DealerTrack Holdings, Inc. Performance Stock Unit Agreement
THIS
AGREEMENT, dated ____________, 2010 (the “Award Date”), is made
between DealerTrack Holdings, Inc., a Delaware corporation hereinafter referred
to as the “Company,” and
______________, an employee of the Company or a Subsidiary of the Company,
hereinafter referred to as the “Participant.”
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1.
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Definitions. All
capitalized terms used in this Agreement but not defined in this Agreement
shall have the meanings ascribed to them in the Company’s 2005 Incentive
Award Plan, as amended from time to time (the “Plan”).
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2.
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Award of Performance
Stock Units.
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(a) Award. Subject
to the terms of this Agreement, the Company hereby grants to the Participant an
Award (as defined below) with respect to a “target” of [______] Performance
Stock Units (subject to adjustment as provided in Section 11.1 of the Plan) (the
“Award”). The
actual number of Performance Stock Units to be delivered, if any, will depend
upon the achievement of certain performance targets and other vesting conditions
as described in Section 3. As used herein, the term “Performance Stock
Unit” shall mean a non-voting unit of measurement which is deemed for
bookkeeping purposes to be equivalent to one outstanding share of the Company’s
Stock (subject to adjustment as provided in Section 11.1 of the Plan) solely for
purposes of the Plan and this Agreement. The Performance Stock Units
shall not be treated as property or a trust fund of any kind. The
number of Performance Stock Units may be increased by additional Performance
Stock Units created by "reinvestment" of dividend equivalents as provided in
Section 6(b).
(b) Plan. The
Award granted hereunder is subject to the terms and provisions of the Plan,
including without limitation, Article 11 thereof.
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3.
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Vesting of Performance
Stock Units. The Performance Stock Units will vest and
become payable to the extent earned on January 31, 2013 (the “Vesting Date”);
provided,
the Participant remains continuously employed in active service by the
Company or its Subsidiaries from the Award Date through the Vesting
Date. Except as otherwise expressly provided herein, in the
event that the Participant is not employed on the Vesting Date, the Award
will be forfeited and terminate on the Participant’s termination of
employment. Employment for only a portion of the vesting period, even
if a substantial portion, will not entitle the Participant to any
proportionate vesting or avoid or mitigate a termination of rights and
benefits related to the Performance Stock Units upon or following a
termination of employment as provided in this Agreement. In addition,
the Participant’s Performance Stock Units are subject to forfeiture if the
Company's performance goals are not achieved, as described
below.
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(a) Adjusted Net Income
Performance. One-half (50%) of the Performance Stock Units
(the “Adjusted Net
Income Units”) will be eligible for vesting only to the extent the
relevant Adjusted Net Income (as defined below) targets are met. If
the target Adjusted Net Income measurement is achieved, the Participant will be
eligible to vest in the Adjusted Net Income Units (the “Target Net Income
Award”). The number of actual Adjusted Net Income Units that
will be eligible to be paid to the Participant, subject to his/her continued
employment (the “Actual Net Income
Payout”), if any, will be determined based on the Company’s achievement
of Adjusted Net Income for the 2010 calendar year (the "Net Income Performance
Period"). The Actual Net Income Payout, if any, will be
subject to increases pursuant to the re-investment of dividends described in
Section 6(b) below.
The
Participant’s Actual Net Income Payout will be determined as
follows:
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The
Actual Net Income Payout will be 125% of the Target Net Income Award in
the event that the Company’s Adjusted Net Income is $26,700,000 or
greater.
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The
Actual Net Income Payout will be 100% of the Target Net Income Award in
the event that the Company’s Adjusted Net Income
$24,300,000.
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The
Actual Net Income Payout will be 25% of the Target Net Income Award in the
event that the Company’s Adjusted Net Income is
$20,700,000.
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In
the event that the Company’s Adjusted Net Income is less than $20,700,000
the Adjusted Net Income Unit portion of the Award will be forfeited and
terminate.
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The
payment percentage is interpolated for performance between the points
indicated in the first three bullet points above on a straight-line
basis.
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For
purposes of this Agreement, "Adjusted Net Income"
shall be the Adjusted Net Income number as reported in the Company’s full
earnings release related to 2010. If prior to December 31, 2010, the
Company acquires a new business from a third party (a “New Business”), then the
each of the Adjusted Net Income Metrics above shall be increased by the Pro-Rata
New Business Additional Adjusted Net Income. “New Business Additional
Adjusted Net Income” shall mean the Adjusted Net Income for the New Business for
the trailing 4 complete calendar quarters immediately preceding the
acquisition. “Pro-Rata New Business Additional Adjusted Net Income”
shall mean New Business Adjusted Net Income multiplied by a fraction, the
numerator of which is the number of whole months remaining in the calendar year
subsequent to the date the New Business is acquired and the denominator of which
is 12.
(b) TSR
Performance. One-half (50%) of the Performance Stock Units
(the “TSR
Units”) will be eligible for vesting only to the extent the relevant TSR
(as defined below) targets are met. If the target TSR measurement is
achieved, the Participant will be eligible to vest in the TSR Units (the “Target TSR
Award”). The number of actual TSR Units that will be eligible
to be paid to the Participant, subject to his/her continued employment (the
“Actual TSR
Payout”), if any, is determined based on the Company’s Total Shareholder
Return for the calendar years 2010, 2011 and 2012, in the aggregate (the "TSR Performance
Period"). The Actual TSR Payout, if any, will be subject to
increases pursuant to the re-investment of dividends described in Section 6(b)
below.
The
Participant’s Actual TSR Payout will be determined as follows:
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If
the Company’s TSR is equal to or greater than the 75th
percentile, the Actual TSR Payout will be 150% of the Target TSR
Award.
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If
the Company’s TSR is equal to the 50th
percentile, the Actual TSR Payout will be 100% of the Target TSR
Award.
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If
the Company’s TSR is equal to or less than the 25th
percentile, the TSR Unit portion of the Award will be forfeited and
terminate.
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The
payment percentage is interpolated for performance between the points
indicated in the first three bullet points above on a straight-line
basis.
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For
purposes of this Agreement, "Total Shareholder
Return" or “TSR” is calculated by
comparing the Company’s three-year TSR to those of individual companies that
comprise the NASDAQ Internet Index using (i) the average closing stock price for
the relevant stock for the 20-trading-day period ending with the last day on
which the NASDAQ is open for trading preceding the first day of the TSR
Performance Period, and (ii) the average closing stock price for the relevant
stock for the 20-trading-day period ending with the last day of the TSR
Performance Period. For this purpose, any company that is a member of
the NASDAQ Internet Index for purposes of clause (i) but is no longer a member
at the measurement time for clause (ii) shall not be included in the TSR
calculation. In the sole discretion of the Committee, the TSR
calculation will assume reinvestment of dividends.
(c) Determination of Company
Performance. The determination as to whether the Company has
attained the performance goals with respect to the Net Income Performance Period
and the TSR Performance Period shall be made by the Committee acting in good
faith. The Committee's determination regarding whether the Company
has attained the performance goals (the "Committee
Determination") shall be made as soon as reasonably practicable following
the end of the applicable performance period. The Performance Stock
Units shall not be deemed vested pursuant to any other provision of this
Agreement earlier than the date that the Committee makes such determination, as
required by Section 162(m) of the Code and the regulations promulgated
thereunder. Any Performance Stock Units forfeited pursuant to this
Section 3, Section 4 or Section 7 shall be deemed to have been forfeited as of
the last day of the applicable performance period, or vesting period, as
applicable.
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4.
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Termination of
Employment due to Death or
Disability. Notwithstanding
anything to the contrary herein, if, prior to the Vesting Date, the
Participant’s employment with the Company is terminated as a result of
his/her death or Disability (as defined below), the Performance Stock
Units will remain outstanding during the remainder of the Net Income
Performance Period and the TSR Performance Period and the payout will be
the Target Net Income Award and the Target TSR Award, regardless of the
actual performance of the Company; provided, however, any
Performance Stock Units that become payable following the Participant’s
death or Disability shall be prorated by multiplying the sum of (i) the
Actual EBTDA Payout and (ii) the Actual TSR Payout by a fraction, the
numerator of which shall be the number of whole months in the TSR
Performance Period that the Participant was employed by the Company and
the denominator of which shall be thirty-six (36). For purposes
of this Agreement, “Disability”
shall be defined as such term is defined for purposes of Section 409A of
the Code, notwithstanding anything to the contrary in the
Plan.
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5.
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Timing and Manner of
Payment of Performance Stock Units. The Company shall
deliver to the Participant a number of shares of Stock (either by
delivering one or more certificates for such Stock or by entering such
Stock in book entry form, as determined by the Company in its discretion)
equal to the number of Performance Stock Units subject to the Award that
are vested pursuant to Sections 3, 4 and 7 on January 31, 2013 (the “Payment Date”),
unless (i) the Participant dies or becomes Disabled during the Net Income
Performance Period or the TSR Performance Period, in which case, the
Payment Date shall be no later than 60 days following the Participant’s
death or Disability or (ii) the provisions of Section 7(d)
apply. The Company’s obligation to deliver Stock is subject to
the condition precedent that the Participant or other person entitled
under the Plan to receive any Stock with respect to the vested Performance
Stock Units deliver to the Company any representations or other documents
or assurances required pursuant to Section 10.5 of the
Plan.
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6.
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Limitations on Rights
Associated with Performance Stock
Units.
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(a) Rights as a
Stockholder. Except as set forth in Section 6(b) below, the
Participant shall have no rights as a stockholder of the Company and no voting
rights with respect to the Performance Stock Units and any Stock underlying or
issuable in respect of such Performance Stock Units until such Stock is actually
issued to and held of record by the Participant.
(b) Dividend Equivalent
Reinvestment. As of any date that the Company pays an ordinary
cash dividend on its Stock, the Company shall increase the number of Performance
Stock Units hereunder by the number of shares that represent an amount equal to
the per share cash dividend paid by the Company on its Stock on such date
multiplied by the number of Performance Stock Units remaining subject to this
Award as of the related dividend payment record date. For this
purpose, fractional interests will be disregarded. Any Performance
Units added pursuant to the foregoing provisions of this Section 4(b) will
be subject to the same vesting, forfeiture, payment, termination and other
terms, conditions and restrictions as the original target Performance Stock
Units to which they relate. No such payment shall be made with
respect to any Performance Stock Units which, as of such record date, have
either been paid pursuant to Section 5 or terminated.
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7.
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Change in
Control.
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(a) If
a Change of Control occurs during the 2010 calendar year and the Performance
Stock Units are converted, assumed, or replaced by a successor entity, the
Performance Stock Units will be subject to time based vesting so that the number
of Performance Share Units set forth in Section 2(a) will be delivered to the
Participant (the “Change in Control 2010
Payout”) provided the Participant remains continuously employed in active
service by the Company or its Subsidiaries from the Award Date through the
Vesting Date. Any such Award will be paid on the Payment Date in
accordance with Section 5. Subject to subclause (c) below, in the
event that the Participant is not employed on the Vesting Date, his/her Award
will be forfeited and terminate; provided, however that if such
Participant dies or incurs a Disability, he/she will he/she will receive the
2010 Change in Control Payout on or no later than 60 days following his/her
death or Disability and such payout will be prorated by multiplying such payout
by a fraction, the numerator of which is the number of whole months in the TSR
Performance Period that the Participant was employed by the Company and the
denominator of which shall be thirty-six (36).
(b) If
a Change of Control occurs following the 2010 calendar year and the Performance
Stock Units are converted, assumed, or replaced by a successor entity, the
number of Adjusted Net Income Units eligible for delivery will be the Actual Net
Income Payout and the number of TSR Units eligible for delivery will be the
Target TSR Award (the “Post 2010 Change in Control
Payout”), and, provided the Participant remains continuously employed in
active service by the Company or its Subsidiaries from the Award Date through
the Vesting Date, any such Award will be paid on January 31, 2013, in accordance
with Section 5. Subject to subclause (c) below, in the event that the
Participant is not employed on the Vesting Date, his/her Award will be forfeited
and terminate; provided, however that if such
Participant dies or incurs a Disability, he/she will receive the Post 2010
Change in Control Payout on or no later than 60 days following his/her death or
Disability and such payout will be prorated by multiplying such payout by a
fraction, the numerator of which is the number of whole months in the TSR
Performance Period that the Participant was employed by the Company and the
denominator of which shall be thirty-six (36).
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(c) Notwithstanding
anything to the contrary herein, in the event that a Change in Control occurs
and the Performance Stock Units are converted, assumed, or replaced by a
successor entity, if the Participant (i) is terminated by the Company’s
successor without Cause or (ii) is then bound by an employment agreement, and
such agreement contemplates a resignation for “Good Reason”, the Participant’s
resignation with “Good Reason” (as such term is defined in the Participant’s
employment agreement), in each case, during the one-year period following the
Change in Control, the Performance Stock Units will immediately vest and become
non-forfeitable. Any such Performance Stock Units shall be delivered
on January 31, 2013 in accordance with Section 5.
(d) Notwithstanding
anything to the contrary herein, in the event a Change in Control occurs and the
Performance Stock Units are not converted, assumed or replaced by a successor
entity, the Performance Stock Units (determined at “target”) shall vest in full
in accordance with Section 11.3 of the Plan and shall be paid in accordance with
the terms of the Plan no later than 60 days following such Change in Control,
provided, however, that if such Change in Control occurs following the 2010
calendar year, the number of Adjusted Net Income Units eligible for delivery
will be the Actual Net Income Payout and the number of TSR Units eligible for
delivery will be the Target TSR Award. Notwithstanding anything to
the contrary herein or in the Plan, for purposes of this Section 7(d), a Change
in Control shall only occur if such Change in Control meets the requirements of
Treasury Regulation Section 1.409A-3(i)(5).
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8.
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Adjustments upon
Specified Events. Upon the occurrence of certain events
relating to the Company’s stock contemplated by Section 11.1 of the Plan
(including, without limitation, an extraordinary cash dividend on such
stock), the Committee shall make adjustments in accordance with such
section in the number of stock units then outstanding and the number and
kind of securities that may be issued in respect of the
Award.
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9.
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Restrictions on
Transfer. Neither the Award, nor any interest therein or
amount or shares payable in respect thereof may be sold, assigned,
transferred, pledged or otherwise disposed of, alienated or encumbered,
either voluntarily or involuntarily. The transfer restrictions
in the preceding sentence shall not apply to (a) transfers to the Company,
or (b) transfers by will or the laws of descent and
distribution.
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10.
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No Right to Continued
Employment. Nothing contained in this Agreement or the
Plan constitutes an employment or service commitment by the Company,
affects the Participant’s status as an employee at will who is subject to
termination without Cause, confers upon the Participant any right to
remain employed by or in service to the Company or any Subsidiary,
interferes in any way with the right of the Company or any Subsidiary at
any time to terminate such employment or services, or affects the right of
the Company or any Subsidiary to increase or decrease the Participant’s
other compensation or benefits. Nothing in this
paragraph, however, is intended to adversely affect any independent
contractual right of the Participant without his consent
thereto.
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11.
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Tax
Withholding. Subject to Section 15.3 of the Plan, upon
any distribution of Stock in respect of the Performance Stock Units, the
Committee may in its discretion reduce the number of shares to be
delivered by (or otherwise reacquire) the appropriate number of whole
shares, valued at their then Fair Market
Value, to satisfy any withholding obligations of the Company or its
Subsidiaries with respect to such distribution of shares at the minimum
applicable withholding rates. In the event that the Company
does not satisfy such withholding obligations by such reduction of shares,
or in the event of a cash payment or any other withholding event in
respect of the Performance Stock Units, the Company (or a Subsidiary)
shall be entitled to require a cash payment by or on behalf of the
Participant and/or to deduct from any compensation payable to the
Participant any sums required by federal, state or local tax law to be
withheld with respect to such distribution or
payment.
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12.
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Governing
Law. The laws of the State of Delaware shall govern the
interpretation, validity, administration, enforcement and performance of
the terms of this Agreement regardless of the law that might be applied
under principles of conflicts of
laws.
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13.
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Conformity to
Securities Laws. The Participant acknowledges that the
Plan and this Agreement are intended to conform to the extent necessary
with all provisions the Securities Act, the Exchange Act, and any and all
regulations and rules promulgated thereunder by the Securities and
Exchange Commission, including without limitation Rule 16b-3 under the
Exchange Act. Notwithstanding anything herein to the contrary,
the Plan shall be administered, and the Awards are granted, only in such a
manner as to conform to such laws, rules and regulations. To
the extent permitted by applicable law, the Plan and this Agreement shall
be deemed amended to the extent necessary to conform to such laws, rules
and regulations.
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14.
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Amendment, Suspension
and Termination. The Awards may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from
time to time by the Committee or the Board, provided, that, except as
may otherwise be provided by the Plan, neither the amendment, suspension
nor termination of this Agreement shall, without the consent of the
Participant, alter or impair any rights or obligations under any
Award.
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15.
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Notices. Notices
required or permitted hereunder shall be given in writing and shall be
deemed effectively given upon personal delivery or upon deposit in the
United States mail by certified mail, with postage and fees prepaid,
addressed to the Participant to his address shown in the Company records,
and to the Company at its principal executive
office.
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16.
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Award Not
Funded. The Participant will have no right or claim to
any specific funds, property or assets of the Company as to this
Award.
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17.
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Force and
Effect. The various provisions herein are severable in
their entirety. Any determination of invalidity or unenforceability of any
one provision will have no effect on the continuing force and effect of
the remaining provisions.
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18.
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Entire
Agreement. This Agreement and the Plan contains the
entire understanding of the parties in respect of the Performance Stock
Units and supersedes all other prior agreements and understandings between
the parties with respect to the Performance Stock
Units.
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19.
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Construction. This
Agreement shall be construed and interpreted to comply with Section 409A
of the Code. The Company reserves the right to amend this
Agreement to the extent it reasonably determines is necessary in order to
preserve the intended tax consequences of the Performance Stock Units in
light of Section 409A of the Code and any regulations or other guidance
promulgated thereunder.
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blank.]
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The
Participant represents that he/she has read this Agreement and the Plan and is
familiar with the terms and provisions of each. The Participant
acknowledges that the Award is issued pursuant to, and is subject to the terms
and conditions of, the Plan, and the Participant will be bound by the terms of
the Plan as if it were set forth verbatim in this Agreement. The
Participant agrees to comply with all rules the Company may establish with
respect to the Plan. The Participant further acknowledges and agrees
that this Agreement (and the Plan) constitutes the entire agreement between the
parties with respect to the Award and that this Agreement (and the Plan)
supersedes any and all prior agreements, whether written or oral, between the
parties with respect to the Award.
IN
WITNESS WHEREOF, this Agreement has been executed and delivered by the parties
hereto as of the date first set forth above.
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PARTICIPANT
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By:___________________________
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Name:
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Title:
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Residence
Address:
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«XXXXXX0»
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«XXXXXX0»
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«CITY»,
«STATE» «ZIP»
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«COUNTRY»
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