Document:

Exhibit 10.87

 

AUTOBYTEL INC.

Inducement Stock Option Award Agreement

 (Non-Qualified Performance-Based Stock Options)

THESE OPTIONS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE STATE SECURITIES LAWS WITH RESPECT TO SUCH SECURITY IS THEN IN EFFECT, OR SUCH REGISTRATION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED DUE TO AVAILABLE EXEMPTIONS FROM SUCH REGISTRATION.  SHOULD THERE BE ANY REASONABLE UNCERTAINTY OR GOOD FAITH  DISAGREEMENT BETWEEN THE COMPANY AND OPTIONEE AS TO THE AVAILABILITY OF SUCH EXEMPTIONS, THEN OPTIONEE SHALL BE REQUIRED TO DELIVER TO THE COMPANY AN OPINION OF COUNSEL (SKILLED IN SECURITIES MATTERS, SELECTED BY OPTIONEE AND REASONABLY SATISFACTORY TO THE COMPANY) IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS.

This Inducement Stock Option Award Agreement ("Agreement") is entered into effective as of the Grant Date set forth on the signature page to this Agreement ("Grant Date") by and between Autobytel Inc., a Delaware corporation ("Company"), and the person set forth as Optionee on the signature page hereto ("Optionee").

Optionee has not previously been an employee or director of the Company.  The Company has determined to offer employment to Optionee, and as an inducement material to Optionee's decision to accept such employment offer, the Company determined to grant Optionee the Options under the terms and conditions set forth herein.

This Agreement and the stock options granted hereby have not been granted pursuant to the Company's 2010 Equity Incentive Plan ("Plan"), but certain capitalized identified herein and not defined herein shall have the same meanings as defined in the Plan.

1.            Grant of Options.  Subject to Optionee's commencement of employment with the Company, the Company hereby grants to Optionee non-qualified stock options ("Options") to purchase the number of shares of common stock of the Company, par value $0.001 per share, set forth on the signature page to this Agreement ("Shares"), at the exercise price per Share set forth on the signature page to this Agreement ("Exercise Price").  The Options are not intended to qualify as incentive stock options under Section 422 of the Code (as such term is defined in the Plan).

2.            Term of Option.  Unless the Options terminate earlier pursuant to the provisions of this Agreement, the Options shall expire on the seventh (7th) anniversary of the Grant Date ("Option Expiration Date").

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3.            Vesting.  The Options shall become vested and exercisable in accordance with the vesting schedule attached hereto as Exhibit A and incorporated herein by reference ("Vesting Schedule").

4.            Exercise of Options.

(a)            Manner of Exercise.  To the extent vested, the Options may be exercised, in whole or in part, by delivering written notice to the Company in accordance with Section 8(f) of the Plan in such form as the Company may require from time to time, or at the direction of the Company, through the procedures established with the Company's third party option administration service.  Such notice shall specify the number of Shares subject to the Options as to which the Options are being exercised and shall be accompanied by full payment of the Exercise Price of such Shares in a manner permitted under the terms of Section 5.5 of the Plan (as if these Options had been granted under the Plan) (including same day sales through a broker), except that payment in whole or in part in a manner set forth in clauses (ii), (iii) or (iv) of Section 5.5(b) of the Plan (as if these Options had been granted under the Plan), may only be made with the consent of the Committee (as such term is defined in the Plan).  The Options may be exercised only in multiples of whole Shares, and no fractional Shares shall be issued.

(b)            Issuance of Shares.  Upon exercise of the Options and payment of the Exercise Price for the Shares as to which the Options are exercised and satisfaction of all applicable tax withholding requirements, the Company shall issue to Optionee the applicable number of Shares in the form of fully paid and nonassessable Shares.

(c)            Withholding.  No Shares will be issued on exercise of the Options unless and until Optionee pays to the Company, or makes satisfactory arrangements with the Company for payment of, any federal, state, local or foreign taxes required by law to be withheld in respect of the exercise of the Options.  Optionee hereby agrees that the Company may withhold from Optionee's wages or other remuneration the applicable taxes.  At the discretion of the Company, the applicable taxes may be withheld in kind from the Shares otherwise deliverable to Optionee on exercise of the Options, up to Optionee's minimum required withholding rate or such other rate determined by the Committee that will not trigger a negative accounting impact.

(d)            Compliance with Securities Trading Policy.  Shares issued upon exercise of the Options may only be sold, pledged or otherwise transferred in compliance with the Company's securities trading policies generally applicable to officers, directors or employees of the Company as long as Optionee is subject to such securities trading policy.

(e)            Limitation on Number of Resales or Transfers of Shares.  The number of Shares that may be resold or transferred to the public or through any public securities trading market at any time may not exceed (i) for any one sale or transfer order, twenty-five percent (25%) of the Average Daily Volume; and (ii) for all sales or transfer volume in any calendar week, twenty-five percent (25%) of the Weekly Volume.  For purposes of this Section 4(e), (i) "Average Daily Volume" will be determined once at the beginning of each calendar quarter for application during such quarter based on an averaging of the daily volume of sales of Company Common Stock as reported by The NASDAQ Capital Market (provided that if the Company's Common Stock is not then listed on The NASDAQ Capital Market, as reported by such trading market on which the Common Stock is traded) for each trading day over the 90-trading day

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period preceding such determination; and (ii) "Average Weekly Volume" is calculated by multiplying the Average Daily Volume by the number of trading days in the calendar week preceding the proposed sale or transfer of Shares.

5.          Option Termination and Other Provisions.

(a)            Termination Upon Expiration of Option Term.  The Options shall terminate and expire in their entirety on the Option Expiration Date.  In no event may Optionee exercise the Options after the Option Expiration Date, even if the application of another provision of this Section 5 may result in an extension of the exercise period for the Options beyond the Option Expiration Date.

(b)            Termination of Employment.

(i)          Termination of Employment Other Than Due to Death, Disability or Cause.

(1)            Termination of Employment On or After Determination of Vesting Eligible Performance Options.  In the event of a termination of Optionee's employment by the Company without Cause or by Optionee for Good Reason on or after the date that the Vesting Eligible Performance Options (as defined in the Vesting Schedule) are determined ("Vesting Eligible Performance Options Determination Date"), the provisions of this Section 5(b)(i)(1) shall apply rather than Section 5(b)(i)(2).  Any unvested portion of the Vesting Eligible Performance Options shall become immediately and fully vested as of the date of such termination of employment without Cause or for Good Reason.  Optionee may exercise the vested portion of the Vesting Eligible Performance Options for a period of ninety (90) days (but in no event later than the Option Expiration Date) following the date of any such termination of Optionee's employment with the Company either by Optionee or the Company, other than in the event of a termination of Optionee's employment by the Company for Cause or by reason of Optionee's death or Disability.  To the extent Optionee is not entitled to exercise the Options at the date of termination of employment, or if Optionee does not exercise the Options within the time specified in this Agreement for post-termination of employment exercises of the Options, the Options shall terminate.  For purposes of this Agreement, the terms "Cause" and "Good Reason" shall have the meanings ascribed to them in that certain Severance Benefits Agreement identified on the signature page to this Agreement ("Severance Agreement").

(2)            Termination of Employment Prior to Determination of Vesting Eligible Performance Options.  In the event of a termination of Optionee's employment by the Company without Cause or by Optionee for Good Reason before the Vesting Eligible Performance Options Determination Date, the provisions of this Section 5(b)(i)(2) shall apply rather than Section 5(b)(i)(1).  Unless otherwise, expired, terminated, forfeited or cancelled prior to the Vesting Eligible Performance Options Determination Date in accordance with this Agreement, no Options shall expire or be cancelled or terminated, nor may any Options be exercised until such time as the Vesting Eligible Performance Options are determined.  Once the Vesting Eligible Performance Options are determined, any unvested portion of the Vesting Eligible Performance Options shall become immediately and fully vested as of the Vesting Eligible Performance Options Determination Date.  Optionee may exercise the vested portion of the Vesting Eligible Performance Options for a period of ninety (90) days (but in no event later

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than the Option Expiration Date) following the Vesting Eligible Performance Options Determination Date.  To the extent Optionee does not exercise the Options within the time specified in this Agreement for post-termination of employment exercises of the Options, the Options shall terminate.

(ii)            Termination of Employment for Cause.  Upon the termination of Optionee's employment by the Company for Cause, unless the Options have been earlier terminated, cancelled, expired or forfeited, the Options (whether vested or not) shall immediately terminate and be cancelled in their entirety and shall thereafter not be exercisable to any extent whatsoever; provided that the Company, in its discretion, may, by written notice to Optionee given as of the date of termination, authorize Optionee to exercise any vested portion of the Options for a period of up to thirty (30) days following Optionee's termination of employment for Cause, provided that in no event may Optionee exercise the Options after the Option Expiration Date.

                          (iii)            Termination of Optionee's Employment By Reason of Optionee's Death.  In the event Optionee's employment is terminated by reason of Optionee's death, the Options, to the extent vested as of the date of termination, may be exercised at any time within twelve (12) months following the date of termination (but in no event later than the Option Expiration Date) by Optionee's executor or personal representative or the person to whom the Options shall have been transferred by will or the laws of descent and distribution, but only to the extent Optionee could exercise the Options at the date of termination.

(iv)            Termination of Optionee's Employment By Reason of Optionee's Disability.  In the event that Optionee ceases to be an employee by reason of Optionee's Disability, unless the Options have been earlier terminated, cancelled, expired or forfeited, Optionee (or Optionee's attorney-in-fact, conservator or other representative on behalf of Optionee) may, but only within twelve (12) months from the date of such termination of employment (but in no event later than the Option Expiration Date), exercise the Options to the extent Optionee was otherwise entitled to exercise the Options at the date of such termination of employment.  For purposes of this Agreement, "Disability" shall mean Optionee's becoming "permanently and totally disabled" within the meaning of Section 22(e)(3) of the Code or as otherwise determined by the Committee in its discretion.  The Committee may require such proof of Disability as the Committee in its sole and absolute discretion deems appropriate, and the Committee's determination as to whether Optionee has incurred a Disability shall be final and binding on all parties concerned.

(c)            Change in Control.  In the event of a Change in Control (as such term is defined in the Plan), the effect of the Change in Control on the Options shall be determined by the applicable provisions of the Plan (including, without limitation, Article 11 of the Plan) (as if the Options had been granted under the Plan), provided that (i) to the extent the Options are assumed or substituted for in connection with the Change in Control, or the Company is the ultimate parent corporation upon the consummation of the Change in Control and the Company continues the Options, the Options will vest and become fully exercisable in accordance with clause (i) of Section 11.2(a) of the Plan (as if the Options had been granted under the Plan), only if within twelve (12) months following the date of the Change in Control Optionee's employment is terminated by the Company or a Subsidiary (or the successor company or a subsidiary or parent thereof) without Cause; and (ii) any portion of the Options which vests and becomes exercisable

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pursuant to Section 11.2(b) of the Plan (as if the Options had been granted under the Plan), as a result of such Change in Control will (1) vest and become exercisable on the day prior to the date of the Change in Control if Optionee is then employed by the Company or a Subsidiary and (2) terminate on the date of the Change in Control.  Notwithstanding the foregoing, if on the date of the Change in Control the Fair Market Value (as such term is defined in the Plan) of one (1) Share is less than the Exercise Price per Share, then the Options shall terminate as of the date of the Change in Control except as otherwise determined by the Committee.

(d)            Extension of Exercise Period.  Notwithstanding any provisions of this Section 5 to the contrary, if exercise of the Options following termination of employment or service during the time period set forth in the applicable paragraph or sale during such period of the Shares acquired on exercise would violate any of the provisions of the federal securities laws (or any Company policy related thereto), the time period to exercise the Options shall be extended until the later of (i) forty-five (45) days after the date that the exercise of the Options or sale of the Shares acquired on exercise would not be a violation of the federal securities laws (or a related Company policy), or (ii) the end of the applicable time period based on the applicable reason for the termination of employment as set forth in this Section 5; provided, however, that in no event shall the exercisability of the Options be extended beyond the Option Expiration Date.

(e)            Adjustments.  The number of Options may be subject to adjustment as provided in Section 12.2 of the Plan (as if the Options had been granted under the Plan).

(f)            Forfeiture upon Engaging in Detrimental Activities.  If, at any time within the twelve (12) months after (i) Optionee exercises any portion of the Options; or (ii) the effective date of any termination of Optionee's employment by the Company or by Optionee for any reason, Optionee engages in, or is determined by the Committee in its sole discretion to have engaged in, any (i) material breach of any non-competition, non-solicitation, non-disclosure or settlement or release covenant or agreement with the Company or any Subsidiary; (ii) activities during the course of Optionee's employment with the Company or any Subsidiary constituting fraud, embezzlement, theft or dishonesty; or (iii) activity that is otherwise in conflict with. or adverse or detrimental to the interests of the Company or any Subsidiary, then (x) the Options shall terminate effective as of the date on which Optionee engaged in or engages in that activity or conduct, unless terminated sooner pursuant to the provisions of this Agreement, and (y) the amount of any gain realized by Optionee from exercising all or a portion of the Options at any time following the date that Optionee engaged in any such activity or conduct, as determined as of the time of exercise, shall be forfeited by Optionee and shall be paid by Optionee to the Company, and recoverable by the Company, within sixty (60) days following such termination date of the Options.  For purposes of the foregoing, the following will be deemed to be activities in conflict with or adverse or detrimental to the interests of the Company or any Subsidiary:  (i) Optionee's conviction of, or pleading guilty or nolo contendre to any misdemeanor involving moral turpitude or any felony, the underlying events of which related to Optionee's employment with the Company; (ii) knowingly engaged or aided in any act or transaction by the Company or a Subsidiary that results in the imposition of criminal, civil or administrative penalties against the Company or any Subsidiary; or (iii) misconduct during the course of Optionee's employment by the Company or any Subsidiary that results in an accounting restatement by the Company due to material noncompliance with any financial reporting requirement under applicable securities laws, whether such restatement occurs during or after Optionee's employment by the Company or any Subsidiary.

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(g)            Reservation of Committee Discretion to Accelerate Option Vesting and Extend Option Exercise Window.  The Committee reserves the right, in its sole and absolute discretion, to accelerate the vesting of the Options and to extend the exercise window for Options that have vested (either in accordance with the terms of this Agreement or by discretionary acceleration by the Committee) under circumstances not otherwise covered by the foregoing provisions of this Section 5; provided that in no event may the Committee extend the exercise period for Options beyond the Option Expiration Date.  The Committee is under no obligation to exercise any such discretion and may or may not exercise such discretion on a case-by-case basis.

	
6.

	
Non-Registered Option and Shares.

(a)            Optionee hereby acknowledges that the Options and any Shares that may be acquired upon exercise of the Options pursuant hereto are, as of the date hereof, not registered:  (i) under the Securities Act of 1933, as amended ("Securities Act"), on the ground that the issuance of the Options and the underlying shares is exempt from registration under Section 4(2) of the Securities Act as not involving any public offering or, with respect to Options, because the grant of the Options alone may not constitute an offer or sale of a security under the Securities Act until such time as the Options are exercised or exercisable or (ii) under any applicable state securities law because the grant of the Options does not involve any public offering or is otherwise exempt under applicable state securities laws, and (iii) that the Company's reliance on the Section 4(2) exemption of the Securities Act and under applicable state securities laws is predicated in part on the representations hereby made to the Company by Optionee. Optionee represents and warrants that Optionee is acquiring the Options and will acquire the Shares for investment for Optionee's own account, with no present intention of reselling or otherwise distributing the same.

(b)            If, at the time of issuance of shares upon exercise of the Options, no registration statement is in effect with respect to such shares under applicable provisions of the Securities Act and other applicable securities laws, Optionee hereby agrees that Optionee will not sell, transfer, offer, pledge or hypothecate all or any part of the shares unless and until Optionee shall first have given notice to the Company describing such sale, transfer, offer, pledge or hypothecation and there shall be available exemptions from such registration requirements that exist.  Should there be any reasonable uncertainty or good faith disagreement between the Company and Optionee as to the availability of such exemptions, then Optionee shall be required to deliver to the Company (1) an opinion of counsel (skilled in securities matters, selected by Optionee and reasonably satisfactory to the Company) in form and substance satisfactory to the Company to the effect that such offer, sale, transfer, pledge or hypothecation is in compliance with an available exemption under the Securities Act and other applicable securities laws, or (2) an interpretative letter from the Securities and Exchange Commission to the effect that no enforcement action will be recommended if the proposed offer, sale, transfer, pledge or hypothecation is made without registration under the Securities Act.  The Company may at its election require that Optionee provide the Company with written reconfirmation of Optionee's investment intent as set forth in Section 6(a) with respect to the shares. The shares issued upon exercise of the Options shall bear a legend reading substantially as follows:

"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE

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TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE STATE SECURITIES LAWS WITH RESPECT TO SUCH SECURITY IS THEN IN EFFECT, OR SUCH REGISTRATION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED DUE TO AVAILABLE EXEMPTIONS FROM SUCH REGISTRATION.  SHOULD THERE BE ANY REASONABLE UNCERTAINTY OR GOOD FAITH DISAGREEMENT BETWEEN THE COMPANY AND OPTIONEE AS TO THE AVAILABILITY OF SUCH EXEMPTIONS, THEN OPTIONEE SHALL BE REQUIRED TO DELIVER TO THE COMPANY AN OPINION OF COUNSEL (SKILLED IN SECURITIES MATTERS, SELECTED BY OPTIONEE AND REASONABLY SATISFACTORY TO THE COMPANY) IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS."

(c)            The exercise of the Option and the issuance of the Shares upon such exercise shall be subject to compliance by the Company and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange or securities trading market on which the Shares may be listed for trading at the end of such exercise and issuance.

(d)            The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Shares pursuant to the Options shall relieve the Company of any liability with respect to the nonissuance or sale of the Shares as to which such approval shall not have been obtained.  However, the Company shall use its best efforts to obtain all such applicable approvals.

7.            Miscellaneous.

(a)            No Rights of Stockholder.  Optionee shall not have any of the rights of a stockholder with respect to the Shares subject to this Agreement until such Shares have been issued upon the due exercise of the Options.

(b)            Nontransferability of Options.  The Options shall be nontransferable or assignable except to the extent expressly provided in the Plan (as if the Options had been granted under the Plan).  Notwithstanding the foregoing, Optionee may by delivering written notice to the Company in a form provided by or otherwise satisfactory to the Company, designate a third party who, in the event of Optionee's death, shall thereafter be entitled to exercise the Options.  This Agreement is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder.

(c)            Severability.  If any provision of this Agreement shall be held unlawful or otherwise invalid or unenforceable in whole or in part by a court of competent jurisdiction, such provision shall (i) be deemed limited to the extent that such court of competent jurisdiction deems it lawful, valid and/or enforceable and as so limited shall remain in full force and effect, and (ii) not affect any other provision of this Agreement or part thereof, each of which shall remain in full force and effect.

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(d)            Governing Law, Jurisdiction and Venue.  This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware other than its conflict of laws principles.  The parties agree that in the event that any suit or proceeding is brought in connection with this Agreement, such suit or proceeding shall be brought in the state or federal courts located in New Castle County, Delaware, and the parties shall submit to the exclusive jurisdiction of such courts and waive any and all jurisdictional, venue and inconvenient forum objections to such courts.

(e)            Headings.  The headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

(f)            Notices.  All notices required or permitted under this Agreement shall be in writing and shall be sufficiently made or given if hand delivered or mailed by registered or certified mail, postage prepaid.  Notice by mail shall be deemed delivered on the date on which it is postmarked.

Notices to the Company should be addressed to:

Autobytel Inc.

18872 MacArthur Blvd., Suite 200

Irvine, CA  92612-1400

Attention:  General Counsel

Notices to Optionee should be addressed to Optionee at Optionee's address as it appears on the Company's records.

The Company or Optionee may by writing to the other party designate a different address for notices.  If the receiving party consents in advance, notice may be transmitted and received via telecopy or via such other electronic transmission mechanism as may be available to the parties.  Such notices shall be deemed delivered when received.

(g)            Agreement Not an Employment Contract.  This Agreement is not an employment or service contract, and nothing in this Agreement or in the granting of the Options shall be deemed to create in any way whatsoever any obligation on Optionee's part to continue as an employee of the Company or any Subsidiary or on the part of the Company or any Subsidiary to continue Optionee's employment or service as an employee.

(h)            Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original Agreement but all of which, taken together, shall constitute one and the same Agreement binding on the parties hereto.  The signature of any party hereto to any counterpart hereof shall be deemed a signature to, and may be appended to, any other counterpart hereof.

(i)            Administration.  The Committee shall have the power to interpret this Agreement and to adopt such rules for the administration, interpretation and application of this Agreement as are consistent with this Agreement and to interpret or revoke any such rules.  All actions taken and all interpretations and determinations made by the Committee (including determinations as to the calculation, satisfaction or achievement of performance-based vesting requirements, if any, to which the Options are subject) shall be final and binding upon Optionee, the

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Company and all other interested persons.  No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to this Agreement.

(j)            No Impairment of Rights.  This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of the business or assets.

(k)            Entire Agreement; Modification.  This Agreement contains the entire agreement between the parties with respect to the subject matter contained herein and may not be modified except as provided herein or in a written document signed by each of the parties hereto and may be rescinded only by a written agreement signed by both parties.

Remainder of Page Intentionally Left Blank; Signature Page Follows

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the Grant Date.

Grant Date:                                                                                      January 13, 2014  

Total Options Granted:                                                                                                                                               40,000

 (Maximum Vesting Eligible Performance Options)

Exercise Price Per Share:                                                                                                                                  $13.62

Severance Benefits Agreement:  Severance Benefits Agreement dated as of January 13, 2014, by and between the Company and Optionee.

"Company"                                                                                                                Autobytel Inc., a Delaware corporation

By:            /s/ Glenn E. Fuller  

Glenn E. Fuller

Executive Vice President, Chief Legal and Administrative Officer and Secretary

"Optionee"                                                                                                                                          /s/ Phillip W. DuPree  

Phillip W. DuPree

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Exhibit A

Option Vesting Schedule

The Options granted under this Agreement shall be subject to two vesting requirements and conditions:  (i) percentage achievement (based on the Performance Goals Achievement Scale) of the Retail Dealer Services Group Revenue Goal and Retail Dealer Services Group Gross Margin Goal, as determined below ("Retail Dealer Services Group Performance Goals Component"); and (ii) time vesting based on the time vesting schedule ("Time Vesting Schedule") set forth below ("Time Vesting Component").  For Options to vest and become exercisable, the number of Options eligible to vest under the Time Vesting Component must first be determined under the Retail Dealer Services Group Performance Goals Component in accordance with the formulas set forth below ("Vesting Eligible Performance Options").  The aggregate number of Vesting Eligible Performance Options is determined based upon achievement of Retail Dealer Services Group Performance Goals.  Once the aggregate number of Vesting Eligible Performance Options is determined, the Vesting Eligible Performance Options are then subject to vesting under the Time Vesting Component in accordance with the Time Vesting Schedule.  Options that are not determined to be Vesting Eligible Performance Options shall not vest and shall be cancelled as soon as the number of Vesting Eligible Performance Options is determined by the Committee.  The Vesting Eligible Performance Options Determination Date is the date that the achievements level under the Retail Dealer Services Group Revenue Goal and Retail Dealer Services Group Gross Margin Goal is determined for the Retail Dealer Services Group Measurement Period in accordance with the Company's Compensation Committee procedures.

The number of Vesting Eligible Performance Options (which may not exceed the Maximum Number of Vesting Eligible Performance Options) is determined in accordance with the following formula:

[Combined Retail Dealer Services Group Performance Goals Vesting Eligible Percentage] x [Maximum Number of Vesting Eligible Performance Options]

The following definitions apply to this Vesting Schedule:

Combined Retail Dealer Services Group Performance Goals Vesting Eligible Percentage means the percentage resulting from the following calculation:

[Retail Dealer Services Group Gross Margin Goal Vesting Eligible Percentage x Retail Dealer Services Group Gross Margin Goal Allocation Percentage] + [Retail Dealer Services Group Revenue Goal Vesting Eligible Percentage x Retail Dealer Services Group Revenue Goal Allocation Percentage]

GAAP means generally accepted accounting principles.

Maximum Number of Vesting Eligible Performance Options means the maximum number of Options that can be determined to be Vesting Eligible Performance Options.  The Maximum Number of Vesting Eligible Performance Options is set forth on the signature page to this Agreement.

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Retail Dealer Services Group means the Company's retail dealers services group that sells consumer lead referrals for vehicles and other dealer products and services to retail automotive dealers. The Retail Dealer Services Group excludes large dealer groups.

Retail Dealer Services Group Goals Achievement Scale means Schedule A-1 attached hereto and incorporated herein by reference.

Retail Dealer Services Group Gross Margin means the Retail Dealer Services Group' Gross Margin for the Retail Dealer Services Group Performance Measurement Period, as determined in accordance with GAAP. Retail Dealer Services Group Gross Margin is determine by the following formula:

[[Retail Dealer Services Group revenue from new and used consumer leads sales, mobile products, SaleMove products, and other retail dealer products and services revenue accounts] minus [Retail Dealer Services Group costs of revenue from new and used consumer leads sales, mobile products, SaleMove products, and other retail dealer products and services accounts]] divided by [Retail Dealer Services Group revenue from new and used consumer leads sales, mobile products, SaleMove products, and other retail dealer products and services revenue accounts] .

Retail Dealer Services Group Gross Margin Goal means the target goal set for the Retail Dealer Services Group' Gross Margin for the Retail Dealer Services Group Performance Measurement Period.  The Retail Dealer Services Group Gross Margin Goal for the Retail Dealer Services Group Performance Measurement Period is Forty-One and 4/10 Percent (41.4%).

Retail Dealer Services Group Gross Margin Goal Allocation Percentage means the percentage allocated to the Retail Dealer Services Group Gross Margin Goal.  The Retail Dealer Services Group Gross Margin Goal Allocation Percentage is fifty percent (50%).

Retail Dealer Services Group Gross Margin Goal Vesting Eligible Percentage means the percentage obtained from the column entitled "Vesting Eligible Percentage" in the Retail Dealer Services Group Goals Achievement Scale applicable to the Retail Dealer Services Group Gross Margin achieved for the Retail Dealer Services Group Performance Measurement Period.

Retail Dealer Services Group Gross Margin Percentage Achieved means the Retail Dealer Services Group Gross Margin percentage achieved for the Retail Dealer Group Performance Measurement Period.

Retail Dealer Services Group Performance Measurement Period means the twelve calendar month period commencing January 1, 2014 and ending December 31, 2014.

Retail Dealer Services Group Revenues means the Retail Dealer Services Group' total net revenues for the Retail Dealer Services Group Performance Measurement Period as determined in accordance with GAAP.

Retail Dealer Services Group Revenue Goal means the target goal set for the Retail Dealer Services Group Revenues for the Retail Dealer Services Group Performance Measurement P

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riod.  The Retail Dealer Services Group Revenue Goal is  *   Dollars ($  *  ).

Retail Dealer Services Group Revenue Goal Allocation Percentage means the percentage allocated to the Retail Dealer Services Group Revenue Goal.  The Retail Dealer Services Group Revenue Goal Allocation Percentage is fifty percent (50%).

Retail Dealer Services Group Revenue Goal Vesting Eligible Percentage means the percentage obtained from the column entitled "Vesting Eligible Percentage" in the Retail Dealer Services Group Goals Achievement Scale applicable to the Retail Dealer Services Group Revenue achieved for the Performance Measurement Period.

Retail Dealer Services Group Revenue Goal Percentage Achieved means the percentage of the Retail Dealer Services Group' Revenue Goal achieved for the Retail Dealer Services Group Performance Measurement Period calculated by dividing the Retail Dealer Services Group Revenues achieved for the Retail Dealer Services Group Performance Measurement Period by the Retail Dealer Services Group Revenue Goal.

Time Vesting Schedule means the following vesting schedule for Vesting Eligible Performance Options:  (1) thirty-three and one-third percent (33 1/3%) of the Vesting Eligible Performance Options shall vest and become exercisable effective as of the Vesting Eligible Performance Options Determination Date; and (2) one thirty-sixth (1/36th) the Vesting Eligible Performance Options shall vest and become exercisable on each successive monthly anniversary of the Vesting Eligible Performance Options thereafter for the following twenty-four (24) months ending on the third anniversary of the Vesting Eligible Performance Options Determination Date.

3

	
 

	
--

	
 

DuPree – 1/13/2014

Schedule A-1

Retail Dealer Services Group Goals Achievement Scale

  

	
2014 Revenue Scale

	
 

	
2014 Gross Margin Scale

	
Revenue

($ Million)

	
Performance

	
Vesting

Eligible

Percentage

	
 

	
Gross Margin (%)

	
Performance

	
Vesting

Eligible

Percentage

	
*

	
67%

	
1%

	
 

	
27.7%

	
67%

	
1%

	
*

	
68%

	
4%

	
 

	
28.2%

	
68%

	
4%

	
*

	
69%

	
7%

	
 

	
28.6%

	
69%

	
7%

	
*

	
70%

	
10%

	
 

	
29.0%

	
70%

	
10%

	
*

	
71%

	
13%

	
 

	
29.4%

	
71%

	
13%

	
*

	
72%

	
16%

	
 

	
29.8%

	
72%

	
16%

	
*

	
73%

	
19%

	
 

	
30.2%

	
73%

	
19%

	
*

	
74%

	
22%

	
 

	
30.6%

	
74%

	
22%

	
*

	
75%

	
25%

	
 

	
31.1%

	
75%

	
25%

	
*

	
76%

	
28%

	
 

	
31.5%

	
76%

	
28%

	
*

	
77%

	
31%

	
 

	
31.9%

	
77%

	
31%

	
*

	
78%

	
34%

	
 

	
32.3%

	
78%

	
34%

	
*

	
79%

	
37%

	
 

	
32.7%

	
79%

	
37%

	
*

	
80%

	
40%

	
 

	
33.1%

	
80%

	
40%

	
*

	
81%

	
43%

	
 

	
33.5%

	
81%

	
43%

	
*

	
82%

	
46%

	
 

	
33.9%

	
82%

	
46%

	
*

	
83%

	
49%

	
 

	
34.4%

	
83%

	
49%

	
*

	
84%

	
52%

	
 

	
34.8%

	
84%

	
52%

	
*

	
85%

	
55%

	
 

	
35.2%

	
85%

	
55%

	
*

	
86%

	
58%

	
 

	
35.6%

	
86%

	
58%

	
*

	
87%

	
61%

	
 

	
36.0%

	
87%

	
61%

	
*

	
88%

	
64%

	
 

	
36.4%

	
88%

	
64%

	
*

	
89%

	
67%

	
 

	
36.8%

	
89%

	
67%

	
*

	
90%

	
70%

	
 

	
37.3%

	
90%

	
70%

	
*

	
91%

	
73%

	
 

	
37.7%

	
91%

	
73%

	
*

	
92%

	
76%

	
 

	
38.1%

	
92%

	
76%

	
*

	
93%

	
79%

	
 

	
38.5%

	
93%

	
79%

	
*

	
94%

	
82%

	
 

	
38.9%

	
94%

	
82%

	
*

	
95%

	
85%

	
 

	
39.3%

	
95%

	
85%

	
*

	
96%

	
88%

	
 

	
39.7%

	
96%

	
88%

	
*

	
97%

	
91%

	
 

	
40.2%

	
97%

	
91%

	
*

	
98%

	
94%

	
 

	
40.6%

	
98%

	
94%

	
*

	
99%

	
97%

	
 

	
41.0%

	
99%

	
97%

	
*

	
100%

	
100%

	
 

	
41.4%

	
100%

	
100%

	
*

	
101%

	
103%

	
 

	
41.8%

	
101%

	
103%

	
*

	
102%

	
106%

	
 

	
42.2%

	
102%

	
106%

	
*

	
103%

	
109%

	
 

	
42.6%

	
103%

	
109%

	
*

	
104%

	
112%

	
 

	
43.1%

	
104%

	
112%

	
*

	
105%

	
115%

	
 

	
43.5%

	
105%

	
115%

	
*

	
106%

	
118%

	
 

	
43.9%

	
106%

	
118%

	
*

	
107%

	
121%

	
 

	
44.3%

	
107%

	
121%

	
*

	
108%

	
124%

	
 

	
44.7%

	
108%

	
124%

	
*

	
109%

	
127%

	
 

	
45.1%

	
109%

	
127%

	
*

	
110%

	
130%

	
 

	
45.5%

	
110%

	
130%

	
*

	
111%

	
133%

	
 

	
46.0%

	
111%

	
133%

	
*

	
112%

	
136%

	
 

	
46.4%

	
112%

	
136%

	
*

	
113%

	
139%

	
 

	
46.8%

	
113%

	
139%

	
*

	
114%

	
142%

	
 

	
47.2%

	
114%

	
142%

	
*

	
115%

	
145%

	
 

	
47.6%

	
115%

	
145%

	
*

	
116%

	
148%

	
 

	
48.0%

	
116%

	
148%

	
*

	
117%

	
151%

	
 

	
48.4%

	
117%

	
151%

	
*

	
118%

	
154%

	
 

	
48.9%

	
118%

	
154%

	
*

	
119%

	
157%

	
 

	
49.3%

	
119%

	
157%

	
*

	
120%

	
160%

	
 

	
49.7%

	
120%

	
160%

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
--

	
 

DuPree – 1/13/2014

4Exhibit 10.88

 January 13, 2014

Phillip DuPree

[Personal Information Redacted]

Re: Offer of Employment

Dear Phillip:

This letter confirms the terms and conditions upon which Autobytel Inc., a Delaware corporation ("Company") is offering employment to you. Note that this offer of employment and your employment by the Company is contingent upon various conditions and requirements that must be completed prior to commencement of employment, which conditions and requirements are set forth below.  In addition, this offer and your employment by the Company is contingent upon the Company's closing of its acquisition of the business of Auto USA from Auto Nation, Inc.

1.            Employment.

(a)            Effective as of the date you commence employment with the Company ("Employment Commencement Date"), which date is anticipated to be January 14, 2014, the Company will employ you as Executive Vice President, President Dealer Services. In such capacity, you will report to the Company's President and CEO or such other person as may be designated by the Company from time to time.

(b)            Your employment is at will and not for a specified term and may be terminated by the Company or you at any time, with or without cause or good reason and with or without prior, advance notice. This "at-will" employment status will remain in effect throughout the term of your employment by the Company and cannot be modified except by a written amendment to this offer letter that is executed by both parties (which in the case of the Company, must be executed by the Company's Chief Legal Officer) and that expressly negates the "at-will" employment status.

(c)            Upon termination of your employment by either party, whether with or without cause or good reason, you will be entitled to receive only such severance benefits, if any, as are set forth in that certain Severance Benefits Agreement between you and the Company to be dated as of the Employment Commencement Date ("Severance Benefits Agreement"), as the Severance Benefits Agreement may be amended, modified or terminated by agreement of the parties.  Receipt of any such severance benefits is subject to your compliance with the terms and conditions of the Severance Benefits Agreement.   You agree to assist and cooperate (including, but not limited to, providing information to the Company and/or testifying in a proceeding) in the investigation and handling of any internal investigation, legislative matter, or actual or threatened court action, arbitration, administrative proceeding, or other claim involving any matter that arose during the period of your employment.  You shall be reimbursed for reasonable expenses actually incurred in the

Phillip DuPree

Offer Letter

Page 2

course of rendering such assistance and cooperation.  Your agreement to assist and cooperate shall not affect in any way the content of information or testimony provided by you.

2.            Compensation, Benefits and Expenses.

(a)            As compensation for the services to be rendered by you pursuant to this agreement, the Company hereby agrees to pay you at a Semi-monthly Rate equal to Eleven Thousand Forty-one Dollars and Sixty-seven Cents ($11,041.67).  The Semi-monthly Rate shall be paid in accordance with the normal payroll practices of the Company.

(b)            You shall be entitled to participate in annual incentive compensation plans, if any, that may be adopted by the Company from time to time and that are afforded generally to persons employed by the Company at your position level (subject to the terms and conditions of any such annual incentive compensation plans). Should such an annual incentive compensation plan be adopted for any annual period, your target annual incentive compensation opportunity will be as established by the Company for each annual period, which may be up to 65% of your annualized rate (i.e., 24 X Semi-monthly Rate) based on achievement of objectives specified by the Company each annual incentive compensation period (which may include Company-wide performance objectives, divisional or department performance objectives and/or individual performance objectives, allocated between and among such performance objectives as the Company may determine). Specific annual incentive compensation plan details, target incentive compensation opportunity and objectives for each annual compensation plan period will be established each year. Awards under annual incentive plans may be prorated for a variety of factors, including time employed by the Company during the year, adjustments in base compensation or target award percentage changes during the year, and unpaid leaves.  You understand that the Company's annual incentive compensation plans, their structure and components, specific target incentive compensation opportunities and objectives, the achievement of objectives and the determination of actual awards and payouts, if any, thereunder are subject to the sole discretion of the Company's Board of Directors, or a committee thereof.

(c)            Upon commencement of your employment with the Company, the Company hereby agrees to pay you a sign-on bonus in the amount of Thirty-five Thousand Dollars ($35,000) to be paid in the payroll cycle following your employment commencement date.

(d)            Upon commencement of your employment with the Company you will be granted options to acquire 40,000 shares of the Company's common stock. The exercise price, vesting, exercise, termination and other terms and conditions of these options shall be governed by and subject to the terms and conditions of the stock option award agreement for such options. The granting and exercise of such options are also subject to compliance with applicable federal and state securities laws and with the Company's Securities Trading Policy.

 (e)            You shall be entitled to participate in such ordinary and customary benefits plans afforded generally to persons employed by the Company at your level (subject to the terms and conditions of such benefit plans, your making of any required employee contributions required for your participation in such benefits, your ability to qualify for and satisfy the requirements of such benefits plans).

(f)            You are solely responsible for the payment of any tax liability that may result from any compensation, payments or benefits that you receive from the Company. The Company shall have the right to deduct or withhold from the compensation due to you hereunder any and all sums required by applicable federal,

Phillip DuPree

Offer Letter

Page 3

state, local or other laws, rules or regulations, including, without limitation federal and state income taxes, social security or FICA taxes, and state unemployment taxes, now applicable or that may be enacted and become applicable during your employment by the Company.

(g)            You will accrue vacation time at a rate of three (3) weeks per year.  The accrual, use and carryover of vacation time shall be subject to the terms and conditions of the Company's general policies and procedures relating to vacation time.

(h)            You shall be entitled to payments of reasonable direct moving costs; reasonable temporary housing for up to 90 day from date of relocation; and reasonable housing search trip travel expenses.

3.            Pre-Hire Conditions and Requirements. You have previously submitted an Application for Employment and a Consent to Conduct a Background Check. This offer of employment and your employment by the Company is contingent upon various conditions and requirements for new hires that must be completed prior to commencement of employment. These conditions and requirements include, among other things, the following:

(i)            Successful completion of the Company's background check.

	
(ii)

	
Your execution and delivery of this offer letter together with the Company's Employee

Confidentiality Agreement and Mutual Agreement to Arbitrate, the forms of which accompany this offer letter and which are hereby incorporated herein by reference. Please sign this offer letter and these other documents and return the signed original documents to me.

	
(iii)

	
Your execution and delivery of your acknowledgment and agreement to the Company's

Employee Handbook and the various policies included therein, Securities Trading Policy, Code of Conduct and Ethics. Upon your acceptance of this offer letter, you will be provided instructions how to access online, sign and return these documents.

	
(iv)

	
Your compliance with all applicable federal and state laws, rules, regulation and orders,

including (1) your execution and delivery of an I-9 Employment Eligibility Verification together with complying verification documents; and (2) your execution and delivery of a W-4 Employee's Withholding Allowance Certificate. Upon your acceptance of this offer letter, you will be provided instructions how to access online, sign and return these documents.

The documents referenced in Sections 3(ii), (iii) and (iv) above are referred to herein as the "Standard Employee Documents."

4.            Prior Employment Requirements or Obligations. The Company requires that you comply with all terms and conditions of any employment or other agreements or legal obligations or requirements you may have with or owe to your current or former employers. In particular, the Company requires that you comply with the terms and conditions of any confidentiality or non-disclosure agreements, policies or other obligations You may owe your former employers, and Employee shall not disclose to the Company or provide the Company with copies of any confidential or proprietary information or trade secrets of any former employer. The Company expects that you will comply with any notification requirements relating to the termination of your employment with your current employer and will adjust the anticipated Commencement Date accordingly to accommodate any required notice period.

Phillip DuPree

Offer Letter

Page 4

5.            Amendments and Waivers.  This agreement may be amended, modified, superseded, or cancelled, and the terms and conditions hereof may be waived, only by a written instrument signed by the parties hereto or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power, or privilege hereunder will operate as a waiver thereof, nor will any waiver on the part of any party of any right hereunder, nor any single or partial exercise of any rights hereunder, preclude any other or further exercise thereof or the exercise of any other right hereunder.

6.            Notices.  Any notice required or permitted under this agreement will be considered to be effective in the case of (i) certified mail, when sent postage prepaid and addressed to the party for whom it is intended at its address of record, three (3) days after deposit in the mail; (ii) by courier or messenger service, upon receipt by recipient as indicated on the courier's receipt; or (iii) upon receipt of an Electronic Transmission by the party that is the intended recipient of the Electronic Transmission. The record addresses, facsimile numbers of record, and electronic mail addresses of record for you are set forth on the signature page to this agreement and for the Company as set forth in the letterhead above and may be changed from time to time by notice from the changing party to the other party pursuant to the provisions of this Section 6. For purposes of this Section 6, "Electronic Transmission" means a communication (i) delivered by facsimile, telecommunication or electronic mail when directed to the facsimile number of record or electronic mail address of record, respectively, which the intended recipient has provided to the other party for sending notices pursuant to this Agreement and (ii) that creates a record of delivery and receipt that is capable of retention, retrieval, and review, and that may thereafter be rendered into clearly legible tangible form.

7.            Choice of Law.  This agreement, its construction and the determination of any rights, duties or remedies of the parties arising out of or relating to this agreement will be governed by, enforced under and construed in accordance with the laws of the State of California, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws of such state.

8.            Severability.  Each term, covenant, condition, or provision of this agreement will be viewed as separate and distinct, and in the event that any such term, covenant, condition or provision will be deemed to be invalid or unenforceable, the arbitrator or court finding such invalidity or unenforceability will modify or reform this agreement to give as much effect as possible to the terms and provisions of this agreement.  Any term or provision which cannot be so modified or reformed will be deleted and the remaining terms and provisions will continue in full force and effect.

9.            Interpretation.  Every provision of this agreement is the result of full negotiations between the parties, both of whom have either been represented by counsel throughout or otherwise been given an opportunity to seek the aid of counsel. No provision of this agreement shall be construed in favor of or against any of the parties hereto by reason of the extent to which any such party or its counsel participated in the drafting thereof. Captions and headings of sections contained in this agreement are for convenience only and shall not control the meaning, effect, or construction of this agreement. Time periods used in this Agreement shall mean calendar periods unless otherwise expressly indicated.

10.            Entire Agreement.  This Agreement, together with the Standard Employee Documents, is intended to be the final, complete and exclusive agreement between the parties relating to the employment of you by the Company 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.

11.              Counterparts; Facsimile or PDF Signature.  This agreement may be executed in counterparts, each of which will be deemed an original hereof and all of which together will constitute one and the same instrument. This agreement may be executed by facsimile or PDF signature by either party and such signature shall be deemed binding for all purposes hereof, without delivery of an original signature being thereafter required.

This offer shall expire noon (EST) on January 14, 2014, after which time this offer shall expire.  Should you wish to accept this offer and its terms and conditions, please confirm your understanding of, agreement to, and acceptance of the foregoing by signing and returning to the undersigned the duplicate copy of this offer letter enclosed herewith.

	
 

	
Autobytel Inc.

 

 

 

	
 

	
By:

	
  /s/ Glenn E. Fuller

	
 

	
 

	
Glenn E. Fuller, Executive Vice President, Chief Legal and Administrative Officer and Secretary

Accepted and Agreed

as of the date

 first written above:

/s/ Phillip DuPree                                              

  Phillip DuPree

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