Document:

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                                                                    EXHIBIT 10.4

                             CONTRACT OF EMPLOYMENT

THE UNDERSIGNED:

1.      Autobytel.Europe Holdings B.V. established and with registered offices
        in Almere, the Netherlands at Alnovum - Witte Toren, P.J. Oudweg 9-15,
        1314 HC, according to the Articles of Association, duly represented by
        Mr. J. Knottenbelt in his capacity as Interim Chief Executive Officer,
        hereinafter referred to as "the employer"

        and

2.      Mr. M.J.L.M. Rens, born on February 4th 1947 in Maastricht, currently
        living in the Netherlands at Van Leijenberghlaan 84, 1082 GM Amsterdam,
        hereinafter referred to as "the employee",

        HAVE AGREED THE FOLLOWING:

1.      POSITION

        1.1.    The employee shall be employed in the position of Chief
                Executive Officer. The employee shall apply his mind and skill
                to the best of his ability.

        1.2.    The employee's place of work shall be based in Almere, the
                Netherlands at Alnovum - Witte Toren, P.J. Oudweg 9-15, 1314 CH.

        1.3.    The employee agrees to accept another place of work, within a
                reasonable distance from the address in subsection 1.2.

        1.4.    The employee shall not fulfil any remunerative ancillary
                functions for or on behalf of another, nor in any other way
                conduct any ancillary remunerative activities, without prior
                written consent of the employer.

        1.5.    The employee shall not fulfil any ancillary non-remunerative
                functions, which are business related, for or on behalf of
                another, nor in any other way conduct any ancillary
                non-remunerative business related activities, without prior
                written consent of the employer.

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2.      DURATION

        2.1.    The term of service commences on October 17th, 2000 and shall
                continue for an indeterminate period. The contract of employment
                shall terminate in any event by operation of law on the last day
                of the calendar month in which the employee attains the
                pensionable age of 65 or the age as stated in the company's
                pension scheme.

        2.2.    Both parties are entitled to terminate the contract by means of
                an interim notice at the end of a calendar month, taking into
                account, with reference to this section exclusively, a notice
                period of 1,5 month for the employee and 3 months for the
                employer in accordance with the Dutch Labour Law.

3.      HOURS OF WORK

        This employment agreement concerns full time employment, the normal
        hours being a total of 40 hours worked, between 08.00 AM and 17.30 PM
        Monday to Friday. The salary as stated under subsection 4.1. of this
        agreement reflects the fact that from time to time the employer may ask
        the employee to work in excess of these hours.

4.      SALARY AND HOLIDAY ALLOWANCE

        4.1.    Gross salary shall amount to USD 400,000 per year. This salary
                will be divided in twelve (12) equal monthly installments. Each
                installment shall be paid on the last day of the month at the
                latest, net of statutory and voluntary deductions into a bank or
                giro account to be designated by the employee.

        4.2.    The salary stated in 4.1 above includes any allowance for
                overtime and hours worked on Saturdays, Sundays and public
                holidays.

        4.3.    The employee is entitled to a yearly bonus based on his
                professional achievements. The bonus is maximised to 25% of the
                annual fixed salary at 100% achievement of set goals. The annual
                fixed salary equals the amount mentioned in section 4.1.

                The bonus is paid out gross to the employee. The objectives will
                be determined at the start of the employment. In case duties as
                mentioned under subsection 1.1. change, new objectives can be
                applicable to the employee.

                For the initial period of employment, ending at December 31,
                2002, the bonus as mentioned above will not be based on set
                goals and individual performance. The bonus associated with this
                period, however, will be fixed at USD 100,000 per annum. The
                bonus is paid out pro rata in accordance with the actual
                employment period.

        4.4.    The employee shall be entitled to a holiday allowance of 8%. The
                holiday allowance is included in the gross annual salary as
                mentioned in section

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                4.1. If the employment commences or terminates in the course of
                a year, the holiday allowance shall be calculated
                proportionately.

        4.5.    The salary and other allowances mentioned in this article will
                be reviewed annually in the month of January. The first review
                will be in January 2002.

5.      STOCK OPTIONS

        The entitlement to stock options will be determined in a separate
agreement.

6.      EXPENSE ALLOWANCES

        6.1.    The employer will reimburse the employee all authorised
                reasonable business expenses incurred in the execution of his
                job duties against submitted receipts by the employee.

        6.2.    The employee will be entitled to a fixed net amount of EUR 340
                for representation costs and small expenditures.

        6.3.    The employer will reimburse the employee for all reasonable
                business telephone costs (telephone, fax, ISDN incurred while
                using his private phone).

                In addition, the employer will provide the employee with a
                mobile phone for business use only.

7.      ILLNESS AND DISABLEMENT

        7.1.    If the employee is unable to attend work due to illness, he or
                his representative shall notify the employer preferably on the
                first day of illness.

        7.2.    The employee shall ensure that he can be contacted by the
                employer as much as possible during his illness.

        7.3.    In the event of disability or illness of the employee, the
                employer shall continue to pay the employee's salary, as set out
                in subsection 4.1. for 100%, during the first year of his
                disability or illness.

8.      INSURANCES

        8.1.    In case the employee will no longer be compulsory insured
                according to the compulsory Health Insurance Act, the employer
                shall pay 50% of the health insurance premium, but this amount
                shall never exceed the employer's contribution to the compulsory
                health insurance premium payable by the employer. The employer's
                contribution shall be subject to wage tax. The employee's
                contribution shall be withheld from the monthly salary.

        8.2.    The employee will be provided with a Business Travel Insurance
                on a world-wide basis. The premium will be paid by the employer.

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        8.3.    The employee will be enrolled in the company's WAO-gap
                insurance. The benefit of the insurance is subject to the terms
                and conditions of the insurance policy. The premium for this
                insurance is paid by employer and employee on a 50:50 basis.

        8.4.    The employer will take out a WAO-excedent insurance on behalf of
                the employee. The insurance covers for 70% of the last earned
                salary as stated in section 4.1. in case of serious
                illness/disability. The benefit of the insurance is subject to
                the terms and conditions of the insurance policy.

        8.5.    The employee will be entitled to participate in the company
                pension scheme. The terms and conditions of the company pension
                scheme are set out in a separate pension letter.

9.      OTHER BENEFITS

        9.1.    In the event of this agreement ending as a result of long-term
                disability of the employee due to an accident, the employee will
                receive a one-time payment up to four times the annual fixed
                salary as stated under section 4.1.

        9.2.    In the event of death of the employee due to an accident, the
                employer will pay a one-time payment up to twice the annual
                fixed salary as mentioned in section 4.1.

        9.3.    The level of the benefits mentioned in subsections 9.1. and 9.2.
                are subject to the terms and conditions of the company provided
                accident insurance policy.

        9.4.    The employee will be entitled to a company sponsored lease car.
                The monthly lease price of the car will be based on the car the
                employee had in his employment immediately prior to this
                employment. The monthly lease price will be inclusive of fuel
                and exclusive of VAT.

10.     HOLIDAY YEAR / DAY'S LEAVE

        10.1.   The holiday year is the period in which the number of days'
                leave is calculated. The holiday year coincides with the
                calendar year.

        10.2.   The employee is entitled to 25 days' leave in each holiday year,
                such to be established by the employer in consultation with the
                employee. This is in addition to the employees entitlement to
                all statutory or public holidays in the country of his
                employment.

        10.3.   An employee who has not been employed for the entire holiday
                year shall be entitled to 1/12 of the annual leave for each full
                month of employment.

        10.4.   The employee undertakes to take all days' leave accruing to him
                before the termination of the contract of employment, unless
                such is not possible because of the nature of the work or other
                circumstances. In this case, the employee and the employer shall
                come to an agreement regarding payment in lieu.

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11.     DIRECTORS' & OFFICERS' LIABILITY INSURANCE

        The employer will supply the employee with a Directors' & Officers'
        Liability insurance. The benefit of the D&O Liability insurance is
        subject to the terms and conditions of the insurance policy.

12.     CONFIDENTIALITY

        12.1.   The employee undertakes, both during and after the termination
                of this contract of employment, not to disclose any information
                about the employer or its business or one or more affiliated
                companies or their business which he knows or suspects could be
                detrimental to the employer and/or those affiliated companies.
                This obligation also applies to information on clients or other
                business contacts. The employee is obliged to return all
                documentation belonging to the employer which he has in his
                possession together with his own notes and photocopies.

        12.2.   Any infringement of this clause during the employment shall
                constitute a pressing reason to terminate the contract of
                employment with immediate effect, without prejudice to the right
                of the employer to demand full compensation.

        12.3.   Any infringement of this clause following termination of the
                employment shall cause the employee to pay a penalty of EUR
                11,345 on demand, without prejudice to the right of the employer
                to demand full compensation instead of the penalty.

13.     INTELLECTUAL PROPERTY RIGHTS

        The Employee shall transfer to the Employer and/or cooperate in the
        transfer to the Employer on the first request of the Employer, all
        (future) inventions made by him and/or any intellectual- and industrial
        property rights that may come into being by his actions and/or
        activities, during this agreement or which are made or will come into
        being after this agreement has terminated but can be considered to
        follow from the existence of this agreement. Parties agree that any
        compensation that can follow from such an invention or property rights
        is deemed to be included in the remuneration for the services rendered
        in the course of this agreement.

14.     PROPERTY OF THE EMPLOYER

        14.1.   All material made available to the employee by the employer is
                and shall remain the property of the employer. It is prohibited
                to use such material for private purposes without the express
                permission of the employer.

        14.2.   The employee shall return all property of the employer to the
                employer without being asked immediately upon the termination of
                the employment or earlier if requested by the employer.

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        14.3.  In case of suspension and termination of employment, regardless
               of the manner in which or the reason why employment is being
               terminated, the employee will put at the disposal of the
               employer, upon its first request, all properties of the employer
               over which he/she has control, as well as all documents and
               copies of documents that in the broadest possible sense in any
               way relates to the employer and/or to associated companies, its
               clients and other business connections.

15.     COMPENSATION FOR DAMAGES

        Contrary to the provisions of section 6:170 subsection 3 and section
        7:661 Dutch Civil Code, the employee is, insofar as and to the extent to
        which he is insured for this risk, liable towards the employer for
        damages that the employee, in carrying out the agreement, causes to the
        employer or a third party to whom the employer is liable for such
        damages, even if such damage was not caused intentionally or due to
        gross negligence on the part of the employee.

16.     RESTRAINT OF TRADE

        16.1.   The employee is forbidden, without prior written consent of the
                employer, both during the period of his term of service, and
                during a period of 2 years after the conclusion of his term of
                service, either directly or indirectly, for himself or for
                others, for remuneration or gratuitously, to be employed in any
                way whatsoever, or to have an interest in any business
                detrimentally competitive to the employer or legal persons and
                companies which belong to the group of which the employer is a
                part. This limitation applies equally to new activities of the
                employer which have commenced after the period during which this
                employment agreement is in force, in so far as the employee was
                involved in such activities.

        16.2.   If the employee acts contrary to the provisions of subsection 1
                of this section, he shall without notice forfeit to the
                employer, an immediate fine of EUR 11,345 increased by an amount
                of EUR 113 per day that the transgression endures beyond the
                first day of the transgression, such liability not infringing
                upon the right of the employer, to claim damages in full in lieu
                of the fine. In addition to payment of a fine and/or damages due
                to a past breach, the employer is also entitled to claim
                compliance in the future.

        16.3.   The employee is equally obliged to comply with the provisions of
                subsection 1 subject to the sanction set out in subsection 2,
                with respect to a future employer, whether or not this concerns
                the transfer of a business undertaking in terms of section 7:662
                and following Dutch Civil Code.

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                                                                          Page 7

17.     SEVERANCE PAYMENTS ON TERMINATION

        17.1.   Subject to the employee agreeing at the time to waive any claims
                he may have against the employer, the employer agrees to make
                the following payments in the circumstances described below.

        17.2.   If the employer terminates this agreement due to other reasons
                than the malfunctioning of the employee as mentioned in
                subsection 17.3, the employer will supply the employee with a
                severance pay equal to one year's salary as stated in subsection
                4.1. This amount will be paid out gross to the employee through
                his final pay slip. During the period of employment the employer
                will keep the above mentioned severance amount in escrow.

        17.3.   If the termination of the employment agreement by the employer
                is the result of the malfunctioning of the employee (being gross
                negligence or willful misconduct), the employee is not entitled
                to any severance pay.

        17.4.   If the employee voluntarily terminates the employment agreement,
                the employer will not supply the employee with a severance pay.

18.     GIFTS

        18.1.   With regard to the fulfilling of his duties, the employee is
                forbidden, without the prior consent of the employer, to accept
                from third parties, directly or indirectly in any way
                whatsoever, any commission, concession or compensation in any
                form whatsoever, or to accept or insist on any gifts.

        18.2.   The provisions of subsection 18.1. do not apply to gifts from
                clients of a nominal value.

        18.3.   The employee is obliged, if he has acted contrary to the
                provisions of the preceding subsections, to pay to the employer
                the value of the commissions, concessions, compensations and/or
                gifts referred to in subsection 18.1, such payment not
                infringing upon the right of the employer to claim damages in
                full lieu thereof.

19.     EMPLOYEE'S OBLIGATIONS

        19.1.   The employee undertakes to perform all work for the employer to
                the best of his ability and in line with the objectives set by
                the employer.

        19.2.   Objectives can be re-negotiated by the employee and the
                management subject to the employer's approval.

        19.3.   The employee undertakes to perform his work in accordance with
                the instructions given to him by the employer.

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20.     EMPLOYER'S OBLIGATIONS

        The employer shall act as a good employer according to reasonableness
        and fairness. The employer undertakes to perform reasonable actions
        within his power in order to avoid damage to the employees.

21.     OTHER

        21.1.   Previous oral and/or written contracts of employment and/or
                agreements on fringe benefits and expense allowances shall be
                superseded upon signature of this contract.

        21.2.   This agreement shall be governed by and interpreted in
                accordance with the laws of The Netherlands.

        21.3.   All controversies relating to and arising from this agreement
                shall exclusively be submitted to the competent court in The
                Netherlands.

Thus drawn up and signed in duplicate in Amsterdam on September 1st 2000

/s/ Max Rens                        /s/ Joop Knottenbelt
---------------------               -------------------------------
Employee                            Autobytel.Europe Holdings B.V.
Mr. M.J.L.M. Rens                   by     Mr. J. Knottenbelt
                                    title  Interim Chief Executive Officer
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                     ADDENDUM TO THE CONTRACT OF EMPLOYMENT

THE UNDERSIGNED:

1.      Autobytel.Europe Holdings B.V. established and with registered offices
        in Almere, the Netherlands at Alnovum -- Witte Toren, P.J. Oudweg 9-15,
        1314 HC, according to the Articles of Association, duly represented by
        Mr. J. Knottenbelt in his capacity as Interim Chief Executive Officer,
        hereinafter referred to as "the employer"

        and

2.      Mr. M.J.L.M. Rens, born on February 4th 1947 in Maastricht, currently
        living in the Netherlands at Van Leijenberghlaan 84, 1082 GM Amsterdam,
        hereinafter referred to as "the employee",

        HAVE AGREED THE FOLLOWING:

1.      EXCHANGE RATE USD TO EUR

        Considering the fact that the employer will be paying the employee in
        Euro's, parties have agreed as follows:

        1.1.    At the commencement of the employment as stated under section
                2.1. of the employment agreement, all USD denominated amounts
                will be converted into Euro's. As of this date, payments will be
                in Euro's.

        1.2.    The exchange rate of the USD to the EUR will be fixed at the
                exchange rate measured at the moment of signature of the
                contract of employment.

2.      OTHER

        2.1.    This agreement forms an inseparable part of the contract of
                employment signed on September 1st 2000.

        2.2.    This agreement shall be governed by and interpreted in
                accordance with the laws of The Netherlands.

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        2.3.    All controversies relating to and arising from this agreement
                shall exclusively be submitted to the competent court in The
                Netherlands, unless other arbitration rules are agreed upon by
                the parties in writing.

Thus drawn up and signed in duplicate in Amsterdam on September 1st 2000

/s/ Max Rens                            /s/ Joop Knottenbelt
-----------------------------           ------------------------------------
Employee                                Autobytel.Europe Holdings B.V.
Mr. M.J.L.M. Rens                       by     Mr. J. Knottenbelt
                                        title  Interim Chief Executive Officer<PAGE>   1
                                                                    EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

        This Employment Agreement ("Agreement") is made and entered into, at
Irvine, California, as of the 3rd day of May, 2000, by and between AUTOBYTEL.COM
INC., a corporation duly organized under the laws of the State of Delaware (the
"Company"), with offices at 18872 MacArthur Boulevard. Second Floor, Irvine,
California, 92612-1400, and DENNIS BENNER (hereinafter referred to as the
"Executive"), who resides at 29906 Avenida Magnifica, Rancho Palos Verdes,
California 90274.

                                    RECITALS

        WHEREAS: The Company desires to employ the Executive as Executive Vice
President, Corporate Development.

        WHEREAS: The Executive desires to be so employed by the Company, subject
to the following terms and conditions.

        NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and with reference to the above recitals, the parties hereby
agree as follows:

                                    ARTICLE 1

                               TERM OF EMPLOYMENT

        The Company hereby employs the Executive as Executive Vice President,
Corporate Development of the Company and the Executive hereby accepts such
employment by the Company for a period of three (3) years (the "Term")
commencing from May 3, 2000 (the "Commencement Date") and expiring on the third
anniversary of the Commencement Date (the "Termination Date"), which Term shall
automatically renew for one year periods unless either party notifies the other
of its election not to renew at least 30 days prior to the Termination Date or
any applicable anniversary thereof. Notwithstanding the above, in the event of a
Change of Control of the Company prior to March 31, 2001 and while the Executive
remains employed by the Company, the Term shall automatically extend for a
period of three (3) years commencing from the date of the Change of Control, and
in the event of a Change in Control between March 31, 2001 and the Termination
Date, the Term shall automatically extend for a period of tw (2) years
commencing from the date of the 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 initial or secondary public
offering) in one or a series of related transactions of all or substantially all
of the assets of the Company taken as a whole to any person (a "Person") or
group of persons acting together (a "Group") (other than any of the Company's
wholly-owned subsidiaries, any Company employee pension or benefits plan, or any
person or entity owning at least five (5) percent of the common stock of the
Company as of March 31, 1999), (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company, (iii) the consummation of any
transactions (including any stock or other purchase, sale, acquisition,
disposition, merger or consolidation, but not including any initial or secondary
public offering) the result of which is that any Person or Group (other than any
of the Company's wholly-owned subsidiaries, any Company employee pension or
benefits plan, or any person or entity owning at least five (5) percent of the
common stock of the Company as of March 31, 1999), becomes the beneficial owners
of more than 40 percent of the aggregate voting power of all classes of stock of
the Company having the right to elect directors under ordinary circumstances; or
(iv) the first day on which a majority of the members of the board of directors
of the Company (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.

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                                    ARTICLE 2

                             DUTIES AND OBLIGATIONS

        2.1 During the Term of this Agreement, the Executive shall: (i) devote
his full business time, attention and energies to the business of the Company;
(ii) shall use his best efforts to promote the interests of the Company; (iii)
shall perform all functions and services as the Executive Vice President,
Corporate Development of the Company; (iv) shall act in accordance with the
policies and directives of the Company; and (v) shall report directly to the
Chief Executive Officer and President of the Company.

        2.2 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 or organization, 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 Chief Executive Officer. 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 shall not require the prior written consent of the Chief
Executive Officer. In addition, the Executive's reasonable assistance to Fluor
Corporation in connection with the Executive's transition from employment with
Fluor Corporation to the Company shall not be deemed a breach of this Agreement,
provided that those activities do not materially interfere with the services
required under this Agreement and shall not extend beyond the first two (2)
months of the Executive's employment with the Company, and shall not require the
prior written consent of the Chief Executive Officer 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;provided, however, that the Executive shall in no event
serve as a director or board member of any competitor of the Company. The
Executive shall notify the Chief Executive Officer of any entity of which he is
a director or board member.

                                    ARTICLE 3

                                  COMPENSATION

        3.1 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 equal to at least Two Hundred Twenty Five Thousand Dollars
($225,000.00) 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 and Chief Executive Officer 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 The Company shall provide the Executive with the opportunity to earn
an annual bonus for each fiscal year of the Company, occurring in whole or in
part during the Term. The annual bonus payable to the Executive shall be in such
amount and based on such criteria for the award as may be established by the
Board from time to time; provided, however, that such annual bonus shall not be
less than One Hundred Thousand Dollars ($100,000). 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.

                                       2
<PAGE>   3

        3.3 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 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 The Executive shall receive a sign-on bonus in the amount of Fifty
Thousand Dollars ($50,000).

        3.6 The Company shall reimburse the Executive for the costs incurred for
accommodations at the Irvine Airport Hilton up to a maximum of fifteen (15) days
per month during the Term.

        3.7 Stock Options. The Executive shall be granted stock options under
the Company's 2000 Stock Option Plan ( the "2000 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 per share on the Commencement Date,
the exercise of which shall be subject to stockholder approval of the 2000 Stock
Option Plan.

                        a. Vesting. The 2000 Options shall vest based on the
                continued employment of the Executive as follows: fifty percent
                (50%) on the first anniversary of the Commencement Date and
                fifty percent (50%) on the second anniversary of the
                Commencement Date. The Company and the Executive agree that the
                terms and conditions set forth on Schedule A hereto are hereby
                deemed incorporated by reference in and made a part of any stock
                option agreements between the Company and the Executive and
                shall govern any stock options to purchase shares of the
                Company's common stock held by the Executive (the "Options")
                other than the Performance Options (as defined below) which
                shall be governed by Schedule B hereto.

        3.8 Performance Options. As further consideration for the services
rendered by the Executive during the Term, the Executive also shall be granted
options to purchase two hundred fifty thousand (250,000) shares of the Company's
common stock (the "Performance Options") under the Company's 2000 Stock Option
Plan, the exercise of which shall be subject to stockholder approval of the 2000
Stock Option Plan. The Performance Options shall vest in five (5) equal
installments of fifty thousand (50,000) as specified below. The Performance
Options shall have a ten (10) year term (the "Performance Option Term") of
exercise and, except as otherwise provided herein shall remain exercisable
following vesting for the full term. The exercise price of an option granted as
a Performance Option shall be equal to the closing price per share on the
Commencement Date. The Company and the Executive agree that the terms and
conditions set forth on Schedule B hereto are hereby deemed incorporated by
reference and shall govern the Performance Options.

                        a. Vesting. The Performance Options shall vest on the
                fifth (5th) anniversary of the Commencement Date, subject to the
                continued employment of the Executive (without regard to stock
                price performance); provided however that based on the continued
                employment of the Executive, the vesting of the Performance
                Options shall accelerate as follows:

                (i) the first installment will vest immediately and fully upon
        the first eight (8) month anniversary of the Commencement Date, or any
        seven month anniversary of such date thereafter, if the average trading
        price (as determined by averaging either the closing price or bid-ask
        midpoint) of the Company's common stock for the ten trading days (the
        "Average Trading Price") preceding any such anniversary date exceeds
        Eleven Dollars ($11.00);

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<PAGE>   4

                (ii) the second installment will vest immediately and fully upon
        the fifteen month (15) anniversary of the Commencement Date, or any
        seven month anniversary of such date thereafter, if the Average Trading
        Price preceding any such anniversary date exceeds Sixteen Dollars
        ($16.00);

                (iii) the third installment will vest immediately and fully upon
        the twenty two (22) month anniversary of the Commencement Date, or any
        seven month anniversary of such date thereafter, if the Average Trading
        Price preceding any such anniversary date exceeds Twenty One Dollars
        ($21.00);

                (iv) the fourth installment will vest immediately and fully upon
        the twenty nine (29) month anniversary of the Commencement Date, or any
        seven month anniversary of such date thereafter, if the Average Trading
        Price preceding any such anniversary date exceeds Twenty six Dollars
        ($26.00); and

                (v) the fifth installment will vest immediately and fully upon
        the thirty six (36) month anniversary of the Commencement Date, or any
        seven month anniversary of such date thereafter, if the Average Trading
        Price preceding any such anniversary date exceeds Thirty One Dollars
        ($31.00).

                                    ARTICLE 4

                                EMPLOYEE BENEFITS

        4.1 The Company agrees that the Executive shall be entitled to all
ordinary and customary perquisites afforded to the employees of the Company, at
the Company's sole expense (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 afforded to the Executive on
the date hereof and the other 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
by the Board on terms and conditions at least as favorable as provided to the
Executive on the date hereof and other employee's of the Company as of the date
hereof or from time to time.

        4.2 The Executive shall be entitled to three (3) weeks of paid vacation
for each year of his employment hereunder (including three weeks for 2000),
which, to the extent unused in any given year, may be carried over in accordance
with the policies of the Company then in effect. Notwithstanding anything to the
contrary, however, the Executive shall not be entitled to carry over any unused
vacation for a period exceeding two (2) years.

                                    ARTICLE 5

                                BUSINESS EXPENSES

        5.1 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

                                       4
<PAGE>   5

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 Chief Executive Officer.

        5.3 As a condition to reimbursement under this Article 5, the Executive
shall furnish to the Company adequate records and other documentary evidence
required by federal and state statutes and regulations for the substantiation of
each expenditure. The Executive acknowledges and agrees that failure to furnish
the required documentation may result in the Company denying all or part of the
expense for which reimbursement is sought.

                                    ARTICLE 6

                            TERMINATION OF EMPLOYMENT

        6.1 TERMINATION FOR CAUSE. The Company may, during the Term, without
notice to the Executive, terminate this Agreement and discharge the Executive
for Cause, whereupon the respective rights and obligations of the parties
hereunder shall terminate; provided, however, that the Company shall immediately
pay the Executive any amount due and owing pursuant to Articles 3, 4, and 5,
prorated to the date of termination. As used herein, the term "for Cause" shall
refer to the termination of the Executive's employment as a result of any one or
more of the following: (i) any arrest of the Executive involving a crime of
dishonesty or moral turpitude, or any conviction of the Executive for any crime
or felony; (ii) any misconduct of the Executive which has a materially injurious
effect on the business or reputation of the Company; (iii) the dishonesty of the
Executive; or (iv) failure to consistently discharge his duties under this
Agreement which failure continues for thirty (30) days following written notice
from the Company detailing the area or areas of such failure. For purposes 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 item (i) above) within fifteen (15) 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. Anything in this Agreement to the
contrary notwithstanding, the Company shall have the right, at any time in its
sole and subjective discretion, to terminate 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 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
this Agreement by reason of any act, decision or omission by the Company that:
(A) materially modifies, reduces, changes, or restricts the Executive's salary,
bonus opportunities, options or other compensation benefits or perquisites, or
the Executive's authority, functions, services, duties, rights, and privileges
as, or commensurate with the Executive's position as, Executive Vice President,
Corporate Development of the Company as described in Section 2.1 hereof; (B)
relocates the Executive without his consent from the offices located at 29906
Avenida Magnifica, Rancho Palos Verdes, California 90274 to any other location
in excess of fifty (50) miles beyond the geographic limits of Rancho Palos
Verdes, California; (C) deprives the Executive of his titles and positions of
Executive Vice President, Corporate Development 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, the Company shall, within thirty (30) days of
notice of termination to or from the Executive (as the case may be), pay to the
Executive in a single lump-sum payment the base salary that would have been
received by the Executive if he had remained employed by the Company for the
remaining balance of the Term but in no event less than twelve (12) months;
provided, however, that for

                                       5
<PAGE>   6

purposes of calculating the payment pursuant to this sentence, the Executive's
base salary per year shall be the highest rate in effect during the Term. The
Company also shall (i) continue to provide to the Executive and his
beneficiaries, at its sole cost, the insurance coverages referred to in Section
4.1 above, and (ii) pay to the Executive in a single lump-sum payment the
aggregate cost of the benefits (other than insurance coverages) under Section
4.1 hereof, in each case to the extent he would have received such insurance
coverages and benefits had he remained employed by the Company for the remaining
balance of the Term but in no event less than twelve (12) months.

        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 ninety (90) consecutive calendar
days, or for a period of one hundred eighty (180) calendar days, whether or not
consecutive, during any three hundred sixty-five (365) day period.

        6.4 TERMINATION WITHOUT GOOD REASON. Anything in this Agreement to the
contrary notwithstanding, the Executive shall have the right, at any time in his
sole and subjective discretion, to terminate this Agreement without Good Reason
upon not less than thirty (30) days prior written notice to the Company. In the
event the Executive voluntarily terminates his employment hereunder other than
for Good Reason, the respective rights and obligations of the parties hereunder
shall terminate; provided, however, that the Company shall immediately pay the
Executive any amount due and owing pursuant to Articles 3, 4, and 5, prorated to
the date of termination.

        6.5 TERMINATION PRIOR TO OR FOLLOWING A CHANGE OF CONTROL.
Notwithstanding the foregoing, in the event the employment of the Executive is
terminated during the twelve (12) months following a Change of Control either:
(i) by the Executive for Good Reason; or (ii) by the Company other than for
Cause, Disability or death, then the provisions of Section 6.2 hereof shall not
apply, and the Company shall, within thirty (30) days of notice of termination
to the Executive, pay to the Executive in a single lump-sum payment the greater
of: (i) the base salary that would have been received by the Executive if he had
remained employed by the Company for the remainder of the Term, or (ii) an
amount equal to one (1) year of base salary plus an amount equal to the highest
annual bonus paid by the Company to the Executive during the Term prior to
termination. In addition, the Company shall continue to provide to the Executive
and his beneficiaries, at its sole cost, the insurance coverages referred to in
Section 4.1 above for one (1) year. For purposes of this Section 6.5, "Term"
shall be the period of time of this Agreement as defined by Article 1 hereof,
which includes any extension thereof by reason of a Change of Control prior to
March 31, 2001.

        6.6 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 option, including the terms and conditions set forth on
Schedules A or B hereto, as applicable, the terms and conditions of which
Schedules A or B, as applicable, shall govern such stock option, it being
understood that Schedule B only applies to the Performance Options.

                                       6
<PAGE>   7
                                    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 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,
        provided, however, that in no event will the amount of the Gross-Up
        Payment payable pursuant to this Article 7 exceed Two Hundred Fifty
        Thousand Dollars ($250,000).

                (b) The determinations of whether and when a Gross-Up Payment is
        required under this Article 7 shall be made by independent tax counsel
        (the "Tax Counsel") 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 an
        independent nationally recognized accounting firm (the "Accounting
        Firm") which shall provide detailed supporting calculations both to the
        Company and the Executive within 15 business days of the receipt of
        notice from the Executive that there has been a Payment, or such earlier
        time as is requested by the Company. The Tax Counsel and Accounting Firm
        shall initially be appointed by the Company after consultation in good
        faith with the Executive and subject to the approval of the Executive
        (which approval shall not be unreasonably withheld), provided, however,
        that if the potential amount of the Gross-Up Payment (but for the limit
        in Section 7.1(a) above) could exceed Two Hundred Fifty Thousand Dollars
        ($250,000), the Executive shall have the opportunity to appoint a new
        Tax Counsel and Accounting Firm after consultation in good faith with
        the Company. If the Tax Counsel and Accounting Firm selected by the
        Company determine that the amount of the Gross-Up Payment is less than
        Two Hundred Fifty Thousand Dollars ($250,000), but Executive provides an
        opinion of a second independent Tax Counsel that the Gross-Up Payment
        (but for the limit in Section 7.1(a) above) could be greater than Two
        Hundred Fifty Thousand Dollars ($250,000) then Executive shall be
        entitled to appoint the Tax Counsel and the Accounting Firm after
        consultation in good faith with the Company and subject to the approval
        of the Company (which approval shall not be unreasonably withheld). All
        fees and expenses of any Tax Counsels and Accounting Firms referred to
        above shall be borne by the Company. Any Gross-Up Payment, as determined
        pursuant to this Article 7, shall be paid by the Company to the
        Executive within ten (10) days of the receipt of the Accounting Firm's
        determination. Any determinations by the Tax Counsel and Accounting Firm
        shall be binding upon the Company and the Executive, provided, however,
        if it is later determined that there has been an underpayment of Excise
        Tax and that 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, subject to the
        overall Two Hundred Fifty Thousand Dollars ($250,000) limit set forth in
        Section 7.1(a) above.

                                       7
<PAGE>   8
                (c) For purposes of any determinations made by any Tax Counsel
        and Accounting Firm acting under Section 7.1(b) above:

                        (i) All Payments and Gross-Up Payments with respect to
                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 such Tax Counsel determines in
                writing 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)Executive shall be deemed to pay federal, state and
                local income taxes at the actual 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 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 then 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 the Company after consultation in good faith with Executive and
subject to approval by 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, if the Gross-Up Payment payable hereunder (determined on the
basis of the amount being contested), together with any previous Gross-Up
Payment made by the Company to the Executive hereunder (collectively the
"Aggregate Gross-Up Payment"), would not exceed Two Hundred Fifty Thousand
Dollars ($250,000) (determined without regard to the Two Hundred Fifty Thousand
Dollars ($250,000) limit in Section 7.1(a)), 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 may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the Excise Tax claim in
any permissible manner, 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. If the Company directs the Executive to pay such Excise Tax claim and
sue 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

                                       8
<PAGE>   9

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. Notwithstanding anything to the contrary herein, the Executive shall
control the settlement or contest, as the case may be, of all non-Excise Tax
issues and of any Excise Tax issues with respect to which the Aggregate Gross-Up
Payment payable hereunder (but for the limit in Section 7.1(a) above) would
exceed Two Hundred Fifty Thousand Dollars ($250,000). The Executive shall be
entitled to settle or contest, as the case may be, any non-Excise Tax issue
raised by the Internal Revenue Service or any other taxing authority, so long as
such action does not have a material adverse effect on an Excise Tax contest
being pursued by and under the control of the Company.

        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 Executive with respect to
and as a result of his prior receipt of any previously paid Gross-Up Payment
indemnifying Executive with respect to any such Excise Tax later so refunded. In
the event Executive files for a refund of the Excise Tax and such request would,
if successful, require Executive to refund any amount to the Company pursuant to
this provision, then 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 Executive (which determination shall
be made by independent tax counsel selected by Executive after good faith
consultation with the Company and subject to approval of the Company, which
approval shall not be unreasonably withheld). Notwithstanding the above,
Executive shall have no obligation to pay any portion of any such tax refund(s)
to the Company if and to the extent that the Excise Tax to which such refund
relates was not eligible for a Gross-Up Payment by reason of the Two Hundred
Fifty Thousand Dollars ($250,000) limit in Section 7.1(a) above. For this
purpose, if the total Excise Tax paid with respect to Executive exceeds the
maximum amount eligible for Gross-Up Payment coverage by reason of the Two
Hundred Fifty Thousand Dollars ($250,000) limit in Section 7.1 (a) above, any
subsequent Excise Tax refunds shall first be applied against the portion of any
Excise Tax payments that are not covered by the Gross-Up Payments provided under
this Article 7. 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 advance shall offset, to the extent thereof, the amount of
the Gross-Up Payment required to be paid.

                                    ARTICLE 8

                       NO MITIGATION OR OFFSET; INSURANCE

        8.1 NO MITIGATION OR OFFSET. The Executive shall not be required to seek
other employment or to reduce any severance benefit payable to him under Article
6 hereof, and no severance benefit shall be reduced on account of any
compensation received by the Executive from other employment. The Company's
obligation to pay severance benefits under this Agreement shall not be reduced
by any amount owed by the Executive to the Company.

                                       9
<PAGE>   10
        8.2 INDEMNIFICATION; INSURANCE.

               (a) If the Executive is a party or is threatened to be made a
party to any threatened, pending or completed claim, action, suit or proceeding,
or appeal therefrom, whether civil, criminal, administrative, investigative or
otherwise, because he is or was an officer of the Company, or at the express
request of the Company is or was serving, for purposes reasonably understood by
him to be for the Company, as a director, officer, partner, employee, agent or
trustee (or in any other capacity of an association, corporation, general or
limited partnership, joint venture, trust or other entity), the Company shall
indemnify the Executive against any reasonable expenses (including attorneys'
fees and disbursements), and any judgments, fines and amounts paid in settlement
incurred by him in connection with such claim, action, suit, proceeding or
appeal therefrom to the extent such expenses, judgments, fines and amounts paid
in settlement were not advanced by the Company on his behalf pursuant to
subsection (b) below, to the fullest extent permitted under Delaware law. The
Company shall provide Executive with D&O insurance coverage at least as
favorable to Executive as what the Company maintains as of the date hereof or
such greater coverage as the Company may maintain from time to time.

               (b) Provided that the Executive shall first have agreed to in
writing to repay such amounts advanced if it is determined by an arbitrator or
court of competent jurisdiction that the Executive was not entitled to
indemnification, upon the written request of the Executive specifying the amount
of a requested advance and the intended use thereof, the Company shall indemnify
Executive for his expenses (including attorneys' fees and disbursements),
judgments, fines and amounts paid in settlement incurred by him in connection
with such claim, action, suit, proceeding or appeal whether civil, criminal,
administrative, investigative or otherwise, in advance of the final disposition
of any such claim, action, suit, proceeding or appeal therefrom to the fullest
extent permitted under Delaware law.

                                    ARTICLE 9

                              RESTRICTIVE COVENANTS

        9.1 COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION. During the Term
and following termination of 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; (ii) the customers of the Company; (iii) the financial condition of the
Company; and (iv) other confidential information pertaining to the Company,
including without limitation, trade secrets, technical data, marketing analyses
and studies, operating procedures, customer and/or inventor lists, or the
existence or nature of any of the Company's agreements (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; or (iv) as may be required by law or judicial
process.

        9.2 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 and to
further protect trade secrets, directly or indirectly, of the Company, the
Executive agrees that during the Term and for a period of one (1) year from the
date of termination of the Executive, 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

                                       10
<PAGE>   11

        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 (2) percent of
        the issued an 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;

                (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.

        9.3 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
9.1 and 9.2 hereof, 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 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
9 shall survive the termination of this Agreement. The covenants and obligations
of the Executive set forth in this Article 9 are in addition to and not in lieu
of or exclusive of any other obligations and duties the Executive owes to the
Company, whether expresses or implied in fact or law.

                                   ARTICLE 10

                               GENERAL PROVISIONS

        10.1 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 with respect to the Term and all prior or contemporaneous
understandings, representations and statements, oral or written, are merged
herein. 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.

        10.2 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.

        10.3 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.

                                       11
<PAGE>   12

        10.4 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.com inc.
                                      18872 MacArthur Boulevard
                                      Irvine, California 92612-1400
                                      Facsimile:  (949) 862-1323
                                      Attn: General Counsel

         If to the Executive:         Dennis Benner
                                      29906 Avenida Magnifica,
                                      Rancho Palos Verde, California 90274.

        10.5 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.

        10.6 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, except that the indemnification provisions of Section
8.2 shall be governed by Delaware law without regard to conflict of laws
principles.

        10.7 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.

        10.8 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.

        10.9 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.

        10.10 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 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 that the Company has breached
or otherwise failed to perform this Agreement or any provision hereof to be
performed by the Company if the Executive prevails in the contest in whole or in
part.

                                       12
<PAGE>   13

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

                                              AUTOBYTEL.COM INC.

                                              By: /s/ MARK W. LORIMER
                                                 --------------------------
                                                 Mark W. Lorimer
                                                 Chief Executive Officer and
                                                 President

                                                  /s/ DENNIS W. BENNER
                                                 -------------------------------
                                                 Dennis W. Benner

                                       13
<PAGE>   14

                                   SCHEDULE A

        (a) Payment Upon Exercise. Payment for the shares subject to any 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.

        (b) Termination for Cause. As of the date of the Executive's termination
for Cause (as defined below), any unvested or unexercised portion of any Option
shall terminate immediately and shall be of no further force or effect. As used
herein, the term "for Cause" shall refer to the termination of the Executive's
employment as a result of any one or more of the following: (i) any arrest of
the Executive involving a crime of dishonesty or moral turpitude, or any
conviction of the Executive for any crime or felony; (ii) any misconduct of the
Executive which has a materially injurious effect on the business or reputation
of the Company; (iii) the dishonesty of the Executive; or (iv) failure to
consistently discharge his duties under this Agreement which failure continues
for thirty (30) days following written notice from the Company detailing the
area or areas of such failure. For purposes hereof, no act or failure to act, on
the part of the Executive, shall be considered "willful" if it is done, or
omitted to be done, by the Executive in good faith or with reasonable belief
that his action or omission was in the best interest of the Company. The
Executive shall have the opportunity to cure any such acts or omissions (other
than item (i) above) within fifteen (15) days of the Executive's receipt of
notice from the Company finding that, in the good faith opinion of the Company,
the Executive is guilty of acts or omissions constituting "Cause".

        (c) Termination Without Cause or for Good Reason. As of the date of the
Executive's termination by the Company without Cause or by the Executive for
Good Reason (as defined below), any unvested portion of any Option which would
otherwise have vested during the Term but for the termination shall become
immediately and fully vested and all Options, including any previously vested
but unexercised portions of any Options, shall be exercisable from such
termination of employment until the date that is two (2) years following the
termination date. The term "termination without Cause" shall mean the
termination of the Executive's employment for any reason other than those
expressly set forth in the definition "for Cause" above, or no reason at all,
and shall also mean the Executive's decision to terminate his employment with
the Company by reason of any act, decision or omission by the Company or the
Board that: (A) materially modifies, reduces, changes, or restricts the
Executive's salary, bonus opportunities, options or other compensation benefits
or perquisites, or the Executive's authority, functions, services, duties,
rights, and privileges as, or commensurate with the Executive's position as,
Executive Vice President, Corporate Development of the Company; (B) relocates
the Executive without his consent from the offices located at 29906 Avenida
Magnifica, Rancho Palos Verdes, California 90274 to any other location in excess
of fifty (50) miles beyond the geographic limits of Rancho Palos Verdes,
California; (C) deprives the Executive of his titles and positions of Executive
Vice President, Corporate Development of the Company; or (D) involves or results
in any failure by the Company to comply with any provision of the Employment
Agreement or any Option, other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive (each a "Good Reason").

        (d) Termination due to Death or Disability. As of the date of the
Executive's termination due to death or Disability (as defined below), any
unvested portion of any Option shall become immediately and fully vested and all
Options, including any previously vested but unexercised portion of any Options,
shall be exercisable from the date of such termination of employment until the
fifth anniversary of the applicable grant date or, if earlier, the date that is
two (2) years following the termination date. If the Company determines in good
faith that the Disability of the Executive has occurred, it shall give written
notice to the Executive of its intention to terminate his employment. In such
event, the Executive's employment with the

                                       14
<PAGE>   15

Company shall terminate effective on the 30th day after receipt of such notice
by the Executive, provided that, within the thirty (30) days after such receipt,
the Executive shall not have returned to full-time performance of his duties.
For purposes hereof, "Disability" shall mean the inability of the Executive to
perform his duties to the Company on account of physical or mental illness or
incapacity for a period of ninety (90) consecutive calendar days, or for a
period of one hundred eighty (180) calendar days, whether or not consecutive,
during any three hundred sixty-five (365) day period.

        (e) 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.

        (f) Termination Prior to or Following a Change of Control. In the event
of a Change of Control (as defined below) while the Executive is employed by the
Company, or the Executive's employment is terminated by the Company without
Cause or by the Executive for Good Reason within six (6) months prior to a
Change of Control, any unvested installment of any Option shall immediately vest
and become exercisable from the date of such Change of Control, or if earlier
the date of termination, until the date that is two (2) years following: (i) the
Change of Control date, or (ii) if earlier the date of termination. For purposes
hereof, "Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation but not including any initial or secondary public
offering) in one or a series of related transactions of all or substantially all
of the assets of the Company taken as a whole to any person (a "Person") or
group of persons acting together (a "Group") (other than any of the Company's
wholly-owned subsidiaries, any Company employee pension or benefits plan, or any
person or entity owning at least five (5) percent of the common stock of the
Company as of March 31, 1999), (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company, (iii) the consummation of any
transactions (including any stock or other purchase, sale, acquisition,
disposition, merger or consolidation, but not including any initial or secondary
public offering) the result of which is that any Person or Group (other than any
of the Company's wholly-owned subsidiaries, any Company employee pension or
benefits plan, or any person or entity owning at least five (5) percent of the
common stock of the Company as of March 31, 1999), becomes the beneficial owners
of more than 40 percent of the aggregate voting power of all classes of stock of
the Company having the right to elect directors under ordinary circumstances; or
(iv) the first day on which a majority of the members of the Board are not
individuals who were nominated for election or elected to the Board with the
approval of two-thirds of the members of the Board just prior to the time of
such nomination or election.

                                       15
<PAGE>   16

                                   SCHEDULE B

        (a) Payment Upon Exercise. Payment for the shares subject to any
Performance 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 such other form of
consideration which has been approved by the Board, including any approved
cashless exercise mechanism or a promissory note given by the Executive.

        (c) Termination for Cause. As of the date of the Executive's termination
for Cause under Section 6.1 of this Agreement, any unvested or unexercised
portion of the Performance 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 under Section 6.2 of this Agreement, any unvested portion of the
Performance Options shall become immediately and fully vested and exercisable to
the extent the stock price targets in Section 3.8(a)(i)-(v) of this Agreement
are met on the termination date or as of the immediately preceding eight (8)
month anniversary of the date of grant, or as of the eight (8) month anniversary
of the grant date immediately following such termination. Any shares subject to
the Performance Options that become vested and exercisable in accordance with
the foregoing and any previously vested but unexercised Performance Options
shall remain exercisable from the date of such termination of employment until
the date that is one (1) year following the termination date.

        (e) Due to Death or Disability. As of the termination date due to death
or Disability of the Executive under Section 6.3 of this Agreement, any unvested
portion of the Performance Options shall become vested and exercisable to the
extent the stock price targets in Section 3.8(a)(i)-(v) of this Agreement are
met on the termination date or as of the immediately preceding eight (8) month
anniversary of the date of grant, or as of the eight (8) month anniversary of
the grant date immediately following such termination. Any shares subject to the
Performance Options that become vested and exercisable in accordance with the
foregoing and any previously vested but unexercised Performance Options shall
remain exercisable from the date of such termination of employment until the
date that is one (1) year following the termination date.

        (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, as of the date of such
termination by the Executive any unvested portion of the Performance Options
shall terminate immediately and shall be of no further force or effect. Any
previously vested but unexercised Performance Options shall remain exercisable
from the date of such termination of employment until the date that is one (1)
year following the termination date.

        (g) Change of Control. In the event of a Change of Control while the
Executive is employed by the Company, or the Executive's employment is
terminated by the Company without Cause or by the Executive for Good Reason
within six (6) months prior to a Change of Control, any otherwise unvested
installment of the Performance Options shall immediately vest and become
exercisable to the extent the installment meets the applicable stock price
targets in Section 3.8(a)(i)-(v) of this Agreement based on the Average Trading
Price at the time of or within six (6) months of the Change of Control but
without regard to any anniversary of the installment's grant date. Any shares
subject to the Performance Options that become vested and exercisable in
accordance with the foregoing and any previously vested but unexercised
Performance Options shall be at the Executive's option either cashed out based
on a value per share determined in accordance with this clause (g) or remain
exercisable from the date of such Change of Control until the date that is one
(1) year following the Change of Control date.

                                       16

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