Exhibit 10.1
DEALERTRACK HOLDINGS, INC.
2005 INCENTIVE AWARD PLAN
FORM OF STOCK OPTION GRANT NOTICE AND
STOCK OPTION AGREEMENT
     DealerTrack Holdings, Inc., a Delaware corporation (the “Company”),
pursuant to its 2005 Incentive Award Plan (the “Plan”), hereby grants to the
holder listed below (“Participant”), an option to purchase the number of shares
of the Company’s common stock, par value $0.01 (“Stock”), set forth below (the
“Option”). This Option is subject to all of the terms and conditions set forth
herein and in the Stock Option Agreement attached hereto as Exhibit A (the
“Stock Option Agreement”) and the Plan, which are incorporated herein by
reference. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Grant Notice and the Stock Option
Agreement.

     
Participant:
  <NAME>
 
   
Grant Date:
  <GRANT DATE>
 
   
Exercise Price per Share:
  <Ex Price>
 
   
Total Number of Shares
Subject to the Option:
  <# Options>                               shares
 
   
Expiration Date:
  <Exp Date — 1 day prior 10th anniv of grant date>

     
Type of Option:
  o Incentive Stock Option                þ Non-Qualified Stock Option
 
   
Vesting Schedule:
  Subject to Article III of the Stock Option Agreement, the Plan and any other
written agreement between the Company or any of its Subsidiaries, on the one
hand, and Participant, on the other hand, the Option shall become vested and
exercisable with respect to 25% of the shares subject to the Option (rounded
down to the next whole number of shares) on <Date — 1 year after vesting
begins>, and 1/48th of the shares subject to the Option (rounded down to the
next whole number of shares) shall become vested and exercisable on the first
day of each full month thereafter, so that all of the shares subject to the
Option shall be fully vested and exercisable on the first day of the
forty-eighth (48th) month after <Grant Date>.

     By his or her signature, the Participant agrees to be bound by the terms
and conditions of the Plan, the Stock Option Agreement and this Grant Notice.
The Participant has reviewed the Stock Option Agreement, the Plan and this Grant
Notice in their entirety, has had an opportunity to obtain the advice of counsel
prior to executing this Grant Notice and fully understands all provisions of
this Grant Notice, the Stock Option Agreement and the Plan. Participant hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions arising under the Plan or
relating to the Option. If Participant is married, his or her spouse has signed
the Consent of Spouse attached to this Grant Notice as Exhibit B.

                     
 
                    DEALERTRACK HOLDINGS, INC.       PARTICIPANT    
 
                   
By:
          By:        
 
                   
Print Name:
  Mark F. O’Neil       Print Name:        
 
                   
Title:
  Chairman, President and CEO                
Address:
  1111 Marcus Ave., Suite M04                
 
  Lake Success, NY 11042                

 

--------------------------------------------------------------------------------

 

EXHIBIT A
TO STOCK OPTION GRANT NOTICE
STOCK OPTION AGREEMENT
     Pursuant to the Stock Option Grant Notice (the “Grant Notice”) to which
this Stock Option Agreement (this “Agreement”) is attached, DealerTrack
Holdings, Inc., a Delaware corporation (the "Company”), has granted to the
Participant an option under the Company’s 2005 Incentive Award Plan (the “Plan”)
to purchase the number of shares of Stock indicated in the Grant Notice.
ARTICLE I.
GENERAL
     1.1 Defined Terms. Wherever the following terms are used in this Agreement
they shall have the meanings specified below, unless the context clearly
indicates otherwise. Capitalized terms not specifically defined herein shall
have the meanings specified in the Plan and the Grant Notice.
          (a) “Administrator” shall mean the Board or the Committee responsible
for conducting the general administration of the Plan in accordance with
Article 12 of the Plan; provided that if the Participant is an Independent
Director, “Administrator” shall mean the Board.
          (b) “Termination of Consultancy” shall mean the time when the
engagement of the Participant as a Consultant to the Company or a Subsidiary is
terminated for any reason, with or without cause, including, but not by way of
limitation, by resignation, discharge, death or retirement, but excluding:
(a) terminations where there is a simultaneous employment or continuing
employment of the Participant by the Company or any Subsidiary, and
(b) terminations where there is a simultaneous re-establishment of a consulting
relationship or continuing consulting relationship between the Participant and
the Company or any Subsidiary. The Administrator, in its absolute discretion,
shall determine the effect of all matters and questions relating to Termination
of Consultancy, including, but not by way of limitation, the question of whether
a particular leave of absence constitutes a Termination of Consultancy.
Notwithstanding any other provision of the Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate a Consultant’s service at
any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.
          (c) “Termination of Directorship” shall mean the time when the
Participant, if he or she is or becomes an Independent Director, ceases to be a
Director for any reason, including, but not by way of limitation, a termination
by resignation, failure to be elected, death or retirement. The Board, in its
sole and absolute discretion, shall determine the effect of all matters and
questions relating to Termination of Directorship with respect to Independent
Directors.
          (d) “Termination of Employment” shall mean the time when the
employee-employer relationship between the Participant and the Company or any
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding: (a) terminations where there is a
simultaneous reemployment or continuing employment of the Participant by the
Company or any Subsidiary, and (b) terminations where there is a simultaneous
establishment of a consulting relationship or continuing consulting relationship
between the Participant and the Company or any Subsidiary. The Administrator, in
its absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Employment, including, but not by way of limitation,
the question of whether a particular leave of

A-1

--------------------------------------------------------------------------------

 

absence constitutes a Termination of Employment; provided, however, that, if
this Option is an Incentive Stock Option, unless otherwise determined by the
Administrator in its discretion, a leave of absence, change in status from an
employee to an independent contractor or other change in the employee-employer
relationship shall constitute a Termination of Employment if, and to the extent
that, such leave of absence, change in status or other change interrupts
employment for the purposes of Section 422(a)(2) of the Code and the then
applicable regulations and revenue rulings under said Section.
          (e) “Termination of Services” shall mean the Participant’s Termination
of Consultancy, Termination of Directorship or Termination of Employment, as
applicable.
     1.2 Incorporation of Terms of Plan. The Option is subject to the terms and
conditions of the Plan which are incorporated herein by reference. In the event
of any inconsistency between the Plan and this Agreement, the terms of the Plan
shall control.
ARTICLE II.
GRANT OF OPTION
     2.1 Grant of Option. In consideration of the Participant’s past and/or
continued employment with or service to the Company or a Subsidiary and for
other good and valuable consideration, effective as of the Grant Date set forth
in the Grant Notice (the “Grant Date”), the Company irrevocably grants to the
Participant the Option to purchase any part or all of an aggregate of the number
of shares of Stock set forth in the Grant Notice, upon the terms and conditions
set forth in the Plan and this Agreement. Unless designated as a Non-Qualified
Stock Option in the Grant Notice, the Option shall be an Incentive Stock Option
to the maximum extent permitted by law.
     2.2 Exercise Price. The exercise price of the shares of Stock subject to
the Option shall be as set forth in the Grant Notice, without commission or
other charge; provided, however, that the price per share of the shares of Stock
subject to the Option shall not be less than 100% of the Fair Market Value of a
share of Stock on the Grant Date. Notwithstanding the foregoing, if this Option
is designated as an Incentive Stock Option and the Participant owns (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any “subsidiary
corporation” of the Company or any “parent corporation” of the Company (each
within the meaning of Section 424 of the Code), the price per share of the
shares of Stock subject to the Option shall not be less than 110% of the Fair
Market Value of a share of Stock on the Grant Date.
     2.3 Consideration to the Company. In consideration of the grant of the
Option by the Company, the Participant agrees to render faithful and efficient
services to the Company or any Subsidiary. Nothing in the Plan or this Agreement
shall confer upon the Participant any right to continue in the employ or service
of the Company or any Subsidiary or shall interfere with or restrict in any way
the rights of the Company and its Subsidiaries, which rights are hereby
expressly reserved, to discharge or terminate the services of the Participant at
any time for any reason whatsoever, with or without Cause, except to the extent
expressly provided otherwise in a written agreement between the Company or a
Subsidiary and the Participant.

A-2

--------------------------------------------------------------------------------

 

ARTICLE III.
PERIOD OF EXERCISABILITY
     3.1 Commencement of Exercisability.
          (a) Subject to Sections 3.2, 3.3, 5.8 and 5.10, the Option shall
become vested and exercisable in such amounts and at such times as are set forth
in the Grant Notice.
          (b) No portion of the Option which has not become vested and
exercisable at the date of the Participant’s Termination of Employment,
Termination of Directorship or Termination of Consultancy shall thereafter
become vested and exercisable, except as may be otherwise provided by the
Administrator or as set forth in a written agreement between the Company and the
Participant.
          (c) Notwithstanding Sections 3.1(a) and 3.1(b), pursuant to
Section 11.3 of the Plan, the Option shall become fully vested and exercisable
in the event of a Change in Control, in connection with which the successor
corporation does not assume the Option or substitute an equivalent right for the
Option. Should the successor corporation assume the Option or substitute an
equivalent right, then no such acceleration shall apply (unless otherwise
determined by the Committee pursuant to the terms of the Plan).
     3.2 Duration of Exercisability. The installments provided for in the
vesting schedule set forth in the Grant Notice are cumulative. Each such
installment which becomes vested and exercisable pursuant to the vesting
schedule set forth in the Grant Notice shall remain vested and exercisable until
it becomes unexercisable under Section 3.3.
     3.3 Expiration of Option. The Option may not be exercised to any extent by
anyone after the first to occur of the following events:
          (a) The expiration of ten years from the Grant Date;
          (b) If this Option is designated as an Incentive Stock Option and the
Participant owned (within the meaning of Section 424(d) of the Code), at the
time the Option was granted, more than 10% of the total combined voting power of
all classes of stock of the Company or any “subsidiary corporation” of the
Company or any “parent corporation” of the Company (each within the meaning of
Section 424 of the Code), the expiration of five years from the Grant Date;
          (c) The expiration of ninety (90) days (or such other period specified
in any written agreement between the Company or any of its Subsidiaries, on the
one hand, and the Participant, on the other hand) from the date of the
Participant’s Termination of Services, unless such termination occurs by reason
of the Participant’s death or Disability; or
          (d) The expiration of one year from the date of the Participant’s
Termination of Services by reason of the Participant’s death or Disability.
     3.4 Special Tax Consequences. The Participant acknowledges that, to the
extent that the aggregate Fair Market Value (determined as of the time the
Option is granted) of all shares of Stock with respect to which Incentive Stock
Options, including the Option, are exercisable for the first time by the
Participant in any calendar year exceeds $100,000, the Option and such other
options shall be Non-Qualified Stock Options to the extent necessary to comply
with the limitations imposed by Section 422(d) of the Code. The Participant
further acknowledges that the rule set forth in the preceding sentence shall

A-3

--------------------------------------------------------------------------------

 

be applied by taking the Option and other “incentive stock options” into account
in the order in which they were granted, as determined under Section 422(d) of
the Code and the Treasury Regulations thereunder.
ARTICLE IV.
EXERCISE OF OPTION
     4.1 Person Eligible to Exercise. Except as provided in Sections 5.2(b),
during the lifetime of the Participant, only the Participant may exercise the
Option or any portion thereof. After the death of the Participant, any
exercisable portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by the Participant’s personal
representative or by any person empowered to do so under the deceased the
Participant’s will or under the then applicable laws of descent and
distribution.
     4.2 Partial Exercise. Any exercisable portion of the Option or the entire
Option, if then wholly exercisable, may be exercised in whole or in part at any
time prior to the time when the Option or portion thereof becomes unexercisable
under Section 3.3.
     4.3 Manner of Exercise. The Option, or any exercisable portion thereof, may
be exercised solely by delivery to the Secretary of the Company (or any third
party administrator or other person or entity designated by the Company) of all
of the following prior to the time when the Option or such portion thereof
becomes unexercisable under Section 3.3:
          (a) An Exercise Notice in a form specified by the Administrator,
stating that the Option or portion thereof is thereby exercised, such notice
complying with all applicable rules established by the Administrator;
          (b) The receipt by the Company of full payment for the shares of Stock
with respect to which the Option or portion thereof is exercised, including
payment of any applicable withholding tax, which may be in one or more of the
forms of consideration permitted under Section 4.4;
          (c) Any other written representations as may be required in the
Administrator’s reasonable discretion to evidence compliance with the Securities
Act or any other applicable law rule, or regulation; and
          (d) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than the Participant,
appropriate proof of the right of such person or persons to exercise the Option.
     Notwithstanding any of the foregoing, the Company shall have the right to
specify all conditions of the manner of exercise, which conditions may vary by
country and which may be subject to change from time to time.
     4.4 Method of Payment. Payment of the exercise price shall be by any of the
following, or a combination thereof, at the election of the Participant:
          (a) Cash;
          (b) Check;

A-4

--------------------------------------------------------------------------------

 

          (c) With the consent of the Administrator, delivery of a notice that
the Participant has placed a market sell order with a broker with respect to
shares of Stock then issuable upon exercise of the Option, and that the broker
has been directed to pay a sufficient portion of the net proceeds of the sale to
the Company in satisfaction of the aggregate exercise price; provided, that
payment of such proceeds is then made to the Company upon settlement of such
sale;
          (d) With the consent of the Administrator, surrender of other shares
of Stock which (A) in the case of shares of Stock acquired from the Company,
have been owned by the Participant for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the shares of Stock with respect to which the
Option or portion thereof is being exercised;
          (e) With the consent of the Administrator, surrendered shares of Stock
issuable upon the exercise of the Option having a Fair Market Value on the date
of exercise equal to the aggregate exercise price of the shares of Stock with
respect to which the Option or portion thereof is being exercised; or
          (f) With the consent of the Administrator, property of any kind which
constitutes good and valuable consideration.
     4.5 Conditions to Issuance of Stock Certificates. The shares of Stock
deliverable upon the exercise of the Option, or any portion thereof, may be
either previously authorized but unissued shares of Stock or issued shares of
Stock which have then been reacquired by the Company. Such shares of Stock shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any shares of Stock purchased upon the exercise of the Option or portion
thereof prior to fulfillment of all of the following conditions:
          (a) The admission of such shares of Stock to listing on all stock
exchanges on which such Stock is then listed;
          (b) The completion of any registration or other qualification of such
shares of Stock under any state or federal law or under rulings or regulations
of the Securities and Exchange Commission or of any other governmental
regulatory body, which the Administrator shall, in its absolute discretion, deem
necessary or advisable;
          (c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Administrator shall, in its absolute
discretion, determine to be necessary or advisable;
          (d) The receipt by the Company of full payment for such shares of
Stock, including payment of any applicable withholding tax, which may be in one
or more of the forms of consideration permitted under Section 4.4; and
          (e) The lapse of such reasonable period of time following the exercise
of the Option as the Administrator may from time to time establish for reasons
of administrative convenience.
     4.6 Rights as Stockholder. The holder of the Option shall not be, nor have
any of the rights or privileges of, a stockholder of the Company in respect of
any shares of Stock purchasable upon the exercise of any part of the Option
unless and until such shares of Stock shall have been issued by the Company to
such holder (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company). No adjustment will be
made for a dividend or other right for

A-5

--------------------------------------------------------------------------------

 

which the record date is prior to the date the shares of Stock are issued,
except as provided in Section 11.1 of the Plan.
ARTICLE V.
OTHER PROVISIONS
     5.1 Administration. The Administrator shall have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. All actions taken and all
interpretations and determinations made by the Administrator in good faith shall
be final and binding upon Participant, the Company and all other interested
persons. No member of the Committee or the Board shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan, this Agreement or the Option.
     5.2 Option Not Transferable.
          (a) The Option may not be sold, pledged, assigned or transferred in
any manner other than by will or the laws of descent and distribution, unless
and until the shares of Stock underlying the Option have been issued, and all
restrictions applicable to such shares of Stock have lapsed. Neither the Option
nor any interest or right therein shall be liable for the debts, contracts or
engagements of Participant or his or her successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.
          (b) During the lifetime of Participant, only Participant may exercise
the Option or any portion thereof. Subject to such conditions and procedures as
the Administrator may require, a Permitted Transferee may exercise the Option or
any portion thereof during Participant’s lifetime. After the death of
Participant, any exercisable portion of the Option may, prior to the time when
the Option becomes unexercisable under Section 3.3, be exercised by
Participant’s personal representative or by any person empowered to do so under
the deceased Participant’s will or under the then applicable laws of descent and
distribution.
     5.3 Adjustments. The Participant acknowledges that the Option is subject to
modification and termination in certain events as provided in this Agreement and
Article 11 of the Plan.
     5.4 Notices. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of the Secretary of the
Company at the address given beneath the signature of the Company’s authorized
officer on the Grant Notice, and any notice to be given to Participant shall be
addressed to Participant at the address given beneath Participant’s signature on
the Grant Notice. By a notice given pursuant to this Section 5.4, either party
may hereafter designate a different address for notices to be given to that
party. Any notice which is required to be given to Participant shall, if
Participant is then deceased, be given to the person entitled to exercise his or
her Option pursuant to Section 4.1 by written notice under this Section 5.4. Any
notice shall be deemed duly given when sent via email or when sent by certified
mail (return receipt requested) and deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.

A-6

--------------------------------------------------------------------------------

 

     5.5 Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
     5.6 Governing Law; Severability. 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.
     5.7 Conformity to Securities Laws. The Participant acknowledges that the
Plan and this Agreement are intended to conform to the extent necessary with all
provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, and state securities laws and regulations. Notwithstanding anything
herein to the contrary, the Plan shall be administered, and the Option is
granted and may be exercised, 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.
     5.8 Amendments, Suspension and Termination. To the extent permitted by the
Plan, this Agreement 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, no
amendment, modification, suspension or termination of this Agreement shall
adversely effect the Option in any material way without the prior written
consent of the Participant.
     5.9 Successors and Assigns. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth in Section 5.2, this Agreement shall
be binding upon Participant and his or her heirs, executors, administrators,
successors and assigns.
     5.10 Notification of Disposition. If this Option is designated as an
Incentive Stock Option, Participant shall give prompt notice to the Company of
any disposition or other transfer of any shares of Stock acquired under this
Agreement if such disposition or transfer is made (a) within two years from the
Grant Date with respect to such shares of Stock or (b) within one year after the
transfer of such shares of Stock to him. Such notice shall specify the date of
such disposition or other transfer and the amount realized, in cash, other
property, assumption of indebtedness or other consideration, by Participant in
such disposition or other transfer.
     5.11 Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of the Plan or this Agreement, if Participant is subject to
Section 16 of the Exchange Act, the Plan, the Option and this Agreement shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, this Agreement shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule
     5.12 Not a Contract of Employment. Nothing in this Agreement or in the Plan
shall confer upon the Participant any right to continue to serve as an employee
or other service provider of the Company or any of its Subsidiaries.
     5.13 Entire Agreement. The Plan, the Grant Notice and this Agreement
(including all Exhibits thereto) constitute the entire agreement of the parties
and supersede in their entirety all prior undertakings and agreements of the
Company and Participant with respect to the subject matter hereof.

A-7

--------------------------------------------------------------------------------

 

     5.14 Section 409A. Notwithstanding any other provision of the Plan, this
Agreement or the Grant Notice, the Plan, this Agreement and the Grant Notice
shall be interpreted in accordance with, and incorporate the terms and
conditions required by, Section 409A of the U.S. Internal Revenue Code of 1986,
as amended (together with any Department of Treasury regulations and other
interpretive guidance issued thereunder, including without limitation any such
regulations or other guidance that may be issued after the date hereof,
“Section 409A”). The Committee may, in its discretion, adopt such amendments to
the Plan, this Agreement or the Grant Notice or adopt other policies and
procedures (including amendments, policies and procedures with retroactive
effect), or take any other actions, as the Committee determines are necessary or
appropriate to comply with the requirements of Section 409A and thereby avoid
the application of penalty taxes under Section 409A.

A-8

--------------------------------------------------------------------------------

 

exhibit B
TO STOCK OPTION GRANT NOTICE
CONSENT OF SPOUSE
     I,                                         , spouse of
                                        , have read and approve the foregoing
Agreement. In consideration of issuing to my spouse the option to purchase
shares of the common stock of DealerTrack Holdings, Inc. set forth in the
Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the
exercise of any rights under the Agreement and agree to be bound by the
provisions of the Agreement insofar as I may have any rights in said Agreement
or any option issued pursuant thereto under the community property laws or
similar laws relating to marital property in effect in the state of our
residence as of the date of the signing of the foregoing Agreement.

         
 
       
Dated:                                         ,      
       
 
       
 
  Signature of Spouse    

B-1