Document:

exv10w13

Exhibit 10.13

ASCENT MEDIA CORPORATION

2008 NON-EMPLOYEE DIRECTOR INCENTIVE PLAN

ARTICLE I

PURPOSE OF PLAN

     1.1 PURPOSE. The purpose of the Plan is to provide a method whereby eligible Non-Employee
Directors of the Company may be awarded additional remuneration for services rendered and
encouraged to invest in capital stock of the Company, thereby increasing their proprietary interest
in the Company’s businesses and increasing their personal interest in the continued success and
progress of the Company. The Plan is also intended to aid in attracting Persons of exceptional
ability to become Non-Employee Directors of the Company.

ARTICLE II

DEFINITIONS

     2.1 CERTAIN DEFINED TERMS. Capitalized terms not defined elsewhere in the Plan shall have the
following meanings (whether used in the singular or plural):

          “Affiliate” of the Company means any corporation, partnership, or other business
association that, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with the Company.

          “Agreement” means a stock option agreement, stock appreciation rights agreement,
restricted shares agreement, stock units agreement, or agreement evidencing more than one type of
Award, in any case as specified in Section 11.4, as any such Agreement may be supplemented or
amended from time to time.

          “Approved Transaction” means any transaction in which the Board (or, if approval of
the Board is not required as a matter of law, the stockholders of the Company) shall approve (i)
any consolidation or merger of the Company, or binding share exchange, pursuant to which shares of
Common Stock of the Company would be changed or converted into or exchanged for cash, securities,
or other property, other than any such transaction in which the common stockholders of the Company
immediately prior to such transaction have the same proportionate ownership of the Common Stock of,
and voting power with respect to, the surviving corporation immediately after such transaction,
(ii) any merger, consolidation, or binding share exchange to which the Company is a party as a
result of which the Persons who are common stockholders of the Company immediately prior thereto
have less than a majority of the combined voting power of the outstanding capital stock of the
Company ordinarily (and apart from the rights accruing under special circumstances) having the
right to vote in the election of directors immediately following such merger, consolidation, or
binding share exchange, (iii) the

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adoption of any plan or proposal for the liquidation or dissolution of the Company, or (iv)
any sale, lease, exchange, or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company.

          “Award” means a grant of Options, SARs, Restricted Shares, Stock Units and/or cash
under this Plan.

          “Board” means the Board of Directors of the Company.

          “Board Change” means, during any period of two consecutive years, individuals who at
the beginning of such period constituted the entire Board cease for any reason to constitute a
majority thereof unless the election, or the nomination for election, of each new director was
approved by a vote of at least two-thirds of the directors then still in office who were directors
at the beginning of the period.

          “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any
successor statute or statutes thereto. Reference to any specific Code section shall include any
successor section.

          “Common Stock” means each or any (as the context may require) series of the Company’s
common stock.

          “Company” means Ascent Media Corporation, a Delaware corporation.

          “Control Purchase” means any transaction (or series of related transactions) in which
(i) any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act),
corporation, or other entity (other than the Company, any Subsidiary of the Company, or any
employee benefit plan sponsored by the Company or any Subsidiary of the Company) shall purchase any
Common Stock of the Company (or securities convertible into Common Stock of the Company) for cash,
securities, or any other consideration pursuant to a tender offer or exchange offer, without the
prior consent of the Board, or (ii) any person (as such term is so defined), corporation, or other
entity (other than the Company, any Subsidiary of the Company, any employee benefit plan sponsored
by the Company, or any Subsidiary of the Company or any Exempt Person (as defined below)) shall
become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20% or more of the combined
voting power of the then outstanding securities of the Company ordinarily (and apart from the
rights accruing under special circumstances) having the right to vote in the election of directors
(calculated as provided in Rule 13d-3(d) under the Exchange Act in the case of rights to acquire
the Company’s securities), other than in a transaction (or series of related transactions) approved
by the Board. For purposes of this definition, “Exempt Person” means each of (a) each of
the directors of the Company as of immediately following the close of business on September 17,
2008, (b) any person or entity that, as of immediately following the close of business on September
17, 2008, was the beneficial owner, directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the then outstanding securities of the
Company, and (c) the respective family members, estates, and heirs of each of the Persons referred
to in clauses (a) and (b) above and any trust or other investment vehicle for the primary benefit
of any of such

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Persons or their respective family members or heirs. As used with respect to any Person, the
term “family member” means the spouse, siblings and lineal descendants of such Person.

          “Director Compensation” means the annual retainer and meeting fees, and any other
regular cash compensation payable by the Company to a Non-Employee Director for service on the
Board, as established from time to time.

          “Disability” means the inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be expected to result
in death or which has lasted or can be expected to last for a continuous period of not less than 12
months.

          “Dividend Equivalents” means, with respect to Restricted Shares to be issued at the
end of the Restriction Period, to the extent specified by the Board only, an amount equal to all
dividends and other distributions (or the economic equivalent thereof) which are payable to
stockholders of record during the Restriction Period on a like number and kind of shares of Common
Stock.

          “Domestic Relations Order” means a domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act, or the rules thereunder.

          “Effective
Date” means September 15, 2008, the date on which the Plan was approved by
the sole stockholder of the Company.

          “Equity Security” shall have the meaning ascribed to such term in Section 3(a)(11) of
the Exchange Act, and an equity security of an issuer shall have the meaning ascribed thereto in
Rule 16a-1 promulgated under the Exchange Act, or any successor Rule.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, or any successor statute or statutes thereto. Reference to any specific Exchange Act section
shall include any successor section.

          “Fair Market Value” of a share of any series of Common Stock on any day means the last
sale price (or, if no last sale price is reported, the average of the high bid and low asked
prices) for a share of such series of Common Stock on such day (or, if such day is not a trading
day, on the next preceding trading day) as reported on the consolidated transaction reporting
system for the principal national securities exchange on which shares of such series of Common
Stock are listed on such day, or, if such shares are not then listed on a national securities
exchange, then as reported on any automated quotation system operated by a national securities
association, or, if such shares are not then listed or quoted on such an automated quotation
system, then as quoted by the OTC Bulletin Board. If for any day the Fair Market Value of a share
of the applicable series of Common Stock is not determinable by any of the foregoing means, then
the Fair Market Value for such day shall be determined in good faith by the Board on the basis of
such quotations and other considerations as the Board deems appropriate.

          “Free Standing SAR” has the meaning ascribed thereto in Section 7.1.

          “Holder” means a Person who has received an Award under this Plan.

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          “Non-Employee Director” means an individual who is a member of the Board and who is
not an employee of the Company or any Subsidiary.

          “Nonqualified Stock Option” means a stock option granted under Article VI.

          “Option” means a Nonqualified Stock Option.

          “Person” means an individual, corporation, limited liability company, partnership,
trust, incorporated or unincorporated association, joint venture or other entity of any kind.

          “Plan” means this Ascent Media Corporation 2008 Non-Employee Director Incentive Plan.

          “Restricted Shares” means shares of any series of Common Stock or the right to receive
shares of any specified series of Common Stock, as the case may be, awarded pursuant to Article
VIII.

          “Restriction Period” means a period of time beginning on the date of each Award of
Restricted Shares and ending on the Vesting Date with respect to such Award.

          “Retained Distribution” has the meaning ascribed thereto in Section 8.3.

          “SARs” means stock appreciation rights, awarded pursuant to Article VII, with respect
to shares of any specified series of Common Stock.

          “Stock Unit Awards” has the meaning ascribed thereto in Section 9.1.

          “Subsidiary” of a Person means any present or future subsidiary (as defined in Section
424(f) of the Code) of such Person or any business entity in which such Person owns, directly or
indirectly, 50% or more of the voting, capital, or profits interests. An entity shall be deemed a
subsidiary of a Person for purposes of this definition only for such periods as the requisite
ownership or control relationship is maintained.

          “Tandem SARs” has the meaning ascribed thereto in Section 7.1.

          “Vesting Date,” with respect to any Restricted Shares awarded hereunder, means the
date on which such Restricted Shares cease to be subject to a risk of forfeiture, as designated in
or determined in accordance with the Agreement with respect to such award of Restricted Shares
pursuant to Article VIII. If more than one Vesting Date is designated for an award of Restricted
Shares, reference in the Plan to a Vesting Date in respect of such Award shall be deemed to refer
to each part of such Award and the Vesting Date for such part.

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ARTICLE III

ADMINISTRATION

     3.1 ADMINISTRATION. The Plan shall be administered by the Board, provided that it may delegate to
employees of the Company certain administrative or ministerial duties in carrying out the purposes
of the Plan.

     3.2 POWERS. The Board shall have full power and authority to grant to eligible Persons Options
under Article VI of the Plan, SARs under Article VII of the Plan, Restricted Shares under Article
VIII of the Plan, and/or Stock Units under Article IX of the Plan, to determine the terms and
conditions (which need not be identical) of all Awards so granted, to interpret the provisions of
the Plan and any Agreements relating to Awards granted under the Plan, and to supervise the
administration of the Plan. The Board in making an Award may provide for the granting or issuance
of additional, replacement, or alternative Awards upon the occurrence of specified events,
including the ` of the original Award. The Board shall have sole authority in the selection of
Persons to whom Awards may be granted under the Plan and in the determination of the timing,
pricing, and amount of any such Award, subject only to the express provisions of the Plan. In
making determinations hereunder, the Board may take into account such factors as the Board in its
discretion deems relevant.

     3.3 INTERPRETATION. The Board is authorized, subject to the provisions of the Plan, to establish,
amend, and rescind such rules and regulations as it deems necessary or advisable for the proper
administration of the Plan and to take such other action in connection with or in relation to the
Plan as it deems necessary or advisable. Each action and determination made or taken pursuant to
the Plan by the Board, including any interpretation or construction of the Plan, shall be final and
conclusive for all purposes and upon all Persons. No member of the Board shall be liable for any
action or determination made or taken by him or the Board in good faith with respect to the Plan.

ARTICLE IV

SHARES SUBJECT TO THE PLAN

     4.1 NUMBER OF SHARES. Subject to the provisions of this Article IV, the maximum number of shares
of Common Stock (i) which may be issued in lieu of Director Compensation pursuant to Section 10.1
and (ii) with respect to which Awards may be granted during the term of the Plan shall be [500,000]
shares. Shares of Common Stock will be made available from the authorized but unissued shares of
the Company or from shares reacquired by the Company, including shares purchased in the open
market. The shares of Common Stock subject to (i) any Award granted under the Plan that shall
expire, terminate or be annulled for any reason without having been exercised (or considered to
have been exercised as provided in Section 7.2), (ii) any Award of any SARs granted under the Plan
that shall be exercised for cash, and (iii) any Award of Restricted Shares or Stock Units that
shall be forfeited prior to becoming vested (provided that the Holder received no benefits of
ownership of such Restricted Shares or Stock Units other than voting rights and the accumulation of
Retained Distributions and unpaid

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Dividend Equivalents that are likewise forfeited) shall again be available for purposes of the
Plan.

     4.2 ADJUSTMENTS. If the Company subdivides its outstanding shares of any series of Common Stock
into a greater number of shares of such series of Common Stock (by stock dividend, stock split,
reclassification, or otherwise) or combines its outstanding shares of any series of Common Stock
into a smaller number of shares of such series of Common Stock (by reverse stock split,
reclassification, or otherwise) or if the Board determines that any stock dividend, extraordinary
cash dividend, reclassification, recapitalization, reorganization, split-up, spin-off, combination,
exchange of shares, warrants or rights offering to purchase such series of Common Stock, or other
similar corporate event (including mergers or consolidations other than those which constitute
Approved Transactions, adjustments with respect to which shall be governed by Section 11.1(b))
affects any series of Common Stock so that an adjustment is required to preserve the benefits or
potential benefits intended to be made available under this Plan, then the Board, in such manner as
the Board, in its sole discretion, deems equitable and appropriate, shall make such adjustments to
any or all of (i) the number and kind of shares of stock which thereafter may be awarded, optioned,
or otherwise made subject to the benefits contemplated by the Plan, (ii) the number and kind of
shares of stock subject to outstanding Awards, and (iii) the purchase or exercise price and the
relevant appreciation base with respect to any of the foregoing, PROVIDED, HOWEVER, that the number
of shares subject to any Award shall always be a whole number. Notwithstanding the foregoing, if
all shares of any series of Common Stock are redeemed, then each outstanding Award shall be
adjusted to substitute for the shares of such series of Common Stock subject thereto the kind and
amount of cash, securities or other assets issued or paid in the redemption of the equivalent
number of shares of such series of Common Stock and otherwise the terms of such Award, including,
in the case of Options or similar rights, the total exercise price, and, in the case of Free
Standing SARs, the base price, shall remain constant before and after the substitution (unless
otherwise determined by the Board and provided in the applicable Agreement). The Board may, if
deemed appropriate, provide for a cash payment to any Holder of an Award in connection with any
adjustment made pursuant to this Section 4.2.

ARTICLE V

ELIGIBILITY

     5.1 GENERAL. The Persons who shall be eligible to participate in the Plan and to receive Awards
under the Plan shall be such Persons who are Non-Employee Directors as the Board shall select.
Awards may be made to Non-Employee Directors who hold or have held Awards under this Plan or any
similar or other awards under any other plan of the Company or any of its Affiliates.

     5.2 INELIGIBILITY. No Person who is not a Non-Employee Director shall be eligible to receive an
Award.

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ARTICLE VI

STOCK OPTIONS

     6.1 GRANT OF OPTIONS. Subject to the limitations of the Plan, the Board shall designate from time
to time those eligible Persons to be granted Options, the time when each Option shall be granted to
such eligible Persons, the series and number of shares of Common Stock subject to such Option, and,
subject to Section 6.2, the purchase price of the shares of Common Stock subject to such Option.

     6.2 OPTION PRICE. The price at which shares may be purchased upon exercise of an Option shall be
fixed by the Board, but shall not be less than the Fair Market Value of the shares of the
applicable series of Common Stock subject to the Option as of the date the Option is granted.

     6.3 TERM OF OPTIONS. Subject to the provisions of the Plan with respect to death, retirement and
termination of service, the term of each Option shall be for such period as the Board shall
determine as set forth in the applicable Agreement.

     6.4 EXERCISE OF OPTIONS. An Option granted under the Plan shall become (and remain) exercisable
during the term of the Option to the extent provided in the applicable Agreement and this Plan and,
unless the Agreement otherwise provides, may be exercised to the extent exercisable, in whole or in
part, at any time and from time to time during such term; PROVIDED, HOWEVER, that subsequent to the
grant of an Option, the Board, at any time before complete termination of such Option, may
accelerate the time or times at which such Option may be exercised in whole or in part (without
reducing the term of such Option).

     6.5 MANNER OF EXERCISE.

          (a) FORM OF PAYMENT. An Option shall be exercised by written notice to the Company upon such
terms and conditions as the Agreement may provide and in accordance with such other procedures for
the exercise of Options as the Board may establish from time to time. The method or methods of
payment of the purchase price for the shares to be purchased upon exercise of an Option and of any
amounts required by Section 11.8 shall be determined by the Board and may consist of (i) cash, (ii)
check, (iii) whole shares of any series of Common Stock, (iv) the withholding of shares of the
applicable series of Common Stock issuable upon such exercise of the Option, (v) the delivery,
together with a properly executed exercise notice, of irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds required to pay the purchase
price, or (vi) any combination of the foregoing methods of payment, or such other consideration and
method of payment as may be permitted for the issuance of shares under the Delaware General
Corporation Law. The permitted method or methods of payment of the amounts payable upon exercise
of an Option, if other than in cash, shall be set forth in the applicable Agreement and may be
subject to such conditions as the Board deems appropriate.

          (b) VALUE OF SHARES. Unless otherwise determined by the Board and provided in the applicable
Agreement, shares of any series of Common Stock delivered in

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payment of all or any part of the amounts payable in connection with the exercise of an
Option, and shares of any series of Common Stock withheld for such payment, shall be valued for
such purpose at their Fair Market Value as of the exercise date.

          (c) ISSUANCE OF SHARES. The Company shall effect the transfer of the shares of Common Stock
purchased under the Option as soon as practicable after the exercise thereof and payment in full of
the purchase price therefor and of any amounts required by Section 11.8, and within a reasonable
time thereafter, such transfer shall be evidenced on the books of the Company. Unless otherwise
determined by the Board and provided in the applicable Agreement, (i) no Holder or other Person
exercising an Option shall have any of the rights of a stockholder of the Company with respect to
shares of Common Stock subject to an Option granted under the Plan until due exercise and full
payment has been made, and (ii) no adjustment shall be made for cash dividends or other rights for
which the record date is prior to the date of such due exercise and full payment.

     6.6 NONTRANSFERABILITY. Unless otherwise determined by the Board and provided in the applicable
Agreement, Options shall not be transferable other than by will or the laws of descent and
distribution or pursuant to a Domestic Relations Order, and, except as otherwise required pursuant
to a Domestic Relations Order, Options may be exercised during the lifetime of the Holder thereof
only by such Holder (or his or her court-appointed legal representative).

ARTICLE VII

SARs

     7.1 GRANT OF SARs. Subject to the limitations of the Plan, SARs may be granted by the Board to
such eligible Persons in such numbers, with respect to any specified series of Common Stock, and at
such times during the term of the Plan as the Board shall determine. A SAR may be granted to a
Holder of an Option (hereinafter called a “related Option”) with respect to all or a
portion of the shares of Common Stock subject to the related Option (a “Tandem SAR”) or may
be granted separately to an eligible Non-Employee Director (a “Free Standing SAR”).
Subject to the limitations of the Plan, SARs shall be exercisable in whole or in part upon notice
to the Company upon such terms and conditions as are provided in the Agreement.

     7.2 TANDEM SARs. A Tandem SAR may be granted either concurrently with the grant of the related
Option or at any time thereafter prior to the complete exercise, termination, expiration, or
cancellation of such related Option. Tandem SARs shall be exercisable only at the time and to the
extent that the related Option is exercisable (and may be subject to such additional limitations on
exercisability as the Agreement may provide) and in no event after the complete termination or full
exercise of the related Option. Upon the exercise or termination of the related Option, the Tandem
SARs with respect thereto shall be canceled automatically to the extent of the number of shares of
Common Stock with respect to which the related Option was so exercised or terminated. Subject to
the limitations of the Plan, upon the exercise of a Tandem SAR and unless otherwise determined by
the Board and provided in the applicable Agreement, (i) the Holder thereof shall be entitled to
receive from the Company, for each share of the applicable series of Common Stock with respect to
which the Tandem SAR is being exercised,

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consideration (in the form determined as provided in Section 7.4) equal in value to the excess of
the Fair Market Value of a share of the applicable series of Common Stock with respect to which the
Tandem SAR was granted on the date of exercise over the related Option purchase price per share,
and (ii) the related Option with respect thereto shall be canceled automatically to the extent of
the number of shares of Common Stock with respect to which the Tandem SAR was so exercised.

     7.3 FREE STANDING SARs. Free Standing SARs shall be exercisable at the time, to the extent and
upon the terms and conditions set forth in the applicable Agreement. The base price of a Free
Standing SAR shall be fixed by the Board, but shall not be less than the Fair Market Value of the
shares of the applicable series of Common Stock with respect to which the Free Standing SAR was
granted as of the date the Free Standing SAR is granted. Subject to the limitations of the Plan,
upon the exercise of a Free Standing SAR and unless otherwise determined by the Board and provided
in the applicable Agreement, the Holder thereof shall be entitled to receive from the Company, for
each share of the applicable series of Common Stock with respect to which the Free Standing SAR is
being exercised, consideration (in the form determined as provided in Section 7.4) equal in value
to the excess of the Fair Market Value of a share of the applicable series of Common Stock with
respect to which the Free Standing SAR was granted on the date of exercise over the base price per
share of such Free Standing SAR.

     7.4 CONSIDERATION. The consideration to be received upon the exercise of a SAR by the Holder shall
be paid in cash, shares of the applicable series of Common Stock with respect to which the SAR was
granted (valued at Fair Market Value on the date of exercise of such SAR), a combination of cash
and such shares of the applicable series of Common Stock or such other consideration, in each case,
as provided in the Agreement. No fractional shares of Common Stock shall be issuable upon exercise
of a SAR, and unless otherwise provided in the applicable Agreement, the Holder will receive cash
in lieu of fractional shares. Unless the Board shall otherwise determine, to the extent a Free
Standing SAR is exercisable, it will be exercised automatically for cash on its expiration date.

     7.5 LIMITATIONS. The applicable Agreement may provide for a limit on the amount payable to a
Holder upon exercise of SARs at any time or in the aggregate, for a limit on the number of SARs
that may be exercised by the Holder in whole or in part for cash during any specified period, for a
limit on the time periods during which a Holder may exercise SARs, and for such other limits on the
rights of the Holder and such other terms and conditions of the SAR, including, without limitation,
a condition that the SAR may be exercised only in accordance with rules and regulations adopted
from time to time, as the Board may determine. Unless otherwise so provided in the applicable
Agreement, any such limit relating to a Tandem SAR shall not restrict the exercisability of the
related Option. Such rules and regulations may govern the right to exercise SARs granted prior to
the adoption or amendment of such rules and regulations as well as SARs granted thereafter.

     7.6 EXERCISE. For purposes of this Article VII, the date of exercise of a SAR shall mean the date
on which the Company shall have received notice from the Holder of the SAR of the exercise of such
SAR (unless otherwise determined by the Board and provided in the applicable Agreement).

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     7.7 NONTRANSFERABILITY. Unless otherwise determined by the Board and provided in the applicable
Agreement, (i) SARs shall not be transferable other than by will or the laws of descent and
distribution or pursuant to a Domestic Relations Order, and (ii) except as otherwise required
pursuant to a Domestic Relations Order, SARs may be exercised during the lifetime of the Holder
thereof only by such Holder (or his or her court-appointed legal representative).

ARTICLE VIII

RESTRICTED SHARES

     8.1 GRANT. Subject to the limitations of the Plan, the Board shall designate those eligible
Persons to be granted awards of Restricted Shares, shall determine the time when each such Award
shall be granted, shall determine whether shares of Common Stock covered by awards of Restricted
Shares will be issued at the beginning or the end of the Restriction Period and whether Dividend
Equivalents will be paid during the Restriction Period in the event shares of the applicable series
of Common Stock are to be issued at the end of the Restriction Period, and shall designate (or set
forth the basis for determining) the Vesting Date or Vesting Dates for each award of Restricted
Shares, and may prescribe other restrictions, terms, and conditions applicable to the vesting of
such Restricted Shares in addition to those provided in the Plan. The Board shall determine the
price, if any, to be paid by the Holder for the Restricted Shares; PROVIDED, HOWEVER, that the
issuance of Restricted Shares shall be made for at least the minimum consideration necessary to
permit such Restricted Shares to be deemed fully paid and nonassessable. All determinations made
by the Board pursuant to this Section 8.1 shall be specified in the Agreement.

     8.2 ISSUANCE OF RESTRICTED SHARES AT BEGINNING OF THE RESTRICTION PERIOD. If shares of the
applicable series of Common Stock are issued at the beginning of the Restriction Period, the stock
certificate or certificates representing such Restricted Shares shall be registered in the name of
the Holder to whom such Restricted Shares shall have been awarded. During the Restriction Period,
certificates representing the Restricted Shares and any securities constituting Retained
Distributions shall bear a restrictive legend to the effect that ownership of the Restricted Shares
(and such Retained Distributions), and the enjoyment of all rights appurtenant thereto, are subject
to the restrictions, terms, and conditions provided in the Plan and the applicable Agreement. Such
certificates shall remain in the custody of the Company or its designee, and the Holder shall
deposit with the custodian stock powers or other instruments of assignment, each endorsed in blank,
so as to permit retransfer to the Company of all or any portion of the Restricted Shares and any
securities constituting Retained Distributions that shall be forfeited or otherwise not become
vested in accordance with the Plan and the applicable Agreement.

     8.3 RESTRICTIONS. Restricted Shares issued at the beginning of the Restriction Period shall
constitute issued and outstanding shares of the applicable series of Common Stock for all corporate
purposes. The Holder will have the right to vote such Restricted Shares, to receive and retain
such dividends and distributions, as the Board may designate, paid or distributed on such
Restricted Shares, and to exercise all other rights, powers, and privileges of a Holder of shares
of the applicable series of Common Stock with respect to such Restricted

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Shares; EXCEPT, THAT, unless otherwise determined by the Board and provided in the applicable
Agreement, (a) the Holder will not be entitled to delivery of the stock certificate or certificates
representing such Restricted Shares until the Restriction Period shall have expired and unless all
other vesting requirements with respect thereto shall have been fulfilled or waived; (b) the
Company or its designee will retain custody of the stock certificate or certificates representing
the Restricted Shares during the Restriction Period as provided in Section 8.2; (c) except as
determined by the Board at the time of grant and set forth in the applicable Agreement, the Company
or its designee will retain custody of all distributions (“Retained Distributions”) made or
declared with respect to the Restricted Shares (and such Retained Distributions will be subject to
the same restrictions, terms and vesting, and other conditions as are applicable to the Restricted
Shares) until such time, if ever, as the Restricted Shares with respect to which such Retained
Distributions shall have been made, paid, or declared shall have become vested, and such Retained
Distributions shall not bear interest or be segregated in a separate account; (d) the Holder may
not sell, assign, transfer, pledge, exchange, encumber, or dispose of the Restricted Shares or any
Retained Distributions or his interest in any of them during the Restriction Period; and (e) a
breach of any restrictions, terms, or conditions provided in the Plan or established by the Board
with respect to any Restricted Shares or Retained Distributions will cause a forfeiture of such
Restricted Shares and any Retained Distributions with respect thereto.

     8.4 ISSUANCE OF STOCK AT END OF THE RESTRICTION PERIOD. Restricted Shares issued at the end of the
Restriction Period shall not constitute issued and outstanding shares of the applicable series of
Common Stock, and the Holder shall not have any of the rights of a stockholder with respect to the
shares of Common Stock covered by such an award of Restricted Shares, in each case until such
shares shall have been transferred to the Holder at the end of the Restriction Period. If and to
the extent that shares of Common Stock are to be issued at the end of the Restriction Period, the
Holder shall be entitled to receive Dividend Equivalents with respect to the shares of Common Stock
covered thereby either (i) during the Restriction Period or (ii) in accordance with the rules
applicable to Retained Distributions, as determined by the Board at the time of grant and set forth
in the applicable Agreement.

     8.5 CASH AWARDS. In connection with any award of Restricted Shares, an Agreement may provide for
the payment of a cash amount to the Holder of such Restricted Shares at any time after such
Restricted Shares shall have become vested. Subject to Section 11.16, such cash awards shall be
payable in accordance with such additional restrictions, terms, and conditions as shall be
prescribed by the Board in the Agreement and shall be in addition to any other compensation
payments which such Holder shall be otherwise entitled or eligible to receive from the Company.

     8.6 COMPLETION OF RESTRICTION PERIOD. On the Vesting Date with respect to each award of Restricted
Shares and the satisfaction of any other applicable restrictions, terms, and conditions set forth
in the Agreement or this Plan, (a) all or the applicable portion of such Restricted Shares shall
become vested, (b) any Retained Distributions and any unpaid Dividend Equivalents with respect to
such Restricted Shares shall become vested to the extent that the Restricted Shares related thereto
shall have become vested, and (c) any cash award to be received by the Holder with respect to such
Restricted Shares shall become payable, all in accordance with the terms of the applicable
Agreement. Any such Restricted Shares, Retained Distributions, and any unpaid Dividend Equivalents
that shall not become vested shall

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be forfeited to the Company, and the Holder shall not thereafter have any rights (including
dividend and voting rights) with respect to such Restricted Shares, Retained Distributions, and any
unpaid Dividend Equivalents that shall have been so forfeited. Subject to Section 11.16, the Board
may, in its discretion, at the time of grant, provide in the applicable Agreement that the delivery
of any Restricted Shares, Retained Distributions, and unpaid Dividend Equivalents that shall have
become vested, and payment of any cash awards that shall have become payable, shall be deferred
until such date or dates as the recipient may elect. Any election of a recipient pursuant to the
preceding sentence shall be filed in writing with the Board in accordance with such rules and
regulations, including any deadline for the making of such an election, as the Board may provide,
subject to Section 11.16.

ARTICLE IX

STOCK UNITS

     9.1 GRANT. In addition to granting awards of Options, SARs, and Restricted Shares, the Board
shall, subject to the limitations of the Plan, have authority to grant to eligible Persons awards
of Stock Units which may be in the form of shares of any specified series of Common Stock or units,
the value of which is based, in whole or in part, on the Fair Market Value of the shares of any
specified series of Common Stock. Subject to the provisions of the Plan, including any rules
established pursuant to Section 9.2, awards of Stock Units shall be subject to such terms,
restrictions, conditions, vesting requirements, and payment rules as the Board may determine in its
discretion, which need not be identical for each Award. The determinations made by the Board
pursuant to this Section 9.1 shall be specified in the applicable Agreement.

     9.2 RULES. At the time of grant, the Board may, in its discretion, establish any or all of the
following rules for application to an Award of Stock Units, which shall be set forth in the
applicable Agreement:

          (a) Any shares of Common Stock which are part of an award of Stock Units may not be assigned,
sold, transferred, pledged, or otherwise encumbered prior to the date on which the shares are
issued or, if later, the date provided by the Board at the time of the Award.

          (b) Such Awards may provide for the payment of cash consideration by the Person to whom such
Award is granted or provide that the Award, and any shares of Common Stock to be issued in
connection therewith, if applicable, shall be delivered without the payment of cash consideration;
PROVIDED, HOWEVER, that the issuance of any shares of Common Stock in connection with an Award of
Stock Units shall be for at least the minimum consideration necessary to permit such shares to be
deemed fully paid and nonassessable.

          (c) Subject to Section 11.16, awards of Stock Units may relate in whole or in part to
performance or other criteria established by the Board at the time of grant.

          (d) Awards of Stock Units may provide for deferred payment schedules, vesting over a specified
period of service, the payment (on a current or deferred basis) of dividend equivalent amounts with
respect to the number of shares of Common Stock covered by

12

 

the Award, and elections by the Holder to defer payment of the Award or the lifting of
restrictions on the Award, if any, subject in any such case to Section 11.16, to the extent
applicable.

          (e) Subject to Section 11.16, in such circumstances as the Board may deem advisable, the Board
may waive or otherwise remove, in whole or in part, any restrictions or limitations to which a
Stock Unit Award was made subject at the time of grant.

ARTICLE X

STOCK AWARDS IN LIEU OF CASH DIRECTOR FEES

     10.1 GENERAL. Each Non-Employee Director shall have the option to elect to receive shares of one
or more series of Common Stock, as prescribed by the Board, in lieu of all or part of the Director
Compensation otherwise payable by the Company during each calendar quarter. Subject to any
applicable Purchase Restriction as described in Section 10.3, to the extent a Non-Employee Director
has elected in writing to receive stock in lieu of Director Compensation, such Non-Employee
Director will receive shares of Common Stock on the last day of the calendar quarter for which the
Director Compensation was earned. The Director Compensation shall be converted to a number of
shares of Common Stock equal in value to such Director Compensation based on the Fair Market Value
of such shares on the last day of the calendar quarter for which the Director Compensation would
otherwise be payable to the Non-Employee Director, with any fractional shares paid in cash. For
this purpose, if the last day of the calendar quarter is not a trading day, then Fair Market Value
shall be determined as of the next succeeding trading day. Any shares issued in lieu of Director
Compensation shall be issued free of all restrictions except as required by law.

     10.2 TIMING OF ELECTION. A Non-Employee Director’s election pursuant to Section 10.1 must be made
no later than the 30th calendar day (or such other day as the Board may prescribe) prior to the end
of the calendar quarter to which the election applies in accordance with the procedures established
by the Board. Once an election is made with respect to a particular calendar quarter, it may not
be withdrawn or substituted unless the Board determines, in its sole discretion, that the
withdrawal or substitution is occasioned by an extraordinary or unanticipated event.

     10.3 PURCHASE RESTRICTIONS . If, on the date shares would be purchased pursuant to an election
under Section 10.1, there is in place any restriction under (x) applicable law (including, without
limitation, a blackout period under the Sarbanes-Oxley Act of 2002) or (y) the rules of the
principal national securities exchange on which shares of the applicable series of Common Stock are
traded or (z) any trading policies adopted by the Company in writing and generally applicable to
executive officers of the Company (any such restriction, a “Purchase Restriction”) which
would prohibit the Non-Employee Director from making such a purchase, then such shares shall not be
purchase on such date but, subject to Section 11.16, shall be purchased on the first trading day
following the lapse or removal of the Purchase Restriction based on the Fair Market Value of the
shares on such trading day.

13

 

     10.4 CONDITIONS. Subject to Section 11.16, nothing contained herein shall preclude the Board, in
its sole discretion, from imposing conditions on any election made under Section 10.1, including,
without limitation, the conditions described in Section 10.3.

ARTICLE XI

GENERAL PROVISIONS

     11.1 ACCELERATION OF OPTIONS, SARs, RESTRICTED SHARES AND STOCK UNITS.

          (a) DEATH OR DISABILITY. If a Holder’s service shall terminate by reason of death or
Disability, notwithstanding any contrary waiting period, installment period, vesting schedule, or
Restriction Period in any Agreement or in the Plan, unless the applicable Agreement provides
otherwise: (i) in the case of an Option or SAR, each outstanding Option or SAR granted under the
Plan shall immediately become exercisable in full in respect of the aggregate number of shares
covered thereby; (ii) in the case of Restricted Shares, the Restriction Period applicable to each
such Award of Restricted Shares shall be deemed to have expired and all such Restricted Shares, any
related Retained Distributions and any unpaid Dividend Equivalents shall become vested and any cash
amounts payable pursuant to the applicable Agreement shall be adjusted in such manner as may be
provided in the Agreement; and (iii) in the case of Stock Units, each such award of Stock Units
shall become vested in full.

          (b) APPROVED TRANSACTIONS; BOARD CHANGE; CONTROL PURCHASE. In the event of any Approved
Transaction, Board Change or Control Purchase, notwithstanding any contrary waiting period,
installment period, vesting schedule, or Restriction Period in any Agreement or in the Plan, unless
the applicable Agreement provides otherwise: (i) in the case of an Option or SAR, each such
outstanding Option or SAR granted under the Plan shall become exercisable in full in respect of the
aggregate number of shares covered thereby; (ii) in the case of Restricted Shares, the Restriction
Period applicable to each such Award of Restricted Shares shall be deemed to have expired and all
such Restricted Shares, any related Retained Distributions, and any unpaid Dividend Equivalents
shall become vested and any cash amounts payable pursuant to the applicable Agreement shall be
adjusted in such manner as may be provided in the Agreement; and (iii) in the case of Stock Units,
each such award of Stock Units shall become vested in full, in each case effective upon the Board
Change or Control Purchase or immediately prior to consummation of the Approved Transaction.
Notwithstanding the foregoing, unless otherwise provided in the applicable Agreement, the Board
may, in its discretion, determine that any or all outstanding Awards of any or all types granted
pursuant to the Plan will not vest or become exercisable on an accelerated basis in connection with
an Approved Transaction if effective provision has been made for the taking of such action which,
in the opinion of the Board, is equitable and appropriate to substitute a new Award for such Award
or to assume such Award and to make such new or assumed Award, as nearly as may be practicable,
equivalent to the old Award (before giving effect to any acceleration of the vesting or
exercisability thereof), taking into account, to the extent applicable, the kind and amount of
securities, cash, or other assets into or for which the applicable series of Common Stock may be
changed, converted, or exchanged in connection with the Approved Transaction.

14

 

     11.2 TERMINATION OF SERVICE.

          (a) GENERAL. If a Holder’s service on the Board shall terminate prior to the complete
exercise of an Option or SAR (or deemed exercise thereof, as provided in Section 7.2) or during the
Restriction Period with respect to any Restricted Shares or prior to the vesting or complete
exercise of any Stock Units, then such Option, SAR, or Stock Unit shall thereafter be exercisable,
and the Holder’s rights to any unvested Restricted Shares, Retained Distributions, unpaid Dividend
Equivalents, and cash amounts and any such unvested Stock Units shall thereafter vest, in each case
solely to the extent provided in the applicable Agreement; PROVIDED, HOWEVER, that, unless
otherwise determined by the Board and provided in the applicable Agreement, (i) no Option or SAR
may be exercised after the scheduled expiration date thereof; (ii) if the Holder’s service
terminates by reason of death or Disability, the Option or SAR shall remain exercisable for a
period of at least one year following such termination (but not later than the scheduled expiration
of such Option or SAR); and (iii) any termination of the Holder’s service for cause will be treated
in accordance with the provisions of Section 11.2(b).

          (b) TERMINATION FOR CAUSE. If a Holder’s service on the Board shall be terminated by the
Company during the Restriction Period with respect to any Restricted Shares, or prior to the
exercise of any Option or SAR, or prior to the vesting or complete exercise of any Stock Unit for
cause (for these purposes, cause shall include, but not be limited to, insubordination, dishonesty,
incompetence, moral turpitude, other misconduct of any kind, and the refusal to perform his duties
and responsibilities for any reason other than illness or incapacity; PROVIDED, HOWEVER, that if
such termination occurs within 12 months after an Approved Transaction or Control Purchase or Board
Change, termination for cause shall mean only a felony conviction for fraud, misappropriation, or
embezzlement), then, unless otherwise determined by the Board and provided in the applicable
Agreement, (i) all Options and SARs and all unvested or unexercised Stock Units held by such Holder
shall immediately terminate and (ii) such Holder’s rights to all Restricted Shares, Retained
Distributions, any unpaid Dividend Equivalents, and any cash awards shall be forfeited immediately.

     11.3 NONALIENATION OF BENEFITS. Except as set forth herein, no right or benefit under the Plan
shall be subject to anticipation, alienation, sale, assignment, hypothecation, pledge, exchange,
transfer, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign,
hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void. No right or
benefit hereunder shall in any manner be liable for or subject to the debts, contracts,
liabilities, or torts of the Person entitled to such benefits.

     11.4 WRITTEN AGREEMENT. Each grant of an Option under the Plan shall be evidenced by a stock
option agreement; each SAR shall be evidenced by a stock appreciation rights agreement; each award
of Restricted Shares shall be evidenced by a restricted shares agreement; and each award of Stock
Units shall be evidenced by a stock units agreement, each in such form and containing such terms
and provisions not inconsistent with the provisions of the Plan as the Board from time to time
shall approve; PROVIDED, HOWEVER, that if more than one type of Award is made to the same Holder,
such Awards may be evidenced by a single Agreement with such Holder. Each grantee of an Option,
SAR, Restricted Shares, or Stock Units shall be notified promptly of such grant, and a written
Agreement shall be promptly executed and delivered by the Company. Any such written Agreement may
contain (but shall

15

 

not be required to contain) such provisions as the Board deems appropriate (i) to insure that the
penalty provisions of Section 4999 of the Code will not apply to any stock or cash received by the
Holder from the Company or (ii) to provide cash payments to the Holder to mitigate the impact of
such penalty provisions upon the Holder. Any such Agreement may be supplemented or amended from
time to time as approved by the Board as contemplated by Section 11.6(b).

     11.5 DESIGNATION OF BENEFICIARIES. Each Person who shall be granted an Award under the Plan may
designate a beneficiary or beneficiaries and may change such designation from time to time by
filing a written designation of beneficiary or beneficiaries with the Board on a form to be
prescribed by it, provided that no such designation shall be effective unless so filed prior to the
death of such Person.

     11.6 TERMINATION AND AMENDMENT.

          (a) GENERAL. Unless the Plan shall theretofore have been terminated as hereinafter provided,
no Awards may be made under the Plan on or after the tenth anniversary of the Effective Date. The
Plan may be terminated at any time prior to the tenth anniversary of the Effective Date and may,
from time to time, be suspended or discontinued or modified or amended if such action is deemed
advisable by the Board.

          (b) MODIFICATION. No termination, modification or amendment of the Plan may, without the
consent of the Person to whom any Award shall theretofore have been granted, adversely affect the
rights of such Person with respect to such Award. No modification, extension, renewal, or other
change in any Award granted under the Plan shall be made after the grant of such Award, unless the
same is consistent with the provisions of the Plan. With the consent of the Holder and subject to
the terms and conditions of the Plan (including Section 11.6(a) and Section 11.16), the Board may
amend outstanding Agreements with any Holder, including, without limitation, any amendment which
would (i) accelerate the time or times at which the Award may be exercised and/or (ii) extend the
scheduled expiration date of the Award. Without limiting the generality of the foregoing, Subject
to Section 11.16, the Board may, but solely with the Holder’s consent unless otherwise provided in
the Agreement, agree to cancel any Award under the Plan and grant a new Award in substitution
therefor, provided that the Award so substituted shall satisfy all of the requirements of the Plan
as of the date such new Award is made. Nothing contained in the foregoing provisions of this
Section 11.6(b) shall be construed to prevent the Board from providing in any Agreement that the
rights of the Holder with respect to the Award evidenced thereby shall be subject to such rules and
regulations as the Board may, subject to the express provisions of the Plan, adopt from time to
time or impair the enforceability of any such provision.

     11.7 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company with respect to Awards shall
be subject to all applicable laws, rules, and regulations and such approvals by any governmental
agencies as may be required, including, without limitation, the effectiveness of any registration
statement required under the Securities Act of 1933, and the rules and regulations of any
securities exchange or association on which the Common Stock may be listed or quoted. For so long
as any series of Common Stock are registered under the Exchange Act, the Company shall use its
reasonable efforts to comply with any legal requirements (i) to maintain a registration statement
in effect under the Securities Act

16

 

of 1933 with respect to all shares of the applicable series of Common Stock that may be issued to
Holders under the Plan and (ii) to file in a timely manner all reports required to be filed by it
under the Exchange Act.

     11.8 WITHHOLDING. The Company’s obligation to deliver shares of Common Stock or pay cash in
respect of any Award under the Plan shall be subject to applicable federal, state, and local tax
withholding requirements. Federal, state, and local withholding tax due at the time of an Award,
upon the exercise of any Option or SAR or upon the vesting of, or expiration of restrictions with
respect to, Restricted Shares or Stock Units, as appropriate, may, in the discretion of the Board,
be paid in shares of the applicable series of Common Stock already owned by the Holder or through
the withholding of shares otherwise issuable to such Holder, upon such terms and conditions
(including, without limitation, the conditions referenced in Section 6.5) as the Board shall
determine. If the Holder shall fail to pay, or make arrangements satisfactory to the Board for the
payment to the Company of, all such federal, state and local taxes required to be withheld by the
Company, then the Company shall, to the extent permitted by law, have the right to deduct from any
payment of any kind otherwise due to such Holder an amount equal to any federal, state, or local
taxes of any kind required to be withheld by the Company with respect to such Award.

     11.9 NONEXCLUSIVITY OF THE PLAN. The adoption of the Plan by the Board shall not be construed as
creating any limitations on the power of the Board to adopt such other incentive arrangements as it
may deem desirable, including, without limitation, the granting of stock options and the awarding
of stock and cash otherwise than under the Plan, and such arrangements may be either generally
applicable or applicable only in specific cases.

     11.10 EXCLUSION FROM OTHER PLANS. By acceptance of an Award, unless otherwise provided in the
applicable Agreement, each Holder shall be deemed to have agreed that such Award is special
incentive compensation that will not be taken into account, in any manner, as compensation or bonus
in determining the amount of any payment under any pension, retirement or other benefit plan,
program, or policy of the Company or any Subsidiary of the Company. In addition, each beneficiary
of a deceased Holder shall be deemed to have agreed that such Award will not affect the amount of
any life insurance coverage, if any, provided by the Company on the life of the Holder which is
payable to such beneficiary under any life insurance plan of the Company or any Subsidiary of the
Company. Director Compensation elected to be received in the form of stock in lieu of cash shall
be treated as regular compensation for purposes of any Director retirement or life insurance plan.

     11.11 UNFUNDED PLAN. Neither the Company nor any Subsidiary of the Company shall be required to
segregate any cash or any shares of Common Stock which may at any time be represented by Awards,
and the Plan shall constitute an “unfunded” plan of the Company. Except as provided in Article
VIII with respect to Awards of Restricted Shares and except as expressly set forth in an Agreement,
no Holder shall have voting or other rights with respect to the shares of Common Stock covered by
an Award prior to the delivery of such shares. Neither the Company nor any Subsidiary of the
Company shall, by any provisions of the Plan, be deemed to be a trustee of any shares of Common
Stock or any other property, and the liabilities of the Company to any Holder pursuant to the Plan
shall be those of a debtor pursuant to such contract obligations as are created by or pursuant to
the Plan, and shall be limited to those of a general

17

 

creditor of the Company. In its sole discretion, the Board may authorize the creation of trusts or
other arrangements to meet the obligations of the Company under the Plan, PROVIDED, HOWEVER, that
the existence of such trusts or other arrangements is consistent with the unfunded status of the
Plan.

     11.12 GOVERNING LAW. The Plan shall be governed by, and construed in accordance with, the laws of
the State of Delaware.

     11.13 ACCOUNTS. The delivery of any shares of Common Stock and the payment of any amount in
respect of an Award shall be for the account of the Company or the applicable Subsidiary of the
Company, as the case may be, and any such delivery or payment shall not be made until the recipient
shall have paid or made satisfactory arrangements for the payment of any applicable withholding
taxes as provided in Section 11.8.

     11.14 LEGENDS. Each certificate evidencing shares of Common Stock subject to an Award shall bear
such legends as the Board deems necessary or appropriate to reflect or refer to any terms,
conditions, or restrictions of the Award applicable to such shares, including, without limitation,
any to the effect that the shares represented thereby may not be disposed of unless the Company has
received an opinion of counsel, acceptable to the Company, that such disposition will not violate
any federal or state securities laws.

     11.15 COMPANY’S RIGHTS. The grant of Awards pursuant to the Plan shall not affect in any way the
right or power of the Company to make reclassifications, reorganizations, or other changes of or to
its capital or business structure or to merge, consolidate, liquidate, sell, or otherwise dispose
of all or any part of its business or assets.

     11.16 CODE SECTION 409A. This Plan and the Awards made hereunder are intended to be (i)
“stock rights” exempt from Section 409A of the Code (“Section 409A”) pursuant to Treasury
Regulations § 1.409A-1(b)(5), (ii) “short-term deferrals” exempt from Section 409A or (iii)
payments which are deferred compensation and paid in compliance with Section 409A, and the Plan and
each Agreement shall be interpreted and administered accordingly. Any adjustments of Awards
intended to be “stock rights” exempt from Section 409A of the Code pursuant to Treasury Regulations
§ 1.409A-1(b)(5) shall be conducted in a manner so as not to constitute a grant of a new stock
right or a change in the time and form of payment pursuant to Treasury Regulations
§1.409A-1(b)(5)(v). In the event an Award is not exempt from Section 409A of the Code, (x) payment
pursuant to the relevant Agreement shall be made only on a permissible payment event or at a
specified time in compliance with Section 409A, (y) no accelerated payment shall be made pursuant
to Section 11.1(b) unless the Board Change, Approved Transaction or Control Purchase constitutes a
“change in control event” under Treasury Regulations §1.409A-3(i)(5) or otherwise constitutes a
permissible payment event under Section 409A of the Code and (z) no amendment or modification of
such Award may be made except in compliance with the anti-deferral and anti-acceleration provisions
of Section 409A. No deferrals of compensation otherwise payable under this Plan or any Award shall
be allowed, whether at the discretion of the Company or the Award recipient, except in a manner
consistent with the requirements of Section 409A.

18Filed by sedaredgar.com - CarBiz, Inc. - Exhibit 10.1

Exhibit 10.1

[TRAFALGAR Letterhead]

TERM AGREEMENT 

Date: September 15, 2008 

Dear Mr. Ritter,

Whereas CarBiz Inc. (“CarBiz”) has issued and sold to Trafalgar
Capital Specialist Investment Fund (“Trafalgar”) the following Secured
Convertible Debentures (“Debentures”) under their respective Securities Purchase
Agreements (“Purchase Agreements”): $750,000 Secured Convertible Debenture
issued on April 13, 2007; $750,000 Secured Convertible Debenture issued on June
26, 2007; $1,000,000 Secured Convertible Debenture issued on August 31, 2007;
and $1,500,000 Secured Convertible Debenture issued on September 26, 2007.

The parties hereto agree as follows:

	1. 	
      Trafalgar will accept payments of $40,000 per month for
      12 months beginning September 2008 for the Debentures on the outstanding
      balance of $4,904,043.00. The balance of the unpaid Interest will be
      accrued over the 12 months. The August 31, 2007 Debenture in the amount of
      $1,000,000 will not be payable during the 12 months unless CarBiz elects
      to pay it.

	 	 
	2. 	
      CarBiz will adjust the outstanding amount(s) owed to
      Trafalgar such that when Trafalgar accepts the Debentures to be fully paid
      off, the internal rate of return to Trafalgar will be at least 20% on the
      Debentures.

	 	 
	3. 	
      Trafalgar will cancel all of its outstanding Warrants in
      CarBiz in exchange for Two and a half million shares of Common Stock to be
      delivered within one week from the date of this letter.

	 	 
	4. 	
      As a forbearance fee for delay of payments, CarBiz will
      provide Trafalgar with four million additional shares of Common Stock to
      be delivered within one week from the date of this letter.

	 	 
	5. 	
      CarBiz will commit to an Investment Relations (“IR”)
      program that is acceptable to Trafalgar six months from the date of this
      letter.

	 	 
	6. 	
      Nothing in this Term Agreement shall waive or cause to
      waive any terms under the original Debentures und Purchase
    Agreements,

SIGNATURE PAGE TO FOLLOW

2

If you are in agreement with the above, please accept by
signing below.

Trafalgar Capital Specialized Investment Fund-FIS

By: /s/ Robert Drew, Portfolio Manager

CarBiz, Inc.

By: /s/ Carl Ritter

3

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