISABILITY. The Executive’s employment shall terminate automatically upon the Executive’s death during the Term. If
the Company determines in good faith that the Disability (as defined below) of the Executive has occurred during the Term, 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 of this Agreement, “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
one-hundred twenty (120) 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. 
  
 6.4 STOCK OPTIONS. Upon the Executive’s termination under this
Article 6, the Company’s obligations with respect to any stock option to purchase shares of the Company’s common stock granted to the Executive shall be determined by the terms and conditions of such option as set forth in the
Executive’s written option agreement regarding such options, including, with respect to the Stock Options, the terms and conditions set forth on Schedule I hereto. 
  
 ARTICLE 7 
 PARACHUTE TAX INDEMNITY 
  
 7.1 GROSS-UP PAYMENT.

  
 (a) If it shall be determined that any amount
paid, distributed or treated as paid or distributed by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, any stock option agreement between the
Executive and the Company or otherwise, but determined without regard to any additional payments required under this Article 7) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, being hereinafter collectively
referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all federal, state and local
taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (including any interest or penalties imposed with respect thereto) and Excise Tax imposed on the Gross-up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. 
  

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 (b) The determinations of whether and when a Gross-Up Payment is required under this
Article 7 shall be made by the Company based on its good faith interpretation of applicable law. The amount of such Gross-Up Payment and the valuation assumptions to be utilized in arriving at such determination shall be made by the Company
which shall provide detailed supporting calculations to the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment subject to the Excise Tax, or such earlier time as is requested by the Company.
Any Gross-Up Payment, as determined pursuant to this Article 7, shall be paid by the Company to the Executive within twenty-five (25) days of the receipt of notice from the Executive that there has been a Payment subject to the Excise Tax.
Any determinations by the Company shall be binding upon the Executive, provided, however, if it is later determined that there has been an underpayment of Excise Tax and that the Executive is required to make an additional Excise Tax
payment(s) on any Payment or Gross-Up Payment, the Company shall provide a similar full gross-up on such additional liability. 
  
 (c) For purposes of any determinations made by the Company acting under Section 7.1(b): 
  
 (i) All Payments and Gross-Up Payments with respect to the
Executive shall be deemed to be “parachute payments” under Section 280G(b) (2) of the Code and to be “excess parachute payments” under Section 280G(b) (1) of the Code that are fully subject to the Excise Tax under Section 4999 of
the Code, except to the extent (if any) that the Company determines in good faith that a Payment in whole or in part does not constitute a “parachute payment” or otherwise is not subject to Excise Tax; 
  
 (ii) The value of any non-cash benefits or deferred or
delayed payments or benefits shall be determined in a manner consistent with the principles of Section 280G of the Code; and 
  
 (iii) The Executive shall be deemed to pay federal, state and local income taxes at the actual maximum marginal rate applicable to
individuals in the calendar year in which the Gross-Up Payment is made, net of any applicable reduction in federal income taxes for any state and local taxes paid on the amounts in question. 
  
 7.2 CLAIMS AND PROCEEDINGS. The Executive shall notify the Company in writing
of any Excise Tax claim by the Internal Revenue Service (or any other state or local taxing authority) that, if successful, would require the payment by the Company of a Gross-Up Payment. Such notification shall be given as soon as practicable but
no later than twenty (20) business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is to be paid. The Executive shall not pay such claim prior
to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such Excise Tax claim, the Executive shall: (i) give the Company any information reasonably requested by the Company relating to such claim; (ii) take such action in
connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by 

  

 - 8 - 

 
the Company after consultation in good faith with the Executive and subject to approval by the Executive (which approval shall not be unreasonably withheld)
under the circumstances set forth in Section 7.1; (iii) cooperate with the Company in good faith in order to effectively contest such claim; and (iv) permit the Company to participate in any proceeding relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expense. Without limitation of the foregoing provisions of this Article 7, the Company shall
control the Excise Tax portion of any proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of
such Excise Tax claim and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided,
however, that the Executive may elect at its sole option to pay the tax claimed and require the Company to contest through a suit for a refund. If the Executive elects to pay such Excise Tax claim and contest through a suit for a refund, the
Company shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest and penalties) imposed
with respect to such advance or with respect to any imputed income with respect to such advance; and provided, however, that any Company-directed extension of the statute of limitations relating to payment of taxes for the Executive’s taxable
year with respect to which such contested Excise Tax amount is claimed to be due shall be effective only if it can be and is limited to the contested Excise Tax liability. 
  
 7.3 REFUNDS. If, after the Executive’s receipt of an amount advanced by the Company pursuant to this Article 7
for payment of Excise Taxes, the Executive files an Excise Tax refund claim and receives any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of this Article 7) except as
provided below, promptly pay to the Company the amount of any such refund of Excise Tax (together with any interest paid or credited thereon, but after any and all taxes applicable thereto), plus the amount (after any and all taxes
applicable-thereto) of the refund (if any is applied for and received) of any income tax paid by the Executive with respect to and as a result of his prior receipt of any previously paid Gross-Up Payment indemnifying the Executive with respect to
any such Excise Tax later so refunded. In the event the Executive files for a refund of the Excise Tax and such request would, if successful, require the Executive to refund any amount to the Company pursuant to this provision, then the Executive
shall be required to seek a refund of the Income Tax portion of any corresponding Gross-Up Payment so long as such refund request would not have a material adverse effect on the Executive (which determination shall be made by independent tax counsel
selected by the Executive after good faith consultation with the Company and subject to approval of the Company, which approval shall not be unreasonably withheld). If, after the Executive’s receipt of an amount advanced by the Company pursuant
to this Article 7, a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the
expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such 

  

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advance shall offset, to the extent thereof, the amount of the Gross-Up Payment required to be paid. 
  
 ARTICLE 8 
 RESTRICTIVE COVENANTS 
  
 8.1 COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION. During the Term and following termination of Executive’s employment under this Agreement, the Executive agrees that, without the Company’s prior written
consent, he will not use or disclose to any person, firm, association, partnership, entity or corporation, any confidential information concerning: (i) the business, operations or internal structure of the Company or any division or part thereof;
(ii) the customers of the Company or any division or part thereof; (iii) the financial condition of the Company or any division or part thereof; and (iv) other confidential information pertaining to the Company or any division or part thereof,
including without limitation, trade secrets, technical data, marketing analyses and studies, operating procedures, customer and/or inventory lists, or the existence or nature of any of the Company’s agreements or agreements of any division
thereof (other than this Agreement and any other option or compensation related agreements involving, the Executive); provided, however, that the Executive shall be entitled to disclose such information: (i) to the extent the same shall have
otherwise become publicly available (unless made publicly available by the Executive); (ii) during, the course of or in connection with any actual or potential litigation, arbitration, or other proceeding based upon or in connection with the subject
matter of this Agreement; (iii) as may be necessary or appropriate to conduct his duties hereunder, provided the Executive is acting, in good faith and in the best interest of the Company; (iv) as may be required by law or judicial process or (v) if
the information is generally known to personnel in the Executive’s trade or business. 
  
 8.2 COVENANT NOT TO COMPETE. The Executive acknowledges that he has established and will continue to establish favorable relations with the customers, clients and accounts of the Company and will have access to trade
secrets of the Company. Therefore, in consideration of such relations to further protect trade secrets, directly or indirectly, of the Company, the Executive agrees that at all times during his employment with the Company through the one (1) year
anniversary of the date of termination of the Executive’s employment, the Executive will not, directly or indirectly, without the express written consent of the Board: 
  
 (i) own or have any interest in or act as an officer, director, partner, principal, employee, agent,
representative, consultant or independent contractor of, or in any way assist in, any business which is engaged, directly or indirectly, in any business competitive with the Company in those automotive markets and/or automotive products lines in
which the Company competes within the United States at any time during the Term, or become associated with or render services to any person, firm, corporation or other entity so engaged (“Competitive Businesses”); provided, however,
that the Executive may own without the express written consent of the Company not more than two percent (2%) of the issued and outstanding securities of any company or enterprise whose securities are listed on a national securities exchange or
actively traded in the over the counter market; 
  

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 (ii) solicit clients, customers or accounts of the Company for, on behalf of or otherwise
related to any such Competitive Businesses or any products related thereto; or 
  
 (iii) solicit any person who is or shall be in the employ or service of the Company to leave such employ or service for employment with
the Executive or an affiliate of the Executive. 
  
 Notwithstanding the foregoing, if any court determines that the covenant not to compete, or any part thereof, is unenforceable because of the duration of such provision or the geographic area or scope covered thereby, such court shall have
the power to reduce the duration, area or scope of such provision to the extent necessary to make the provision enforceable and, in its reduced form, such provision shall then be enforceable and shall be enforced. The Company shall pay and be solely
responsible for any attorney’s fees, expenses, costs and court or arbitration costs incurred by the Executive in any matter or dispute between the Executive and the Company which pertains to this Article 8 if the Executive prevails in
the contest in whole or in part. 
  
 8.3 SPECIFIC PERFORMANCE.
Recognizing that irreparable damage will result to the Company in the event of the breach or threatened breach of any of the foregoing covenants and assurances by the Executive contained in Sections 8.1 and 8.2, and that the
Company’s remedies at law for any such breach or threatened breach may be inadequate, the Company and its successors and assigns, in addition to such other remedies which may be available to them, shall, upon making a sufficient showing under
applicable law, be entitled to an injunction to be issued by any court of competent jurisdiction ordering compliance with this Agreement or enjoining and restraining the Executive, and each and every person, firm or company acting in concert or
participation with him, from the continuation of such breach. The obligations of the Executive and rights of the Company pursuant to this Article 8 shall survive the termination of the Executive’s employment under this Agreement. The
covenants and obligations of the Executive set forth in this Article 8 are in addition to and not in lieu of or exclusive of any other obligations and duties the Executive owes to the Company, whether expressed or implied in fact or law.

  
 ARTICLE 9 
 GENERAL PROVISIONS 
  
 9.1 FINAL AGREEMENT. Except with respect to the terms of (a) any existing confidentiality, non-disclosure, and non-competition agreements between the
Company and the Executive (solely for the purposes of permitting either party to seek remedies for a breach thereof in respect of acts or omissions occurring prior to the date hereof), and (b) any existing indemnification agreements, inventions
agreements, and stock option agreements between the Executive and the Company, this Agreement is intended to be the final, complete and exclusive agreement between the parties relating to the employment of the Executive by the Company and all prior
or contemporaneous understandings, representations and statements, oral or written, are merged herein. Except as set forth in clauses (a) and (b) above, this Agreement supersedes all of the Executive’s compensation agreements with
the Company, and the Executive expressly acknowledges that he is not and will not be entitled to any severance payments under any 

  

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Company agreement or change of control plan. No modification, waiver, amendment, discharge or change of this Agreement shall be valid unless the same is in
writing and signed by the party against which the enforcement thereof is or may be sought. 
  
 9.2 NO WAIVER. No waiver, by conduct or otherwise, by any party of any term, provision, or condition of this Agreement, shall be deemed or construed as a further or continuing waiver of any such term, provision, or
condition nor as a waiver of a similar or dissimilar condition or provision at the same time or at any prior or subsequent time. 
  
 9.3 RIGHTS CUMULATIVE. The rights under this Agreement, or by law or equity, shall be cumulative and may be exercised at any time and from time to time.
No failure by any party to exercise, and no delay in exercising, any rights shall be construed or deemed to be a waiver thereof, nor shall any single or partial exercise by any party preclude any other or future exercise thereof or the exercise of
any other right. 
  
 9.4 NOTICE. Except as otherwise provided in
this Agreement, any notice, approval, consent, waiver or other communication required or permitted to be given or to be served upon any person in connection with this Agreement shall be in writing. Such notice shall be personally served, sent by
telegram, tested telex, fax or cable, or sent prepaid by either registered or certified mail with return receipt requested or Federal Express and shall be deemed given (i) if personally served or by Federal Express, when delivered to the person to
whom such notice is addressed, (ii) if given by telegram, telex, fax or cable, when sent, or (iii) if given by mail, two (2) business days following deposit in the United States mail. Any notice given by telegram, telex, fax or cable shall be
confirmed in writing), by overnight mail or Federal Express within forty-eight (48) hours after being sent. Such notices shall be addressed to the party to whom such notice is to be given at the party’s address set forth below or as such party
shall otherwise direct. 
  
 If to the Company: 
  
 Autobytel Inc. 
 18872 MacArthur Boulevard 
 Irvine, California
92612-1400 
 Facsimile: (949) 862-1323 
 Attn: General Counsel 
  
 If to the Executive:

  
 Michael Schmidt 
 c/o Autobytel Inc. 
 18872 MacArthur Boulevard

 Irvine, California 92612-1400 
 Facsimile: (949) 862-1323 
  
 9.5 SUCCESSORS. The terms
and conditions of this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto. 
  

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 9.6 GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the laws of the
State of California, without giving effect to the principles of conflict of laws thereof. 
  
 9.7 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one instrument. 
  
 9.8 SEVERABILITY. The provisions of this Agreement are agreed to be
severable, and if any provision, or application thereof, is held invalid or unenforceable, then such holding shall not affect any other provision or application. 
  
 9.9 CONSTRUCTION. As used herein, and as the circumstances require, the plural term shall include the singular, the singular
shall include the plural, the neuter term shall include the masculine and feminine genders, and the feminine term shall include the neuter and the masculine genders. 
  
 9.10 ARBITRATION. Except as otherwise provided in Section 8.3 hereof, any controversy or claim arising out of, or
related to, this Agreement, or the breach thereof, shall be settled by binding arbitration in the City of Irvine, California, in accordance with the employment arbitration 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 Agreement, 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 brought by either the Executive or the Company alleging that the other party breached or otherwise failed to perform this Agreement or any provision hereof to be performed by the other party if the
Executive prevails in the contest in whole or in part. 
  
 9.11
LEGAL FEES. All reasonable attorney’s fees and costs incurred by the parties in connection with the negotiation and preparation of this Agreement and diligence related matters shall be borne by the Company. 
  
 [SIGNATURE PAGE FOLLOWS] 
  

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

  

					
	AUTOBYTEL INC.
		
	By:	 	/s/ Richard A. Post
	 	 	 Name:
	 	 Rick Post

	 	 	 Title:
	 	 Chief Executive Officer

	
	MICHAEL SCHMIDT
		
	By:	 	 /s/ Michael Schmidt

  

 - 14 - 

 SCHEDULE I 
  
 (a) Vesting. Unless a more favorable vesting schedule is approved by the Board, the Compensation Committee or other appropriate committee of the
Board, the Stock Options shall vest, assuming the Executive at all times remains an employee of the Company, as follows: (a) 50,000 of the shares underlying such Stock Options shall vest on the first anniversary of the date on which they are
granted, and thereafter (b) 4,166 of the shares underlying such options shall vest on each monthly anniversary of the grant date. 
  
 (b) Payment Upon Exercise. Payment for the shares subject to any Stock Option may be tendered in cash or by certified, bank cashier’s or
teller’s check or by shares of the Company’s common stock (valued at fair market value (as determined by the Company) as of the date of tender) already owned by the Executive, or some combination of the foregoing or through cashless
exercise or such other form of consideration which has been approved by the Board, including a promissory note given by the Executive. 
  
 (c) Termination for Cause. As of the date of the Executive’s termination for Cause, any unvested or unexercised portion of any Stock Options
shall terminate immediately and shall be of no further force or effect. 
  
 (d) 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, any unvested portion of any Stock Option shall become immediately
and fully vested and all Stock Options, including any previously vested but unexercised portions of any Stock Options, shall be exercisable from such termination of employment until the date that is two (2) years following the termination date, but
in no event later than ten (10) years following the date of grant. 
  
 (e) 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 Stock Option shall become immediately and fully vested and all
Stock 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, but in no event later than ten (10) years
following the date of grant. 
  
 (f) 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, but in no event later than
ten (10) years following the date of grant. 
  
 (g) Termination
Prior to or Following a Change of Control. In the event of a Change of Control of the Company (a) during the Term while the Executive remains employed by the Company, or (b) at any time during the six (6) month period following the termination
of the Executive’s employment with the Company (other than for Cause or without Good Reason), any 

  

 
unvested installment of any Stock 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, but in no event later than ten (10) years following the date of grant; provided, however, that
notwithstanding the foregoing, any such Stock Options shall remain exercisable beyond such dates so long as Executive is an employee of the Company or any successor thereto or affiliate thereof.

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